South Africa, as the first African country to assume the presidency of the G20, is taking on a singularly important role in articulating an African agenda towards the global community of nations.
This is an opportunity but potentially also a challenge to the continent’s development, said Achim Steiner, the under-secretary-general of the United Nations and administrator of the United Nations Development Programme (UNDP).
He was speaking to the Mail & Guardian in Johannesburg on the sidelines of the UNDP Global Leadership Retreat in Johannesburg, last week.
“This is a very interesting moment of the G20 and I think perhaps to many South Africans, there is a question of why should we care about what the G20 does,” Steiner said. “First of all, these 20 countries represent 80% of the world’s economy so any decision they take in their own interest is of immediate consequence to every other citizen on the planet.”
If those decisions are only taken from a narrow or national interest perspective and perhaps from the viewpoint of the world’s richest countries, they won’t address pervasive issues of inequality and the continent’s debt crisis, among others.
South Africa is the fourth consecutive G20 presidency from a developing or emerging economy. In 2026, the United States will take over.
The vantage point that South Africa will bring to its 2025 presidency “will be a significantly different one than that of the American presidency”, Steiner pointed out.
“For South Africa, it is also an opportunity to put fundamental issues on the front-burner, whether it’s the global economy, financing and the debt crisis but also addressing climate change in the context of developing countries’ pathways becomes such a central topic.”
G20 ‘found wanting’
Globally, the UNDP estimates that 58 developing countries are spending more money on servicing loans on interest payments for their debt than they are investing in their health or education budgets. This is not a formula for investment development, Steiner said.
Finding a solution to the debt crisis has always had many drivers. “Frankly, it became a crisis on the back of an inflation and high interest rate set of monetary policies responses by the wealthiest nations, which has now turned into a financing and fiscal crisis for many countries on the continent.”
The international financial architecture has been very slow to respond. “The G20 has also been found wanting in the sense that it acknowledges that this is a problem for many countries but the bottom line is that it’s not material to the global financial system’s stability, so, ‘we all have problems, let’s in a sense see whether something can be done.’”
There have been attempts by the International Monetary Fund, the World Bank and other institutions to address this crisis, he said. Reflecting on the narrative of the so-called “soft landing” of the global economy” in the past two years, the harsh truth is that for some countries — the wealthiest — the landing is softer, Steiner said. “For many countries, the hard landing is actually the reality right now.”
Disabling Africa
From the UNDP’s standpoint, the world has again moved into an era where development is heading into two distinct trajectories: the countries that are wealthy enough to take off and a group of countries that are stuck.
“We have had economies go bankrupt in Sri Lanka, we have had defaults from Zambia and Ethiopia. These are catastrophic moments for a country’s economy because not only are you unable to import basic vital commodities … you also are not able to invest and investors will not come to an economy that is essentially junk rated on the financial markets.”
Here, Steiner cited an “extremely frustrating” phenomenon, particularly for Africa and one which the UNDP has tried to shine the spotlight on: the way in which credit rating agencies essentially enable — or disable — Africa from being a viable player in borrowing on the world’s capital markets.
Many African countries “pay a kind of collective price” for the continent being viewed as a high-risk investment destination. “It’s fascinating that there are three or four ratings agencies in the world, and between them have only four offices on the African continent and yet they determine billions of dollars worth of higher interest rates because of the way they rate countries and the financial markets.
“They don’t know individual economies so they will take this off the shelf and this is why so much of Africa struggles to actually leverage that famous private investment capital for its own development.”
‘Not a paper tiger’
In November, the world met in Baku, Azerbaijan, for the 29th annual conference on climate change (COP29). “Those in 1992 thought that a convention [the United Nations Framework Convention on Climate Change] is a meaningless document, a paper tiger … that the UN helps the world to create every now and then.”
For almost 30 years, they had been proven wrong. “Even in the worst of moments, and perhaps we could describe the year 2024, in geopolitical and also geoeconomic terms, as one of the worst moments in recent history, all nations came to Baku and spent two weeks struggling to reach agreement.”
This was “perhaps unsurprising” because what COP29 was centrally about was whether the world could agree on a more ambitious, significantly higher target of how financing climate action would happen.
“Not unexpectedly, those who were asked to bring more money to the table have great difficulties to have that accepted politically at home. For many developing countries, it’s increasingly a matter of you cannot ask us constantly to raise our levels of ambition and then not also step forward with financing … We just about managed to get an agreement.”
The Baku finance goal contains a core target for developed countries to take the lead on mobilising at least $300 billion a year by 2035 for climate action in developing countries, with the inclusion of a $1.3 trillion target by 2035. The Global South asked for $1.3 trillion a year towards climate action.
For Steiner, while the $300 billion figure is “not so much of a success story”, it is “not peanuts”, he noted. “Yet in terms of the overall energy transition that must be achieved over the next few years, it’s clearly far from where we need to be.”
The most important signal out of Baku was that the Paris Agreement is “alive”, he said. “[It] remains the only viable and credible platform on which a 193-plus nations can actually synchronise their action on climate change and mutually reinforce each other’s ability to confront climate change.”
What remains a constant source of frustration, however, is the inadequate efforts to finance climate adaptation in Africa, which faces disproportionate climate impacts.
“Africa is now having to divert billions of dollars simply to secure its development infrastructure, instead of being able to invest that money in expanding the digital infrastructure, the healthcare systems, the education systems … Again, since it is not the principal cause of carbon emissions and climate change historically, there is a deep level of frustration on the continent that not more financing is available.”
Energy transition
While many are “rightly frustrated” by the international climate negotiations, “what they sometimes don’t always realise is that it is the only place that has actually enabled a green transition agenda to emerge and ultimately for some remarkable things to happen over time”.
“The Paris Agreement, in part, is reflected in what the International Energy Agency predicts for this year’s total investment in new electricity generating infrastructure. The number is mind boggling: the world will spend $3 trillion this year in building new electricity generating capacity.”
Of this figure, a staggering $2 trillion is in the renewables sector. “We are in the midst of an energy revolution already and obviously for an economy like South Africa, it’s been a bit of a stop and start, because South Africa has had a progressive view of having to address climate change because it already is experiencing climate change.”
Its energy infrastructure and economic history, in terms of power generation, were clearly heavily rooted at the time in the availability of coal, which was “unfortunately some of the dirtiest coal in terms of emissions”.
“The question has always been, should South Africa simply continue to generate its power by using fossil fuels because we have it?”
Two things have changed. “The world is already in the midst of an energy revolution but essentially the country is an export dependent economy. The markets of the world are not going to buy goods from a country that says ‘climate change is not my problem and I’m going to continue to produce the power that I need from my industry’, with a carbon footprint that is simply no longer going to be accepted.”
South Africa, he said, has returned to an ambitious decarbonisation strategy because it recognises that it’s a fallacy to believe that the cost of a kilowatt hour produced with coal is significantly cheaper than one produced with solar or wind power.
Social disruption
The greatest challenge for South Africa is two-fold. “One is to adapt the electricity infrastructure to a renewable energy powered economy, which has some challenges and costs. Second is also to deal with … local economies and livelihoods that have grown up around coal mines and coal-fired power stations … There are significant additional costs of this transition that are more in the realm of the social – the jobs and livelihoods that are disrupted.”
Ironically the biggest challenge perhaps for South Africa is no longer the economics of transition nor its capacity to evolve its power grid, “it’s now the social economic transition”, Steiner said.
Tackling this is not rocket science, though. “We have done it dozens of times through the industrial revolution, the digital revolution … And the world is showing us all over how it can be overcome. Why should a country like Kenya be able to power 90% of its electricity needs with renewables or Uruguay … It is being done by small economies, large economies, and wealthy ones, by poor ones. There is no longer an argument that you can’t do it. It’s a matter of policy choice and to get it right.”
Nobody is suggesting that the country from one week to another switches off one power infrastructure and puts another on.
“The question is should South Africa invest in an energy technology that is 200 years old in essence and will run out of essentially an opportunity continuing in the next few decades. Or should it invest every new kilowatt hour of generating capacity it now constructs into a 21st century energy infrastructure?”
The United Nations Development Programme’s Achim Steiner criticizes slow global response to Africa’s debt crisis
