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REGIONS MIDDLE EAST & AFRICA


Russia’s Africanambitions R


RUSSIAN INVESTMENT IN AFRICA CONTINUES, CAUSING POLITICAL UNEASE IN SOME QUARTERS. ALEX IRWIN-HUNT REPORTS


ussia has ramped up efforts in recent years to expand its role in Africa through investment,


trade and military assistance. Moscow’s moves to expand its com- mercial and geopolitical interests on the continent culminated in October 2019 with the first Russia-Africasum- mit, in Sochi. President Vladimir Putin announced to the 45 African heads of


state and government in attendance that foster- ingmutually beneficial tieswith African nations “is nowone of Russia’s foreign policy priorities”. Following the event, 92 deals were signed


between Russia and African countries with a total value of Rbs1000bn ($13.95bn), according to organiser Roscongress. However, increasing Russian military influ-


ence is fostering fears of heightened geopoliti- cal tensions on the continent, while corona- virus disruption could hamper Russia’s ability to achieve its ambitions.


Smaller player In 2019, Russia exported $13bn-worth of prod- ucts to Africa, an increase of more than 40% since 2015, according to International Trade Center data. However, that pales in comparison to the $101bnof exports from China and almost $29bn of exports fromthe US. Since 2003, Russia-based companies have


also announced less than a quarter of the num- ber of greenfield FDI projects made by Chinese companies in Africa, and less than 9% as many as US companies, according to greenfield investmentmonitor fDi Markets. Indeed, less than 1% of Africa’s total FDI


stock ultimately originated from Russia in 2017, according to Unctad estimates. However, invest- ment by Russian companies in Africa has increased in recent years, with a record 19 greenfield projects announced in 2019, according to fDi Markets. Last year, Moscow-based foreign exchange


broker Grand Capital led the way, opening 11 offices across the continent – including in Burkina Faso, Nigeria and Tanzania – while investment bank Renaissance Capital opened a new trading desk in Nairobi, Kenya. In March 2020, Grand Capital also opened its African headquarters in Namibia’s capital, Windhoek.


Mining a richseam Though Russian companies in the financial ser- vices sector are becoming more active in Africa, the bulk of Russian state-backed commercial interests are in the natural resources sector. The metals, coal, oil and gas sectors collec- tively account for 90% of the total Russian


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announced greenfield investment in Africa since 2003, according to fDi Markets estimates. KirilDmitriev, the CEOof Russia’s sovereign


wealth fund, told fDi in an interview that Russia has “great cooperation in diamonds and other extractive industries with many African countries” and this will “definitely” increase in the future. Russian mining companies have activities


in at least seven African countries, including diamond giant Alrosa’s operations in Angola, Russia’s Vi Holding’s joint venture platinum mining project in Zimbabwe and Esimath’s gold mining operations in Sudan. Meanwhile, Russian aluminium company


Rusal owns and operates bauxite mines and an alumina refinery in Guinea, and has other operations in Nigeria.


Nuclear deals Nuclear energy has also become a strategic sec- tor for Russian investment in Africa, with at least seven sub-Saharan countries signing pre- liminary agreements with the country, accord- ing to theWorld Nuclear Association. Russia’s state-owned atomic energy giant


Rosatom is also currently building Egypt’s first nuclear power plant in El Dabaa, with the Russian state extending a loan of $25bnto cover its cost. Meanwhile, Russian oil and gas compa- nies, such as state-ownedRosneft, Gazpromand Lukoil, are increasingly interested. Collectively, the three Russian firms have interests in coun- tries such as Algeria, Egypt, Mozambique, Cameroon, Ghana, Nigeria and Libya. Alongside the Sochi summit in October


2019, Russian state development bank VEB also signed a $2.2bn agreement to finance an oil refinery inMorocco.


Militaryinterest While most of Russia’s activity in Africa is driven by commercial interests, increased use of private military contractors, weapon sales and political strategy assistance has fuelled a debate over its real agenda in the continent. “It is difficult to draw a clear line between


state and private interests in Russia’s engage- ment in Africa, or for that matter, commercial and political,” says Daragh McDowell, head of Europe and principal Russia analyst at global risk analysis firm Verisk Maplecroft. Since 2015, Russia has signed military coop-


eration agreements with more than 17 African countries, according to a Swedish Defence Research Agency report. In recent years, Russia has overtaken the US and China to become the largest exporter of arms to Africa, accounting for 49% of exports to the region between 2015– 19, according to the Stockholm International


www.fDiIntelligence.com August/September 2020


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