Top job for South African Lesetja Kganyago gives African countries sway
Kampala, Uganda | DANNY BRADLOW | South Africa’s Reserve Bank Governor, Lesetja Kganyago, has been selected as the first sub-Saharan African to serve as chair of the International Monetary and Finance Committee. The chair is appointed by consensus. The three-year appointment is not only an impressive personal achievement; it’s also a significant opportunity for South Africa and the African continent.
The finance committee plays an important role in global economic governance. Its 24 members, who are ministers of finance and central bank governors, represent constituencies of the International Monetary Fund’s (IMF’s) Board of Governors. It meets twice a year to discuss an agenda prepared by the IMF’s managing director and the committee’s chair.
Its mandate is to advise the board of governors which is the IMF’s highest decision making body. The committee’s remit is to oversee the “supervision and management of the international monetary and financial system” and to provide strategic guidance to the IMF’s management and board.
Kganyago is becoming chair at a sensitive time. For almost 70 years, the global economy and global economic governance institutions like the IMF have been dominated by the U.S. This dominance had been slowly eroding. Under President Donald Trump the process is accelerating. The U.S appears to be retreating from full engagement with the world and is rapidly losing its authority as the responsible leader of the global order.
This fluid situation will create both opportunities and risks over the next three years. If well managed, the changing balance of forces could lead to global economic governance arrangements that are more representative and more focused on promoting a sustainable and inclusive global economy. But if mismanaged, they could precipitate a breakdown and generate a more volatile and anarchic global economic environment.
The IMF will play an important role in shaping the international community’s responses to these opportunities and risks. Its views will influence the advice it gives its member states, the conditions it attaches to the financial services it offers them, and its selections of topics for its publications and research activities. They will also affect its willingness to adapt its governance arrangements to the changing global order.
The IMF’s high profile and the role of the finance committee in its affairs mean that Kganyago’s appointment creates the opportunity for some African gains in international economic diplomacy.
Given the realities of global power relations, African countries must measure progress in international economic diplomacy in millimetres, not centimetres.
At its core, global economic diplomacy is about how the global economy is structured, how decisions about its functioning are made and whose interests it serves. Unsurprisingly, the rich and powerful countries have the strongest voices in global economic governance. They pay careful attention to issues that affect their interests and their control over the global economy. The realities of power mean that they are likely to get their way on these issues, regardless of the merits of their views.