South African business leaders seek actionable solutions at G20 Summit

The business community in South Africa is hoping that the upcoming G20 Summit in Johannesburg will pivot actionable solutions and proactive strategies to tackle Africa’s $100 billion financing gap.

This comes as South Africa in November will host the annual Summit of the Group of 20 (G20) sovereign countries, the European Union (EU) and the African Union (AU) in response to developments in the global economy.

The G20 is responsible for creating the foundation for global economic stability, a vital catalyst for economic development and implementing consequential global commitments such as the Pact for the Future and the 2030 Agenda for Sustainable Development (Agenda 2030).

The Business 20 (B20), which serves as the official G20 dialogue forum with the global business community, is of the view that South Africa’s G20 Presidency has given the continent a rare platform to lead global economic discourse, not just participate in it. 

Cas Coovadia, B20 South Africa Sherpa, said through B20 South Africa, the country has shown that African business leaders are ready to shape policy, drive reform and deliver solutions.

In an interview, Coovadia said the handover of their policy recommendations was not the end but the beginning of a new era of advocacy, accountability and action.

“The business community is looking for tangible outcomes - not just declarations. We want to see commitments to blended finance and scalable public-private partnerships that can unlock the $100bn annual financing gap Africa faces. We are also advocating for investment in green industrialisation, digital infrastructure and future-ready skills,” Coovadia said.

“SMEs and women-led enterprises are central to the G20’s economic agenda. These are not peripheral actors, they are the backbone of employment and growth. As the Presidency transitions to the United States, we expect continuity and commitment to these priorities.” 

Absa has partnered with B20 South Africa as a Diamond Sponsor, and a Gold Sponsor for G20, playing an active role in shaping economic policy and amplifying Africa’s voice on the global stage.  

Stephen Seaka, the managing executive for public sector and growth capital at Absa Corporate and Investment Banking, said they definitely want infrastructure to be financed so it can push economic growth across the continent. 

However, Seaka raised issues around the implementation of Basel IV without modifications, saying it could lead to a substantial rise in capital costs, making it tougher for developing nations in Africa to finance necessary infrastructure. 

Basel IV is the latest regulatory capital standard introduced by the Basel Committee on Banking Supervision for internationally active banks.

It includes a new standardized approach for credit risk, revisions to internal model approaches, and an "output floor" that limits how much banks can reduce their risk-weighted assets by using internal models.

Seaka, who is part of the B20 finance and infrastructure Task Force, said the cost of capital will be “a big elephant” in the room because of the global regulation, Basel IV.

“Basel regulations enforce the requirement of banks to maintain capital reserves against risks for loans, which, in practice, means less available funding for crucial projects that can stimulate economic growth,” Seaka said.

“So we were saying in Basel IV, if we implement it, all stock and barrel, it will continue to increase the cost of capital. In our view, these are for development and they have a multiplier effect. If we finance them, it's for the growth of the countries. If we could look into that regulation, we could address something around the cost of capital. As developing countries, we need this infrastructure. We are not like the developed world, which already has speed trains and all of that. So there's a discussion around that reform, and let's see where it takes us.”

Concerns around Basel IV have been raised by a number of financial institutions in South Africa. 

Monocle Solutions, a specialist management consultants firm, recently conducted a comprehensive Basel IV implementation and regulatory capital impact survey across the South African banking industry, which concluded that South African banks’ implementation measures were progressing well, with 100% of respondents confident that they will achieve full implementation by the 1 July 2025 deadline.

In a note last year, Era Gunning, an Executive at ENS in the banking and finance practice, said Basel IV requires a significant increase in a bank’s capital, and increased capital requirements require banks to raise more equity or lend less, resulting in higher costs for banks and borrowers.

“If loan commitments are assessed as higher risk, in terms of Basel VI’s risk weightings assigned to various asset classes, banks will need to allocate more capital, which is likely to lead to higher commitment fees,” Gunning said. 

“In sum, Basel IV's increased capital requirements and revised Credit Conversion Factors will make loan commitments more expensive and are likely to result in heightened commitment fees for such loans as banks adapt to the new regulatory landscape.”

Seaka also echoed Coovadia’s sentiments, saying that they were pushing for blended finance to tackle Africa's infrastructure challenges.

“Secondly, we were talking more around blended financing, and we're saying we have a lot of State-Owned Enterprises. We are saying the credit rating of these entities is no longer where it used to be, and so we will have to look into blended financing here such that we continue to unlock the infrastructure.

“In Africa we must spend close to $500bn each year just to be on par with the constraint that we have and deal with the infrastructure backlog. In South Africa, the number is being put around $30bn a year to get on par with the backlog. So there is a huge backlog that is sitting into these State-owned entities. But we can't do that because some of them have too much debt, so they can't absorb this debt. So the area that we're exploring here was blended financing.

“The third area is around the Private-Public Partnerships to make sure that they unlock this infrastructure because I might not be able to give money directly to a municipality, but I can give it to a well-run private entity that can still do the work jointly with the City. The money is ring-fenced, and we are able to follow their money and follow their work, and we have periodic checks as to how the money is being used. So those are the three [interventions] we are submitting as part of the Infrastructure Task Force”

Meanwhile, Coovadia South Africa has used its G20 Presidency to reposition Africa from the margins to the centre of global policy-making. 

“We have framed Africa not as a region in need of aid, but as a partner in innovation, resilience and reform. We [will] reach an important milestone as B20 South Africa hands over a series of policy recommendations to the G20 on 4 September. These recommendations are a roadmap backed by KPIs, case studies and actionable playbooks,” he said.

“It is a call to action for global business leaders to invest in African solutions - from climate-smart agriculture to digital transformation. Our message is clear: Africa must move from being a policy taker to a policy shaper. The G20 in South Africa must leave a legacy that positions the continent as a co-author of global economic policy.” 

South Africa, which has championed the theme “Solidarity, Equality, and Sustainability” in its tenure, will be handing over the G20 Presidency to the United States at the end of November after the Summit.

Coovadia said South Africa has risen to the challenge with clarity and conviction.

“From the outset, our Presidency of the B20 has been anchored in a vision to elevate African priorities within the global economic dialogue. The business sector has responded positively to the inclusive and consultative nature of the B20 process, which brought together voices from over 25 countries to shape a policy blueprint rooted in African realities and global relevance,” Coovadia said.

“The transition from drafting to advocacy marks a critical phase. We now need to ensure these proposals are implemented. The Presidency has laid the groundwork - now business must step up to drive delivery.” 

BUSINESS REPORT