Russia-Africa Ties: Constraints of Raising Business Cooperation

Published on 9th May 2016

Recognizing the widening gap and huge untapped potential in their economic cooperation, Russia and Africa are gearing up efforts in raising the level of trade and business, Andrey Efimenko, an Expert at the Russian Chamber of Commerce and Industry (CCI) said in an exclusive interview with me, emphasizing unreservedly the importance of increasing business and economic cooperation with the African countries.

In the interview, he highlighted some of the significant business events by the Chamber during 2015 as follows:

- Forum under the theme "international trade initiative" organized by the Ministry of Trade and Industry South Africa (Moscow and Novosibirsk, March 2015),

- Meeting of Russian business circles with the President CCI of Benin Jean-Baptiste Sacivi, the results of which was signed the Memorandum of Understanding (MoU) on cooperation between CCI of Russia and the CCI of Benin (Chamber of Commerce, May 2015),

- Section under the theme "Prospects of Cooperation Between Africa and Russia" at the International Economic Forum of Municipalities (Dmitrov Region, September 2015),

- Meeting with the delegation of the Ministry of Trade of Cameroon (the CCI of Russia, September 2015),

- Russian business mission to Botswana, held during the annual multidisciplinary exhibition "Global Expo Botswana – 2015" (city of Gaborone, November 2015),

Efimenko said that CCI of Russia closely monitored the activities of Russian companies in Africa, as a number of companies – members of Chamber are implementing major investment projects in this region of the world, in particular, Renova group, Gazprombank, LUKOIL, Rosneft, etc.

"Unfortunately," Efimenko regrettably pointed out, "some large Russian companies operating on the African market have established themselves negatively in a number of countries. This is primarily due to ignorance of cultural peculiarities of the region, the lack of social responsibility, and failure to fulfill contractual obligations. These cases damage the image of Russia and Russian companies with further entering the African market."

A survey of Russian companies by the Russian Chamber of Commerce and Industry regarding the work on African markets has shown that conditions of sanctions have hampered their access to financial and credit resources that could be directed to participate in the implementation of infrastructure projects, the purchase of foodstuffs and agricultural raw materials.

Deterrent factors include the cost of logistics from Africa to Russia and vice versa, weak solvency of local companies interested in obtaining of Russian products on preferential terms, the Ebola virus (Guinea, Nigeria, Sierra Leone), as well as the lack of political stability in several African countries (Chad, Nigeria, Liberia, etc), Efimenko explained.

In conditions of high competition on the African markets from China, European Union and the United States, public-private partnership with the coordinating and steering role of the state is at this stage the key to success and the best form of development of cooperation of Russia with African countries.

An important factor in the expansion of Russian-African relations is the establishment of development institutions such as the Russian export centre and Roseximbank. The CCI of Russia is making serious efforts to unite the business community of the country for development of interaction with African countries.

On the initiative of the Chamber and with the support of the Russian state, public and private organizations in 2009 established a Coordinating Committee on Economic Cooperation with Africa (south of Sahara) popularly referred to as AfroCom. Today, it unites more than 120 Russian organizations and companies interested in developing relations with Africa.

With the participation of the Committee, business activities are regularly conducted, which are important both for the deepening of bilateral relations with individual countries and for strengthening Russia-African relations in general. The Committee pays special attention to information and education devoted to the economy of the African continent and the development of Russian-African economic relations.

The Vice-President of the Chamber of Commerce and Industry of the Russian Federation, Georgi Petrov, noted at the AfroCom's annual executive meeting held in April 2015 that "in view of the current geopolitical situation in the world and the economic situation in Russia, Russian businesses have to look for new markets."

"In this regard, of particular interest is the African continent, which today is one of the fastest growing regions in the world with an annual GDP growth - 5%," Petrov pointed out, and added "In addition, opportunities for projects in Africa are opened with the accession of South Africa to the BRICS bloc."

According to the Russian Chamber of Commerce and Industry, Russia's trade with Africa, south of the Sahara, is only $3.2 billion.

By Kester Kenn Klomegah

The author is an independent research writer on Russia-African affairs and a member of the Regional Council for Development of Relations with Africa.

This article has been read 13,300 times