After the second Russia-Africa summit held in St. Petersburg from July 27-28, media reports indicated South Africa’s continues play of Russian roulette with its economy. Several reports underlined the historical fact that Russia had contributed tremendously during its political struggle to attain independence, but also highlighted Russia’s extremely low level of economic engagement and investment in the southern African nation.
Research establishes the fact that Russia accounts for a paltry 0.2% of South Africa’s global export trade, while the United States, United Kingdom, and the European Union account for a combined 35%, with China around 9%. Energy deficit has crippled industrial operations and supplies for domestic use has largely been reduced. Social discontent, as a result of the crisis, has engulfed every corner in South Africa.
Russia and South Africa have had good bilateral relations and both are members of BRICS (Brazil, Russia, India, China and South Africa), but the current level of economic cooperation could be described as unjustifiable and unacceptable in these relationships. South Africa, widely considered as economic power in Africa is currently experiencing the worst economic crisis in its history.
Mark-Anthony Johnson notes in his opinion article early August that the country risks becoming bankrupt for its relationship with Russia, which adds virtually nothing to the economy, state revenues, economic growth, job creation, socioeconomic stability, and investor sentiment.
South Africa has been hit with problems ranging from energy deficits, collapsing industrial production, rising tensions among the large labour force. For instance early August, South African business leaders told President Cyril Ramaphosa that the jobless rate could rise to 38.1% by 2030 without urgent action to solve the country’s energy, logistics and crime crises. Unemployment in South Africa is already among the highest of more than 80 nations tracked by Bloomberg.
South Africa’s Investec Chief Annabel Bishop, has also given some detailed appraisal and analysed critical setbacks in the current Russia-South African bilateral cooperation. Annabel Bishop explained the dire consequences of entertaining relations with Russia – a country that has continued to push war with Ukraine. Russia began the war in February 24, 2022 and it has shattered the global economic system. Russia-Ukraine conflict has adversely impacted on Africa.
Concerns arose when the United States formally indicated that South Africa was in danger of being ousted from the African Growth and Opportunity Act (AGOA), losing its trade benefits due to its love of Russia. Since its inception more than two decades ago, the African Growth and Opportunity Act (AGOA) has offered Africans the opportunity to engage and establish business networks from Africa to the United States and vice versa. It offers condition as a “stepping stone to address regional and global challenges,” especially with Africa’s young and entrepreneurial population.
In a letter to the Secretary of State Antony Blinken at the beginning of June, US legislators said that there are “serious concerns with current plans to host this year’s AGOA Forum in South Africa” and that “actions by South Africa call into question its eligibility for trade benefits under AGOA.”
This development came as United States Intelligence suggested that South Africa’s government has deepened its military relationship with Russia over the past year, as accusations suggested a Russian cargo vessel subject to US sanctions docked in South Africa where the government covertly supplied Russia with arms and ammunition that could be used in its illegal war in Ukraine.
On top of this, South Africa held joint military exercises with Russia and China, authorised a Russian military cargo plane (also subject to United States sanctions) to land at a South African air force base, and continues the push to host the BRICS Summit, where the government aims to strengthen its ties with China and Russia.
With an estimated population of 58 million, South Africa is the southernmost country in Africa. Perhaps, this South Africa’s love for Russia might only be justifiable if there were massive economic upsides to strengthening ties with the Russian Federation. However, it’s the exact opposite.
That however, President Vladimir Putin used the opportunity during bilateral discussions with his South Africa President Cyril Ramaphosa at the second Russia-Africa summit to re-emphasize that Russia-South Africa relations are based on the principles of strategic partnership, with interaction becoming more diverse and varied.
“We have established a multi-level political dialogue, and our trade and economic ties and cooperation are making progress. In 2022, mutual trade posted growth of 16.4 percent, which is a solid indicator. I think absolute figures could also be higher, but $1.3 billion is actually a good figure,” Putin said.
In his response, Ramaphosa explained that “what is particularly pleasing is that Russia conducts its relationship with Africa at a strategic level, and it conducts it with a great deal of respect and recognition of the sovereignty of African states. Russia has continued to be supportive of Africa as it did in the past, even during the days of the Soviet Union.”
But specifically relating to Russia’s relationship with South Africa, Ramaphosa noted that “at the investment level, there is quite a number of Russian companies that have invested in the South African market, as there are companies from South Africa that are also investing in the Russian market.”
Ramaphosa expressed wariness over low economic engagement. South Africa has to experience more growth in exchanges of trade. Cooperation should now be much broader in the energy sector. Currently, South Africa is going through an energy crisis, and could learn a lot and do a lot together with Russia on the energy side.
South Africa and Russia have lately drawn criticisms. So let’s hope that Moscow will be able to fully use this leverage. Nevertheless, the question arises – what, in fact, Africa can offer Russia? Doing business there is still very risky. Therefore, making investments in disadvantaged countries, the impact on which is very limited, is a dubious prospect, argues Viktor Birykov in his Russian article published in Military Review.
With the global complexities and contradictions, smart African nations prefer Russia play a role by investing in Africa, but this does not mean that other external partners won’t capitalize on the competitive environment to come to Africa. In profitable terms, Africa should have many partners, especially with the creation of a single free trade area in the continent. Generally accepted fact is that Africa’s burgeoning population of 1.4 billion presents multifaceted economic opportunities there.
Despite unprecedented pressure from the West, the summit was held. Now Africa is looking forward to have a unique economic engagement, not rhetorics on neo-colonialism. It was very noticeable throughout the summit that Russia aspires to build a truly strategic and resonating diverse partnership with Africa. Understandably, Russia has offered a lot of economic initiatives to its African friends and colleagues, but the simple question remains – to what extent these ambitious economic initiatives could effectively and practically be realized in South Africa and across Africa.