Russian brands flood the African continental market

Squeezed between sanctions from the United States and the European Union, Russia has been exploring effective ways to increase exports of its industrial products under the “Made in Russia” program to traditional markets in Latin America, Asia and Africa.

The main strategic objective is to secure Russia’s economic interests abroad and at the same time support Russian industries in raising revenue to modernize Soviet-era industries. But by increasing its exports, especially to African markets, Russia has to face market competition from Western players and from Asian countries such as China, India and the Gulf States.

In an interview, former CEO of the Russian Export Center and now President and CEO of Promsvyazbank, Peter Fradkov, explained that Russia has been making every effort to avoid the “raw materials” export model and focus on the development of export-oriented industries. and the launch of the Russian Export Center was a key step towards the development of a comprehensive national export support system.

The Soviet Union made a significant contribution to the social and economic development of African countries by building large industrial and infrastructure facilities and helping to establish national education and healthcare systems. However, in the 1990s Russian-African relations practically came to a standstill.

Currently, Russia’s foreign trade turnover with Africa is about $20 billion, which is a rather modest achievement. However, the African continent remains a quite promising market for Russian industrial products.

It is true that government authorities, intergovernmental commissions and the REC are primarily concerned with removing barriers for Russian exporters and opening foreign markets for them in Africa. To strengthen the positions of Russian exporters in Africa, it is necessary to create certain conditions and the key task is penetration into the world market.

To this end, the Russian Export Center has launched a program to promote Russian goods and services under a single country brand, “Made in Russia”, and in this context, Fradkov noted that “Africa is a very important partner for us, Although it is not easy,” he added that “Russian manufacturers have a number of specific competitive advantages. Take, for example, agricultural machinery. The main advantage of Russian products in comparison with those of leading foreign manufacturers is their lower price and almost the same level of capacity, quality and service life.

On the other hand, there are still some difficulties inherent in the trade partnership between Russia and Africa. According to Fradkov, Russian companies still do not have sufficient knowledge of real economic opportunities, market conditions and specific counterparties in African markets, and there is also not enough knowledge of the capabilities of Russian partners for African ones.”

“We often face discriminatory barriers, which do not exist because we are from Russia, but because we simply have not thought about how to eliminate them. Our main task is to gradually change the way of thinking of Russian businessmen, who are often skeptical about entering foreign markets, including the African one. Secondly, we strive to promote the image of Russia as a producer of diverse and high-quality products,” he explained.

With new trends and directions in global business, African countries have to look at the Eurasian region as a huge market for exports, as well as make efforts to consolidate and strengthen economic cooperation, says Tatiana Cheremnaya, president of the “Center for the Effective Development of ANO”. Territories” and head of the working group on public-private collaboration, “Eurasian Business Union”, based in Moscow.

Cheremnaya discussed three main points here, which are as follows: The problems of effective cooperation between Russia and Africa are political in nature. Thus, the strengthening of Russia’s position leads to a strengthening of its influence in the world, including Africa, and vice versa; Sectoral policy has significantly reduced Russian exports.

The second problem for the development of Russian-African companies is Russia’s lack of competitiveness, which only allows work in the low-budget segment. This is due to the structural problems of the Russian economy, the need for modernization, most of the products produced during the Soviet Union.

The third problem is competition from the United States, China and India as more developed countries with more advanced technological solutions, and from European countries as former “sponsors” of African countries.

Russian President Vladimir Putin participated in a conference during Russian Business Week organized by the Russian Union of Industrialists and Entrepreneurs (RUIE) in early February and discussed how innovative technology is reshaping the global business landscape. However, he encouraged Russian industrialists and companies participating in the forum to improve their business approaches to have competitive advantages in the global market.

“This is the most important thing. And fundamentally new markets for goods and services will become available, and new leaders will also appear. Naturally, competition will be exacerbated. Clearly, in a situation like that, no one will play fair with their competitors, even in the global business environment,” Putin said.

Russian leaders, at least over the past two decades, have noted the pace of cooperation by foreign actors on the continent and have indicated interest in reviewing and deepening economic influence in Africa. In June 2009, after a trip to Africa, Dmitri Medvedev, as then president, declared that it was not too late for Russia to play a role on the continent. In summarizing his trip, he candidly noted that Russia arrived “almost too late” to engage with Africa.

“The work with our African partners should have started earlier and Africa is waiting for our support,” he said at the time. Recognizing that the interest of major international players in Africa is actively discussed on the continent, Medvedev declared: “We should also participate.”

During a panel discussion within the 14th International Conference on Africa organized by the Institute of African Studies, Evgeniy Korendyasov, head of the Russian-African Studies department at the Institute of African Studies (IAS) and former Russian ambassador to the Republics of Mali and Burkina Faso presented its research report entitled “Russia: A difficult return to Africa” in which it identified the main obstacles such as political bureaucracy, lack of leadership and the absence of a comprehensive action plan for Africa.

In his opinion, Russia is gradually emerging as a global player and is becoming increasingly stronger on the world arena after the Soviet era. “It is understandable that Africans expect Russia’s level of influence to be as high as that of China, India, Turkey, etc. But it is very difficult to penetrate the African landscape. Russia today has no concrete political agenda for Africa and its influence has been low over the years due to many obstacles that still remain to be resolved. “Russian authorities need to design and implement a long-term strategic plan to increase economic partnership with Africa,” she stated.

Russia has established trading centers in Africa. But these Russian business centers must necessarily embark on a “Doing Business in Africa” campaign to encourage Russian companies to take advantage of growing trade and investment opportunities, promote trade fairs and business-to-business meetings in key spheres in Africa.

Very recently, Maxim Matusevich, associate professor and director of the Russian and East European Studies Program at Seton Hall University, told me in an interview that “in the last decade there has been some revival of economic ties between Africa and Russia, in mostly limited. to the arms trade and the exploration and extraction of oil and gas. Russia’s presence in Africa and within African markets remains marginal and I believe Russia has often failed to capitalize on the historical connection between Moscow and African elites who had been educated in the Soviet Union.

“The current crisis in relations between Russia and the West is likely to stimulate Russian leaders to seek new markets for new sources of agricultural products. Many African nations possess abundant natural resources and have little interest in Russian oil and gas. As during Soviet times, Russia can only offer a few manufactured products that can successfully compete with products made in the West. “African nations will probably continue to acquire Russian-made weapons, but otherwise I see little prospect of diversifying cooperation in the near future.”

Former Ambassador Extraordinary and Plenipotentiary of Ethiopia to the Russian Federation, Professor Teketel Forssido, also explained that Russian businessmen believe that business can be done from the government to government level (at the state level), but in many countries business At the state level they have been complemented by private participation.

Using the government as an umbrella might be fine, countries like India, China and others run businesses without government in Africa. Of course, the government has to pave the way for smooth business transactions. “Russians count on the authorities to do business, but if they always depend on the State, business can be ineffective. That is why, as we have seen, Russian businessmen are slow,” he stated.

According to Forssido, Russia must open its market to Africa and there are several ways to do it. A safer way is to use existing rules and regulations. Preferential treatments for agricultural products exist but Africans do not use them. Individual countries then have to negotiate with the Russian government to get their products onto the market.

Furthermore, African regional economic blocs can be useful instruments because they are very important and can work with their counterparts to facilitate trade between Africa and Russia. For example, in the COMESA and SADC zones in Africa, goods and services move freely, and I now believe that these blocs should consider working as regional economic blocs with Russia.

“At the moment, China has done a lot in Africa despite global criticism. China is not the only player on the continent, but also India, Türkiye and other important players. But when we talk about Russia, I think it is not comparable. China has become very involved in Africa, in practically all sectors as we can see. We hope that Russia can do more if it so wishes, given its enormous potential capabilities. Anyway, they still have their own priorities,” she pointed out firmly.

As is already known, Moscow’s long-term goals include developing investment cooperation with African countries, expanding the presence of Russian companies in African markets through increased deliveries of industrial and food products, and improving Russia’s participation in boosting economic development in Africa. At the same time, Russia should seek to simplify access to its market for African countries.

In one of his speeches published on the official website, Russian Foreign Minister Sergei Lavrov candidly noted: “It is clear that the significant potential of our economic cooperation is far from being exhausted and much remains to be done to enable partners Russians and Africans know more about each other’s capabilities and needs. “On the agenda is the creation of a mechanism for public support for business interaction between Russian companies and the African continent.”