Standard Bank CEO Sim Tshabalala, co-chair of the B20 finance & infrastructure task force, says the working group is confident it can push its recommendations through the G20 system despite deep geopolitical and geo-economic divisions.
“It’s a sticky wicket,” Tshabalala said on Monday at a pre-B20 summit event, “but we took the view that we are dealing with long-term issues, not short-term cycles. In the long arc of history, the conversations held in Africa must have an impact not just on SA, but on the continent and the world.”
Tshabalala said the group deliberately crafted principles that every reasonable person would accept, “articulated in language that works whether you’re South African, American, Russian, Chinese, Nigerian or Australian”.
He emphasised the working group was global in composition, with members from every corner of the world, with SA forming the largest team, followed by the US and Zimbabwe.
While acknowledging geopolitical tensions, he said the task force “stuck to principle” and engaged continuously with corporates and industry bodies worldwide, including the American Chamber of Commerce and major multinationals.
“The US made a contribution, China made a contribution, [and] JP Morgan is one of our co-chairs. We were careful to stay within our lane and stick to the basics,” he said.
The interdependent recommendations outlined by the working group are:
- Support the expansion of investable infrastructure projects.
- Improve access to capital by increasing the availability, effectiveness and resilience of public, private and philanthropic investment.
- Enhance the flow of funds between investors, infrastructure projects and the wider economy.
A working group report states: “The overarching objective of the finance & infrastructure task force is to identify actionable recommendations that can be taken forward by the B20 and other key stakeholders to help close this infrastructure gap.
“This mission is especially important in the context of an increasingly fragmented global financial environment, which poses particular challenges for [emerging market and developing economies] but also provides opportunities for private-sector-led investment and collaboration to help offset growing geopolitical fragmentation.”
British Robinson, chairperson of the Milken Institute, added the political moment should not be confused with the structural investment trend. She said short-term political turbulence, including major-power tensions, should not obscure long-term commitments to structured energy transitions and cross-sector coalitions.
The Milken Institute is an independent American think-tank.
“You’re not handing off to the political situation. You’re handing off to philanthropy, foundations, the private sector and US companies. As an American who loves this continent, I can tell you the American people believe in Africa’s future,” Robinson said.
The B20 has called for improved prudential treatment of multilateral development banks and development finance institutions. Because multilateral development banks and development finance institutions often co-lend, provide guarantees and bring high credit ratings and specialist structuring skills, the task force recommends expanding the list of institutions eligible for a zero percent risk weight and updating guidance to better reflect the derisking effect of guarantees and preferred-creditor arrangements.
It further proposes clarifying standards for conditional clauses used in complex infrastructure deals, allowing commercial lenders to rely more confidently on multilateral development banks and development finance institution credit enhancements.
These recommendations come as the debate over Basel III’s impact on development financing is intensifying.
The B20 is urging the G20 and global regulators to reform prudential requirements that it says are constraining private-sector investment in long-term infrastructure, particularly in emerging and developing economies.
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