Global Insider: Russia’s Stake in Africa

In late May, Russia announced that it would invest $1 billion in uranium exploration in Namibia. In an e-mail interview, Raksha Maharaj, a director at South Africa-based Emerging Market Focus, explains Russia’s renewed interest in Africa.

WPR: What is the extent and nature of Russia’s current economic involvement in Africa?

Raksha Maharaj: In recent years, Russia’s sphere of influence in Africa has been largely diluted by the increasing activities of countries like China and India, as well as the continued involvement of Western countries. Russia’s trade with Africa has grown an estimated 14.9 percent since 1992, and amounted to $8 billion in 2008. But that is dwarfed by Chinese and Indian trade with Africa, which in 2008 amounted to $100 billion and $40 billion respectively.

In order to reinvigorate Russia-Africa relations, Russian President Dmitry Medvedev undertook an extensive tour of the continent in 2009, visiting strategic countries like Egypt, Nigeria, Namibia and Angola. While Egypt is currently Russia’s most significant trading partner in Africa, Gazprom’s $2.5 billion joint venture with Nigeria’s National Petroleum Corporation could lead to Nigeria emerging as a significant strategic partner on the continent as well.

Major Russian commercial activity in Africa includes mining operations in Angola, metallurgy interests in South Africa, Gabon, Guinea and Nigeria, and oil and gas development in Namibia, in addition to Gazprom’s mega-deal in Nigeria. In addition, Russian companies are increasingly becoming involved in other sectors, such as financial services and telecommunications.

WPR: Does the investment in Namibia reflect a renewed Russian interest in Africa?

Maharaj: Russia’s recent investment in Namibia is indeed indicative of its desire to increase its African presence, and is largely the result of Medvedev’s African tour last year. The deal can also be viewed in the context of increasing Russia’s standing in the international uranium market. It has been suggested that the Namibian exploration and production deal, estimated at $1 billion, will give impetus to Russia’s drive to challenge the current top three uranium producers — Australia, Canada and Kazakhstan. Russia currently stands at No. 5, and the deal with Namibia, which has the world’s eighth-largest proven resources, could result in Russia significantly increasing its production.

WPR: How has China’s increasing African presence impacted Russian ambitions on the continent?

Maharaj: Both Russia and China have demonstrated a strategic interest in Africa in recent years. While China’s motives are driven by the need to secure resources, Russia is resource-rich. Where both countries share a common agenda is that they have a variety of companies, as well as available capital to invest in lucrative sectors in Africa.

Russia has been described as lagging behind the other BRIC countries in establishing a significant footprint in Africa. With regards to China, state backing has allowed Chinese companies to become more involved in Africa, particularly via platforms like the Forum on China-Africa Cooperation (FOCAC) and the China-Africa Development Fund. In addition, China has an Africa policy dating back to 1964. This points to the fact that the Russian government needs to develop a specific Africa policy and also craft a more integrated approach between the public and private sectors in engaging opportunities there. Nonetheless, Russian involvement in Africa has been welcomed as an alternative or balancing force to Western and Chinese involvement on the continent.