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Russia Must Face New Geopolitical Realities, Challenges

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Russia Returns Putin

By Kester Kenn Klomegah

The United States, European Union and their Pacific allies’ sanctions are truly fast-driving Russia towards Africa. As the sanctions bite, Russia continues stepping up to realign with Africa, steadily stemming its policy with mountainous pledges of helping with sustainable development, increasing trade through economic cooperation and strengthening relations.

In addition, the sanctions have created the conditions for Russia to push its anti-Western and neo-colonialism agenda, reminiscent of the Cold War during the Soviet days. But such steps must necessarily and discernibly be implemented with renewed determination and decisiveness.

In late April, Russian Presidential Special Representative for the Middle East and Africa, and Deputy Foreign Affairs Minister Mikhail Bogdanov explicitly explained in an interview to Interfax News Agency that Africa has always been an important region from the point of view of foreign policy for Russia. As oftentimes, he traced and renarrated, especially from the 1950s and 1960s, the historical role the Soviets played in support for African peoples in attaining their statehood and political independence, the fight against colonial rule.

“After the collapse of the Soviet Union, many other problems emerged and pushed cooperation with Africa into the background. Regrettably, much has been lost over this period,” he told the media, and frankly admitted further that Western and European countries, China, Turkey, and India et cetera, have filled the vacuum that emerged after the ‘retreat’ from Africa.

According to Bogdanov, Africa is beyond any doubt a continent of the future, both from the point of view of human resources and because it is a storeroom of the world, one of the richest regions. But another issue is that colonial powers, as well as neocolonialists, have never let the Africans take advantage of the treasure which is literally right under their feet.

These past years, Russian diplomats have played the song of “neo-colonialism” and its negative effects on Africa, this song aims at winning the sympathy of African leaders. It has meanwhile embarked on fighting “neo-colonialism” which it considers as a stumbling stone on its way to regaining part of its Soviet-era influence in Africa. Russia has sought to convince Africans over the past years of the likely dangers of neocolonial tendencies perpetrated by the former colonial masters and the scramble for resources on the continent.

Russian diplomats might have read Jamaican Walter Rodney’s book “How Europe Underdeveloped Africa” – as they similarly and consistently blame Western and Europeans for political, economic and social bottlenecks in Africa. Russia has expressed uttermost dissatisfaction with Western and European engagement with Africa. All kinds of Soviet assistance were rendered until many African states got their independence.

In an interview with Steven Gruzd, Head of the African Governance and Diplomacy Programme at the South African Institute of International Affairs (SAIIA), explained that Africa is a busy geopolitical arena, with many players, both old and new, operating. Apart from EU countries, China and the US. There are players such as Iran, Turkey, Israel, the UAE, Japan and others. Russia has to compete against them and distinctively remain focused on its efforts with strategies. On the other side, Russia uses the rhetoric of anti-colonialism in its engagement with Africa, and it is fighting neo-colonialism from the West, especially in relations with their former colonies. It sees France as a threat to its interests, especially in Francophone West Africa, the Maghreb and the Sahel.

“I would largely agree that there is a divide between what has been pledged and promised at high-level meetings and summits, compared to what has actually materialized on the ground. There is more talk than action, and mere intentions and ideas have been officially presented as initiatives already in progress. There needs to be a lot of tangible progress on the ground for the second summit to show impact. It will be interesting to see what has been concretely achieved in reports at the second Russia-Africa summit scheduled for this 2022,” he distinctively argued.

Steven Gruzd heads the Russia-Africa Research Programme initiated at SAIIA, South Africa’s premier research institute on international issues. It is an independent, non-government think tank, with a long and proud history of providing thought leadership in Africa.

From Russian and African experts’ point of view, Africa’s most valuable asset is not only its natural resources but its people, especially the youth. The population of the continent has already passed the 1.3 billion mark, with a median age of about 20. Around 60% of the population are young people under the age of 25. With digital technology, these young Africans have the benefit of several alternative perspectives and choose the approach they feel is closest to them. The young African generation between 25 and 45 years now has different perceptions and approaches toward issues relating to politics, economics and social questions.

Given these numbers, for instance, the United States and European countries are investing in the youth. China trains about 10,000 yearly, ranging from short-term courses to long-term academic disciplines. During the days of Barak Obama, the White House created the Young African Leaders Initiative (YALI). It brings 500 Africans to the White House in Washington and this YALI still runs various academic and training programmes for Africans. Before the Covid-19, The The Times Higher Education index indicated that approximately 43,000 Africans enrolled in American universities. There are many African universities and institutes with joint agreements running programmes, including fellowships, together with Westerners and Europeans. That compared to Russia’s annual scholarship of about 1,800.

The young African generation (that constitutes the electorate) expects their leaders to deliver on sustainable development and initiatives that focus on employment creation. Political leaders, highly desirous to consolidate their positions, are searching for external partners who are ready to invest in energy, transport, industry, agriculture, health and other viable economic sectors. Therefore, in practical terms, all such warnings on the existing or emerging neo-colonialism could fall on deaf ears as African leaders choose development partners with funds to invest in the economy.

In terms of working with the African continent, Russian business leaders say the African continent remains so little known in Russia. Historic Russia–Africa Summit and Economic Forum held three years ago played a crucial role in addressing this, as did the 2018 FIFA World Cup. But many issues stipulated in the joint political declaration largely remain untouched on the shelves of the Kremlin and the Russian ministries, departments and agencies. And who cares about those official files? The newly created Russian African Public Forum Secretariat and the Association of Economic Cooperation with African States (AECAS). People who work within these structures hardly talk about the African Continental Free Trade Area (AfCFTA). They faintly know, if nothing at all, that AfCFTA could also serve as a platform to strengthen business ties between Russia and Africa.

Nevertheless, the African Continental Free Trade (AfCFTA) promises to create a single borderless market, it offers various opportunities for localization, production and marketing of consumables throughout Africa. This should perhaps, be the strongest dimension of Russia’s dealings in Africa.

Currently, Russians know and strongly value only state-to-state cooperation, completely ignoring the private sectors and civil society in their diplomacy with Africa. While the public sector has a responsibility to create an enabling environment for businesses to thrive, the private sector, equally plays a key role in among others, enhancing trade and investment, expanding innovations and resource mobilization for investment in socio-economic projects. Increased investment is a prerequisite for the realization of the UN Development Goals 2030 and the African Union’s Agenda 2063.

Unsurprisingly, both Russian and African experts have expressed their concern about official visits proliferating both ways, with little impact on the sustainable development currently needed by the majority of African countries. While some see official visits simply as diplomatic tourism. But a number of the African leaders wonder how to turn Russia’s focus toward realizing the Sustainable Development Goals (SDGs).

Last November, a group of 25 leading experts headed by Sergei A. Karaganov, the Honorary Chairman of the Presidium of the Council on Foreign and Defence Policy, released a report that vividly highlighted some spectacular pitfalls and shortcomings in Russia’s approach toward Africa. It pointed to Russia’s consistent failure in honouring its several pledges over the years. It decried the increased number of bilateral and high-level meetings that yield little or bring to the fore no definitive results. In addition, insufficient and disorganized Russian African lobbying combined with a lack of “information hygiene” at all levels of public speaking, says the policy report.

The United States, EU representatives, China, India, Turkey and even the Gulf States are these days, looking at Africa from different perspectives, but more importantly pushing for their economic footprints on the continent. For instance, fresh from their previous EU-AU summit, both agreed on several infrastructure and investment projects. EU is committing approx. €300 billion ($340 billion) for financing new investment initiatives – similar to China’s Belt and Road initiative – an investment programme the bloc claims would create links, not dependencies.

U.S. investment amounts to billions of dollars. At the 13th US-Africa Business Summit, organized by the Corporate Council on Africa (CCA), a leading reputable American business association, the American investors indicated that there are ways the continent can benefit from them, including in sectors like pharmaceuticals, automobiles, agro-processing and financial technology. On the other hand, American investors are looking 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.

The United States is pursuing agreements that go beyond the African Growth and Opportunities Act (AGOA). It will be pursuing public-private partnerships that support the US and African businesses, including women-owned and led Small and Medium Enterprises. Special focus is also on youth business especially technology while looking to build stronger relationships with willing Africans through bilateral engagement. There were diverse panel discussions that emphasized the growing trend of digitalization of SMEs and African business operations.

During the separate discussions with more than 20 former African ambassadors who served in the Russian Federation, they have abundantly made it clear how to stimulate African governments to explore the best investment opportunities in Russia and woo Russian investors into developing Africa’s SDGs within a framework of bilateral cooperation.

Former South African Ambassador, Mandisi Mpahlwa, said that Sub-Saharan Africa has understandably been low on post-Soviet Russia’s list of priorities, given that Russia is not as dependent on Africa’s natural resources as most other major economies. The reason: Soviet and African relations, anchored as they were on the fight to push back the frontiers of colonialism, did not necessarily translate into trade, investment and economic ties, which would have continued seamlessly with post-Soviet Russia.

“Of course, Russia’s objective of taking the bilateral relationship with Africa to the next level cannot be realized without a close partnership with the private sector. Africa and Russia are close politically, but they are geographically distant, and the people-to-people ties are still rather under-developed. This translates into a low level of knowledge on both sides of what the other has to offer. There is perhaps also a measure of fear of the unknown or the unfamiliar in both countries,” according to Mpahlawa.

On April 29, the Russian International Affairs Council (RIAC), a Russian NGO that focuses on foreign policy, held an online conference with the participation of experts on Africa. Chairing the online discussion, Professor Igor Ivanov, former Foreign Affairs Minister and now RIAC President, made an opening speech, pointing out that Russia’s task in Africa is to present a strategy and define priorities with the countries of the continent, build on the decisions of the first Russia-Africa Summit.

On the development of cooperation between Russia and African countries, Professor Igor Ivanov pointed out a few steps here: “Russia’s task is to prevent a rollback in relations with African countries. It is necessary to use the momentum set by the first Russia-Africa Summit. First of all, it is necessary for Russia to define explicitly its priorities: why are we returning to Africa? Just to make money, strengthen our international presence, help African countries or participate in the formation of the new world order together with the African countries? Some general statements of a fundamental nature were made at the first Summit, now it is necessary to move from general statements to specificity.”

In this context, Russia needs to face the new geopolitical realities and its challenges. Whether one likes it or not, Africa has become an arena for competition between various global powers. As Chinese President Xi Jinping emphasized at the Boao Forum, “We have to uphold the principle of indivisible positions on the global stage, continue building a balanced, effective and external sustainable economic architecture around the world.”

Foreign Minister Sergey Lavrov and AUC Chairperson, Chad’s Moussa Faki Mahamat have also been discussing the ways and means of encouraging Russian corporations’ participation in major infrastructure projects on the continent and especially in Africa’s Fourth Industrial Revolution. Lavrov has many times assured that Moscow firmly supports the principle of “African solutions to African problems” within a framework of achieving the Sustainable Development Goals (SDGs) as developed by individual African countries, sub-regional organizations and the African Union.

Most importantly, given the sanctions imposed on Russia by the collective West, it would be necessary to substantially adopt mechanisms of cooperation to suit these new realities, primarily in the bilateral and multilateral relations. Lavrov, in one of his speeches posted to the official website, has noted frankly in remarks: “it is evident that the significant potential of our economic cooperation is far from being exhausted and much remains to be done so that Russian and African partners know more about each other’s capacities and needs. We still have to create conditions necessary for interaction between Russia and Africa.”

Now at the crossroad, it could be meandering and longer than expected to make the mark. Russia’s return journey could take another generation to reach its destination in Africa. With the current geopolitical changing world, Russia has been stripped of as a member of many international organizations. As a direct result of Russia’s “special military operation” aims at “demilitarization and denazification” in its neighbouring post-Soviet republic of Ukraine since late February, Russia has come under a raft of sanctions imposed by the United States and Canada, the European Union, Japan, Australia, New Zealand and a host of other countries.

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Africa Gets Just 12% of Climate Change Financing

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Climate Change

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.

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Australia Begins Process to Introduce Central Bank Digital Currency

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australia 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.

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Mozambique Risks Economic Stability Over Russian Oil

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Mozambique Risks Economic Stability

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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