The Coordination Committee for Economic Cooperation with African Countries – AFROCOM – was set up 15 years ago. What has changed in its work over these years? How difficult is it for Russia today to compete in Africa with the Americans, Europeans and Chinese? Do we need to change our export laws? This and much more is the subject of our exclusive interview with Igor Nikolayevich Morozov, Chairman of the Board of Directors of AFROCOM.
– Igor Nikolayevich, AFROCOM is 15 years old this year. What has changed in your work over these years? Neither Russia, nor Africa, nor the world as a whole is standing still, and the importance of a comprehensive approach to developing relations with African countries is coming to the fore.
– AFROCOM is a business platform that came into being just as the President of Russia decided to re-engage with African countries. It was a time of great hope and change, including in the economy of the Russian Federation. Vladimir Vladimirovich was Prime Minister at the time. It was the beginning of a great, multifaceted work to restore relations between Russia and Africa.
Then came a series of civilisational changes, and the work was frozen. It was frozen until the first Russia-Africa Summit, which took place in Sochi. The Sochi Summit and the Business Forum gave an impetus to a completely new work of Russian companies in the direction of Africa. The first hopes arose that we are really returning to Africa, that the African market is in demand for Russian regional products, that Russia has reached new frontiers and that its state support measures for exporters meet the requirements of the modern market.
At the same time, our African partners had great hopes that Russia would come back with a whole range of offers to compete with companies from Europe, the US, China and India.
The first three years showed that the hopes of the African partners did not match the realities of the Russian market at that time. What was the problem? You are right, in 30 years, Africa has moved on, and new players have emerged. The Asian tigers now dominate the African market, especially China and India. And our state support measures proved to be uncompetitive. And in all sectors.
– Do you mean the new institutions and new mechanisms of financing and state support for their business that they have created? Sectoral funds, systems of technoparks and free economic trade zones…
– Exactly. Today, our competitors have industrial funds and private equity funds in every sector. There is a huge network of banks across Africa. Some have hundreds of branches. Take China’s Exim Bank, for example. They have offices in all the major economies in Africa. And they finance all companies that have obtained export licences from the China Export Support Agency.
In terms of sectoral funds, India is now the leader, with six of its funds operating in Africa. These are mainly in digital technology, pharmaceutical technology and pharmaceuticals, and more. A huge India-Africa skyscraper has now been built in Mumbai, with African offices on every floor.
All this reflects the expectations that our African partners have of Russia. Over the past 30 years, two generations of Russian entrepreneurs have grown up whose knowledge of Africa dates back to the 70s and 80s of the last century. When the older generation built plants, factories, roads, irrigation systems, universities and hospitals. When ministerial meetings were held in Russian in a number of countries because more than six hundred thousand African students graduated from Soviet universities.
– Was it this inconsistency that prevented momentum from building between the Sochi and St Petersburg summits?
– You are right. But last year’s summit in St. Petersburg was not a summit of illusions and hopes, but a real political and powerful business forum, addressed to an already prepared audience. Russian small and medium-sized businessmen came to St Petersburg. And that was the main success of the forum. The entrepreneurs are young, ambitious, motivated to move forward, to open new markets and to fully understand what is happening in African countries.
No one needed to be told that digital transformation is moving at a breakneck pace and that the African Union’s solution was already quite clear – localisation of production after exports. Today, Africa is home to free trade zones, new manufacturing and scientific hubs that offer amazing conditions that do not exist on any other continent. Not even successful China. Zero rates on imports of equipment and technology range from 5 to 10 years. The zero rate on exports of products manufactured by companies in the free trade zone extends for seven years. There are many other privileges developed by the African Union and implemented in Africa’s leading economies. This is what has happened in the 15 years you are talking about.
And that is why, in the four years between the first and second summits, AFROCOM did its best to bring business missions to Africa, to show free trade zones, to show the readiness of African companies to produce in Russia.
We can clearly see all the problems that await Russian business, from ratification to technical regulation. But this is all work in progress, which is understood by the management and administration of AFROCOM. We tell this to entrepreneurs from the regions who want to go to Africa.
– In today’s reality, with Russia in the grip of European and American sanctions, access to Africa is a strategic necessity for domestic regional companies. In this way, we will strengthen our regions and expand industrial production. And that means technological re-equipment and new jobs. Let’s talk a little about business trips to Africa. As head of AFROCOM, how satisfied are you with their number, level and results?
– Of course, we would like to be more active in Africa, where the principle of technological and psychological separation plays a role. While the first business missions were attended by 10-12 Russian companies, we now see that up to 50 representatives of Russian factories and innovative companies are ready to travel to Africa.
We believe that the time has come to expand the AFROCOM business platform. That is why today all our 12 offices and 18 representative offices are open seven days a week, almost 24 hours a day. We meet representatives of local companies who are already there and prepare partners for them so that we can have an interesting dialogue with our African colleagues and possibly future partners. The nature of business missions has also changed.
Our Russian embassies and some trade missions are very supportive. There is very strong work going on between AFROCOM and Russian foreign institutions, supported by the Ministry of Industry and Trade.
The goals we have set for 2024 are ambitious. We are preparing to open a trading house in Addis Ababa. I must say that this is a very serious way of promoting Russian technologies and production capabilities in one of Africa’s largest economies. We plan to open three more trading houses this year. These will be full-fledged trading centres, supported by all the companies we are in contact with. We expect that up to a hundred positions of Russian companies will be represented there, ranging from engineering to agricultural machinery. There is no doubt that we are satisfied because we have been doing our best for four years.
– There is a lot of talk now about the need to change our export laws. What has been done and what is planned?
– I think this is more a matter for the Federation Council and the State Duma. This is a special level of legislation that needs to be worked on. At the moment, on the initiative of the State Duma, in particular its chairman Vyacheslav Volodin, an expert council on the development and support of a comprehensive partnership with African countries has been set up, which includes both businessmen and representatives of ministries and departments responsible for the export of Russian products. On 1 March, there was a substantive discussion of our legislation. The legislative environment itself must be ready for changes. I sincerely believe that Alexander Babakov, the chairman of the Council of Experts, as an economist, as a doctor of science, as the deputy speaker of the State Duma, should be the driving force behind this process.
It is possible that the changes will concern not only and not so much changes in the legislative framework, but the very forms of work, especially for banks, insurance and leasing companies. I am sure that by the time of the next Russia-Africa Summit, many issues related to the legislative framework will have been improved.
– You talked a lot about the banking sector. What about the Russian digital rouble and digital transformation in Africa in general?
– I will tell you frankly, digital transformation is just flying across Africa. If 480 million people in Africa were using mobile phones at the Sochi Summit in 2019, which is also a lot, then more than 620 million people were already using them at the St Petersburg Summit. Almost every capital city on the continent has already developed Wi-Fi, and online shopping programmes have appeared. Our Yandex Go is active in 13 countries on the African continent and is pursuing a rather aggressive policy not only to expand its platform, but also to create very privileged conditions for local business taxis. Our experts are implementing different financial models and platforms. And we are in no way inferior to the British or the Europeans, and we are competing with the Indians and the Chinese. This is particularly evident in Kenya, Tanzania and Egypt. I am not talking about the North African countries.
Today, AFROCOM is working to promote Russian digital platforms on the African market – both the labour market and the economic market. We are also present in the education sector. Russia is now one of the most digital powers in the world. That is why our digital platforms should form the basis in many African-friendly countries. And AFROCOM is doing everything to make it happen.
– You spend a lot of time in Africa. Is it because, as the saying goes, “on the ground” you can see problems more clearly and find solutions faster?
– AFROCOM has 12 offices and almost all of our staff are based in these offices. These include Addis Ababa and Nigeria, where two major projects will open in the near future. I will not go into details, but I will say that all the initial documents have already been signed, which will allow our strategic companies not only to mine lithium, but also to build solar battery stations using the latest technologies. We are not lagging behind the world’s leading countries.
Today we are actively working in Burkina Faso, and in the near future we will be in the Central African Republic. So, whoever is in Moscow today can be working in any African country tomorrow.
One of our main tasks today is to open trading houses that will allow our export companies to export their products there. We have an idea of how it should be done, having studied the experience of China, India and many European companies. The algorithm is quite obvious: the more we are represented in Africa with real products, the more we will be able to sell them, implementing various projects, from solar panels to agricultural technologies that Africa needs. Russian houses should soon form the backbone of our domestic export promotion.
– At the end of the interview, our traditional question. What is your Africa like? What attracts and fascinates you? What is it like for you?
– I am an Orientalist by training and have lived in the Middle East all my life. I fell in love with Africa 10 years ago when I visited South Africa for the first time. And then, after receiving the mandate to head AFROCOM, I started travelling to countries sympathetic to the Russian Federation. Africans remember very well what the Soviet Union did for them, and they are very sympathetic to Russia, stressing that the Russians were never colonisers. This was very striking to me at first – no matter at what level meetings are held, Africans always emphasise this fact. That is why they want to come to us, they want to learn from us, they want to adopt our experience. They are ready to accept Russian businessmen in any capacity to build the economy of 21st century Africa together with them. They are ready. All that remains is for us to enter this new market stronger, faster and more powerful.
– Igor Nikolayevich, thank you for an interesting and topical conversation, and I wish you all the best in the realisation of your plans. And I suggest that we make our talks regular. For example, we could meet at the end of the year and talk about what we have achieved.
Interview conducted by Yulia NOVITSKAYA, writer, correspondent of “New Eastern Outlook“
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