Introduction
This policy note sets out the Compact with Africa’s (CwA) significance for and impact on African countries thus far and presents four recommendations for the G20 presidency in 2025.
Background: The Compact’s Mandate
The G20 CwA was initiated in 2017 under the finance track of the German G20 presidency with the ultimate mandate of boosting private investment and increasing infrastructure provision on the continent. The Compact brings together several stakeholders, including African countries, international organisations and bilateral partners of the G20 and beyond. Its core activities are coordinating country-specific reform agendas, supporting relevant policy measures and advertising investment opportunities to private investors. The Compact is voluntary and currently has 13 members. Benin, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Rwanda, Senegal, Togo and Tunisia entered the CwA in 2017 while Burkina Faso joined in 2018. The Democratic Republic of Congo is the newest member, having joined in 2023.
The Compact’s departure point is the understanding that Africa has great potential for sustained inclusive economic growth, but investment rates and efficiency need to be increased to achieve this growth. The World Bank estimates that countries need to have investment-to-GDP ratios greater than 25% to achieve a sustainable and inclusive growth path. Guided by an analytical report by the African Development Bank (AfDB), the International Monetary Fund (IMF) and World Bank, the Compact covers reforms in three broad blocks identified as crucial for improved investment and economic growth. These are: (1) the macroeconomic framework (macroeconomic stability, debt sustainability, domestic resource mobilisation, improved performance of public entities, etc.), (2) the business framework (reliable regulations and institutions, investor protection, standardising contracts, etc.), and (3) the financing framework (increased availability of financing at reduced costs and risks, risk mitigation instruments, easing of unnecessary restrictions, developing domestic debt markets, etc.).
The initiative is premised on the following commitments:
- African countries seek to create a more enabling environment;
- G20 and other partner countries and international organisations coordinate better, step uptechnical assistance and take action on a multilateral level; and
- G20 and other partner countries encourage their business sectors to invest in Compact countries.
By definition, and to promote country ownership, the initiative is demand-driven and has a long-term focus.The CwA is coordinated and monitored by the African Advisory Group (AAG), which comprises South Africa and Germany as co-chairs, other G20 members and African Compact countries. Participating G20-AAG members include Canada, the EU, France, Germany, Italy, Japan, the Netherlands, Norway, Spain, the UK and the US. Compact conferences at heads-of-state level are held annually.
