Putin is yet again on another charm offensive.
This time he’s looking at Africa.
Last week, Russian President Vladimir Putin made his move to win African’s golden heart, and her pockets. On October 23rd and 24th, Russia hosted the first-ever Russia-Africa Summit at the Black Sea resort in Sochi, where he welcomed leaders of all 54 African countries, including Ghana’s President His Excellency Nana Addo Dankwa Akufo-Addo. This signifies the tremendous effort Russia is putting into its outreach project to the continent.
Russia is already Africa’s top arms supplier. At the Summit, Russia offered African leaders fighter jets, nuclear power plants and missile defence systems in an attempt to revive Russia’s influence in the region, as well as boost cooperation and commercial opportunities in Africa.
Seemingly more emphasis on Trade Export from Russia.
At the Summit Vladimir Putin set out his plans to boost Russia’s trade engagement with the continent. He has stated that unlike other world powers, he promises to refrain from “political or other” influence. He said,
“We have very good potential for development. We have much to discuss. All this allows us to account for a further increase in trade. I believe that it is within our power to at least double the volume of trade in the next 4 to 5 years.”
This shows Russia’s plans to build up its export market from wheat and fertilisers to energy and weapons, which it already sells to about 30 African countries. Russia is especially interested in Africa’s oil reserves and also in mining. Even though Russian companies have made a breakthrough in the diamond sector, the country still has a long road ahead to catch up with other world powers when it comes to Trading with Africa.
In 2018, Russia’s export to Africa was estimated at $20billion. China on the other hand exported over $200billion to our continent. Russia also trails behind India, USA and the European Union in exports to Africa. The Kremlin reports that $12.5billion worth of deals were struck at the first-ever Russia-Africa Summit. Since most of the deals were Memoranda of Understanding, it is difficult to specify how many of them are going to actually result into any real investment.
Defence Defence Defence!
Uganda’s President, Yoweri Museveni, told Vladimir Putin at their bilateral meeting:
“The number one [issue] is defence and security. We have been co-operating very well, we have supported the building of our army by buying good Russian equipment, aircraft, tanks, and so on. We want to buy more!”
Russia has been open to taking more orders on any day before this Summit. By iterating a want to buy more, of course the Ugandan President was hinting at a readiness to accept financial help from Moscow to increase defence purchases.
At the Summit, Russia did not shy from displaying its lead in arms sales to the continent. The official arms export agency said Russia has defence orders to the tune of $14billion from Africa alone, which accounts for about one-third of Russia’s total defence exports worldwide.
Putin said that he has come to “military technical co-operation agreements” to supply weapons to more than 30 African states. He even added that “Some of these deliveries are free of charge.”
Russia is doing a lot to woo Africa. The Deputy Chief Economist at the Institute of International Finance, Elina Ribakova, has defined these deeds as having “no strings attached”. One might still theorise as to why.
Why Russia is making this move now.
Trade is always going to be part of the major motivators for such actions as an upswing with time is almost as sure as guaranteed. But the circumstances that should solidify my aforementioned statement as fact has been there for a few decades now. What changed?
Donald Trump happened.
The current US Government has made clear its intentions to re-evaluate its relationship with Africa. Former US National Security Advisor, John Bolton, even stated before that as part of Trump’s new Africa strategy, the United States will also “re-evaluate its support for UN peacekeeping missions” in Africa.
Several analysts and political pundits concur that this Summit and the opportunities it holds for Russia was created by the President Donald Trump Administration’s reduced interest in Africa. It’s hard to argue against that. But Russia is late to the table.
The Scramble for Africa
It could also be argued that Russia is merely joining what has been dubbed the “Scramble for Africa”, and will now compete with other World Powers, the likes of China, South Korea, Turkey, Japan, The Arab League, India and the European Union, that already have well-rooted, institutionalised agreements with many African countries similar to what Russia aims to have.
In the Scramble for Africa, World Powers vie for influence in the continent. Now, Vladimir Putin is looking to regain some of the leverage lost following the collapse of the Soviet Union. Many African Leaders have loudly welcomed this, especially Special Guest of Honour, Egyptian President Abdel Fattah Al-Sisi.
President Al-Sisi said, “We consider Russia a reliable partner of the African Continent. We really hope Russia will work in Africa in all spheres and sectors, including financing infrastructure, energy, and road construction.”
For African Countries, the more foreign powers competing to invest in our economies, the better. The atmosphere at the Summit by all indications was a very positive one.
The Summit ended in Agreements
Amidst the MOU’s and the cooperation agreements, some of the African Leaders did leave Sochi with couple of trade agreements. Here is a report of this from JIC Media:
Below is a list of military, energy and other deals made between Russia and African countries at the inaugural summit:
Military and politics:
— Russia signed a contract to supply 12 Mi-35 Hind E attack helicopters to Nigeria.
— Overall, Russia plans to send $4 billion worth of weapons to African countries in 2019, the state arms exporter said.
— Putin said Russia wrote off $20 billion of African countries’ debts that had accumulated during Soviet times.
— Putin has signalled readiness to help stabilize conflicts in the Central African Republic and Sudan.
— Russia’s state nuclear company Rosatom is in talks with Ethiopia to build a nuclear power station there.
— Russia’s state development bank VEB, the Russian Export Centre, the African Export-Import Bank and the Societe Nationale des Petroles du Congo signed an investment cooperation deal on a regional oil product pipeline in the Democratic Republic of the Congo.
— VEB and the Russian Export Centre, a state institute supporting non-commodities exports, also signed a memorandum with Morocco’s MYA Energy on financing a refinery in the North African country.
— Russia’s Rosgeo exploration company signed memoranda and cooperation agreements with Equatorial Guinea, South Sudan and Rwanda.
— An affiliate of Russia’s Rostec conglomerate, the Russian Export Centre, Russia’s Vi Holding industrial group and the African Export-Import Bank agreed to create an interstate platform for mining projects in Africa.
Economy and trade:
— Russia’s largest lender Sberbank, VEB and the Russian Export Centre teamed up with London-based investment firm Gemcorp Capital for a $5 billion deal to create a mechanism to support trade between Russia and African countries.
- The agreement will help boost Russian exports by providing financial assistance for the supply of Russian goods to African countries including Angola, Ethiopia, Mozambique and Zimbabwe, Sberbank said.
- It is expected to offer financial support and counsel to Russian exporters’ projects in sectors like agricultural products, fertilizers and medical products, it added.
— Putin said Russia’s trade turnover with Africa doubled in the past five years to total more than $20 billion, and he plans to double that in another 5years.
— Russia lags far behind its geopolitical competitors on this new frontier. Bloomberg compares its $20 billion trade volume with Africa to the European Union’s $334 billion and China’s $205 billion and said it equals around one-third of the United States’ trade volume.
What two experts are saying about the summit’s significance:
Samuel Ramani, doctoral researcher in international relations at the University of Oxford specializing on Russian foreign policy said, “The summit in Sochi is a significant development for Russia’s power projection ambitions on the world stage.”
“It also acknowledges Russia as a significant power in Africa, at a time when the US is disengaged from the continent, the EU is divided on how to approach it and China is strengthening its hegemony. This summit marks Russia’s arrival as a continent-wide player.”
“But whether or not it is political theatre/PR or a genuine strategic game-changer lies in the economic deals that are actually crystallized from the summit.”
Anna Arutunyan, senior Russia analyst at the International Crisis Group NGO, also tweeted: “I think what [it] comes down to is Russia exporting sovereignty. … In a nutshell, we are going to sell you cheap weapons, do business deals with you, set up partnerships, all under the umbrella of helping you be strong and independent — and stand up to the West.“
“The difference with the Soviet, ideologically driven approach is that Russia is not hiding its primary driver — self-interest. And is not nearly invested enough to want to impose much. African participants, meanwhile, speak of Russia offering partnerships, not aid.”
“Russia’s actions look suspicious to the West because it doesn’t see what’s driving them. But I’m not seeing a hidden cache of motivations here. Sure, Russians talk of doing good. Sure, they want influence. Who wouldn’t. But this is about selling stuff. They’re not hiding that.”
This concisely concludes this week’s Macroeconomic Bulletin.
Hit me up on social media and let’s keep the conversation going! I read all the feedback you send me on LinkedIn, Instagram, Twitter and Facebook.
Also, feel free to send me your articles on relevant topics for publication on the Macroeconomic Bulletin. I’d give you full credit, an intro, and an outro. Kindly make it about 1000 words.
Have a lovely week!
Maxwell Ampong is the Group CEO of Maxwell Investments Group, an International Trade and Business Development Solutions Provider. He is also the Property Investment Consultant for Coldwell Banker Commercial Real Estate Ghana. He works with a team of motivated professionals, governed by industry experts with experience spanning over a century. He writes about trending and relevant economic topics, and general perspective pieces. LinkedIn:/in/thisisthemax Instagram:@thisisthemax Twitter:@thisisthemax Facebook:@thisisthemax Website: www.maxwellinvestmentsgroup.com Email: firstname.lastname@example.org Mobile: 0249993319