Despite conflicts and instability in parts, Africa’s fast growth and development, at least during the past decade, has attracted external countries mainly from Asian region, European Union (EU) and the United States. In this special interview, David Shinn, an Adjunct Professor in the Elliott School of International Affairs, a former U.S. Ambassador to Ethiopia and Burkina Faso, and previously served as a Director of the Office of East African Affairs in Washington, explains some ways to engage Africa.
He further discusses the important institutional differences in each BRICS member countries that impact on the implementation of policies in Africa, whether to compete or cooperate jointly on development infrastructure projects, and finally identifies the tools and tactics some countries use to achieve their respective goals on the continent.
How unique is East Africa and the Horn for foreign investors and who are the proactive countries there?
This region, especially the Horn of Africa, has more than its share of conflict, which poses a special challenge for foreign investors. The three East African countries—Kenya, Tanzania, and Uganda–have been more successful in attracting foreign investment because they have experienced less conflict in recent years and made a special effort to reach out to foreign investors. The investment has come from a variety of countries including the United Kingdom, Netherlands, India, Canada, South Africa, China, United States, Germany, and France. The Horn of Africa is witnessing a growing amount of investment from the Gulf States, but political instability is limiting investor interest. Before the independence of South Sudan, there was considerable investment in Sudan’s oil sector by China, India, and Malaysia.
While that investment remains, it is now shared between Sudan and South Sudan. Conflict in South Sudan has stopped new investment. Somalia and Somaliland attract investment from the Somali diaspora but foreign countries have been reluctant to go into both entities for different reasons. Somalia is not sufficiently stable and Somaliland is not recognized internationally and, therefore, poses legal challenges for potential investors.
While Djibouti and Eritrea are politically stable, their markets are too small to attract significant foreign investment. Of all the countries in the Horn, Ethiopia has in recent years been the recipient of most foreign investment from countries such as China, Turkey, Bangladesh and the Netherlands. Political protests that began last summer are beginning, however, to impact foreign investment. A number of foreign investments were destroyed during the most recent protests concerning a range of grievances. This will discourage others from coming.
China is still leading with investment in infrastructure, but are the United States and European Union competing or cooperating with China?
China is the largest builder of infrastructure in Africa today, but this is not foreign direct investment. These are contracts with Chinese state-owned companies financed by loans from Chinese government institutions, the African Development Bank, World Bank, etc. In some cases, the African governments finance the projects. Once the infrastructure project is completed, China almost never has any ownership involvement. Hence, it is not foreign direct investment, but a commercial deal financed by loans that have to be paid back by the African government. Private US and European companies are in a much weaker position to win these contracts because they have less access to financing from their own governments and tend to submit higher bids than Chinese companies. There are exceptions such as the Italian company that is building the Grand Ethiopian Renaissance Dam on the Blue Nile. In any event, this is an area where the US and European Union compete with China.
There are areas where China, the US, and EU cooperate. All three seek political stability in Africa and cooperate on UN peacekeeping operations, African Union efforts to achieve peace such as in South Sudan, and the anti-piracy campaign in the Gulf of Aden. There is occasional collaboration on aid projects, but there is room for much more, especially in the areas of health and agriculture. All three parties have partnered with Africa to achieve development and they all want to see Africa succeed economically. There is one area of major difference. The US and EU, to varying degrees, encourage open political systems, the rule of law, and free and fair elections in Africa. China is satisfied with whatever form of government exists in a particular African country and has no desire to be critical of any governmental system. African governments prefer the Chinese approach; many African civil society organizations prefer the US and EU approach.
In your view, can Russia (a member of BRICS) make any headway into the region?
The short answer is yes and, to some extent, it has. Following the end of the Cold War, Russia pulled back sharply from Africa, although it maintained most of its diplomatic missions there. Serious economic problems in Russia prevented it from reengaging in Africa until relatively recently. There has been an increase in Russian investment in Africa, especially North Africa and several countries in Sub-Saharan Africa. There are prospects for greater Russian investment in Africa. Russian trade with Africa has been especially disappointing. In 2014, it exported $9.3 billion to Africa, most to North Africa, and imported $2.8 billion from Africa. This is less trade than Turkey has with Africa. Russia is energy self-sufficient; Africa just does not have much that Russia wants to buy. This situation is not likely to change any time soon. At the political level, Russia has demonstrated minimal high-level interest in Africa. Until it makes a decision to pay more high-level attention to Africa, it is difficult to see greater engagement at the political level. For the time being, Russia is preoccupied with Syria, Ukraine, and relations with China and the US. I doubt that it will be in a position in the foreseeable future to devote much attention to Africa.
What’s the best way for foreign countries to engage Africa?
I assume your question about the best way to engage Africa refers to engagement by governments outside Africa. If so, I think the process should be as follows. First, foreign governments should determine what kind of engagement individual African governments prefer. The foreign government must then decide if it is prepared to engage in that manner. If not, it should explain frankly to the African government why not.
If the engagement sought by the African government is the kind of interaction that the foreign government is prepared to do, then both sides should discuss the details. At this point, it is essential that the foreign government not mislead the African government that it can do more than is, in fact, the case. Western governments, compared to statist driven governments, have a handicap because so much Western engagement comes from the private sector, which Western governments do not control. This handicap also applies to a number of non-Western governments.
Now, looking at BRICS (Brazil, Russia, India, China, and South Africa), are there institutional differences in implementing business policies in Africa?
There are institutional differences among the BRICS. The private sector is proportionally much more important in India, Brazil, and South Africa than is the case in China and Russia. The state-owned sector of the economy is especially important in the case of China. BRICS’ business practices and the degree to which their governments control business practices vary widely from one member to another.
Unlike many Western countries, however, none of the BRICS attaches political strings to their business engagements although they all, to varying degrees, impose economic conditions. These conditions include, for example, infrastructure loans tied to construction companies from the offering country and contractual arrangements for a percentage of labor from the offering country.
Can BRICS members, say for example Brazil, China or India, compete or cooperate with Russia on development projects in Africa?
I believe there are cases where BRICS’ members have already competed for winning contracts in Africa. This has especially been the case between India and China in the petroleum sector. While I don’t know of specific examples involving Russia, I would be surprised if Russia has not competed against another BRICS’ country for winning a contract in Africa. By its very nature, business interaction usually involves competition. At the same time, companies from two different BRICS’ member countries can team up in their effort to win a contract or start a business in Africa.
The area where there is more likely to be cooperation is foreign aid. China and Brazil have been cooperating on agricultural research in Africa. Theoretically, all BRICS’ members, including Russia, could cooperate on a development project financed by two or more BRICS’ members. The BRICS’ New Development Bank has approved its first package of four loans to Brazil, China, South Africa, and India worth some US$811 million. They are all in the field of renewable energy; South Africa received a loan for US$180 million. This is an example of cooperation but, so far, only to the benefit of BRICS’ members.
Do they have strategic differences that make it difficult for a unified approach in Africa?
I believe the BRICS have strategic differences that will complicate a unified approach in Africa. Each BRICS’ member country has its own interests in Africa. Each one has a different development model and political system. The size of their respective economies varies enormously from China’s nominal GDP of US$11.4 trillion to Russia’s US$1.1 trillion and South Africa’s US$266 billion. These countries have more differences than they have commonalities. I don’t believe this will result often in unity of action.
Africa Awaits Russia’s Investment
Russia has been looking to raise its existing relationship with African countries and Afreximbank is now providing huge support in realizing that long term goal. The bank, with the task of transforming Russia’s trade with Africa, organized an economic conference for more than 1,500 participants from June 20-22 in Moscow. The economic conference and other Russia–African events in 2019 can be described as “the Year of Africa” in the Russian Federation.
The Afreximbank Annual Meetings included Seminar and Meeting of the Afreximbank Advisory Group on Trade Finance and Export Development in Africa and special meetings between Russian and African political and business leaders to discuss trade, industrialization, export, and the implementation of joint investment projects.
Russia continues to strengthen its relationship with Africa due to multiple factors such as untapped abundant natural resources, improvement of the business climate, the rise of the middle-level income class and economic growth, Prime Minister Dmitry Medvedev noted in his speech at conference. He further pointed to Africa’s growing appeal to and demand for high-tech, telecom investors and other products that could make swift business connection with Russia.
“All these things have already made Africa attractive for investments, and not merely in producing industries but, which is of particular importance, in high technologies and telecommunications,” Medvedev said.
According to certain estimates, about a half of the resource potential of the planet is in Africa, he argued “we therefore need to more efficiently use these resources and at the same time promote cooperation in this sphere, just like cooperation in other spheres.”
Besides those factors, there is high desire for mutual-cooperation. “It is also important to have a sincere internal desire, and such a sincere desire is present from the side of the Russian Federation and from the side of African states. We see this at different levels, including the top levels of cooperation,” Medvedev said.
Opening the conference, Foreign Minister Sergey Lavrov reminded conference participants that while relying on the long-time accumulated experience of constructive partnership, Russia and Africa are confidently moving along the road of comprehensively expanding Russian-African ties.
According to the Foreign Minister, the long years of solid friendship, which has been created, gives a fresh impetus to cooperation in many spheres and provides necessary conditions for building up trade, economic and investment exchanges, as well as cooperation in banking, and for encouraging business communities to implement mutually beneficial projects in African countries.
These include the construction of the country’s first nuclear power plant and the establishment of the Russian Industrial Zone in Egypt, as well as the projects that are being implemented in Africa by such leading Russian businesses as Rosneft, Lukoil, Rosgeo, Gazprom, Alrosa, Vi Holding, GPB Global Resources and Renova.
“We can report first achievements in this sphere. Mutual trade is growing – it exceeded US$20 billion last year – and becoming more diversified. Large projects are being implemented in Africa with direct financial support from Russia,” he assertively said, and added: “I am confident that cooperation with Afreximbank, which the Russian Export Centre (REC) has joined as a shareholder, will help promote long-term trade and economic relations between Russian businesses and their African partners.”
As expected, REC predicts the volume of Russian-African trade relations will double within the next 3-4 years. “The Russian Export Center maintains a close partnership with Afreximbank and has already entered the first deals that we are jointly implementing on the African continent. We intend to increase the volumes and we foresee the volume of the Russian-African trade ties in the next three to four years doubling,” said the Russian Export Center’s (REC) chief Andrei Slepnev.
“It goes without saying that the Russian Export Center sees the African region as an important area to promote Russian non-commodity export. Our objective is to use today’s positive market environment to open the access to African markets to as many exporters as possible and expand our geography,” he argued.
The African continent currently has enormous potential as a sales market. Many African countries are enacting economic reforms, demand is growing for high-quality, competitive products. Russian businesses are interested in this niche, and our goods are already competitive in terms of price and quality.
Basic financial instruments of supporting trade between Russia and Africa could be direct loans to foreign buyers (including those secured by the sovereign guarantee of the borrowing country) and loans to banks of foreign buyers under the insurance coverage Exiar, loans to sovereign borrowers, financing receivables against export earnings.
In 2018, for instance, the volume of export-supported Russian products to African countries amounted to US$2.47 billion. The main partners are Egypt, South Africa, Zambia, Morocco, Algeria, Nigeria and Kenya.
Advisor to the President of the Russian Federation, Anton Kobyakov, noting the importance of multilateral cooperation between Russia and Africa: “The current situation in the world is such that we are witnesses to the formation of new centres of economic growth in Africa. Competition for African markets is growing accordingly. There is no doubt that Russia’s non-commodity exporters will benefit from cooperating with Africa on manufacturing, technologies, finances, trade, and investment.”
Afreximbank President and Chairman of the Board of Directors, Dr. Benedict Okey Oramah, presented the 2019 African Trade Report, an analytical survey of African trade. “As we gather in this historic city of Moscow, we will explore how we can shape the future of trade and how we can transform our continent,” said Oramah. “Our collective endeavours will impact the economic future and wellbeing of Africans for generations to come.”
In the report, special attention was paid to practical cooperation in the spheres of finances, energy, mining, railway infrastructure, digital technologies, cybersecurity, healthcare, education, food security in Africa.
In 2017, the Russian Export Center became Afreximbank’s third largest non-African financial institution or organization shareholder, which has allowed for the rapid acceleration of investment, trade, and economic relations between Russia and African countries. It’s active in mining projects in Zimbabwe and Sierra Leone, and has expressed interest in attracting Russian partners to the implementation of projects in the oil industry in Africa.
Notable among the Russian-African foreign economic projects include the signing of a memorandum of cooperation between the REC and Joint company Afromet (Vi Holding) regarding the comprehensive development of the Darwendale platinum field project in Zimbabwe, which was signed during a visit by the President of Zimbabwe, Emmerson Mnangagwa, to the Russian Federation in January 2019.
According separate reports, Russia has been developing a number of projects in cooperation with Afreximbank, including a project concerning the shipment of Russian ground transport and projects to finance industrial infrastructure construction and modernization projects in Nigeria and Angola. At the end of 2018, REC, Russian Railways, and Afreximbank signed a memorandum of cooperation. As a result, a trilateral working group was created, tasked with studying export and investment project issues in the railway and related industries, as well as forms of project and investment financing.
The latest description of Africa, which consists of 54 states, to many experts and business investors, is the last frontier. It is the last frontier because it has huge natural resources still untapped, all kinds of emerging business opportunities and constantly growing consumer market due to the increasing population. It has currently become a new business field for global players.
That negative perceptions deeply persistent among political and business elite, middle class and the public towards Russia. For the two past decades, due to Russia’s low enthusiasm, lack of coordinated comprehensive mechanism and slowness in delivering on skyline investment pledges have been identified as the key factors affecting effective cooperation between Russia and Africa.
London based Business Research and Consultancy firm published a new report about global players set to continue broadening economic and business engagement across Africa. The publication has become largely important as Russia with its recognizable global status and among BRICS (Brazil, Russia, India, China and South Africa) dominated headlines that it has played less visible role in sub-Saharan Africa after Soviet’s collapse.
The Russian Export Center, as a state institution for the support of non-primary goods, providing Russian exporters with a wide range of financial and non-financial support, is also working on a number of projects with Afreximbank in various African regions. Afreximbank was founded in 1993 in Abuja, Nigeria, with the authorized capital of US$5 billion. The main objectives of the bank are the development of trade between African countries and abroad. The banks’ headquarters is located in Cairo, Egypt.
Water Diplomacy: Creating Spaces for Nile Cooperation
The Nile River is the longest river on the earth, with eleven nation states sharing it and over 487 million people or about 20% of the African population living in the basin countries and they depend partly or fully on the Nile for their daily water use, foods and other economic benefits. The river drains 10 % of the African continent or an area greater than 3,176,541 km2, and its divided to ten different sub-basins with two main feeding sources’ the White Nile and the Blue Nile, which making it one of the worlds largest and complicated international trans-boundary river basins.
It’s very clear that the long and current regional disputes over the Nile’s waters between the upstream and downstream countries specially Uganda, Ethiopia and other upstream nations who are been the forehead leading the campaign for the lifting of colonial era treaties regarding Nile waters allocutions, governance, management, economic use and other Nile related issues and they been demanding renegotiating Nile river basin for fair shares and equal benefits and which they did in 2010 by reaching and signing of (Cooperative Framework Agreement or Entebbe agreement) to replace all the European colonial agreements, meanwhile the two downstream countries Egypt and Sudan in the other sides refusing to renegotiate or sign the Entebbe treaty and insists on maintaining the colonial era treaties or what they called “the historical rights” which gave the lion’s share of the Nile waters and the absolute veto to only two Nile countries and ignored the rights of other Nile’s nations.
Egypt and Sudan for years been using what they called “the historical rights” guaranteed by the colonial era agreements and their diplomatic influence to block international development funds and loans a policy which its aims only to prevent the upstream nations from establishing or constructing any developmental or economical projects on the Nile River, while Egypt is warring about the potential impacts which could effect its water security level as a result of any construction on the Nile river, the other Nile Basin nations said they are addressing the undergoing social, economic and environmental changes plus the population in the region is growing rapidly which will need more access to Nile basin resources in aim to provide water, food and energy to their people.
The looming conflict in the Nile Basin region over water recourses governance, allocutions and economic use has been a major security threat to the regional and international peace and stability, the risks of militarizing the Nile water dispute among the basin countries has been a growing serious security threat to the basin region as a result of lacking of middle point agreement on how to share, mange and benefit from the longest river fairly and equally.
In past years the downstream nations had already unilaterally constructed dams, used Nile waters for irrigation, industrial and other projects and with the upstream nations complaining about those unilateral projects done by the downstream nations and the none cooperative method and approach of Egypt and Sudan and as an outcome of years of disagreement over the Nile water issues and unilaterally decisions and actions taken by the individual countries claiming the Nile River waters and only favoring their own benefits over other Nile nations. The Entebbe Agreement came in to escalate the none cooperation situation more by geo-politically shifting the control of Nile basin waters away from the downstream nations and gave the upstream countries a legal frame to construct dams, establish different projects and increase their water use for different propos.
With some countries see themselves as victims of other Nile countries who had taken an advantage of certain period of time or situation that they were in, which let some of them to see no benefit now in been cooperative with the others concerning the Nile related issues and looks only at their national interests, but still the diplomatic dialogue and inclusive negotiations between the Nile basin nations is the only way forward to build confidence, trust and cooperation for sustainable future of the Nile and mutual and shared benefits for basin members countries. A positive engagement between the Nile basin members now can be observed in some steps taken by the countries were technical dialogue and diplomatic approach has increased the sharing of technical and hydrological data between the basin members countries, capacity building workshops and inter-nations trainings and seminars for technicians, policy and decision makers, government officials, diplomats, scientists, researchers, journalists, local and global think-tank institutions, NGOs, regional and other international stakeholders had really helped in easing the interstate political tensions and putting concord foundation for more regional cooperation which will contribute to a better understanding, enhancing the diplomatic relations and cooperation among the basin nations.
To have a sustainable Nile Basin with equal benefits, comprehensive cooperation, joint management, and effective partnership the diplomatic approach and inclusive negotiations is the only solution to overcome years of mistrust and standoff in the Nile Basin region.
Russia, Africa and the SPIEF’19
In 2019, four African countries – Côte d’Ivoire, Lesotho Niger and Somalia – for the first time attend the St Petersburg International Economic Forum (SPIEF’19) held on June 6-8 under theme “Creating a Sustainable Development Agenda” in Saint Petersburg, Russia.
The Forum brought together a record-breaking number of participants: over 19,000 people from 145 countries, with 1,300 guests representing heads of companies. The sheer number of business community participants, variety of thematic events, and level of representation on both national and international levels underscore the status of SPIEF as a truly global economic forum.
Over the years, SPIEF has become an open platform to exchange best practices and key competences in the interest of providing sustainable development.
The main event was the plenary session, with the participation of President of the Russian Federation Vladimir Putin, President of the People’s Republic of China Xi Jinping, President of the Republic of Bulgaria Rumen Radev, Prime Minister of the Republic of Armenia Nikol Pashinyan, Prime Minister of the Slovak Republic Peter Pellegrini, and Secretary-General of the United Nations António Guterres.
During his address to the participants of the Forum, Vladimir Putin talked about the tasks the country is facing, as well as about the importance of national projects as a driver of economic growth in Russia.
The overall budget for the implementation of proposed development projects of Russia is about US$400 billion. The priorities are healthcare, education, research and development, and support for entrepreneurship. And, considerable funds will also be allocated to develop major infrastructure, transport and the energy industry.
Putin also stressed to the guests and participants for their friendly attitude to Russia, their willingness for joint work and business cooperation based on pragmatism, understanding of mutual interests and, of course, trust, frankness and clear-cut positions. That global inequality between countries and regions is the main source of instability. It is not just about the level of income or financial inequality, but fundamental differences in opportunities for people.
More than 800 million people around the world do not have basic access to drinking water, and about 11 percent of the world’s population is undernourished. A system based on ever-increasing injustice will never be stable or balanced.
As a first step, necessary to conduct a kind of demilitarisation of the key areas of the global economy and trade, that also includes utilities and energy, which help reduce the impact on the environment and climate. This concerns areas that are crucial for the life and health of millions, one might even say, billions of people on the entire planet.
Russia has embarked on implementing long-term strategic programmes, many of which are global in nature, it is important to hear each other and pool efforts for resolving common goals. Russia is ready for these challenges and changes.
During the four days of the Forum, over 1,300 speakers and moderators, including Russian and international experts, took part in discussions. They shared their knowledge, experiences and best practices with the participants of the Forum. There was special zone of the area that hosted interviews with politicians, government officials, representatives of big business.
On the sidelines, there were business dialogues between Russia and other countries, for example Russia–Africa, were very popular this year. President of the Senate of the Parliament of the Republic of Zimbabwe, Mabel Chinomona, was one of the African participants. State officials came from Botswana, Egypt, Zimbabwe, Côte d’Ivoire, Lesotho, Mauritius, Niger, Sierra Leone and Uganda.
The Russia-Africa session featured Mikhail Bogdanov, Deputy Minister of Foreign Affairs of the Russian Federation; Special Presidential Representative for the Middle East and Africa; Amani Abou-Zeid, Commissioner for Infrastructure and Energy, African Union Commission and Tatyana Valovaya, Member of the Board – Minister in Charge of Integration and Macroeconomics, Eurasian Economic Commission.
Isabel Jose dos Santos, Chairman, Unitel SA; Daniel Kablan Duncan, Vice President of the Republic of Cote d’Ivoire; Dmitry Konyaev, Deputy Chairman of the Board of Directors, URALCHEM JSC and Benedict Okey Oramah, President, Chairman of the Board of Director, The African Export Import Bank.
Sylvie Baipo-Temon, Minister of Foreign Affairs and Central Africans Abroad of the Central African Republic; Nikita Gusakov, General Director, EXIAR; Boris Ivanov
Managing Director, GPB Global Resources and Nataliya Zaiser, Chair of the Board, Africa Business Initiative UNION; Executive Secretary, Russian National Committee, World Energy Council (WEC).
The participants noted that 2019 should be a historic year in the development of Russian-African relations. The summit of heads of state in October should take place amidst record growth in Russian exports to Africa. Russia is interested in new markets and international alliances more than ever before, while Africa has solidified its position as one of the centres of global economic growth in recent years.
In this context, the countries need to rethink the approaches, mechanisms, and tools they use for cooperation in order to take their relations to the next level as their significance grows in the new conditions of world politics and economics. What steps are needed to give a new impetus to bilateral economic relations? What are the key initiatives and competencies that can create a deeper strategic partnership between Russia and African states?
These are among the key questions on the meeting agenda for the upcoming Russia-Africa Summit planned for October in Sochi under the co-chairmanship of President of the Russian Federation Vladimir Putin and President of the Arab Republic of Egypt Abdel Fattah el-Sisi, Chairperson of the African Union.
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