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Russia–Africa: a structural approach to cooperation in the new economic reality

May 29, 21:17 UTC+3
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Russias economic cooperation with African nations has been growing steadily in recent years, yet being still modest by the standards of Western countries and China. Meanwhile, the Russia–Africa trade, economic and investment potential remains very high, prompting the Russian Government and businesses to work towards a more favourable political, regulatory, economic and information environment to boost relations with Africa.

The last couple of years have seen a rise in Russia–Africa trade, with aggregate turnover reaching USD 14.5 billion in 2016, up by USD 3.4 billion year-on-year.

  • The bulk of it (USD 10.1 billion) was done by four countries, including Egypt (USD 4.16 billion), Algeria (USD 3.98 billion), Morocco (USD 1.29 billion) and South Africa (USD 718 million), with Algeria as the major growth driver adding USD 2 billion.
  • The rising trend was seen by 28 out of 55 African nations, with Ethiopia, Cameroon, Angola, Sudan and Zimbabwe doing better than neighbours, percentage-wise.
  • According to the Eurasian Economic Commission, Africa was the only region to have expanded its trade turnover with Russia in 2016 (unlike the EU, MERCOSUR, APEC, and others).

While the bilateral potential has not yet been fully tapped, Russia’s economic penetration into the African continent is lagging behind major western counterparties and China, boasting USD 100 billion (the US) and USD 300 billion (China) trade levels.

Russia’s historically strong arms trade with African countries has been growing in recent years, despite tough competition.

  • According to Rosoboronexport, Russia ranks first in arms imports to sub-Saharan Africa accounting for 30% of all supplies in 2011–2015.
  • Missiles, artillery, small arms, and automotive equipment are key Russia’s export items to Africa, with helicopters taking an increasingly important share.

Agriculture is another significant contributor to the bilateral trade.

  • Africa is becoming a promising market for Russian grain and agricultural machinery, with the country’s wheat exports heading to Morocco, South Africa, Libya, Kenya, Sudan, Nigeria and Egypt.
  • Egypt, Côte d'Ivoire, Benin, Nigeria, Guinea-Bissau, CAR, Guinea, Burkina Faso and Mali are in turn increasing supplies of fruit and vegetables to Russia, benefiting from Russia’s counter-sanctions against European food products.

Major Russian businesses see Africa as a promising investment destination and are mostly into energy, mining, agriculture, manufacturing, transport and infrastructure sectors.

  • Nuclear power development options in Africa are now a hot topic, with relevant agreements already signed with Sudan, Zambia, Morocco, South Africa and other countries.
  • Sudan, Congo and Senegal have recently indicated interest in pursuing joint oil and gas projects. Last year, Russia and Zimbabwe signed an agreement for the joint development of the world's second largest Darwendale platinum project.

Russian businesses are successfully tapping into other African market segments, too.

  • A Mordovia-based Lisma set up a joint venture in Burundi for the production of lamps and street lights for the entire East African market. The project is financed locally, while Lisma provides equipment and technology.
  • The Atlantic seafood factory launched by Russian private investors in Senegal in 2015 is the largest fish processing company in West Africa.

A more solid institutional foundation is needed to boost Russia’s multilateral cooperation and increase trade turnovers with African nations.

  • In particular, systemic certification disruptions of agricultural supplies on both sides need to be carefully looked into by relevant Russian and African regulators.
  • Lack of understanding of African political, social and economic environments is viewed by experts as another hurdle, with similar difficulties experienced by African partners.
  • The Africa Business Initiative launched last year with the participation of the Russian Ministry of Foreign Affairs, the Ministry of Economic Development and the Institute for African Studies of the Russian Academy of Sciences is set to address these challenges.
  • It seeks to support Russian small and medium-sized businesses in their forays into the African market along with promoting liaison between businesses, providing advisory support and pursuing other goals.
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