South Africa's participation in the G20, the forum for global economic cooperation, has often been framed in purely economic terms, says Hugh Hacking, Executive Head of Structured Investments and Annuities at Momentum Corporate.
While South Africa's GDP is not among the top 20 globally, it's inclusion in the G20 is based on a strategic, geopolitical and economic rationale to ensure the G20's global legitimacy and diverse perspective.
South Africa advocates for the collective interests of the African continent, ensuring issues such as debt relief, access to climate finance, infrastructure investment and fair sovereign credit ratings are on the global agenda.
It's role in the G20 has provided a crucial reputational "halo effect", connecting us with the world's major economies and finance ministers. This association is not merely symbolic. Being part of the G20 helps South Africa's reputation indicating that we are part of the major league which indirectly helps promote foreign investment and interest in the country. This supports a perception of stability that is essential for investment appeal, fostering economic growth and securing the long-term stability of vital sectors, including pensions and annuities.
South Africa's recent removal from the "grey list" and the modest, but significant, improvements in our economic outlook are positively reinforced by this global engagement.
The Financial Dividend: Pension Stability and Lower Capital Costs
The Finance Track of the G20, co-led by the National Treasury and the South African Reserve Bank (SARB), is where global policy translates into local, tangible benefits. The mandate for structured investments and annuity providers is stability and predictable returns. The G20 discussions on debt reform and global financial architecture are not abstract; they are about reducing the high-risk premiums and volatility that directly erode the purchasing power of an individual's retirement savings over a 20-year horizon.
By hosting the G20, South Africa's credit rating upgrades and improved fiscal discipline, which allow for strategic reallocation from expenditure to critical investments, are given a megaphone on the world stage. By advocating for a lower cost of capital for the Global South, South Africa is not just serving its own interests — it is creating a more fertile and stable environment for institutional investors globally.
A successful outcome from South Africa's advocacy for a lower cost of capital ultimately benefits the local equity and bond markets, providing a more fertile environment for retirement funds to grow and secure better outcomes for retirement members.
A successful push for lower borrowing costs improves the national debt outlook, enabling fiscal surpluses to be redirected toward growth-driving infrastructure and the Just Energy Transition.
The Just Energy Transition: From Necessity to Opportunity
The inevitable shift away from coal is not just an environmental imperative; it is the most significant economic diversification opportunity of our generation. South Africa's commitment to a Just Energy Transition (JET) is a sustained theme, requiring massive, predictable, long-term capital flows.
The G20 forum is where the global frameworks are negotiated to safely allocate institutional capital — including retirement funds — into these projects, while meeting fiduciary duties. This is a strategic move, positioning South Africa as an appealing destination for investment in alternative energy, green hydrogen and electric vehicle manufacturing.
The Just Energy Transition and the focus on critical minerals are massive opportunities for structured investments. The G20 needs to finalise the frameworks that allow institutional capital to be deployed efficiently and safely into these projects, ensuring the capital invested on behalf of pensioners helps to create jobs and grow the economy without compromising security.
South Africa's G20 priority on inclusive economic growth and industrialisation is key. We are looking for tangible commitments on local beneficiation of critical minerals and large-scale infrastructure investment. When these global talks translate into funded projects, we see a direct, positive feedback loop: more jobs mean more contributors to retirement funds, better growth means better investment returns and a more stable base for the economy as a whole.
Geopolitics: The Price of Principle
The geopolitical storms, however, cannot be ignored. Recent political rhetoric from the United States — which led to the United States administration boycotting the 2025 G20 and questioned South Africa's ongoing G20 status — must be seen in its proper context. Concerns about future exclusion are driven by domestic United States political and ideological grievances, rather than a sober economic assessment of South Africa's global standing.
South Africa's presence in the G20 is a symbolic one, representing the pillars of diversity, equity and inclusion (DEI). This very symbolism, borne from our history and commitment to multilateralism, makes us a lightning rod in global political narratives. Our geopolitical importance, in this sense, outweighs our current economic size, giving us leverage to champion an African agenda, but also exposing us to political pushback.
Any temporary political theatre should not distract from the long-term reality: South Africa remains the key economic representative of the African continent on the G20 platform. The conversations we lead on debt sustainability, climate finance, and inclusive growth are critically important for half the world's population.
Interestingly, despite the United States' administration's call to boycott this year's G20, the US Chamber of Commerce has had a presence at the B20, the business arm of the G20, indicating that United States businesses recognise the opportunities that Africa, with its young and growing population, offers.
A Forward-Looking Narrative
As we move forward, the narrative must focus on this foundation of stability and growth. South Africa is not merely a beneficiary of the G20; it is an important contributor, using its unique position to shape a global economy that is more equitable and resilient. By showcasing the critical links between global dialogue, domestic economic upgrades and strategic investments in the future, we reinforce a positive perception that is the best defence against short-term political headwinds.
Our economic outlook is intrinsically linked to our global engagement, and our G20 membership is an indispensable tool for securing a stable, prosperous future for all South Africans.
For more information, visit www.momentumgroupltd.co.za. You can also follow Momentum Group on LinkedIn, X, Instagram, or on TikTok.
*Image courtesy of contributor