The inaugural Russia-Africa Summit is taking place in the Russian resort town of Sochi this week. We revisit this opinion piece by Dr Hippolyte Fofack, who reflects on the significance of the emerging Russia-Africa relations.
The cooperation between the Russia Federation and Africa goes back decades to when the then Soviet Union provided tactical and logistical support to African countries during their struggle for independence and self-determination.
In recent years, and perhaps reflecting global ideological convergence, it is the level of economic cooperation between Russia and Africa that has generated the most interest and traction. For example, in just the past decade, the volume of trade between the two partners has grown by more than 140% reaching $20.4bn in 2018 and inbound investments from Russia have been on the rise as well.
Prospects for further expansion are positive, especially considering the rich historical possibilities for complementarity between the two economies.
Russia’s technology and expertise in energy and infrastructure is extremely important and relevant in Africa where infrastructure deficit, and especially the chronic deficit of power generation and distribution, has been singled out as a major constraint to productivity growth and output expansion.
Russia’s technology and expertise in energy and infrastructure is extremely important and relevant in Africa.
Meanwhile, Russian expertise in integrated natural resource management could help the continent draw on its excess natural resource endowment to catalyse commodity-based industrialisation and lay the foundation for a win-win economic cooperation and trade in an increasingly challenging zero-sum global trade and economic environment.
In his official opening speech at the The Annual Meetings of the African Export-Import Bank (Afreximbank), held in Moscow, last June, Russia’s Prime Minister, Dmitry Medvedev, pointed out that globalisation had shifted the drivers of growth to developing countries, making Africa a more important partner for Russia, adding that Africa could tap into Russia’s decades-old business and industrial expertise to boost productive capacities and exploit opportunities.
In the same vein, Professor Benedict Oramah, president of Afreximbank, called on partners from all corners of the world who shared the vision of a progressive African continent and of Afreximbank to “join forces to push forward a new agenda for Africa”. The Annual Meetings focused on the theme ‘Harnessing Emerging Partnerships in an Era of Rising Protectionism’.
Africa has been enjoying strong economic growth over the last two decades with growth rates averaging 4.5%, above the world average of 3.8%. The region has some of the fastest-growing economies in the world and is offering high returns on investment, which have been a source of attraction for global investors from both developed and developing regions.
Still, the growth resilience enjoyed by the region also reflects the increasing diversification of its sources of growth and trading partners in a changing global trading landscape of a rising South, where China and India – two BRICS countries along with Russia – have become Africa’s first and second single largest trading partners, respectively.
But in a world where global trade has been largely dominated by manufactured goods with increasing technological content, sustaining robust growth rates in Africa and enhancing its integration into the global economy will require expanding investment in energy, technology and innovation. This in addition to investment in physical and economic infrastructure, to boost value addition and drive manufacturing output.
In this context, closing Africa’s infrastructure gap to boost productivity is particularly critical. Russia’s investment in key strategic sectors and industries, such as petrochemicals, aviation and rail will not only sustain economic expansion across Africa, it also has the potential of accelerating the implementation of the African Continental Free Trade Area – AfCFTA.
Dealing with infrastructure bottlenecks
Although the AfCFTA has been touted as a game-changer with the potential to create one of the largest single markets for goods and services in the world, forging new trade partnerships to attract more foreign direct investment in support of infrastructure development and expansion of manufacturing output will be critical for its successful implementation.
Even though digitalisation is revolutionising payment and delivery systems, geography still determines the flows of goods and services. And in Africa where about a third of countries are landlocked, addressing infrastructure bottlenecks will go a long way to boosting cross-border trade and accelerating the process of economic transformation needed to further the integration of African countries into the global economy.
The growing partnership between Africa and Russia offers further potential for the latter to join the growing ranks of investors and take advantage of new trade and investment opportunities associated with the AfCFTA.
Investors, including those from Russia – are taking advantage of the growth opportunities to be created by the expanding economies of scale and the higher returns on investment the new trading bloc and integrated market will bring.
Already, multinational corporations are responding to new incentives associated with the AfCFTA, with Volkswagen and Peugeot announcing their intention to build manufacturing and assembly plants in Rwanda and Kenya.
The growing partnership between Africa and Russia offers further potential for the latter to join the growing ranks of investors and take advantage of new trade and investment opportunities associated with the AfCFTA.
Russia’s competitive advantage
However, while opportunities for growth and high returns are expected to be significant under the AfCFTA, Russian investors will have to adapt to the new and increasingly more competitive economic environment within the region. Interest in Africa is growing not just from traditional partners but also, and increasingly, from emerging developing market economies. This is perhaps one of the crucial challenges that resurgent Russia could face in its reengagement and increasing economic cooperation with Africa.
But Russia’s expertise around energy, infrastructure and technology – where it is globally competitive – could set the deepening level of cooperation, on a truly win-win partnership and strengthen the foundation of growth resilience both in Africa and Russia, in a zero-sum global trade and policy environment.
The first high-level Russia-Africa Investment Summit, which is scheduled to be held in Russia’s Black Sea city of Sochi later this year, will provide the opportunity to introduce African sovereign and corporate leaders to their Russian counterparts and to broaden areas of mutual interest with a view to further strengthening the level of engagement for a win-win partnership. The fact that so many African leaders have welcomed the event augurs well.
Expectations are very high. In a continent where infrastructure financing needs exceed $100bn annually and where annual trade financing gaps are just as large, the importance of this summit will not be about the number of contracts expected to be signed, but rather the scale and size of deals and their relevance to growth and development priorities. This should be the metric to inform the planning of the summit and monitor its development impact and outcomes.
Expectations are very high. In a continent where infrastructure financing needs exceed 100bn annually and where annual trade financing gaps are just as large, the importance of this summit will not be about the number of contracts expected to be signed, but rather the scale and size of deals and their relevance to growth and development priorities. This should be the metric to inform the planning of the summit and monitor its development impact and outcomes.
However, the Sochi summit should also provide a platform to explore and realise investment opportunities both around economic development and national security.
However, the Sochi summit should also provide a platform to explore and realise investment opportunities both around economic development and national security.
If there is one lesson learned over the years from the Russian experience in a zero-sum game world of competing geopolitical interests, it is the strong link between national security and economic development. Indeed, as Kofi Annan, the late UN Secretary-General, stated in one of his most memorable speeches, there can be “no development without security, and no security without development”.
The Sochi summit should provide a platform to explore and realise investment opportunities both around economic development and national security.
In this regard the renewed and deepening partnership between Russia and Africa should also aim to strengthen the foundation for national security, to set Africa on an irreversible growth path during the implementation of the AfCFTA.
Moments in history
The Sochi summit, and more generally, the new rapprochement will also provide the opportunity to reintroduce Russia to Africa at a time when the increasing emphasis on economics and competition from a growing number of development partners has perhaps clouded the historical relationship that Russia played during the liberation movements, putting it on the right side of African history.
In effect despite the strong historical ties, very few Africans and Russians, especially among the younger generation, remember the sacrifices made by the latter during the struggle for independence in Africa.
However, in Africa this historical inability to remember the support provided by Russians is part of a broader cultural challenge and historical amnesia, which has characterised the post-independence era.
For example, the legacy of the freedom fighter and first post-colonial Prime Minister of the Democratic Republic of Congo – Patrice Lumumba – is more alive in Russia, where a prestigious university was named after him, than in the DR Congo, let alone the rest of Africa, where leaders are yet to erect a single monument where leaders are yet to erect a single monument in his honour and memory.
The Russia-Africa Summit in Sochi will therefore, also be the first step on the path to increasing recognition and greater acknowledgement of many other acknowledgement of many other important contributions Russia has made at critical moments in African important contributions Russia has made at critical moments in African history.
In this regard, creating the right conditions for a mutual understanding and cooperation not just at the economic and corporate level, but also in the education and cultural sphere, will be an important outcome of this first-ever Russia-Africa Summit.
It is one that will lay a strong foundation for a win-win partnership and ensure historical continuity across generations.
Dr Hippolyte Fofack is the Chief Economist and Director of Research and International Cooperation at Afreximbank
