New export: Russian harvesters on African cacao plantations
What commodities and services it is the most profitable to supply to the continent that is becoming the world leader in economic development pace
Moscow is an equal partner, Russia establishes relations with foreign countries precisely on these terms. Our country sticks to the same principle when it comes to African countries, notes expert and analyst Natalia Pchyolkina. In an op-ed column for Realnoe Vremya the expert explains what horizons the possibility of exporting products and equipment opens for Russian businesses.
Russia sets course for rapprochement with Africa
The Africa union is an association that is forecasted by many to become the main political force of the continent and one of the leading in the world in the next 30 years. This will provide both a fast growth of the region’s economy and a bigger number of the population. Therefore many are already trying to occupy a niche here. Turkey and China as well as transnational corporations like Google are demonstrating such an approach at state level.
Russia also set course for rapprochement with Africa. So during the decade from 2010 to 2020, export growth in this direction is 86%. The largest state corporations — Rosatom, Alrosa and Rusal — have their own interests on the continent. But both mid-sized and small enterprises — suppliers of agricultural produce, harvesters, machine tools and industrial equipment for the development of the mining sector, transport and R&D — are actively keeping an eye on this market.
Russia invests in the development of staff potential too. The number of African students by 2022 has tripled compared to the 2000s. After the dissolution of the USSR, the deficit of qualified specialists in different sectors of the economy suddenly decreased. Also, in 1992, Russia closed nine embassies on the continents and is just starting their restoration. Therefore the development of trade and economic relations is based including on commercial and service offices of Russian companies and enterprises.
Who benefits from exports to Africa in Russia?
First of all, companies from energy, security systems, medical development and logistics pay attention to this continent.
Experts expect Russia to present a fully-fledged strategy of relations with African states during the next summit Russia — Africa, which is due to be in November in Saint Petersburg.
Such indicators as elimination of tariff restrictions and a rise in the number of trade representative offices, the organisation of direct flights between Russia and Africa can be among targets.
It is profitable for producers of agricultural machinery, cars and their components as well as manufacturers of eco-friendly energy systems to consider the possibility of exports. Even though Russia already has the status as one of the leading exporters on the continent, there are still considerable growth areas. For instance, there are high duties on agricultural produce, if they reduce, exports will grow manifolds.
It is especially important to not only expand the exports of ready-to-use products but also service equipment that is supplied. This is significant in the context of a holistic approach to the development of business and trade relations. A shutdown in the production line or equipment at the field is fraught with financial losses for the African businessman and reputational losses for the Russian supplier.
Talking about the services market Russian medical services, education, digital technologies and design are an obvious priority and have competitive advantages.
Digital taxation and capital traffic tracking systems allowing minimising leaks and qualitatively boosting the efficacy of legal systems is another promising area of Russian export.
This is topical for African countries, whereas in Russia there are results like reliable software in this area.
Obstacles on the way to Africa
Information hunger is one of the obstacles on the way of economic cooperation between Russia and African states. Russian businesses have little knowledge and available analytics about the specifics, risks and mentality of market players of African states. African entrepreneurs and consumers almost don’t have information about Russian products. The main problem now is not finance but the absence of sufficient knowledge, African consumers don’t know about the quality of Russian commodities and service anything. For instance, Russian Metalwork company will soon open its own trade and service centre in Nigeria.
There is also a shortage of specialised trade platforms, investments and agreements to protect entrepreneurial activity abroad. Russia is now taking these measures to increase exports to Africa. But the main peculiarity of the continent is that there is huge growth potential for many products, but solvent demand is scattered.
The author’s opinion does not necessarily coincide with the position of Realnoe Vremya’s editorial board.