Doing Business in Africa: Challenges and Opportunities

KEY CONCLUSIONS

Africa possesses high investment potential

“In the next 20 years the African population will reach 2.5 billion people. You see what an incredible potential for business that is <…> Population aside, Africa has incredible natural resources: minerals, agriculture, forestry, water resources,” H.E. Yoweri Museveni, President of the Republic of Uganda.

“65% of all arable lands on the planet are in Africa. By the time when the global population will reach 10 billion, the areas that are going to have territories for agricultural expansion, for productivity improvement – those are mainly going to be in Africa,” H.E. Olusegun Obasanjo, President of the Federal Republic of Nigeria (1976–1979), (1999–2007).

Economic and humanitarian relations between Russia and the African countries are on the rise

“According to the Institute of Africa of the Russian Academy of Sciences, during the past 10 years Russian investment into Africa grew by 185% and reached USD 17 billion. As president of the Russian Union of Industrialists and Entrepreneurs I must say that a significant share of these investments came from the members of our union. However, we still can – and should – do more both in terms of increasing the trade volume and in investment activity,” Alexander Shokhin, President, Russian Union of Industrialists and Entrepreneurs (RSPP).

“Russian presence in the African continent and in the Republic of Guinea is 60 years and counting. We are talking about mining, as well as healthcare. We would like to thank the Russian Federation for support in our ferocious struggle with the terrible Ebola, that appeared in the second decade of the 21st century and peaked between 2014 and 2015,” Gabriel Curtis, Minister of Investments and Public and Private Partnerships of the Republic of Guinea.

“There are incredible business opportunities with Russia. After coming here yesterday, I already signed 2 memorandums and 3 contracts. <…> If you want to do business in Madagascar, I am ready to sing any paperwork,” H.E. Richard Randriamandrato, Minister of Economy and Finance of the Republic of Madagascar.

Russian companies are successful in Africa

“Rusatom today is an indisputable leader in nuclear technology. We are building 36 power-generating units in 12 countries around the world. During the past 14 years we have commissioned 15 new generating units, and this year we are putting the first floating power plant into operation. Certainly, Africa is a priority region for us. We have been working in Africa for a while now. We have projects in over 20 countries. <…> We see incredible demand and incredible interest to nuclear energy from the African countries,” Evgeny Pakermanov, President, Rusatom Overseas.

“Renova is among the first Russian investors in South Africa and probably the largest one. Overall investments in the manganese production are projected to reach USD 500 million this year. <…> UMK mine and infrastructure project worth 1.7 billion rand developed rapidly and was commissioned on time. Mining was also developing quite rapidly and in 2013 it reached a record-breaking level of 3.4 million tons,” Viktor Radko, Chief Executive Officer, United Manganese of Kalahari.

“We have been working in Africa for over 10 years. Over the years we have invested close to USD 2 billion in the African countries,” Evgeny Tulubenskiy, Chief Legal Officer, Corporate and Regulatory Affairs, Member of the Board of Directors, Nordgold.

 

PROBLEMS

Underdeveloped infrastructure

“Above all, we are missing a developed infrastructure, as any successful business requires minimizing the costs. More than anything, business must make profit, but you cannot make any profit if the production costs are this high,” H.E. Yoweri Museveni, President of the Republic of Uganda.

African countries are not united on regulation issues

“There are 55 counties in Africa. It is a problem for investors, because nobody wants to trade with Africa. These are 55 countries with 55 different legislatures, 55 different customs regulations. There are fewer than 55 currencies – I think a few countries have common currencies – but still there is over 30. That is hard to overcome. It is a problem,” H.E. Olusegun Obasanjo — President of the Federal Republic of Nigeria (1976–1979), (1999–2007)

Russian businesses underestimate regional specifics

“I would like to point out a few common mistakes our businessmen make when they come to work in Africa. <…> Lack of understanding local mentalities leads to the gravest of errors. Further on, there are civilizational differences that must be taken into account. Without it the work is not going to go anywhere. Another important aspect is that our businessmen are preoccupied exclusively with their own profit. It would be nice to see them also thinking about the interests of African people,” Galina Sidorova, Professor, Moscow State Linguistic University

 

SOLUTIONS

Expanding Russian-African cooperation as a whole

“We need to work on consolidating and coordinating the efforts on promoting Russian-African cooperation with all of the stakeholders. <…> Expanding cooperation with our African partners not only via bilateral cooperation but using the multilateral institutional opportunities as well, including Russian business programmes. <…> Stimulating the development of multilayer cooperation mechanisms to foster business cooperation by increasing the resource potential of Russian companies <…> encourage involving small and medium-sized enterprises, as well as Russian and African regions via project financing, project groups, and so on,” Alexander Shokhin, President, Russian Union of Industrialists and Entrepreneurs (RSPP).

“It is a huge mistake to try to get as much profit as soon as possible and ignore the long-term investments. It is a huge loss. Third, we do not support small and medium-sized business in Africa. They cannot exist there without state support. So, let us create a few support centres for business, for instance North, South, West, and East. It would be extremely efficient in promoting our investments,” Irina Abramova, Director, Institute for African Studies of the Russian Academy of Sciences; Corresponding Member, Russian Academy of Sciences.

Consider every country’s specifics

“For over 10 years now we have been designing security systems for the businesses that work in the potentially risky locations: Africa, Middle East, Latin America. We try to create an algorithm for each structure to facilitate a secure entrance into their country of choice,” Mikhail Anichkin, Chairman of the Board of Directors, Peacemaker International Security Centre.

“What do we see? Incredible opportunities. As it was mentioned before, there are 55 countries and each one needs to be approached individually. Uralkali, as a business, is ready for that,” Dmitry Osipov, Chief Executive Officer, Uralkali; Chairman, Russian-Nigerian Business Council.

Creating stable investment environment

“There is money waiting to be invested into Africa’s development, but that money is cowardly. It will come when the atmosphere is right. Yet, the moment the situation changes and there is no incentive to stay in the country, it is out. What can we do to motivate investments and trade development? What can we do so that the money arrives into a country and stays there? There has to be predictability, good return of investment, law must prevail because you need to be sure that should a conflict arise it will be resolved fairly,” H.E. Olusegun Obasanjo, President of the Federal Republic of Nigeria (1976–1979), (1999–2007).

“When we talk about Russia we mean stability. We mean security, we mean peace. You, the Russian Federation, you bring peace to different parts of the world. In Syria you pacify every side of their conflict. For us you are a role model, an example of how to act. We are very proud of Russia in this regard and would like for you to help us too,” Youssouf Moussa Dawaleh, President, Chamber of Commerce of Djibouti

Brining science into the development of bilateral relations

“Centres of thought have to be linked to businesses and politicians. <…> We have great scientists, but they go underused. There is a huge disparity between industry, politicians, and thinkers. Thinkers must be used. Let all the research be driven by demand, as countries cannot develop without science,” H.E. Hala Helmy Elsaid Younes, Minister of Planning, Monitoring and Administrative Reform of the Arab Republic of Egypt.

“People thrust into Africa not knowing one thing about its culture, ethnic make-up, or local peculiarities. In order to avoid these mistakes, I recommend consulting think tanks, that have been doing research for decades and can help a lot,” Irina Abramova, Director, Institute for African Studies of the Russian Academy of Sciences; Corresponding Member, Russian Academy of Sciences.

 

 

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

To participants in the Russia–Africa Economic Forum

Ladies and gentlemen,

It gives me great pleasure to welcome you at the opening of the Russia–Africa Economic Forum.

The rich history of relations between Africa and Russia has never seen an event of a similar scale. Members of government agencies and business community, and experts are meeting at this Forum to substantively discuss the current status and prospects of cooperation and a wide range of topical issues of the world economy.

Today, the countries of Africa are well on their way towards social, economic, scientific and technological development, and are playing a significant role in international affairs. They are strengthening mutually beneficial integration processes within the African Union and other regional and sub regional organizations across the continent.

In recent years, the traditionally friendly ties of partnership between Russia and Africa have gained new momentum, both at a bilateral level and in various multilateral formats. In addition to preserving our past experience of successful cooperation, we have also managed to make significant new steps forward. Trade and investment are growing dynamically, and new joint projects are under way in extractive industries, agriculture, healthcare, and education. Russian companies are ready to offer their scientific and technological developments to their African partners, and share their experience of upgrading energy, transport and communications infrastructures.

I hope that the Forum will help identify new areas and forms of cooperation, put forward promising joint initiatives that will bring the collaboration between Russia and Africa to a qualitatively new level and contribute to the development of our economies and the prosperity of our peoples.

I wish the Forum’s participants fruitful work and all the best.

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