NIGERIA AND SOUTH AFRICA IN THE G20. Peter Draper Senior Research Fellow South African Institute of International Affairs

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1 NIGERIA AND SOUTH AFRICA IN THE G20 Peter Draper Senior Research Fellow South African Institute of International Affairs

2 Overview 1. Context: The G20 s Trajectory 2. Nigeria and the G20 3. South Africa and the G20 4. Exploring shared interests

3 Context: The G20 s Trajectory Post financial crisis, searching for a new role On macroeconomics, big powers resort to unilateral measures Financial regulation agenda has enjoyed some success The sherpa track has a patchy record no obvious saleable successes to speak of Are we heading towards a G0 world? Yet if the G20 did not exist it would have to be invented And given its composition it certainly needs something approaching a development agenda

4 Nigeria and the G20 Nigeria is now the largest economy in Africa, and consequently has a claim to leadership Services, notably finance, are central to this story Economic size, and the financial sector, are central to the G20 The post Asian crisis Larry Summers-Paul Martin process almost included Nigeria Unfortunately the reasons they didn t are instructive and enduring: Institutional weaknesses Endemic corruption

5 Nigeria and the G20 Nigeria remains fragile, especially: Its security situation Its fiscal position, and to some extent its economy, are still largely reliant on oil extraction The economy remains largely informal and therefore at odds with other G20 members So domestic challenges constrain its international footprint, for which it has limited policy bandwidth Global economic governance is a complex terrain, requiring significant domestic resourcing for effective participation

6 Nigeria and the G20 Nonetheless, Nigeria s potential is huge What will it take for Nigeria to step up to the plate? And what interests/positions would it advance, particularly in the G20? Would it lay claim to representing Africa? Development agenda (if so which components)? Resisting trade reforms? Climate change and fossil fuel subsidies? Corruption? It is difficult to see Nigeria s offensive interests; perhaps easier to see what it might seek to defend

7 South Africa and the G20 South Africa is an original member of the financial G20 Based on, inter alia: Its large and competitive financial services sector Then political gateway (if not economic gateway) to Africa status Its relatively diversified economy Its large outward FDI footprint While other gateways, notably Nigeria, have emerged, SA has mostly retained these advantages Somewhat like Nigeria, though, it faces serious domestic constraints From the beginning it has actively sought to advance African interests in the G20 Towards this end it has established formal consultative mechanisms, notably the C10 coordinated by the AfDB

8 South Africa and the G20: A Simple Scorecard Active Participation The Development Working Group (especially African infrastructure) Financial sector reforms (Basle 3, FSB) IFI reforms (increasing African voice ) Resisting OECD intrusions in the trade space Supporting the OECD agenda on tax (BEPS) Relative neglect Macroeconomic coordination (to the extent this actually exists) Imbalances and currency manipulation Climate change (although it is active in the UNFCCC process)

9 Nigeria and SA in the G20: Exploring shared interests Commonalities The African agenda Development issues, eg infrastructure IFI reforms ( voice ; conditionalities) Financial sector reforms? Corruption? Divergences Who would represent Africa? Bilateral tensions could promote competition Would a putative African agenda survive potential bilateral divergences?

10 Nigeria and SA in the G20: Exploring shared interests Beyond the bilateral? South Africa is quite preoccupied with BRICS, at least on the foreign policy front Does Nigeria share this orientation? If not, with whom would Nigeria ally? How would it work with African representative groupings, eg NEPAD; AU; AFDB; C10