Daniel Bradlow on How Africa Should Respond to the Financial Crisis
My friend and colleague Daniel Bradlow, professor of law and director of the international legal studies program at Washington College of Law, as well as SARCHI professor of development law and African economic relations at the University of Pretoria, has a new short opinion essay on how Africa should respond to the global financial crisis and the deliberations of the G20. I will put up my own views on the financial crisis and the developing world and, particularly, the World Bank and IMF in all this, but I wanted now to bring Professor Bradlow’s piece to the international law professor community. Those of us who work in international development and law discover that we do not cross-connect very much with public international law scholarship – something I would like to remedy in a small way here at Opinio Juris. Professor Bradlow:
African governments and civil society should focus their efforts on the following four sets of issues:
- Protect the innocent: African governments and civil society should remind the G20 that many people and countries in Africa are suffering from a crisis they didn’t create, and they need the support that was previously promised to them. Moreover, providing this support is consistent with current efforts to stimulate the global economy. Financial assistance to Africa creates demand for goods and services from the rest of the world, which redounds to the benefit of the rich countries. By living up to previous promises of support, the rich economies are also demonstrating that they understand the need to incorporate the poor into the new international financial order. Consequently, Africa should insist that rich countries meet their existing commitments regarding aid and debt reduction, and their promises to make the Doha round of trade negotiations a “development round.”
- Ensure that the current crisis doesn’t undermine efforts to address the food, energy, and climate crises. The financial crisis should not divert our attention away from the other crises affecting the international community. This means that Africa needs, and should seek G20 support for, funding that supports infrastructure projects that provide underserved communities with sustainable access to energy, water, transport, and telecommunications, and are based on responsible social and environmental policies and practices. In this regard, it’s sobering to note that the G20 Summit statement makes no mention of the upcoming Financing for Development meeting in Doha or the climate change negotiations in Poznań, Poland, both of which offer opportunities to promote sustainable and responsible infrastructure projects in Africa and export opportunities for the rest of the world.
- Allow poor countries to engage in the regulatory reform process: The G20 has developed an extensive list of items to be addressed as part of their efforts to create a more effective and coherent system of global financial regulation. While the list is impressive and relevant to Africa, the G20 agenda does not include all issues of interest to poor countries and communities. For example, it would be useful for global financial regulators to create a global community reinvestment process, which acknowledges financial institutions that operate globally are recipients of capital flight from Africa and should share the benefit of these flows with the countries from which they come. Thus, they should be required to reinvest a stipulated portion of their lending portfolio in Africa. Similarly, the groups working on regulatory reform should look at the creative efforts of countries like South Africa and microfinance institutions around the world to expand poor people’s access to banking and financial services. At a minimum, these groups should ensure their regulatory reforms encourage efforts to provide financial services to the poor that comply with international best practices in making financial services available to the poor.
Enable African countries to engage in the institutional reform process: There’s general agreement that the institutions of global financial governance, including the IMF, World Bank, and the Financial Stability Forum, need to be reformed. However, less attention is being paid to making the reform process itself transparent and participatory. Given the G20′s central role in this process, it needs decision-making procedures that are responsive to the concerns of non-G20 stakeholders in its decisions. Thus, Africa should advocate for the creation of formal channels through which they can submit position papers and voice their concerns to the participants in the G20. They should also call for the G20 to establish a “notice and comment” period prior to all actions and decisions that are likely to have a substantial impact on the poor. This will ensure the views of all interested stakeholders on the proposed action or decision are considered in the G20 decision-making process. In addition, Africa should create regional institutions that focus more specifically on African concerns, and can interact with global institutions and other regional institutions to promote African interests. The African Union’s efforts to create an African Monetary Fund and an African Investment Bank are noteworthy in this regard.