Russia-Africa trade ties overview

2020-10-05 12:44:29
Russia-Africa trade ties overview

Within the framework of the joint declaration adopted in Sochi, the Ministry of Foreign Affairs of the Russian Federation created a Secretariat of Russia-Africa Partnership Forum. The Secretariat’s primary task is to coordinate efforts for promoting cooperation between Russian and African business associations, ensure political and diplomatic support for projects carried out by Russia’s state-run and private companies in Africa, and coordinating aspects of preparations for future Russia-Africa summits.

During its September meeting, the Secretariat created Coordinating Council headed by Chief Executive Officer and Chairman of the Roscongress Foundation Alexander Stuglev. Early October, Alexander Stuglev gave an exclusive interview to Modern Diplomacy’s Special Regional Representative, Kester Kenn Klomegah, in which he discussed some aspects of Russia’s plan to raise its economic, investment and trade profile in Africa.

Q: Is it comfortable for you to discuss the key questions that were raised during September meeting of the Secretariat under the slogan “Time to Act” and what is the main advantage to have Roscongress Foundation acting as the coordinator for business-related aspects with Africa?

A: The main objective of the event held in Moscow was to make all stakeholders based in Russia and African States aware of two specialized bodies that were established following the Russia–Africa Summit and Economic Forum in 2019. These are the Russia–Africa Partnership Forum Secretariat and the Association of Economic Cooperation with African States.

The Summit and Economic Forum laid the foundations for further collaboration. The wide-ranging and ambitious task now ahead of us is to create the conditions and to identify opportunities which will allow us to strengthen and increase Russian-African cooperation across the board.

Three interdepartmental councils have been established within the Russia-Africa Partnership Forum Secretariat: a coordinating council, research council, and public council. By working together, these three bodies will enable us to take a comprehensive approach to fulfilling existing and new emerging tasks. We have a great deal of work ahead of us right now, and the outcomes will be discussed at the next Russia-Africa Summit and Economic Forum, which is set to take place in 2022.

For our part, we will continue working hard to promote the African agenda, including at key events organized by the Roscongress Foundation. We will involve all stakeholders in the process, especially our African partners. I have every confidence that the Foundation’s experience, extensive international ties, and expertise will enable us to build an integrated ecosystem which will facilitate effective collaboration between the business, political, and expert communities of Russia and Africa. That is our long-term objective as we see it.

Q: What are your views on trade between Russia and Africa following the inaugural Russia-Africa Summit and Economic Forum in October 2019? Trade needs to flow in both directions. What can Russia offer Africa, and vice versa?

A: Russia has achieved impressive results across numerous areas to date, and is ready to share its experience and expertise with its African partners. Specific examples would include agriculture, energy, medicine, digital technologies, and infrastructure projects. There is interest on both sides in working together in these areas – a fact which was demonstrated at the Economic Forum in Sochi. Something that is crucial and extremely relevant for the times we currently live in is the successful experience of working together in healthcare. Up to 60% of yellow fever vaccines imported by Africa are produced in Russia. A Russian vaccine against Ebola has also shown to be highly effective, and is currently being used in Guinea.

At the same time, I am convinced that Africa possesses enormous potential to become, for example, one of the key players on the international food market. It is Russia’s objective to help Africa achieve this by entering into an equal and mutually beneficial partnership. By working together, we can fully deal with any of the difficulties which can be encountered in certain regions of Africa. We can increase the amount of cultivated land, improve irrigation systems, and increase the use of fertilizers. I believe that close collaboration in this area could serve as a good example of a mutually beneficial endeavour which results in African states improving their agricultural sectors and increasing production, and over time, in Russia having the opportunity to purchase high-quality agricultural products.

Q: According to official statistics, Russia’s current exports to Africa are worth US$20 billion. However, two thirds of exports go to the Maghreb region or North Africa. What could be the reasons for the low level of trade with countries in sub-Saharan Africa?

A: I would highlight two key problems here which have negatively impacted trade with countries in sub-Saharan Africa. Firstly, there is a lack of mutual awareness. Unfortunately, the African continent remains little known in Russia, and in Africa, there’s only a vague notion of what Russia is. All of this ultimately leads to the creation and reinforcement of stereotypes, and puts up barriers to more productive cooperation. Russian businesses simply don’t know what to expect from Africa or vice versa.

Secondly, the risks can be high, and investors are often not willing to assume all these risks alone. I think that a possible solution to this problem could lie in the creation of mechanisms to facilitate inter-governmental collaboration and provide support. That way, an investor can feel assured that in the event of force-majeure, such as socio-political unrest, their investment is protected by the state in question. An additional security guarantee for investments could be provided by having two or more states involved via subregional organizations and large African banks, for example.

Q: For many years now, trade between Russia and Africa has been unbalanced, and has often been one-sided in Russia’s favour. What measures could be taken to overcome this disparity?

A: As I have already mentioned above, the experience and expertise that Russia is able to offer African states can, in the long-run, positively impact the level of exports from Africa to our country. It therefore follows that balancing out trade between Russia and Africa depends, to a specific extent, on the willingness of Russian businesses to invest in promising areas of Africa’s economy and to share their knowledge, and on the willingness of partners in Africa to facilitate this process by putting in place all the necessary prerequisites for this to happen.

The mutual awareness factor I mentioned will also play an important role. As far as that is concerned, it will be crucial to raise awareness in our countries, both through having an increased Russian media presence on the continent, and as a result of joint humanitarian initiatives. I believe that centres of expertise and business support centres will do a great deal to help resolve this issue locally, as will working together with the local population on a regular basis.

Furthermore, I would like to highlight the question of mutual trust. An initiative by our partner -the African Export-Import Bank – deserves special attention in this regard. They have built a platform called MANSA, which collates verified information about African organizations which are registered there. That means that MANSA operates as a guarantee of sorts, and as a one-stop resource to find reliable partners on the continent. We will step up our collaboration with Afreximbank in this area and identify common areas of interest together with members of the Russian business community.

Q: Do you see any difficulties for African exporters? What advantages exist, particularly in light of the establishment of the new Eurasian Union, which is made up of five former Soviet republics?

A: Of course, Russian imports of goods from Africa make up the smallest percentage of total trade by some distance (accounting for around 15%). However, this figure is growing faster than the average rate of growth of imports among all trading partners in Africa. There are also no global barriers in this area. You are correct to note that trade and economic ties are being strengthened through regional and continent-wide intergovernmental organizations. Of course, one of the main outcomes of the Summit was the signing of a memorandum between the Eurasian Economic Commission and the African Union Commission. We see enormous potential in this area.

Indeed, since 2010, trade between the EAEU and African nations has grown by almost 170%.Presuming that free talks between the EAEU and Egypt conclude successfully, the parties involved will be able to enjoy free movement of goods, services, and capital. This in itself is already unprecedented in the context of our trade relations with the continent. The EAEU and a number of African countries are already discussing mutual settlements in national currencies in order to avoid incurring cross-rate costs. This, in my objective view, will help boost trade.

Q: The African Union has established the African Continental Free Trade Area (AfCFTA), which allows for the free movement of goods and services across the entire continent. With that in mind, what would be your advice to Russian exporters?

A: For my part, I can say that the establishment of the African Continental Free Trade Area represents an important step forward, both in terms of trade on the continent, and trade with foreign partners. I believe that as competition for African markets increases, it is essential to increase the number of trading partners we have in Africa, to increase the amount of trade we do, and to provide assistance in creating the right conditions for increasing African exports to Russia.

Q: What immediate plans does Roscongress have with regard to Africa? What prospects exist for strengthening relations between Russia and African countries?

A: The Roscongress Foundation’s priority is to create opportunities, build communication platforms, and to make it possible for members of the Russian and African business communities to discuss their ideas and proposals directly. Dialogue lies at the heart of everything. Without dialogue, it is difficult to build trusting relations.

That is why we are continuing to collect ideas and proposals from our colleagues and partners so that we can analyse them and try to implement them in practice. There is no doubt in my mind that there is enormous potential to build relations between Russia and Africa, starting with the investment and financial sphere, and ending with various humanitarian projects in culture and sport. Each area is unique and significant in its own way. That is why it is vital to pay close attention to everything, even details which may appear, at first glance, to be wholly insignificant. A comprehensive approach must be employed when building Russian-African relations. It was with this aim in mind that the interdepartmental councils were established.

I would like to highlight the role of the Roscongress Foundation’s regional partners who have expressed an interest in working together with Russia. It is our hope that the Foundation’s partnerships in Africa will only become stronger and encompass more countries on the continent. For our part, we are always open to new initiatives and mutually beneficial partnerships. After all, it is by working together that we will be able to create a space defined by trust, which is vital in the current environment, as it continues to be shaped by a new reality.

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