Russia To Set Up US$5 Billion Online Trading Platform With Africa
Op/Ed by Chris Devonshire-Ellis
Great Opportunities For Russian Online Retailers Selling Products To Africa
With Russian businesses looking to expand their trade potential with Africa, the Russian Export Center (REC), Russian banks and African partners will sign an agreement on creating a Russia-Africa commercial payments platform, with its volume estimated at around US$5 billion at this weeks Russia-Africa Summit, REC Director General Andrei Slepnev has said, stating:
“There is a plan to sign an agreement on creating a mechanism for funding Russia-Africa trade. The REC, jointly with Russian banks and global partners, is working on a platform for commercial payments with Africa, and its volume will reach around $5 billion. The platform will enable absorbing risks related to doing trade with the [African] continent, and launching deliveries that are highly valued in the international market. We, in turn, will attract … at least 10 countries and literally open a trade corridor. The Russian business will be able to take advantage of it, and therefore our presence in Africa will increase significantly.”
The agreement aims at ensuring the funding of Russian products and deliveries to Africa. Current bilateral trade between Russia and Africa is about US$20 billion per annum and has been growing at 17% per annum.
Targeting African trade at this time is significant. Most African nations signed off a Pan-African Continental Free Trade Agreement (AfCFTA) earlier this year, which eliminates taxes on products traded across African nations on 90% of all products. This is excellent news for companies sourcing from different African countries, or wishing to combine African products with for example Russian made components to create a finished product such as a vehicle, to sell on the African market.
Russia has also established a Free Trade Zone in Egypt’s Port Said, catering exclusively for Russian companies wishing to invest in the region. Others are expected to follow in other African countries.
Russia has also been busy in recent years developing trade ties with Africa, and has Double Tax Treaties, which reduce the profits tax rates on specific goods and services, with Algeria, Botswana, Egypt, Mali, Morocco, Namibia & South Africa. The African Continent, along with parts of South-East Asia, offer competitive wages and over the next decade it can be expected much of the worlds global manufacturing will be relocating to these areas. We can compare the average wages in the Russian backed trade bloc the Eurasian Economic Union with Africa and the ASEAN nations of South-East Asia as follows (Figures in USD, World Bank 2019 projections):
|Region||GDP||GDP Per Capita||GDP Growth|
|Eurasian Economic Union||1.9 Trillion||10,389||4.1%|
|ASEAN (South-East Asia)||3 Trillion||4,538||4.8%|
|African Continent||2.2 Trillion||6,122||4.0%|
- Russia – Africa Continental Investment Opportunities & Potential Explained
- Russia’s North African Free Trade Zone To Export US$3.6 Billion Goods By 2026