Latest news with #AshrafPatel
IOL News
29-06-2025
- Business
- IOL News
How Africa can foster sustainable diplomacy amidst global trade tensions
Ashraf Patel The abrupt exit of Donald Trump from the G7 Summit in Canada, without having side meetings with Global South leaders from South Africa, India et al, and this week's NATO Summit where core nations committed to a 5% of GDP spending on Defence amidst Trump tariffs has cemented 'nationalism as the new normal.' Meanwhile, 9 July is a key date when Trump tariffs kick in and will further erode African nations - who face high costs of capital and many face social conflicts amidst multiple cost of living crises facing the continent. In this context, South Africa should develop a smart agile and sustainable diplomacy rooted in both national interest and continental solidarity. Traditional blocks and alliances are no longer viable for middle powers. It is thus imperative that South Africa needs to craft a more nuanced trade and investment-people partnership to address its sagging economy and deep-seated structural problems such as unemployment, inequality, hunger and digital deficits. The recent announcement by China to accept duty-free access for 53 African nations is a huge boost that can promote exports and preserve jobs - but trade facilitation and meeting product standards will be crucial to leverage these opportunities. Both China and India offer a market of hundreds of millions of consumers that African exporters can tap into. Russia and the St Petersburg Economic Forum In early June Deputy President attended the 28th St. Petersburg International Economic Forum (SPIEF) in Russia's second-largest city. This year's forum, "Shared Values: The Foundation of Growth in a Multipolar World attracted nearly 20,000 representatives from 140 countries and regions and heads of several international organizations. Russia has managed GDP growth and currency reserves despite sanctions and war and is the Gateway to Eurasia. This forum is held when the global economy is facing severe challenges. It is a platform for issues ranging from accelerating digitalization to addressing climate change and formulating specific, practical solutions that can adapt the global economy to new conditions. The forum included more than 150 events, with entrepreneurs from Russia, China, the United States, Türkiye, Brazil, Vietnam, India, Iran, the United Arab Emirates and Africa. Southern Africa, SACU and AFCFTA expansion Our Southern African region comprises over 300 million citizens with huge trade and development potential. AFCFTA has been operational for five years but trade is negligible. Trade facilitation capacity and product quality support are needed as well as tech transfer. As the G20 host nation South Africa needs a new trade and investment package rooted in SADC industrialisation and energy plans. Smart tariffs would be needed with SACU nations Lesotho, Swaziland and Botswana. However, South Africa Inc.'s story in Africa has been that of a 'regional hegemon exploiting the rest of Africa', especially in mining and retail. Can a new AFCFTA be possible? One rooted in fair trade, solidarity and the SDG model with smaller nations? Here responsible diplomacy is needed beyond rhetoric. France and its commitments to Multilateralism and SDGs agenda In the current geopolitical situation, France is ensuring multilateralism and UN norms are adhered to. President Macron's stated position on advancing the two-state solution for Palestine will go a long way in ensuring a peaceful settlement. The Paris AI Safety Summit in February with France committing to a progressive vision for AI rooted in sustainability, inclusion and addressing inequality is progressive and aligned to UN and G20 commitments. The annual Paris Peace Conference is a global platform providing the world with a plethora of progressive ideas -and solutions on a range of key global issues for dialogue. At a bilateral level, a visit to France in early June saw Deputy President Paul Mashile deepen partnerships in areas of investment, development infrastructure, energy and technology. Indonesia, Malaysia and the ASEAN bloc ASEAN nations Indonesia and Malaysia nations offer enormous opportunities. With a population of 250 million, this is a major opportunity in trade especially in small business developments, exports, tourism and culture. Canada and Australia - progressive Commonwealth nations with common values Canada and Australia are fellow Commonwealth nations that currently have progressive governments in power with a deep commitment to multilateralism. Australia's Labour leader and Prime Minister Albanese is an example of smart diplomacy and managing a 'strategic autonomy' balance with major powers in the Asia Pacific region, China and the EU. His domestic agenda is rooted in progressive social policies from climate change to social cohesion. For example, the smartphone ban in Australian schools is seen as a game-changer in regulating social media and youth, a policy Africans can learn from. Canada too has a range of commitments to development aid and investments in skills development across Africa. Both nations are major investors in mining in Africa and committed to the sustainable mining agenda, although much more can be done in terms of human rights and mining. Solidarity and Sustainability in Latin America In Colombia President Gustavo Petro has showed the way of solidarity and banned coal exports to Isreal. The city of Bogota is known to be a model city in terms of urban transport and spatial transformation, something South African metros can draw upon. Chile a progressive social democracy and once a poster child of Chicago-style neoliberalism, now has a solid social democracy increasing well-being and wealth social safety nets, and higher education access. Here South Africa can learn much on how to manage the headwinds of neoliberalism and ensure our eroding social agenda is preserved. Bolivia's socialist government is maturing and learning to be in government. South Africa has cordial relations for two decades. With large reserves in lithium and being in the headwinds of large power competition for resource extractions, South Africa and African nations can better engage Bolivia and Latin American nations in the big development ideas on resource governance and the beneficiation of critical minerals for development, trade and the UN SDG sustainable agenda. While Trump 2.0 tariffs have severely disrupted African nations, neighbours Canada and Mexico, we can learn from Cuba, who for decades have endured the illegal US blockade yet managed to maintain their sovereignty and continue to advance their historical mission and revolution. By contrast, our current tariff challenges are merely a 'walk in the park'. Hence, internationalism and solidarity should still be a core feature of foreign policy while also being smart in navigating partnerships with a diverse range of nations across continents regardless of ideological blocs. However, in order to navigate the 'new nationalist normal' in this chaotic trade geopolitics nexus calls for a new generation of smart and agile diplomats. Smart and sustainable diplomacy and outreach are required by our embassies, chambers of commerce as well as academic institutes and civil society towards a more calibrated trade, investment, solidarity and people-to-people partnerships. We may do well to establish Bi-National Commissions with some of these nations. * Ashraf Patel is a Senior Research Associate at the Institute for Global Dialogue, UNISA. ** The views expressed do not necessarily reflect the views of IOL, Independent Media or The African.
IOL News
02-05-2025
- Business
- IOL News
G20 Summit: A Mountain to Climb for Africa
Ashraf Patel South Africa and Africa host the G20 under severe geopolitical and geoeconomic storms from trade wars to massive cuts in ODA from the US and EU. In this context, development finance, debt and, international tax policy intersect on a fraught vortex, one that needs resolution. From the UN Tax Convention and G20 Common Debt Frameworks and the IMF-World Bank Spring meetings, global policy elites, under severe pressure need to find ways to achieve resource mobilisation targets for the UN SDGs. As SA hosts the G20, the addition of the G20 Expert panel also adds urgency to the need for financial and development consensus. The UN's Seville Finance for Development Summit in June, held once a decade will provide the 'broad global consensus on Finance'. Will the G20 cohere or derail at a time when the geopolitics are fracturing at a velocity unseen in decades? The issue of the African debt crisis, Illicit financial flows, the UN Treaty and the G20 Common framework are key areas that will occupy finance ministers in finding consensus. The High-Level Panel Report on illicit financial flows from Africa (Mbeki Panel Report) and the High-Level Panel on International Financial Accountability and Transparency (FACTI Panel Report), have extensively outlined strategies to combat IFFs. Unpacking the Challenges: Global bonds: US borrowing costs are hurting the rest of the world Last week, African Development Bank AfDB President Dr Akinwumi Adesina, at the launch of Macroeconomic Performance and Outlook (MEO) of the African continent on April 12, was vocal against the unfair allocation of the International Monetary Fund's (IMF) Special Drawing Rights (SDRs), noting that the continent received a measly $33 billion from the global lender, 4.5% of the $650 billion issued globally. Hence, the African agenda at the G20 is a mountain to climb. In the same week, a new Cost of Capital, report by Jeffry Sachs et al of Columbia University was more concerning: Within the African context, Africa's median public debt ratio has been on an upward trajectory since the beginning of this decade from 54.5% of GDP in 2019, to 64% in 2020, moving to around 63.5% from 2021–23 according to the Africa Economic Outlook 2024 report. In addition to this, the flow of FDI, ODA, portfolio investments and remittances dropped by 19.4 % in 2022. With high debt servicing costs, and strained tax capacities as evidenced by a median of a tax to GDP ratio of 14% in Africa, this region is experiencing constrained fiscal space which is crowding out financing for critical public services such as health and education. On the streets of African capitals, cost of living riots are mushrooming. These macroeconomic outlook indicators are grave and if the world economy faces a recession many nations in the global South and within Africa will be at depression-era levels. ( Sachs et al, Caos of Capital report, Columbia University) The unfortunate truth is that both public and private resources have not been enough to finance the development needs of Africa and other Global South countries, especially in the wake of major economic shocks. Access to finance through the global financial architecture has been particularly difficult for many developing countries with little to no access to concessional loans/grants, higher financing costs and limited representation in international financial institutions. Back to basics. Bold solutions needed from South Africa's G20 2025 leadership So given the deepening policies especially in the context of Trump 2.0 trade wars and EU Development aid budget cuts, which may see many regions going into recession, bold and even radical solutions are needed. Some suggestions: Tobin Tax on Financial Transaction At the dawn of the Millenium, the global community began discussion on supporting the UN Millenium MDGs, during the African debt crisis, there was a robust debate on the potential of a Tobin Tax on financial transaction. Named after Nobel laureate Dr James Tobin, the debate was shelved, but it is still relevant. In the current polycrisis, a currency tax is a levy on international capital flows and, as such, is a regulatory and fiscal counterpart to capital liberalisation and globalisation. In an environment of diminished nation-state economic sovereignty, the idea offers the opportunity to restore some of governments' lost taxation power and potentially raises the challenge of supranational taxation and redistribution of revenues within the international community. It has the additional advantage of being a levy on a sector that is relatively under-taxed at present. (Oxfam Tobin Tax Report, 1999) The report cautions that there needs to be a trade-off between the aims of stabilisation and development funding. According to its advocates, a currency transaction tax would be a strategic element of global financial management since it can: a) reduce short-term, speculative currency and capital flows b) enhance national policy autonomy c) restore the taxation capacity of nation-states affected by the internationalisation of markets. The tax is an attractively simple formula for reducing destabilising flows. (Oxfam, 1999) The profitable = revenue base of financiers and bankers consists of very short-term, two-way speculative and financial arbitrage transactions in the inter-bank market. The greater the frequency of transactions, the higher the tax charge can be applied to reduce speculation. This policy intervention appeal consists of being a disincentive to short-term transactions while not inhibiting international trade, long-term capital flows, or currency price adjustments based on changes in the real economy.
