Economy
Shift in Geopolitical Relations: Russia’s Roadmap to Nigeria, ECOWAS and Africa
By Professor Maurice Okoli
The growing US-China rivalry and Russia-Western allies’ geopolitical tension have shaken the international peace and security system’s foundation and significantly shaped Russia’s diplomacy with Africa. While that seems to be the general trend across the board, the Federal Republic of Nigeria is also getting highly renewed attention from Moscow. Historically Nigeria, like a number of African states, has had relations from the Soviet times and still maintains traditional relationships after the Soviet’s collapse in 1991. Nevertheless, it is interesting to explicitly note that a new wave of democratic change has also blown all over Africa. We can convincingly point to the fact that old ideological friends of the Soviet Union changed camps and transformed in favour of the capitalist-democratic model, in line with the changing political dynamics inside Africa and around the world.
In practical terms, the Soviet Union offered enormous assistance during the decolonization process of African countries in the late 1950s and early 1960s, and the Kremlin’s policy, at that period, for the newly liberated African countries included:
To gain a lasting presence in the African continent,
To have a voice in African affairs,
To undermine Western influence in the African continent by equating capitalism with imperialism, and
To keep communist China out of the African continent.
In pursuit of its foreign policy agenda, the Soviet Union maintained diplomatic relations between Nigeria and many on the continent. There were 48 diplomatic offices across Africa. Nigeria established diplomatic relations on November 25, 1960, after it had attained political independence from Britain. The mission was formally opened in 1961.
There are noticeable bits of historical landmarks between Nigeria and Russia. Olusegun Obasanjo visited Russia in 2001. That was followed by Muhammadu Buhari in 2019. However, in June 2009, Dmitry Medvedev, president of Russia, visited Nigeria for the first time and held topmost state-level talks on possible nuclear energy, oil exploration and military cooperation. There were talks also focusing on establishing a petrochemical plant in Nigeria. There was also a declaration on principles of friendly relations and partnership between Nigeria and the Russian Federation.
Russia’s second-largest oil company, and privately controlled Lukoil, has gone back and forth these several years with plans to expand its operations in Nigeria and several West African countries. There has been a long-dead silence after Gazprom, the Russian energy giant, signed an agreement with the Nigerian National Petroleum Corporation (NNPC) on the exploration and exploitation of gas reserves with a new joint venture company known as NiGaz Energy Company.
Despite the complexities and obstacles, Nigeria is still high on Russia’s agenda for reviving multifaceted business ties, at least to share the market and take up opportunities similar to external players such as the United States, Europe and China. We sincerely acknowledge efforts by Russians now gearing up to revamp the Ajaokuta Iron and Steel Complex, which was abandoned after the collapse of the Soviet Union three decades ago, and further take up energy, oil and gas projects in Nigeria, as well as facilitate trade between Nigeria and Russia.
Further to the above, there could be specific points of focus in the current relations: The strategic point of convergence between Moscow and Abuja is stability in the West African region, which is vital for both countries in their interests. It could best be achieved through ensuring security, boosting economic development, expanding tentacles in energy and infrastructure projects and raising cooperation with the regional bloc – the Economic Community of West African States (ECOWAS).
Suffice it to say that Russia’s passion for humanitarian cooperation is strongly recommended here. This will help sustain its traditional sphere of influence in the western region of Africa. The main reasons are that Nigeria is considered the economic powerhouse. Ghana now hosts the headquarters of the African Continental Free Trade Area (AfCFTA), spanning 54 states over the next years with the potential to unite more than 1.3 billion people in a $2.5 trillion economic bloc. It has the potential to generate a range of benefits through supporting trade creation, structural transformation, productive employment and poverty reduction. The AfCFTA opens up more opportunities for both local African and foreign investors from around the world.
Both African and foreign policy experts argue that African countries need to support meaningful dialogue and take steps toward addressing the economic dimensions in the continent, and this must necessarily reflect in their relations with potential external partners while, at the same time, maintaining their territorial integrity and political independence. We strongly believe that African economic diplomacy and partnerships could be raised to appreciably new levels the Russia-Africa relations. This is where I shared my views with both foreign and our African experts that these measures will contribute tremendously, in pursuit of the economic integration of our continent, towards the attainment of the well-known vision: Agenda 2063, the Africa We Want.
Egypt, Nigeria, and South Africa are the biggest economies on the continent, and Nigeria, for example, plays a major role in the West African region. The Nigerian economy is based on private enterprise, but the state participates in many ways. That is why Russia has to redirect its focus to the private sector to enhance its economic profile. In this case, Nigeria, Ghana, Cote d’Ivoire (Ivory Coast) and other countries have enormous potential to cooperate with Russia in the West African region. According to reports, on different occasions, former Vice President Yemi Osinbajo expressed keen interest in developing bilateral cooperation and spoke frankly about the need to increase the presence of Russian companies in Nigeria.
Three key factors are at work here for Russia to get a foothold in West Africa. First, Russia is seen as the provider of security, and Russia’s defence capabilities continue to play a crucial role in maintaining stability in the region. One more point here is the French-speaking Sahel-5 (Burkina et al.) is nearly under the control of Russia. Reports pointed out that cooperation among forces from the so-called G5 countries – Burkina Faso, Chad, Mali, Mauritania and Niger – remains difficult given the anti-French sentiments in the country, forcing under-equipped local armies to quickly step up their game against Islamist rebels in the volatile Sahel region.
With high interest, Russians are consistently pushing for military-technical cooperation. For Nigeria, Russian military equipment supply could be a high-value addition to the fight against the notorious Boko Haram, which threatens West African states. Many experts say conflict resolution should be coordinated and undertaken within the framework of multilateralism, which, of course, falls within Russia’s interest in forging relations with respective Security Councils of ECOWAS, the African Union and the United Nations.
Second, an opportunity to have market access to the West African region if potential Russian investors decide to locate some kind of production with the rules and regulations put in place under the African Continental Free Trade Area (AfCFTA). Unlike Russia, United States investors look forward to exploring several opportunities in the African Continental Free Trade Area (AfCFTA), a policy signed by African countries to make the continent a single market. Russian investors could similarly pursue public-private partnerships that support Russian and African businesses, including women-owned and led Small- and Medium-Scale Enterprises (SMEs).
Third, to carefully look at optional ways of utilizing civil society and private sector organizations. If Russia wants to play a pivotal role in advancing its economic influence, it has to navigate, leverage or make inroads into the private sector. Understanding these factors is crucial in formulating policies and appropriate mechanisms for realizing them. Worth to say that efficiency and effectiveness must reflect in its policy implementation. On the other hand, the shifting geopolitical landscape dictates new refined strategies. It also implies the ability to choose the multi-alignment dimension of countries rather than just dealing with a few in the region.
Notwithstanding multiple challenges with pursuing general policy goals in Africa, I would also note here in this article that Russia has maintained a traditional friendship, particularly with Nigeria and broadly with West Africa, so it is important that some focus be given to issues raised here at the forthcoming Russia-Africa summit. The critical focus areas are agriculture, energy, oil and gas, telecommunications, healthcare, transport, financing, marine exploration, aerospace, and other areas where Russian technology can have a comparative advantage.
Many Russian companies such as Lukoil, Gazprom, Rosatom and Rosneft are some of Russia’s energy and power industries actively engaged in Nigeria, Egypt, Angola, Algeria and Ethiopia. It must be stressed that in 2018, “Nigerian oil and gas Exploration Company Oranto Petroleum announced that it would be cooperating with Russia’s largest oil producer, Rosneft, to develop 21 oil assets across 17 African countries.” Unfortunately, this has not materialized due to Rosneft’s lack of interest in doing business in Africa. Additionally, Russian Rosatom has signed nuclear energy agreements with 18 African countries, including Nigeria, Egypt, Ethiopia and Rwanda, to address the power needs of those countries.
The Russian strategic policy interest in Africa and given the strong limitation of its current capability, according to Paul Stronski, one-time Senior Analyst for Russian domestic politics for the U.S. State Department Bureau of Intelligence and Research, “in many respects, Russia’s re-emergence in Africa, is an earnest attempt to resume relations where they were left when the Soviet Union departed the scene.” Paul Stronski further argues, “In sub-Saharan Africa, Russia’s priority is on exploiting new commercial opportunities and securing diplomatic support for its positions in multilateral institutions.”
The trade volume between Russia and Africa was $ 14.5 billion annually in 2020. However, this figure pales insignificance when compared with China, whose trade with Africa has attained $ 165 billion per annum during the same period and $ 254 billion in 2021, even with its late-comer status in Africa. This is to say that the doubling of trade relations within the next five years between Africa and Russia, as stated by Vladimir Putin in 2019, Sochi is not only a vision in the right direction of growing Russia’s partnership with Africa but also a desirable imperative.
In this sense, a new partnership with Africa could be defined not in terms of ideology but by alternative economic and developmental options which give Africa competitive parity. There are two distinctive initiatives which are appreciated: (i) President Vladimir Putin’s debt cancellation of twenty billion dollars ($20 billion) owed to Russia by African countries, which, in his very own word, “was not only a mark of generosity but also a manifestation of pragmatism.”
(ii) The systematization of regular summits. The joint declaration says, “At the initiative of African participants, a new dialogue mechanism – the Russia-Africa partnership forum – has been created. Top-level meetings will occur within its framework once every three years, alternately in Russia and African states. And, the foreign ministers of Russia and three African countries – the current, future and previous chairpersons of the African Union – will meet for annual consultations.”
The two sides have set goals and tasks for further developing Russia-Africa cooperation. They moved from an “ad hoc approach” and often controversial decision-making modalities to “a more comprehensive structured long-term policy plan” dealing with relations.
Beyond the summit, it is necessary to follow up on the concrete decisions as these will give a new impetus to the wide-ranging and long-term multifaceted relations with the countries in West Africa. Ghana, Nigeria and a few countries are already traditional markets for foreign producers and investors, including the United States, Europe, China, India, and even the Gulf states. Ghana and Nigeria open wide windows and doors to the real African market, beginning with the formidable Economic Community of West African States (ECOWAS) regional market.
“Today, for instance, Nigeria offers Russia the advantage of that cheap and robust labour. Given Russia’s recent experience of sanctions by America and its Western allies, a new model of doing business with Africa through investment has become not only sustainable but also imperative.” This was argued by Professor Shehu Abdullai Yibaikwal, Ambassador Extraordinary and Plenipotentiary of the Federal Republic of Nigeria, with concurrent accreditation to the Republic of Belarus. In his academic lecture at the Diplomatic Academy of the Russian Federation, perhaps one of the sectors where this model of doing business can be symbiotically harnessed is the field of agriculture and its value chain as a result of the steep rise in the large African market and the projected certainty of huge returns on investment in this sector.
Russia has expressed deep interest in Nigeria, highly pledging to build nuclear power plants, petroleum pipelines, railways and infrastructure. Unfortunately, these corporate plans have not been realized; Russia sees instability or neo-colonialism as factors impeding its investment. Then there are also the project financing and legal aspects that must be mutually resolved.
Our part is to ensure sustainability by making partnerships more reliable, workable and long-termed. We still have skyline hope and optimism for building back better relations between the two countries, and most importantly within the context of the Declaration “On the Principles of Friendly Relations and Partnership between the Russian Federation and the Federal Republic of Nigeria” signed as far back in 2001, and the multilateral cooperation that was signed between Russia and Nigeria by both leaders at the first Russia-Africa Summit held in Sochi. The forthcoming second summit in July 2023 also signals Russia’s practical preparedness and commitment to work based on a single rule book for trade and investment and towards sustainable development growth across Africa.
To finalize this article, we should refer to the quote by Egyptian President Abdel Fattah el-Sisi, Chairperson of the African Union (AU) in 2019 and co-chair of the first Russia-Africa Summit: “Our declaration has reaffirmed the goals of Agenda 2063 and the 2030 Agenda for Sustainable Development. We have approved a ministerial mechanism for promoting dialogue and partnership. We appreciate all these moves and believe they have created a solid foundation for further developing Russian-African relations.” Aware of this common responsibility, the Russian and African sides will continue coordinating their efforts to monitor the implementation of the documents adopted at the summit. This meets the desires and aspirations of African states and the Russian Federation.
Professor Maurice Okoli is a fellow at the Institute for African Studies and the Institute of World Economy and International Relations, Russian Academy of Sciences. He is also a fellow at the North-Eastern Federal University in Russia.
Economy
Investors Gain N333bn Trading Nigerian Equities
By Dipo Olowookere
A 0.31 per cent gain was recorded by the Nigerian Exchange (NGX) Limited on Tuesday, helped by renewed bargain-hunting by investors, with the year-to-date return extending to 6.61 per cent.
It was observed that the growth achieved by Customs Street yesterday was supported by the banking and the industrial goods indices, which went up by 1.32 per cent and 0.69 per cent apiece.
They offset the losses recorded by the three other sectors, with the insurance counter down by 1.32 per cent, the consumer goods segment down by 0.23 per cent, and the energy space down by 0.17 per cent.
At the close of business, the All-Share Index (ASI) increased by 516.94 points to 165,901.57 points from 165,384.63 points and the market capitalization appreciated by N333 billion to N106.495 trillion from N106.162 trillion.
The market breadth index was positive yesterday after the bourse ended with 35 price gainers and 34 price losers, representing bullish investor sentiment.
The quartet of Industrial and Medical Gases (IMG), Union Dicon, Zichis, and Austin Laz chalked up 10.00 per cent each to sell for N34.65, N9.90, N5.06, and N4.07, respectively, while RT Briscoe appreciated by 9.95 per cent to N9.50.
On the flip side, Omatek lost 10.00 per cent to trade at N2.43, Cutix also fell by 10.00 per cent to N3.15, Union Homes shrank by 9.95 per cent to N76.90, Sunu Assurances declined by 9.94 per cent to N4.62, and Deap Capital crashed by 9.93 per cent to N7.62.
During the trading day, 736.4 million stocks worth N24.7 billion exchanged hands in 46,026 deals compared with the 762.8 million stocks valued at N18.4 billion traded in 55,374 deals a day earlier, indicating a rise in the trading value by 34.24 per cent, and a slip in the trading volume and number of deals by 3.46 per cent and 16.88 per cent apiece.
The activity chart was led by volume on the second trading session of the week by GTCO with 65.9 million equities valued at N6.5 billion, Chams transacted 55.7 million shares worth N249.8 million, Custodian Investment traded 49.8 million stocks for N2.2 billion, Universal Insurance sold 36.1 million equities valued at N51.5 million, and Zenith Bank exchanged 35.4 million shares worth N2.6 billion.
Economy
Oil Market Rises 2% on Fresh Iran-US Confrontation
By Adedapo Adesanya
The oil market was up by nearly 2 per cent on Tuesday after the United States shot down an Iranian drone approaching an aircraft carrier and armed boats in the Strait of Hormuz, stoking concerns talks aimed at de-escalating US-Iran tensions could be disrupted.
This action caused the Brent futures to rise by $1.03 or 1.6 per cent to $67.33 per barrel, as the US West Texas Intermediate (WTI) futures jumped by $1.07 or 1.7 per cent to $63.21 a barrel.
Both crude benchmarks dropped more than 4 per cent on Monday after President Donald Trump said Iran was seriously talking with America.
However, the US military shot down an Iranian drone that “aggressively” approached the Abraham Lincoln aircraft carrier in the Arabian Sea on Tuesday.
In the Strait of Hormuz between the Persian Gulf and the Gulf of Oman, Iranian gunboats approached a US-flagged oil tanker in what US and British maritime security sources describe as a failed attempt to interfere with the vessel’s transit.
Members of the Organisation of the Petroleum Exporting Countries (OPEC) including Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, mainly to Asia. The Strait of Hormuz, through which roughly a fifth of the world’s oil supply passes, remains Iran’s most obvious pressure point.
Despite the latest development, the UAE urged Iran and the US on Tuesday to use the resumption of nuclear talks this week to resolve a standoff that has led to mutual threats of air strikes. Iran, meanwhile, is demanding that talks be held in Oman not Turkey.
In Ukraine, President Volodymyr Zelenskiy accused Russia on Tuesday of exploiting a US-backed energy truce to stockpile munitions, and using them to attack Ukraine a day before peace talks. This boosted worries that Russia’s oil would remain sanctioned for longer.
On Monday, President Trump announced a trade deal with India, one of the world’s biggest economies and oil importers, on Monday to cut tariffs to 18 per cent from 50 per cent in exchange for the country halting Russian oil purchases and lowering trade barriers.
The American Petroleum Institute (API) estimated that crude oil inventories in the US decreased by 11.1 million barrels in the week ending January 30. Crude oil inventories decreased by 247,000 barrels in the week prior.
Official data from the US Energy Information Administration (EIA) will be published later on Wednesday.
Economy
AFC Commits Support to Transformative Reforms in Nigeria’s Power Sector
By Adedapo Adesanya
The Africa Finance Corporation (AFC), the continent’s leading infrastructure solutions provider, has reiterated its commitment to playing a pivotal role to support transformative reforms in Nigeria’s power sector.
This is as it act as co-Financial Adviser to the Nigerian government on the successful issuance of the recent N501 billion inaugural tranche under the Presidential Power Sector Financial Reforms Programme (PPSFRP), as part of the N4 trillion Power Sector Bond Programme, aimed at resolving over a decade of legacy debt obligations in Nigeria’s electricity supply industry and restoring financial stability across the sector.
AFC provided comprehensive financial advisory services to the federal government, including the design of the Programme’s negotiation strategy framework, support in negotiating and executing Settlement Agreements with Power Generation Companies (GenCos), and structuring the bond issuance. Working in partnership with CardinalStone Partners as co-Financial Advisers, AFC deployed its deep sector expertise and strong local market knowledge to deliver the landmark transaction.
The programme was overseen by the Presidential Power Sector Debt Reduction Committee (PPSDRC), with technical leadership from the Office of the Special Adviser to the President on Energy, and implemented through NBET Finance Company Plc, a special purpose vehicle of Nigerian Bulk Electricity Trading Plc (NBET). Proceeds from the issuance will be used to settle verified, overdue receivables owed to GenCos for electricity supplied between February 2015 and March 2025, injecting liquidity into the power sector and extinguishing long-standing claims.
Commenting on AFC’s involvement, Mr Banji Fehintola, Executive Board Member and Head, Financial Services at Africa Finance Corporation, said: “The successful issuance of the inaugural tranche under the Power Sector Bond Programme underscores AFC’s commitment to supporting transformative reforms in Nigeria’s power sector. By resolving long-standing liquidity challenges and restoring confidence among investors and operators, this transaction lays the foundation for sustainable growth and improved electricity supply across the country.”
When fully implemented, the programme is expected to impact approximately 5,398MW of electricity generation capacity by Nigerian GenCos and finalise settlement for 290,644.84GWh of electricity billed since 2015. It will also strengthen companies serving about 12 million active registered customers, creating a solid platform for new investments in capacity enhancement and expansion.
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