Afreximbank Advances AfCFTA at 2nd Russia-Africa Economic Forum

By Kestér Kenn Klomegâh

With the prevalent dependency of African economies on the external supply of fertilizers and grains and up to 30% of cereals imported from Russia, ensuring that critical trade flows continue uninhibited remains the priority of Afreximbank and its African member states.

The lingering global food security challenges and the critical role trade with Russia play in guaranteeing Africa’s food security were at the core of discussions for Afreximbank at the second Russia African Economic and Humanitarian Forum, which was held at St. Petersburg from the 27th to the 29th of July, 2023.

Addressing the summit, Professor Benedict Oramah, President and Chairman of the Board of Directors of the Bank, said in his remarks that “Afreximbank is working with the African Union Commission, the United Nations System and Russian partners to use the Africa Trade Exchange (ATEX) e-commerce platform to facilitate seamless flow of goods and payments in any currencies chosen by sellers and buyers in a transparent manner. The platform pools Africa’s demand for grains and fertilizers, and the Bank has placed an aggregate credit limit of $3 billion to support these transactions.”

“Beyond the food security priorities and in line with the Bank’s mandate, Afreximbank and the Russian Export Centre are collaborating to promote trade and investments in other critical sectors, with focus placed on activities that will help integrate the African economy and advance the implementation of the African Continental Free Trade Agreement (AfCFTA),” continued the President.

Afreximbank offers a portfolio of solutions to support investments in agriculture, industrial parks and critical infrastructure in partnership with the Russian Export Centre and supports African investors seeking to explore opportunities in Russia.

Trade flows between Africa and Russia reached almost $20 billion in the four years to 2021, as against about $10 billion in 2015, despite the COVID-19 pandemic and other significant global crises, bringing it closer to the target of $40 billion by 2026. It is expected that the trade flows could double over the next four years.

Russian companies are actively redirecting shipments from traditional export markets to Africa and their industrial exports to African countries could grow by more than 40% this year, First Deputy Industry and Trade Minister Vasily Osmakov said.

“Due to the fact that traditional, comfortable markets on which it is simpler to work have closed, we and the industry are orienting ourselves toward new markets, key among which, of course, is the African market. Particularly when it comes to machine building in all its manifestations, chemicals, metal products and so on,” Osmakov said at the Russia-Africa forum.

“The growth of specifically our industrial exports to Africa could exceed 40% for the year,” Osmakov said.

The acting head of the Federal Customs Service, Ruslan Davydov, also said that African countries share of Russia’s total visible trade turnover grew to 3.7% this year from 2.3% in 2022.

According to the Deputy Industry and Trade Minister, Vasily Osmakov, Russia’s main exports to African countries at the moment are fertilizer, forest products and metal products. He added by explaining that the government would be adjusting measures of support to the needs of exporters to African markets.

“This export market needs its own recipes for support, logistics support – subsidies for logistics costs, special subsidized credit programs. And right now, we are adapting instruments specifically for new markets, for entering new African markets, within the context of the International Cooperation and Exports national project. In other words, we are increasing the level of subsidies for logistics costs; we’re making support for loans specifically more preferential,” Osmakov said.

Russia has completed the preparation of the regulatory framework for the creation of a Russian Industrial Zone in Egypt and expects to start building infrastructure by the end of this year. Russia needs to prepare a comprehensive strategy for promoting Russian products in African markets. The creation of an industrial zone in Egypt will give Russian companies access to the entire African market.

Industrial zone residents also receive benefits for the import of equipment and materials, the opportunity to receive an income tax deduction, and are exempt from property taxes. This is a comprehensive and systemic approach to determining robust developing trade with African partners.

The intergovernmental agreement on the creation of the Russian Industrial Zone in the Suez Canal economic zone was signed by Russia and Egypt as far back as 2018.

“It is important that cooperation with Africa has reached a new level in recent years. We intend to continue to develop it: to promote trade and investments, deepen cooperation,” Putin said in his greetings to the participants and guests of the Russia-Africa summit.

The first Russia-Africa Economic Forum held in Sochi in 2019 had committed to systematically pursue stronger trade and investment ties between Russia and Africa and to reset socio-economic relations, in addition to moving the two-way trade to $40 billion by 2026.

Similar to the first such event in 2019, the summit was held under the motto: “For Peace, Security and Development.” The second Russia-Africa Summit, attended by top political and business leaders from Russia and Africa, along with an economic and humanitarian forum, took place in the Russian city of St. Petersburg on July 27-28.