Vice-President of the Chamber of Commerce and Industry of the Russian Federation, Vladimir Padalko, gave this insightful interview to Kester Kenn Klomegah in which he discusses existing challenges and emerging prospects, especially for strengthening relations trade and economic relations with Africa, amid unprecedented harsh sanctions by the United States, the European Union and their Pacific allies.
Here are the interview excerpts:
Q: What can we expect from the second Russia-Africa summit scheduled for this year? Is it worth talking about increasing the level of Russian investment, strengthening interaction with African companies?
Vladimir Padalko: The second Russia-Africa Summit will become an important starting point for cooperation between the Russian Federation and African countries. Russia’s economic situation has now changed dramatically, as most countries on the continent have refrained from participating in anti-Russian sanctions. Therefore, we are talking about the formation of new approaches in a wide field of interaction, adjustment or rather expansion of these strategic tasks formulated at the first Russia-Africa summit.
Let me remind you that three years ago priority areas for economic cooperation were identified in a number of industries. These are energy, infrastructure development, in particular railway construction, mineral extraction and processing, agriculture, digital technologies, medicine, science and technology. ‘education. These priorities will also be expressed at the second summit. But I think the main topic of the next forum will be the formation of new tools for fruitful cooperation between Russia and Africa, including new methods of mutual settlements, logistics routes, media and cultural communication.
Q: How competitive is the current African market for Russian companies and potential investors who have shown interest in Africa?
Vladimir Padalko: In recent years, many African countries no longer experience the lack of attention from foreign partners. Unfortunately, today the share of Western states, as well as China, in trade with African countries is much higher than that of Russia. But, nevertheless, our country is able to occupy significant niches in many areas. We sell goods that are very popular in Africa: fertilizers, petroleum products, wood products, plastics, rolled metal products, cereals, certain types of machinery and equipment, vehicles.
In turn, African countries are ready to supply the Russian market with a whole range of food products, the supply of which has recently caused problems. And in some countries, in particular, South Africa, there are good products from mechanical, chemical, food industries, which will also be useful to us today. The African market today is very promising for Russia, but also very difficult. Russian companies need to work on this thoroughly and systematically to be successful.
Q: Does the Chamber of Commerce and Industry of the Russian Federation intend to encourage Russian companies to locate their production in African countries, thus using one of the most reliable ways to develop trade and economic cooperation?
Vladimir Padalko: The Chamber of Commerce and Industry of the Russian Federation supports all positive trends in business, including foreign economic activity. Localization of Russian production in African countries is already a mature stage of cooperation, when companies understand all the specifics of doing business in a particular country, are confident in the long-term nature of project implementation and the return on their investment. In my opinion, now for the majority of Russian companies that intend to work in Africa, it is important to create a set of tools that will allow them to confidently develop their business with the countries of the continent.
The Chamber of Commerce and Industry of the Russian Federation has already prepared a series of proposals that should seriously contribute to the promotion of Russian companies in African markets. The initiatives were discussed and approved at the last meeting of the heads of the business councils of the Chamber of Commerce and Industry of the Russian Federation for cooperation with African countries. For example, it is important for Russian banks to come to Africa. Now there is only one bank – it is very small for the whole continent. We need settlement banks that would work with different currencies, not just dollars and euros.
Chairman of the Russian Chamber of Commerce and Industry Sergey Katyrin in a letter to the Chairman of the Government of the Russian Federation Mikhail Mishustin offered to conclude intergovernmental agreements with African states on the use of national currencies in mutual settlements and payments. It was also proposed to settle the question of the creation of a bank specializing in import-export and a trust fund to support the export activities of small and medium-sized enterprises in African countries. We really need a Russia-Africa trading house.
In connection with the latest events in the world, international logistics have seriously changed. We need commodity hubs that work for multiple countries at once. As you can see, we are now at the stage of creating an infrastructure that will allow us to reach a qualitatively new level of cooperation between Russia and Africa.
Q: Companies need vital information, knowledge about the investment climate, the specifics of working in a particular country. Companies need vital information, knowledge about the investment climate, the specifics of working in a particular country. Do you think there is an information vacuum between Russia and Africa?
Vladimir Padalko: The information void does exist, and this obstacle must first be removed. One of the most effective tools in this direction is the holding of exhibitions. Experience shows that African companies are very interested in it. In this context, the CCI of the Russian Federation proposes to redirect the funds allocated for exhibitions in Europe to the organization of exhibitions and business forums in African countries.
But at the same time, you have to work fast – it takes an average of six months to prepare an exhibition, and the situation in this area can change dramatically. It is also necessary to organize business missions more often, organize roadshows, presentations of Russian companies in African countries. The online communication format is good, but direct contact, so to speak, on land is still effective and pays off.
I would like to emphasize that the CCI of the Russian Federation intends to actively contribute to the expansion of the network of trade representative offices in Africa. Currently, there are only four Russian trade missions operating on the continent – in Morocco, Algeria, Egypt and South Africa. There should be more.
Q: What do you think are the main problems of foreign players on the African continent, what hinders the development of trade and the influx of Russian investments in African countries?
Vladimir Padalko: Trade and economic cooperation is always a bilateral process. African countries must further develop financial and investment infrastructure, on which foreign partners, in our case, the Russians, can rely. Do not expect investors to come, find promising projects on their own and implement them at their own expense. At the same time, the experience of the Soviet Union shows that it is possible and necessary to cooperate with African countries in a wide format.
However, the interaction business model is now fundamentally different – no one will invest lightly. All work is based on a mutually beneficial basis. At the same time, Russia now lives in fundamentally new economic realities. Many communication, logistics and supply chains have been disrupted. Companies are forced to adjust their collaboration strategies with foreign partners, to seek new opportunities for their development. And in this situation, cooperation in friendly areas – with African countries – becomes one of the priorities.
Q: At the end of this exclusive interview, what are your last words of motivation and what can you wish for potential customers and partners in Africa?
Vladimir Padalko: Africa has changed a lot in recent years. A number of countries show high rates of economic growth, new industries are developing, businesses are opening up, and not in the field of primary processing of minerals and agricultural raw materials. The African continent has become a place of expansion for many foreign companies. Russia cannot stay away from this process. Businesses need to take the initiative and take some risk – it’s like two sides of a coin. The main thing is that our country has a good mood for the development of cooperation, and this is also unambiguous on the part of African countries. Then we will succeed. A vast field of collaboration is offered to us.