African countries have made a quantum leap in terms of investment and trade conditions, making the continent one of the most promising export markets for Russian goods and an attractive investment destination, says Andrei Slipov, director of the Russian Export Centre (REC).
In 2018 trade between Russia and Africa increased 17 per cent, moving beyond $20 billion. During the first half of 2019 non-resource exports grew 15 per cent compared to the same period in 2018, and according to REC estimates trade between Russia and Africa is set to triple.
Russian suppliers of farming machinery, motor vehicles — KAMAZ, GAZ Group, URAL, UAZ — and specialised equipment are already present in African markets. LADA assembles vehicles in Egypt and RENAULT supplies Russian-made car bodies to Algeria. Russian companies are involved in the maintenance and upgrading of power stations, the oil industry and the construction of infrastructure for the chemical and mining industries. Educational, health care and hi-tech projects are under development, and Russian involvement in the agricultural sector is growing.
What is on REC’s agenda for the forum?
REC Group and Afreximbank, our main partner in Africa, are the official co-organisers of the Economic Forum. REC has been actively preparing for Sochi. We have analysed existing international partnerships and investments between a number of countries and Africa and we will be holding two sessions within the forum, addressing trade finance issues and the Russian Industrial Zone in Egypt.
There will be a presentation of both products and technological solutions which we believe have potential in African markets in the agricultural, transport engineering, chemistry, medicine, pharmaceutical and information technology sectors.
In addition, all-terrain vehicles, the latest generation city trams, agricultural machinery, construction and special equipment and mobile healthcare centres will be on display and a special business communication area has been designated for networking between Russian and African businessmen.
At the moment Russia’s presence in Africa is limited. Do you plan to expand your presence and open more REC representative offices in countries where you are not yet represented?
Africa is a major driver in the development of the non-resource non-energy market. We have good historical ties, and in many countries those who comprise the local elite studied in Russia. We can foster dialogue with them and build long-term strategic relations.
Currently, the Russian Industrial Zone in Egypt is under development. It can be considered our export gate to Africa and will be showcased at the forum. It is the first large-scale Russian-African infrastructure project for decades.
We will gradually develop a unique complex on 525 hectares at the East Port Said site of the Suez Canal Economic Zone. Russian exporters and suppliers will be able to locate production facilities there to serve the Middle East and Africa markets. Those who move operations to the zone will enjoy state-of-the-art infrastructure and utilities, a variety of exemptions and incentives and will be able to repatriate 100 per cent of their revenues back to Russia.
Twenty-five memoranda of understanding have been already signed with Russian companies concerning their participation in RIZ. They include manufacturers of biochemistry products and fertilisers, construction materials, metal structures, composite materials, farming machinery, electrical goods, oil and gas equipment and dock facilities.
Egypt meets many of the requirements demanded by such a zone. It has free trade agreements with 72 countries, excellent logistics and is close to the Suez Canal, all factors that help reduce costs for exporters. Strong relations between Moscow and Cairo are also an asset. The potential of RIZ is huge.
Are many agreements expected to be signed during the two-day forum?
The number of Russian companies eyeing the African market is growing and we expect cooperation agreements to be signed by Russian manufacturers and African partners. They will be large-scale agreements covering areas such as infrastructure and energy.
There will be a memorandum of cooperation with Nigeria over the Ajaokuta Steel Plant construction project. It will be symbolic for us. We will be returning to a project that began in Soviet times. There are some hurdles remaining though. The local government, for example, has yet to conclude plant concession agreements with foreign investors. Negotiations between representatives of the Federal Government of Nigeria and the State of Kogi and the management of the Ajaokuta Steel Plant on the one hand, and Afreximbank on the other, have already been held, and there are ongoing meetings backed by the Russian Embassy in Nigeria.
Are the agreements due to be signed at the forum industry-specific?
Yes. Many involve developing railroad infrastructure and railroad equipment supplies. For example, one of the agreements covers the supply of more than 1,000 passenger cars for Egyptian National Railways. Meetings are planned with ministers of transport from a number of African countries to discuss priority projects.
And other bilateral Russia-Africa projects…
First I would mention the Darwendale mining project in the Republic of Zimbabwe. The deposits are enormous, with a potential of up to 1,350 tons of output. The total project budget is around $1 billion, and it will be financed by a syndicate led by Afreximbank.
We are also signing cooperation agreements to promote Russia’s civil aviation industry, and covering land reclamation. Several memoranda are due to be signed between Russian and Angolan companies.
Will there be funding agreements?
We expect to sign an agreement to create a mechanism for Russian-African trade finance. REC, Russian banks and international partners will join together to create a settlement platform with a $5 billion capacity. The agreement aims to boost cooperation with the African countries and ensure payment of deliveries of Russian goods to Africa. The platform will help absorb trade risks and cover goods that enjoy international demand.
I would also like to mention a memorandum of partnership between REC, JSC and First Bank of Nigeria Limited, which aims to encourage trade between Russia and not only Nigeria, but other countries where the First Bank of Nigeria has a presence, states like Gambia, Ghana, Guinea, Senegal and Sierra Leone.
*A version of this article appears in print in the 24 October, 2019 edition of Al-Ahram Weekly.