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In an effort to promote a similar worldview during the Cold War, the Soviet Union cultivated close ties with socialist movements and governments in countries such as Angola, Algeria, Egypt and Ethiopia. As a result, top Russian officials spent significant amounts of time in Africa early on in their careers, including current Russian energy tsar Igor Sechin. This has led to privileged relations with many elites in African countries, some of which go back decades.

The 2019 Sochi Reset

Political relations between Russia and Africa underwent a ‘reset’ after the 2019 Russia Africa Summit in Sochi, Russia. Previously occupied with securing its interests within its borders and its near abroad, Russia announced it could now set aside some resources to look further abroad – and at Africa in particular. Several underlying trends can be distinguished as likely to unite the efforts between Russia and Africa.

A Common Struggle Against the Wests Colonial Legacy

Unlike its European neighbours, Russia has no colonial legacy in Africa and can only support states’ wish to be rid of what leftovers of the colonial era remain. As such, Russia’s presence in the region does not raise Africans’ eyebrows: it is viewed as a more transactional and pragmatic partner where outcomes are clear – certainly more reliable than a former colonial power potentially harbouring ulterior motives. Multipolarity plays in both sides’ interest. Russia’s desire to see a world where there is not one, but multiple centres of power (and that our main institutions and standards should ultimately reflect this) is a vision shared by Africa to the extent that it could give it more influence on charting the course of global development aims and means. ‘Sovereign democracy’ as an attractive ideal.

In the eyes of many Africans – justly or wrongly – Russia’s path since the 1990s in consolidation of its national sovereignty is an example of a viable and replicable model of development. Indeed, many African countries face danger in the form of fluctuating borders, domestic terrorism, and a complicated economic situation – much like Russia in the 1990s.

To Africa’s credit, it also boasts a better demographic situation than the former Soviet Union, albeit with its own set of challenges.

Investment

Source: World Investment Report, 2022

There Is Little to No FDI Investment On The Surface.

According to the Africa Center FDI from Russia is less than 1% of total FDI into Africa – while a more thorough look at the data used enables us to confirm that Russia is officially nowhere near the top 10 investors. This has not stopped Russia from undertaking hefty investment projects in friendly African countries such as Egypt, where Rosatom is building a whopping US$20 billion powerplant at El-Daraa. That one project amount is roughly equivalent to the FDI stock held by Italy, oscillating between US$20-30 billion for the last few years. As will be discussed further, Russia’s footprint in Africa is primarily state led, which complicates the ability to gather high-quality data on the deals that do take place.

Trade

Source: AfricaCenter.org

The EAEU: A Low Trade Total In Dollar Terms

The most recent figures available show Russia’s trade with Africa is dwarfed by that of Russia’s (near-) peers by a factor of 4 by the United States, represents only 5% of the European Union’s total trade with Africa, and no more than 6% of China’s total. Russia has committed to boosting turnover with Africa to US$40 billion, which is a very optimistic number considering the above.

Source: EAEU

Good Year-on-Year Figures for 2021e.

When factoring in the EAEU as a market, trade between Eurasia and Africa only rises to just under US$20 billion. Crucially, however, it has seen a 20% YoY increase in turnover, including a rise of 24% in exports and 14% in imports. Trade is also more balanced than with Russia.

Efforts to that end are supported by the EAEU, as evidenced by the Russia-Africa business dialogue held in Q4 2022.

Source: Comtrade, Trademap

Positive dynamics?

Steadily increasing from 2013 to 2018, where it reached a peak of US$20 billion, Russia-Africa trade has recovered from the slight slump it experienced from 2018 onwards, reaching a low of US$11 billion during Covid. Since then, trade has seen a sharp recovery to US$18 billion – something that is likely to increase further as the 2022 figures become available. Indeed, if the Russia-Ukraine war can only harm longer-term commercial prospects, 2022 will likely have seen market players booking in as much as trade as possible before sanctions implying the use of new mechanisms for trade and the creation of new supply chains.

The trade balance is favourable to Russia

Africa imports 5 times more than it exports to Russia, racking up a nearly US$12 billion current account balance. Russia is a top commodities exporter (see Fig. 5) that caters for the most demographically active region of the world, which encourages demand for Russian goods, whereas African exports require hefty imports of capital to source and distribute (limiting demand for African produce).

Source: Comtrade, Trademap

Commodity-heavy trade.

As is clear from the table above, Russia imports mostly edible products and minerals (diamonds or rare earth metals) from Africa while Africa has demand for Russian commodities to feed and fuel their economies. There is also a significant demand for Russian finished industrial goods. Perhaps not the most important in dollar terms, in physical terms and from the qualitative point of view, Russia is a crucial partner to African states.

Four main trade partners

70% of Russia’s Africa trade is concentrated within the four economies of Algeria, Egypt, Morocco and South Africa. These countries are the cornerstone of Russia’s Africa policy; and are generally recognised to become important economies by 2050 with Egypt in the 15th spot for GDP PPP and South Africa ranking 27th.

Source: Comtrade, Trademap

South Africa runs a current account surplus with Russia. With just under US$500 million worth of exports to Russia as of 2021e, around US$200 million were exports of finished goods such as machinery and vehicles – an example of value-added exports from Africa reaching Russia worth highlighting. There has been talk of an EAEU-South African Customs Union trade agreement, while South Africa is a key member of the BRICS grouping. That bloc is also working on developing multilateral trade and economic links.

Meanwhile, Russia’s trade with Egypt rose by 30% in 2022. According to local news outlets, trade with Russia rose sharply – coinciding with the first year of Russia’s export brand (‘Made in Russia’) opening an office in Cairo. Arms are an important driver in relations. As of end 2021, Russia remained the region’s premier source for weapons systems and risk management in complex jurisdictions (44% market share), though this is expected to drop as flows divert to the Ukraine conflict. Please see our year end 2022 Russia-Egypt report for detailed analysis here.

In terms of market size, Algeria has the tenth largest proven natural gas reserves globally, is the world’s sixth-largest gas exporter, and has the world’s third-largest untapped shale gas resources. It has applied to join an expanded BRICS. Russia’s involvement with Algeria is understandably an energy play, however additional non-energy trade is also developing. This is especially true in agriculture, where Russia’s exports of soya increased by 25% last year. Algeria is one of Russia’s biggest trading partners on the African continent, with trade reaching US$3 billion in 2022.

Morocco remained Russia’s third-largest trading partner in Africa during 2022, following Egypt and Algeria. Russian exports to Morocco doubled last year, while bilateral trade has reached US$1.2 billion.

Russia’s export agency announced in late 2022 that it seeks to boost its Agro-food exports to Morocco by a multiple of ten during 2023-24.

The 2023 Russia-Africa 2023 Summit

This upcoming event has a stated focus: ‘Cooperation in ‘Sustainable Energy’. That means sustainable, not just green energy. In the run-up to this year’s event, both parties have already discussed access to cheap and efficient energy as paramount to their development per UN SDG n°7 together with a “human rights issue” according to African Energy Chamber Chairman NJ Ayuk.

Addressing Ambassador Oleg Ozerov recently, he stated that Russian and African interests clearly align in the energy sector: rather than aiming to reach for lofty ‘green’ energy goals, Africa plans to leverage all available efficient energy sources – from natural gas to hydropower and modern oil infrastructure – as a matter of African nations’ sovereignty.

Agreeing with this approach in principle, Russia – with Russian behemoth RusHydro at the forefront of this effort – has expressed its willingness to provide many of these solutions and develop them with local market actors.

Other topics include regional peace and security. After the Central African Republic and Burkina Faso issues, is there time for peace, security and development in Sudan?

Market entry for Sudanese products

Sudanese Free Zones and Markets Company Samia Nour reportedly lobbied for securing access to the Russian market for Sudanese products and requested consulting services from Roscongress to improve its performance. Sudan will be present at the 2023 Russia-Africa summit, and officials from Russian regional capitals such as Voronezh and Vladimir will be courting the countries that turn up. Sudan’s experience in Russia may pave the way for other African nations to follow suit, in a market now clear of much European competition, savvy African exporters will be looking to see how they can access Russian demand.

‘Pax Russica’

Will there be security assistance, gold mining and infrastructure investments? Russia’s curious blend of mixing security and commerce has long taken root: relations between Russian and Sudanese elites have reportedly blossomed in more opaque sectors for state and non-state actors. Russian authorities have long pushed for a naval base in Port Sudan and it is rumored that certain private companies have received gold mining assets as payment for services in the security sector contracted by the current Sudanese leadership. Russia’s approach is clearly gaining traction in the region – time will tell whether this lasts.

Chris Devonshire-Ellis of Dezan Shira & Associates also comments: “Part of the Russian issue in Africa is the manner in which it approaches trade and investment. Like China, but unlike the European Union, Russia tends to stay away from imposing additional clauses and expectations on African nations such as democratic and human rights values.

While not unreasonable in the longer term, the problem is that these tend to be framed to current Western standards and expectations without taking into account long held historical issues and ideologies. Change takes time, and the Europeans taste for discussing various ‘rights’ when also being perceived as colonial powers does not sit well with Africans.

Russia meanwhile can operate from a clean slate and concentrate on trade and investment without forcing discussions at too early a time for many African nations to perceive or adapt to such social changes in attitude immediately. Ultimately this suggests that Russia, along with more African friendly countries, will start to take some of the African market away from the EU.

This trade issue is enhanced, for Russia and China at least, by the development of the African Continental Free Trade Agreement, which is in effect and starting to be used. This agreement does away with 90% of intra-African trade tariffs in nearly all African Union states. (Eritrea is still to join).

This is leading to African Special Economic Zones being created at strategic ports, where Russian and other investors can source a variety of products pan-Africa, consolidate them into one processing facility and add Russian and other imported component parts to make a whole, finished item. Given Africa’s relatively low manufacturing costs, matching this with Russian technical expertise makes sense. The finished products can then be reexported to Russia or other markets in the EAEU or CIS nations or resold back onto the African consumer market. This is a significant opportunity for Russian and other investors, as according to the African Development bank, middle-class Africans have tripled to 313 million (approximately 34% of the continent’s population) over the last 30 years.