African leaders, export trade organizations and corporate businesses have an extraordinary opportunity to design a well-timed strategy to take advantage of the growing market and to boost trade as a way to reverse considerably trade imbalance that has existed from Soviet days between Russia and Africa, both foreign and local experts have suggested.
In an interview, Maxim Chereshnev, the chairman of the Board of Directors of the Council for the Development of Foreign Trade and International Economic Relations, explains that nowadays there are equally good business perspectives for Africa and that his organization, for instance, is ready to help with trade facilitation and can offer support for African companies, either small or medium enterprises that are looking for new trade opportunities in the Russian Federation.
“It’s pleasure to note that Russia and African states have a long story of relations. Import of coffee, cocoa, tea, citrus, sea products and many more from African countries are important for Russia,” he stressed assertively, adding that import substitution policy of Russia and the economic diversification are favorable for African countries to promote export/import and to cooperate in investment spheres with Russian companies.
In light of Russia’s anti-sanctions – the ban on imports of many types of European agricultural products – diversification of sources of such raw materials has become especially crucial, while import substitution in the country is only fledging. This presents an opportunity for strengthening trade with Asia and Africa.
Chereshnev, at least, is not alone calling for exports from Africa. Quite recently, Olga Kulkova, a research fellow at the Center for Studies of Russian-African Relations, Institute for African Studies in Moscow, noted assertively in her opinion article that “Africa has already started filling the niche, Russian market shelves are enjoying a surge in African vegetables and fruits, most of which used to be re-exported through the EU.”
In 2014, African farmers expressed readiness to boost direct exports to Russia, bypassing European mediators. African countries of the continent can make a fortune by selling agricultural products to Russia.
Interestingly, there are only few Africans trading products in Russia’s market due to multiple reasons including inadequate knowledge of trade procedures, rules and regulations as well as the changing market conditions. And there are many other obstacles hindering African trade to Russia that have been identified and discussed in many business conferences and seminars, but concrete measures to improve the situation have not been seriously implemented.
As Ibrahim Usman Gafai, Charge d’Affairs at the Embassy of the Federal Republic of Nigeria in Moscow explained in an interview with Buziness Africa, that the overall trade volume between Africa and Russia has been extremely low and highly skewed in favor of Russia.
Gafai pointed out the key challenge from both sides, Africa and Russia, has been dearth of information on doing business and the market environment, and thus has over the years created a condition of uncertainty, misgivings and negative perceptions among prospective traders and investors.
He, however, called for the need to create a mechanism for the dissemination of vital business and trade information that will enhance business interaction among African exporters and Russian importers. In addition, African leaders have to cultivate business interest in organizing trade platforms and business mission to showcase their potentialities in the Russian Federation.
Comparatively, African exports to the United States, European Union and even to India and China has been growing due to trade preferences, lower custom tariffs and other trade incentives that were made available to African exporters by these big-time players, for instance the U.S. offers incentives through the African Growth and Opportunities Act (AGOA).
According to Rex Essenowo, chairman of the Russian Chapter of Nigerian Diaspora Organization in Europe (NIDOE), “African exporters have keen interests in the Russian market but face many challenges in getting their goods delivered on time to consumers in Russia. They know that the market potential is vast in both ways and further understand that Asian countries have comparative advantage trading with Russia, in terms of distance, transportation of goods and other infrastructure including logistics and warehousing.”
In addition, he pointed out assertively that one key advantage is regional trade alliances have helped their member states over the years in providing adequate information about the market rules and custom regulations of exporting products of all kinds to Russia.
“In order to boost Russia-African trade, there should be policy interventions, initiate trade platforms for both Russians and Africans to participate in practical discussions on how to make trade policies more effective and to offer import and export credit support for corporate traders to achieve appreciable results,” Essenowo told me further in his interview discussion.
“If we look at the trade volume between China and Africa, both regions have done so much for more than the past 10 years despite all the skepticism and criticism, but can’t African countries raise their trade volume dramatically in order to cut down the trade imbalance given the necessary trade incentives and lower custom duties by Russia?” the chairman of NIDOE asked rhetorically.
As for ways on how to reverse the huge trade imbalance that exists between Africa and Russia, Dr Shaabani Nzori, a Moscow based independent African expert on Russia-African issues, doesn’t see much that could be done at the moment for the following simple reasons:
First, there is no much that Africa can propose to Russia that Russia lacks in its own country, that is raw materials in the form of gas, oil, minerals, and other products such as agricultural produce that Russia can easily and cheaply get from other regions like Latin America and/or Asia.
Secondly, the lack of developed infrastructure, manufacturing, strict quality control and packaging in Africa also add to the odds of Africa’s failure to export its products to Russia.
As for quality control and packaging, this is a huge problem with Russians as they seem to be too strict and particular on this subject, thereby among others, their reluctance to offer trade preferences to African goods, as they consider African products as being of poor or questionable quality, Dr Nzori explains.
Foreign Affairs Minister Sergei Lavrov has stated several times in his speech to African diplomats that Russia was prepared to consider new initiatives aimed at improving trade between the two regions.
In May 2014, Lavrov wrote in his own article:”we attach special significance to deepening trade and investment cooperation with the African States. Russia provides African countries with extensive preferences in trade.”
Russian Foreign Affairs Ministry has 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 the traditional goods are eligible for preferential customs and tariffs treatment.”
As far back as 2008, the African Development Bank (AfDB) said in a report that the importance of Russia as a trading partner to African countries is quite minimal when compared to other developed countries and emerging markets such as the European Union, the United States, China, India, and Brazil. Bilateral trade between Russia and Africa reached its peak of US$ 7.3 billion in 2008.
That is understandable. However, Georgi Petrov, vice president of the Chamber of Commerce and Industry of the Russian Federation said at the executive board meeting of the Coordinating Committee for Economic Cooperation with African Countries (AfroCom) held in April 2015, that Russia’s trade with Africa, south of the Sahara, was only US$3.2 billion. The fact still remains that African trade has been minimal in the Russian Federation. And unbelievably, African trade figures with Russia are very hard to find from both African and Russian sources.
For trade relations between Russia and Africa to improve appreciably, Professor Dmitri Bondarenko, deputy director of the Institute for African Studies, also confirmed to Buziness Africa that “Russia gives some trade preferences to African countries – for example, tax exceptions or reduction among other measures. This can become an effective political step to strengthen trade relations with African countries.”
According to the views of Jimmy Saruchera, a director at Schmooze Frontier Markets, an investment fund that works to support small-and-medium sized businesses in new emerging markets, both Russia and Africa need work on a good trade policy, stable and transparent institutions that are fundamental ingredients, then tools such as credits and export guarantees can be more effective in boosting trade to both regions.
Experts have repeatedly called for state support and for radical corporate trade initiatives that can systematically bolster private African entrepreneurs’ efforts not only to raise their economic presence but also to facilitate in making strong inroads into the Russian market.
Russia is a member of the newly created Eurasian Economic Union (which constitutes a huge market and allows free movement of goods among member countries) and the other members include Armenia, Belarus, Kazakhstan and Kyrgyzstan. The Eurasian Economic Union is an economic union of states located primarily in northern Eurasia.
Report: CPEC offers enormous potential to Boost Pakistan Economy
With investments in road, railways and ports, the $60 billion China Pakistan Economic Corridor (CPEC) offers enormous potential for Pakistan to boost its economy, reduce poverty, spread benefits widely and help those likely to be affected by the new trade route, a new report says.
The report, entitled “The Web of Transport Corridors in South Asia”, published by the Asian Development Bank, the United Kingdom’s Department for International Development, the Japan International Cooperation Agency, and the World Bank, discusses several economic corridors including CPEC
“The largest economic gains from investing in transport corridors may arise from urbanization and job creation around this new infrastructure, rather than from many more vehicles using it”, said one of the report’s authors, World Bank economist Martin Melecky, who added: “not all corridor investments are equally successful in creating large economic surpluses that spread fairly throughout society.”
The report notes that the many transport corridors proposed across Asia would cost trillions of dollars to implement, far exceeding the financing resources available. Hence, countries need to prioritize the most promising corridors that will deliver the expected transformative impacts for their economies and people. Engineering designs and geopolitical considerations could be important, but sound economic analysis is the key to designing truly successful corridors, the report argues.
The ability of large-scale transport investments to generate wider economic benefits depends on the population density in the areas they cross. Their capacity to spur structural transformation along the way depends on complementary factors around the transport corridors, such as the skills of the local population or restrictions on local land use. The new transport infrastructure must come with the means for people to take advantage of the improved connectivity right from the start.
“The upcoming Khyber Pass Economic Corridor project is a positive example, where trade facilitation and the development of local economic activities are explicitly integrated in the design of the project”, said Illango Patchamuthu, World Bank Country Director for Pakistan.
The report reviews the international experience with economic corridors, from the Pacific Ocean Belt in Japan in the 1960s to high-speed train networks in Europe more recently. It also analyzes the impacts of the Golden Quadrilateral highway system in India and finds positive effects, including higher economic activity and better (non-farm) jobs for women. However, air pollution rose in parallel and gains in household consumption were not equally shared across connected districts. Appraisal simulations for CPEC and the Kolkata-Dhaka corridor suggest that complementary measures are needed to improve local conditions that in turn will create formal jobs and generate tax revenues that could pay for corridor investments.
In light of the international evidence and specific analyses for South Asia, the report advocates for a more comprehensive design of corridor programs that actively manages tradeoffs and closes potential financing gaps in a sustainable manner.
Good Tourism Practices to Advance Sustainable Development in the Americas
Concrete examples of how to advance sustainable development through tourism take centre stage in the first joint publication between the World Tourism Organization (UNWTO) and the Organization of American States (OAS). ‘Tourism and the Sustainable Development Goals: Good Practices in the Americas’ provides 14 case studies from across the region on why tourism ranks high among the economic sectors better positioned to enable the Agenda 2030 for Sustainable Development and its 17 Sustainable Development Goals.
Ranging from tourism projects to strengthen the peace process in Colombia to initiatives in the heart of the Peruvian Amazon, addressing climate change in Mexico or providing insight into management and sustainability systems in Honduras or Panama. A total of 14 case studies portray the contribution of tourism to advance the Sustainable Development Goals in the Americas.
‘Tourism and the Sustainable Development Goals: Good Practices in the Americas’ recommends to pay critical attention to tourism management as well as to strengthening partnerships between national and international public and private stakeholders, as well as local communities. The report also addresses the emergence of a more responsible traveler and how destinations in the region should integrate resource efficiency and multi-stakeholder involvement in their policies, actions and initiatives.
“With more than 200 million international tourists who traveled to the Americas in 2017, tourism can and must play a significant role in delivering solutions for sustainable development in the region”, said UNWTO Secretary-General, Zurab Pololikashvili. “I am grateful for the partnership with the Organization of American States and am confident that together we will support tourism’s role in the sustainable development agenda of the region up to and beyond 2030”, he added.
According to the Executive Secretary for Integral Development of the OAS, Kim Osborne, this joint effort “provides greater awareness on how tourism can help address poverty alleviation, protect biodiversity and cultural heritage, and support community development in the Americas”.
Authorities at all levels in the Americas have identified tourism as a priority sector to promote economic development and diversification and countries across the region are adopting new legislation and policies in this direction. Against this backdrop, ‘Tourism and the Sustainable Development Goals: Good Practices in the Americas’ provides insight into how a common approach – including policy makers, private sector, tourists and the development community – can catalyze sustainable development through tourism.
The report was presented during the 2018 Inter-American Congress of Ministers and High-level Authorities of Tourism, under the theme ‘Connecting the Americas through sustainable tourism’.
Azerbaijan’s geo-economic expansion prospects: Conventional or emerging markets?
In the background of global geo-economic shifting, nation states confront significant challenges in terms of appropriate positioning. In case of Azerbaijan, these challenges are also related to regional geopolitical imbalances as well as structural problems existing in the national economy.
Throughout its independence, Azerbaijan has pursued the way to formulate its foreign economic relations through maximizing its economic benefits in the context of achieving relevance to its national interests. Indeed, country’s geographical location and economic strength gained thanks to oil boom gave birth to the possibility of formulation of Azerbaijan as a regional geo-economic pivot.
Azerbaijan iscurrently conducting multi-vectorial geo-economic development strategy in order to maximize its geographic advantages as well as maintaining better positioning in the framework of massive realignments observing in global economic architecture.Looking through of the policy frameworks which encapsulate country’s medium and long-term economic vision, it becomes obvious that Azerbaijan will continue to adjust these strategies to the “new game rules” of geo-economic shifting.
However, it should also be mentioned that in some cases, Azerbaijan’s geographic location takes part as an impediment rather than advantage.Referring to conventional understanding of the concept of “space”, Azerbaijan has only limited number of spaces in which geo-economic sustainability can be realized. However, shifting from geopoliticsrelying on the dominance over geographic basins to the geo-economics which relying on controlling financial and trade flows creates an excellent opportunity for Azerbaijan to tackle with this problem. In this regard, it should be emphasized that successful realization of trade-logistics and energy transport projects in recent years have created a sound ground to continue geo-economic expansion in the new stage of economic development. But the question currently standing in front of this expansion strategy is that which markets or “geo-economic spaces” should be main target?
Assessment of trans-regional projects initiated or supported by Azerbaijan during last two decades indicate that these initiatives are mainly directed to mitigate EU’s dependence on several routes or building an appropriate infrastructure to bolster these countries’ trade relations with Central Asian countries. This factor was strategically and economically beneficial for Azerbaijan in terms of getting better access to European markets and eliminating infrastructural backwardness inherited from Soviets. However, as aforementioned, current realignments in geo-economic landscape make it necessity to add new directions and quality features to the geo-economic expansion strategy of the country.
In this regard, Strategic Road Map for the perspectives of the national economy which approved by President Ilham Aliyev in late 2016 can be accepted as a reliable guide to find answer to the question put above. It is not secret that in recent years, we are observing geo-economic shifting from Euro-Atlantic region to the Asia-Pasific. This shifting is gradual and time-consuming process and cannot be constrained only by Chinese economic expansion or South Korean success story.
According to the World Bank, over the next three years the $75 trillion global economy will expand by more than $6.5 trillion in size. It is also estimated that China and India will be among Top 3 contributors to real GDP growth predicted for 2018-2020 while Turkey, Indonesia, South Korea and Japan will be also among major contributors.Furthermore, emerging and developing Asia seems will be achieved to quadruple its share in global GDP based on PPP during 1980-2020.
In the light of these figures, it can be put forward that Azerbaijan can take more benefits through getting better access to these emerging Asian markets. Furthermore, taking into consideration country’s medium and long-term economic vision in which acceleration of joining to global value chains has been mentioned as one of the strategic targets,integration to these markets promise more economic gains. The scale of these gains will not be constrained only in the framework of monetary or financial units. Particularly, significant progress achieved in realization of North-South and East-West transport corridors in recent years, additionally much brighter prospective transport projects which are expected to be realizedin the near future will lead to increase Azerbaijan’s geo-economic importance. This achievement can be accepted as a result of continuous efforts made by Azerbaijan during last two decades. As mentioned by President Aliyev, situated between Europe and Asia, Azerbaijan will continue to use wisely its geographical location to become one of the leading transportation hubs in Eurasia. Pursuant to his opinions, it is highly predictable that Azerbaijan geo-economic expansion will continue in accordance with regional and global economic landscape movements.
Getting efficient positioning in regional integration movements which dominantly shaping under priority of national interests is one of the key directions of Azerbaijan’s geo-economic expansion strategy.In this regard, preserving independence in integration processes is one of the significant imperatives in Azerbaijan’s foreign economic and trade relations.It is worth to mention that Azerbaijan, unlike to some of other region countries, still preserves independence in making choices regarding with integration movements. Therefore, Azerbaijan’s current stance lets us put forward the idea that consistence of joining to such type of integration movements with the country’s strategic foreign and domestic economic targets is more deterministic imperative rather than nominal participation.This hypothesisalso involves some insights regarding with the issue that in which direction geo-economic expansion ought to be continued in the following years.
On the macroeconomic and foreign trade perspective, it is worth to emphasize that Azerbaijan has achieved significant growth rates during 2004-2014. After some adverse effects of oil price crunch after 2014 Azerbaijan economy is currently in the process of adjusting new equilibrium points.This process is conducting not only through improving macroeconomic indicators, but also through making changes in geographic orientation of the country’s foreign trade relations. According to the official figures, the share of Asian markets is averagely 38% in exports and 39% in imports. However, analyzing of commodity structure of this trade turnover exhibits that in exports low value-added commodities dominate while in imports particularly medium and high value added ones take the lion share. This structure of trade relations with Asian countries brings forth some challenges in terms of diversifying commodity structure of exports as well as increasing turnover with these emerging economies. Therefore, in the context of geo-economic expansion, it would be more reasonable for Azerbaijan to pay much attention to join global value chains appearing in these markets. Additionally, thanks to already finished and prospective trade-logistics and transportation projects, Azerbaijan’s opportunities to benefit from new trade reality which involves geographical fragmentation of production is increasing. This new reality offers to accelerate diversification of economy with limited resources avoiding from conventional barriers existing in small economies such as Azerbaijan.
Finally, Azerbaijan seems very determined to become a geo-economic pivot in its region relying on its comprehensive and continuous development strategies and rising international economic competitiveness which achieved during recent years. This deterministic stance will continue through shifting beyond a new quality stage of geo-economic expansion in the era of formulation multipolar global economic order. This shifting additionally requires revision of geographic expansion postulates of the country’s geo-economic development strategies. The characteristics of this revisionwill be determined by systemic realignments in the global economy.
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