President Cyril Ramaphosa has called on the multilateral finance institutions of the global community to reform their practices and allow emerging economies to access development finance on fair terms.
Ramaphosa was addressing the World Economic Forum meeting in Davos, Switzerland, on Tuesday. He took the opportunity to tout South Africa’s government of national unity, Eskom’s suspension of load-shedding for nearly 10 months and the country’s presidency of the G20.
He said when South Africa takes over the presidency of the G20 this year, the government will ensure that the meeting focuses on three themes: solidarity, inequality and sustainable development.
“These themes can best be taken forward through the collective actions of a number of institutions like the G20, as well as various multilateral organisations such as the United Nations, the World Trade Organisation, the World Health Organisation, financial institutions of the world — some of which should be reformed and be made more representative and more responsive to the needs of the citizens of the world,” he said.
“We will seek to get the G20 to focus more on how we can enhance solidarity through collective efforts to make sure that in the pursuit of progress in the world, and progress for all, no person and no country should be left behind.”
This is not the first time Ramaphosa has urged established multilateral organisations to approach Africa and other emerging economies more fairly when it comes to matters of development finance. At the height of the Covid-19 pandemic and global lockdown, South Africa was granted a $4.3bn (R79.56bn) loan from the International Monetary Fund at a rate of 1%, which took the government’s debt exposure to R3-trillion at the time.
Ramaphosa said one of the biggest impediments to achieving greater levels of growth, development and stability around the world was the persistence of inequality within and between nations.
“The pursuit of the UN sustainable development goal on reducing inequality is as much an economic imperative as it is a social imperative. As the G20 we need deliberate as well as co-ordinated effort to focus on inclusive growth based on responsive trade and investment to grow the incomes of poor countries and the poorest in society.”
Global finance institutions should help to de-risk and support more financing for emerging and developing countries
— President Cyril Ramaphosa
He warned that debt sustainability for low-income countries was one of the four main priorities of South Africa’s presidency of the G20 in 2025. He also urged developed economies to be mindful of their conduct where it relates to energy consumption, as this also affects developing countries.
“In addition to huge gaps in economic capabilities and levels of human development, countries in the Global South face a lack of predictable finance in development, as well as climate change. They also face high levels of debt and they are vulnerable to pandemics.”
Mobilising finance for the just energy transition is another priority for South Africa at the G20, Ramaphosa said, calling out the steep rates developing economies have to pay for loans, leaving them in long-term debt cycles.
“It is simply, in our view, not fair that over 60% of special drawing rights go to a handful of wealthy countries. These drawing rights should be redirected to enable countries in Africa and other parts of the Global South to realise their developmental aspirations, to enable them to invest in infrastructure, industrial development, education and training, and health care.
“We need to leverage private capital and use innovative forms of finance, as well as taxation, to raise additional resources for sustainable development in various countries in the Global South. Global finance institutions should help to de-risk and support more financing for emerging and developing countries.”
Speaking to Bloomberg in Davos earlier on Tuesday, Reserve Bank governor Lesetja Kganyago warned that one of the risks the global economy showed was a fragmentation of the global economy in which developed countries take protectionist measures, which would be negative for global trade.
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