LIC Forums

This page attempts to map organisations (global and regional) that attempt to govern financial regulation and represent the views of LICs.

Global Groupings

The G24, which advocates the position of developing countries on international monetary and financial issues, has an active interest in the FSB and related issues, as reflected in a recent Policy Brief on the macroeconomic effects of Basel III, and its membership comprises the central banks and finance ministries of each country. Given that three African C10 members (Algeria, Egypt, South Africa)[1] are also in the G24, it could also potentially be a good channel for African LIC voices. As its secretariat is already admitted to the G-20 and FSB meetings it would be well-placed to advocate LIC-specific positions. However, it has only 3 LIC members, and is currently led by three MICs - South Africa, India and Mexico (who are already on the G20). As a result, it is not clear how close its members’ interests are to those of LICs. It could perhaps become more representative if it mobilised LIC opinions more systematically through a constituency system, and rotated at least some of its seats among different countries.

The Global Governance Group (“Triple G” or “3g”), initiated by Singapore, was established at the London Summit to give a voice to small and medium sized countries and form a bridge between G20 and non-G20 countries. It therefore addresses global governance issues for its 27 members, and channels their views into the G20 process[2]. However, although much more balanced geographically and in terms of country size than the G-20, only 2 members are LICs (Rwanda, Senegal)[3]. Unfortunately therefore, integration of 3g into the G20 will not enhance LIC representation, raising the issue of the need to lobby for greater LIC representation in the 3g.

Asian Regional Organisations

The South Asian Association for Regional Cooperation (SAARC) comprises 8 members, of which 2 are LICs (Afghanistan and Nepal), although its economic cooperation focusses primarily on trade[4].

The Pacific Islands Forum, whose objectives are to stimulate economic growth and enhance political governance and security in the region, features 1 LIC (the Solomon Islands).

ASEAN includes a higher share of LICs (3 of 10 members: Cambodia, Lao PDR, and Myanmar), which may yield greater LIC representation if they focus sufficiently on financial stability issues.

African Regional Organisations

The 53 members of the African Union (AU) include LICs and non-LICs[5]. The most relevant organs are the Assembly, Executive Council, Commission, Permanent Representatives Committee, and selected Specialised Technical Committees, and the financial institutions (African Central Bank, African Monetary Fund, and African Investment Bank)[6], and NEPAD as a technical body of the AU.

The Assembly is the supreme organ, made up of the Heads of State or their representatives. It meets annually, chaired by an elected Head of State[7]. The Executive Council is made up of Ministers of Foreign Affairs or other designates. It meets at least twice a year[8].

The Commission serves as the Secretariat, with functions defined by the Assembly[9]. Key contacts include Chair Jean Ping (Gabonese), Deputy Chair Erastus Jarnalese Onkundi Mwencha (Kenyan), and Commissioner for Economic Affairs Maxwell M. Mkwezalamba (Malawian)[10].

The Specialised Technical Committees[11] of Ministers or senior officials prepare projects and programmes for the Executive Council; supervise, follow up and evaluate implementation of AU decisions; coordinate and harmonise projects and programmes; submit reports and recommendations; and carry out other functions as relevant. The Committee on Monetary and Financial Affairs sounds most relevant[12]. However, the Assembly is mandated when appropriate, to restructure existing Committees or establish other Committees.

The Permanent Representatives Committee is charged with preparing the work of the Executive Council, acting on its instructions, and setting up sub-committees or working groups as necessary[13].

As a technical body of the AU, NEPAD comes under the supervision of the AUC Chair, with guidance from the NEPAD Chair of the Heads Coordinating Agency of State and Government Orientation Committee. The NEPAD Planning and Coordinating Agency replaced the NEPAD Secretariat in February 2010, and its CEO is Ibrahim Mayaki[14].

NEPAD’s objective to enhance Africa's growth, development and participation in the global economy, and desired outcome to implement capacities for global engagement correspond very closely with the objective of enhancing the LIC voice within FSB. However, its themes, directorates and action plan appear at first sight to be rather vague in this respect. The closest matching theme relates to economic and corporate governance. It is not presently clear which Directorate would be the most appropriate in lobbying for FSB engagement from among the Office of the CEO; Strategy and Knowledge Management; Policy Alignment; Programme Implementation and Coordination; or Partnerships, Resource Mobilisation and Communications.[15] The AU / NEPAD African Action Plan does not mention G20, FSB, or address financial stability issues explicitly[16].

African Development Bank Group

The Group’s objective is to spur sustainable economic development and social progress in its regional member countries, thus contributing to poverty reduction by mobilising and allocating resources for investment; and providing policy advice and technical assistance to support development efforts. Its 53 member states include LICs and non-LICs, and 24 non-regional non-LIC countries. The Group comprises the Bank (AfDB), Fund (AfDF) and Nigeria Trust Fund (NTF). The organisational chart as of 1 January 2011 is available on the website[17].

Activities cover a huge array of topics and sectors[18]. Those most relevant to FSB include:

· African Financial Markets Initiative: this does not appear to be functioning yet. Its objectives would broadly speaking be to further the development of domestic African capital markets. Potential participants include development partners, regional Central Banks, and public and private sector experts with specific objectives performed by dedicated working groups. Its outputs would feed into the Annual Pan-African Conference

· Economic and Financial Governance (via the Governance, Economic and Financial Management Department): dealing with the Making Finance Work for Africa Partnership (most relevant, facilitating financial sector development), Africa Peer Review Mechanism, Extractive Industries Transparency Initiative, Investment Climate Facility, and Strategic Partnership with Africa (aid effectiveness)

· Financial Crisis: analysis and response, in the context of the G20, Committee of 10, African Finance Ministers and Governors of Central Banks Conference etc

· NEPAD Support Unit: AfDB Group collaborates with UNECA on Economic and Corporate Governance, and on helping foster the adoption and implementation of banking and financial standards

United Nations Economic Commission for Africa (ECA)

The Economic Development and NEPAD Division[19] would appear to be most relevant to the FSB. Its Director is Emmanuel Nnadozie. In addition to supporting various joint regional initiatives (discussed elsewhere), UNECA organised a workshop on 3-4 June 2010 titled: “Africa and the Establishment of a New International Financial Architecture: Challenges and Opportunities”. At this event, experts called on ECA to continue analysing proposals for reforming international financial architecture, promoting information sharing among Member States, multilateral, regional and subregional organizations, forming financial intelligence units to address AML, and cooperating with the AU in creating a Regional Central Bank, Regional Monetary Fund and Regional Investment Bank. ECA has expressed sympathy to greater regulation with well-regulated domestic financial markets and financial institutions, starting with extending margin, capital and reserve requirements to financial institutions engaged in traditional lending, hedge funds and derivative markets, and a greater voice for African countries on the IMF and World Bank Boards. At this event, participants also underscored the need to be selective in the implementation of international regulations and standards, particularly in the framework of Basel II and called on African countries to develop a hybrid of Basle I, II and the proposed III that would promote sustainable development of the financial sector.

Committee of Ten Finance Ministers and Central Bank Governors (C-10)[20]

(AfDB / ECA / AUC)

The Committee of Ten African Ministers of Finance and Central Bank Governors (C10) was created during a meeting of Ministers and Governors in Tunis in November 2008. The Secretariat is AfDB, supported by ECA and AUC.

Members include only 2 LICs (Kenya, Tanzania), 6 non-LICs (Algeria, Botswana, Cameroon, Egypt, Nigeria, South Africa) and 2 regional Central Banks presumably BCEAO and BEAC (Central Bank of West African States (CBWAS) and Central Bank of Central African States (CBCAS)) although the latter themselves include several LICs.

The Tunis meeting, convened by AfDB, ECA and AUC, charged C10 with the following objectives: monitor impact and responses to the global financial and economic crisis; advocate enhanced African participation in governance of international financial institutions; and identify strategic economic priorities for Africa and developing a clear strategy for Africa’s engagement with the G20. Objectives were to be addressed via periodic meetings, the results of which are summarised as follows.

1^st Meeting (Cape Town, January 2009)

It stressed the importance of mobilizing G20 members to support a strong African participation in the London Summit.

2^nd Meeting (Dar Es Salaam, March 2009)

C10 prepared a submission to the G 20 Meeting documented in a report titled “Impact of the Crisis on African Economies – Sustaining Growth and Poverty Reduction: African Perspectives and Recommendations to the G20”. This was presented to British PM Gordon Brown as host of the G20 Summit in London and supported the inputs made by the NEPAD delegation participating in the Summit. Some of its recommendations were incorporated in the London Communiqué.

3^rd Meeting (Abuja, 14 July, 2009)

It reviewed the crisis, recent internal and international developments, and agreed African perspectives to be fed into the global discussions, in particular those leading up to the G20 Summit in Pittsburgh.

4^th Meeting (Cape Town, February 2010)

Topics discussed included: impact of the crisis; Africa’s recovery and medium term growth; G20 work plan and BCBS financial and regulatory standards; financial issues arising from Copenhagen Climate Change Summit; and way forward.

1^st Deputies Meeting (Abidjan, May 2010)

This addressed economic recovery, exit strategies from crisis intervention policies, and measures for sustained and inclusive growth; heard the chair’s report on developments since the C10 Cape Town meeting regarding G-20 related activities; and determined the scope for, and focus of, Africa’s input for the G-20 Summit Meetings in Canada and next C-10 meeting in Egypt.

5^th Meeting / 2^nd Deputies Meeting (Washington, DC, October 2010)

This followed the Korea-Africa Economic Cooperation (KOAFEC) ministerial meeting in Seoul, and was intended to help put development and Africa at the centre of the G20 Seoul Summit agenda. It therefore addressed Africa’s economic recovery; domestic resource mobilization; and financing of sustainable energy solutions. Participants endorsed conclusions of the paper on “Achieving Strong, Sustained, and Shared Growth in Africa in the Post-crisis Global Economy” prepared for the recent KOAFEC Ministerial Conference. IMF governance reforms were discussed, with the objective to enhance the Africa’s voice. Participants noted the establishment of the G20 Working Group on Development and tasked South Africa to articulate Africa’s issues and concerns. They agreed that the number of African chairs on the IMF Board should be increased to ensure that Africa’s voice is adequately heard and to enhance legitimacy of the IMF and its standing in lower-income countries.

Southern African Development Community (SADC)[21]

SADC has 15 member states, of which 6 are LICs (DRC, Malawi, Mozambique, Tanzania, Zambia, and Zimbabwe). To keep staff levels and the Secretariat small and ensure wide involvement, each member country was allocated certain sectors to coordinate in which they had comparative advantage. Thus, most applicable to FSB liaison, South Africa was charged with finance and investment. SADC restructuring grouped these sectors into four clusters. Trade and Industry (led by Tanzania) merged with Finance and Investment to form Trade, Industry, Finance and Investment (TIFI).

The Committee of Central Bank Governors (CCBG), which comes under TIFI, is probably the most relevant and potent contact with respect to the FSB, and already has a link in the G20 via the South African Reserve Bank. It seeks to focus on regional integration, and promote closer cooperation among central banks in monetary policy, bank supervision, money and capital markets, international financial relations, payment systems, training and money laundering. It has Subcommittees for Macroeconomics and Financial Markets. Private sector initiatives reporting to SADC Ministers via the CCBG include the Committee of SADC Stock Exchanges and the SADC Banking Association. Meetings take place twice a year, normally in April and September. The Chair is the Governor of the South African Reserve Bank. A small Secretariat sits in the International Relations Unit of the Research Department in the South African Reserve Bank. A Working Group, chaired by the Secretariat and comprising representatives from three other central banks on a rotational basis, assists the Secretariat in managing projects. All reporting to the Governors goes through this Working Group. The Committee of Central Bank Officials, chaired by the Head of the Secretariat, meets two days prior to the CCBG meeting in order to prepare. Parallel to CCBG, it may therefore be a good lobbying point to ensure particular issues are on the agenda.

No evidence was found on the website of research dealing with recent financial stability issues. However, during 2010, the SADC Training and Development Forum incorporated financial stability into a couple of courses for senior central bankers in the context of the financial crisis[22].

Common Market for Eastern and Southern Africa (COMESA) /

East African Community (EAC)

COMESA[23] and EAC[24] websites do not indicate the existence of work on financial sector issues at the present time. However, EAC at least is known to be working on this. More information is needed from both organisations.