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Russia Plans New Trade, Investment Cooperation With Africa

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Russia investment cooperation

By Kestér Kenn Klomegâh

Russian Foreign Minister, Mr Sergey Lavrov, said at his annual press conference on January 18 that Russia and Africa would hold a summit in July this year and a number of documents, including new instruments of trade and investment cooperation, were being prepared to readjust methods of interaction amid the environment of sanctions, and in the context of geopolitical changes.

“As you know, we are planning the second summit in St. Petersburg, and we are preparing a whole series of activities for it. Documents are being prepared on the readjustment of interaction mechanisms in conditions and sanctions and threats, new instruments of trade and investment cooperation, supply chain systems and payments. The transition to payments in national currencies is underway. This is not a quick process, but it is progressing and gaining momentum,” the Foreign Minister said.

Ahead of the forthcoming African leaders gathering, the South African Institute of International Affairs has put into circulation its latest policy report on Russia-African relations.

In the introductory chapter, Steven Gruzd, Samuel Ramani and Cayley Clifford – have summarized various aspects of the developments between Russia and Africa over the past few years and finally questioned the impact of Russia’s policy on Africa.

According to Steven Gruzd, Samuel Ramani and Cayley Clifford, this special far-reaching policy report includes academic research from leading Russian, African and international scholars. It addresses the dimensions of Russian power projection in Africa and new frontiers of Russian influence and provides a roadmap towards understanding how Russia is perceived in Africa.

The report highlights narratives about anti-colonialism and describes how these sources of solidarity are transmitted by Russian elites to their African public. For seeking long-term influence, Russian elites have oftentimes used elements of anti-colonialism as part of the current policy to control the perceptions of Africans and primarily as new tactics for power projection in Africa.

While it has made thousands of investment promises and signed several bilateral agreements, Russia is largely invisible in economic sectors and keeps a remote distance from participating in building critical infrastructures, investing in industrial spheres and in the newly created single market. Moscow simply builds relations on illusions and lacks the capacity and overwhelming power to realize its policy goals in Africa.

That report says Russia’s expanding influence in Africa is compelling, but a closer examination further reveals a murkier picture. Despite Putin’s lofty trade targets, Russia’s trade with Africa stands at just $20 billion, which is lower than that of India or Turkey.

Over the previous years, similar observations on the stagnation in Russia-Africa economic and trade relations were also noted by politicians and academic researchers. A publication headlined “Russian Business in Africa: Missed Opportunities and Prospects” appeared in the foreign policy journal Russia in Global Affairs, where Professor Alexei Vasilyev, former Special Representative of the Russian Federation to African Countries, wrote in that article that Russian companies are pursuing their diverse interests in Africa.

The main reason is that Africa remains an enormous and large market for technology and manufacturing of consumer goods due to the increasing population and the growing middle class. Until recently, Russians have been looking at the mining industry, and economic cooperation is steadily expanding. But, Africa still accounts for just 1.5% of Russia’s investment which is a drop in the ocean. It must be admitted that Russia’s economic policy grossly lacks dynamism in Africa.

“In fact, African countries have been waiting for us for far too long; we lost our positions in post-apartheid Africa and have largely missed new opportunities. Currently, Russia lags behind leading foreign countries in most economic parameters in this region,” he pointed out in the article.

In another Russian media headlined: “West seeks to dissuade African states from participating in Russia-Africa summit” that was published last December, Federation Council Deputy Speaker Konstantin Kosachev explicitly noted that the first Russia-Africa summit held three years ago was successful, “but, in many respects, its results remained within the dimension of politics” and were not translated into additional projects in trade, economic, scientific or humanitarian cooperation.

Russia’s increasing political dialogues have not been transformed into economic capabilities. Returning as a strategic player, Russia’s business initiatives have inconsistently been followed across Africa. Senator Kosachev,, quoting trade figures to illustrate his argument, said that “the trade turnover speaks for itself. Roughly, the European Union’s trade with Africa stands at around $300 billion, China’s – at around $150 billion, and the United States – at approximately $50-60 billion. Despite the tendency to grow, our current turnover is around $20 billion.”

Back in 2019, Foreign Affairs Minister Sergey Lavrov said that trade between Russia and Africa would grow as more and more African partners continued to show interest in having Russians in the economic sectors of Africa.

“Our African partners are interested in Russian business working more actively there. This provides greater competition between companies from Western countries, China, and Russia. With competition for developing mineral resources in Africa, it is easier and cheaper for our African colleagues to choose partners,” he said at the Moscow State Institute of International Affairs in early September.

“Overall, we are, of course, far from the absolute figures characterizing trade and investment cooperation between the African countries which stood at $20 billion,” he informed the fully-packed auditorium.

In May 2014, Lavrov said in a speech posted to the official website: “We attach special significance to deepening our trade and investment cooperation with the African States. Russia provides African countries with extensive preferences in trade. At the same time, it is evident that the significant potential of the 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.”

As far back in October 2007, the Russian Foreign Affairs Ministry posted an official report on its website that traditional products from least-developed countries (including Africa) would be exempted from import tariffs. The legislation stipulates that traditional goods are eligible for preferential customs and tariff treatment.

While Russia announced this preferential tariff regime for developing countries, which also granted duty-free access to African products, potential African exporters either failed to take advantage of it or were unaware of the advantageous terms for boosting trade.

Analyzing the present market landscape of Africa, Russia can export its technology and compete on equal terms with China, India and other prominent players. On the other hand, Russia lacks the competitive advantage in terms of finished industrial (manufactured) products that African consumers obtain from Asian countries such as China, India, Japan and South Korea.

Charles Robertson, Global Chief Economist at Renaissance Capital, thinks that the major problem is incentives. China has two major incentives to invest in Africa. First, China needs to buy resources, while Russia does not. Second, Chinese exports are suitable for Africa – whether it is textiles or iPads, goods made in China can be sold in Africa.

Keir Giles, an Associate Fellow of the Royal Institute of International Affairs (Chatham House) in London, told me that “there are some more fundamental problems which Russia would need to overcome to boost its trade turnover with the region. The majority of this vast amount of trade with China simply cannot be competed with by Russia. A large part of African exports to China by value is made up of oil, which Russia does not need to import. And a large part of China’s exports to Africa is consumer goods, which Russia doesn’t really produce.”

He explains further that trade in foodstuffs in both directions suffers similar challenges, which are unlikely to be affected by the current politically-motivated Russian ban on foods from the European Union, the United States and Australia. In effect, in sharp contrast to China, the make-up of Russian exports has not really developed since the end of the Soviet Union and still consists mostly of oil, gas, arms and raw materials. For as long as that continues, the scope for ongoing trading with most African nations is going to be severely limited.

Academic experts, who have researched Russia’s foreign policy in Africa at the Moscow-based Institute for African Studies, have reiterated that Russia’s exports to Africa can be possible only after the country’s industrial base experiences a more qualitative change and introduces tariff preferences for trade with African partners.

“The situation in Russian-African foreign trade will change for the better if Russian industry undergoes rapid technological modernization, the state provides Russian businessmen systematic and meaningful support, and small and medium businesses receive wider access to foreign economic cooperation with Africa,” according to Professor Alexei Vasilyev, former Special Representative of the Russian Federation to African Countries.

Quite recently, Dr Gideon Shoo, Media Business Consultant based in Kilimanjaro Region in Tanzania, explained in an interview discussion with me that Russian companies need to prove their superiority in the business spheres, and African governments have to make it easier for Russian companies to set up and operate in their countries.

“Russian financial institutions can offer credit support that will allow them to localize their production in Africa’s industrial zones, especially southern and eastern African regions that show some stability and have a good investment and business incentives. In order to operate more effectively, Russians have to take risks by investing, recognize the importance of cooperation on key investment issues and work closely on the challenges and opportunities on the continent,” he added.

On the other hand, Dr Shoo noted that Russia is, so far, a closed market to many African countries. It is difficult to access the Russian market. However, African countries have to look to new emerging markets for export products and make efforts to negotiate for access to these markets. This can be another aspect of economic cooperation and a great business opportunity for both regions.

Nearly all the experts have acknowledged here that import and export trade has been slow due to multiple reasons, including inadequate knowledge of trade procedures, complicated certification procedures, expensive logistics, security and guarantee issues, rules and regulations, as well as the existing market conditions.

By looking at and revising the rules and regulations, the situation regarding Russia’s presence in Africa and Africa’s presence in Russia could change. All that is necessary here is for Russia and Africa to make consistent efforts to look for new ways, practical efforts at removing existing obstacles that have impeded trade over the years.

According to the African Development Bank, Africa’s economy is growing faster than those of any other region. Nearly half of Africa’s countries are now classified as middle-income countries, and around 380 million of Africa’s 1.3 billion people are now earning good incomes – rising consumerism – that makes trade profitable in Africa.

For decades, Russia has been looking for effective ways to promote multifaceted ties and new strategies for cooperation in economic areas in Africa. Now, Kremlin will hold the second Russia-Africa Summit on July 26-29 in St. Petersburg with high hopes of enhancing multifaceted ties, trying to reshape the existing relationships and significantly rolling out ways to increase the effectiveness of cooperation between Russia and Africa. The first Russia-Africa summit and economic forum were held in October 2019 in Sochi.

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Russia’s Military Diplomacy in Africa: High Risk, Low Reward and Limited Impact

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Military Diplomacy in Africa

By Kestér Kenn Klomegâh

The South African Institute of International Affairs, a Johannesburg-based foreign policy think tank, has released a special report on Russia-Africa relations. According to the report, Russia has signed military-technical agreements with over 20 African countries and has secured lucrative mining and nuclear energy contracts on the continent.

Russia views Africa as an increasingly important vector of its post-Western foreign policy. Its support for authoritarian regimes in Africa is readily noticeable, and its soft power has drastically eroded. As suspicions arise that Russia’s growing assertiveness in Africa is a driver of instability, its approach to governance encourages pernicious practices, such as kleptocracy and autocracy in Africa.

Over the years, Russia has fallen short of delivering its pledges and promises, with various bilateral agreements undelivered. Heading into the July 2023 Russia-Africa Summit in St Petersburg (unless the proposed date and venue change, again), Russia looks more like a ‘virtual great power’ than a genuine challenger to European, American, and Chinese influence.

What is particularly interesting relates to the well-researched report by Ovigwe Eguegu, a Nigerian policy analyst at Development Reimagined, a consultancy headquartered in Beijing, China. His report was based on more than 80 media publications dealing with Russia’s military-technical cooperation in Africa. His research focused on the Republic of Mali and the Central African Republic as case studies.

The report, entitled Russia’s Private Military Diplomacy in Africa: High Risk, Low Reward, Limited Impact,  argues that a quest for global power status drives Russia’s renewed interest in Africa. Few expect Russia’s security engagement to bring peace and development to countries with which it has security partnerships.

While Moscow’s opportunistic use of private military diplomacy has allowed it to gain a strategic foothold in partner countries successfully, the lack of transparency in interactions, the limited scope of impact, and the high financial and diplomatic costs expose the limitations of the partnership in addressing the peace and development challenges of African host countries, the report says.

Much of the existing literature on Russia’s foreign policy stresses that Moscow’s desire to regain great power has been pursued largely by exploiting opportunities in weak and fragile African states.

Ovigwe Eguegu’s report focuses on the use of private military companies to carry out ‘military diplomacy’ in African states, and the main research questions were: What impact is Russia’s private military diplomacy in Africa having on host countries’ peace and development? And: Why has Russia chosen military diplomacy as the preferred means to gain a foothold on the continent?

He interrogates whether fragile African states advance their security, diplomatic, and economic interests through a relationship with Russia. Overcoming the multidimensional problems facing Libya, Sudan, Somali, Mali, and Central African Republic will require comprehensive peace and development strategies that include conflict resolution and peacebuilding, state-building, security sector reform, and profound political reforms to improve governance and the rule of law – not to mention sound economic planning critical for attracting the foreign direct investment needed to spur economic growth.

In the report, Eguegu further looked at the geopolitical dynamics of Russia’s new interest in Africa. He asserted that during the Cold War, the interests of the Soviet Union and many African states aligned along pragmatic and ideological lines. After independence, many African countries resumed agitation against colonialism, racism, and capitalism throughout the 1970s and 1980s. The clash between communism and capitalism provided ample opportunity for the Soviets to provide support to African countries both in ideological solidarity and as practical opposition to Western European and US influence in Africa.

Since the Soviet collapse in 1991, Russia has rekindled relationships with African countries for myriad reasons – but these can largely be attributed to pragmatism rather than ideology. More specifically, Russia’s interactions with African states have been multi-dimensional ranging from economic and political to security-oriented.

He offered the example of Moscow’s relationships with Eritrea and Sudan, which ultimately gave Russia some influence and leeway in the critical Red Sea region and countered the influence of the US and China. But the main feature of Russia’s policy is mostly ‘elite-based’ and tends to lend support to illegitimate or unpopular leaders.

The report also highlighted the myriad socioeconomic and political challenges plaguing a number of African countries. Despite these developments, some have struggled to maintain socioeconomic and political stability. The spread of insecurity has now become more complex across the Sahel region. The crisis is multidimensional, involving political, socioeconomic, regional and climatic dimensions. Good governance challenges play their own role. Moreover, weak political and judicial institutions have contributed to deep-seated corruption.

Conflict resolution has to be tied to the comprehensive improvement of political governance, economic development, and social questions. Some fragile and conflict-ridden African countries are keen on economic diversification and broader economic development. However, progress is limited by inadequate access to finance and the delicate security situation.

According to the International Monetary Fund, these fragile states must diversify their economies and establish connections between the various economic regions and sectors. Poverty caused by years of lacklustre economic performance is one of the root causes of insecurity. As such, economic development and growth would form a key part of the solution to regional security problems.

Analysts, however, suggest that Russia utilizes mercenaries and technical cooperation mechanisms to gain and secure access to politically aligned actors and, by extension, economic benefits like natural resources and trade deals.

Arguably, adherence to a primarily military approach to insecurity challenges is inadequate and not the correct path for attaining peace and development. Furthermore, fragmented, untransparent and unharmonized peace processes will impede considerably sustainable solutions to the existing conflicts in Africa.

Worse is that Russia’s strengths expressed through military partnerships fall short of what is needed to address the complexities and scale of the problems facing those African countries. Moscow certainly has not shown enough commitment to comprehensive peacebuilding programs, security sector reforms, state-building, and improvement to governance and the rule of law.

Surely, African countries have to begin to re-evaluate their relationship with Russia. African leaders should not expect anything tangible from meetings, conferences and summits. Since the first Russia-Africa summit held in 2019, very little has been achieved. Nevertheless, not everything is perfect. There is some high optimism that efforts might gain ground. The comprehensive summit declaration, at least, offers a clear strategic roadmap for building relations.

At this point, it is even more improbable that Moscow would commit financial resources to invest in economic sectors, given the stringent sanctions imposed following Putin’s invasion of Ukraine. The impact of sanctions and the toll of the war on the Russian economy is likely to see Moscow redirect its practical attention towards ensuring stability within its borders and periphery.

Notwithstanding its aim of working in this emerging new multipolar world with Africa, Russia’s influence is still comparatively marginal, and its policy tools are extremely limited relative to other international actors, including China and Western countries such as France, European Union members, and the United States. This article was also published at Geopolitical Monitor.com

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Lukashenko Hands Over Agricultural Equipment to Zimbabwe

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Belarus President Lukashenko and Zimbabwean President Mnangagwa agricultural equipment

By Kestér Kenn Klomegâh

On January 30, Belarusian President, Alexander Lukashenko, paid a working visit to hand over in a special ceremony Belarusian agricultural vehicles, tractors and equipment to President Emmerson Mnangagwa in Harare, Zimbabwe.

“First of all, I want to thank the Americans and the entire Western world for having imposed sanctions against us. Otherwise, American and German tractors would have come instead of Belarusian ones to this huge field,” Lukashenko said.

The Belarusian leader noted that in Zimbabwe, there are the friends of Belarus, with whom Minsk is building cooperation for the sake of achieving the common good.

After years of negotiations, Zimbabwe finally received its $58 million farm mechanization facility from Belarus, while another deal worth $100 million was signed, according to reports from Zimbabwe’s presidency in Harare.

Zimbabwe and Belarus agreed on assembling 3000 tractors. They also agreed to supply Zimbabwe with different kinds of machinery and equipment made in Belarus for the agriculture and timber industry. Both have further agreed to establish a mechanization programme for the farming and timber industries.

It provides for over 800 units of equipment to be delivered in two batches. These include, among others, 60 self-propelled grain harvesters, 210 precision seed drills, 474 tractors of different power capacities, fifth wheel trucks with semi-trailers for transportation of heavy equipment and four dump trucks.

The agreement makes provision for other equipment such as six semi-trailers with hydraulic manipulators for transportation of construction machinery, 10 drop-side trucks, firefighting equipment critical in forest business, cities and other communities and emergency rescue operations. The agricultural equipment also includes 30 motorcycles and a complete set of spare parts for every type of machinery and equipment delivered.

Zimbabwe has been looking for foreign partners from other countries to transfer technology and industrialize its ailing economy. The report said that the government had launched a similar facility from a US company, John Deere, estimated at $50 million, intended to boost agricultural production. Negotiations are also underway with Chinese manufacturers to set up bus assembling plants locally after the government recently procured buses from the Asian country.

Zimbabwe and Belarus officials noted that the unique relationship would help in technical skills transfer and transform the agricultural sector in Zimbabwe.

“The implementation of the project involves an approach that includes not only full responsibility regarding warranty and service support, provision of spare parts, training of local specialists, but also providing advanced technologies, comprehensive decisions and solutions in agriculture for every agricultural period from cultivation, seeding, irrigation, planting to crop harvesting,” according to the report from Zimbabwe’s Ministry of Agriculture.

In addition to the statement, the Belarus cooperation deal and the commissioned John Deere project for the supply of agriculture mechanization equipment were a culmination of the re-engagement policy of President Emmerson Mnangagwa.

The principle for re-engagement and engagement is open to all countries worldwide. Zimbabwe is ready to cooperate in business with external countries and for the benefit of the people. President Mnangagwa has reiterated that Zimbabwe is open for business.

Mnangagwa’s working visits to Minsk have helped to break barriers that have impeded progress in its economic diplomacy and to seek increased business cooperation with Belarus, an ex-Soviet republic and a member of the Eurasian Economic Union. The Eurasian Economic Union members are Armenia, Belarus, Kazakhstan and Russia.

Zimbabwe is a landlocked country in southern Africa. Mineral exports, gold, agriculture, and tourism are the main foreign currency earners of this country. The mining sector remains very lucrative. Its commercial farming sector is traditionally another source of exports and foreign exchange. In the southern African region, it is the biggest trading partner of South Africa. Zimbabwe is one of the members of the Southern African Development Community (SADC).

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Interest in Netflix Stocks Jumps 131% After Oscar Nominations

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Interest in Netflix stocks

By Aduragbemi Omiyale

Interest in Netflix stocks went up by 131 per cent, with signing-up to the streaming platform increasing by 166 per cent after sweeping 15 nominations across numerous categories at the Academy Awards nomination announcement.

On January 24, 2023, Oscar nominations were released, and an analysis of Google search data by AskGamblers showed that Netflix sign-up exploded over to double the average search volume in one day, an unprecedented increase in movie fans looking to stream some of the most popular titles.

Netflix’s most nominated film is All Quiet on the Western Front, a German film set during World War I. The film was nominated nine times in categories such as Best Picture and Best Cinematography. Other feature-length titles from Netflix, such as Blonde, Guillermo Del Toro’s Pinocchio and The Sea Beast, also gained nominations, as well as two documentary short films.

“The Academy Awards are the pinnacle of the awards season, with many filmmakers and studios hoping for recognition from the Academy in this latest nomination announcement.

“With 15 nominations given to films produced by Netflix, it will be interesting to see if these searches translate into sign-ups to the platform and if Netflix will receive even more new customers if they win big during the ceremony in March,” a spokesperson for AskGamblers commented on the findings.

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