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Are the agreements to be signed at the Forum industry-specific?
Actually, yes. Some projects are aimed at the development of railroad infrastructure and railroad equipment supply. For example, one of the agreements suggests the supply of more than a thousand passenger cars for Egyptian National Railways. Meetings are planned with Ministers of transport of a number of African countries to discuss priority projects for infrastructure development.
Can you tell about the other bilateral Russia-Africa projects of high priority?
First of all, I would like to mention the Darwendale mining project in the Republic of Zimbabwe. Platinum group metal ore to be extracted also contains gold, nickel and copper. The project was initiated by Russian Vi Holding. The deposit is characterized by huge resources in place and no less significant potential of up to 1350 tons of output. The total project budget is about $1 billion.
It is planned to organize bank financing within the syndicate led by Afreximbank. Besides, we are signing the cooperation agreements to promote Russian civil aircraft building, solutions in the field of land reclamation in the African region, a number of agreements and memoranda between Russian and Angola companies.
Will there be any other interbank agreements?
We are going to sign an agreement to create a mechanism for Russian-African trade financing. REC, Russian banks and international partners create a settlement platform to be used to execute settlements with Africa totaling $5 billion. The agreement aims to boost the cooperation with the African countries and ensure financing of deliveries of Russian goods to Africa. This platform will make it possible to absorb the trade risks and cover deliveries that are popular in the international arena. In turn, we will engage at least 10 countries and literally create a trade corridor for Russian business to be able to expand our presence in Africa.
I would like to mention a memorandum of partnership executed between Russian Export Center JSC and First Bank of Nigeria Limited that aims to bring our efforts together to stimulate trade between Russia and Nigeria, and other countries of the presence of First Bank of Nigeria, namely Gambia, Ghana, Guinea, Senegal and Sierra Leone.
Russia-Africa Forum was preceded by extensive cooperation with Afreximbank. What prospects does this cooperation open to Russian export?
The African region is big and our exporters do not know the local business landscape and environment. Moreover, the settlement system often put export deals and projects on the brake.
Afreximbank, which is the largest development institution in Africa and our system partner, can facilitate us with a solution to the said problems. Several years ago REC acquired approx. 2 thousand shares of Afreximbank and became the third-largest non-African financial shareholder.
About 10 projects were elaborated with Afreximbank to mitigate the financial risks. First of all, those projects cover Egypt, Zimbabwe, Zambia, Nigeria and Angola. We should note that all the parties to the projects are interested in long-term fruitful cooperation. This year, we executed the first deals with the Bank. For example, Eximbank of Russia confirmed two letters of credits in favor of Uralkali’s subsidiary issued by Afreximbank. The deals allow arranging payments for Russian fertilizers supplied to Zambia to the amount of approx. $45 million. Other projects with Afreximbank imply the supply of Russian ground transport vehicles, construction and modernization of industrial infrastructure in Zambia and Angola, mining projects in Zimbabwe and Sierra Leone. Russian partners are increasingly involved in oil (pipelines processing) and agricultural projects.
In June, we held the Russia-Africa economic conference that attracted special attention to the issues of practical Russian-African cooperation within the industries of the top priority. More than 1,500 participants, the large portion of which was the foreign delegates, visited the event.
President @CyrilRamaphosa will lead the SA delegation to the first Russia-Africa Summit on Wednesday and Thursday in Sochi -Russia. The #RussiaAfrica summit is expected to deepen relations with the continent at both bilateral and multilateral levels @en_forumafrica pic.twitter.com/tjiFfAfySb
— South African Government (@GovernmentZA) October 21, 2019
What is the volume of the current Russia and Africa trade turnover and what REC is anticipating in the next year?
At the moment, Africa is one of the most attractive markets for sales of products and long-term investments for Russian companies. Moreover, African countries made a quantum leap, trying to create favorable investment conditions. The local countries introduce reforms and initiate ambitious projects. To implement the said changes, they are looking for international partners with a solid background who can offer advanced solutions and competitive products. We appreciate much that Russian companies are among those partners too. One of the REC’s goals is to open Africa to the broader audience of local exporters. Russian exporters may focus on the supply of motor vehicles and accessories, wheat milling and oil processing equipment, railroad infrastructure development and modernization, etc. when planning to expand their operations.
Russian suppliers of farming machinery, motor vehicles (KAMAZ, GAZ Group, URAL, UAZ) and special equipment are already working in African markets. LADA assembles vehicles in Egypt, RENAULT supplies Russian-made car bodies to Algeria. Russian companies successfully participate in projects on maintenance and modernization of power stations, oil development and transportation, construction of facilities for chemical and metal mining industries in Africa.
Agricultural products and food commodities are of great significance for export operations too. Besides, there are many educational, health care, hi-tech projects under the development, including those implying smart cities design.
At the moment, we promote non-resource export in such key countries like Egypt (which accounts for two-thirds of Russian-African trade turnover), the Republic of South Africa, Zambia, Angola, Algeria, Nigeria and Kenia.
At the end of 2018, the trade turnover between Russia and Africa increased 17% in absolute terms, moving beyond $20 billion. During the first half of 2019, non-resource exports grew 15% compared with the same period in 2018. According to our positive expectations, in 2020, Russian-African turnover will grow approx. 20%. The Russian industrial zone in Egypt that will be commissioned soon will create a significant impact on the said turnover growth.
According to our estimations, the trade turnover between Russia and Africa will grow three times. Africa is our important strategical partner. In turn, we are conducting economic diplomacy in Africa by expanding exports and opening the local market.
