Progress on Global Development Commitments, or More of the Same? CGD Experts Share Hopes and Predictions for 2017 G20 Summit

Each of the G20 summits of the past seven years has suffered in comparison with the London and Pittsburgh Summits of 2009, when the imperative of crisis response motivated leaders, finance ministers, and central bankers to coordinate effectively with each other. Subsequent summits have lacked the same sense of urgency and have failed to deliver any kind of agenda that can be pinpointed as clearly as “saving the global economy.” This week’s summit in Hamburg, Germany promises more of the same, with the real possibility that the G20’s stock could fall even further at the hands of a non-cooperative US delegation.

Given this peril, it’s important to recognize that the G20 has had some successes since the global financial crisis. First and foremost, a global commit to address climate change has depended on important groundwork and commitments made within the G20. Second, even as conflict and failures continued to define key elements of the trade and macroeconomic agenda, steady adherence to core principles within the G20 arguably played a salutary role in the face of difficult national politics. And finally, the G20’s clear prioritization of infrastructure investment, initially as a developing country issue and then as a universal agenda item, has no doubt motivated much of the recent work in institutions like the multilateral development banks (MDBs).

And so last fall, as we looked forward to Germany’s G20 leadership for 2017, we might have expected more of the same—an ever-expanding and diluted agenda, punctuated by moments of low-key progress on some issues. But after the election of Donald Trump in the United States, what the Germans and other G20 countries are now discovering by its absence is the degree to which the United States itself has long been the primary motivator behind a globally-oriented G20 agenda. No longer is there a US-backed G20 agenda that seeks to combat climate change, coordinate on macroeconomic policy, avoid trade protectionism, or elevate support for initiatives in developing countries.

If a shift in orientation in Washington is clear, what remains less clear is just how far the White House will go to disavow the sprawling G20 agenda of the past seven years or how much (and how well) the rest of the G20 might seek to counter the Trump administration’s more damaging tendencies. On the latter, Chancellor Merkel has vowed to make a strong push at this week’s summit in favor of a robust climate agenda. And on the former, the White House itself is showing signs of adopting the playbook of the last seven years, using the G20 to roll out a new initiative on women’s entrepreneurship in developing countries.

Taking these two data points as some grounds for hope, here at CGD we have thoughts on various elements of the G20 agenda and how they might see progress at this week’s summit.

Take serious action on displacement and migration – Jeremy Konyndyk

The G20 Summit could be an important opportunity to advance a constructive agenda on displacement and migration—but don’t hold your breath. The G20 has had migration and refugee challenges on the agenda for several years running now but delivered little real change. And the global politics of this issue are, if anything, even more problematic this year. Last year’s G20 took place a few weeks before President Obama’s summit on refugee issues at the UN General Assembly—a perfect moment to demonstrate the G20’s relevance and resolve on the issue. Instead, the summit did little to advance the agenda apart from some general (and target-free) language on burden sharing in the summit communique, while the summit annex documents (where the real commitments reside) didn’t touch on these issues at all.

As for this year’s summit, it is hard to be optimistic. President Trump is showing that he sees refugee and migration policy mainly as a law enforcement issue. Rather than sharing the burden of global displacement, his plans to cut refugee resettlement in the United States mean the US will be putting more of the global burden on frontline states that are already overwhelmed. The UK looks ill-suited to lead on this issue as well, with migration policy politicized by Brexit, and Prime Minister May’s government hobbled by the recent election. If there is any hope for a good outcome, it rests with Germany and France, whose leaders have actively pushed back on the sort of isolationist rhetoric that has characterized US and UK migration politics for the past year. But even the EU’s policy has been focused on minimizing migration into the Union while refugee drown by the thousands in the Mediterranean. I would love to see a G20 agreement that takes serious action on the deadly migration routes through the Mediterranean by developing safer legal options, and proposes a real framework for global burden sharing on refugee resettlement. But it’s hard to hold out much hope.

Support private investment in Africa – Scott Morris

This week’s summit will officially launch the G20’s Compact with Africa Initiative, which aims to support private investment in Africa. The compacts will seek to improve the conditions for private investment through comprehensive, coordinated, country-specific investment compacts between select African countries and multi- and bilateral development partners. Arguably, the G20’s political support will lend the compacts credibility, visibility and scale. From this standpoint, not all G20 countries are equal, and perhaps more than any of the others, China could make or break this initiative given the scale of its bilateral investments in Africa.

Keep up the good work on digital financial inclusion – Liliana Rojas-Suarez

I have high expectations for the upcoming G20 Summit. The G20 has made commendable progress in assessing and promoting digital financial inclusion initiatives through its Global Partnership for Financial Inclusion (GPFI), building on the work of the previous Summit in Hangzhou, where the G20 leaders endorsed the High-Level Principles for Digital Financial Inclusion. The G20 recognizes that inclusive digital payment systems are fundamental to providing basic financial services to excluded populations

 More recently, the G20 has taken an active role in reviewing improvements in the provision of digital finance. By presenting different approaches, the G20 is highlighting various paths countries have taken, or can take, to achieve greater financial inclusion. In a recent publication, Digital Financial Inclusion: Emerging Policy Approaches, the G20 highlights a sample of national initiatives, focusing on its High-Level Principles.

As I have reported before, Principles 2, 3, and 7, in particular, are very much aligned with the 2016 CGD Task Force Report, Financial Regulations for Improving Financial Inclusion. For example, Principle 2, “Balance innovation and risk to achieve financial inclusion,” encapsulates the analytical backdrop which frames the CGD report; whereas, Principle 3, “Provide an enabling and proportionate legal and regulatory framework,” describes the core aims of the CGD report and underlines the necessity of proper financial regulation. Principle 7, “Facilitate customer identification for digital financial services,” emphasizes how strong national identification ID systems can improve Know-Your-Costumer (KYC) compliance—one of the key focuses of the CGD Report. Both the G20 and the CGD reports underscore multiple innovations that are fostering digital financial inclusion. Beyond the well-known case of Kenya’s mobile money transfer services (M-Pesa), Peru and Tanzania’s digital payments ecosystems are also discussed (Billetera Móvil and Tigo Pesa respectively). And India’s unique biometric ID system (Aadhaar) is inspiring similar initiatives in other developing countries.

But of course, much remains to be done. I hope that the upcoming G20 Summit catalyzes further action towards achieving more accessible and digitally supportive financial systems, and also, that the G20 reports on more successful experiences in future publications.

Move the AMR response from “concern” to concrete commitments – Rachel Silverman

Once esoteric, the challenge of antimicrobial resistance (AMR) has received increasing global attention in recent years, including a landmark UNGA resolution last September and inclusion on this year’s list of G20 priorities. But as I’ve previously discussed, it’s relatively easy (though important) for the global community to express concern; the hard part is identifying and agreeing to concrete measures to address the problem. The scope and scale of the AMR crisis may be daunting, but the G20 has an opportunity to get the ball rolling, potentially by honing in on one or two manageable pieces of the puzzle where concrete action is possible. In particular, policy change to tackle inappropriate antimicrobial use is politically sensitive, but enormously important and thus far largely neglected. G20 leaders could start by tackling antimicrobial use for growth promotion in agriculture; for inspiration, I suggest they read my colleagues’ proposal for an international treaty to reduce antimicrobial use in livestock. And as always, additional funding commitments would certainly be welcome; the World Bank estimates that an effective AMR response would come at a $9 billion per year price tag relative to the 2016 baseline—and there’s still a long way to go.

Empower all women entrepreneurs – Tanvi Jaluka and Mayra Buvinic

At April’s Women20 dialogue, Chancellor Merkel and White House adviser Ivanka Trump unveiled plans for a new fund to promote women’s entrepreneurship, bolstered by contributions from governments and businesses. It’s clear that a fund to bolster women’s economic empowerment is much needed. Female small- and medium-sized enterprises (SMEs) face disproportionate financial barriers: only half of women-owned business in developing countries have access to loans from commercial banks.

However, in order for the fund to deliver on its promise of empowering women entrepreneurs, it must incorporate three considerations. Firstly, the fund’s governance structure must be inclusive. The fund would benefit most from diversity in leadership—including representatives from developing countries, grassroots organizations, and the private sector—rather than prioritizing donors. Secondly, the fund’s approach must be holistic. While access to capital is a significant barrier for women entrepreneurs, most women also face a range of socio-cultural challenges. Tackling these barriers requires the creation of an environment enabling of business, which means that the fund should address the lack of family planning, healthcare, child care, education, and capabilities available to women in addition to financial constraints. Lastly, it is key to recognize that SMEs do not encompass the poorest of women entrepreneurs, whose businesses operate at the micro-level. Indeed, as it stands, only one-third of SMEs are owned by women; most women’s work is represented in the informal sector. While the fund has the potential to remove some barriers for SMEs, it will not be a “silver bullet” to promote economic empowerment for all women.