St. Petersburg is hosting the second Russia–Africa Summit on 27–28 July. The summit is meant to advance initiatives and bolster cooperation between Russia and African countries in all fields, including politics, security, economy, science and technology, as well as cultural and humanitarian domains.
This article sheds light on the economic ties between Russia and African countries, analyzing the motivations of each side to forge closer ties and zeroing in on the topics likely being discussed at the Summit.
Russian Sway in Africa
Russia seeks to increase its economic presence in African markets and improve trade and investment with African countries, with the aim of maximizing the benefits from the economic potential and investment opportunities in the African region in various fields such as oil, gas, mining, and infrastructure. This is especially true given the tightening of the European noose around the Russian economy and the escalation of sanctions imposed on it as a result of the ongoing conflict in Ukraine.
The following are the principal areas of collaboration between Russia and Africa:
• Investment: Russian investments in Africa account for less than one percent of the continent’s total foreign direct investment. Although Moscow is not one of the top ten investors in Africa, it is involved in a number of enormous investment projects across the continent. For instance, Gazprom invests $500 million in infrastructure, pipeline construction, and gas projects across several African countries, while Lukoil invests $1 billion in oil production in West Africa.
In the area of rare metals, the Russian company Renova has made investments totaling over $1 billion in the mining industry in South Africa, Gabon, and Mozambique, amid the intensifying competition among countries to extract the minerals required for the technological and military sectors and hastening the energy transition process. Russia is also investing more in lithium in Africa, since lithium is an important metal for making batteries for electric cars. Demand for lithium is anticipated to increase by up to 60 fold by 2050 as a result of the growing switch to electric vehicles.
• Trade: By the end of 2022, the total value of trade between Russia and African countries had risen to about $18 billion. Russia-Africa trade grew steadily between 2013 and 2022.
Even though trade between Russia and African countries has increased significantly, it is still small in comparison to trade between Africa and the other major economies in the world, which totals about $295 billion with the European Union, $254 billion with China, and about $65 billion with the United States.
Four major economies, namely Algeria, Egypt, Morocco, and South Africa, account for roughly 70 percent of all trade between Russia and Africa. That is why these countries are so vital to Russia’s Africa strategy. Africa relies on Russia for approximately 30 percent of its grain supplies, particularly wheat, and 80 percent of Russian wheat exports are concentrated in North Africa (Algeria, Egypt, Libya, Morocco, and Tunisia). In addition to trade, Russia cancelled $20 billion of debts owed by African countries, confirming that it places a high priority on the growth of the economies of the African continent.
Concerning trade in the energy sector, Russian exports of refined petroleum to Africa —particularly gasoline— have increased since the Ukrainian war by roughly 14 times in a period of less than a year, from 33,000 barrels per day prior to the war to 420,000 barrels per day by March 2023. These exports were mainly focused on Libya, Tunisia, and Nigeria.
• Arms: According to the latest data from the Stockholm International Peace Research Institute, Moscow is still the largest exporter of arms to Africa, even though the volume of arms trade between Russia and Africa is relatively small. Between 2018 and 2022, African countries received about 12 percent of Russian exports of arms. Thus, Russia provides assistance to African countries by arming them, in addition to training their security forces.
• Collaboration to Resist Dollar Hegemony: Recently, Sergei Lavrov, the foreign minister of Russia, stated that the process of using national currencies in mutual settlements between Russia and its African partners is gaining momentum. Lavrov added that, in light of Western sanctions, they are drafting documents to reorganize a mechanism for cooperation in this area. Evidently, Russia recognizes the value of securing a place for its domestic currency in the global economy, especially in light of the tightening sanctions placed on it, with the goal of lessening the effects of the sanctions imposed on the Russian energy, financial, and technology sectors, internationalizing the Russian currency, and addressing the dominance of the dollar in the global economy.
Moreover, Russia has claimed that by withdrawing from the Black Sea Grain Deal it signed with Ukraine in 2022, which it claimed was concentrated in developed countries only and excluded developing and poor countries. Moscow stated that it has taken a position in defense of the rights of developing countries in Africa. However, this is not the only reason Russia withdrew from the Deal; it has consistently criticized the insufficient shipments of grain to the developing world. In this vein, Russian President Vladimir Putin said his country can, commercially or for free, ensure deliveries of grain to Africa.
Russia-Africa Summit 2023
The second Russia-Africa Summit takes place against the backdrop of a dire global economic situation. Russia and Africa are thus looking for ways to improve their economic cooperation and get the most out of one another’s potential.
Russia believes African countries might be able to reduce the severity of the sanctions put in place against it. Africa, on the other hand, depends on Moscow to meet its food needs, particularly in light of the aggravation of all the factors that adversely affect the continent’s ability to secure its food supply. Russia can also assist African countries in achieving Agenda 2063 objectives, particularly those that focus on advancing the energy transition and developing the energy sector.
Given Russia’s capacity to take the lead in assisting energy projects in Africa and advancing regional peace and security, discussions aimed at enhancing cooperation in sustainable, renewable, and nuclear energy are likely to take center stage at the summit. In addition to that, Russia and African countries’ bilateral talks may center on the Grain Deal. After withdrawing from the UN agreement, Moscow might use the grain issue to forge closer ties with African countries. If this happens, Russia will be able to sign bilateral grain export agreements with a number of its allies in Africa.
It is worth noting that the first Russia-Africa Summit took place in Sochi in 2019 and resulted in the signing of 92 contracts and memoranda of understanding with a publicly disclosed value of RUB 1.004 trillion ($12.5 billion). Its outcomes were focused on a variety of topics, including political, security, technological, and economic issues. In terms of the economy, it gave rise to the Russia-Africa Partnership Forum was established, with the triennial Russia-Africa Summit serving as its supreme body.
During the first Russia-Africa Summit, it was agreed to coordinate efforts to support trade, investment, and sustainable development with the intention of influencing the global economic order, assisting Russian and African businessmen in examining ways of mutually beneficial cooperation, identifying promising areas for economic, trade, and investment partnership between the Russian Federation, the African Union, and the leading African regional organizations, along with making efforts to significantly expand and diversify trade exchange between Russia and African countries, including by increasing the proportion of agricultural products in import and export operations, as well as strengthening cooperation in the area of energy security by encouraging the diversification of energy resources and making the necessary assistance available to large Russian companies operating in the African markets and businessmen from African countries.
In conclusion, Russia’s influence in Africa is evidently motivated by the promotion of its geostrategic interests. African countries are a potential market for Russian goods and an opportunity for Moscow to expand its economic and commercial influence. Additionally, Moscow wants to expand its political and military influence across Africa and strengthen its geopolitical presence there.