Economy
Russia’s Politics of Writing Off Africa’s Debt
By Kestér Kenn Klomegâh
During the International Parliamentary conference Russia-Africa held March 19-20 in Moscow, Russian President Vladimir Putin, in a speech at the plenary session, reminded African parliamentarians that the partnership between Russia and African countries had gained additional momentum and is reaching a whole new level. He said the current geopolitical changes present an opportunity to build on the strong momentum in boosting economic cooperation.
“We are ready to shape the global agenda jointly, strengthen fair and equal interstate relations, and improve mechanisms for mutually beneficial economic cooperation. Thanks to our assistance, many industrial enterprises have been built on the continent, entire industries have been created, and vital infrastructure and social facilities have been built. At the same time, Russia wrote off the debt to African states of more than $20 billion,” Putin emphasized in a copy of his text posted on the Kremlin’s website.
Putin further offered spiteful goal-setting policy outlines and some aspects of lofty Russia’s economic policy directions for Africa. Most of these directions considered significant have, over these years, featured prominently in all his previous speeches on Russia’s relations with Africa. But what strikes many listeners and readers relates to historical references intended to draw on sympathy and enlist support from Africa. By simple description, Africa consists of 55 member states. Africa is not a country but a continent; thus, Africa’s debt could mean the entire of Africa.
Long seen as a strategic partner, Russia has opened a new chapter and started building better relations with Africa, and most significantly, made its move by writing off a number of African countries’ debts accumulated from the Soviet era. After the Soviet collapse, Russia first attempted to collect its debts. Indeed, these Soviet-leaning debt-trapped African countries were unable to pay them (these debts) back to Russia.
During the Soviet era, Moscow forged alliances with African countries, especially those that supported its communist idealogy, supplied them with military equipment and offered technical assistance on a bilateral basis. In particular, supplied arms went to Angola, Algeria, the Democratic Republic of Congo (DRC), Ethiopia, Namibia, Mozambique, Morocco and South Africa. That Soviet-era form of diplomatic engagement left those African countries indebted to an amount of $20 billion, according to official documents.
In an interview with TASS, Russian State News Agency, ahead of the first Russia-Africa Summit, Russian President Vladimir Putin explained the Soviet’s role in the liberation of the continent and support for the struggle of their people against colonialism, racism and apartheid. In addition, the enormous help offered to those African countries to protect their independence and sovereignty, gain statehood, support national economies, and create capable armed forces for Africa.
“Our African agenda is positive and future-oriented. We do not ally with someone against someone else, and we strongly oppose any geo-political ‘games’ involving Africa,” he said during that interview and categorically referred to the debts write-off to Africa. “Let me point out that in the post-Soviet period, at the end of the 20th century, Russia cancelled $20 billion of African countries’ debts to the Soviet Union. This was both an act of generosity and a pragmatic step because many of the African states were unable to service those debts. We, therefore, decided that it would be best for everyone to start our cooperation from scratch,” said President Putin during that interview in 2019.
On 23 October 2019, President Vladimir Putin and the President of the Arab Republic of Egypt, African Union Chairman and Co-Chairman of the Russia-Africa Summit Abdel Fattah el-Sisi took part in the Russia-Africa Economic Forum. During the plenary session held under the theme “Russia and Africa: Uncovering the Potential for Cooperation” and attended by top officials, politicians and business leaders, and almost 2,000 Russian and foreign companies, the question of debts write-off as the basis for economic growth and for developing long-term relations featured prominently.
“Economic issues are an integral part and a priority of Russia’s relations with African countries. Developing close business ties serves our common interest, contributes to sustainable growth, helps to improve quality of life and solves numerous social problems,” Putin said, and then added, “Russia provides systematic assistance to developing the African continent. Our country is participating in an initiative to ease the African countries’’ debt burden. To date, the total amount of write-offs stands at over $20 billion. Joint programmes have been launched with a number of countries involving the use of debts to finance national economic growth projects.”
On 5 September 2017, President Putin attended a meeting of BRICS leaders with delegation heads from invited states, including the Heads of State and Governments of Egypt, Tajikistan, Mexico, Guinea and Thailand. The meeting discussed the implementation of the 2030 Agenda for Sustainable Development and prospects for further developing their partner relations. Before the meeting, the BRICS leaders and delegation heads from invited states had a joint photo session. President Putin informed that “Russia has been working actively to implement the 2030 Agenda for Sustainable Development. We have written off over $20 billion of African countries’ debts through the Heavily Indebted Poor Countries Initiative.”
On 30 January 2015, President Putin sent his greetings to the 24th Ordinary Session of the Assembly of the African Union Heads of State and Government. The message stated in part: “The Russian Federation’s relations with our African partners are developing positively. We have established a substantial political dialogue and work actively together in international affairs. Russia’s decision to write off much of African countries’ debt and the preferential conditions we offer the majority of Africa’s traditional export goods open up new possibilities for trade, economic and investment cooperation.”
On 27 March 2013, in Durban, South Africa, in a speech at a meeting with Heads of African states, President Putin explicitly noted, “Over the course of many decades, Russia has provided direct assistance to the African continent. I would like to note that we have written off over 20 billion dollars in debt; we have written off far more than any other G8 nation. We plan to take additional measures to ease the debt burden.”
According to the Russian leader, the BRICS group’s companies are working actively in the African market; there is a growing influx of investments into various sectors in Africa’s economies, from traditional mineral extraction and farming to high technologies and banking. He added BRICS countries are championing the rights and interests of Africa and other nations with emerging economies, speaking out in favour of increasing their role and influence in the global governance system, particularly international financial and economic organizations.
On 28 June 2002, in Kananaskis, Canada, there was a media conference after the G8 Summit. There was one specific question regarding Africa. The G8 approached the plan submitted by African countries in a creative way. What can be Russia’s role and place in addressing the global problem of combating poverty?
President Vladimir Putin answered: “As regards Russia, it has traditionally had very good relations with the African continent. We are very perceptive of the problems on the African continent. I must say that Russia has been making a very tangible contribution to solving Africa’s problems. Suffice it to say Russia is making a big contribution to the initiative adopted here, a multi-lateral initiative, including the writing off part of African debts. Of all the African debts that are to be written off, 20% are debts to the Russian Federation. That is $26 billion.”
On 21 May 2007, The Kremlin made available Excerpts of the Transcript of the Cabinet Meeting. Finance Minister Aleksei Kudrin on the meeting of G8 finance ministers. The issue is about supporting and helping African countries. Minister Kudrin told the cabinet meeting, “We discussed the implementation of a number of initiatives that should improve the management and transparency of public finances in those countries, including by better employing revenues from the extraction of mineral resources in Africa to fight against poverty.”
“We discussed responsible lending and relations with countries that have benefited from debt relief. We are writing off debt, reducing these countries’ debt burden, and meanwhile, their opportunity to incur new debts is increasing simultaneously. And a number of countries are starting to make huge loans to these countries, taking advantage of the fact that they are no longer in debt and lending to them at such a rate that these countries will once again require help. These instances exist. In fact, this practice is liable to be perceived in a negative way. A number of leading countries in the world are engaged in this practice,” he said.
At Sochi’s summit, Putin’s announcement about the “debt write-off” was, therefore, nothing new. Africa’s debts write-off debt has been played for years. It has, several times since his appointment, re-occurred in Foreign Minister Sergey Lavrov’s speeches; these texts are available at the official website of the Foreign Affairs Ministry.
He said: “Russian development assistance is invariably aimed at solving the most pressing challenges faced by the countries in need. In these efforts, we are neither trying to lecture our partners on how they should build their lives nor impose political models and values. Poverty eradication is the key objective of Russia’s state policy in the area of international development assistance at the global level.” (Remarks by Foreign Minister Sergey Lavrov at the UN Summit for the Adoption of the Post-2015 Development Agenda, New York, September 27, 2015 (1814-27-09-2015).
“Debt relief is an effective tool in this regard. Under the Heavily Indebted Poor Countries Initiative (HIPC), our country has written off over $20 billion of the principal debt owed by African countries alone. Russia also contributes to reducing the debt burden of the poorest countries beyond the HIPC through debt-for-aid swaps. We also take other steps towards the settlement of a debt owed to Russia, both within multilateral and bilateral formats,” he added.
As it is known, Russia has written off over $20 billion in debt to African states. We are undertaking steps to further ease the debt burden of Africans, including through the conclusion of agreements based on the scheme “debt in exchange for development,” according to the Foreign Minister (Speech by the Russian Foreign Minister Sergey Lavrov at the reception on the occasion of Africa Day, Moscow, 22 May 2014 (1243-22-05-2014).
In April 2014, President Vladimir Putin approved the new State policy concept of the Russian Federation in the area of contribution to international development. Its practical implementation will contribute to the build-up of our participation in the area of assistance to the development of states of the African continent, according to the report posted on the website.
“Russia has done a great deal to alleviate the debt burden, particularly in the framework of the Enhanced Heavily Indebted Poor Countries Initiative and in writing off multilateral debts to the IMF and the International Development Association. The overall amount of the African countries’ indebtedness cancelled by us, including on a bilateral basis, exceeds 20 billion dollars, of which about one-half in the last two years,” Lavrov told the gathering on Africa Day in 2008 (Transcript of Remarks by Minister of Foreign Affairs of the Russian Federation Sergey Lavrov at Reception on Occasion of Africa Day, Moscow, May 26, 2008 (751-26-05-2008).
As far back as May 2007, the Foreign Ministry showed interest in Africa’s debts. “We are helping our African partners reduce the burden of foreign debt. We have written off African debt within the framework of the initiative to reduce the indebtedness of the poorest nations,” Foreign Minister Sergey Lavrov said at May 25 gathering of a group of ambassadors, diplomats and ministry officials marking Africa Day.
The move signalled Russia’s intention to fulfil its commitments made at that time in Group of Eight (G8) meetings, as well as paving the way to increased trade with the African continent. It was then signed into law on March 10, ratifying the agreement between Russia and African countries it aided during the Soviet era. Russia continued discussions on a full debt write-off on a bilateral basis, and African countries owed nearly $20 billion. The debt was primarily through weapon deliveries, according to the official transcript.
“The most important aspect of economic cooperation in our foreign policy is to encourage African countries to trade with us and to not only depend on development aid. Always looking for aid makes these countries less productive, and funds for projects end up in foreign banks at the expense of the suffering population,” Lavrov said.
In March 2019, President Vladimir Putin chaired a meeting of the Commission for Military-Technical Cooperation with Foreign States, and the Kremlin’s website transcript pointed to the geographic reach of military-technical cooperation as constantly expanding, with the number of partners already in more than 100 countries worldwide.
Since then, President Putin has repeatedly called for renewed efforts not only to preserve but also to strengthen Russia’s leading position in the global arms market, primarily in the high-tech sector, amid tough competition. He further called for reliance on the rich experience in this sphere and building up consistent military technology cooperation with foreign states.
“We strictly observe international norms and principles in this area. We supply weapons and military equipment solely in the interests of security, defence and anti-terrorism efforts. In each case, we thoroughly assess the situation and try to predict the developments in the specific region. There are no bilateral contracts ever targeted against third countries, against their security interests,” he explained.
According to the Kremlin website, Russia targeted global export contracts worth $50 billion in 2018. Russia’s export priority is to expand its scope and strengthen its position in the market.
Over the past years, strengthening military-technical cooperation has been a strong part of the foreign policy of the Russian Federation. Russia has signed bilateral military-technical cooperation agreements with many African countries. On the other hand, Moscow’s post-Cold War relations with Africa undoubtedly, lean toward military support and arms trade. Analysis by the Stockholm International Peace Research Institute (SIPRI) indicates that between 2014 and 2018, Russia accounted for 49% of arms imports to North Africa and 28% to Sub-Saharan Africa.
Africa has started accumulating debts. For example, Johan Burger’s article details crucial information in relation to Russia’s military interests in Africa. Russia has established or intends to establish military bases in Sudan along the Red Sea Coast, Somaliland, and Egypt. Another publication highlights Russia’s military bases in Madagascar, Mozambique, and Guinea. Lately, the Central African Republic intends to host a Russian military base.
October 2019, the President of the Arab Republic of Egypt, African Union Chairman and Co-Chairman of the Russia-Africa Summit, Abdel Fattah el-Sisi, noted in his speech at the plenary session of the Russia-Africa Economic Forum: Africa welcomes the efforts to encourage an open door policy and cooperation with its partners with a view to making a breakthrough in developing its economy. Russia and other foreign countries, as well as international financial organizations, have to develop cooperation and invest in Africa.
The Egyptian leader urged international and regional financial organizations to take part in funding Africa’s economic growth and to give it financial guarantees on consolidating its economic potential. This would help promote trade and investment. He further urged foreign countries to grant African states generous terms for their projects and development programmes, which would help Africa reach its dream – to embark on the road of progress, modernization and sustainable development.
Before concluding his speech, President Abdel Fattah el-Sisi emphasized that cooperation with Africa must be based on common interests in the protection of African property, which would allow Africa to promote comprehensive sustainable development by carrying out three major goals.
First, it is necessary to accelerate economic reforms and create a businesslike atmosphere by establishing close partnerships with the private sector. Second, it is essential to implement social justice principles with the broad participation of society. Third, it is necessary to consolidate peace and stability in accordance with the African Union’s Agenda 2063 and Sustainable Development Goals 2030.
The 15-member UN Security Council has unanimously adopted a resolution welcoming AU initiatives for infrastructure development and pledging support for “African solutions to African problems” in an attempt to achieve the Sustainable Development Goals (SDGs).
Significantly noting that African Union officials have repeatedly urged African leaders to prioritize Africa’s Agenda 2063 – a strategic framework for delivering on Africa’s goal for inclusive and sustainable development – and the United Nations Sustainable Development Goals (SDGs).
Economy
UAE to Leave OPEC May 1
By Adedapo Adesanya
The United Arab Emirates has announced its decision to quit the Organisation of the Petroleum Exporting Countries (OPEC) to focus on national interests.
This dealt a heavy blow to the oil-exporting group at a time when the US-Israel war on Iran had caused a historic energy shock and rattled the global economy.
The move, which will take effect on May 1, 2026, reflects “the UAE’s long-term strategic and economic vision and evolving energy profile”, a statement carried by state media said on Tuesday.
“During our time in the organisation, we made significant contributions and even greater sacrifices for the benefit of all,” it added. “However, the time has come to focus our efforts on what our national interest dictates.”
The loss of the UAE, a longstanding OPEC member, could create disarray and weaken the oil cartel, which has usually sought to show a united front despite internal disagreements over a range of issues from geopolitics to production quotas.
UAE Energy Minister Suhail Mohamed al-Mazrouei said the decision was taken after a careful look at the regional power’s energy strategies.
“This is a policy decision. It has been done after a careful look at current and future policies related to the level of production,” the minister said.
OPEC’s Gulf producers have already been struggling to ship exports through the Strait of Hormuz, a narrow chokepoint between Iran and Oman through which a fifth of the world’s crude oil and liquefied natural gas supplies normally pass, because of threats and attacks against vessels during the war.
The UAE had been a member of OPEC first through its emirate of Abu Dhabi in 1967 and later when it became its own country in 1971.
The oil cartel, based in Vienna, has seen some of its market power wane as the US has increased its production of crude oil in recent years.
Additionally, the UAE and Saudi Arabia have increasingly competed over economic issues and regional politics, particularly in the Red Sea area.
The two countries had joined a coalition to fight against Yemen’s Iran-backed Houthis in 2015. However, that coalition broke down into recriminations in late December when Saudi Arabia bombed what it described as a weapons shipment bound for Yemeni separatists backed by the UAE.
Economy
NASD OTC Exchange Inches Up 0.03% as CSCS Outshines Four Price Decliners
By Adedapo Adesanya
Central Securities Clearing System (CSCS) Plc bested four price decliners on the NASD Over-the-Counter (OTC) Securities Exchange on Monday, April 27. The alternative stock market opened the week bullish during the session with a 0.03 per cent uptick.
According to data, the security depository company added N2.61 to its share price to close at N76.26 per unit compared with the preceding session’s N78.87 per unit.
As a result, the market capitalisation of the platform increased by N820 million to N2.425 trillion from N2.424 trillion, and the NASD Unlisted Security Index (NSI) gained 1.38 points to finish at 4,053.97 points compared with the 4,052.58 points it ended last Friday.
The four price losers were led by NASD Plc, which slumped by N3.80 to sell at N34.70 per share versus N38.50 per share. FrieslandCampina Wamco Nigeria Plc fell by N1.45 to N98.10 per unit from N99.55 per unit, Food Concepts Plc slid by 27 Kobo to N2.43 per share from N2.70 per share, and Geo-Fluids Plc dipped by 9 Kobo to N2.91 per unit from N3.00 per unit.
The value of securities transacted by market participants went down by 82.0 per cent to N7.4 million from N41.3 million units, the volume of securities declined by 28.5 per cent to 319,831 units from 447,403 units, and the number of deals dropped by 34.1 per cent to 29 deals from 44 deals.
Great Nigeria Insurance (GNI) Plc was the most active stock by value on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by CSCS Plc with 59.6 million units sold for N4.0 billion, and Okitipupa Plc with 27.8 million units exchanged for N1.9 billion.
Also, GNI Plc was the most traded stock by volume on a year-to-date basis with 3.4 billion units valued at N8.4 billion, followed by Resourcery Plc with 1.1 billion units traded for N415.7 million, and Infrastructure Guarantee Credit Plc with a turnover of 400 million units worth N1.2 billion.
Economy
Naira Opens Week Weaker at N1,364/$ at NAFEX After N5.80 Loss
By Adedapo Adesanya
The first trading day of the week in the currency market was bearish for the Naira in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Monday, April 27.
Yesterday, it lost N5.80 or 0.43 per cent against the United States Dollar to trade at N1,364.24/$1, in contrast to the N1,358.44/$1 it was traded last Friday.
In the same vein, the Nigerian currency depreciated against the Pound Sterling in the official market by N13.70 to close at N1,847.72/£1 versus the preceding session’s N1,834.02/£1, and slumped against the Euro by N11.56 to sell at N1,602.29/€1 versus N1,590.73/€1.
Also, the Nigerian Naira tumbled against the greenback during the trading day by N5 to quote at N1,385/$1 compared with the previous rate of N1,380/$1, and at the GTBank FX desk, it traded flat at N1,370/$1.
The poor performance of the domestic currency could be attributed to liquidity shortage at the official currency market on Monday, which came amid surging demand for international payments. At $76.50 million, interbank liquidity printed higher across 79 deals, up from the $43.572 million reported on Friday.
Nigeria’s gross external reserves declined to $48.45 billion amid a month-long decline in inflows, amid uncertainties in the global commodity market. The depletion of foreign reserves could be partly attributed to the Central Bank of Nigeria’s intervention in the FX market.
The market remains perturbed by persistent concerns over liquidity constraints, policy transparency, and weakening confidence in Nigeria’s FX market, while boosters, including oil prices, continue to look rocky due to stalled discussions and unclear ceasefire negotiations between the US and Iran.
A look at the cryptocurrency market, Bitcoin (BTC) has been rejected near $79,000 three times in eight sessions, leaving the level as the de facto ceiling of its current trading range even as major cryptocurrencies trade lower over the past day. It lost 0.9 per cent to sell at $77,003.61.
Analysts say that upcoming US Federal Reserve policy decisions and top tech firms’ earnings this week could provide the catalyst to push bitcoin decisively above $80,000.
The market also continued to weigh Iran’s interim deal proposal to reopen the Strait of Hormuz, which failed to advance over the weekend. The White House said US officials were discussing the latest Iranian proposal but maintained “red lines” on any deal to end the eight-week war.
Solana (SOL) dropped 1.8 per cent to $84.25, Ripple (XRP) went down by 1.6 per cent to $1.39, Ethereum (ETH) depreciated by 1.3 per cent to $2,290.00, Binance Coin (BNB) declined by 0.5 per cent to $625.18, and Cardano (ADA) fell by 0.2 per cent to $0.2480.
However, Dogecoin (DOGE) rose by 2.0 per cent to $0.1002, and TRON (TRX) appreciated by 0.2 per cent to $0.3242, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism10 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn
