Russia’s Trade Remains Business As Usual With Africa
In her weekly media briefing on March 23, Foreign Ministry Spokeswoman, Maria Zakharova, indicated that geopolitical developments are rapidly shifting from the Global North towards the Global South, and that turning around and making a global shift towards the South definite includes Africa as it was during the Soviet times.
She admittedly explained that Russia turned its back, and away from Africa during the past three decades, after the collapse of the Soviet era. And that time required consolidating resources and capabilities to move unto a qualitatively new level, and now the internal growth processes were completed, relations with different regions started to take shape on a new foundation.
In the past, relations with a whole range of countries and regions were largely built on ideology. Despite the extraordinary assistance provided by Russia to African countries, these were at the inter-state level. Russia still has to develop the fabric of contacts with people, the youth and women groups and the civil society as well as the private sectors. This component needed to be upscaled based on new frameworks, which is currently happening now.
She further added: “Russia’s active work on the African track is a significant part of the entire scope of measures to develop constructive cooperation with a great number of countries that pursue an open and balanced foreign policy guided by common sense and their own interests and, most importantly, within the principles of the supremacy of international law and indivisible security with the central and coordinating role of the United Nations.”
Zakharova, however, underscored the fact that the level expected to reach has not been achieved across all components across Africa. The fabric of real economic relations is indeed forming now, and this process is extremely important. That is why the second Russia-Africa summit meeting at the highest level will be another stepping platform in building a strategic partnership with the continent.
This platform has to determine the dynamics for years to come, substantially contribute to tackling global and regional challenges. In addition these, it has to discuss and thoroughly review with African colleagues matters related to food and energy security, healthcare, humanitarian cooperation and many others, according the exlanation offered by Zakharova.
Over the past several years since his appointment to the post, Foreign Affairs Minister Sergey Lavrov has often said that trade between Russia and Africa would grow as more and more African partners continued to show interest in having Russians in the economic sectors in Africa.
“Our African partners are interested in Russian business working more actively there. This provides greater competition between the companies from Western countries, China, and Russia. With competition for developing mineral resources in Africa, it is easier and cheaper for our African colleagues to choose partners,” Lavrov told the staff and students at Moscow State Institute of International Affairs early September, transcript made available at the official website.
“In the early post-Soviet years, Russia’s relations with Africa has faded into the background. As we regained our statehood and control over the country, and the economy and the social sphere began to develop, Russian businesses began to look at promising projects abroad, and we began to return to Africa. This process has been ongoing for the past 15 years,” Lavrov said about post-Soviet Russia’s relations with Africa.
Approximately ten years ago, precisely in May 2014, Lavrov said in a speech posted to the official website: “We attach special significance to deepening our trade and investment cooperation with the African States. Russia provides African countries with extensive preferences in trade. At the same time, it is evident that the significant potential of our economic cooperation is far from being exhausted and much remains to be done so that Russian and African partners know more about each other’s capacities and needs.”
Reports this author has monitored, however, show that Russia started strengthening its economic cooperation by opening trade missions with the responsibility of providing sustainable business services and plans to facilitate import-export trade in a number of African countries. Besides all that, Russia has embarked on ‘Doing Business in Africa’ campaign to encourage Russian businesses to take advantage of growing trade and investment opportunities in Africa.
According to Russian President Vladimir Putin, trade between Russia and Africa stand at almost $18 billion. Chairman of the State Duma Vyacheslav Volodin, addressing African parliamentarians at the plenary session, said at the end of 2022, it reached $17.9 billion. Statistics on Africa’s trade with foreign countries vary largely. For example, the total United States two-way trade in Africa has actually fallen off in recent years, to about $60 billion, far eclipsed by the European Union with over $200 billion, and also China more than $200 billion, according to Africa in Focus post by the Brookings Institution.
According to the African Development Bank, Africa’s economy is growing faster than those of any other regions. Nearly half of Africa’s countries are now classified as middle income countries, and around 350 million of Africa’s one billion people are now earning good incomes – rising consumerism – that makes trade profitable. On the other hand, Russia lacks the competitive advantage in terms of finished industrial (manufactured) products that African consumers obtain from Asian countries such as China, India, Japan and South Korea.
As far back in October 2007, Russian Foreign Affairs Ministry posted an official report on its website that traditional products from least developed countries (including Africa) would be exempted from import tariffs. The legislation stipulates that the traditional goods are eligible for preferential customs and tariffs treatment. While Russia announced this preferential tariff regime for developing countries, which also granted duty-free access for African products, potential African exporters either failed to take advantage of it or were unaware of the advantageous terms for boosting trade. These have not happened as said.
Keir Giles, an Associate Fellow of the Royal Institute of International Affairs (Chatham House) in London, told me that “there are some more fundamental problems which Russia would need to overcome to boost its trade turnover with the region. The majority of this vast amount of trade with China simply cannot be competed with by Russia. A large part of African exports to China by value is made up of oil, which Russia does not need to import. And a large part of China’s exports to Africa are consumer goods, which Russia doesn’t really produce.”
He explains further that trade in foodstuffs in both directions suffers similar challenges, which are unlikely to be affected by the current politically-motivated Russian ban on foods from the European Union, the United States and Australia. In effect, in sharp contrast to China, the make-up of Russian exports has not really developed since the end of the Soviet Union and still consists mostly of oil, gas, arms and raw materials. For as long as that continues, the scope for ongoing trading with most African nations is going to be severely limited.
Academic experts, who have researched Russia’s foreign policy in Africa, at the Institute for African Studies, have reiterated that Russia’s exports to Africa can be possible only after the country’s industrial based experiences a more qualitative change and introducing tariff preferences for trade with African partners.
“The situation in Russian-African foreign trade will change for the better, if Russian industry undergoes rapid technological modernization, the state provides Russian businessmen systematic and meaningful support, and small and medium businesses receive wider access to foreign economic cooperation with Africa,” according to Professor Aleksey Vasiliyev, Hon. President of the Institute for African Studies and the first appointed Special Presidential Representative to Africa.
Quite recently, Dr. Gideon Shoo, Media Business Consultant based in Kilimanjaro Region in Tanzania, explained in an interview discussion with me that Russian companies need to prove their superiority in the business spheres and African governments have to make it easier for Russian companies to set up and operate in their countries, cited additional opportunities emerging in the African Continental Free Trade Area (AfCFTA). This could be an opportunity for Russian businesses to invest in infrastructures such as roads, railways, ports, hydropower plants, and internet connectivity that facilitate trade on the continent over 1.3 billion consumers.
“Russian financial institutions can offer credit support that will allow them to localize their production in Africa’s industrial zones, especially southern and eastern African regions that show some stability and have good investment and business incentives. In order to operate more effectively, Russians have to risk by investing, recognize the importance of cooperation on key investment issues and to work closely on the challenges and opportunities on the continent,” he added.
On the other hand, Dr. Shoo noted that Russia is, so far, a closed market to many African countries. It is difficult to access the Russian market. However, African countries have to look to new emerging markets for export products, make efforts to negotiate for access to these markets. This can be another aspect of the economic cooperation and great business opportunity for both regions. The fact that the middle class is growing, leaps and bounds, in Africa makes this market even more attractive and opens more opportunities for Russian businesses.
Nearly all the experts have acknowledged that import and export trade have been slow due to multiple reasons including inadequate knowledge of trade procedures, complicated certification procedures, expensive logistics, security and guarantee issues, rules and regulations as well as the existing market conditions. Obviously the potential Russian investors have to explore Africa’s young and entrepreneurial population, and further consider the possibility of developing keen interest in pursuing public-private partnerships rather than wait for the Kremlin.
For decades, Russia has been looking for effective ways to promote multifaceted ties and new strategies for cooperation in economic areas in Africa. By looking at and revising the rules and regulations, the situation about Russia’s presence in Africa and Africa’s presence in Russia could change. All that is necessary here is for Russia and Africa to make consistent efforts to look for new ways, practical efforts at removing existing obstacles that have impeded trade over the years.
Now, Kremlin will hold the second Russia-Africa summit with high hopes of enhancing multifaceted ties, trying to reshape the existing relationships and significantly roll out ways to increase the effectiveness of cooperation between Russia and Africa. Hyperbolic slogans and anti-Western rhetorics have become the main content of the policy initiatives which will not facilitate the expected economic and trade cooperation with Africa. After all China consistently views Africa, not as grounds for confrontation and competition, but as grounds for cooperation. China has set an admirable examples, achieved so many tangible development-oriented results in the continent.
Soviet Union and Africa had very close and, in many respects, allied relations with most of the African countries during the decolonization of Africa. For obvious reasons, the Soviet Union ceased to exist in 1991. As a result, Russia has to struggle through many internal and external difficulties for the past couple of decades, it is still struggling to survive both the United States and European sanctions. Nevertheless, Russia simply has to really focus on the economic agenda, and that should necessarily conform with the African Union’s Agenda 2063.