SADC on a distinctive spotlight for Russia

Interview excerpts

Russia and Africa mark nearly 30 years of bilateral relations after the Soviet collapse. What does this mean from African perspectives?

Russia has a long history of bilateral engagements with the Southern African countries, which constitute the Southern African Development Community (SADC), a regional economic community. Russia, as part of the then Union of Soviet Socialist Republics (USSR), supported the concerted efforts of the Frontline States and the Liberation Movements to fight against apartheid and the existential threats posed by it. 

The USSR, in this regard, provided technical and military support to most of the countries that were part of the Frontline States in order to achieve total liberation in the region. Even after the break-up of the USSR, Russia has continued to play an important role in technical assistance, economics and military support to African countries, including SADC member states – our relationship with Russia is therefore not new, it is very valuable, and need to be sustained.

The most recent visit (2018) of the Russian Foreign Minister Sergey Lavrov, to the Republics of Angola, Ethiopia, Namibia and Zimbabwe, (as we understand it) was largely focused on signing of economic cooperation agreements to attract Russian investments in key areas such as mining, aviation and energy sectors, as well as fostering military technical cooperation.

Southern African leaders are looking for investment in infrastructure, industry and trade. How would you characterize Russia’s role in Southern Africa, comparing it among BRICS?

Investment in infrastructure, industry and trade is seen as a catalyst for regional integration, economic growth, and sustainable development. In this regard, SADC welcomes investors from all over the world.  It is worth noting that one of the BRICS [Brazil, Russia, India, China and South Africa] countries, South Africa, is a SADC member state. Any comparison will therefore be limited to the other BRICS countries – namely Brazil, India and China.  

While Russia as part of the then USSR supported SADC Frontline States and the Liberation Movements, since a few years ago, it has not been that visible in the region compared to China, India or Brazil. It is encouraging that, of recent, Russia has positioned herself to be a major partner with Southern Africa and being part of the BRICS promotes her engagement with the region, particularly in investment in minerals, aviation, defence and energy sectors. 

Russia has also launched an Africa business forum, aimed at improving direct trade with the continent/region beyond the traditional sectors like mining, seeking to invest in areas like agriculture, industrial production, high technology and transport. The recent Russia and SADC Investment Forum that took place on 23 October 2018 in Russia, also sought to provide an opportunity for businesses and partnerships. 

Foreign Minister Sergey Lavrov has reiterated during his last African tour that Russia’s preferred focus is on Russia-SADC in its diplomacy in Africa. Why is the SADC region considered a strategic partner for Russia? 

We cannot obviously speak for Russia, but we could give you a general overview of why international partners and investors would consider SADC an attractive or strategic investment partner. 

There are a number of inter-related factors for this, the first being peace and stability: The SADC region is peaceful and stable. A peaceful and stable environment is attractive to investors as it fosters confidence by assurance of longevity, property rights and fundamental freedoms, which underpin economic rights. Peace in SADC is sustained through cooperation between the 16 member states of the Community, as espoused in the SADC Treaty, and in particular, the Protocol on Politics, Defence and Security Cooperation whose general objective is to promote peace and security in the region. 

The founders of SADC had long recognised that the region could remain stable by fostering common political values, building legitimate democratic institutions and mechanisms to sustain peace as a pre-requisite for regional integration and prosperity.

Second, the region has an integrated market resulting from a combined population of approximately 327 million people, and a collective gross domestic product of US $600 billion (2016), which is supported by generally favorable weather conditions in most parts of the region. 

Third, the region has abundant natural resources ranging from vast energy resources, arable land and forestry; to precious minerals such as diamonds, gold, platinum, copper, cobalt, oil, and natural gas to mention but a few. These are vital for the global economy and strategic partnerships. 

Notwithstanding, the above-mentioned comparative advantages the region has relatively under-developed human capabilities and infrastructure, which are essential for bolstering the region’s efforts to exploit and maximise benefits from these natural resources. Hence, the need for the region to cooperate with external partners, such as Russia, which have advanced technologies and capacities that could be transferred to the region. A peaceful and stable environment surely presents a “strategic” imperative as well.

The Russian Federation’s priorities are also in line with SADC priorities as evidenced by the priorities of the Foreign Economic Strategy in the region as indicated below:

• Prospecting, mining, oil, construction, purchasing gas, oil, uranium, and bauxite assets (Angola, Namibia and South Africa);
• Construction of power facilities—hydroelectric power plants on the River Congo (Angola, Namibia and Zambia,) and nuclear power plants (South Africa);
• Creating a floating nuclear power plant, and South African participation in the international project to build a nuclear enrichment centre in Russia;
• Railway construction (Angola);
• Creation of Russian trade houses for the promotion and maintenance of Russian engineering products (South Africa);
• Participation of Russian companies in the privatisation of industrial assets, including those created with technical assistance from the former Soviet Union (Angola).

In your estimation, what is the level of Russia’s engagement with the SADC region? 

Russia and SADC member states have had long-standing bilateral partnerships for development for decades, providing substantial results in the priority areas of cooperation. Through such significant historical ties, the peoples of SADC and of Russia have strengthened friendship and mutual understanding for developing comprehensive, equitable and fruitful cooperation.

The ten SADC member states represented in the Russian Federation, namely Angola, the Democratic Republic of Congo, Madagascar, Mauritius, Mozambique, Namibia, South Africa, Tanzania, Zambia and Zimbabwe provide an extensive representation for engagement. 

At the regional level, SADC and Russia signed a Memorandum of Understanding (MOU) on Basic Principles of Relations and Cooperation on 23 October 2018, in the following areas, among others, Technical Cooperation and Assistance; Capacity Building; Peace, Security, Conflict Prevention and Resolution; Preventive Diplomacy; Trade, Industry, Finance and Investment; Infrastructure Development, and Energy; Information Communication Technology; Transport, Communications and Meteorology; Water, Agriculture, Ocean Economy, Food Security; Minerals, Natural Resources and Protection of the Environment; Education and Science; Healthcare; Technology and Innovation; and Culture, Tourism and Information Exchange. In addition, a MOU in the area of Military - Technical Cooperation, with the aim of promoting cooperation between the Parties in regional and international peace and security was signed in July 2018.

What are the outcomes of the Russian Foreign Minister’s March 2018 visit to some SADC member states?

In March 2018, the Russian Foreign Minister, Sergey Lavrov, visited the Southern Africa region where he held talks with the Presidents of Angola, Namibia, Mozambique and Zimbabwe. In his statement, the Minister noted that Russia together with Africa wanted to elevate trade, economic and investment relations to a level that would meet political and trust-based relations. 

It is our considered view that the bilateral engagements served to strengthen the already existing ties, coming up with a win–win bilateral cooperation between Russia and these member states. This will be augmented by the two Memorandum of Understanding: MOU in the area of Military–Technical Cooperation, that is to promote cooperation between the parties that was signed in July 2018, and the [five-year] MOU on Basic Principles of Relations and Cooperation that was signed on 23 October 2018.

What challenges and setbacks, in your view, still remain to get both parties (Russia and Southern Africa) towards result-oriented and effectively closer in their post-Soviet economic cooperation?

SADC works closely with the International Cooperating Partners (ICPs) in achieving its developmental results. As such, SADC’s cooperation with the ICPs is guided by the principles of partnership and commitments. Both SADC and Russia value their adherence to the aims and principles of the United Nations Charter, seeking to contribute to the establishment of a democratic and just world order and to strengthen regional and inter-regional ties to ensure peace, stability, socio-economic development, and mutual confidence.

In view of the above, the thrust for SADC-Russia cooperation shall be aligned with global, continental, regional, and national policies. By so doing, both sides will be able to contribute and create favourable conditions for socio-economic development, cooperation, and mutual confidence.

Soft power and public diplomacy are largely or significantly not in Russia’s engagement with Southern Africa. What are your objective views on these issues?

If you follow the history of Russia’s engagement with Africa, and Southern Africa in particular, from the days of the USSR to the present, one is likely to find that public diplomacy by Russia has encompassed many forms. These have included, educational programmes, cultural exchanges, scholarly visitor programmes, and of course, the use of the media to cover and project issues on Africa from a Russian perspective. These are all instruments and forms of public diplomacy, which would ordinarily have the effect of reaching audiences on our continent and beyond, and impacting positively on what Russia has to offer the world. In the same vein, this can be seen as a form of “soft power” as its aim is to appeal and attract partners rather than coerce them into a relationship of one form or the other.

Arguably, do you think intermediaries will be required, for example, the private equity and commodity trading communities to play a supportive role in forging business links between Russia and Southern Africa?

Like most of the developing countries, Southern African countries have, over the years, largely relied on multilateral and regional development financial institutions to fund their development projects. However, given the huge demand for resources, policy makers have realised that these cannot be met solely from these traditional sources, and therefore, the need to explore alternative and innovative sources of funding. Private equity and commodity trading exchanges can play a critical role in mobilising resources mostly from the private sector to fund projects in the Southern African countries. 

For the region to realise its enormous potential, it needs the support of the next generation of financial instruments and intermediaries to capitalise on opportunities, navigate challenges, and build the businesses and economies, that will enable the continent to thrive. Private equity could become a major force for accelerating growth in African countries. While regional penetration is low, smaller markets and modest penetration create significant potential for high risk-adjusted returns. Major growth sectors are: natural resources, transportation, energy, real estate, fintech, healthcare and hospitality. Many private equity funds are nurturing the requisite skills and experience to invest, grow and add value to portfolio/innovative companies.

Similarly, the establishment of commodity trading exchanges can play a critical role in boosting the region’s economic development. Successful securities exchanges all over the world are key to the economic development, providing the most efficient channel for savers (domestic and foreign) to channel funds into long-term productive enterprises, creating growth and increased prosperity. Since the region has a comparative advantage in the vast natural resources sector, and in line with SADC objective of developing and adding value and beneficiation concept, the setting of the commodities trading exchanges present attractive growth opportunities. 

In this context, SADC has already undertaken initiatives to develop the interconnectivity project whereby the aim is to link the SADC stock exchanges, and to encourage cross border trading of shares/stocks. Efforts are also being made to improve the operational, regulatory and technical requirement underpinnings and capabilities of the region’s exchanges to make the securities markets more attractive to both regional and international investors.

The region remains a top destination for investment as its attractiveness to investment has risen dramatically over the last several years, and this should continue to present attractive growth opportunities for private equity for the foreseeable future. Private equity represents a new source of capital, complementing traditional sources and project finance, with private equity investors offering more than just funds, but also the needed skills. All said, there are positive directions in the relationship; we look for a bright future. 
 

*Kester Kenn Klomegah writes frequently about Russia, Africa and BRICS.