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Russia and Africa: Long-Term Partnership in Trade and Economy

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Russia and Africa: Long-Term Partnership in Trade and Economy

Release date: 22 October 2019

Topics:

Education

Foreign direct investment

Economic Integration

Trade policy

Export Promotion

Africa

Africa continues to build up its appeal in trade and investment. The countries of the region are getting increasingly involved in international trade and integration processes, are scaling up their GDPs and carrying out regulatory reforms that improve the business environment. Despite the fact that the growth of GDP and FDI in the region is slowing down, it is expected that the rates of growth will remain higher than those in other developing countries or emerging economies.

The authors of the report state that Russia and Africa are moving closer to each other in trade, investment, and industrial integration at a rapid pace. This is particularly important in the current context of rising instability in the global economic system, tensions in trade, and growing complexity of forecasting on a global scale.
The trade turnover between Russia and Africa is currently dominated by Russian exports (85.6%) and their share continues to grow. The pace of export growth outstrips the average growth rates among all Africa’s trade partners. If this trend continues, Russia might soon increase its share in Africa’s total imports. In the service sector, export of education services appears to be the most promising segment, particularly since Africa is currently demonstrating an increased interest in this area. Russia’s imports from Africa account for a much smaller percentage of the total trade turnover (14.4%) but, as in the case with exports, the pace of import growth outstrips average growth rates among all Africa’s trade partners.

For African countries, Russia is one of the key importers, and its importance continues to rise. Africa is demonstrating confidence in its Russian partners and is willing to use the emerging opportunities to meet the challenges currently faced by the states and the society in the region. Russia has every chance to increase its FDI to Africa, though its share in total FDIs is currently the smallest among the BRICS countries. The rates of GDP growth and the business environment in individual African states can serve as indicators for making investment decisions.

Trade and economic relations are strengthened through inter-agency communications, regional and pancontinental integration associations, and regional trade agreements. For Russia as an EAEU member state, the free trade agreement between EAEU and Egypt (in case the negotiations are successfully completed) will open up Egypt’s market, make it possible to expand and diversify the trade, and will also unlock the markets of other countries which currently have trade agreements with Egypt. In addition to that, Russia and Egypt are actively communicating in the area of industrial cooperation. This experience can be extended to potential negotiations on trade liberalization and industrial integration with other countries.

On the whole, the authors conclude that the way the relations between Russia and Africa are developing indicates that the countries are intent on forging a mutually beneficial long-term partnership.
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