By Kester Kenn Klomegah
The 24th St. Petersburg International Economic Forum (SPIEF’21) held on June 2-5, and under the theme Together Again – Economy of New Reality provided open platforms to exchange the best entrepreneurship practices and key admirable competencies in providing sustainable development.
While the theme reflects the ultimate desire and initiative to review post-pandemic steps in connecting Russia with global businesses, outline strategies for stepping up sustainable economic development, it further offered the chance for putting back or revive inter-personal interaction.
Russian President Vladimir Putin explicitly emphasized that point, addressing the plenary session on June 4, “We are pleased that it is Russia that is hosting the first global business event after a long forced break where members of the global business community can communicate with each other not only using advance telecommunication technologies but in-person as well.”
In his address to forum participants, who came mostly from Europe, Asia and Africa, Putin talked about some economic achievements and tasks facing Russia. He further spoke about the importance of national projects as drivers of economic growth, the vaccines and foreign tourism, as well as the readiness to forge closer and long-term economic, scientific, and technical cooperation with its foreign partners and share experience in various significant economic areas.
Putin was joined via video link by Austrian Chancellor Sebastian Kurz and Sheikh Tamim bin Hamad Al-Thani, the emir of Qatar, to address the gathering. According to forum documents, about 2,000 foreign participating groups came to St. Petersburg. There were delegations from Germany, France and Italy, and from Asia such as Qatar, Japan and China.
Qatar mounted the biggest cultural and arts stand. On the territory, the Doha Hall was a space where the heads of ministries and departments, heads of key companies of the country, representatives of public organizations discussed the strengthening of economic and political relations between states, business and cultural ties, cooperation in the field of ecology and nature protection, sports and innovation, health care and information technology.
There were business dialogues between Russia and a number of foreign countries, for example, Russia-Africa. The Russia-Africa Business Dialogue session, moderated by Professor Irina Abramova, Director of the Institute of African Studies under the Russian Academy of Sciences, featured Mikhail Bogdanov, Deputy Minister of Foreign Affairs of the Russian Federation; Special Presidential Representative for the Middle East and Africa.
The Guest Speaker – Eduard Ngirente, Prime Minister of the Republic of Rwanda; Rania Almashat, Minister of International Cooperation of Egypt; Alexander Saltanov, Chairman of the Association for Economic Cooperation with African States (AECAS); and heads of major Russian and African companies – Transmashholding, Uralchem, Russian Railways, the UN Least Developed Countries Technology Bank, Afreximbank and others took part in the discussion.
The Russia-Africa Business Dialogue session was part of the brainstorming session in preparation for the forthcoming second Russia-Africa summit planned for 2022 in Addis Ababa, Ethiopia. Speakers at the session set the stage and attempted to provide answers to a few questions: What agenda will Russia and Africa follow at the 2022 summit? What business strategy will serve both Russian and African interests? What Russian investment projects had already been implemented on the African continent? Are there new mechanisms and instruments for the Russia-Africa partnership being developed?
“Africa is first and foremost about people. What kind of water they will drink, what they will eat, how they will develop, what kind of education they will have. Our knowledge is our capital and our competitive advantage,” Professor Irina Abramova, Director of the Institute for African Studies under the Russian Academy of Sciences, remarked while moderating the session.
As previously and oftentimes, Abramova has explained that cooperation between Russia and Africa must be of a targeted nature, that is, there needs to be a gradual transition to individual concrete work with the specific countries. This will serve as proof of Russia’s deep and systematic approach to its policy for enhancing relations with Africa.
She has also proposed that, in addition to the framework for Russian policy in Africa and Russia’s renewed strategy for foreign economic activity, the Russian Federation develops an implementable trade and investment strategy for Africa, move forward in practical terms in identifying partner countries and in setting concrete objectives.
During his address at the opening, Rwandan Prime Minister Edouard Ngirente has called upon Russians to consider increasing investment in Africa. That Africa has great opportunities that investors from Russia can take advantage of, among these, are the continent’s young population and workforce, the fast rate at which urbanization is taking place, and the huge potential that has been demonstrated in technological progress in areas like telecommunications and digitization of the society.
“Therefore, advancing our common prosperity agenda would imply translating the existing business opportunities into reality. And this calls for important flows of investments in priority areas,” he said. In addition, pointed at the African Continental Free Trade Area (AfCFTA) and regional integrations of economic communities as another priority to advance quickly Africa’s growth agenda and position the continent as an investment destination.
“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 of 1.3 billion consumers. The investment required is estimated at US$130 billion to US$170 billion per year,” he said.
He also highlighted the need for Africa to build its own capacity, working together with partners including Russia, to undertake scientific research to manufacture vaccines for various diseases, including Covid-19.
Mikhail Bogdanov, Deputy Minister of Foreign Affairs of the Russian Federation and Special Presidential Representative for the Middle East and Africa noted that Russian-African cooperation is gaining new momentum ahead of the second Russia-Africa summit in 2022, and recalled the need to create mechanisms to support Russian business in Africa, citing Russian President Vladimir Putin’s message to African leaders on the occasion of Africa Day on 25 May.
“Today, we have reached a point where there is a need to intensify our cooperation by creating new fundamental mechanisms to support Russian business in Africa through so-called economic diplomacy, which consists of close cooperation between the Russian Foreign Ministry and line ministries and organizations,” he said.
Bogdanov informed that the Secretariat of Russia-Africa Partnership Forum, created in 2020 on the instruction of the Russian president, has become the main body to organize the upcoming Russia-Africa summit, develop and intensify friendly and effective bilateral business dialogue with African countries.
The Association of Economic Cooperation with African States (AECAS) was also established, headed by Alexander Saltanov, who for many years the Russian Deputy Foreign Minister with responsibility for Africa direction.
Taking his turn at the session, Alexander Saltanov, Chairman of AECAS, remarked that the need for state support for Russian companies is crucial for making a real breakthrough on the African continent, – and in this sense, it is a useful idea to create Direct Investment Fund.
Saltanov further spoke of the need to create representative offices, logistics, and service centres of Russian business in the form of public-private partnerships in several countries or regions of Africa to organize systematic sales of Russian products on the continent.
“We can also use the experience of the Soviet Union to work in Africa – for example, creating a foreign trade company that would coordinate efforts in a particular country or in a particular region of Africa to assemble the products offered by Russian business in the market. One company will probably not be able to cope with this, but when there is some structure working in this direction, it will speed up the process,” he stressed.
Saltanov said that an essential topic on the Russian-African cooperation agenda relates promotion of information. Information exchange in terms of business is also necessary – an agreement was signed during the SPIEF’21 to create a Russia-Africa Common Information Space. A full-scale presentation of this project scheduled for October.
Rapidly growing Africa is a promising market for Russian companies. “We, as Russian Railways, see Africa as our promising market due to the fact that Africa is developing dynamically. Today, this continent and its countries are emerging as leaders, including in terms of social and economic indicators.
We expect Egypt to be the starting point from which we will begin interacting with other countries. We also see some opportunities in Tanzania. And of course, Ghana, Botswana, Morocco are of great interest to our holding company,” stressed Sergey Pavlov, First Deputy Managing Director, Russian Railways.
“Egypt is an African country that is also developing investment programmes. We have important projects with the Russian Federation – the nuclear power plant in El Dabaa, which is a huge investment of US$13 billion. Egypt is a gateway to other African countries. We have done a lot in terms of developing transport partnerships between our neighbours, with our African neighbours. We are developing road projects, we are developing construction projects, we are also developing private companies,” according to Rania Almashat, Minister of International Cooperation of the Arab Republic of Egypt.
Africa’s growing and emerging market need modern technology. “Another interesting area we want to develop in Africa is the digitalization of agriculture, various digital platforms that we are already successfully applying in Russia. Digital itself is useless unless it comes with infrastructure and with applicable things. Thus, digital is simply an accelerator for us,” Dmitry Konyaev, Chairman of the Board of Directors, UralChem.
Konyaev suggested that, given the crucial importance of direct contacts between African heads of state and the Russian leadership, it should be necessary to intensify the work of all bilateral intergovernmental commissions.
“Of course, Africa is no exception in terms of all the global trends that we are seeing around the world today. Mainly, it is a growing population, urbanization, and the development of new technologies. It is the development of transport accessibility for both passengers and freight. It is the construction of port infrastructure. In all of these aspects, Russia certainly has all the necessary technologies and competencies to finally go back to these trade, economic and mainly social relations,” Kirill Lipa, General Director, Transmashholding.
Economic diplomacy, strengthening of intergovernmental commissions and increased number of mutual visits. “After the Sochi summit, all efforts were focused on launching export to Africa. It is not easy, because 30 years after we left the region, we need to enter a competitive environment. This competitive environment has already been integrated into African life, into African legislation, and the conditions that are opening up for Russian business today – they are not quite the same as those for businessmen from France, the European Union, India, or China,” according to Igor Morozov, Member of the Committee for Economy Policy of the Federation Council of the Russian Federation.
As head of the Coordination Committee on Economic Cooperation with Africa (AfroCom) established in 2009, Senator Igor Morozov hopes that the e-rouble will help or encourage Russian banks to enter the African continent after all and do their best to participate in financing Russian-African start-ups, Russian-African trade and, of course, in localizing Russian-African production.
Speakers at the session believe that mutual advancement by both African governments and businesses could drive further cooperation between Russia and Africa. “Investing in the private sector can unlock the full potential of our continent and implement our plans. We are keen to increase our cooperation with Russia for the benefit of the whole continent,” in the objective opinion of Rania Almashat, Minister of International Cooperation of the Arab Republic of Egypt.
“Today, the concession model primarily provides for initial and significant input by the investor. In this situation, I think in order to help Africa develop dynamically and rapidly, these concession models need to be revised, more attention needs to be paid, including to security and guarantees from the government, from the state, so that the investor feels protected,” added Sergey Pavlov, First Deputy Managing Director, Russian Railways.
Over these several years, Russians have been discussing and referring to priority economic areas of cooperation in Africa. Some experts have also been stressing the importance of getting down to implement specific programmes and projects. Have repeatedly spoken about the systemic efforts, with well-developed guidelines, to boost the investment into the continent.
After the first Russia-Africa summit held 2019, expectations are skyline high as it offers the impetus, in the next few years, to substantially increase investment in the economy, industry, transport, telecommunications and tourist infrastructures, as well as in high technology, healthcare, urban development, and other fields that are vital to the quality of life. Africa, with its 1.3 billion population and resources, offers great opportunities for both states, corporate and private initiatives in investment spheres.
Due to the coronavirus pandemic, the forum this year was held, a combination of an offline and online format, with all epidemiological precautions observed. The Saint Petersburg International Economic Forum (SPIEF), often dubbed the Russian Davos, is the country’s main showcase for investors, attracting political and business leaders from around the world. The SPIEF is held annually, and since 2006 it has been held under patronage and with the participation of the President of the Russian Federation.
Africa Gets Just 12% of Climate Change Financing
By Adedapo Adesanya
A new report from Climate Policy Initiative (CPI) has said that Africa is getting just 12 per cent of the finance it needs to manage the impact of climate change.
It, however, raised pressure on rich nations to do more in the run-up to global climate talks at COP27 in November.
CPI said that around $250 billion is needed annually to help African countries move to greener technologies and adapt to the effects of climate change, yet funding in 2020 was just $29.5 billion.
Wealthy countries have faced growing criticism for failing to meet a pledge made in 2009 to provide $100 billion annually to help poorer countries and the issue is likely to be central to discussions at the COP27 climate talks in Egypt.
According to the International Energy Agency, Africa has about a fifth of the world’s population but produces less than 3 per cent of its carbon dioxide emissions.
“Harnessing climate investment opportunities in Africa will require innovation in financing structures and strategic deployment of public capital to ‘crowd-in’ private investment at levels not yet seen,” the CPI report said.
It cited a lack of skills, infrastructure, data and financial markets depth, governance issues, and currency risks as holding back climate investment to varying degrees in African countries.
The barriers were most numerous in central African countries, where infrastructure and access to credit are lacking and there are high risks of political and regulatory issues hampering investment, the report said.
“While these barriers are real, the perception of risk linked to investments in the African continent is often aggravated by a limited understanding of national contexts by private investors,” it said.
Australia Begins Process to Introduce Central Bank Digital Currency
By Adedapo Adesanya
As more countries gravitate towards a digital currency, Australia joined the cadre as it announced the beginning of a collaborative effort to review the case for a central bank digital currency (CBDC) in the country.
The Reserve Bank of Australia (RBA), Treasury, and other agencies will oversee the research effort designed to explore the potential economic benefits of introducing such a currency in Australia, the RBA said in a statement Tuesday. The project is expected to run for about a year.
Speaking on this, the RBA’s Deputy Governor Michele Bullock said the work “is an important next step in our research on CBDC. We are looking forward to engaging with a wide range of industry participants to better understand the potential benefits a CBDC could bring to Australia.”
The central bank reiterated the research comes in the context of Australia already having “relatively modern and well-functioning payment and settlement systems.”
The RBA is collaborating with the Digital Finance Cooperative Research Centre in the project, while Treasury is participating as a member of the steering committee. The work will involve the development of a “limited-scale pilot that will operate in a ringfenced environment for a period of time.”
Over the course of the next 12 months, interested industry participants will be invited to develop specific use cases that demonstrate how the digital currency could be used to provide innovative and value-added payment and settlement services to households and businesses, the RBA added.
A report on the findings, including an assessment of the various use cases developed, will be published at the conclusion.
Central banks worldwide are acting swiftly to ensure they don’t fall behind as money edges toward its biggest reinvention in centuries with alternative concepts like cryptocurrencies taking hold.
Nigeria is one of the countries at the forefront of a CBDC with the introduction of the eNaira in 2021 with the Digital Euro still under investigation phase while Jamaica began its own testing phase in May. China’s Digital Yuan has been in testing since 2020.
Blockchain technology, as well as events like the coronavirus pandemic, are among the forces pushing consumers to go cashless.
Mozambique Risks Economic Stability Over Russian Oil
By Kestér Kenn Klomegâh
Mozambique risks destabilizing its economy and further losing western development finance if it goes ahead to purchase sanctioned oil from Russia.
With the return of western development finance institutions such International Monetary Fund (IMF), World Bank and the USAID, and currently showing tremendous support for sustainable development projects and programmes, Mozambique would have to stay focused and stay clear of the complexities and contradictions of the Russia-Ukraine crisis.
Mozambique needs to seriously concentrate on and pursue its plans of exporting liquefied natural gas (LNG), extracted from the Coral South field, off the coast of Palma district, in the northern province of Cabo Delgado, possibly starting this October. It marks an economic turning point and opens a new chapter for its revenue sources.
According to our research, Mozambique will become the first country in East Africa to export LNG. It will be produced on a floating platform, belonging to a consortium led by the Italian energy company, Eni. The platform, built in a Korean shipyard, arrived in Mozambican waters in January and is now anchored in Area Four of the Rovuma Basin, some 40 kilometres from the mainland.
This is the first deep-water platform in the world to operate at a water depth of about two thousand meters. The Coral South project is expected to produce 3.4 million tons of LNG per year over its estimated 25-year lifespan.
A second project is planned for Area One of the Rovuma Basin, where the operator is the French company TotalEnergies. The planned LNG plants for this project, are onshore, in the Afungi Peninsula of the Palma district. The jihadists seized Palma town in March 2021, and TotalEnergies withdrew all of its staff from the district. Subsequently, the Mozambican defence and security forces and their Rwandan allies drove the terrorists out of both Palma and the neighbouring district of Mocimboa da Praia.
The current global economic situation is changing, and competition and rivalry for markets are also at their height. During the past months, Russia has cut its export of gas as a reciprocal action against European Union members and has redirected its search for new clients in the Asian region. It has already offered discounted prices to China and India, and now looking beyond Africa.
United States Special Envoy to the United Nations, Thomas-Greenfield, has made one point clear in her speeches with African leaders that “African nations are free to buy grain from Russia but could face consequences if they trade in U.S.-sanctioned commodities such as oil from Russia.”
“Countries can buy Russian agricultural products, including fertilizer and wheat,” Linda Thomas-Greenfield said. But she added that “if a country decides to engage with Russia, where there are sanctions, then they are breaking those sanctions. We caution countries not to break those sanctions because then … they stand the chance of having actions taken against them.”
Russian Ambassador to Mozambique, Alexander Surikov, after a meeting with the Confederation of Economic Associations of Mozambique (CTA), had proposed that the Mozambican authorities could buy Russian oil in roubles after Moscow presented the option to Maputo. Ambassador Surikov further expressed Russian companies’ continuing interest in investing in Mozambique. Likewise, the possibility was raised of Russia opening a bank in Mozambique focused on supporting bilateral trade and investment.
Russia previously had a VTB bank in Maputo, later involved in opaque deals. It was a financial scandal involving three fraudulent security-linked companies, and two banks – Credit Suisse and VTB of Russia, relating to illicit loan guarantees issued by the government under former President Armando Guebuza. Until today, it is popularly referred to as the “Hidden Debts” scandal involving US$2.7 billion (€2.3 million), the financial scandal that happened in 2013.
In the aftermath, financial institutions exited, projects were abandoned and this southern African country has struggled to rebound economically. Now they are returning with new financial assistance programmes that would promote sustainable and inclusive growth and long-term macroeconomic stability.
In the context of the current cereal crisis, one other issue that the ambassador raised was how Mozambican companies could have direct access to Russian wheat suppliers. In this regard, it was not clear how Russian wheat would enter the market and how it would be paid for because Mozambique uses principally the US dollar in its foreign transactions, and Russia cannot conduct transactions using the US currency due to the sanctions imposed following the invasion of Ukraine.
“The rouble and the medical are worthy currencies that do not need the benevolence of some other countries that control the international system,” the Russian diplomat explained, adding that Moscow wanted to strengthen cooperation with Maputo.
Nonetheless, Minister of Mineral Resources and Energy of Mozambique, Carlos Zacarias, admittedly the possibility of buying Russian oil in roubles. “I am sure that we will study and verify the feasibility of this offer from Russia. If it is viable, for sure Russian oil will be acquired in roubles,” Carlos Zacarias said.
Mozambique’s receptivity to the Russian proposal stems from the fact that the world is experiencing a peculiar moment, characterized by great volatility in oil prices on the international market as a result of the Russia-Ukraine war.
Mozambique was among the countries that abstained on two resolutions that were voted on by the General Assembly of the United Nations, one condemning Russia for the humanitarian crisis in Ukraine as a consequence of the war and the other suspending Moscow from the Human Rights Council.
The Mozambican Liberation Front (Frelimo, the ruling party) was an ally of Moscow during the time of the former USSR and received military support during the struggle against Portuguese colonialism and economic aid after independence in 1975.
Mozambique and Russia have admirable political relations. Mozambique has to focus on trade and economic development with external partners. According to data provided by CTA, the annual volume of economic transactions between Mozambique and Russia is estimated to be, at least, US$100 million (€98.5 million at current exchange rates).
Experts aptly point to the fact that there is a tremendous opportunity window for Mozambique. With partners including ExxonMobil Corp., China National Petroleum Corp. and Mozambican state-owned Empresa Nacional de Hidrocarbonetos, Mozambique has to move towards its own energy development. These past few years, experts have also reiterated adopting a suitable mechanism, mapping out strategies and utilizing financial support for sustainable development.
Mozambique has considerable gas resources and the right decision is to move toward both an onshore concept and an offshore concept. The ultimate goal has to establish connectivity between its resource exploration and national development. The idea is to foster economic relations based on its domestic development priorities. And consequently, it has to determine influential external investment partners ready to invest funds and, in practical terms, committed to supporting sustainable development in the country.
The Mozambique LNG offshore project, valued at around $20 billion, aims to extract about 13.12 million tonnes of recoverable gas over 25 years and generate profits of US$60.8 billion, half of which will go to the Mozambican state.
The process to achieve this task has started and would generate 14,000 possible jobs in phases – first creating 5,000 jobs for Mozambicans in the construction phase and 1,200 in the operational phase, with a plan to train 2,500 technicians and so forth. These projects also have a great capacity to create indirect jobs, with foreign labour decreasing throughout the project and Mozambican labour increasing. Most of these jobs are expected to be provided by contractors and subcontractors.
Several corporate projects came to a halt due to armed insurgency in 2017 in Cabo Delgado province. The entry of foreign troops to support Mozambican forces in mid-2021 has improved the security situation. Since July 2021, an offensive by government troops was fixed, with the support of Rwandans and later by the Standby Joint Force consisting of forces from members of the Southern African Development Community (SADC).
Cabo Delgado province, located in northern Mozambique, is rich in natural gas. Although the gas from the three projects approved so far has a destination, Mozambique has proven reserves of over 180 trillion cubic feet, according to data from the Ministry of Mineral Resources and Energy. With an approximate population of 30 million, Mozambique is endowed with natural resources. It is a member of the Southern Africa Development Community (SADC) and the African Union.
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