For Russian business, big dreams in Africa

With economic growth stalled after five years of Western sanctions, Russia is anxious to find new business partners.

23 October 2019 | Economics

Andrea Palasciano - From diamonds and arms to nuclear power and oil, Russia has major business ambitions in Africa, even if it is coming late to the party.

Western countries like France and the United States are deeply entrenched in African economies and in recent years China has emerged as the continent's biggest new business player.

But with president Vladimir Putin hosting dozens of African leaders – including president Hage Geingob from Namibia – this week, experts say Moscow is aiming to expand its reach in Africa's growing economies.

The timing of the Russia-Africa Summit - the first major gathering of African leaders in Russia since the collapse of the Soviet Union in 1991 - is hardly a coincidence.

With economic growth stalled after five years of Western sanctions, Russia is anxious to find new business partners.

"What the Russian authorities didn't want was to let this train go by without them, it would have been unacceptable," French geopolitical analyst Arnaud Kalika said.

Footprint

Russia's business footprint in Africa is relatively small, about the same size as that of Turkey, another country that has been looking to expand its influence on the continent.

Overall Russian trade with Africa stood at about US$20 billion in 2018, less than half the continent's trade with France and 10 times less than with China.

The numbers have been growing however. Russian exports to Africa doubled in the last three years and have risen from one percent of total exports five years ago to four percent now.

Grains account for a significant amount of exports, as do weapons, with Africa representing 15% of total arms sales for the world's second-largest exporter.

Russian firms are also involved in oil operations in Ghana and Nigeria, diamonds in Angola and nickel elsewhere.

Competitive advantage

Russia's traditional industries are giving it a competitive advantage in Africa, said Charles Robertson, chief economist at Renaissance Capital.

"Chinese skills in arms and oil and gas are not as good as Russian skills," he said.

North Africa dominates, accounting for about 80% of Russia's trade with the continent.

Putin took modern Russia's first major steps in Africa in 2006, when he announced a deal in Algiers to write off Algeria's Soviet-era debt in exchange for a huge arms contract.

Algeria now represents 80% of Russian arms sales to Africa.

Putin did it again in 2008 in Libya, exchanging debt for rail contracts and oil prospects, but the country's descent into war in 2011 left the projects stalled.

Arms deals

Russia's experience in neighbouring Egypt has been much more positive, with Putin and president Abdel Fattah al-Sisi restoring a Soviet-era strategic partnership after Sisi came to power in 2013.

Cairo and Moscow have agreed a slew of deals for Russia to sell arms and build nuclear power plants, and Egypt - the world's biggest grain importer - is now mainly fed by Russian supplies.

Arms deals have been especially useful as Russia expands its interests into Sub-Saharan Africa, with agreements reached over the last few years that included the Central African Republic, Nigeria and Equatorial Guinea.

The deals, Kalika said, offer a form of "security in exchange for economic advantages" and are especially welcome in countries where there is a "weariness" with China's role as a lender and investor.

Lacking strategy

But so far, experts say, Moscow appears to lack an overall strategy for doing business across Africa.

Russian business instead seem to be seizing opportunities ad hoc, in contrast to the Turkish approach.

Ankara has launched a major charm offensive in Africa, sending diplomatic and business delegations throughout the continent.

There are direct flights from Turkey to more than 50 African destinations.

By contrast, from Moscow it is possible to fly direct only to a handful of countries such as Egypt and Ethiopia.

But Robertson said it is not too late for Russia to take a bite out of the "growing pie" that African economies represent.

"Is there still a market? Yes, there is, because Africa's going to keep on growing and will be the fastest-growing part of the world by 2030," he forecast. – Nampa/AFP

Similar News

 

Treasury demands reports of lockdown procurement

1 day - 03 June 2020 | Economics

OGONE TLHAGEWINDHOEKThe ministry of finance will demand full reports from public entities, ministries, agencies and offices detailing procurement expenditure incurred during stage one of the...

Credit extension dries up

2 days ago - 02 June 2020 | Economics

Cirrus Securities has released information derived from private sector credit extension (PSCE) figures for April 2020, painting a bleak picture of the Namibian business landscape....

Stimulus in battle to survive

2 days ago - 02 June 2020 | Economics

Andrew Rowles, CFO for Ashburton Namibia: “We expect that the Namibian recession will deepen even further, with the short- to medium-term outlook remaining very challenging.”Augetto...

Water a powerful weapon

2 days ago - 02 June 2020 | Economics

Phillepus ­Uusiku With water being an essential resource to cope with the Covid-19 pandemic, the sector received the third-largest share behind transport and education in...

Transport drives development budget ...

3 days ago - 01 June 2020 | Economics

Phillepus Uusiku - Sectors that have the potential to create employment and boost overall output such as the agricultural sector got a share of 8%...

Tourism faces biggest slump since ‘50s

3 days ago - 01 June 2020 | Economics

Empty sunbeds lie along a beach in the Cypriot resort town of Ayia Napa. International tourism is set to fall by 70% this year, marking...

Payroll gobbles bigger income chunk

6 days ago - 29 May 2020 | Economics

Jo-Maré Duddy – Nearly N$560 out of every N$1 000 of government’s own revenue in 2020/21 will pay for civil servants’ salaries and benefits, leaving...

We are not at war - Kamwanyah

6 days ago - 29 May 2020 | Economics

Kenya KamboweRUNDUPolitical commentator Ndumba Kamwanyah has questioned why government continues to divert billions of dollars to the defence ministry, while the country is not under...

No money to pay green scheme workers

1 week ago - 28 May 2020 | Economics

The managing director of the Agricultural Business Development Agency (AgriBusDev), Petrus Uugwanga, says the agency does not have enough money to pay the outstanding salaries...

Price monster remains meek in April

1 week ago - 28 May 2020 | Economics

The fallout from the coronavirus has had a large disinflationary effect on prices in April due to the large demand shock and plunge in oil...

Latest News

Pupils in God's hands

3 hours ago | Education

ILENI NANDJATOOMUNGWELUMEWhile learners at Omungwelume Senior Secondary School squat in shacks due to an incomplete hostel, their principal has placed the situation in God's hands.“They...

Shimbulu wins first round against...

3 hours ago | Justice

ILENI NANDJATOOSHAKATIThe Windhoek High Court yesterday ordered the Oshakati town council not to implement an order by Swapo to replace councillor Katrina Shimbulu.The court also...

Central hospital gears for corona...

3 hours ago | Health

STEFFI BALZARWINDHOEKPresident Hage Geingob yesterday inaugurated an intensive care and isolation ward at the Windhoek Central Hospital, which will be used as part of the...

Heavy is the head

3 hours ago | Opinion

President Hage Geingob will deliver his State of the Nation Address today during what many have described as the gravest time for post-democratic Namibia.If any...

Fishrot investigators get more time

3 hours ago | Justice

OGONE TLHAGEWINDHOEKThe State has been allowed more time to complete its investigations into the Fishrot bribery scandal. Windhoek magistrate Ingrid Unengu yesterday refused to set...

Ondangwa robbers still at large

3 hours ago | Crime

ILENI NANDJATOONDANGWAThe Oshana police have so far recovered over N$92 000 of the N$200 000 stolen from a woman in front the Ondangwa FNB branch...

Gustavo denied bail

3 hours ago | Justice

OGONE TLHAGEWINDHOEKFishrot accused Ricardo Gustavo was denied bail in the Windhoek Magistrate’s Court yesterday.Magistrate Johannes Shuuveni said in his judgment that the charges faced by...

Let's be positive – Steenkamp

3 hours ago | Education

STAFF REPORTER WINDHOEK The executive director in the ministry of education, Sanet Steenkamp, yesterday encouraged teachers and learners to be positive, saying that...

No community transmission of Covid-19

3 hours ago | Health

ELLANIE SMIT WINDHOEK Health ministry executive director Ben Nangombe has confirmed there has still been no community transmission of the coronavirus...

Load More