Tuesday, November 8, 2011

Update from the G20 Summit: South Africa

South African president, Jacob Zuma returned home after attending the G20 Summit in Cannes, France. The G20 Summit was established in 1999 and brought together 20 world leaders, finance ministers and central bank governors in developing economies to discuss key issues critical to ensuring global stability. President Zuma and Finance Minister Pravin Gordhan represented South Africa . Their goals were to promote not only South Africa but all of Africa’s potential for being a vital contributor to global demands - manufacturing and innovation, food security and increased prices for food, and opportunities for investing in infrastructure. This year’s discussion, among other things on the agenda, included fixing the Eurozone financial crisis. This exciting conference was a huge stepping stone for the group because it enabled them to tackle important issues such as employment, growth, International Monetary Fund reform, the situation in Greece and implementing a Financial Transaction Tax (FTT, also known as the Robin Hood Tax). South Africa wanted to make it clear that this summit should not be overwhelmed with the European crisis but "it should attempt to come up with a plan that incorporates bringing about growth in developing countries," says Mac Maharaj, spokesman for the South African President.

At the end of 2010, South Africa’s unemployment rate was 24.9%. Since the country’s unemployment rate is so high, South Africa was happy that the summit would discuss this issue. The finance minister, Pravin Gordhan, urged the summit to tackle this important issue.. "There's a recognition that lack of jobs for young people brings social challenges and a decline in social cohesion. The public around the world has been making clear that these are challenges that require urgent attention," he said. South Africa has implemented programs on its own to try to combat unemployment but needed more help, so the conference gave South Africa more ideas to implement for providing more jobs. South African President Zuma affirmed that “South Africa was pleased with the summit's commitment to renew efforts to combat unemployment and promote decent jobs” and that “The focus on job creation is in line with South Africa's own domestic focus on economic transformation to promote inclusive growth and decent jobs.”

South Africa, the only African country represented at the summit, was a strong supporter of the FTT. The FTT would put a tax on the financial institutions. One very important issue targeting the South African population is HIV. The country has the highest number of people suffering from HIV in the world and today over 5 million people South Africans are diagnosed with the disease. This has led to a decrease in South Africa’s workforce and life expectancy, and higher death rates in the nation. The projected US$81 billion per year that the tax would bring in if all of countries in attendance signed on to such a tax could really help the world community tackle many things including the Eurozone crisis andglobal health issues. More importantly, the money would help South Africa tackle many health problems including HIV treatments to raise the average life span, preventing measles outbreaks, helping treat those who are already diagnosed with diseases, preventing malnutrition in children, etc. Unfortunately, the world leaders failed to reach an international agreement about the Robin Hood Tax even though South Africa, Brazil and Argentina backed it.

The conference also hoped to attract non-Euro zone countries like the BRICS countries (Brazil, Russia, China, China and South Africa) that could provide some funding for the bailout for the Euro zone. South Africa said that they were not in any position to make a big commitment with Europe until it "[gets] its act together so [they] have a clear picture of what Europe is proposing," Maharaj told The Associated Press. The BRICS weren’t convinced that the three pronged strategy (a) reduce Greece’s debt, b) scale up their European Financial Stability Facility rescue fund and c) create ways to invest that will attract foreign support of bond markets in Europe) that the European countries came up with to combat the financial crisis was going to successful. However, South Africa is keeping an open mind. It was not prepared to dish out the money but as one of the BRICS countries that the summit acknowledged as powerful, South Africa is gaining the recognition that it deserves in a western dominated global affairs arena. Even though the BRICS countries are skeptical that the debt in the Euro zone will have an nefative impact on their economy, they are waiting to hear what the European countries come up with before they offer any funding. However, they did, say they would support the IMF in taking steps to fix and prevent a crisis from happening again.

On the thursday of the summit, South Africa along with 12 other countries signed the Convention on Mutual Administrative Assistance. This Convention would combat cross-border tax evasion by allowing nations to share tax information among themselves. "The benefit is that our country ... will automatically have the benefit of exchange of information, simultaneous tax examinations (audits) between revenue administrations of different countries," said a South African spokesperson.

And last but not least on the long list of agenda items is climate change. African countries and other underdeveloped countries have been the hardest hit by climate change, which made it fitting for President Zuma to be the President of the Durban Conference on Climate Change at the G20 summit. In the conference, President Zuma encouraged the developed nations to finance the Green Climate Fund. This fund will promote and implement green projects throughout the world.

Africa is the hardest-hit by climate change. Its vulnerability stems not only from climate change impacts such as the rise in the sea level, severe droughts and floods, but also from the current levels of poverty, which limit their [sic] ability to cope with these impacts... There is no doubt that a global response is the only effective and sustainable answer to this global challenge.”

President Zuma succeeded in this role and got the support of the member nations at the summit to agree to the fund the Green Climate Fund hoping to raise US$100 billion a year. He reminded them that world leaders were “accountable to the global citizens who suffer daily from the impacts of climate change” and that they expect “effective solutions to the threat that climate change presents to their livelihood, quality of life, dignity and in many cases their very survival.” By succeeding, he assured participants in the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) that South Africa was prepared to the conference next month while they are moving towards a more ‘greener’ economy.

Alexis Roe

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