Russia Looking At Special Economic Zones In Mozambique & Namibia

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As we predicted would happen, Russia is considering the creation of industrial zones in Mozambique and Namibia to develop exports to Africa, Industry and Trade Minister Denis Manturov said in an interview at this weeks Russia-Africa forum.

“We should form industrial sites in southern Africa, on the west coast, on the east coast, bearing in mind first of all the logistical advantages of a certain country. In particular, today we are considering such options as Mozambique, Namibia using their port capacities in terms of logistics. In particular, today the minister [Namibia’s Minister of Industrialization and Trade Tjekero Tveya] outlined to us the prospects of developing 2,000 hectares of land for the industrial purposes with an invitation of our Russian economic operators who might be interested in locating their assembly plants there.” he said.

Mozambique is on Africa’s east coast and provides access to markets in neighboring South Africa as well as export potential to the Middle East, India and South-East Asia.

mozambique-map

Namibia is on Africa’s West coast and also shares a border with South Africa, with additional export potential to Europe.

namibia-map

Manturov also added that such zones can be created in several African countries.

Russia is currently finishing the development of its industrial zone in Egypt’s Port Said, which is a special economic zone with tax incentives for Russian resident enterprises. Output is expected to reach US$3.6 billion by 2026 with export production expected to commence from Port Said in the next two years. Investment agreements have been concluded with 25 resident companies planning to establish operations in Port Said, with an expectation that by 2024 this will have doubled.

Russia, along with China, is beginning to create a network of overseas special economic zones that can take advantage of emerging market labor rates in addition to tax incentives and the benefits of existing trade blocs. The majority of African countries have signed up to the AfCFTA pan-African Free Trade Agreement, which has eradicated cross-border taxes on 90% of goods traded across Africa – good news for businesses sourcing different products from across the continent. South-East Asia also has a similar arrangement with its ASEAN bloc. These two regions are expected to provide the bulk of cheap global labour for the next two-three decades.

We can see comparisons below, with Russia featured among the Eurasian Economic Union (EAEU) bloc. ASEAN and Africa possess the most competitive wages. (Figures in US dollars)

wage-comparisons

An overview of why Africa could be of interest to Russian investors can be viewed in our previous article Russia-Africa Investment Opportunities & Potential

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Russia Briefing is written by Dezan Shira & Associates. The firm has 27 years of operations in China and assists Russian and Foreign investors establish operations into the country. Please contact us at russia@dezshira.com or visit us at www.dezshira.com

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