The Annual General Meeting of Shareholders of Afreximbank has set the stage for the new journey the Russian Federation has decided to embark upon with Africa. Russia joins the path well-trodden by China and India to forge a new partnership with Africa, a relationship built on trust and a felt need for mutual prosperity. But Africa and Russia have to deepen further their friendship on the basis of business and more active interactions to bring economic prosperity to both Africa and Russia.
Afreximbank President and Chairman of the Board of Directors, Dr. Benedict Okey Oramah, presented the 2019 African Trade Report, an analytical survey of African trade, the June Economic Conference held in Moscow, capital of Russia. It attracted more than 1,500 participants, many of them from Africa.
More than 100 speakers, including ministers, central bank governors, subject matter experts, business leaders, representatives of international trade organisations, export credit agencies, African and global trade development experts, and academics, spoke during the three days of the meetings, which opened on 20 June. The Annual Meetings focused on the theme “Harnessing Emerging Partnerships in an Era of Rising Protectionism.”
Oramah said: “It is vital that Africa grasps the economic growth opportunities flowing from the African Continental Free Trade Agreement, growing domestic demand and population and our ever-closer investment and trading links with emerging partners in the South. We must exert concerted action to ensure that we develop, industrialize and diversify our industries and support infrastructure to foster regional integration and participate fully in regional and global value chains.”
Of great importance in the changing world, African political and corporate business leaders are consistently looking for emerging partners who are eager to assist the economic development through sectoral and infrastructure investments across the continent and embrace stronger trading links with Africa, according to Oramah.
Oramah, however, believes that Russia represents one of such partners that Africa looks up to. It could be a source of investment that Africa needs to develop its infrastructure, and transfer technology to mining and processing of raw materials. Russia could be a source of non-debt creating investments that Africa needs in key areas, such as rail, aviation, healthcare and petrochemicals.
He questioned why there is no reason 2-way trade that at 2018 levels, about US$22 billion, far below potential cannot be increased rapidly. Afreximbank predicts Russia-Africa bilateral trade flows can easily exceed 40 billion U.S. dollars by 2023.
There are many indicators that support the forecast. Since the past three years when Russia began to re-engage actively with Africa, trade values have risen rapidly, with two-way trade rising by about 70 percent between 2017 and 2018. Russia is also making concerted efforts to promote trade and investment relations.
In December 2017, Russia Export Centre joined the shareholding of Afreximbank providing an institutional platform for promoting Africa-Russia trade. That partnership has seen Afreximbank and Russia Export Centre jointly supporting the import of critical fertilizer needs by Zambia and Zimbabwe.
Afreximbank and Russia Export Centre are collaborating in implementing mining projects with added processing capacities in Sierra Leone and Zimbabwe as well as in facilitating discussions for the establishment of a petrochemical plant in Angola and Nigeria under Joint Ventures between Russian and Angolan entities.
Under a Memorandum of Understanding Afreximbank entered into with Russia Railways, bringing active participation of Russia in rebuilding Africa’s rail infrastructure just as Russian aviation companies are exploring new markets across Africa.
The Strategy for Export Trading Companies launched during the conference as one of the key focal points for the strengthening of trade and economic relations between Russia and Africa.
“The African continent currently has enormous potential as a sales market. Many African countries are enacting economic reforms, demand is growing for high-quality and competitive products. Russian businesses are interested in this niche, and our goods are already competitive in terms of price and quality. We plan to increase export volumes in the next few years,” said Andrey Slepnev, Chief Executive Officer of the Russian Export Center (REC).
For many political leaders, experts and business investors Africa is the last frontier. It is the last frontier because it has huge natural resources still untapped, all kinds of emerging business opportunities and constantly growing consumer market due to the increasing population. It has currently become a new business field for global players.
In his contribution, South African based Senior Expert on Foreign Policy, Dr Kelvin Dewey Stubborn, has urged Russian investors and industry leaders to make a headway by playing consistently key roles in the transformation of Africa’s trade and industrial landscape with the establishment of the African Continental Free Trade Area (AfCFTA).
According to him, the opportunities for investors and traders in the AfCFTA market are enormous. For example, SADC offers opportunities for value addition to promoting industrialisation through the development of regional value chains. The opportunities for trade in intermediate and final goods within the AfCFTA market.
“The large market offers enhanced opportunities for joint ventures with foreign companies looking for reliable partners in Africa. This is just a sample of opportunities. Investors and traders are encouraged to move in as soon as the market becomes operational to capitalize on first mover advantages,” he suggested.
“Indeed, through frequent interactions, Russia has to discover specific expectations, new directions and how to deal with Africa. The games there have considerablly changed, many global players have adopted investment strategies more appealing and acceptable for Africa. That has to focus on development-oriented projects and how to seek more cooperation on employment creation across sectors. That’s the best way to sustain peace and eradicate conflicts in Africa,” the expert elaborated in his report.
Russia continues to strengthen its relationship with Africa due to multiple factors such as untapped abundant natural resources, improvement of the business climate, the rise of the middle-level income class and economic growth, Prime Minister Dmitry Medvedev noted in his speech at conference. He further pointed to Africa’s growing appeal to and demand for high-tech, telecom investors and other products that could make swift business connection with Russia.
“All these things have already made Africa attractive for investments, and not merely in producing industries but, which is of particular importance, in high technologies and telecommunications,” Medvedev said.
According to certain estimates, about a half of the resource potential of the planet is in Africa, he argued “we therefore need to more efficiently use these resources and at the same time promote cooperation in this sphere, just like cooperation in other spheres.”
Besides those factors, there is high desire for mutual-cooperation. “It is also important to have a sincere internal desire, and such a sincere desire is present from the side of the Russian Federation and from the side of African states. We see this at different levels, including the top levels of cooperation,” Medvedev said.
Opening the conference, which attracted more than 1,500 delegates, Foreign Minister Sergey Lavrov reminded conference participants that while relying on the long-time accumulated experience of constructive partnership, Russia and Africa are confidently moving along the road of comprehensively expanding Russian-African ties.
According to the Foreign Minister, the long years of solid friendship, which has been created, gives a fresh impetus to cooperation in many spheres and provides necessary conditions for building up trade, economic and investment exchanges, as well as cooperation in banking, and for encouraging business communities to implement mutually beneficial projects in African countries.
These include the construction of the country’s first nuclear power plant and the establishment of the Russian Industrial Zone in Egypt, as well as the projects that are being implemented in Africa by such leading Russian businesses as Rosneft, Lukoil, Rosgeo, Gazprom, Alrosa, Vi Holding, GPB Global Resources and Renova.
“We can report first achievements in this sphere. Mutual trade is growing – it exceeded US$20 billion last year – and becoming more diversified. Large projects are being implemented in Africa with direct financial support from Russia,” he assertively said, and added: “I am confident that cooperation with Afreximbank, which the Russian Export Centre (REC) has joined as a shareholder, will help promote long-term trade and economic relations between Russian businesses and their African partners.”
Ambassador Albert Muchanga, Commissioner for Trade and Industry of the African Union Commission, delivered a goodwill message on behalf of the Chairman of the Commission. Later in an interview, Muchanga explained that Africa needs more Russian foreign direct investments to enhance the current Russia-African economic ties and further talked about creating a new Africa and “win-win cooperation” with foreign partners. People should forget the Africa that thrives on aid, people should see an Africa that has the capacity to create its own future and be treated as equal partners.
“We are not coming with the begging bowl. Africans have to create a big market and by creating that big market there’s going to be greater manufacturing in Africa and exportation of commodities. There is going to be greater agro-processing and Africa is going to transform itself from a net importer of food to a net exporter of food. It’s a cultural mindset that this is impossible,” argued Muchanga.
According to him, Nelson Mandela said “It seems impossible until it’s done.”
Spearheaded by Afreximbank, the Russia-Africa Economic Conference was the first of such kind to discuss effective ways of strengthening Russian-African relations with a focus on new mechanisms for exploring trade and business opportunities, and economic cooperation in Africa. Afreximbank was founded in 1993 in Abuja, Nigeria, with an authorized capital of US$5 billion. The main objectives of the bank are the development of trade between African countries and abroad. The banks’ headquarters is located in Cairo, Egypt.
Please Donate Today
Did you enjoy this article? Then please consider donating today to ensure that Eurasia Review can continue to be able to provide similar content.