Recognizing the widening gap and huge untapped potential in their economic cooperation, Russia and Africa are gearing up efforts in raising the level of trade and business, Lyubov Demidova, Deputy Chairperson of the Regional Chamber of Commerce and Industry at Moscow Region, explained in an interview with me, while emphasizing unreservedly the importance of increasing business and economic cooperation with the African countries.
She says that Russians are constantly interested in partnering with large and medium scale businesses in the African market as well as in the continuing interest of Africans to further cooperate with Russia, and further pointed out that a significant impetus to the Russian-African business cooperation was given by the visit of the then Russian leader Dmitry Medvedev to a number of African countries in June 2009.
Since then, many Russian delegations have visited the continent, the highest ranking delegation headed by Foreign Minister Sergei Lavrov to a few African countries, notably Zimbabwe where he launched the $3 billion project and in Addis Ababa, Ethiopia where he held discussion with Africa Union Commission Chairperson, Nkosazana Dlamini-Zuma, about Russia’s readiness to infrastructural development.
In 2014, Russia started a new $3 billion platinum mine about 50 km north-west of Harare, the Zimbabwean capital. The Russian project, where production is projected to peak at 800 000 ounces year, involves a consortium consisting of the Rostekhnologii State Corporation, Vneshekonombank, as well as investment and industrial group, Vi Holding, in a joint venture with some private Zimbabwe investors as well as the Zimbabwean government.
Brigadier General Mike Nicholas Sango, Zimbabwe’s Ambassador to the Russian Federation, wrote recently that Russia’s biggest economic commitment to Zimbabwe to date was its agreement in September 2014 to invest $3 billion in what is Zimbabwe’s largest platinum mine.
“What will set this investment apart from those that have been in Zimbabwe for decades is that the project will see the installation of a refinery to add value, thereby creating more employment and secondary industries,” Brigadier General Sango explained to the local media.
“We are confident that this is just the start of a Russian-Zimbabwe economic partnership that will blossom in coming years. Our two countries are discussing other mining deals in addition to energy, agriculture, manufacturing and industrial projects. Russia also continues to assist Zimbabwe in training young Zimbabweans in special-skills areas such as medicine, general engineering, agricultural engineering and many other disciplines,” Ambassador Sango added. Groundwork was laid for expanding trade and investment when Zimbabwean President Robert Mugabe met President Vladimir Putin in Moscow in May 2015.
Undoubtedly, Russia has been implementing a number of other large-scale projects with participation of Russian capital in Africa. Among them are the development of the world’s largest bauxite deposit in Guinea and an aluminium plant in Nigeria as well as oil and gas in Uganda.
Of particular importance is also the creation a Russian industrial zone in Egypt. It is expected that products of Russian companies will localize their production and will be in demand not only in the local market, but also in all regions of North and East Africa, the Middle East and Eastern Europe.
Besides projects, trade is also important. Speaking at a symposium organized by the Embassy of the Republic of Ghana as part of the Independence Day (March 6) celebration in Moscow and which was attended by the eminent group of diplomats, industry leaders, prominent international traders and analysts, Dr. Leonid Fituni, Deputy Director of the Institute for African Studies under the Russian Academy of Sciences, called on Russian authorities to take significant practical steps to provide African countries with broad preferences in trade.
He pointed out that “Russia attaches special significance to deepening trade and investment cooperation with African States, including the involvement of Russian economic operators in the implementation of infrastructure projects. It is encouraging that more Russian companies being aware of the prospects that are opening in the large market of the continent work actively in such fields as nuclear energy, hydrocarbon and metallurgy industries.”
On their part to engage Russian investors, Africans have seized efforts and shown activeness in business events (conferences, forums, seminars and exhibitions) in many cities, the latest in St. Petersburg and Yekaterinburg, in the Russian Federation. Official government representatives and private individuals from about fifteen African countries attended the IV Russian-African Forum (RAF) held on 11-14 July as part of the INNOPROM-2016 international industrial trade fair in Yekaterinburg (Urals).
According to the organizing committee, this year the African delegates represented different countries included Burkina Faso, Zimbabwe, Burundi, South Africa, Namibia, Rwanda, Senegal, Cameroon, Mozambique, Chad, Kenya, Ghana, Nigeria, Algeria and Egypt.
The “Russian – African Forum” has become an integral part of the program of the exhibition and it is no coincidence, that the African vector every year becomes more and more significant in the foreign policy of Russia, – said Russian Minister of Industry and Trade, Denis Manturov while addressing the gathering.
He expressed assertively Russia’s readiness to expand its activities in projects of nuclear energy and, oil and gas industry. “We hope that the authorities of the countries of the African continent will contribute their part in creating most favorable conditions for the development of all joint projects that we have been discussing and also here at INNOPROM,” said Denis Manturov.
As already well-known, Russian companies are interested in projects focusing on mineral extraction, the energy sector, construction of large manufacturing facilities, human resources training, healthcare development, agriculture and food security, cooperation in digital technology and communications.
The general or popular sentiments at the 2016 Russian-African forum was that Russia and Africa need a more efficient system of exchanging vital information and effective efforts have to target, first and foremost, the search for new partnerships, new ways directed at boosting the economic cooperation and at implementing the biggest and most promising projects.
Unbelievably for over two decades, Russian officials in their speeches have repeated the same identified pitfalls, speed bumps or setbacks in the bilateral relations between Russia and Africa. The Foreign Ministry published the text of Deputy Foreign Minister Mikhail Bogdanov’s speech at its official website in July 2013 which he highlighted the same decade-old problems at a session of the Urals-Africa economic forum in Yekaterinburg.
“One must admit that the practical span of Russian companies’ business operations in Africa falls far below our export capabilities, on the one hand, and the huge natural resources of the huge continent, on the other,” Bogdanov said.
“Poor knowledge of the African markets’ structure and the characteristics of African customers by the Russian business community remains an undeniable fact,” he said. “The Africans in their turn are insufficiently informed on the capabilities of potential Russian partners,” Bogdanov said.
Experts have also been looking at ways to improve trade relations and economic cooperation. For instance, Andrey Efimenko, an Expert at the Russian Chamber of Commerce and Trade said in an exclusive interview with me that CCI of Russia closely monitored the activities of Russian companies in Africa, as a number of companies – members of Chamber are implementing major investment projects in this region of the world, in particular, Renova group, Gazprombank, LUKOIL, Rosneft, etc.
“Unfortunately,” Efimenko regrettably pointed out, “some large Russian companies operating on the African market, has managed to establish itself negatively in a number of countries. This is primarily due to ignorance of cultural peculiarities of the region, the lack of social responsibility, failure to completely fulfill contractual obligations. These cases damage the image of Russia and Russian companies with further entering the African market.”
The Russian Chamber of Commerce conducted a survey of Russian companies regarding the work on the African markets has shown that in conditions of sanctions have hampered their access to financial and credit resources that could be directed to participate in the implementation of infrastructure projects, the purchase of foodstuffs and agricultural raw materials.
Certain deterrent factor is the cost of logistics from Africa to Russia and/or vice versa and weak solvency of local companies, interested in obtaining Russian products on preferential terms. Another constraint to the development of business cooperation with certain countries in the region (Guinea, Nigeria, Sierra Leone) is currently an epidemic of the Ebola virus, as well as the lack of political stability in several African countries (Chad, Nigeria, Liberia, etc), the Expert explained.
In conditions of high competition on the African markets from China, European Union and the United States believe that public-private partnership with the coordinating and steering role of the state is at this stage the key to success and the best form of development of cooperation of Russia with African countries.
An important factor in the expansion of Russian-African relations – the establishment of development institutions such as the Russian export center and Roseximbank. CCI of Russia is making serious efforts to unite the business community of the country for development of interaction with African countries.
On the initiative of the Chamber and with the support of Russian state, public and private organizations in 2009, established a Coordinating Committee on Economic Cooperation with Africa (south of Sahara) popularly referred to as AfroCom. Today, it unites more than 120 Russian organizations and companies interested in developing relations with Africa.
With the participation of the Committee are regularly conducted business activities, which are important both for the deepening of bilateral relations with individual countries, and to strengthen Russia-African relations in general. The Committee pays special attention to information work. The site completely devoted to the economy of the African continent and the development of Russian-African economic relations.
As a further step, the Africa Business Initiative (ABI) in partnership with the Institute for African Studies of the Russian Academy of Sciences, with the support of the Ministry of Foreign Affairs of the Russian Federation, are also attempting to bring together key representatives from large Russian companies, government and the academic community as a working group to focus on helping Russian companies to enter and work in Africa.
There is still high optimism. “Russia has a large scientific and technical potential, and the Moscow regions also are historically developed as industrial and scientific centers and have good opportunities to develop their export potential to Africa. I would not want to associate the current crisis in the West and in Europe with the development of relations between Russia and African States,” Lyubov Demidova wrote me in an emailed interview.
She further informed that the new regional committee will include representatives of Russian organizations and companies, from government, public and business organizations in Russia, major Russian companies which already occupied a niche in Africa, and those who plan to transact business in Africa.
The main directions of its work are to inform members of the committee, to explore the possibilities of establishing a mechanism of financial support for Russian entrepreneurs, the organization of various business activities, including conferences, seminars, business meetings to establish contacts with potential partners.
One of the most important directions in the committee’s work is working on the information back-up of the image. It consists of several components: forming a positive image of Russia and its business community, the provision of necessary business information about Africa, including the dissemination of information on tenders declared in Africa, analysis of the peculiarities of economic and socio-cultural development in Africa, reference materials about Russia and about the potential of Russian-African cooperation.
In order to bolster trade and raise economic cooperation, another new Regional Council for the Development of Economic Relations with African countries (RCDRA) was created early this February which will serve as a good mechanism for the development of fruitful cooperation in various fields.
For its part, the newly created Council will make every effort to establish large-scale, long-term and mutually beneficial cooperation and hopefully will meet the some positive results on the part of African States.
The main obstacle is insufficient knowledge of the economic potential, on the part of Russian entrepreneurs, needs and opportunities of the African region. For this, the Council hopes to help members of the business community of all African countries to address systematically issues of effective cooperation.
“The main task is to shift to a more comprehensive approach, using the extensive territorial network of the Russian Chamber of Commerce. Russia’s business should be provided with full information on economic development in African countries and their needs in order to establish an ongoing Russia-African mutually beneficial business dialogue,”she suggested.
The most promising option for solving the problem of intensification of bilateral contacts is the practical work to establish links between individual companies and business associations from both sides, which will gradually accumulate positive experience of working together, to understand the capabilities and needs of each other leading to the development of the economy with Russian and with the African side, Demidova concluded.
Currently, the turnover of trade between Russia and Africa is estimated at $2.5 billion, while imports of non-primary goods to the African continent already aggregate to $430 billion and are growing at 10-15 % a year. Nearly, in all economic sectors in African countries, Russia’s major competitors are from foreign countries especially Asia, western Europe and European Union.
The Blazing Revival of Bitcoin: BITO ETF Debuts as the Second-Highest Traded Fund
It seems like bitcoin is as resilient as a relentless pandemic: persistent and refusing to stay down. Not long ago, the crypto-giant lost more than half of its valuation in the aftermath of a brutal crackdown by China. Coupled with pessimism reflected by influencers like Elon Musk, the bitcoin plummeted from the all-time high valuation of $64,888.99 to flirt around the $30,000 mark in mere weeks. However, over the course of the last four months, the behemoth of the crypto-market gradually climbed to reclaim its supremacy. Today, weaving through national acceptance to market recognition, bitcoin could be the gateway to normalizing the elusive crypto-world in the traditional global markets: particularly the United States.
The recent bullish development is the launch of the ProShares Bitcoin Strategy ETF – the first Bitcoin-linked exchange-traded fund – on the New York Stock Exchange. Trading under the ticker BITO, the Bitcoin ETF welcomed a robust trading day: rising 4.9% to $41.94. According to the data compiled by Bloomberg, BITO’s debut marked it as the second-highest traded fund, behind BlackRock’s Carbon fund, for the first day of trading. With a turnover of almost $1 billion, the listing of BITO highlighted the demand for reliable investment in bitcoin in the US market. According to estimates on Tuesday, More than 24 million shares changed hands while BITO was one of the most-bought assets on Fidelity’s platform with more than 8,800 buy orders.
The bitcoin continued to rally, cruising over the lucrative launch of BITO. The digital currency rose to $64,309.33 on Tuesday: less than 1% below the all-time high valuation. In hindsight, the recovery seems commendable. The growing acceptance, albeit, has far more consequential attributes. The cardinal benefit is apparent: evidence of gradual acceptance by regulators. “The launch of ProShares’ bitcoin ETF on the NYSE provides the validation that some investors need to consider adding BTC to their portfolio,” stated Hong Fang, CEO of Okcoin. In simpler terms, not only would the listing allow relief to the crypto loyalists (solidifying their belief in the currency), but it would also embolden investors on the sidelines who have long been deterred by regulatory uncertainty. Thus, bringing larger, more rooted institutional investors into the crypto market: along with a surge of capital.
However, the surging acceptance may be diluting the rudimentary phenomenon of bitcoin. While retail investors would continue to participate in the notorious game of speculation via trading bitcoin, the opportunity to gain indirect exposure to bitcoin could divert the risk-averse investors. It means many loyalists could retract and direct towards BITO and other imminent bitcoin-linked ETFs instead of setting up a digital custodianship. Ultimately, it boils down to Bitcoin ETFs being managed by third parties instead of the investor: relenting control to a centralized figure. Moreover, with growing scrutiny under the eye of SECP, the steps vaguely intimate a transition to harness the market instead of liberalizing it: quiet oxymoronic to the entire decentralized model of cryptocurrencies.
Nonetheless, the listing of BITO is an optimistic development that would draw skeptics to at least observe the rampant popularity of the asset class. While the options on BITO are expected to begin trading on the NYSE Arca Options and NYSE American Options exchanges on Wednesday, other futures-based Bitcoin ETFs are on the cards. The surging popularity (and reluctant acceptance) amid tightening regulation could prove a turn of an era for the US capital markets. However, as some critics have cited, BITO is not a spot-based ETF and is instead linked to futures contracts. Thus, the restrain is still present as the regulators do not want a repeat of the financial crisis. Nevertheless, bitcoin has proved its deterrence in the face of skepticism. And if the BITO launch is to be marveled at, then the regulations are bound to adapt to the revolution that is unraveling in the modern financial reality.
Is Myanmar an ethical minefield for multinational corporations?
Business at a crossroads
Political reforms in Myanmar started in November 2010 followed by the release of the opposition leader, Aung San Suu Kyi, and ended by the coup d’état in February 2021. Business empire run by the military generals thanks to the fruitful benefits of democratic transition during the last decade will come to an end with the return of trade and diplomatic sanctions from the western countries – United States (US) and members of European Union (EU). US and EU align with other major international partners quickly responded and imposed sanctions over the military’s takeover and subsequent repression in Myanmar. These measures targeted not only the conglomerates of the military generals but also the individuals who have been appointed in the authority positions and supporting the military regime.
However, the generals and their cronies own the majority of economic power both in strategic sectors ranging from telecommunication to oil & gas and in non-strategic commodity sectors such as food and beverages, construction materials, and the list goes on. It is a tall order for the investors to do business by avoiding this lucrative network of the military across the country. After the coup, it raises the most puzzling issue to investors and corporate giants in this natural resource-rich country, “Should I stay or Should I go?”
Crimes against humanity
For most of the people in the country, war crimes and atrocities committed by the military are nothing new. For instances, in 1988, student activists led a political movement and tried to bring an end to the military regime of the general Ne Win. This movement sparked a fire and grew into a nationwide uprising in a very short period but the military used lethal force and slaughtered thousands of civilian protestors including medical doctors, religious figures, student leaders, etc. A few months later, the public had no better options than being silenced under barbaric torture and lawless killings of the regime.
In 2007, there was another major protest called ‘Saffron Uprising’ against the military regime led by the Buddhist monks. It was actually the biggest pro-democracy movement since 1988 and the atmosphere of the demonstration was rather peaceful and non-violent before the military opened live ammunitions towards the crowd full of monks. Everything was in chaos for a couple of months but it ended as usual.
In 2017, the entire world witnessed one of the most tragic events in Myanmar – Again!. The reports published by the UN stated that hundreds of civilians were killed, dozens of villages were burnt down, and over 700,000 people including the majority of Rohingya were displaced to neighboring countries because of the atrocities committed by the military in the western border of the country. After four years passed, the repatriation process and the safety return of these refugees to their places of origin are yet unknown. Most importantly, there is no legal punishment for those who committed and there is no transitional justice for those who suffered in the aforementioned examples of brutalities.
The vicious circle repeated in 2021. With the economy in free fall and the deadliest virus at doorsteps, the people are still unbowed by the oppression of the junta and continue demanding the restoration of democracy and justice. To date, Assistant Association for Political Prisoner (AAPP) reported that due to practicing the rights to expression, 1178 civilians were killed and 7355 were arrested, charged or sentenced by the military junta. Unfortunately, the numbers are still increasing.
Call for economic disengagement
In 2019, the economic interests of the military were disclosed by the report of UN Fact-Finding Mission in which Myanmar Economic Corporation (MEC) and Myanmar Economic Holding Limited (MEHL) were described as the prominent entities controlled by the military profitable through the almost-monopoly market in real estate, insurance, health care, manufacturing, extractive industry and telecommunication. It also mentioned the list of foreign businesses in partnership with the military-linked activities which includes Adani (India), Kirin Holdings (Japan), Posco Steel (South Korea), Infosys (India) and Universal Apparel (Hong Kong).
Moreover, Justice for Myanmar, a non-profit watchdog organization, revealed the specific facts and figures on how the billions of revenues has been pouring into the pockets of the high-ranked officers in the military in 2021. Myanmar Oil & Gas Enterprise (MOGE), an another military-controlled authority body, is the key player handling the financial transactions, profit sharing, and contractual agreements with the international counterparts including Total (France), Chevron (US), PTTEP (Thailand), Petronas (Malaysia), and Posco (South Korea) in natural gas projects. It is also estimated that the military will enjoy 1.5 billion USD from these energy giants in 2022.
Additionally, data shows that the corporate businesses currently operating in Myanmar has been enriching the conglomerates of the generals and their cronies as a proof to the ongoing debate among the public and scholars, “Do sanctions actually work?” Some critics stressed that sanctions alone might be difficult to pressure the junta without any collaborative actions from Moscow and Beijing, the longstanding allies of the military. Recent bilateral visits and arm deals between Nay Pyi Taw and Moscow dimmed the hope of the people in Myanmar. It is now crystal clear that the Burmese military never had an intention to use the money from multinational corporations for benefits of its citizens, but instead for buying weapons, building up military academies, and sending scholars to Russia to learn about military technology. In March 2021, the International Fact Finding Mission to Myanmar reiterated its recommendation for the complete economic disengagement as a response to the coup, “No business enterprise active in Myanmar or trading with or investing in businesses in Myanmar should enter into an economic or financial relationship with the security forces of Myanmar, in particular the Tatmadaw [the military], or any enterprise owned or controlled by them or their individual members…”
Blood money and ethical dilemma
In the previous military regime until 2009, the US, UK and other democratic champion countries imposed strict economic and diplomatic sanctions on Myanmar while maintaining ‘carrot and stick’ approach against the geopolitical dominance of China. Even so, energy giants such as Total (France) and Chevron (US), and other ‘low-profile’ companies from ASEAN succeeded in running their operations in Myanmar, let alone the nakedly abuses of its natural resources by China. Doing business in this country at the time of injustice is an ethical question to corporate businesses but most of them seems to prefer maximizing the wealth of their shareholders to the freedom of its bottom millions in poverty.
But there are also companies not hesitating to do something right by showing their willingness not to be a part of human right violations of the regime. For example, Australian mining company, Woodside, decided not to proceed further operations, and ‘get off the fence’ on Myanmar by mentioning that the possibility of complete economical disengagement has been under review. A breaking news in July, 2021 that surprised everyone was the exit of Telenor Myanmar – one of four current telecom operators in the country. The CEO of the Norwegian company announced that the business had been sold to M1 Group, a Lebanese investment firm, due to the declining sales and ongoing political situations compromising its basic principles of human rights and workplace safety.
In fact, cutting off the economic ties with the junta and introducing a unified, complete economic disengagement become a matter of necessity to end the consistent suffering of the people of Myanmar. Otherwise, no one can blame the people for presuming that international community is just taking a moral high ground without any genuine desire to support the fight for freedom and pro-democracy movement.
The Covid After-Effects and the Looming Skills Shortage
The shock of the pandemic is changing the ways in which we think about the world and in which we analyze the future trajectories of development. The persistence of the Covid pandemic will likely accentuate this transformation and the prominence of the “green agenda” this year is just one of the facets of these changes. Market research as well as the numerous think-tanks will be accordingly re-calibrating the time horizons and the main themes of analysis. Greater attention to longer risks and fragilities is likely to take on greater prominence, with particular scrutiny being accorded to high-impact risk factors that have a non-negligible probability of materializing in the medium- to long-term. Apart from the risks of global warming other key risk factors involve the rising labour shortages, most notably in areas pertaining to human capital development.
The impact of the Covid pandemic on the labour market will have long-term implications, with “hysteresis effects” observed in both highly skilled and low-income tiers of the labour market. One of the most significant factors affecting the global labour market was the reduction in migration flows, which resulted in the exacerbation of labour shortages across the major migrant recipient countries, such as Russia. There was also a notable blow delivered by the pandemic to the spheres of human capital development such as education and healthcare, which in turn exacerbated the imbalances and shortages in these areas. In particular, according to the estimates of the World Health Organization (WHO) shortages can mount up to 9.9 million physicians, nurses and midwives globally by 2030.
In Europe, although the number of physicians and nurses has increased in general in the region by approximately 10% over the past 10 years, this increase appears to be insufficient to cover the needs of ageing populations. At the same time the WHO points to sizeable inequalities in the availability of physicians and nurses between countries, whereby there are 5 times more doctors in some countries than in others. The situation with regard to nurses is even more acute, as data show that some countries have 9 times fewer nurses than others.
In the US substantial labour shortages in the healthcare sector are also expected, with anti-crisis measures falling short of substantially reversing the ailments in the national healthcare system. In particular, data published by the AAMC (Association of American Medical Colleges), suggests that the United States could see an estimated shortage of between 37,800 and 124,000 physicians by 2034, including shortfalls in both primary and specialty care.
The blows sustained by global education from the pandemic were no less formidable. These affected first and foremost the youngest generation of the globe – according to UNESCO, “more than 1.5 billion students and youth across the planet are or have been affected by school and university closures due to the COVID-19 pandemic”. On top of the adverse effects on the younger generation (see Box 1), there is also the widening “teachers gap”, namely a worldwide shortage of well-trained teachers. According to the UNESCO Institute for Statistics (UIS), “69 million teachers must be recruited to achieve universal primary and secondary education by 2030”.
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