Efforts To Increase Bilateral Trade Between Russia And Africa Steadily Growing – OpEd

In the new economic reality with markets becoming competitive, the importance of exports is increasingly drawing attention of both government and private investors. Generally, exporters need support both through foreign economic lines and through business networking channels. 

“It is important to note that there is huge competition in new markets, have already established rules and have their own players. Russian companies have to master them virtually from scratch. The synergy in the work requires creating an effective system of  support measures for exporters,” explained General Director of the Russian Export Center Veronika Nikishina.

It is a two-way road – foreign countries are looking to Russia, and Russia is also looking for suitable market niches and to establish cooperation between local businesses and Russian companies, and then accompany specific export transactions at each stage of the project life cycle, according to Nikishina.

The first direction is connected with the retention and strengthening of the positions of Russian products in the traditional markets abroad. The second is the development of new promising markets that can accept for sales of Russian products.

With the deepening instability between Russia on one side and the United States and Europe on the other side, Russia is diverting its trade towards Asia and Africa. Reports indicated that in 2022 Russia, under the Made in Russia brand, participated in a number of international exhibitions and undertook some business missions to Asia and Africa. Scanning through the report, it only listed Egypt and South Africa in the African region.

On the other hand, while Asian countries are making efforts to penetrate into Russia and the Eurasia markets, African exporters are very slow due to a number of factors. The Russian and Eurasian regions are simply unknown and market conditions remain unexploited. There are other questions relating to import-export regulations, customs and tax preferences, and logistics.

With the current stringent sanctions by United States and Europe against Russia, there was a massive opportunity for African producers to develop their own trading relationships with Russia, Managing Director at the Catalyze – International Events, Rex Bowden told me an interview after the 27th World Food Moscow exhibition held from 17-20 September in Moscow.

While European Union countries and Turkey have been banned from exporting some key food and beverage products to the Russian Federation, a number of African countries have identified this market opportunity. South Africa and Egypt, as examples, have had a constant growth in trade to Russia, whereas exports from other countries around the world have decreased dramatically, he explained.

According to Bowden, “Africa fresh produce is also growing due to massive international demand and there has been a steady growth in the output in Africa. All these factors point towards continued growth into Russia from African countries.”

The World Food Moscow exhibition has attracted a number of African countries, including South Africa, Egypt, Tunisia, Morocco, Algeria, Nigeria, Kenya, Tanzania and Rwanda. These African countries have shown their preparedness to cooperate and are still looking at the possibility to boost exports of agricultural products especially fruits and vegetables to Russian food market to help fill in the gap after President Vladimir Putin slapped sanctions that severely limit food imports from those European Union countries.

For instance, Egypt exported $26.8 billion worth of goods globally. Egyptian food companies have spotted a huge opportunity to get their products to lucrative market in Russia. The future looks great for Egyptian produce in the Russian food market. Egyptian exports to Russia increased by 30% according to Russian Trade and Industry Ministry. 

As with all exporters, there are still some key challenges such as competition from other African producing countries, namely South Africa and Morocco. Ethiopia specializes in flowers while Kenya export coffee and tea. Over the past few years, South Africa and Egypt have been the biggest represented countries at World Food Moscow. Egyptian food producers showcased fruit, vegetables, confectionery, tea, coffee and a range of meat produce. West Africa, with its tropical fruits, has missed the World Food Moscow.

“Russia has a huge and fantastic consumer base for agricultural products from Africa. Be it fresh tropical fruits and vegetables, or the processed ones, dried or canned,” Rex Essenowo, Member of the Board of Trustees of Nigerians in Diaspora Europe (NIDO) and Senior Executive of Asian Africa Trade, a Moscow based business lobbying NGO, told me by phone.

As Western sanctions on Russia still loom, agricultural ministries and export promotion agencies in West African countries should come out boldly to help their farmers to perform better by utilizing these new market opportunities in Russia. There is absolutely no need complaining about lack of information. It’s time to make a good use of their foreign missions and the strength of the African, Essenowo suggested.

South Africa’s Economic Counsellor at the Diplomatic Representative Office in Moscow, Moloko Leshaba, said that “South Africa has continued to see positive growth in exports to the Russia in a number of products. Bottled wines have been growing at more than 10 percent in the last four years, increasing the number of South African wine brands in the country.”

He, however, observed that “Russia is actively looking for alternative suppliers of food and beverages to mitigate the effects of sanctions. South African companies have the opportunity to expand into a receptive market in Russia.”

Philip Mundia Githiora, who is the Minister Counsellor at the Kenyan Embassy in Moscow, pointed out explicitly that Russia offers a large market for Kenyan agricultural products and that Kenya already exports some agricultural products including cut-flowers, tea and coffee to the Russian Federation.

He explained to in an interview that “a preferential trade agreement with Kenya in particular and Africa in general would be a positive step because such agreements hasten the progress of trade negotiations, leads to the achievement of timely, substantial reduction in barriers to trade, particularly agriculture, non-tariff barriers, and dispute settlement procedures, and stimulate economic growth and development.”

Over the years, the African diplomatic community in the Russian Federation has asked the Russian government for an initiative to waive its import tariffs on or grant special trade preferences for African agricultural exports to Russia.

“This might help potential African exporters looking to transact agro-business or searching to export fruits and vegetables to Russia’s burgeoning market under new preferential trade agreements, a significant step that will strengthen Russia-African trade relations,” an out-spoken African Ambassador told me in an interview by phone and asked that his name be withheld.

According to the Association of Russian Agricultural Products Importers, Russia has a long-term partnership agreement with South Africa and other African countries. South Africa was granted by the Russian government a preferential status in 2003, thus provided a realization of double increase export of SA fruits to Russia.

The Association is currently working with government authorities on removal of artificial barriers for import of fruits and vegetables from foreign countries to Russia. It says that the biggest and reliable importers covering about 60-70% of Russian fresh produce market, provides an excellent opportunity for African companies to enter Russian market. It is very simple method: they have to formulate their possibilities, confirm their export-ready potentials and send all these and other relevant details such as profile of the exporting companies.

In another interview, Alisa Andreevna Prokhorova, Managing Director for International Activities and Interaction with Business Councils, and Group of companies of the Russian Export Center, explained that Russia has set the grounds for raising trade collaboration across various areas and work towards a new dynamism in the existing economic cooperation with African countries.

Prokhorova further stressed that as the African continent undergoes positive transformation, platforms for dialogue on trade between Russia and Africa are emerging too. She refers to the newly created continental free trade zone in Africa for potential Russian investors and enterprises, facilitating their quest for interaction with industry organisations in sub-Saharan African countries. 

In her interpretation, first Russian companies do not have enough resources to engage in an investment expansion. The market is potentially the largest, Africa is the continent of the future, but at the moment, the demand is generally limited. 

Secondly, the USSR (Russia’s predecessor, the Union of Soviet Socialist Republics) was comparatively very active in Africa. It had built and invested a lot, so since those times, Russia has a positive image. Besides the past achievements, it is necessary to form an economic strategy for the future. 

Between and Russia and Africa, the development of bilateral trade relations in the business environment depends further on a number of factors. To improve the situation in two-way trade, it is necessary to develop state cooperation. Moreover, the remoteness and insufficiency of developed transport networks with Africa are also vital issues of bilateral cooperation. The elimination of trade barriers and dialogue at intergovernmental commissions will allow countries to improve two-way trade links.

The African free trade zone opens up opportunities for the free movement of services, goods, capital and labour in the region. This reduces costs and facilitates trade between countries, making Africa even more attractive to other states. It increases the attractiveness of the African market and makes it more significant for Russian exporters. 

The African single market, which would be the world’s biggest free-trade zone by area when it kicks into full gear in 2030, became operational in January 2021 and has a potential market of 1.3 billion people with a combined gross domestic product of $2.6 trillion.