Russia’s rising trade with Africa amid geopolitical challenges

By Kestér Kenn KLOMEGÂH

After two symbolic African leaders’ summits, Russia’s trading is steadily increasing but significantly in exports of military weapons and equipment. According to Kremlin reports, Russian President Vladimir Putin said the trade turnover between Russia and African countries had increased by almost 35% in the first half of 2023 despite international sanctions.

During the first summit, Putin promised to double trade with African states within five years as he sought to win new friends with offers of nuclear power plants and fighter jets. He fixed the expected figure at $40 billion, which he repeated in several speeches until the last summit held in July 2023 in St. Petersburg.

According to Russia Today (RT) report, under the headline “Russia expanding African defence partnerships” issued 5th Sept. 2024, Russia’s arms exporter Rosoboronexport has outlined plans for joint ventures regarding military equipment with the continent. That report indicated that the Russian arms export agency Rosoboronexport has been advancing multiple cooperation projects with African countries, quoted Aleksandr Mikheev, the agency’s head.

Mikheev, speaking on the sidelines of the Egypt International Airshow, further said his agency was working on several industrial cooperation projects with African countries, focusing on the licensed production of small arms, ammunition, armoured vehicles, and fast combat boats.

The head of the Russian arms export agency also noted the increasing importance of Africa and the Middle East in the company’s overall business. “The combined share of Middle Eastern and African countries in Rosoboronexport’s order portfolio exceeds 50%, which translates to over $25 billion,” he said.

Mikheev revealed that over 40 African nations are actively engaged in military-technical collaboration with Russia. “There is a very significant share of signed and executed contracts in the order portfolio. Mostly, of course, it is equipment, air force, air defence, helicopters, small arms, electronic warfare.”

Last December for instance, the Rosoboronexport head said that African countries bought more than 30% of the weapons systems exported by Russia in 2023. The Stockholm International Peace Research Institute (SIPRI) reported last year that Russia had overtaken China as the leading arms seller in sub-Saharan Africa, with market share growing to 26% as of 2022. According to the report, Algeria, Angola, Egypt, and Sudan were the top importers of Russian weapons on the continent.

Business& Financial Times also reported that Putin had promised to double trade with African states within five years as he sought to win new friends with offers of nuclear power plants and fighter jets. Moscow remains the biggest exporter of arms to Africa.

The most successful pillar of Russia’s conventional trade with Africa is arms, managed mainly by state-controlled Rosoboronexport. Between 2010 and 2021 Russian arms exports to Africa dwarfed those of every other supplier and were three times greater than those of China, the second-biggest over the period, according to SIPRI.

Other Russian companies with significant operations in Africa include Alrosa, which operates diamond projects in Angola and is exploring in Zimbabwe; Rusal, which mines bauxite in Guinea; and Rosatom, which is building a nuclear power plant in Egypt.

As years move on, few of those promises have concretely materialized and yet Russian influence on the continent is growing faster than at any point since the end of the Cold War. But this trend has fallen short of the Kremlin’s promise to African leaders.

African exporters are not trading in Russia’s market due to multiple reasons including inadequate knowledge of trade procedures, rules and regulations as well as the existing market conditions. Until now, African entrepreneurs have struggled pathways to explore Russia’s market as trade preferences also mentioned several times failed to be implemented.

Multiple challenges still grossly remain and stand in the pathways to ultimately realize the economic cooperation goals set by the two summits. Foreign Minister Sergey Lavrov plans to hold the first Foreign Ministerial Conference in November 2024 to strategize some aspects of strengthening economic cooperation between Russia and Africa.

Some experts think that the ongoing crisis between Russia and the West is stimulating Russia’s leadership to look for new markets, and besides Asia-Pacific countries, Africa has become its choice. Quite recently, Russian Foreign Minister Sergey Lavrov wrote in his article: “We attach special significance to deepening our trade and investment cooperation with the African States. Russia provides African countries with extensive preferences in trade.”

The minister went on: “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.”

Reports further showed that Russia has started, after the second summit in July 2023, strengthening its economic cooperation by opening trade missions with the responsibility of providing sustainable business services and plans to facilitate import-export trade in some African countries.

But these Russian trade centres can also embark on a ‘Doing Business in Africa’ campaign to encourage Russian businesses to take advantage of growing trade and investment opportunities, to promote trade fairs and business-to-business matchmaking in key spheres in Africa.

China, India and Russia are members of the BRICS association with the common goal of fighting against Western domination in Africa. However, the three have different distinctive individual economic interests in Africa. China entered Africa immediately after Russia created the vacuum following the Soviet’s collapse, China has developed its economic tentacles across Africa.

For some time, Russia has been concerned with China’s growing presence in Africa. And that points to the fact that Moscow has to step up its activities, whether between governments or private enterprises, more strategically in African countries.

Many Russian and African analysts and policy observers believe that a public-private partnership (participation) strategy in promoting trade will help significantly to polish part of the soft power image both in Russia and Africa.

According to the African Development Bank, Africa’s economies are growing faster than those of any other continent. Nearly half of African countries are now classified as middle-income countries, the number of Africans living below the poverty line fell to 39 per cent in 2023 as compared to 51 per cent in 2021, and around 380 million of Africa’s 1.4 billion people are now earning good incomes – rising consumerism – that makes trade profitable.

Of course, there are various ways to open the burgeoning market for Africa. One of the surest ways is to use the existing rules and regulations. The preferential tariffs for agricultural products exist but only a few African exporters use them, mainly from South Africa, Kenya, Morocco and Egypt. Russian authorities should make it possible for more individual African countries to negotiate for their products to enter the market.

The African regional economic blocs can be useful instruments for facilitating trade between Africa and Russia. In addition, the Russian Foreign Affairs Ministry posted an official report on its website that traditional products from least-developed countries (including Africa) would be exempted from import tariffs. The legislation stipulates that traditional goods are eligible for preferential customs and tariff treatment.

Most of the experts interviewed for this story expressed skepticism and wondered if Russian authorities were seriously prepared to open the market for Africa, while others suggested, that with the context of current global competition, Russian authorities have to provide trade incentives.

An academic researcher at the African Studies Institute in Moscow told me the trade preferential for only traditional African goods would really not promote a large scale trade, unfortunately, Russia’s trade with Africa has mostly concentrated in weaponry and military hard-wares. Simple products such as African tea and coffee trade would face keen competition from other global brands.

As China and India are currently doing, Russia should similarly embark on trade facilitation measures, including simplifying import-export procedures (customs, warehousing and transportation) to encourage trade with African countries.

Some say it’s probably both a mix of negative perception and inadequate knowledge about the emerging business potentials that might have an impact on trade development between Russia and Africa. Trade facilitation focusing on lowering the cost of doing business by minimizing regulations and procedures required to move goods and services across borders.

Russia can change the equation that way, and the authorities can even shift focus and transfer their technology to agriculture, and oil and gas in Africa which is booming these days. The experts believe that new trade alliances are emerging and have great potential for growth amid the economic sanctions. Russia has to capitalize on the historical connection between Moscow and those African elites who had been educated in the Soviet Union.

As it was during the Soviet times, Russia could only offer a few manufactured goods that would successfully compete with Western-made products. African nations will probably continue to acquire Russian-made arms, but otherwise, there are a few prospects for diversification of cooperation in the near future.

While Russia’s trade still straddles with Africa, China and other external players are navigating the single African Continental Trade Area (AfCFTA) which offers huge opportunities, an initiative by the African Union (AU). Russia can build on the historical and time-tested friendly ties with Africa but has to review and take concrete measures to work jointly with African countries in strengthening economic and trade cooperation, an essential pillar of the multipolar world.

A complete departure away from mere rhetoric will be an encouraging step forward, and enhance economic relations between African States and the Russian Federation. With the current geopolitical situation, Russia and African countries could now use the chance to strengthen their trade relations and take further decisive actions from both sides to drive foreign policies in a more qualitative manner in this emerging multipolar world.

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