Igor Morozov, Chairman of AFROCOM, Senator of the Russian Federation: “Africa for Russia is the last relatively free market for the export of domestic goods”
14.02.2022

In recent decades, Africa has become the main continent for which an active struggle is unfolding between the Euro-Atlantic region and Greater Eurasia. Therefore, there is nothing surprising in the fact that the European Union is increasing its trade turnover with African countries, and today it amounts to more than 300 billion dollars a year. The United States, implementing the Prosper Africa Program, continues to push American investments and high-tech products to priority African markets. China makes powerful competition to the West in all azimuths.

 

At the same time, China, being a leader in financing infrastructure projects, selects seaports, transport arteries, hydropower, and promising deposits of rare earth metals through colossal investments. According to the Agency for International Development and Cooperation, China has built more than 6,000 km of railways, 6,000 km of roads in Africa, nearly 20 ports and invested in 25 for reconstruction, more than 80 large energy facilities, more than 130 medical facilities, 45 sports facilities, and more than 170 schools. Japan and Korea are actively moving forward. India, Turkey, Saudi Arabia and the United Arab Emirates are trying to maintain the Asian pace.

 

In such difficult conditions, "Return to Africa", which was proclaimed at the Sochi Summit as a planetary slogan for Russia, was received with great enthusiasm by our business community and the ruling elite. Indeed, with the severe sanctions of the West and the crisis caused by the pandemic and the decline in world trade, it is impossible to grow the national economy without developing new markets, especially reaching the indicators of increasing non-resource non-energy exports up to $250 billion (parameters of the national project "International Cooperation and Export").

 

What does Russia have in Africa today? A little more than 20 companies are working on raw materials projects in different parts of the continent, there are traditional deliveries through the military-technical cooperation, export of grain, mineral fertilizers, oil products with a total turnover of 17 billion dollars (2020)! This situation says only one thing - it is necessary to involve large-scale involvement of small and medium-sized businesses from the Russian regions in the African direction. It is necessary to reconsider the entire range of the export potential of the regional economy: the transport industry, agricultural machinery and units, mechanical engineering and navigation equipment, the mining sector, water treatment, and information technology.

 

And most importantly, what can Russia offer our African high-tech partners today? For 30 years, Russia has become a completely different country, and today we understand that information technology, pharmaceutical technology, space - this is all in which Russia has entered the world paradigm and today is one of the most competitive players.

 

Russia is among the leaders in terms of the prevalence of fintech services. The country is in first place in the use of contactless payments. The level of penetration of fintech services in Russia is 82%. Above - only in India and China. According to Skolkovo, the volume of venture investments in Russia in the first half of 2021 amounted to $1 billion, investments in fintech - $78 million in 8 transactions.

The global volume of venture investments for the first half of 2021 amounted to $291 billion. Russian financial organizations are now most interested in the development of payment services, financial marketplaces and wallets, embedded finance, as well as in personal finance management, loyalty program solutions, secure personal data processing, cybersecurity, banking process automation and cloud technologies.

 

It is known that in the regions over the past five to seven years, centers of high-tech medicine have been created and telemedicine methods are being developed. The foundations laid for disaster medicine departments are capable of responding to civilizational challenges anywhere in the world, and after the breakthrough of the Sputnik V vaccine into the world leaders in the pharmaceutical market, it became clear to everyone: Russia has something to offer its African partners.

 

However, it should be understood that Africa is rapidly changing, and the rules of work in it are changing. Agenda 2063, adopted by the African Union as a program for the development of the continent, requires the localization of foreign manufacturers, job creation, investment in infrastructure projects with a social agenda. And yet, despite the current and potential problems, the African continent is gradually becoming a global project for the West and Eurasia, and the competitive struggle for it is just beginning.

 

In this regard, in order to promote Russian goods, it is necessary to create conditions that would be competitive for our exporters. It is quite obvious that the Russian Export Center does not have a direct investment fund in the system of financing African projects. Successful practice in Africa clearly demonstrates the widespread use of such funds by China, India, and France.

 

We need to create new mechanisms for recording concessions for natural resources in investment projects and foreign trade operations, compensatory (counter) trade, mutual settlements in national currencies. We see how Chinese partners use the electronic yuan when paying for their foreign contracts, primarily African ones.

 

Do not lag behind China and other countries. The Central Bank of Russia, when developing the concept of the electronic ruble, should already take into account the Chinese experience at the first stage in order to test such innovative solutions in the African direction. This will require a change in the current legislation, and most importantly, a change in consciousness in the understanding that Africa for Russia is the last relatively free market for the export of domestic goods. Another one or two decades and it will turn into a highly developed industrial space, where there is no place for those who are lagging behind.

 

Therefore, we need to boldly move forward, taking cardinal political and economic decisions, creating free trade zones and a system of agreements to encourage and protect investments, eliminating administrative and trade barriers, using the competitive advantages we inherited from the Soviet Union. It is necessary to launch the Russian Industrial Zone in Egypt in the near future, and this will help our exporters quickly localize their production.

 

Considering the tactics of promoting goods and services, one should pay attention to the practice of AFROCOM CCI (Coordinating Committee for Economic Cooperation with African Countries). AFROCOM was created as a coordinating structure of the Chamber of Commerce and Industry of the Russian Federation, with the aim of uniting all regional business in Russia, as well as in order to do everything possible to transfer new knowledge about what Africa is like today and why it is interesting for Russian business.

 

Creating trading houses and Russian business support centers in key African countries, AFROCOM sends business missions from Russian regions to them, holds conferences and round tables (in Russia and Africa, in person and via videoconferencing), which allow Russian entrepreneurs to get acquainted with the market situation, partners, better understand the atmosphere of the investment climate in the country. In turn, mobile expositions, exhibitions of export production introduce our African partners to the competitive goods that our regions offer today.

 

Today AFROCOM is a bridge between Russian business and African countries, a platform for restoring active economic cooperation with our African partners. AFROCOM has already done a lot to create a work infrastructure for Russian regional business. On the basis of the new model of the Russian School Abroad, thought out in Rossotrudnichestvo, AFROCOM intends to actively assist in its promotion throughout Africa. School is the Russian language, it is knowledge about Russian literature, the history of Russia. The school is the future students of Russian universities, the future elite of Africa. And Africa expects this from Russia...