Putin leads push to boost trade ties between Russia and Africa
For every 100 rubles traded between Africa and Russia, 85 end up in the bank accounts of Russian business owners, who mostly sell farm equipment, arms and technology solutions to African governments and corporates. On the other hand, Africa combined retains the remaining 15 per cent.
“When our ships come to Africa, they return to Russia empty,” says Nikita Gusakov in an exclusive interview with People Daily. “This is something we want to change because Russia is struggling to find goods it can buy from Africa”.
Gusakov is an important person to know in the Russia-Africa trade ecosystem that was estimated at $18 billion last year. Not only is he CEO of the Russia Export Centre, the institution that decides what Russia will import and export, he is also the man who stands at the nexus of his country’s trade policy and its implementation. As part of his job, he is involved in deciding which Russian and African companies will get loans from the Russia Afrexim Bank.
This is the subsidiary of Russia’s Exim Bank, which specifically facilitates commerce between the two regions. It is the bank that gives the guarantees needed to facilitate international trade. It also provides insurance services, without which ships cannot sail from ports on either shores.
After the high-level talks between 17 African presidents and their Russian counterparts, and hundreds of business leaders from the two divides last week, Russia now wants to ramp up trade and other forms of cooperation, including military, between the two regions. And it is looking for African companies that that tap into the three services offered by Afrexim Bank.
Before the Russia-Ukraine war, Moscow used to buy goods from European majors, basically groups of middlemen based in the Netherlands — one of the biggest flower markets in the world — and London, for horticultural and other produce from Africa — among other European business hubs.
With European companies and businesses imposing sanctions on Russia as a result of the ongoing war, the country has seen an opportunity to import directly from African source markets, including Kenya which exports tea to Russia, its sixth biggest consumer of the beverage. Now, it is has moved to cut out the European middlemen.
When People Daily interviewed him on the sidelines of the Second Russia-Africa Summit in St Petersburg, Gusakov revealed that 300 business meetings were held that day alone and various memoranda of understanding signed ahead of the consummation of the partnerships that will have far-reaching impact on trade, commerce and the economy in Africa.
Michel Ussene, Executive chairman of Mitra Energy, a Mozambique-based company operating in 14 African countries, attended some of those negotiations.
“The most important thing is that we must use the natural resources found within Africa for our own benefit,” says Ussene. “We need to have a very clear way on how to monetise our natural resources.”
One of those resources, which Mitra Energy has leveraged, is oil and gas. His company supplies these sources of energy to among others, players in the mining sector in Mozambique. He is concerned about how natural gas can be used to generate more power.
“How do we increase capacity of electricity production today?” he asks. “How can we transmit and distribute this power. That is where the Russian example is very clear.”
Although there has been debate over whether Africa should use traditional or green energy such as solar and wind to power its industrialisation, there is a growing movement of experts who think these green sources are not sustainable in the long run from an industrial point of view.
“You need classic energy for industrialisation. Green energy will not work for Africa,” Gusakov says. “The best alternative is natural gas, which is eco-friendly.”
Mozambique has vast resources of natural gas that remains untapped. And this is the niche that Mitra
Energy has positioned itself in to grow its market share in Africa’s energy sector.
“If you look at natural gas, many African countries – such as Mozambique, Tanzania, Nigeria, Algeria, Libya are blessed. All of these should think about how we can propel African development for the next 50 years.”
In his view, African countries ought to work together on strategic sectors, such as natural gas, to grow together and to drive industrialization.
“They do not have to compete,” says Ussene. “They can compliment.”
That way, they can collectively improve Africa’s earnings from global trade. It is worth noting that export volumes from Africa, despite its rich natural wealth and potential, account for a paltry three per cent of global trade for both goods and services.
This is a point that President Vladimir Putin of Russia alluded to in his final press conference at the conclusion of the summit last Friday when he called for strategic development of both regions through mutually beneficial partnerships in food security, Information Technology, education, health services and infrastructure.
He, for instance, said Russia will invest 1.2 billion rubles in the campaign to eradicate communicable diseases, which remain a major health challenge in many African countries. In addition, Russia will create more opportunities for African students to study there with the ultimate aim of facilitating technology transfer.
“The main thing is that the summit has again confirmed the firm resolve of both Russia and Africa to continue developing mutually beneficial partnerships,” President Putin told journalists at the end of the two-day summit.
One of his agenda is to create a new world order in which trade is conducted in national currencies, including the ruble. With this, he was speaking to the movement, which has included China, who are pushing for de-dollarisation of international trade.
While agreeing with the broad views, the President Azahi Assoumani of Comoros, who is also the chair of the African Union, asked Russia to lead the way in the creation of this new order and improve bilateral co-operation on various fields with Africa. But even in doing so, it must pursue peace with Ukraine.
“We will find a solution to the conflict,” President Assoumani said, underlining its important to the continued trade between Africa and the rest of the world. “Putin is ready and the African Union will try to convince the other party and be mediators.”
His final message on behalf of the continent? “Russia is going to invest in Africa, he said, “but this does not mean others are not welcome.”