Authors: Do Quynh Anh & Francis Kwesi Kyirewiah*
Over the past decades, there have been numerous arguments about China’s relations with Africa which is seen as the foundation of Beijing’s diplomacy. Some scholars have linked China-Africa relations to a new form of colonialism and resources diplomatic strategy of China. For historical and political reasons, China has been close with African countries because they share common past of their former colonial suffering and the common tasks of promoting their economic development. Now as the largest developing country as well as the second largest economy of the world, China’s economic relations with Africa en bloc is obviously changing from the previous low-technology aid to a rapidly medium- and high-technology assistance. To that end, China is able to provide more financial aid to all the developing countries including Africa.
To be sure, it is normal for any country to provide aid to each other in terms of borrowing and lending. Historically and politically, the parties involving international financial interactions might end up as enemies. Professor J. A. Frieden, of Harvard once argued, in general, developing countries are by definition short of capital, so most of their governments are eager to borrow abroad. It is therefore presupposed that the prospect of using borrowed money is to speed up growth and increase national output. Yet, sometimes the borrowers could have little incentive to use the money wisely. It is also true that the lending powers have used or misused or even abused the financial weapons available: they can cut off debtor governments from future lending, and they may be able to retaliate in related areas, such as freezing debtor governments’ bank accounts or taking other government-owned properties. Equally noted is that lending governments are able to use broader foreign policy considerations to induce the borrowing side into compliance with the lenders’ demands. That is true in terms of many cycles of lending and debt crises. For example, all through the 19th and early 20th centuries, rapidly growing countries borrowed heavily from the major European financial creditors, primarily London but also Paris, Amsterdam and Berlin. Usually, debts appear to have contributed to economic development, but there are also plenty of crises and political disputes. Therefore, debt crises have existed in world politics for centuries, and now it appears in a new face as “debt trap.”
China’s relation with Africa is relatively new due to the fact that the rise of China and the independence of Africa are the most recent scenario over the past 40-60 years. As Dr. DambisaMoyo, a scholar in international affairs anda native from Zambia, argued, “No country has come to symbolize the profound economic transformation witnessed in the past half-century than China. It has become the largest exporter and the largest foreign currency-holder of the world and it has already surpassed Japan to rank second in terms of GDP.” By 1978, China’s world GDP share was only 1.75%, but since then, it share has risen up to 17% in 2017.Today China is the largest FDI source to Africa and the bilateral trade has been rising substantially. The resultant fact is not necessarily because of China’s smart policy, but equally due to the West’s own folly policymaking.
Yet, China has been targeted by the West headed by the United States as the “debt-trap maker”. The reasons might be different but it argues that China has tried to use its increasing financial power to dictate its Communist will and nationalistic goal in the world affairs, in particular towards the Africans. This is really ridiculous. First, a closer look into the Marshal Plan endorsed by the United States in 1948 to assist European recovery from the war-time destruction, the West called it the “European Recovery Plan” which aimed to invest billions of U.S. dollars to help the war-worn states of Europe. However, when they discuss the economic plan from Beijing and Moscow, they use the terms of traps and conspiracy, such as “Beijing’s expansion is inexorable, has a global scope and is driven by the depression in the West.” Ideologically, the United States has tried to distort any Chinese economic plan including the “Belt & Road Initiative”. Second, the United States and many other countries of the West as well have entertained the mentality of their superiority. They do hold the perception that Europeans are the only most creative people on the Earth. Thus the rise of China is surely regarded as the loss of their superiority and prestige as well. In light of this, the third point is that they have perceived China as a potential or even a real rival or enemy in a geopolitical sense, as U.S. politician Mike Pompeo has repeatedly targeted China both publicly and privately.
However, the relationship between China and Africa has gone beyond the so-called “debt trap diplomacy”. From the mid-1950s, China was committed to supplying all possible aid and supports to the African peoples who were struggling for their national independence, while newly-independent states consistently extend their supports to China diplomatically and politically. Since the last decades of the 20th century, China-Africa relations have been primarily focused on economic cooperation. With its economic power growing, China’s aid has been focused on infrastructure development, consisting of constructing railways, roads and hydropower to business cooperation such as mining, farming and tourism. In return, Africa has made all possible efforts to improve its investment and business environment in order to protect the legitimate rights and interests of Chinese companies. This is now urgent for both sides need to work decisively to transform and upgrade the quality and efficiency of the cooperation in strategic terms. As Italian economist Vilfredo Pareto argued, it is quite possible for there to be an action in an economy that harms no one and helps at least one by one. Whether it is accepted or not, China’s sustained growth can’t be in isolation from the rest of the world in a long perspective.
China’s aid to Africa has never been a lip-service as it believes that in order to insure sustainable economic growth, it is strategically necessary for any country, either small or large, to have a complete transportation network and reliable power-supply system. This is what is referred to as ‘two wings theory for development.’ Today, most African countries lack basic transportation system and sustainable power supply for accelerated and sustainable economic development. For example, agreements signed in various fields between China and Africa wasvalued at over $50 billion between 2015 and 2016. Most African states have been eager to accelerate their national industries’ production capacity in order to achieve their economic independence. Thus far, Chinese companies have been instrumental in the construction of numerous symbolic infrastructure projects, including but not limited to the newly-completed railwayline connecting the capital of Kenya (Nairobi) to its coastal city and port hub of Mombasa, and the highly anticipated network of Chinese-built railway in East Africa. In addition, China is currently the largest contributor to peacekeeping missionin Africa,rangingfrom non-combat peacekeepers in medical and engineering servicesto the deployment of troops in Sudan.
For sure, China’s overall capacity in Africa has been much greater than 50 years ago when it started the first railway from Tanzania to Zambia during the Cold War heydays. Now is the time for China to link infrastructure development to a grand strategy, such as “the Belt & Road Initiative” proposed by Chinese President Xi in 2013. This is manifested by the completion of the railway line from Nairobi to Mombasa in 2018. Politically, according to the consensus between China and Africa, the leaders of the two sides vowed to promote their comprehensive ties to a new-level of strategic partnership. Also unlike Western foreign-aid policies, which generally prioritize political issues and social values, China’s aid has been primarily driven to economic issues. On one hand, this is consistent with China’s adherence to non-intervention policy in domestic affairs of other states. On the other hand, both China and Africa look forward to a future of unprecedented transformation on the launch of the Nairobi-Mombasa railway that would not only revolutionized the transport sector of Kenya, but also more important stimulating investments in advanced manufacturing in Kenya and African as a whole.
For China, the pace of transformation of Africa has been remarkable. Even though its short-term goal remains economic and diplomatic, it seems inevitable that China’s basic interests will eventually lead it to far greater involvement in the continent. Though diverse in both economics and politics, Africa remains sided with China on international issues, and this quasi-alliance strictly delimits the scope of Sino-African collaboration and the opportunity to assist in the formation of Chinese conceptions and strategy in the world politics for decades to come. It is true that Chinese leaders are well-aware of this advantage.
In conclusion, China has high expectations for Africa as the latter has an immense reservoir of resources to spur its envisioned growth and China’s economic growth. As a rising power, Chinawillwork in conjunction with Africa towards the creation ofa more just and impartial world order and that places the East Asian giant in a stronger position to provide more substantial aid to Africa under win-win cooperation. As expressed at the G-20 FM meeting in Bonn in 2017, Chinese Foreign Minister reconfirmed that China would carry on enhancing strategic relationships with Africa. China would alsoabide by the key tenet which aims to develop the local, regional and international economics in light of “Africa’s initiative, Africa’s consent and Africa’s first”. Due to this, China’s strategic partnership with Africa is patently beyond the debt trap diplomacyin terms of Beijing’s global strategy.
*Francis Kwesi Kyirewiah, a PhD student in International Affairs, at SIPA, Jilin University, China.
South Africa Values its Relations with Russia and BRICS
This insightful interview offers understanding about the current relations between South Africa and Russia, and BRICS. It focuses on the bilateral economic cooperation between South Africa and Russia, and some aspects with the BRICS. With an estimated 58 million population, South Africa is the 25th largest country in the world. It has friendly relations dated from the Soviet times, and now with the Russian Federation. It joined the BRICS, an organisation of five emerging economies, in December 2010 in line with the country’s foreign policy to strengthen South-South relations.
Ambassador Extraordinary and Plenipotentiary of the Republic of South Africa to the Russian Federation and the Republic of Belarus, Mzuvukile Maqetuka, who has been in this current post since 2021, gave this interview to our media executive Kester Kenn Klomegah early June 2023. Here are the interview excerpts:
Question: First, what are your Government’s position and your thoughts on the emerging world order? Do you think absolute neutral position by majority of African countries helps push the evolutionary process of this new world order?
Mzuvukile Maqetuka: South Africa’s neutral position is consistent on all military conflicts around the world, that the international community needs to work together to bring peace.
South Africa is committed to the articles of the United Nations (UN) Charter, including the principle that all members shall settle their international disputes by peaceful means. Since the dawn of democracy in South Africa almost 30 years ago, we have called for the reform of the United Nations and multilateral organisations to make such structures more representative, inclusive of African representation.
South Africa is a sovereign state, governed by a democratic Constitution and committed to the consistent application of international law. We will continue to fulfil our obligations in terms of the various international agreements and treaties to which we are signatories.
On the Russia-Ukraine conflict, the international community needs to urgently achieve a cessation of hostilities and to prevent further loss of life and displacement of civilians in Ukraine. It needs to support meaningful dialogue towards lasting peace, which ensures the security and stability of all nations. We support the principle that members should refrain from the threat or use of force against the territorial integrity or political independence of other states. The South African position seeks to contribute to the creation of conditions that make the achievement of a durable resolution of the conflict possible.
Q: What are the key results from the last June meeting of the Russia-South African Business Council at the Russian Chamber of Commerce and Industry? What challenges have been identified hindering economic cooperation between the two countries?
Russia and South Africa are known to be closely cooperating in the mining and energy sectors. What efforts is your country making to diversify investment opportunities into other sectors for Russian business people?
In what areas do you think the Russia-South African bilateral relations could be improved and what do you suggest to be done, promoting relations both ways?
Maqetuka: The South Africa–Russia Business Council submits the reports of their meetings to the Joint Intergovernmental Committee on Trade and Economic Cooperation (ITEC) which is chaired by the Minister of International Relations and Cooperation of South Africa and the Minister of Natural Resources and Environment of the Russian Federation. The last session of ITEC was held in Pretoria on 30 March 2023.
Russia and South Africa are focusing on intensifying trade relations and economic development. Both countries aspire to strengthen cooperation within the Russian-South African business community.
One of the current priorities of the SA-Russia Business Council is to develop a joint programme of cooperation which would involve relevant authorities on both sides to facilitate business to business meetings in identified sectors.
Some of the subcommittees in the Business Council continue to perform exceptionally well. For example, the Agricultural subcommittee has maintained high levels of agricultural exports to the Russian Federation. South African citrus fruit exports to Russia are of top quality and falls within the top 3 of citrus fruit exporter countries for the Russian market.
Another example is South African wines exported to the Russian Federation, such as KWV wines which has recently achieved a spot in the top 50, and one of four South African wine brands, in the “World’s Most Admired Wine Brand in Africa & Middle East”.
According to the South African Department of Trade and Competition (dtic) statistics, total trade (export + import) between South Africa and Russia in March 2023 was R638,945,978 South African Rand.
In March 2023 total exports from South Africa to Russia were R392,335,607. In comparison to February 2023, the total exports increased by 38%. In comparison to the same period of 2022 (March 2022), exports increased by 298%.
Q: Now that you have arrived as the South African ambassador, what would you say are your Government’s priorities then? What are, generally, the investment opportunities for external countries and foreign investors in South Africa?
Maqetuka: South Africa has one of the biggest economies on the continent, and it is still rapidly developing. South Africa is the most diversified as well as the most industrialised economy on the continent.
The South African economy is essentially based on private enterprise, but the state participates in many ways. Economic policy has been aimed primarily at sustaining growth and achieving a measure of industrial self-sufficiency. Agriculture is of major importance to South Africa. It produces a significant portion of exports and contributes greatly to the domestic economy.
South Africa is rich in a variety of minerals. In addition to diamonds and gold, the country also contains reserves of iron ore, platinum, manganese, chromium, copper, uranium, silver, beryllium, and titanium. Not much deposits of petroleum have been found that may be commercially exploitable, but there are moderate quantities of natural gas located off the southern coast, and synthetic fuel is made from coal at two large plants in the provinces of Free State and Mpumalanga. South Africa is the world’s largest producer of platinum and chromium, which are mined at centres such as Rustenburg and Steelpoort in the northeast and are becoming increasingly significant economically.
The major manufacturing sectors are food processing and the production of textiles, metals, and chemicals. Agriculture and fisheries provide the basis for substantial activity in meat, fish, and fruit canning, sugar refining, and other processing; more than half these products are exported.
A large and complex chemical industry has developed from early beginnings in the manufacture of explosives for use in mining. A coal-based petrochemical industry produces a wide range of plastics, resins, and industrial chemicals.
South Africa has a well-developed financial system, centred on the South African Reserve Bank, which is the sole issuing authority for the rand, the national currency. There are many registered banking institutions, a number of which concentrate on commercial banking, as well as merchant, savings, investment, and discount banks. One such bank, the Development Bank of Southern Africa, is a quasi-governmental company created to promote development projects. Private pension and provident funds and more than two dozen insurance companies play significant roles in the financial sector.
Tourism is becoming increasingly important to South Africa’s economy and this sector, which is an economic driver, is finally making positive recovery post Covid-19. While the majority of tourists still come from African countries, an increasing number of arrivals are from Europe, the Americas and Russia. Since SA and Russia signed the visa waiver agreement in 2017, which allows for 90-day visa free travel between our two countries, we have seen a steady increase in Russian tourists visiting South Africa.
South Africa welcomed and fully supported the adoption by African nations of the African Continental Free Trade Agreement (AfCFTA) which we believe will contribute tremendously in pursuit of economic integration of our continent towards the attainment of our vision: Agenda 2063, the Africa We Want.
Through the implementation of AfCFTA, African states are determined to increase manufacturing and industrial capacity so that we trade in African goods and products, produced in Africa.
As the largest African investor in other African countries, South Africa hopes to build on this and mobilise resources for industrial investment.
Q: How comparable is Russia to those external investors in South Africa? Why are China and India so popular with economic diplomacy there in your country?
Maqetuka: South Africa was the first member of an expanded BRICS in 2010 when the group of four (Brazil, Russia, India and China) was already holding its 3rd Summit in China that year. We considered it an honour to have been invited to form part of this partnership of leading emerging markets and developing countries.
Together, the Federative Republic of Brazil, the Russian Federation, the Republic of India, the People’s Republic of China and the Republic of South Africa represent over 42% of the global population, 30% of the world’s territory, 23% of GDP and 18% of global trade.
The BRICS partnership has grown in scope and depth with BRICS members exploring practical cooperation in a spirit of openness and solidarity to find mutual interests and common values. Around 150 meetings are held annually across the three pillars of BRICS cooperation: political and security cooperation, financial and economic cooperation, and cultural and people-to-people cooperation. Over 30 agreements and memoranda of understanding provide a legal foundation for cooperation in the areas as diverse as the Contingent Reserve Arrangement, customs, tax, interbank cooperation, culture, science, technology and innovation, agricultural research, energy efficiency, competition policy and diplomatic academies.
The South African Minister of International Relations and Cooperation, Dr Naledi Pandor, hosted the most recent Meeting of BRICS Ministers of Foreign Affairs and International Relations on 1 June 2023 in Cape Town. The mid-term meeting provided an opportunity for BRICS Foreign Ministers to reflect on regional and global developments. The ministerial meeting was preceded by the meeting of Sherpas and Sous-Sherpas from 29 – 30 May 2023 and the Russian delegation attended all these meetings in Cape Town, Minister Lavrov was leading the delegation.
As chair of BRICS, South Africa practices the policy of inclusive engagement and invited 15 Foreign Ministers from Africa and the global south to a “Friends of BRICS” meeting held on 2 June 2023.
From 22 to 24 August 2023, all BRICS Leaders are expected to attend the 15th BRICS Summit in South Africa at the Sandton Convention Centre (SCC) in Johannesburg, Gauteng.
BRICS Leaders will engage with business during the BRICS Business Forum and engage with the New Development Bank, BRICS Business Council and other mechanisms during the Summit. South Africa will also continue its Outreach to Leaders from Africa and the global South and hold a BRICS Outreach and BRICS Plus Dialogue during the 15th BRICS Summit.
Q: Do you also think that Russia can engage in transfer of its science and technology in different sectors to Africa? What else do you have on the agenda in the Russian Federation?
Maqetuka: In May 2023, a delegation from South Africa’s Department of Science and Innovation (DSI) and the Technology Innovation Agency (TIA) travelled to Moscow to attend the annual Skolkovo Startup Village. During the delegation’s visit to Russia, Memoranda of Understanding were signed in the field of innovation and technology.
TIA is a national public entity in South Africa that serves as the key institutional intervention to bridge the innovation chasm between research and development from higher education institutions, science councils, public entities, and private sector,and commercialisation. The Organization’s focus is on technological development; from proof of concept to pre commercialisation.
The Russian Federation has identified the expansion of science and technology cooperation as spearheaded by the Russian Academy of Science as an important part of its renewed engagement with the African Continent, this is witnessed in the theme of the Economic and Humanitarian Forum that forms part of the 2nd Russia-Africa Summit scheduled for July 2023 i.e., Technology and Security for Sovereign Development that Benefits People. The Summit is scheduled to discuss very important themes including Infrastructure, Innovation, and Improvements to the Urban Environment; Nuclear Technologies for African Development; Building Independent Systems for Assessing and Promoting National Science Programmes in Russia and Africa: Opportunities for Mutual Support; Achieving Technological Sovereignty Through Industrial Cooperation; Improving the Reliability of Africa’s Energy Infrastructure with Low Emission Technologies; How Russian Digital Technologies Can Boost Africa’s Industrial Potential; Bringing Russian Prospecting and Development Technologies to Africa; Effective Healthcare Cooperation: Technologies, Innovations, Human Capital; Bringing Russian Shipbuilding to Africa: A Modern Fleet to Develop the Entire Continent; An Emerging Global Order as Seen by African and Russian Researchers: Alternatives to Western Models
Q: What is your assessment of the possibilities of a joint, coordinated foreign trade policy within the BRICS? What do you think about the proposal to introduce national currency trade settlement arrangements within the BRICS?
Maqetuka: The South African Reserve Bank will give consideration to possible national currency trade settlement arrangements amongst BRICS countries following extensive and detailed work on the matter.
Key questions will include its intended arrangement and consideration will be given to any related risk, including, though not limited to, any sanctions risk to South Africa.
Republic of Ghana to host PanAfrican Mall
The capital city of Accra, Republic of Ghana, hosts the African Continental Free Trade Area (AfCFTA). The AfCFTA spearheads the operations of the continental single market, a mega project of the African Union (AU). In a parallel development, a Pan-African Mall (PAM), set to become one of sub-Saharan Africa’s historic landmark mall for shopping.
The first of its kind, Pan African Mall is aimed at a more inclusive retail concept being introduced in Africa in furtherance of trade and socio-economic development and facilitation in alignment with the AfCFTA, considering it will accommodate businesses from several African countries and economic classes.
For shoppers, the experience will be all inclusive yet unique. PAM looks at “fostering multilateral socio-economic development and ties between African economies,” Deputy Minister of Trade and Industry of Ghana, Stephen Amoah, during the sod-cutting ceremony marking the start for construction of Pan-African Mall.
Minister of Trade and Industry of Nigeria, Otumba Adeniyi Adebayo, praised the investors for their commitment to the project and their dedication to the development of Africa.
In her speech, Chairman/CEO of Nigerians in Diaspora Commission (NiDCOM), Abike Dabiri-Erewa said that they would provide mortgage financing for Nigerian business owners in Ghana, which should further be a boost.
The project is being spearheaded by Brains and Hammers Ltd (Ghana), in collaboration with Nigerians in Diaspora Organisation(NIDO), who are committed to the economic growth, job creation and empowerment of Africans. Brains and Hammers Ltd is a real estate and infrastructure construction, development and management company.
According to Mallam Bashir Patty, the Managing Director of Brains and Hammers Limited (Ghana), “the mall will have over 400 shops and over 300 workstations for those who can’t afford shops.”
The mall is functionally designed and will be replete with facilities and amenities, including but not limited to roof-top garden, 150 ground and basement parking spaces, banking halls, office spaces, restaurants, adequate supply of portable water, renewable energy supply and other environmentally sustainable features and elevators – a modern state of the art mall with eco-friendly facilities and environment.
As Chief Calistus Elozieuwa, the Chairman of the Board of Trustees for Nigerians in Diaspora Organisation – Ghana Chapter (NIDO), said: “This is a mall to be owned by Africans, not only Nigerians and Ghanaians because of the spirit of integration on the continent in terms of the area of trade.”
Andrew Achampong-Kyei, Managing Director of GLICO General Insurance also reiterated that they would offer guarantees to the investors and shop owners and had designed a special policy i.e the rent to own, which enables an investor make substantial regular rent payments towards owning the shop.
The mall is aimed at contributing to sustainability and youth employment, including women and the disabled. It is, however, expected that the shopping mall becomes accessible to its customers and favorite shopping destination to purchase various goods and services. There are plans to include foreign products from the most desired retailers to meet the needs of customers.
By managing every aspect, the mega mall offers its customers a simple, secure and convenient solution to shopping directly from many of the best brands in the world. The PAM welcomes all African traders to take advantage of the fully secured state of the art shops and the mall. The construction is planned over a period of two years.
South Africa Faces Deep-Seated Economic and Energy Crisis
South Africa, highly considered as an economic powerhouse, is in deep-seated crisis. Energy deficit has crippled industrial operations and supplies for domestic use has largely been reduced. Unemployment is rising and cost of living becomes unbearable across the country. Social discontent, as a result of the crisis, has engulfed every corner in South Africa.
Reports monitored here say South Africa’s President Cyril Ramaphosa and his cabinet on May 7 held an extensive meeting with key business leaders as concern over the country’s energy crisis, logistic constraints and close ties with Russia grow. Attendees discussed collaborating to obtain inclusive growth, inspire confidence in the economy and create jobs, the Presidency said in an official Twitter post.
Five years after Ramaphosa ushered in a wave of business optimism that he’d revive the economy crippled by industrial-scale corruption under his predecessor, executives are running out of patience with the president, who is seeking reelection next year.
Economic stagnation stoked by record daily power cuts, rampant crime, disintegrating infrastructure and foreign policy missteps is leading investors to the exits. Yields on the benchmark 10-year generic government bond have risen 129 basis points this year to 12.1%, foreign buyers have been net sellers of the nation’s stocks and the rand has plunged 11%.
Executives including Daniel Mminele, Nedbank Group Ltd.’s chairman, and MTN Group Ltd.’s Chief Executive Officer Ralph Mupita have called for urgency in resolving domestic hindrances to economic growth and warned the country is at risk of becoming a so-called failed state. Others such as FirstRand Ltd. Chief Executive Officer Alan Pullinger have criticized the country’s relationship with Russia. The government’s indifference to the war in Ukraine and its friendship with Russia is “foolhardy in the extreme,” he said.
Early March, reports also warned that South Africa’s banking industry faces a “profound geopolitical risk” from the government’s close ties with Russia. South Africa has drawn criticism from some of its biggest trading partners, including the United States and the European Union, over military exercises it conducted with Russia and China. Those countries have also censured Ramaphosa’s administration over its abstention from United Nations resolutions condemning Russia’s war with Ukraine.
“Our government’s left-leaning enthusiasm for China and Russia is being noticed by countries vehemently opposed” to the war in Ukraine, FirstRand Ltd. Chief Executive Officer Alan Pullinger said at an investor briefing in Johannesburg. The government’s indifference to the war and its friendship with Russia is “foolhardy in the extreme,” he said.
South Africa’s banking industry is dependent on access to international markets, global clearing and settlement, Pullinger said. The country risks consequences because of its stance on Russia, he said. “Our collective access is a privilege; it is not a right and it can be revoked with ease,” Pullinger said. “FirstRand does not share our government’s enthusiasm for Russia.”
With an estimated population of 58 million, South Africa is the southernmost country in Africa. It is bounded to the south by 2,798 kilometres of coastline that stretches along the South Atlantic and Indian Oceans; to the north by the neighbouring countries of Namibia, Botswana, and Zimbabwe; and to the east and northeast by Mozambique and Eswatini.
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