Russia and Africa Yet to Break Multitude of Business Barriers

By Kestér Kenn Klomegâh 

The scramble for the entrepreneurial influence and control of the African continental landscape by global players is a geopolitical reality. To be part of this geopolitical arena, foreign corporate business players have been devising different approaches and pathways for revitalizing investment partnerships and strengthening cooperation with potential African partners, says Louis Gouend, founder of Hello Africa and founding Executive Director of the African Business Club.

In this interview taken by Kestér Kenn Klomegâh late May 2024, Louis Gouend gives useful insights into the dynamics of why Russia and Africa ultimately have to forge an engagement in business and economic sectors, to expand cooperation in both regions and further highlights the existing challenges facing the evolving entrepreneurial initiatives in Russia and Africa.

Here are the interview excerpts.

How would you characterize the level of business cooperation between Russia and Africa?

In recent years, business relations between Russia and Africa have acquired new dynamics. Russia is actively seeking opportunities to strengthen economic ties outside traditional Western markets, and Africa is attractive as a region experiencing rapid economic growth and rich natural resources. In this case, special attention is paid to sectors such as energy, mining, agriculture and educational projects. Russian companies are actively investing in mineral resource development projects, and are also entering the agricultural sector of some African countries.

ln your expert point of view, what are the basic challenges that currently confront businesses on both sides?

There are several key difficulties that complicate business interaction between Russia and Africa. These are, first of all, differences in business culture and legal regulation, which complicate the process of doing business. Logistics challenges, including the difficulty of transporting goods over long distances and across multiple borders, also pose additional obstacles. The bureaucracy can be sluggish, and corruption in some African countries makes the situation worse.

Another barrier is a lack of knowledge. On one hand, Russian companies lack knowledge of the environment and available high-quality analytical materials about the African market, its specifics and risks. On the other hand, African entrepreneurs and consumers have virtually no knowledge about Russian products and corporate business services. The main problem now is not funding, but the lack of sufficient knowledge and contacts. One of the options for resolving this issue is to increase Russian business missions to Africa, which will help promote Russian goods and technologies on the African market. And vice versa, in terms of bilateral cooperation.

Another factor limiting exports to Africa is the lack of special investment agreements and lack of regulation in this direction. When we talk about investment activity, the question arises about the lack of investment protection agreements. Their absence prevents Russian companies from insuring investments, which prevents them from exporting to Africa.

Our club members are mainly representatives of various African diaspora who live or studied in Russia and have been operating businesses in Russia or Africa. They know the mentality and culture of both sides, and they have strong ties with both sides, allowing them to be reliable bridges between Africa and Russia.

We work with African chambers of commerce, embassies, diaspora representatives, as well as other regional associations and export companies. Stakeholders include large and small businesses from Russia and Africa, various industry associations, government agencies and diplomatic missions. To improve business cooperation, the club plans to develop knowledge exchange programs, conduct business forums and master classes, and create special working groups to discuss specific issues and problems.

Why did the creation of an African Business Club (ABC) become necessary only now and what are its main goals?

The growth of economic activity and the increase in the number of bilateral projects between Russia and Africa required the creation of a platform to facilitate these interactions. The African Business Club aims to be a platform where entrepreneurs can share knowledge, network, explore new opportunities and solve emerging problems together. The club’s main goals include strengthening trade relations, and stimulating investment and technological exchange.

Our clients value us because, first of all, we help adapt the work of a foreign company to Russian realities, organize and debug many business processes within various aspects and support the foreign company as a reliable partner. Companies planning to invest in African economies will need strong ties to the African government and partnerships with local businesses. How to contact the right people? We are ready to help with this issue.

We offer advisory services to small, medium and global companies that want to invest in the African continent. Thus, we promote entrepreneurship and help create new trade ties between Russia and Africa. We attract potential investors interested in financing projects in the African private sector. We create online access to market research resources and relevant business contacts in Africa. We publish position papers covering issues related to trade with Africa, investment, regulation, policy and industry content.

The number of Russian companies wishing to enter the African market is growing regularly, and this confirms our intentions to promote the development of bilateral economic relations. On the other hand, we can note an increase in the number of African companies wishing to develop close cooperation with their Russian partners.

We offer a wide range of services for Russian companies entering the African market. This includes market research, selection of partner companies, assistance in organizing a business, and personnel search, including offers for Russian citizens to work in African companies.

Who are your current stakeholders and members? And how do you plan to develop a common approach to increasing the level of business cooperation between the two regions?

Our club members are mainly representatives of various African diaspora who live or studied in Russia and have operating businesses in Russia or Africa. They know the mentality and culture of both sides, and they have strong ties with both sides, allowing them to be a reliable bridge between Africa and Russia.

We work with African chambers of commerce, embassies, diaspora representatives, as well as other regional associations and export companies.

Stakeholders include large and small businesses from Russia and Africa, various industry associations, government agencies and diplomatic missions. To improve business cooperation, the club plans to develop knowledge exchange programs, conduct business forums and master classes, and create special working groups to discuss specific issues and problems.

Why is the presence of African business in the Russian Federation extremely low?

A combination of bureaucratic barriers, lack of awareness of the economic environment and opportunities, complex legal and regulatory frameworks, and relatively high market entry costs deter African companies from actively doing business in Russia.

What complimentary roles can African diplomatic missions and business associations play here?

The club has already been negotiating to simplify procedures for African investors and exporters, and assisting in the creation of reliable and effective communication channels between African companies and Russian regulators. As a two-way street, African diplomatic missions can also act as a bridge, helping to overcome cultural and administrative barriers, and actively participate in the club’s activities, supporting its multifaceted initiatives at various levels.