Cape Town Statement on the G20 Multi-Year Action Plan on Development

Commonwealth Secretariat and Organisation Internationale de La Francophonie

June 28, 2011

1. Members of the Commonwealth and the Francophonie, including a number of developing countries from Africa, Asia-Pacific and Caribbean Regions, together with several G20 members of the two associations, participated in a Commonwealth-La Francophonie conference on the G20 Multi-Year Action Plan on Development, held in Cape Town on 28^th June 2011. We welcomed a presentation by South Africa, co-Chair with France and Korea of the G20 Development Working Group (DWG) on progress by the DWG. We also welcomed the attendance and participation of a number of other G20 member countries and international organisations.

2. We reflected on the multiple challenges confronting developing countries of the two associations, particularly the poorest, smallest and most vulnerable economies, including a disproportionate risk of failing to overcome poverty and other consequences, and the need to strengthen growth and manage risks associated with weak resource capacity and economic vulnerability.

3. We welcomed the establishment and pursuit of the G20 DWG multi-year action plan on development. The nine areas of this action plan – infrastructure, human resource development, trade, private investment and job creation, food security, growth with resilience, financial inclusion, domestic resource mobilization, and knowledge sharing - are critical development challenges. Our discussion focused on three of these pillars - trade, growth with resilience and financial inclusion. These areas rank among the most essential areas of challenge for developing countries in securing sustainable growth, effectively participating in global trade and widening and deepening domestic financial markets to ensure the participation of the unbanked and small and medium enterprises.

4. The poorest, smallest and most vulnerable countries have seen their share of global trade progressively decline. We noted that two interlinked factors - inadequate market access and limited trade capacity – have contributed to this; and agreed that domestic policy action and consistent multilateral support can serve to enable these countries to become more competitive and expand their exports. The Doha Development Round has now stalled. We urged the DWG to promote an urgent initiative to return development issues to the centre stage of the WTO negotiating agenda, with particular attention paid to the issues of agriculture, preferential market access, rules of origin, trade in services and preference erosion.

5. We offered a number of practical suggestions to the DWG, including proposals to establish a task force to examine the feasibility of a more comprehensive duty-free and quota-free market access framework; examining options to simplify and streamline rules of origin; and early and concerted implementation of the WTO services modalities for LDCs and the expansion of these modalities, as well as the overall G20 preference regime to benefit all of the poorest and most vulnerable countries. We noted a number of additional issues affecting trade in these countries, including non-tariff barriers such as standards and labelling; regional integration, the effects of climate change on trade and initiatives to expand aid for trade and productive capacity development. South-South trade to these countries is particularly important and we called for improved market access provision by emerging market economies. Several further practical suggestions include monitoring progress on aid for trade and coordinating the implementation of development-related commitments.

6. We considered the challenges experienced by the poorest, smallest and most vulnerable countries in achieving growth with resilience so as to withstand economic shocks, including low growth rates, high debt rates and the impact of climate change and natural disasters. The smallest countries are especially vulnerable because of their economic openness, dependence on a narrow range of exports, dependence on strategic imports and peripherality. We welcomed the economic resilience framework and country-focused vulnerability and resilience profiling developed and successfully piloted by the Commonwealth Secretariat, which focuses on competitiveness, savings, macroeconomic stability, market efficiency, good political governance, social development and environmental management. We recommended that the DWG promote its use, expand the country-focused vulnerability and resilience profiling exercise, create a Growth with Resilience Trust Fund to finance programmes in developing countries which foster growth with resilience; and develop a framework to promote growth in the world’s poorest, smallest and most vulnerable countries.

7. We welcomed the progress made by the G20 in promoting financial inclusion. We noted the wide range of initiatives implemented by developing countries to promote financial inclusion, including technological and market innovation, private investment initiatives and financial literacy training initiatives, and the successes which have emanated from these initiatives. Several factors influence access to finance by households including employment, education and qualifying requirements. We reviewed supply side and demand side factors affecting the financing of small and medium enterprises in developing countries, including small amount transactions, lack of transparency, limited tailored financial services, limited competition, and physical inaccessibility. Where necessary, developing countries should implement policies to address these factors. A number of further practical measures were recommended to meet the goals of financial inclusion. These included the adoption of an SME financing framework that is appropriate for developing countries; development of a set of indicators on financial inclusion; the formulation of principles for effective financial inclusion, development of region specific programmes; new initiatives to build capacity, including in insurance and m-financial services as well as south-south learning programmes; reviewing IFI lending policies towards countries, and re-considering the financial action task force principles in small states.

8. We welcomed this conference and the work of the Commonwealth Secretariat and La Francophonie on trade, growth with resilience and financial inclusion. We have asked the two organisations to collaborate closely with the G20 DWG through facilitating dialogue to address the needs of the poorest, smallest and most vulnerable countries. We recognised that a strong outreach process by the G20 DWG is essential to the success of its multi-year action plan on development, and we urge the G20 DWG to draw on the resources of the Commonwealth and La Francophonie in the context of extensive analytical research, consensus-building and advocacy.

9. We expressed appreciation to the Government and people of South Africa for hosting this conference. We agreed to reconvene shortly to discuss challenges and options in regard to innovative finance for development.

Cape Town Statement on the G20 Multi-Year Action Plan on Development

Déclaration du Cap sur le Plan d’Action pluriannuel du G20 en faveur du développement