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New Forms of Cooperation between Russia and Africa: Opportunities for Special Economic Zones Based on the Project to Establish a Russian Industrial Zone in Egypt

KEY CONCLUSIONS

 

Russian industrial zone in Egypt is a new promising form of cooperation between two countries

 

“Together with our Russian colleagues we are discussing the use of a territory with the area of five million square metres; this is the territory that, as part of the larger special economic zone, will be provided to Russian residents at some stage of the project implementation. <…> We are certain that our cooperation with Russia, with Russian companies will be very fruitful, and that they will become more and more interested,” Yehia Zaki, Chairman, c (SCZone).

 

“Our main objective is to unlock our potential and that of Russian technologies using this amazing platform in Egypt. <…> We are talking about a combination of Russian high-tech production and the Egyptian platform, where we can see workforce and related industry sectors that are necessary for implementation of this product. As a result, we see a lot of potential,” H.E. Amr Nassar, Minister of Trade and Industry of the Arab Republic of Egypt.

 

“The industrial zone project in Egypt is a very different scale than just an industrial park. Such zone is a hub, where and around which a competence centre is created. The imprint that Russia will be leaving over the upcoming years and decades around this hub is going to be much more significant than just some profit, some goods that are produced and sold. This is going to be a huge community of people who will have received education according to our technologies, approaches and standards,” Mikhail Orlov, Partner, Head of Tax and Legal, KPMG Russia; Chairman of the Expert Council of the Committee for Budget and Taxes of the State Duma of the Federal Assembly of the Russian Federation.

 

“The interest expressed by Egypt is very understandable. It is great that they see Russia as a partner: indeed, we can bring certain technologies, certain capital and facilitate development,” Andrey Slepnev, Chief Executive Officer, Russian Export Center.

 

“Africa is no stranger to Russia. Brand new unique opportunities are emerging, and we will not miss them. In ten years, Africa might be the second China in terms of production, consumption and scale. <…> We believe in this project. We know that it was conceived long ago. Now we are implementing it,” Marina Kim, Anchor, Channel One Russia.

 

PROBLEMS

 

Lack of information

 

“One of the main challenges that our companies are facing is lack of information, lack of experience, lack of confidence in order to enter new markets, including African and Middle Eastern markets,” Andrey Slepnev, Chief Executive Officer, Russian Export Center.

 

“Lack of information is one the major problems both in Egypt and all over Africa. It is not there, and it is really hard to extract in a consistent manner,” Mikhail Orlov, Partner, Head of Tax and Legal, KPMG Russia; Chairman of the Expert Council of the Committee for Budget and Taxes of the State Duma of the Federal Assembly of the Russian Federation.

 

Lack of financing, and financial risks

 

“Among the major challenges are the financing issue and the related risks. For large companies and big business this might not be that relevant, but for us, private structures, it is a pressing issue – the issue of return on investment and its terms,” Aleksey Filippov, Executive Director for Foreign Economic Activities, Plant of Electrotechnical Equipment.

 

SOLUTIONS

 

Financial support and guarantees

 

“As the Russian Export Center group includes the Russian Agency for Export Credit and Investment Insurance and Eximbank of Russia, we already have all products related to financing Russian companies’ projects abroad. It refers to both insurance of loans issued by banks and Eximbank of Russia’s own crediting. <…> The national project for international cooperation and export is being implemented in the Russian Federation that implies allocation of significant budget funds for projects implemented abroad,” Andrey Slepnev, Chief Executive Officer, Russian Export Center.

 

“We clearly understand the risks related to doing business in Africa. We totally support Russian investors and the idea of the Suez Canal special economic zone. <…> Floating capital, project financing, investment insurance, guarantees are the instruments that make you feel safe. We have a plenty of guarantee products. <…> Moreover, we guarantee governmental support in case of difficult situations,” Kanayo Awani, Managing Director of its Intra-African Trade Initiative, Afreximbank.

 

Creation of necessary infrastructure

 

“The first level of our work is the creation of an adequate infrastructure on this territory, of environment, of conditions for industrial workers. In the first quarter of 2020 we will be finishing the first stage, and a significant part of the territory will be ready to welcome Russian companies interested in becoming residents. <…> The Russian industrial zone will provide the best working conditions,” Yehia Zaki, Chairman, Suez Canal Economic Zone (SCZone).

 

Focus on comprehensive and long-term cooperation

 

“Undoubtedly, countries count upon not just simple trade operations, but upon cooperation, participation in added value, development of jobs and competences. It is also related to staff training, localization of technologies etc. <…> Only overall, close and deep cooperation is the form of interaction that can lead us to success,” Andrey Slepnev, Chief Executive Officer, Russian Export Center.

 

For more information, visit the Roscongress Information and Analytical System at roscongress.org.

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“We highly value the results of our joint work at the summit. I am sure the achieved results are creating a good foundation for further deepening the Russia-Africa partnership in the interests of our nations’ prosperity and wellbeing.”

President of the Russian Federation
Vladimir Putin

The Russia–Africa Summit, which is taking place in Sochi on 23–24 October 2019, encapsulates the historically friendly relations between the African continent and the Russian Federation. This Summit carries great significance as it is the first of its kind to emerge during a period of major global and international transformations. In response to the aspirations of the people it is representing, the Summit intends to build a comprehensive framework for expanding Russian–African relations into broader horizons of joint cooperation across different fields.

The African nations and Russia share a common understanding of international relations, based on the principles of respect for the rule of international law, equality, non-interference in the internal affairs of states, and the peaceful resolution of disputes. Both sides affirm their commitment to support multilateral actions to oppose new international threats, be they terrorism and extremism in all their forms, or declining growth rates. The two sides share a firm conviction regarding the importance of developing trade flows and supporting mutual investment in such a way as to ensure security, peace and development for the African and Russian people.

African countries have huge potential and opportunities that will allow them, once efforts to streamline their economies have been achieved, to emerge as real global players. In recent years, the nations of this continent have achieved major successes spanning the political, economic, social and administrative spheres. Africa has flourished in terms of growth over the past decade, reaching a continent-wide growth rate of 3.55% in 2018.

The African Union Summit, which was held in Niger in July 2019, continued the efforts of the African countries and saw the African Continental Free Trade Agreement come into force, along with its operational instruments. The agreement is one of the key objectives of Agenda 2063, an African development strategy that has been created to address the African people’s desire for prosperity and decent living standards.

These successes are opening up wide-ranging prospects for cooperation between African countries and the Russian Federation, and confirm the determination of African governments and their people to cooperate with multiple partners in order to establish mutually beneficial relations.

With this in mind, we express our hopes that the Russia–Africa Summit will help in the establishment of constructive strategic relations, based on partnership between two sides across various fields, and in the service of fulfilling the hopes and aspirations of the African people and their friends in Russia.

President of the Arab Republic of Egypt
Abdelfattah ALSISI