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South Africa’s Economic Hegemonic Imperatives in SADC

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South Africa is the current chair of SADC, and as such its leadership is of paramount interest. South Africa is also the gateway to foreign direct investment to the developing world. The country also holds the key for the success of SADC both at economic and political level. However, since 1994 Pretoria has only intermittently, and reluctantly so, demonstrated leadership in SADC. More than 24 years later, a majority of key institutions for regional integration are largely inefficient and the prospects for human development index are painfully blur. A number of factors were earmarked to comprehend the lethargic state of regional integration and development in SADC. These include the lack of political will amongst member states to integrate for development purposes, various levels of economic development and systems.

Retrospectively, since the achievement of a democratic state, South Africa earmarked Southern Africa as its foremost foreign relations priority. This relationship with the region is a delicate one for Pretoria as it has to fulfill its roles as regional, continental and global player. South Africa assumed the region’s responsibility as to address such issues as closer collaboration and economic integration and utilised the SADC as a vehicle to steer the developmental agenda of the region. Arguably, this has benefited the region since South Africa’s spotlight on the global arena helps intensify the regions potential in many aspects. Notwithstanding the fact that this has not always brought the desired results for the region and beyond. Subsequently, South Africa has, overtime, continued to isolate itself from the region and likewise the region may have also chose to isolate South Africa in its own dealings.  South Africa acceded to the SADC Treaty on 29 August 1994 at the Heads of States Summit in Gaborone, Botswana. This accession was approved by the Senate and National Assembly in September 1994.After joining SADC South Africa was given a sector responsibility for finance, investment and health. This was a decision that was formed by South Africa’s comparative advantage in this area. It is undeniable that South Africa is the most developed and advanced economy in SADC and on the continent of Africa. This position cannot be ignored if the possibility of regional integration is prioritized on the region and the continent itself. For this reason, it is perhaps essential to earmark the owing to its economic strength South Africa also holds the capacity to make or break regional integration within the SADC and the continent. Moreover South Africa can be described as the economic hub of the region.

Consequently, South Africa is often confronted with a crisis of trying to balance its domestic, regional and global interests especially with the rise of transnational cooperation’s including membership into the BRICS group of countries. Evidently, in the process the probability of conflict of interest is inevitable. On the other hand, the success of the SADC unequivocally rely on South Africa’s will to support and develop it as envisaged. SADC established the Regional Indicative Strategic Development Plan as a thorough guide to intensify integration. According to the 15 year plan, the key milestone are to reach a Free Trade area in 2008, Customs Union in 2010, Common Market in 2015, Monetary Union in 2016 and regional currency in 2018. The Regional Indicative Strategic Developmental Plan (RISDP) remains the strongest indicator of SADC’s desire for deeper integration with an objective of achieving a level of intra-regional unrestricted flow of goods, services and investment. The RISDP cannot be implemented without the support of the biggest economy of the region. SADC needs South Africa but the fear is that the same cannot be said of South Africa needing SADC.

According to Alde and Pere, South Africa’s biggest export market is SADC. This is often overlooked when surveying South Africa’s trade figures, the reason being that a great portion of South Africa’s exports to other countries are concealed within SACU. Evidently, the relevance of the SADC market to South Africa should not be underestimated. Since 1994 the South African government has regarded the Southern African region as the foremost priority of its foreign relations. To exemplify the prominence attached to this region, the first foreign policy document adopted by its democratic government was in fact a “Framework for Co-operation in Southern Africa” endorsed by Cabinet in August 1996. In terms of this “Framework”, the vision for the Southern African region is one of the highest possible degree of economic cooperation, mutual assistance where necessary and joint planning of regional development initiative, leading to integration consistent with socio-economic, environmental and political realities.

South Africa has taken a leading role in the region to address such issues as robust cooperation and economic integration. These include the establishment of a free trade area within the region, the development of basic infrastructure, the development of human resources and the creation of the necessary capacity to drive this complicated process forward, as well as the urgent need for peace, democracy and good governance to be established throughout the region. Nevertheless, history has proven that South Africa bullies its fellow member states within the region. South Africa opts to wield its economic power when negotiating with partners in both SACU and SADC. This oversight plays itself out in how some South African government officials view their regional partners. For example in response to questions about the consequences of the negative impact that an EU/SA Free Trade Agreement would have on its SACU member states. Former Director of Regional Economic Organisations within the South African Ministry of Foreign Affairs Willem Bosman maintained that, there is a need for a shock treatment that is necessary to fellow SACU member states. Bosman further maintained that SACU members are on their own, as South Africa would no longer provide for the 50% of their budget….”now you will have to tax your own people; you also have to work according to the structures of a free independent country”. The irony of this statement is that even if the new SACU agreement replaced the old agreement in 2002, SACU largely remains an apartheid-created relic, designed to ensure that South Africa would have a captive market for its agricultural and non-international competitive manufactured products. This economic dependency of the SACU states on South Africa was “part of a strategy to ensure that South Africa’s economic hegemony in Africa. If SACU states experienced economic deterioration as a result of the EU/SA Free Trade Agreement, who will buy South Africa’s non-international competitive manufactured products? By placing integration at the global level a priority, South Africa has always risked national and regional economic destabilization.

South African’s global integration agenda

In the interest, for many, South Africa has an urgent need to further integrate its economy into the world economy. This could also be at the expense of its SADC counterparts. Nevertheless, for South Africa to attract good foreign direct investment, therefore there’s an urgent need for South Africa be seen as an environment of peace and tranquility not just in South Africa but the region. Many global players who take interest in investing in Africa perceive South Africa as the gate way.  Nonetheless unfamiliar circumstances arise from the role played by external partners in the region, especially the EU and the USA. In respect of the EU, the outcomes of the Economic Partnership Agreements negotiations will fundamentally alter the peace and nature of regional integration in Africa. Other global players refuse to be side-lined. This was illustrated by the recent introduction of the China-Africa office in South Africa in March 2008. South Africa has to assume leadership in ensuring that the Zimbabwean problems are resolved since regional peace is important for the national economy of South Africa. Nonetheless, many have questioned South African former President Thabo Mbeki’s impartiality in the process. What this means is that there has to be a balance of interest between national, regional and global integration aspirations for South Africa.

Moreover, there are ways in which South Africa has attempted to integrate its economy in the world economy at the expense of its regional counterparts. It is also noteworthy to point out that this was inevitable in light of long term planning. The EU/SA TDCA agreement stabling a free trade areas demonstrate this phenomenon. South Africa become a signatory to this trade agreement with full knowledge that it would bare devastating impact on both the members of SACU and SADC. In light of the SACU, the agreement was endorsed without consultation without consultation with the other BLNS SACU member states. This was a precise disregard of the SACU Treaty that stipulates that such agreements must be approved by all SACU members. By acting unilateral, it is clear that South Africa is trying to monopolise/maximize these economic benefits for itself at the expense of the other members.

In light of SADC, the fear of EU goods flooding the regional market has been duly noted. This is because when EU goods have entered South Africa, it becomes relatively easy to have them anywhere else within the SADC region and Africa at large.  Evidently, this has undermined the agricultural and industrial sectors. A number of SADC states launched a complained that South Africa only became serious about completing the negotiations for the SADC FTA when it had completed negotiations with the EU. However, a few South African trade officials felt that the EU/SA FTA allowed them to become more integrated into the world economy, notwithstanding the fact that the consequences could also be severe for South Africa’s own economy.

A look at the TDCA agreement will show that South Africa has divided attention, with more emphasis place on the EU and not the SADC region. This agreement follows several aspects; strengthening dialogue between the parties, supporting South Africa in its economic and social transition processes, promoting regional cooperation and the country’s economic integration in Southern Africa and in the world economy, and expanding and liberalizing trade in goods, services and capital between the parties. The amount of loss of revenue is very high since SACU and SADC states will not be able to levy duties on the EU products. “Based on respect for democratic principles, human rights and the rule of law, the Agreement establishes a regular political dialogue on subjects of common interest, both at bilateral and regional level (within the framework of the EU’s dialogue with the countries of Southern Africa and with the group of the African Caribbean and Pacific (ACP) countries. The duration of the agreement is unspecified, but provision is made for its revision every five years of the date of its entry into force in order to consider possible amendments. The agreement covers a number of areas and includes a future developments clause making it possible to widen the field of cooperation”.

Concluding remarks

South Africa’s dominance in southern Africa, most prolific in the economic sphere, remains uncontested. South Africa accounts for about 60% of SADC’s total trade and about 70% of the regions GDP. The country is also within the region, the most diversified economy and thus critical to SADC’s drive towards developmental regionalism. Nevertheless, it is also true that a relationship of interdependence binds South Africa to the region. Moreover, in varying degrees, the economies of other SADC member states also benefit from employment opportunities, skills transfer, tax revenues and global linkages as a result of the business activities of South Africa firms.

Charles Matseke studied his Masters in International Relations and Foreign Policy at the SARChI: Chair for African Diplomacy and Foreign Policy at the University of Johannesburg. He is currentlyProgram Manager for Africa-China in International Forums at the Centre for Africa-China Studies at the University of Johannesburg. His main areas of focus are developmental policy and developmental foreign policy. He has published on these areas in various platforms.

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Development in South Africa: Bridging the Gap

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To live in one of the most unequal yet highly urbanised societies in the world means that there are high levels of inequality, poverty and other injustices that the majority of the population have to live with  (Burger, Van der Berg, van der Walt, and Yu, 2017). This reality carries with it not only decades of discriminatory policies, but poverty stricken livelihoods that cripple any chance of progress in a society where wealth has a strong racial correlation (Burger, et al, 2017; Leibbrandt, Woolard, and Woolard, 2000). While South Africa is the most advanced and diversified economy in Africa, and the wealthiest in terms of GDP per capita, the country is still haunted by high levels of inequality. According to the 2018 World Bank Report, more than half of South Africa’s population lives below the upper poverty line of R992 per month per person by use of 2018 prices. These are the realities that we are faced with – this is in addition to being the leading country in the world in unequal income distribution with a Gini index of 63.4 as shown in Table 1.1. Although great strides have been made in targeting unemployment and economic growth to ensure that development has taken place, historical inequities still need to be addressed adequately in order to improve the quality of life for the majority of South Africans, and to bridge the gap between these parallel worlds. This chapter will take measure of the nature of inequality as well as advance some routes which could be taken to allay the present challenges.

The world’s 10 most unequal countries

(Source:https://www.worldatlas.com/articles/the-world-s-most-unequal-countries.html)

Ranking Name of country Gini coefficient
1 South Africa 63.4
2 Namibia 61.3
3 Haiti 60.8
4 Botswana 60.5
5 Suriname 57.6
6 Zambia 57.1
7 Central African Republic 56.2
8 Lesotho 54.2
9 Belize 53.3
10 Swaziland 51.5

Not a New Idea

The idea of bridging the gap between two parallel worlds is not one that is unheard of (Zhu, 2017). Asia, being the largest continental economy by GDP (Gross Domestic Product), also implies that it has experienced rapid socioeconomic development in recent years. A great example of this is China – since the late 1970s, the development in the cities has not only attracted immense inflows, but have also been a key driving force for urban growth and development, with the 2010 census stating that 87 percent of China’s “floating” population migrated to cities and towns from villages. Zhu and his colleagues make use of the in situ urbanization, which refers to the process of rural settlements and populations transforming themselves into urban or quasi-urban ones with little geographical relocation of the residents. This phenomenon has two dimensions whose development has played a key role in China’s urban growth between the late 1970s and the late 1990s (Zhu, 2017). Of the two dimensions, one of them focuses on the creation of new industrialised centres, and the other dimension refers to the practical and physical modifications of rural areas through the expansion of township and village enterprises (TVEs) (Zhu, 2017).

The experiences of developed countries propose that in the industrial period and post-industrial period, many individuals and their families move between and/or within cities numerous times due to changes in either employment status or housing needs, which are often caused by various life cycle events such as marriage, child bearing, etc. This is the kind of urban-urban and intra-urban mobility that is often observed in many developed countries (Zhu, 2017).

From the case study mentioned above, we learn that incorporating migration along with in situ urbanisation will not only ensure that people residing in the rural areas benefit from the prosperity of the cities, but will also benefit from the resources and potential development that could occur in their hometowns (Zhu, 2017). Spatial links will need to be visualized and implemented at finer spatial levels, with “a coordinated regional approach” required to “cuts through fragmented boundaries” in order to assist the movement of people between and/or within urban and rural spaces (Zhu, 2017). Additionally, more attention will need to be given to issues of various social security programs and public services, to ensure that migrants will not be disadvantaged by this migration (Zhu, 2017). Gopaul’s (2009) paper based on the South Africa case also indicates that something needs to be done to assist people living in rural areas who live in extreme poverty; else, their standard of living will continue to worsen. He suggests that the solution lies in tourism – “to accomplish rural development, there is a need to nurture a sense of willingness and enthusiasm amongst the poor communities to participate in rural development” (Gopaul, 2009).

The Evolution of Urban Development in South Africa

Rapid development and large scale rural-urban migration in South Africa were inspired by the discovery of diamonds in Kimberly, and that of gold in the Witwatersrand in the 1860s and 1880s respectively (Mabin, 1992; Turok, 2012). These economic activities brought some much-needed opportunities to the rural community, and transformed South Africa from an agricultural state to an industrialized nation (Moomaw and Shatter, 1996; Turok, 2012). An invasion of foreign investment in mining from De Beer, Anglo American and Consolidated Gold Fields was also witnessed in the late 1800s, and further generated rapid growth of support industries and services that were supported by temporary migrant labour that was migrating to the cities (Turok, 2012). As a result, the developing world – including South Africa – has witnessed unprecedented growth in urbanisation rates in the last two decades (Cohen, 2006). Thus far, urbanisation in South Africa has been increasing by roughly 0.5% on a year-to-year basis, with technological innovation and employment in urban areas continuing to increase due to its ability to offer considerable socio-economic opportunities in comparison to rural areas. Behrens and Robert-Nicoud (2014) further argue that cities are not only the locus in which inequality materialises, but they are hosts to instruments that contribute extensively to changes in that inequality.  Thus, it is not surprising that individuals seem to migrate to economic hubs where more opportunities exist (Behrens and Robert‐Nicoud, 2014; Ozler and Hoogeveen, 2005).

Having an urbanised economy or cities as economic powers while rural communities are under-developed is not an exclusive South African phenomenon – it happens all over the world because of several reasons as seen in the case of Asia. Amongst the key reasons is that of economies of scale and rural-urban migration. As such, Fields (1972) referred to the rural-urban migration theory as an economic phenomenon in his paper. The theory hypothesizes that workers compare the projected incomes in the urban sector with agricultural wage rates in the rural areas and migrate if the former exceeds the latter. In addition, the rural-urban migration is often regarded as the adjustment mechanism that workers use to assign themselves between different labour markets, some of which are located in urban areas and some located in rural areas. Thus, rural-urban migration is the equilibrating force that connects rural and urban projected incomes and is regarded as a disequilibrium phenomenon (Fields, 1972).

Consequences of Urbanisation

Over time, we have observed how urbanised South African cities are, and how they continue to advance. The downsides of these advances have had destructive societal, economic and environmental consequences (Turok, 2012). Meanwhile, rural areas continue to remain under-developed with high levels of deprivation with respect to sanitation, access to water and access to energy, high levels of unemployment, inadequate use of natural resources, insufficient access to socio-economic and cultural infrastructure, low skills level and insufficient literacy rate (Behrens and Robert-Nicoud, 2014; Burger, et al, 2017; Gopaul, 2009; Krishman, 2016; Ozler and Hoogeveen, 2005).

Upon the analysis of international studies, Barro (2000) found that people living in rural areas might be using old technological methods, whereas urbanised areas employ more recent and advanced techniques in their daily undertakings. As such, we observe how large municipalities within the cities are deeply accommodative of additional commercial services and more advanced roles concerning finance as well as developmental projects; whereas smaller municipalities, which are mainly located on the peripheries of the cities are only able to accommodate a large portion of lower mandate facilities and industrial work (Behrens and Robert-Nicoud, 2014). In addition, these smaller municipalities are often under-resourced and are surrounded by areas that have high levels of poverty and deprivation.

As it stands, an approximate 66% of South Africans are living in urban areas, with the expectation that eight in ten people will be living in urban areas by the year 2050. This not only means that the demand for infrastructure and housing will increase rapidly, but the cost of living will also increase for the average South African. Though urbanisation is the most convenient instrument currently being used to accelerate the rate of growth in developing countries by means of (i) driving economic growth, (ii) sustaining larger and more productive populations, (iii) sourcing higher means of income, new and diversified engines of growth need to be considered. The results of having cities that are too urbanised may have negative externalities that may affect negatively on rural economies, whose role is to provide economic sustainability and food security (Krishman, 2016). As such, other measures need to be considered if we are to sufficiently and effectively bridge the gap between rural economies and urban economies in order to ensure that growth takes place in a way that is beneficial to everyone.

Although cities are the dominant centres of economic activity and employment, and continue to attract maximum foreign investment; they are not performing to their potential or reaping the benefits of agglomeration due to prevailing shortages of energy and water infrastructure, transport congestion and deficits in education and skills (Turok, 2012). This is in addition to creating poverty traps on the peripheries of the cities, which results in favouritism for road-based transport – private cars and minibus taxis (Turok, 2012). To ensure that rural economies are not left behind in this fast paced economy, we need to consider redeveloping rural areas into sustainable communities that can support themselves economically (Gopaul, 2009; Krishman, 2016).

Poverty and Inequality in Rural Areas

Households that have high levels of poverty and inequality are largely black or coloured communities who tend to reside on the periphery of the cities, thus, a high level of vulnerability is usually observed in some areas that are remote and isolated from the main cities (Burger, et al, 2017). High levels of unemployment are largely concentrated among the poor people in rural areas and continues to remain a core challenge in the South African economy with a 238% growth from 1 703 863 in 1994 to 5 752 632 in 2016 (Dube, das Nair, Nkhonjera, and Tempia; 2018 Quantec, 2018). According to Ozler and Hoogeveen (2005), South Africans are neither separate, nor are we equal in post-Apartheid South Africa. The authors make this statement because the question of whether the economic inequalities of the apartheid era have faded remains, especially with the high levels of poverty and inequality that this country still faces in the rural areas.

Poverty is at an all-time high in South Africa and is highly concentrated within the African race, women, rural areas and the youth (Triegaardt, 2006; Woolard, 2012). Statistics show that Africans account for 95% of the poor population and a large percentage of them reside in former homelands, rural areas and townships households (Woolard, 2012).  It is also important to note that poverty is closely linked with the mortality rate. This stems from the fact that poor people have difficulties in accessing health care facilities seeing as they do not have the basic income for transport services, nutrition and clothing which further perpetuates the high levels of inequality (Woolard, 2012). Consequently, the unsatisfactory living conditions continue to intensify the high poverty levels, which further exclude and marginalise poor people from participating in the economy (Triegaardt, 2006; Woolard, 2012). As such, agriculture presents opportunities of job creation, particularly in rural areas (Dube, et al, 2018). As a labour-intensive and rural industry, agriculture makes a contribution of 10% to total employment. However, a slight decline has been observed between the period of 1994 and 2016 – from 12 percent to 6 percent (Dube, et al, 2018).

How Can Agriculture Help Eliminate Poverty and Deprivation?

In rural areas all over the world, agriculture represents the principal land use and is a major element of the practicality of rural areas. Rural communities can be developed to increase their competitiveness in agriculture. The in situ urbanisation case mentions to how rural areas have to transform themselves into urban or quasi-urban ones with little geographical relocation of the residents; in the case of South Africa, this can be achieved through agriculture. Farming and related undertakings primarily encompass the basic fabric of rural life, contributing meaningfully to the overall state of rural areas by facilitating and creating employment, business prospects, infrastructure and quality of the environment. This can be a driving force for economic growth and can have lasting impacts on the overall community.

In South Africa, agriculture is a twofold production system that comprises of large-scale commercial farmers and small-scale farmers (Dube, et al, 2018). As it stands, agricultural production remains concentrated on field crops given their prominence in determining national food security. However, the growth in South Africa’s agriculture sector –the fruit sector and small-scale farmer participation in particular – is restricted by insufficient infrastructure; mainly ripening facilities, pack-houses and cold storage facilities (Dube, et al, 2018). This limitation causes costly delays, limits entry into the formal sector and hinders expansion into export markets.

Government or private sector needs to intervene by initiating and constructing capabilities in agriculture and agro-processing if these small-scale manufacturers do not have the means to get their products to final consumers (Dube, et al, 2018). What will ensure success in this initiative is linking farmers with large producer-exporting companies that already have access to infrastructure and international markets (Dube, et al, 2018). The government can then incentivise large producer-exporting companies to collaborate with minor producers. In return for large-scale companies lengthening technical services and information on production and standards to small-scale farmers, the large companies can be offered tax breaks, grants for investments in storage and cold chain amenities or support with raising funds. This initiate is one that not only benefits the small-scale farmers, but also the capability to have spill over effects that will benefit the whole economy.

Recommendations

Rural areas undoubtedly have the potential to lead to great economic growth; however, this reality will only be possible if skills uplifted and investment in R&D (research and development) is prioritised. The results of investing in rural economies will have spill over effects and positively impact on urban areas, while creating employment in the peripheries of the country. With a highly urbanised country as South Africa, it is crucial that we look into other alternatives which will not only benefit the country as a whole, but also have an undeniable impact that can bridge the gap between rural and urban areas.

Competitive agriculture in rural communities, particularly when supported by technological platforms can drive economic growth – an example of this is the Khula app.  Khula is a farming app founded by Karidas Tshintsholo with the aim of assisting emerging farmers in finding their feet. To date, 175 farmers are currently using it, and this has ensured that famers who were initially unable to access the formal markets can connect with suppliers. The purpose of the app is not only to assist small-scale farmers, but to assist with alleviating poverty and ensuring that young entrepreneurs have an opportunity to make a decent living.

With such great innovations taking place in the country, the possibilities of the kind of development that can be fostered in rural areas are endless. Indeed South Africa’s developmental woes can only be resolved from within; through South African ingenuity, and modulation of the experiences, technologies and investment of external partners.

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Russia and Angola: Stuck Between Diplomatic Rhetoric and Business Reality

Kester Kenn Klomegah

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Russian President Vladimir Putin held talks at the Kremlin with President of Angola leader João Lourenço on strengthening cooperation in trade, the economy and culture, as well as current international and regional matters.

“Angola is a reliable and old partner. We need to consider what we need to do, without delay, to stimulate our trade and economic ties. There are interesting fields of activity, such as the diamond industry, fisheries and space exploration. There are also cultural spheres, such as education and the training of personnel,” Putin told the Angolan President at the meeting.

On his part, the Angolan leader João Lourenço added: “We have come to Russia on an official visit to strengthen our ties and cooperation and, if possible, to promote interaction between our countries. Russia is doing splendidly in the spheres of mineral resources, education, healthcare and defence. But we would like to know about Russia’s potential in other fields so we can promote cooperation in these areas of the Angolan economy.”

He informed further that his opening speech at the Angola-Russia Forum in Moscow was designed to attract the interest of Russian business people to investing in the Angolan economy, and finally added “many countries are doing this, and we are confident that Russia can help with economic diversification.”

Putin and Lourenço signed a joint communique after their consultations. The number of bilateral documents signed included the intergovernmental agreements on the peaceful exploration and use of space, and on fishery and aquaculture, as well as documents on cooperation in diamond mining and processing.

Consultations continue on draft agreements on cooperation in the peaceful use of outer space and nuclear energy, commercial shipping, mutual protection of classified information, simplified access to Angola’s ports for Russian warships, as well as agreements involving Russia’s Justice Ministry, Ministry of Industry and Trade and Communications Ministry, according to the Kremlin Press Service.

Before their final departure from the Kremlin, João Lourenço presented Vladimir Putin with a high Angolan award – the Order of Agostinho Neto, the first President of Angola – as a sign of gratitude for the years of support for the Republic of Angola.

Agostinho Neto Order is the highest distinction of the Angolan State with a single degree, granted to nationals and foreigners, in particular Heads of State and Government, political leaders and other heavyweight individuals.

Earlier at the Angolan-Russian Forum, the Angolan leader said that political and diplomatic relations with Russia were “excellent and privileged” but asked for more Russian private investment.

In his objective assessment about economic engagement by foreign players, only few Russian companies are comparatively operating in the Angolan market and limited solely to the exploration and production of diamonds, to the financial system and to the construction of hydroelectric dams.

“Angola wants to change that scenario through public-private partnerships or by creating Angolan-Russian companies with a focus on the manufacturing industry, agro-industry, fishing, energy, tourism, geology and mining, among other sectors,” he added.

Lourenço, however, recalled the long-lasting tradition of “friendship and solidarity” between the two countries, which have remained firm and strong despite the great changes the world has seen in the last decades. Angola counts with Russia’s solidarity and support at a time when it must guarantee economic cooperation and sustainable development, the president said.

Russia-Angolan interaction in the Kremlin has attracted attention of a former Russian diplomat. “Angola is a priority area of Russia’s cooperation in Africa. To begin with, that was the case since the time when Angola fought for its independence. Secondly, this is due to Angola’s huge economic potential,” explained Sergei Nenashev, who served as Russia’s Ambassador to Angola from 2007-2012.

“Now the country lives off oil, gas and, partially, diamonds. On the other hand, Angola has vast resources. Today, Russia and Angola maintain ties in all areas of interstate relations, including culture, education, personnel training, military-technical, financial and economic cooperation.” the former Ambassador told the Kommersant daily newspaper.

Russians like historical references. As expected, the local Russian media were awashed with articles highlighting Russia’s historical contributions to the independence of Angola, the development and strengthening of friendly relations with the country during the Soviet era. That Russia has promoted political dialogue, including the exchange of visits at the high levels, as well as trade and economic cooperation and cultural relations between the two countries.

Media reports offered a number of examples of many areas of cooperation. But Russian companies, at least over the past ten years, have made little results or impact on development of the country. Alrosa is involved in diamond mining in Angola’s largest Catoka deposit. Global Resources is involved in geological prospecting. Rosneft has won a tender for working in Angola. Russia and Angolan companies are cooperating on high technology.

Itar-Tass reported that Russian truck-maker Kamaz may organize assembly of trucks in Angola and Russian Railways may participate in upgrading the rail infrastructure in this country. Russian Railways (RZD) in restoring and upgrading the railroad infrastructure are among looking-forward cooperation projects.

But, Professors Vladimir Shubin and Alexandra Archangelskaya from the Russian Academy of Sciences’ Institute for African Studies, have argued that “both Russia and Angola still need to be more strategic in aligning their interests, and more proactive in carving out efficient bilateral instruments and mechanisms in order to promote economic exchanges and reap the benefits of a fully-fledged partnership.”

Cooperation between Angola and Russia date back to 1976, when the two countries signed a treaty of friendship and cooperation. But official figures are still staggering, trade between the two countries stood at US$500 million in 2016, 15 times higher than that of 2012 (US$25 million).

Angola has diamonds, oil, gold, copper and a rich wildlife, forest and fossil fuels. Since independence, oil and diamonds have been the most important economic resource. It’s a member of the Southern African Development Community, an inter-governmental organization that has made its goal to further socio-economic cooperation and integration as well as political and security cooperation among 16 Southern African States.

The Republic of Angola is a country in south-central Africa, the seventh largest by territorial size and bordered by Namibia to the south, Democratic Republic of Congo to the north and Zambia to the east, and on the west the South Atlantic Ocean.

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Russia and Angola: Cooperating On Trade, Arms Delivery and Natural Resource Exploration

Kester Kenn Klomegah

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Russia is ready to raise its full-fledged bilateral ties and strengthen multifaceted cooperation by signing a series of agreements with Angola, one of Russia’s key partners in the African region, during the meeting scheduled early April between President Vladimir Putin and Angolan counterpart Joao Manuel Goncalves Lourenco in the Kremlin, Moscow.

Putin has expressed his confidence that Joao Lourenco official visit marks a new stage in the development of bilateral relations between the two countries. Putin has had bilateral connectivity with this southern African country, for example, during the leadership of Jose Eduardo Dos Santos who visited in October 2006.

Russia-Angolan relations have been developing actively “on the principles of mutual respect, trust and sincere friendship.” It is worth saying that Russia and Angola successfully cooperate in resolving actual international and regional problems and in ensuring security, law and order in the world.

In July 2018, Vladimir Putin held a meeting with President of Angola Joao Lourenco on the sidelines of the BRICS Summit. “Russia and Angola have longstanding and friendly relations that we greatly treasure. We are actively cooperating in political matters, security, and at international organizations. Our trade is quite modest so far, but in general, we have good projects that can be implemented. Our military and technical cooperation is also developing,” Putin told his Angolan Joao Lourenco.

During the Cold War, Russia always supported the Angolan people and helped achieve what is now treasure most of all: independence. Even after independence, Angola has enjoyed political freedom for 42 years, Russia never turned its back on Angola; it always supported and helped us fight the apartheid regime, which was a threat to Angola and the entire African continent.

“Rest assured that the people of Angola will never forget the friendship between our countries that was forged in battle. Now, we are focused on development. We want our country to develop in all areas. Speaking about economic cooperation, we are counting on interaction with Russia. First of all, Russian enterprises work in our mining complex. But, we would also like Russian businesses to be represented in other industries,” Joao Lourenco, in his turn, told Putin.

Russia plans large-scale economic engagement with Angola. Last year February, during a working meeting between Vladimir Putin and Alrosa CEO Sergei Ivanov in Kremlin, it came out that Russia’s Alrosa plans to develop one of the largest diamond deposits, Luaxe in Angola. “We are currently conducting a feasibility study. We have met with the President of Angola. Everything is on schedule. I am certain it will be a significant asset that will help us maintain our leadership,” according to Sergei Ivanov.

Soon, the truth in his words comes to fruition. In March 2019, Joao Lourenco gave an exclusive interview to a Russian media, Itar-TASS, he outlined some of his plans. The Angolan leader hinted that his country was ready to undertake the building factories to manufacture Russian weapons and military equipment for the African market.

“As for our military and technical cooperation with Russia – it will continue and be deepened. We would like to evolve from our current state of purchasers of Russian military equipment and technologies towards becoming the manufacturers and having an assembly point of Russian military equipment in our country,” he told the news agency.

Russia and Angola have military and technical cooperation. In 2018, Russia agreed to supply arms and military equipment to Angola worth US$2.5 billion, including spare parts for the Soviet-made weaponry, light weapons, ammunition, tanks, artillery and multi-purpose helicopters.

Besides, there are a number of Russia companies interested in Angola. For example, Mazepin’s companies considers an important step building nitrogen fertilizer plant in Angola. Zarubezhneft, an intermediary for the state interests in the field of fuel and energy complex on the international arena, plans to work in the oil and gas industry – from exploration and field construction to the pipeline systems construction and supply of equipment to the oil facilities.

Zarubezhneft has sealed a memorandum of understanding with Angola’s authorities to cooperate when exploring and producing from crude oil fields of that African country. For this purpose, the consortium eyes the Atlantic shelf of Angola, expecting to produce from it in partnership with Angola’s Sonangol and Dark Oil Company, which licenses for the area.

On the other hand, it was also reported in March 2017 that Angola had given two Russian companies the green light to build a major refinery complex and railroad. The US$12bn mega project put forward by companies Rail Standard Service and Fortland Consulting Company, which have set up a consortium with local partners.

Gustavo Plácido Dos Santos, Researcher at the Portuguese Institute of International Relations and Security (IPRIS), wrote recently that Angola has been on the frontline of Russia’s expansion in sub-Saharan Africa. Luanda enjoys strong historical ties with Moscow. Although political ties have failed to translate into deeper commercial interactions, it is worth highlighting Angola’s potential for Russian companies, especially in terms of mineral resources.

According to him, Sub-Saharan Africa is set to produce more gas than Russia by 2040. Thus, the region becomes a viable alternative for the European Union’s aim of diversifying energy sources away from Russia. In this sense, given the geographic proximity, countries such as Nigeria would be in the front line to satisfy Europe’s diversification goals. However, instability in Nigeria and its neighborhood positions Angola — one of Africa’s most stable energy producers — as a viable alternative.

Interesting to recall that back in June 2009, Dmitry Medvedev and Jose Eduardo dos Santos also held bilateral talks. A joint communique issued following the talks sets out the priority areas for developing the partnership between the two countries. The sectors in question include mining, energy, transport, telecommunications, military-technical cooperation, health and education.

Both leaders then witnessed the signing of a number of bilateral agreements, in particular, an intergovernmental agreement on air transport links, an agreement on encouragement and mutual protection of investment, and the medium-term program for economic and trade, science and technology as well as agreements on cooperation in geology and higher professional education.

In addition, there was a contract signed for the building and financing of Angola’s national satellite communications and broadcasting system, AngoSat. Energiya corporation reaffirmed its intention to fulfill the contract that envisions creation of a satellite network for telecommunication and broadcasting in Angola.

This April, some of the large-scale economic and investment projects crystallized in the documents signed covering projects in energy, minerals exploration, and high technology, in particular building a satellite communications system, and that of economic cooperation to a new level. There are the desires and the possibilities, but the need to reflect on setting up new financial mechanisms, according to South African based Senior Analyst on African policy, Kelvin Dewey Stubborn.

In his discussion for this article, Dewey Stubborn acknowledged that there are various forms of cooperation two largest state-owned companies, Zarubezhneft and Sonangol. There are a number of projects to develop and find new hydrocarbon deposits. This is certainly of interest because of very big players in the oil market, but this does not mean that Russians cannot cooperate in this field. Regarding the overall situation, Africa is a continent developing very dynamically, a continent on the rise, and second, Africa today has powerful countries that have chosen their own development paths.

Experts, such as Professors Vladimir Shubin and Alexandra Archangelskaya, Institute for African Studies in Moscow, have also argued that “both Angola and Russia still need to be more strategic in aligning their interests, and more proactive in carving out efficient bilateral instruments and mechanisms in order to promote economic exchanges and reap the benefits of a fully-fledged partnership.”

According to Wikipedia, compared to the Soviet era, trade between Russia and Angola is still minimal. In 2016, exports from Russia to Angola amounted to US$567.9 million and Angolan exports to Russia amounted to just US$14.94.

Angola has diamonds, oil, gold, copper and a rich wildlife, forest and fossil fuels. Since independence, oil and diamonds have been the most important economic resource. The Republic of Angola is a country in south-central Africa, the seventh largest by territorial size and bordered by Namibia to the south, Democratic Republic of Congo to the north and Zambia to the east.

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