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Tuesday, 18 December 2012 15:00

Russia – The New Player in African Politics

By Ioannis Mantzikos

LONDON, December 18, 2012 (OilPriceDomCom)
- Russia is relatively a new player in African politics today, and it only has a part in a very small proportion of the continents exports and merely 1.5 percent of its FDI. Nigeria firmly holds second place among the sub-Saharan African countries in trade with Russia.



In addition, as the economic relations of Russia with Nigeria have developed steadily, a number of leading Russian companies are implementing in Nigeria major investment projects in areas such as energy, hydrocarbon extraction, metals, and farm mechanization.

 

Business relations between the countries are currently being conducted by the Russia-Nigeria Business Council (RNBC), which was established in 2009. The RNBC was formed to consolidate the efforts of Russian and Nigerian private business communities, including representatives of the small and medium businesses that are interested in the market of both countries.

Who calls the shots?

Nevertheless, since the lines between private interests and politics in Russia are blurring, we cannot simply ignore who calls the shots in the creation of the country's foreign policy priorities in Africa. From Russia's perspective, there are important geo-political as well as strategic implications regarding Africa. The continent's 54 states represent a key voting bloc within the structures of global governance. A huge stock of non-state financial actors have a large investment in Russia's African “safari”.

One prime example of such groups is the Russian-funded group Renaissance Capital, an investment banking firm that operates in high-opportunity emerging markets. Renaissance Group began operations in sub-Saharan Africa in 2006, from its operational office in Lagos, Nigeria, and today approximately 25 percent of the organization's revenue comes from business dealings in Africa.

Recent Developments and Turf Wars

A 2007 ruling by the Nigerian Supreme court over the illegal sale of Aluminum Company ALSCON to RUSAL, a Russian conglomerate, has threatened the relationship between Russia and Nigeria.

According to the court, ALSCON should have been sold to an American company which had the highest offer. Despite violations of RUSAL's financial and other commitments, it is still not known why they got the deal. It is a strange story, since the former President was never considered to be close to Russian interests. However, in the wake of last year's release of Wikileaks cables the most logical explanation is a tale of corruption in the whole process.

In July, Business Insider reported, “Rusal's winning bid was $250 million in shares, conditions, and $130 million in cash; with this Rusal managed to arrange with the Nigerian government's privatization agency to overrule a $410 million cash offer by the Bancorp Financial Investment Group Divino Corporation (BFIG), a Nigerian-American group based in Los Angeles and headed by Reuben Jaja.”

In Moscow the story is now developing as former partners, shareholders, and former employees expose Chairman Oleg Deripaska's management mistakes, and his senior executives fight among themselves. More problems have surfaced after the collapse of a private arrangement between Deripaska and the President of Guinea, Alpha Conde.

When Russia's Foreign Ministry warned Nigeria of potential damage to relations, it became clear that official Russian foreign policy on the African continent is designed to protect some of its leading businessmen, despite the fact that some of them have been engaged in illegal activities.

***Ioannis Mantzikos is a PhD Candidate at King’s College London and an external consultant for Consultancy African Intelligence. Prior to this he served as a research Director in the Hellenic African Chamber of Commerce and Development.

 

 
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