Early January, Russia and four other ex-Soviet republics completed finally the creation of a new economic alliance intended to bolster their integration. The Eurasian Economic Union or popularly referred to as EAEU, which includes Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan, came into existence on January 1, 2015.
It is expected that Kyrgyzstan will become a full-fledged member from May 1, 2015. In addition to free trade, it’s to coordinate the members’ financial systems and regulate their industrial and agricultural policies along with labor markets and transportation networks.
Russia’s changing economic identity with its neighbouring ex-Soviet republics, Armenia, Belarus and Kazakhstan has opened business and economic opportunities despite the inherent teething problems associated with its creation. For instance, President Vladimir Putin said that the new union will have a combined economic output of $4.5 trillion and bring together 170 million people which means a huge potential market for business. “The Eurasian integration is based on mutual benefit and taking into account mutual interests,” Putin said after business talks with his colleagues in the Kremlin.
Some experts say the union members will benefit largely members and other foreign countries if the emerging opportunities are exploited strategically, while other analysts have explained in an email to Buziness Africa that foreign countries such European countries and Asian states, expecially all three major powers of Asia – China, Japan and India are ready to take their share of the new developments. But on the other hand, the experts interviewed for this story are, however, skeptical as to what extent African business leaders, investors and political elites will recognise, interprete and explore the profitability of the new geostrategic economic arrangement in the region.
The key question is who can benefit from EAEU. According to an official statement posted on Kremlin website on Decemebr 23, 2014, “there is growing interest in cooperating with the Eurasian Union among countries in other regions. Thus, the drafting of a free trade agreement with Vietnam has entered its final stage. We are working on similar agreements with Turkey, India and Israel.”
In addition, the Eurasian Economic Commission (EAEC) press office explained in an email query to Buziness Africa media that foreign countries interested in cooperation with the Union have to apply to the EAEC and if all the necessary conditions fit both parties, the consultations about one of the forms of cooperation (e.g. Free Trade Agreement) could be started.
The press office cited in the report sent by email to Buziness Africa that “EAEC has negotiations with Vietnam about Free Trade Agreement. At this time, we have eighth round of negotiations, that were dedicated to existing provisions of the future agreement. The parties believe that they manage to reach a fair balance of benefits for the both of them and provide for necessary tools that would mitigate the risks for entrepreneurs. But the work is not over yet, the remaining issues will be solved in further consultations.”
According to media reports, East African Community (EAC) countries could soon be able to export tea, coffee and horticultural products to the Eurasian Economic Commission (EAEC) member states without going through Western Europe. According to the article based on official statement issued after a meeting by the EAC Ambassadors in the Russian Federation, this was one of the resolutions agreed on during a recent meeting between EAC ambassadors in the Russian Federation, “the meeting was aimed at learning about the EAEC integration process and development of the economic bloc with view of exploring business opportunities for EAC member states.”
EAC diplomats agreed that traders from the region pay custom taxes at only one entry point to the EAEC bloc to boost exports from East Africa. Once in effect, the EAEC bloc will represent a single economic market of 171 million people with a gross domestic product of $3 trillion. The East African Community (EAC) is a regional intergovernmental organisation of the Republics of Burundi, Kenya, Rwanda, the United Republic of Tanzania and the Republic of Uganda, with its headquarters in Arusha, Tanzania.
Last year, a high-powered delegation of officials from the Eurasian Economic Commission also visited South Africa to explore economic relations with SA and Africa broadly. Headed by Tatyana Valovaya, a member of the Board of the Commission responsible for Integration and Macroeconomics, the delegation held discussions with South African business representatives, political actors and academics on significant economic opportunities for South Africa and Africa.
This visit received no media reports or publicity but this does not mean that it was insignificant. The key questions are what is the potential for SA-Russia relations to be the springboard for relations with the whole of Eurasia generally or the Commission area particular? What would be the key drivers and pillars of such relations? What economic and trade potential lies is such relations? How should South Africa’s foreign policy and Russian foreign policy gurus be thinking through this development?
Egypt is one of Russia’s leading trade partners in the Arab world and may soon conclude an agreement to establish a free trade zone with the Eurasian Economic Union (EAEU), according to the Russia’s Chamber of Commerce and Industry. Experts argue that this will contribute to the revitalization of trading activities and develop deeper cooperation in a number of fields between Egypt and member countries of EAEU.
Victor Spasskiy, the director in charge of integration development, said there are initiatives to expand the bloc to include Armenia and Kyrgyzstan. Local business people were encouraged to take advantage of the immense opportunities in the bloc to develop new business ties with the EAEU business community. Possible exports from EAEC include natural resources, human capital, technology in manufacturing industry and farming machinery.
Some experts are skeptical pointing to the teething problems including differences in approach to varying issues in the region. The creation of the Eurasian Economic Union parallels two deepening interrelated crises: the growing rift between Russia and the West over the conflict in Ukraine and the looming economic crisis in Russia.
Since the beginning of 2014 the ruble lost almost half of its value and the inflation in Russia has exceeded 11%. Some of the member-states of the Eurasian Union (Belarus and Kazakhstan in particular) have been growing more and more ambivalent about Russia’s increasingly heavy-handed attempts to reassert its influence in the former Soviet spaces, according to views of Maxim Matusevich, director of the Russian and East European Studies program at Seton Hall University in New Jersey.
Historically, he maintained that African states have been exceptionally sensitive to any real or perceived efforts by “developed” nations to establish neocolonial control in their former zones of influence. And by a number of measures, Russia’s muscle-flexing in the so-called “near abroad” can be perceived as neocolonial.
“I wouldn’t be surprised if some African states responded to such aggressive expansionism with caution or even distaste. So far only Egypt, which under the new military leadership has grown closer to Putin’s regime, expressed any interest in possible closer ties with the EAEU. But there exist far more specific reasons, for which, I believe, the creation of the Eurasian Union will have little relevance for Africa,” the director said.
Matusevich pointed out: “The member-states of the union have little to no manufacturing output, the two pillars of the union (Russia and Kazakhstan) have economies almost entirely based on oil and gas exports. It is not clear what exactly they can offer to African nations, especially in the context of the deepening economic crisis in Russia. I expect that just like during the previous period of economic turmoil in the 1980s and 1990s Russia and some of its post-Soviet allies will cut down on their ties with Africa rather than expand them. Africa, in my opinion, has very little either to gain or to lose from the creation of the Eurasian Economic Union.”
In an address at the Supreme Eurasian Economic Council meeting in December 2014, Putin further explained that Memorandum of Understanding (MoUs) were drafted with ASEAN and Mercosur states. “I am certain that expanding ties with all countries and organisations both in the East and in the West on the basis of equality and mutual benefit meets the interests of our Union as well. There are great new challenges ahead of us. We are to ensure the stable and efficient functioning of the Eurasian Union and continue strengthening its institutional basis,” Putin said assertively.
Among the priorities is the need to make the Union more competitive and attractive for investors, to launch joint projects and create high-technology jobs in the oil and gas sector, in the metals and chemical industries, aviation, machine-building and the space industry. In addition, to remove the existing barriers that impede the free movement of goods, services, capital and labour, and to implement plans to form as of 2016 a common market of pharmaceutical and medical products.
Putin added: “We will also approve a list of services sectors where the common market will become functional on January 1, 2015. This will benefit construction workers, wholesale and retail traders and companies working in tourism. It is important that we do not drag our feet with the mutual approval of licences for these activities issued by our respective countries. This will make it possible for our companies to take full advantage of the benefits of integration right from the start.”
The Treaty on the establishment of the Eurasian Economic Union was signed by the presidents of Russia, Belarus and Kazakhstan on May 29, 2014 in Astana. The agreement is the basic document defining the accords between Russia, Belarus and Kazakhstan for creating the Eurasian Economic Union for the free movement of goods, services, capital and workforce and conducting coordinated, agreed or common policies in key sectors of the economy, such as energy, industry, agriculture and transport. The agreement stipulates the transition of Russia, Belarus and Kazakhstan to the next stage of integration after the Customs Union and the common economic space.
Addressing Economic Challenges in Africa Through Deep Investments
The African continent comprises a diverse collection of countries, each with its own set of challenges. The governance of individual territories, regions, and countries requires tremendous care and attention, particularly where peace and stability are concerned. Leadership is central to the prosperity of the African continent, particularly economic development. If the authorities are perceived as legitimate, peace and prosperity have a better chance of succeeding. The political culture and climate of the African continent is an important barometer of where Africa will be as an emerging force in the global economy.
Currently, Africa’s 54 nations comprise approximately 25% of the countries making up the United Nations. The interaction of regional and national governance is sacrosanct. Over the years, Africa has undergone periods of violent change, from precolonial to postcolonial, and modern-day leadership. Given that European cartographers drew the boundaries of many African nations, the ties between people and their leaders are often fraught with difficulties. Over the years, African governments have redrawn their boundaries to better reflect cultural, political, and social nuances.
Over time, the conflict-ridden areas throughout Africa have eased. Multiple peace initiatives have supplanted growing conflict, and fomented a new cultural consciousness that espouses growth and development over war and conflict. While conflict still exists across many parts of Africa, the overall climate has cooled significantly from the days of rebellion and genocide. War-torn zones still exist, and development in these areas is riddled with challenges, extreme poverty, and hopelessness.
Conflict and governance are interlinked across Africa. Corruption is a widespread problem, particularly in the Central African Republic, Somalia, and South Sudan. Post-Cold War, major changes began to shape the political and social landscape across Africa. The liberalization of the USSR led to the development of civil society across Africa. Consider the Freedom House report from 1988 (17/50 countries were free or partly free) compared to the report from 2015 (31/54 countries were free or partly free).
Massive and Unprecedented Urbanization across Africa
Governance is also impacted by external forces. Global political movements, particularly the rise of India, China, Russia, and Arab states have impacted African society in many ways. These external actors necessitate economic environments which are conducive to peace and stability. The increasing urbanization of African society is yet another driver of success. The shift from rural to urban development is unprecedented. A report titled ‘Urbanization and Migration in Africa’ found a total of 53% of African emigrants living within Africa as a percentage of the total emigrants population
The migration between people is one of the most notable trends taking place across Africa. In 2017, intra-African migration was strongest in countries like South Africa, Ethiopia, Côte d’Ivoire, Uganda, Nigeria, and Kenya. Factors leading to mass migration include underdevelopment and development. Nigeria currently tops the list of countries in Africa with remittance receipts at approximately $22.3 billion (2018), followed by Egypt at $18.1 billion, Morocco at $7.1 billion, and Senegal at $2.3 billion. The rate of urbanization in sub-Saharan Africa was measured at 37.9% in 2015 and is expected to grow towards 54.8% by 2050. The figure is even greater for the continent as a whole at 40.4% in 2015, and 55.9% by 2050.
Tapping into Africa’s Rich Natural Resources
Africa is a hive of activity with respect to natural resources. South Africa is home to vast supplies of gold and coal, while countries like Angola are rich with diamonds, oil and natural gas. North African countries are the chief suppliers of crude oil, including Algeria, Cameroon, Chad, Egypt, Eritrea, Libya, Tunisia, Sudan and South Sedan. Central African countries like the Democratic Republic of the Congo, the Central African Republic, Botswana, and Angola lay claim to massive diamond supplies, cobalt, and petroleum resources. The issues of extracting these natural resources and marketing them to the world at large hinge upon the effectiveness of transportation networks, infrastructure development, and telecommunications facilities. Many African leaders are investing heavily in these areas, fast-tracking Africa’s learning curve to meet the requirements of major world players like China, the United States, and the European Union.
Spotlight on Angola: An African Giant in The Wings
Angola has substantial resources of liquefied natural gas and oil. It also boasts tremendous economic potential, given its hydropower facilities, agricultural growth and development, fisheries, gold production, iron production, and diamond production. The country also lays claim to significant international financial support a.k.a. FDI. Of course, its reliance on commodities like crude oil means that the country’s revenues are subject to extreme volatility. Among the many other challenges faced by Angola are its rising unemployment rate and social inequalities. The country, like many other African nations lacks a world-class infrastructure, and it has a fragile banking sector.
Leaders like Isabel Dos Santos, chair of Unitel, and other major companies like ZAP, Candando, Sodiba, and Efacac are convinced that the pathway to success is the result of a multi-faceted approach. Education and skills training, rural development, the provision of basic resources, access to financing, eradication of malaria and waterborne diseases, hospitals and paediatric clinics, and combating gender stereotypes are central to the success of Angola. For her part, Isabel Dos Santos has invested heavily in gender equality initiatives, such as promoting women from within the ranks, empowering local communities of women to take charge of their own economic destiny, and fostering a climate where female academic and economic development is encouraged and supported.
Angola’s GDP rate is expected to turn the corner by the end of 2019 and reach 1% growth, following three years of negative growth rates. The inflation rate has declined from 30.4% on average in 2016 to 15.9% forecast for 2019. Public debt in Angola has also declined from 71.9% in 2016 to a forecast total of 69.9% for 2019. And yet, despite these dramatic strides, Angola still battles the demons of volatile prices for commodities. The country generates approximately 90% of its revenues through crude oil exports, but its strongest resources have yet to be tapped – its people. By investing in the youth, women and men through literacy initiatives, educational development, and vocational training, business leaders like Isabel Dos Santos are confident that the economy will turn the corner for the better.
The World Bank report on Angola states that the new administration in the country is supportive of reforms geared towards macroeconomic stability. This is all conducive to economic growth and prosperity. The IMF has offered additional assistance to the country through its Extended Financial Facility (EFF) valued at $3.8 billion. While oil accounts for 33% of GDP and 90% of Angolan exports, there are factors limiting economic expansion in the current year. These include a production limit set by OPEC, and low oil prices globally. The central bank of Angola has adopted a monetary tightening policy to hedge against inflationary pressures, and this is already starting to pay dividends with reduced year-on-year inflation figures reported in January 2019. The World Bank group has committed $1.05 billion towards 9 investment projects across Angola.
Africa yet to unleash full potential of its nature-based tourism
Countries in Africa can do more to develop tourism in protected areas, which would in turn create jobs in rural places, diversify and grow their economies and improve environmental resilience in the face of growing pressures, a report has said.
Africa’s biodiversity could “transform” the continent’s economy, but at present many governments are scaling back on protection because of limited budgets needed for other pressing public needs, a report produced by conservation organization Space for Giants Club and the UN Environment Programme said. To preserve their wildlife and wild places, governments should look at protected areas not only as environmental assets but economic ones as well, with the continent’s 8,400 protected areas producing US$48 billion in revenue.
According to the paper, nature-based tourism could improve the livelihoods of many people as it generates 40 per cent more full-time employment than agriculture and provides greater opportunities for women than other sectors.
Oliver Poole, Executive Director of Space for Giants Club, said the organization “strongly believed” that the right type of nature-based tourism done in a sustainable way is a powerful conservation tool.
“That’s because it creates jobs for the local community, and it brings visitors to the national parks, creating money for wildlife services, that often have limited budgets,” he said. “But it also starts building a nature-based tourism sector that pays taxes and builds economies, making them of national importance and therefore more likely to be protected.”
Wildlife is the single biggest revenue for Africa’s tourism, with the United Nations World Tourism Organization stating 80 per cent of annual trips to Africa were for wildlife watching. And as projections point to a doubling of visitors to the continent by 2030 from the current 62 million, the report argues that additional revenue is attainable.
Ethiopia, which boasts nine UNESCO World Heritage sites, wasn’t able to attract more than 50,0000 visitors to each one in 2016. To improve these numbers, the report says the country would need to invest in better infrastructure for national parks and capitalize on its unique features, like being home to 835 bird species—a potential birdwatcher’s paradise rivalling Costa Rica or South Africa.
As the continent grapples with a growing population, poverty, climate change and a booming illegal wildlife trade, the report says important ecological areas could be lost before their value is utilized. Several places in Africa have already developed parks in ways that could threaten their natural capital, while others are planning to extract oil, minerals and other activities.
Doreen Robinson, wildlife expert at UN Environment said it was important for governments to develop partnerships with private, community and non-profit organizations to realize the full capacity of nature-based tourism in Africa and thus ensure wildlife for future generations.
“Private investment and know-how are needed to develop attractive tourism services and products, while good public management must ensure equitable business practices and reinvestment of profits into conservation of wildlife,” she said. “Ultimately this formula grows the economy, protects nature and supports human development.”
The report states only four African countries—Kenya, Rwanda, South Africa and Zimbabwe—are top nature tourism destinations, each attracting between 2–5 million visitors a year. But there is a lot of room for improvement, particularly in western Africa that has tropical forests and beaches, yet due to poor marketing hasn’t tapped its full tourism potential.
For governments to gain the most of protected areas, they should create national tourism plans for protected areas and integrate them into the economic plans of the country—that way, wild places will finally get the resources they deserve.
Saudi Iranian rivalry polarises Nigerian Muslims
A recent ban on a militant, Iranian-backed Shiite group raised the spectre of the Saudi Iranian rivalry spilling onto Nigerian streets as security forces launched a manhunt to find the alleged Boko Haram operatives who killed 65 people attending a funeral.
Nigeria, Africa’s foremost oil producer, banned the Iranian-backed Islamic Movement of Nigeria (IMN) this weekend after demonstrations in the capital Abuja to free its leader, Ibrahim El-Zakzaky turned violent. At least six people were killed.
“The Saudis watching the Iranians trying to break into northern Nigeria is almost like watching someone else try to befriend your best friend,” said Ini Dele-Adedeji, a Nigerian academic at the University of London’s School of Oriental and African Studies, referring to the region’s religious elites that have aligned themselves with the kingdom.
Saudi cables released in 2015 by WikiLeaks reveal concern about Iranian-funded Shiite expansion in West African and Sahel nations including Mali, Mauritania, Burkina Faso and Nigeria.
Mr. Dele-Adedji said Saudi and Iranian funding was “on the surface…about these countries helping out with ‘charitable work’ activities. But beyond that it’s also a way for those countries to almost create extensions of themselves.”
Mr. El-Zakzaky, a Sunni Muslim student activist inspired by the 1979 Iranian revolution, initially agitated for a repeat in his native Nigeria. When that didn’t work, Mr. El-Zakzaky went to Iran, converted to Shiism, and started wearing the white turban of a Shiite cleric.
Returning home in the 1990s, he became the leader of the Islamic Movement and turned it into a vehicle for proselytizing and gaining followers.
Things got out of hand when Nigerian troops killed hundreds of Shiites in the ancient university town of Zaria in December 2015 and arrested Mr. El-Zakzaky and hundreds of his followers. The army accused the Shiite group of attempting to kill Nigeria’s army chief-of-staff, a charge the movement denies.
Iran has been funding Mr. El-Zakzaky for years and the area of Zaria he worked in became the “mecca for the dispossessed in Nigeria,” according to Matthew Page, a former U.S. State Department specialist on Nigeria. The Islamic Movement has been receiving about $10,000 a month from Iran, he estimated.
Mr. El-Zakzaky used the money to fund soup kitchens and homeless shelters, Mr. Page said. “This was a very inexpensive way for Iran to have a toehold in Nigeria,” he said.
Ghanem Nuseibeh, founder of London-based consultants Cornerstone Global Associates estimated that Mr. El-Zakzaky’s organization operates more than 300 schools, Islamic centres, a newspaper, guards and a “martyrs’ foundation.” The network is similar to welfare systems established elsewhere by Lebanese Shiite militia Hezbollah and other Iranian-backed groups.
The Nigerian government first declared the Islamic Movement a security threat in 2017, comparing it with the Boko Haram insurgency, according to Nigerian diplomats.
Peregrino Brimah, a trained medical doctor who teaches biology, anatomy and physiology at colleges in New York never gave much thought while growing up in Nigeria to the fact that clerics increasingly were developing links to Saudi Arabia.
“You could see the money, the big ones were leading the good life, they ran scholarship programs. In fact, I was offered a scholarship to study at King Fahd University in Riyadh. I never thought about it until December 2015 when up to a 1,000 Shiites were killed by the military in northern Nigeria. Since I started looking at it, I’ve realized how successful, how extraordinarily successful the Wahhabis have been.” Mr. Brimah said.
He decided to stand up for Shiite rights after the incident in which the military arrested Mr. El-Zakzaky.
The Nigerian military said that it had attacked sites in Zaria after hundreds of Shia demonstrators had blocked a convoy of Nigeria’s army chief General Tukur Yusuf Buratai in an effort to kill him.
Military police said Shiites had crawled through tall grass towards General Buratai’s convoy “with the intent to attack the vehicle with [a] petrol bomb” while others “suddenly resorted to firing gunshots from the direction of the mosque.”
A phone call to Nigerian President Mohammed Buhari in which King Salman expressed his support for the government’s fight against terrorist groups was widely seen as Saudi endorsement of the military’s crackdown on the country’s Shiite minority.
The state-owned Saudi Press Agency quoted King Salman as saying that Islam condemned such “criminal acts” and that the kingdom in a reference to Iran opposed foreign interference in Nigeria.
Mr. Brimah’s defense of the Shiites has cost him dearly, illustrating the degree to which Saudi-funded ultra-conservatism and Iranian agitation has altered Nigerian society.
“I lost everything I had built on social media the minute I stood up for the Shiites. I had thousands of fans. Suddenly, I was losing 2-300 followers a day. My brother hasn’t spoken to me since. The last thing he said to me is: ‘how can you adopt Shiite ideology?’ I raised the issue in a Sunni chat forum. It became quickly clear that these attitudes were not accidental. They are the product of Saudi-sponsored teachings of serious hatred. People don’t understand what they are being taught. They rejoice when a thousand Shiites are killed. Even worse is the fact that they hate people like me who stand up for the Shiites even more than they hate the Shiite themselves,” Mr. Brimah said.
In response to Mr. Brimah’s writing about the clash, General Buratai invited him for a chat. Mr. Brimah politely declined. When Mr. Brimah reiterated his accusation, General Buratai’s spokesman, Colonel SK Usman, adopting the Saudi line of Shiites being Iranian stooges, accused the scientist of being on the Islamic republic’s payroll.
“Several of us hold you in high esteem based on perceived honesty, intellectual prowess and ability to speak your mind. That was before, but the recent incident…and subsequent events and actions by some groups and individuals such as you made one to have a rethink. I was quite aware of your concerted effort to smear the good name and reputation of the Chief of Army Staff to the extent of calling for his resignation,” Colonel Usman said in an email to Mr. Brimah that the activist shared with this writer.
General Buratai “went out of his way to write to you and even invited you for constructive engagement. But because you have dubious intents, you cleverly refused…. God indeed is very merciful for exposing you. Let me make it abundantly clear to you that your acts are not directed to the person of the Chief of Army Staff, they have far reaching implication on our national security. Please think about it and mend your ways and refund whatever funds you coveted for the campaign of calumny,” Colonel Usman said.
Mr. Brimah’s inbox has since then been inundated with anti-Shiite, anti-Iranian writings in what he believes is a military-inspired campaign.
Mr. Brimah’s predicament reflects the fallout of the Saudi Iranian rivalry in West Africa as a result of Saudi and Iranian funding that has let the genie of intolerance, discrimination and bigotry out of the bottle.
Issoufou Yahaya, in the Sahel state of Niger, recalls his student days in the 1980s when there wasn’t a single mosque on his campus. “Today, we have more mosques here than we have lecture rooms. So much has changed in such a short time,” he said.
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