South Africa has taken over the presidency of the world’s premier economic forum, the G20, from Brazil. The G20 presidency operates on a troika system made up of the current, previous and next holders. The three members cooperate with one another in preparing for an annual summit. This means that South Africa will be working with Brazil and the US (2026 presidency).
The G20 members – 19 countries plus the European Union and the African Union –account for about 80% of global GDP, 75% of global exports and 60% of the world’s population.
The Conversation Africa asked Laura Carvalho, a director of Economic and Climate Prosperity at Open Society Foundations and associate professor of economics at the University of São Paulo, what South Africa can learn from Brazil’s experience.
How did Brazil connect its domestic policy discussions to the G20 agenda?
First, Brazil managed to connect the climate agenda to the inequality agenda in the G20 as a reflection of its own domestic challenges. According to the World Inequality Database it is one of the most unequal economies in the world when we consider the share of national income that goes to the top 1%. This is partially caused by a deeply unfair tax system.
The first and second administrations of Luiz Inácio Lula da Silva made substantial progress in reducing inequalities by increasing income at the bottom. This was done through cash transfers, minimum wage gains and job creation.
The third Lula government has used different measures to tackle an extremely high concentration of income and wealth at the top. The main one has been to reform the tax system.
Some proposals faced strong pressure by elite representatives in the Brazilian congress. But the government remained steadfast.
It also seized the opportunity of its G20 presidency to lead this agenda internationally.
For example, it proposed a minimum tax on billionaires. This led to an unprecedented commitment by all G20 countries to ensure that ultra-high-net-worth individuals are effectively taxed.
This is only a first step in a broader tax cooperation agenda that the United Nations and other multilateral forums should take up.
Meanwhile the Brazilian finance ministry is putting forward a proposal for a minimum tax on its own millionaires. We will see if they succeed in using global momentum to approve the proposal domestically. It would be an important step.
What can South Africa learn from Brazil?
Brazil got strong social participation in the G20 process through engagement groups like think tanks, businesses and civil society organisations. This helped the process gain relevance throughout the year in domestic and international policy debates.
It also left an important domestic legacy. For the first time many Brazilian actors engaged on global climate and economic agendas. They now know more when adding their voices in multilateral spaces.
This strong social participation had a number of outcomes:
- it kept the inequality between and within countries at the core of the G20 process
- it contributed to securing commitments of rich countries to the Global Alliance for Fighting Hunger and helped the drive to tax super-wealthy individuals
- it created an ambitious roadmap to reform multilateral development banks.
But as we know, many developed countries are facing their own political and fiscal constraints. Therefore, it’s not surprising that the 2024 G20 summit made little progress on some other important issues. These included increasing capital commitments to multilateral development banks. Another was reforming the international financial and debt architecture. These circumstances will not improve soon.
South Africa’s leadership can aim to better connect existing sources of development and climate finance to the real socioeconomic and climate challenges faced by global south governments and citizens.
What should the South African presidency do differently to secure a better climate financing deal?
South Africa’s commitment to ambitious energy transition and green development plans and quality of finance can inform proposals to push for more coordination of international donors to finance government-led climate transition agendas.
Country platforms such as just energy transition partnerships – platforms through which developed nations assist developing ones with climate finance – offer the promise of making use of concessional finance and national planning to overcome countries’ political economy challenges. This makes it possible for governments to pursue ambitious projects while ensuring alignment with national needs and priorities.
But country platforms should not be seen only as ways to attract capital or de-risk private finance. They can also provide a clear plan to mobilise, direct and coordinate international and domestic finance, technical expertise and knowledge sharing.
Country platforms must demonstrate that climate transition goals can be achieved alongside economic growth, job creation and socio-economic equality. Maintaining the credibility and impact of this model requires better coordination from multilateral development banks and other international donors to deliver the appropriate level of concessional finance.
This is something that the South African leadership in the G20 could focus on.
South Africa is well positioned to demonstrate that these platforms can be more than a collection of projects to mobilise private capital to reduce emissions. They are also vehicles to provide more flexible, affordable and sustainable sources of international finance. This would allow developing country governments to deliver tangible benefits for their populations.
Ultimately, that’s what all governments need to show their constituents. Only if we manage to bring together the climate transition and economic development will we succeed in tackling the climate crisis. I am hopeful that under South Africa’s leadership and building on the work of the Brazilian G20 presidency, we will see progress.
Laura Carvalho, Associate Professor of Economics, Universidade de São Paulo (USP)
This article is republished from The Conversation under a Creative Commons license.
