Participation in the G20 contributes to Africa's economic growth

The African Union (AU), on September 9, 2023, officially took its seat at the table of the world’s richest and most powerful countries, commonly known as G20,at its last summit in New Delhi with the approval of all and at the request of the summit's host, Indian Prime Minister Narendra Modi.

Comprised of 19 nations and the EU, Africa had only been marginally represented within the G20 through South Africa’s seat and the AU permanent guest ship but the admission is the first change since the conception of the group in 1999, which brings together 19 of the world's largest economies plus the European Union, representing 85 per cent of global GDP and two-thirds of the world's population.

AU has 55 members

Officially launched in 2002 and based in Addis Ababa, the capital of Ethiopia, the AU has 55 members (including six suspended because they are under the rule of juntas), representing about 1.4 billion people and around 10 per cent of the world’s economy. The AU has become the second regional organisation to join the G20 after the European Union, totaling three trillion dollars in GDP.

Granting the African Union a permanent seat in the G20 would make it possible to “repair an injustice,” Senegalese President Macky Sall argued in July when he spoke via video conference as part of the Economic Meetings in the Aix-en-Provence in the south of France. “Africa combined is in eighth place in the world in terms of gross domestic product,” recalled Mr Sall, 

Diplomatic victory for Modi

The expansion of the block is a notable diplomatic victory for Modi, who faces national election next year and has used hosting rights for this year's forum to burnish his image as an international statesman.

By helping the African Union earn a seat at the G20 table, India has emerged as a champion of the global South. The AU joining the G20 comes as India and China are competing for greater influence.

China is the largest trading partner for the African continent and the fourth-biggest source of international investment. Bilateral trade between China and Africa stood at about $282 billion in 2022, whereas trade between India and Africa stood at nearly $98 billion in 2022-23 according to government data from Beijing and New Delhi, respectively.

Azali Assoumani — AU Chairperson

"There is a degree of competition for influence in Africa not only between India and China, but also other partners operating in the region such as the US, EU, Brazil, Turkey, UAE, Japan, Indonesia among others," said Bhatia.  Earlier in August, the BRICS grouping of Brazil, Russia, India, China and South Africa announced it would welcome six new members, including Ethiopia and Egypt from the African continent.

Advantages for AU

As part of this influential group, the AU gains access to a host of advantages that can propel the continent’s interests and actively shape global agenda and participation in the G20 contributes to Africa’s economic growth.

The AU can leverage this platform to foster economic cooperation, attract investments and explore opportunities for trade expansion with major global players. The World Bank’s positive GDP growth forecasts for Africa further underline the potential for economic advancement.

The G20 membership also opens doors to increased Foreign Direct Investment (FDI) and economic partnerships. African nations can attract investments in vital sectors such as infrastructure, technology and renewable energy, fostering economic development.

International trade agreements

The AU can actively engage in discussions related to international trade agreements within the G20, shaping trade policies that benefit the continent, promote fair trade practices and reduce trade barriers. G20 leaders are committed to open trade and have mandated key organisations to monitor and report on these commitments.

Also, as a G20 member, the AU can advocate for financial assistance and support for African nations, addressing crucial issues such as poverty alleviation, healthcare and infrastructure development. The G20’s comprehensive financial inclusion plan benefits all nations and populations, including vulnerable groups.

Since India assumed the rotating presidency of the G20 in December, Modi's government has pushed for international consensus on issues that affect developing nations. 

"One of the points India has also been making with its presidency is that, at a time when multilateral institutions across the board are not working effectively, the G20 with a mix of the developing and developed world is at a better position to articulate global governance issues," Harsh Pant, the Vice- President of studies and foreign policy at the New Delhi-based Observer Research Foundation said.

Conclusion

While G7 represents an older order, G20 represents a new global order where new voices are rising and new actors are making their presence felt and analysts say the idea is to bring more African voices to the table instead of them being the recipients of decisions, norms and rules by countries and institutions that are far more advanced.

“We welcome the African Union as a permanent member of the G20 and strongly believes that inclusion of the African Union into the G20 will significantly contribute to addressing the global challenges of our time,” said the summit’s final declaration.