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Understanding Russia’s Financial Strategy for Africa

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In order to raise its geopolitical influence, Russia has been making efforts identifying mega infrastructure projects such as nuclear power and energy, natural resources exploration and talks consistently about increasing trade with Africa. On the other hand, Russia primarily needs to work on a coordinated mechanism for financing these corporate policy initiatives and further push for increased trade with Africa.

On November 23, a videoconference organized by Federation Council of Russia, Chamber of Commerce and Industry of Russia and Business Russia Association, focused partly on identifying funding sources for exports, concretizing proposals for increasing exports to Africa and looking at facilitating amendments to the Russian legislation if required to promote exports to the African market.

Senator Igor Morozov, a member of the Federation Council Committee on Economic Policy, and newly elected Chairman of the Coordinating Committee on Economic Cooperation with Africa, noted during the meeting that in conditions of pressure from sanctions, it has become necessary to find new markets, new partners and allies for Russia. “This predetermines the return of Russia back to Africa, makes this direction a high priority both from the point of geopolitical influence and in the sphere of trade and economic context.”

“It is important for us to expand and improve competitive government support instruments for business. It is obvious that over the thirty years when Russia left Africa, a number of countries such as China, India, the USA, and the European Union have significantly increased their investment opportunities there in the region,” Morozov stressed.

With a renewed growing interest in the African market, Russians are feverishly looking for establishing effective ways of entry into the huge continental market. As result, Senator Igor Morozov unreservedly suggested creating a new structure within the Russian Export Center – an investment fund. He explained thus: “Such a fund could evaluate and accumulate concessions as a tangible asset for the Russian raw materials and innovation business.”

The Coordinating Committee for Economic Cooperation with African States was created on the initiative of the Chamber of Commerce and Industry of the Russian Federation and Vnesheconombank with support from the Federation Council and the State Duma of the Federal Assembly of the Russian Federation. It has had support from the Ministry of Foreign Affairs, the Ministry of Economy and Trade, the Ministry of Natural Resources, as well as the Ministry of Higher Education and Science.

During a restructuring meeting with the Coordinating Committee for Economic Cooperation with African States, President of the Russian Chamber of Chamber and Industry, Sergei Katyrin, said “the primary task now to accelerate Russia’s economic return to African continent, from which we practically left in the 90s and now it is very difficult to increase our economic presence there in Africa.”

According to Katyrin, Russia’s economic presence in Africa today is significantly inferior in comparison to the positions of leading Western countries and BRICS partners. “It’s time to overcome this yawning gap. Today, we face a difficult task to ensure the activities of Russian entrepreneurship on the African continent in the new conditions, taking into account all the consequences of the coronavirus pandemic.”

Katyrin stressed the necessity to resolve financial mechanism for business and for infrastructural projects. “We need a state financial mechanism to support the work of Russian business in Africa otherwise it will be very difficult to break through the fierce competition of Western companies with such support. We need to focus on those areas where you can definitely count on success,” he told the meeting.

With the participation of representatives of business and expert circles, this committee’s primary task is to consolidate the efforts of business, government and public structures of Russia, facilitate the intensification of economic activities in Africa. It has the responsibility for adopting a more pragmatic approach to business, for deepening and broadening existing economic collaborations and for the establishment of direct mutually beneficial contacts between entrepreneurs and companies from Russia and African countries.

During this October meeting, the participants discussed various issues and acknowledged that the committee has achieved little since its establishment. The meeting identified factors that have hindered its expected achievements and overall performance since 2009. Admittedly, a quick assessment for one decade (2010 to 2020) has shown very little impact and tangible results in Africa.

The committee’s documents listed more than 150 Russian companies as members, most of them hardly seen participating in business events in order to get acquainted with investment opportunities in Africa.

Notwithstanding the setbacks down these years, Russians are still full of optimism for business. Completely a new team was put in place during the meeting hosted by the Russian Chamber of Commerce and Industry. Russian Senator Igor Morozov was elected as the new Chairman of the Coordinating Committee for Economic Cooperation with African States.

Over the years, experts have reiterated that Russia’s exports to Africa could be possible only after the country’s industrial based experiences a more qualitative change and argued the benefits for introducing tariff preferences for trade with African partners.

“The situation in Russian-African foreign trade will change for the better, if Russian industry undergoes technological modernization, the state provides Russian businessmen systematic and meaningful support, and small and medium businesses receive wider access to foreign economic cooperation with Africa,” Professor Alexey Vasileyev, former director of the Institute for African Studies (IAS) under the Russian Academy of Sciences.

As a reputable institute established during the Soviet era, it has played a considerable part in the development of African studies in the Russian Federation. For over 25 years, Professor Vasileyev directed the Institute for African Studies. His research interests extend beyond the Middle East. For instance, he carried out analysis of socio-economic problems of Africa, including Sub-Saharan Africa. He has many books and monographs including the one titled Africa: The Stepchild of Globalization and Africa, the Challenges of the 21st Century.

Professor Vasileyev, now the Chair for African and Arab Studies at the Peoples’ Friendship University of Russia (since 2013), and Special Representative of Russian President for Relations with African leaders (2006–2011), pointed out that the level and scope of Russian economic cooperation with Africa has doubled in recent years, “but unfortunately Russian-African cooperation is not in the top five of the foreign players in Africa.”

Speaking particularly about trade, the professor noted that not all African countries have signed agreements with Russia, for example, on the abolition of double taxation. He urged African countries to make trade choices that are in their best economic interests and further suggested that Russia should also consider the issue of removal of tariff and non-tariff restrictions on economic relations.

In order to increase trade, Russia has to improve its manufacturing base and Africa has to standardize its export products to compete in external markets. Russia has only few manufactured goods that could successfully compete with Western-made products in Africa. Interestingly, there are few Russian traders in Africa and African exporters are not trading in Russia’s market, in both cases, due to multiple reasons including inadequate knowledge of trade procedures, rules and regulations as well as the existing market conditions, he said.

He believes that it is also necessary to create, for example, free trade areas. “But before creating them, we need information. And here, I am ready to reproach the Russian side, providing little or inadequate information to Africans about their capabilities, and on the other hand, reproach the African side, because when our business comes to Africa, they should know where they go, why and what they will get as a result,” Professor Vasileyev explicitly added.

The United States, European Union members, Asia countries such as China, India and Japan, have provided funds to support companies ready to carry out projects in various sectors in African countries. Some have publicly committed funds, including concessionary loans, for Africa.

For example, during the last Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC), Chinese President Xi Jinping said “China will expand cooperation in investment and financing to support sustainable development in Africa. China provided US$60 billion of credit line to African countries to assist them in developing infrastructure, agriculture, manufacturing and small and medium-sized enterprises.”

It fully understands Africa’s needs and its willingness to open the door to cooperation in the field of scientific and technological innovation on an encouraging basis. The method for financing the building of infrastructure is relatively simple. In general, governments obtain preferential loans from the Export-Import Bank of China or the China Development Bank, with the hiring of Chinese building contractors.

The Chinese policy banking system allows leading Chinese state-owned enterprises to operate effectively in Africa, with the majority of these active in infrastructure and construction in Africa. China has always been committed to achieving win-win cooperation and joint development with Africa. Russia could consider the Chinese model of financing various infrastructure and construction projects in Africa.

Official proposals for all kinds of support for trade and investment has been on the spotlight down the years. In May 2014, Russian Foreign Minister Sergey Lavrov wrote in one of his articles: “we attach special significance to deepening our trade and investment cooperation with the African States. Russia provides African countries with extensive preferences in trade.”

Lavrov wrote: “At the same time, it is evident that the significant potential of our economic cooperation is far from being exhausted and much remains to be done so that Russian and African partners know more about each other’s capacities and needs. The creation of a mechanism for the provision of public support to business interaction between Russian companies and the African continent is on the agenda.”

After the first Russia-Africa Summit in the Black Sea city, Russia Sochi in October 2019, Russia and Africa have resolved to move from mere intentions to concrete actions in raising the current bilateral trade and investment to appreciably higher levels in the coming years.

“There is a lot of interesting and demanding work ahead, and perhaps, there is a need to pay attention to the experience of China, which provides its enterprises with state guarantees and subsidies, thus ensuring the ability of companies to work on a systematic and long-term basis,” Foreign Minister Lavrov explicitly said.

According to Lavrov, the Russian Foreign Ministry would continue to provide all-round support for initiatives aimed at strengthening relations between Russia and Africa. “Our African friends have spoken up for closer interaction with Russia and would welcome our companies on their markets. But much depends on the reciprocity of Russian businesses and their readiness to show initiative and ingenuity, as well as to offer quality goods and services,” he stressed.

Amid these years of Western and European sanctions, Moscow has been looking for both allies and an opportunity to boost growth in trade and investment. Currently, Russia’s trade with Africa is less than half that of France with the continent and 10 times less than that of China. Asian countries are doing brisk business with Africa. According to UNCTAD’s World Investment Report 2020, the top five investors in the African continent are Netherlands, France, the United Kingdom, the United States and China.

In 2018, Russia’s trade with African countries grew more than 17 per cent and exceeded $20 billion. At the Sochi summit, Russian President Vladimir Putin said he would like to bring the figure $20 billion, over the next few years at least, to $40 billion.

In practical reality, from January 2021 marks the start of the African Continental Free Trade Area (AfCFTA), gives an additional signal for foreign players to take advantage of this new opportunity in Africa. It aims at creating continental market for goods and services, with free movement of business people and investments in Africa. As trumpeted, the AfCFTA has a lot more on offer besides the fact that it creates a single market of 1.3 billion people.

That said however, Russia, of course, has its own approach towards Africa. It pressurizes no foreign countries neither it has to compete with them, as it has its own pace for working with Africa. With the same optimism towards to taking emerging challenges and opportunities in Africa, Russia has to show financial commitment especially now when the joint declaration from the first historic Summit held in October 2019 ultimately sets the path for a new dynamism in the existing Russia-Africa relations.

MD Africa Editor Kester Kenn Klomegah is an independent researcher and writer on African affairs in the EurAsian region and former Soviet republics. He wrote previously for African Press Agency, African Executive and Inter Press Service. Earlier, he had worked for The Moscow Times, a reputable English newspaper. Klomegah taught part-time at the Moscow Institute of Modern Journalism. He studied international journalism and mass communication, and later spent a year at the Moscow State Institute of International Relations. He co-authored a book “AIDS/HIV and Men: Taking Risk or Taking Responsibility” published by the London-based Panos Institute. In 2004 and again in 2009, he won the Golden Word Prize for a series of analytical articles on Russia's economic cooperation with African countries.

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Wagner: Putin’s secret weapon on the way to Mali?

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Soldiers from the Wagner Group (source: middleeastmonitor.com)

France is outraged at the prospect of Russian mercenaries from the Wagner group arriving in Mali. However, Paris is seeking a way out of an unwinnable conflict.

On September 13, a Reuters news agency article citing unnamed sources and reporting advanced negotiations between Mali and the Russian mercenary company Wagner sparked a firestorm of reactions. The United States, Germany, and the United Nations have all warned Bamako’s military against such collaboration. According to them, the arrival of Russian mercenaries – a thousand have been estimated – would jeopardize the West’s commitment to fighting the jihadists who control a large portion of Malian territory.

But France, understandably, is the most vocal against such a move. The former colonial power has maintained a military presence in the country since 2013, when it halted the jihadists’ advance on the capital. Florence Parly, the French Minister of the Armed Forces, visited Bamako on September 20th to warn Malian colonels in power following two coups in August 2020 and May 2021. Wagner’s choice, she said, would be that of “isolation” at a time when “the international community has never been so numerous in fighting jihadists in the Sahel”.

What the minister does not mention is that France’s commitment to Mali is waning. Emmanuel Macron used the second Malian coup d’état last June, less than a year before the French presidential election, to announce a “redeployment” of French forces in Mali. Although Paris refuses to discuss a de facto withdrawal, even if it is partial, the truth is that the tricolored soldiers will abandon the isolated bases of Kidal, Timbuktu, and Tessalit in the country’s north by next year, concentrating on the area further south of the three borders with Niger and Burkina Faso.

Europeans, who are expected to be more supportive of France, are also perplexed. The humiliation of the Western withdrawal from Afghanistan has served as a wake-up call. The Afghan government’s sudden collapse in the face of the Taliban has demonstrated how difficult it is to build a strong army and institutions. This scenario appears to be repeating itself in Mali.

The possibility of a rapprochement between Bamako and Moscow is taken seriously because Putschists in Mali have always been sensitive to Russian offerings. Colonel Sadio Camara, Mali’s Defense Minister, visited Russia on September 4. Disagreements over a reversal of Mali’s alliances are said to have been one of the causes of the Malian colonels’ second coup, which ousted the civilian transitional government last May.

Russia also acts as a boogeyman for the Malian military. According to a Daily Beast investigation, the Malian army organized a supposedly spontaneous demonstration last May demanding Russian intervention. This was also a warning to the international community, which is growing weary of the country’s poor governance and repeated coups.

Is Mali transitioning from the French to the Russian spheres of influence? Since Moscow gained a foothold in the Central African Republic, the scenario is not a figment of the imagination. Russian instructors and Wagner’s mercenaries have proven their worth in this former French backyard. Even though the UN condemns Russia’s atrocities in this conflict, the Russians were able to push back the rebels who were threatening the capital Bangui last December with the help of UN peacekeepers and Rwandan reinforcements.

The Kremlin denies any involvement with the Wagner group. However, the company is actually run by a close associate of Vladimir Putin. The use of private mercenaries allows Moscow to avoid military commitments abroad, as it did previously in Ukraine and Libya. “Russia is not negotiating a military presence in Mali,” said a Kremlin spokesman in mid-September. When questioned by the magazine Jeune Afrique on September 20th, Central African President Faustin-Archange Touadéra swore that he had “not signed anything with Wagner.” “In the Central African Republic, we have companies that were established in accordance with the law and operate on liberalized markets,” he explained.

Nothing has been decided on Wagner, it is repeated in Bamako. According to the military, the selection of foreign “partners” is a matter of Mali’s “sovereignty.” They regard these “rumors” as an attempt to “discredit the country.” The Malian junta is under siege, not only from jihadists but also from the international community. The latter is calling for elections to be held in February to return power to civilians, as stipulated in the military-agreed transition charter. Electoral reform must come before the election. However, Colonel Assimi Gota, the transitional president, has shown little interest in preparing for these elections. The Malian junta may also be hoping that Russia’s partners will be less stringent on democratic requirements.

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Google Drives Deeper into Africa

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As the African Continental Free Trade Area (AfCFTA), the new initiative that places emphasis on intra-African trade – including free movement of goods, capital  and people – foreign players have accordingly raising eyes on using the new opportunity to expand their operations in Africa.

Foreign enterprises are gearing up to localize production in industrial hubs and distribute their products across the borderless territory considered as a single market in Africa. Thus, by its description, Africa’s estimated population of 1.3 billion presents itself a huge market – from baby products through automobiles and to anything consumable.

Google LLC, the U.S. Global Technology Gaint, has primarily set its eyes on business, with a comprehensive plan to expand its operations into Africa. Google made known its plans to commit US$1 billion over the next five years in tech-led initiatives in Africa. It is investing this US$ 1 billion in Nigeria and African countries to support and transform the digital market over the next five years.

In its media release, it said the investment would include landing a subsea cable into the continent to enable faster internet speeds, low-interest loans for small businesses, equity investments into African startups, skills training and many more directions determined in future.

This is in a bid to enable fast, affordable internet access for more Africans, building helpful products, supporting entrepreneurship and small business, and helping nonprofits to improve lives across Africa.

The Chief Executive Officer (CEO) of Google and Alphabet, Sundar Pichai, noted that the company was building global infrastructure to help bring faster internet to more people and lower connectivity costs. Through the Black Founders Fund, Google will invest in Black-led startups in Africa by providing cash awards and hands-on support.

The developing world represents the best chance of growth for large internet companies, and today, one of the very biggest set out its strategy for how it plans to tackle that.

“We’ve made huge strides together over the past decade – but there’s more work to do to make the internet accessible, affordable and useful for every African. Today, I’m excited to reaffirm our commitment to the continent through an investment of US$1 billion over five years to support Africa’s digital transformation, to cover a range of initiatives from improved connectivity to investment in startups,” said Pichai.

According to him, this is in addition to Google’s existing support through the Google for Startups Accelerator Africa, which has helped more than 80 African startups with equity-free finance, working space and access to expert advisors over the last three years. The subsea cable is set to cut across South Africa, Namibia, Nigeria and St Helena, connecting Africa and Europe.

According to Managing Director for Google in Africa, Nitin Gajria, it will provide approximately 20 times more network capacity than the last cable built to serve Africa. It is projected to create about 1.7 million jobs in Nigeria and South Africa by 2025 as the digital economy grows.

Google further announced the launch of the Africa Investment Fund, where it will invest US$50 million in start-ups across the continent providing them with access to Google’s employees, network, and technologies to help them build meaningful products for their communities.

It will additionally disburse US$10 million in low-interest loans to small businesses in Nigeria, Ghana, Kenya and South Africa in order to alleviate hardships brought about by the Covid pandemic.

Google is bringing venture capital into the continent. The fund might work in a similar fashion as the Google for Startups Accelerator programme.

Although Africa has a Big Four (Nigeria, Kenya, South Africa and Egypt) in terms of startup and venture capital activity on the continent, the accelerator has made sure to accept applications from startups in less-funded and overlooked regions. These countries include Algeria, Botswana, Cameroon, Ivory Coast, Ethiopia, Ghana, Morocco, Rwanda, Senegal, Tanzania, Tunisia, Uganda and Zimbabwe.

Founded in September 1998 by Larry Page and Sergey Brin, Google is considered as one of the Big Five information technology companies alongside Amazon, Apple, Facebook and Microsoft. Google specializes in internet cloud services, software and hardware as well as online advertising technologies.

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Because Now We Can

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ASARPI, registered in  South Africa as The Institute for Advanced Study of African Renaissance Policies Ideas and in Mauritius as Advanced Study of African Renaissance Policies Ideas, is not only a primarily virtual  Pan African bridging Asia think tank but  is also a  global multicultural restorative justice and peacemaking making movement.We of ASARPI believe and strive daily to  live lives embracing ,living , and advocating restorative justice embedded policy ideas and practices which eradicate serious quality of life problems such as colonialism, racism sexism, ageism,poverty, environmental injustices,  anti-religious bigotry,poor government and civil society leadership; and  lack of access to decent  water,healthcare, law, and education.Core in this ASARPI mission is our rock solid belief that we are all made in the image of God and thus are all brothers and sisters in need of recovering our humanity in the authentic embracing of others especially those we have been  wrongly taught we are inferior or superior to  since as human beings we are all endowed with gifts and talents deserving to be recognized, cultivated, mentored, and used positively for our self  benefit and that of our loved but  most importantly ,for the  benefit of the rest of humanity.

Giving honor to The Right Honorable Lady Sarojini Jugnauth , welcome  Giving honor to  my great friend and more than that great brother Mr.Maxime N.C  King , to my present and absent brothers and sisters of the  Diplomatic Corps  lead by my gracious sister Her Excellency Rezina Ahmed,   High Commissioner for Bangladesh as well as  my brothers and sisters of The Chinese Chamber Silk Route Business community, including FALCON ; educational political,  religious , and other civil society leaders  and  my other brothers and sisters here today including the  marvelous leadership of  Jienfie Smart City on this  October 1 National Day of the People’s Republic of China, and UN International  Day Greetings and Welcome. Thanks for coming. All other protocols are respected  , appreciated,and observed.

I wish to thank my brother Maxime King for inviting me as Director of ASARPI, to be the Honorary Chair of this historical The SILK ROAD FOUNDATION & The CHINESE BUSINESS CHAMBER__Africa event in germinating right here in Jinfei Smart City the seeds of something well bigger than life in a new needed perspective in linking the economic and business relations among Chinese and other Asians with their continental African brothers and sisters with full effort as well in involving Africans and Asians not only on the two massive continents of the world but also Africans and Asians in their global Diasporas with points of conversions and synergies. As we move forward we need to be forward thinking about mutual respect and collaboration rather than imitating our western brothers and sisters who for centuries indulged in creating and sustaining  oppressive and exploitative  hierarchies of colonialism, slavery, racism, seismic,ageism,indentured labor, genocide, massive poverty , and the devastation of environments including the disability of biodiversity creating such horrible ecological imbalances generating the terrible pandemics which are characterizing our lives in this 21st century world in which we are trying to survive let alone prosper.

 We can do much better than this since  as human beings we all are made in the image of God in need of embracing each other and thus finding our own sustaining humanity. We must do better than this what the West has done to us and what we have and do to each other in grotesquely bigoted  attitudes and ill exploitative treatments as Africans and Asians take the center field of global affairs with a West not declining but in serious need of reorientation in understanding that White Supremacy and its demands for hegemony and imperialism does not work any more.

 We need new ways of coming to justice and peace tables in how we do economics and business together in a world with declining resources  though  with incredible digital age technologies thus in need to learn how to collaborate rather than taking and keeping rather than going to war to take the oil, the other precious minerals and to take the land of the helpless and hopeless if not by war through deceptive humanitarian overtures with evil undercurrent agendas. We need to do much better. We must and can in bold design and implementation with effective monitoring and evaluation authentic,  build a   sustainable new world glowing from an African and Asian center which produces quality technologies and commodities from fashions to food to automobiles made to last rather than made cheaply to roll over profits.   Where human  responsibilities and rights  are lived each day not merely talked about. We need to use surplus capital from means of digital  knowledge and traditional industrial production to be philanthropically socially responsible and responsive rather than copying the Western way of being greedy and stingy or promoting philanthropic initiatives which are superficial and short term rather than sustainable, Liberating, and empowering. We can do all of this because now we can . 

We Africans and Asians wherever we are , no longer have to stoop to those in the North and in the West or in other ways ask for permission and have our sovereignty and other human rights imposed on. Not with nearly half of the global economy being anchored in China and in other Asian countries and with African national leaders increasingly understanding that they too hold extraordinary promise in being serious economic players especially when in coalition with China and other nations as genuine partners in global economic and business futures. 

We have a long way to go. What matters is what we are going to do  in the described partnership we mark and celebrate today. We are going here in Mauritius on this train of a new era of African and Chinese and otherwise Asian economic and business collaborative partnerships not only for the betterment of our national and continental selves but for the entire world in desperate need to make new mojitos in new glass mugs to bring together all of us be it with chopsticks, utensils, or eating with our hands. So it is the reason why ASARPI as a virtual and face to face think tank  is joining brotherly and sisterly arms with the SILK_ROAD Foundation, the African_ China Business Forum, the Chinese Business Chamber , and other Asian business  partners in locked brotherly and sisterly arms with African partners   to be THE venue for freedom of exchange of ideas and strategies to do the necessary to bring what we dream as being a more equitable world driven by justice and peace and human responsibilities and human rights into a stunning reality for the entire world to see but more importantly benefit from in the liberation and empowerment of all humanity no matter who we are demographically, nationalities,our systems of governance, and our religious beliefs .Let’s go.Let’s get going Now Now.

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