World
Russia Plans New Trade, Investment Cooperation With Africa
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.
By Modupe Gbadeyanka
A funding support of up to €15 million has been provided by Swedfund for small and medium-sized enterprises (SMEs) across Africa.
The money would be managed and disbursed by a private equity initiative, AfricInvest Small Cap Fund.
AfricInvest integrates environmental, social and governance (ESG) principles with a focus on gender equality and sustainability.
The fund aims to invest at least 30 percent of its portfolio in companies that are women-led or have significant female ownership.
Moreover, climate-related objectives will be embedded in the investment process.
Swedfund’s support will help ensure that African SMEs have the resources and guidance they need to grow responsibly and effectively.
With decades of experience and a strong presence across the continent, the fund aims to invest in a range of sectors including agribusiness, healthcare, education, consumer goods, manufacturing and services, and is therefore well positioned to contribute to economic growth and social development.
The choice of SMEs is because they are a cornerstone of economic development, driving job creation and innovation.
However, many companies face significant barriers to accessing capital. This indirect investment can enable more growth-oriented investments to unlock the full potential of SMEs in Africa.
Commenting on the funding support, the Investment Director for Sustainable Enterprises at Swedfund, Sofia Gedeon, said, “This investment will allow Swedfund to expand its support for underserved businesses across Africa.
“AfricInvest aligns its investments with measurable sustainability outcomes, allowing us to drive economic growth, create jobs and promote greater inclusion. At the same time we set new benchmarks for responsible investing.”
By Kestér Kenn Klomegâh
South Africa, for the first time, heads the G20, a multilateral organization, and it is taking pecuniary measures to balance the heightening complexities around the world. With President Donald Trump in the helm of power in the United States, the most different pragmatic approach in being adopted towards a number of issues ranging from politics through the global economy to social and humanitarian parameters. Geographical regions, including Africa, are also affected to a distinctive extent.
Below is an insightful interview conducted by Kestér Kenn Klomegâh with Mr Tariq Khan, a Senior Research Associate at the Institute for Global Dialogue (IGD) associated with the University of South Africa. Tariq focuses on economic, security and diplomatic issues in areas such as Pakistan-Africa Relations, Africn Relations, and Major Powers’ relations with Africa, Asia-Africa Relations and South-South Cooperation, Maritime Affairs. In this interview, Tariq Khan discussed Global Powers, G20 and Africa relations in the emerging new world. Here are the significant excerpts.
What are the practical implications of the United States, a major contributor among G20 members, skipping South Africa’s February summit?
The absence of the United States at the South Africa G20 summit poses diplomatic and strategic connotations of some importance. As a key global economic player, the U.S. influences major policy decisions within the G20, and its non-attendance could signal a de-prioritization of Africa within its foreign policy agenda.
First, it seems that there is no real commitment to the critical issues which the African continent is facing including debt relief, fair trade and development funding. South Africa, as the only African G20 member, has been a strong advocate for the continent’s economic priorities. If the Washington give unimportance or sideline this engagement, it risks reinforcing the perception that Washington is more focused on geopolitical tensions in Europe and Asia while offering only rhetorical support to Africa.
In adding up, such a move will give BRICS a boost, of which South Africa is a component and plays a prominent role. With BRICS growing and positioning itself as an alternative to Western-led institutions, the U.S. absence might encourage African nations to deepen their economic and political cooperation within BRICS which will lead to reduce reliance on Western-dominated frameworks.
Finally, absence of US could deteriorate or weaken the trustworthiness or credibility of the G20 as an inclusive global forum. South Africa has effectively championed the inclusion of the African Union (AU) as a permanent G20 member. If the U.S. disengages from the summit, it could slow momentum for integrating African priorities into global decision-making, reinforcing existing frustrations about Western dominance in multilateral institutions.
Can South Africa’s presidency change perceptions of the G20’s role in global politics and its contributions to Africa’s development?
South Africa’s G20 presidency presents a significant opportunity to reshape Africa’s role in global governance. Traditionally, the G20 has been dominated by the economic priorities of Western and Asian powers, often sidelining the challenges of the Global South. As the only African G20 member, South Africa can drive a more inclusive agenda through three key areas:
- Reinforcing Africa’s Economic Potential: South Africa can emphasize Africa’s role as a strategic investment destination rather than just an aid recipient, advocating for reforms in global financial institutions to support Africa’s economic growth.
- Advocating for Structural Reform: Building on its success in securing AU membership in the G20, South Africa can push for concrete actions such as debt restructuring, fair trade terms, and increased voting rights for Africa in institutions like the IMF and World Bank.
- Shaping Global South Solidarity: By aligning G20 priorities with those of BRICS and the broader Global South, South Africa can challenge the perception that the G20 merely upholds Western economic dominance and instead position it as a balanced institution where emerging economies wield real influence. On the other hand, South Africa must navigate its complex diplomatic positioning. At the same time as maintaining strong Western ties, its BRICS membership and increasing alignment with China and Russia could generate tensions. Achievement will depend on its capability to bridge these divides and promote an Africa-first agenda.
In the context of a rapidly changing global landscape, do we see G20 competing or collaborating with BRICS?
The relationship between G20 and BRICS is distinguished and characterized by both competition and selective collaboration. BRICS as an organization has turned out to be more and more self-confident to challenge Western domination in global governance, mainly following its expansion to Saudi Arabia, the UAE, Egypt, Iran, and Ethiopia and other states.
This reflects a broader shift toward a multipolar world where such organizations similar to the G20 face substitute governance frameworks. Though, collaboration between G20 and BRICS remains indispensable. Several BRICS members such as South Africa, China, India, and Brazil are also in the G20 which means they have an interest in shaping both platforms rather than abandoning one for the other.
Cooperation on issues such as debt relief, climate change and development financing is promising, but ideological and strategic differences may persist. If the G20 remains inflexible in its Western-centric approach, then BRICS could become a direct competitor, attracting more nations disappointed with Western-led economic policies.
The challenge of South Africa is to balance its engagement with both which ensures that interests of Africa are advanced across multiple platforms and could not be compromised its broader economic and diplomatic objectives.
What is the future of the G20, particularly in relation to Africa, given BRICS’ growing influence?
The G20’s significance to Africa will depend on whether it can transition from symbolic commitments to tangible actions. Traditionally, African engagement with the G20 has been marked by unfulfilled promises. To remain a meaningful partner for Africa, the G20 must focus on:
- Debt Relief and Fair Financing: Many African nations struggle with unsustainable debt burdens. The G20 must push for genuine restructuring mechanisms rather than perpetuating cycles of dependency.
- Infrastructure Investment: Africa’s development hinges on infrastructure, yet financing remains a challenge. The G20 should support merged financing models that combine public and private investment in sustainable projects.
- Technology and Industrialization Support: Africa’s long-term prosperity depends on industrialization and technological advancement. The G20 must facilitate technology transfer and capacity-building initiatives that give power to African economies. If the G20 fails to deliver meaningful reforms, African nations may increasingly turn to BRICS, which is enthusiastically positioning itself as a more responsive and approachable alternative.
Should African leaders first reform the African Union (AU) and regional blocs like ECOWAS before expecting changes in global institutions?
Of course yes, African leaders must first strengthen internal institutions before expecting global institutions to treat the continent as a unified force. Weak regional organizations undermine Africa’s bargaining power in global negotiations.
Key areas for reform include:
- Financial Independence: Reducing reliance on external donors would allow the AU and regional blocs to act with greater autonomy in decision-making.
- Stronger Enforcement Mechanisms: Regional organizations need better mechanisms to uphold democratic norms and economic agreements to prevent instability from weakening Africa’s global influence.
- Policy Coordination: A fragmented Africa cannot effectively engage with global institutions. Greater intra-African coordination is needed to present a unified front in international forums. If Africa wants to negotiate from a position of strength, its institutions must be stable, credible, and self-sufficient. Strengthening the AU and regional organizations will enhance Africa’s ability to engage effectively with both G20 and BRICS.
Final Thoughts: The Vision of ‘Africa We Want’
The realization of the “Africa We Want,” as outlined in the AU’s Agenda 2063, requires strategic engagement with external partners. However, Africa must ensure that these partnerships are mutually beneficial rather than reinforcing external dependencies. South Africa’s role is fundamental in this vision. As a bridge between the West, BRICS, and the African continent, it must advocate and promote policies that advance Africa’s long-term interests and objectives. Africa’s engagement with the G20, BRICS, and other international platforms must be strategic to ensure that these institutions contribute to Africa’s broader development agenda rather than perpetuating historical imbalances. In the end, Africa’s success in the global arena will depend on its ability to take advantage from both external partnerships and internal reforms.
By Adedapo Adesanya
The Pan-African Payments and Settlement System (PAPSS), a pan-African payments infrastructure provider designed to facilitate trade on the continent is piloting an African currency market platform to boost commerce across borders in the region.
According to its chief executive, Mr Mike Ogbalu, the service backed by 15 central banks on the continent, expects to add the platform later this year.
He said this will complement its payments infrastructure that it says is currently integrated with 150 commercial banks.
“The rates will be market driven, and our system is able to do a matching based on the rates offered by the different participants in our ecosystem,” the CEO of PAPSS, told Reuters in an interview from Cairo.
The Africa Currency Marketplace, as the platform will be known, will allow parties to exchange local currencies directly, Mr Ogbalu said.
Africa has faced challenges in its foreign exchange markets with challenges ranging around liquidity.
Already, South Africa and Nigeria dominate geographically and much of the wider trading centre around local and hard currency pairs. Those seeking other African currencies must typically secure Dollars first.
However, the region has also seen some major currency reforms with countries such as Nigeria, Egypt and Ethiopia pushing ahead with efforts to move to more market-based regimes.
There have been frequent case of companies not being able to repatriate their revenue from other countries in the region, whenever violence or economic problems cause Dollar shortages in markets like South Sudan or the Central African Republic.
Mr Ogbalu cited the example of an Ethiopian airline selling Naira-denominated tickets in Nigeria, which could then exchange its naira revenue with a Nigerian company trading in Ethiopia using the Birr.
“Our system will intelligently match them and then party A will get Naira in Nigeria and party B will get birr in Ethiopia. The transaction just completes without any third-party currency being involved at all,” Mr Ogbalu said.
He also noted that companies operating in the region have been forced to take a write down every financial year to account for currency revaluations in markets with volatile currencies.
He added that others have invested in assets like real estate to try to preserve the value of their assets in such markets.
There have been attempts to use cryptocurrencies like Bitcoin to get around that problem but their usage is still low, partly due to lack of legal frameworks to support their use in markets like Kenya.
“Those are some of the things we think that this African currency marketplace will unlock,” he said.
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