Global IssuesTRADE-RUSSIA: ‘‘Africa Should Shake off Mineral Dependency’’
A group of Russian executives from industry, investment banks and commercial enterprises are seeking Russian government support for a five billion dollar investment in the Southern African Development Community (SADC) under the auspices of the Russia-South Africa Business Council.
There remains a divide between the Russian political leadership's newly-revived interest in the region, which is strategically long term in nature, and Russian business involvement there, which is often driven by short-term priorities. Signs exist that this divide can be bridged.
The aggregate value of Russian companies' proposals for a medium-term investment in SADC countries is estimated at five billion dollars.
‘‘Southern Africa is a well-organised, stable market,’’ the executive secretary of the Russia-South Africa Business Council, Victor Polikarpov, told IPS in an e-mail after a Russia-SADC business conference on Apr 28. He regards SADC as an African prototype of the European Union.
With a view to boosting Russian investment in southern Africa, the Russia-South Africa Business Council organised a one-day business conference on Apr 25.
Participants included ambassadors from South Africa, Namibia, Tanzania and Zimbabwe and representatives from the Russian foreign affairs ministry and federal assembly, the Russian business community, non-governmental organisations and the media. About 20 presentations were made at the business conference.
Polikarpov pointed out that Russia's interest for economic expansion in southern Africa has formed a basis for the direct investment of about three billion dollars by Russian companies in the region's natural resource sector over the past decade.
But unfortunately, he said, the expansion has involved primarily those industries in which Russian companies have been active domestically, namely ferrous and non-ferrous metals, diamonds, petroleum and uranium.
These investment opportunities have placed the Russian government and corporate sector in the race with foreign investors in Africa that involves both ‘‘traditional’’ stakeholders, such as the United States and European Union, and emerging markets, particularly China.
Polikarpov explained that, ‘‘as for investments, we have companies investing and operating there. For instance, the Renova Group of companies is mining manganese. Before the crisis it promised one billion dollars of investments but things have changed now. We should consider the changes in the world economic situation.
‘‘I guess only China can come up with large-scale investments nowadays, primarily in mining,’’ Polikarpov added. Russia's niche is a bit different. ‘‘Regretfully our business is not enjoying that much government support in Africa. We are trying to change the situation by conducting conferences and forums to attract attention to the problem.’’
Polikarpov explained further that Russian engineering companies of small and medium-sized businesses won't be able to push its way in Africa without proper government support. ‘‘Russian business going to southern Africa should realise that they are about 15 years late. There is competition but they will hopefully catch up,’’ he concluded optimistically.
Sergey Litovchenko, executive director of the Russian Managers’ Association, pointed out to IPS that ‘‘Russian companies have a lot to offer Africans, including clean coal fuel, green housing solutions, renewable energy technologies, environmentally friendly cleaning and recycling expertise, green fertilisers, and other new generation products.’’
In a report dubbed ‘‘Re-Think Russian Investment in Southern Africa’’, the Russian Managers’ Association called on Russian businesses and investing companies to reinvest their revenues from sales of southern Africa mineral resources in sustainable projects that will generate more employment for local people.
‘‘In the past, the Soviet Union provided support to liberation movements in many African countries. It is high time that the green revolution and the struggle against energy and mineral dependency in Africa be supported,’’ author of the report and head of the trade and investment programme at the World Wildlife Fund, Ivetta Gerasimchuk, told IPS.
‘‘The current crisis has opened up new opportunities of mutually advantageous cooperation between Russia and Africa, as the latter is characterised by unique biodiversity and abundant sources of solar and wind energy,’’ she argued.
Southern Africa has over the past several years became one of the significant recipients of Russian investments. Such activities have not been limited to South Africa but have included Angola, Botswana and Namibia, with possible expansion to the rest of the SADC bloc.
The participants at the business conference directed a collective resolution at the Russian government, saying that the current global economic recession has revealed some common challenges for both Russia and southern African countries.
They called for intensive efforts in tapping the region’s natural resources for the mutual benefit of Russia and southern Africa.
The resolution stated that as Russia strives to strengthen its geographical stance and its economic influence in the world, it is necessary to embrace the African sub-region in its foreign policy. It identified the huge potential market for growth in the southern African region and the economic advances made by SADC.
Given the potential, the resolution further suggested that these SADC countries diversify their economies to ultimately become a ‘‘third force’’ in balancing expansion of both China and Western countries in the region.
During the financial crisis that has engulfed the world's economy, Russia and SADC can work together towards economic recovery and sustainable development by ulitising Russia's innovative industries and collaborating in the scientific and technical spheres.
It further noted that Russia's membership of the African Development Bank could be helpful in facilitating bids for Russian companies. Bilateral intergovernmental commissions are among the various other measures that will practically contribute to diversifying sustainable sources of economic growth for Russia and SADC countries and extending Russia's footprint in southern Africa.
© Inter Press Service (2009) — All Rights ReservedOriginal source: Inter Press Service