Russias billion dollar charm to AFRICA
Business
The Russian Federation has commenced a systematic undertaking to court the African continent, in a bid to rope in the world’s wealthiest natural resources continent in its fold as it embarks on its global power house ambitions.
Led by its controversial President, Vladimir Putin the leading diamond producing countries in the word has now joined the tow world largest economies United States and China in the new scramble for Africa wave. The former Soviet Union Cold war powerhouse last week hosted African Head of States, Top government officials, business leaders, and investors to a two day Russia Africa summit at Black Sea resort in Sochi.
When officially opening the summit President of the Russia Federation Vladmire Putin said the event was organized to facilitate meaningful discussions on a wide variety of aspects related to economic cooperation between Russia and Africa.The leader of one of the world’s military powerhouse added that his country and Africa was eager to assess the potential to expand trade, economic ties, and investment; to develop transport, utilities, and energy infrastructure; to introduce advanced technology; and to implement environmental initiatives.
“The theme of this year’s forum is dedicated to the unifying role that the business community has been tasked with fulfilling on this vast territory, stretching from the Atlantic to the Pacific. The Russia –Africa summit discusses and closed in a number of deals geared towards increasing partnership between the two countries,” he said.
ARMS DEAL
At the summit Russia offered nuclear power plants, fighter jets and missile defense systems to African countries in what experts says is bit to buy back influence on the continent, at a summit low on concrete trade and investment deals but high on congeniality. Reports from Moscow indicate that $12.5bn worth of deals were struck during the first ever Russia-Africa Summit, though majority of that were memorandums of understanding that may not result in any investment.
“Let’s drink to the success of our joint efforts to develop full-scale mutually beneficial co-operation, wellbeing, peaceful future and prosperity of our countries and people,” said Russian president. Russian state owned military export agency revealed at the summit that the Russian Federation has defense orders worth $14bn from African countries. Sales to the continent account for about a third of Moscow’s military exports. President Putin said Russia had agreed military technical co-operation agreements with more than 30 African states, to supply weapons.
DOING BUSINESS IN AFRICA
The Russia- Africa summit underscored that Africa possesses high investment potential, noting that in the next 20 years the African population will reach 2.5 billion people. According to the Institute of Africa of the Russian Academy of Sciences, during the past 10 years Russian investment into Africa grew by 185% and reached USD 17 billion.
President of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin explained that significant share of these investments came from the members of his union. “However, we still can and should do more both in terms of increasing the trade volume and investment activity,” he said.
The summit also underscored that there are prevailing impediments that hinder easy of doing business in Africa. President of the Republic of Unganda Yoweri Museveni, noted Underdeveloped infrastructure was one of the key issues “Above all, we are missing a developed infrastructure, as any successful business requires minimizing the costs. More than anything, business must make profit, but you cannot make any profit if the production costs are this high,” he said.
COLLABORATIONS IN THE ENERGY SECTOR
At present, African countries have 14.4 trillion cubic metres of natural gas reserves.The share of natural gas produced by African countries in the total volume of commercial gas production around the world will increase and exceed 10.4% by 2050, this was said by Yury Sentyurin, Secretary General of the Gas Exporting Countries Forum.
It was noted that Africa is a place that offers a great return on investment. “I think that Russia needs to take the bull by the horns and understand the market. You have already made an effort in this direction. Perhaps within 10 -15 years we will be able to achieve global dominance”, said Wale Tinubu, Group Chief Executive of Oando PLC , a Russian Gas Powerhouse.
Pavel Sorokin, Deputy Minister of Energy of the Russian Federation said all can be achieved by joining efforts, including in terms of cooperation between Russia and Africa. “We will all have a larger market on which competing technologies will emerge. This all ties our interests together, and if we share these views, we will be successful,” he said.
COLLABORATION IN THE DIAMOND INDUSTRY
Yury Truntney Deputy Prime Minister of the Russian Federation – Presidential Plenipotentiary Envoy to the Far Eastern Federal District of the Russian Federation said Africa and Russia essentially have majority stake in the global diamond mining industry. Taken together, Russia and Africa control approximately 75% of the industry.
Russia is the world‘s leader in diamond reserves, mining, and export. It has over 1 billion carats in reserves; mines over 43 million carats, through state owned Alrosa, Just above Botswana under the hospices of De Beers, Debswana. The majority of diamonds mined in Russia are exported. Its primary export destinations are Belgium, India, and the United Arab Emirates.
Russia has underscored Africa as a strategic partner. “Africa is a friend in our efforts to facilitate the sustainable development of the entire industry. We have a long history of friendly, tried-and-true business relations with the Republic of Angola, we have mining enterprises, geological exploration, and we are discussing a number of technologies for the sorting and categorization of diamonds,” said Sergei Ivarnovy- Special Presidential Representative for Environmental Protection, Ecology and Transport.
Business
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.
Business
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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Business
Moody’s Reaffirms African Trade Insurance’s A3 Rating & Revises Outlook to Positive
Moody’s Investors Service (“Moody’s”) has affirmed the A3 insurance financial strength rating (IFSR) of the African Trade Insurance Agency (ATI) for the fifth consecutive year and changed the outlook from stable to positive.
Moody’s noted that the change in outlook to positive reflects the strong growth in ATI’s membership base – that has resulted in improved portfolio diversification, strengthened capital adequacy, and the good profitability despite the challenging operating environment. In addition, ATI benefits from its preferred creditor status (PCS) amongst sovereign member states which protects it from the risk of default by member sovereigns through securing recoveries against claims paid on guarantees.
The strong membership and equity growth are some of the key considerations for the consistent reinstatement of ATI’s A/Stable rating by Standard & Poor’s and Moody’s rating, over the years. Also supporting the rating affirmation are; consistent improvement in financial performance, commitment of its shareholders who continue to uphold the preferred creditor status, its high quality and conservative investment portfolio as well as strong relationships with a number of global reinsurers that provide significant risk-bearing capacity.
With the change in outlook to “positive”, ATI is now better placed to provide enhanced support to its member countries, attract additional shareholding and grow its portfolio. The positive outlook is an indication that if ATI continues to demonstrate its strong underwriting performance and ability to recover claims under the preferred creditor arrangements, among other factors, an upward pressure towards an upgrade may be generated. The Moody’s press release can be accessed from here
Commenting on the rating, Africa Trade Insurance Chief Executive Officer Manuel Moses said: “This positive revision is in line with our 2023 – 2027 strategic objectives in which we set to improve our rating outlook to positive in the first year, and achieve an upgrade of at least “AA”/Stable rating by both Moody’s and S&P within this Strategic Plan period. We aim to achieve this by doubling our exposures and increasing our capital to more than USD1 billion.”
ATI’s mandate is to provide trade-credit and political risk insurance, as well as other risk mitigation products to its member countries and related public and private sector actors. These insurance products not only directly encourage and facilitate foreign direct investment as well as local private sector investment in our member countries, but also contribute to intra- and extra-African trade.
About The African Trade Insurance Agency
ATI was founded in 2001 by African States to cover trade and investment risks of companies doing business in Africa. ATI predominantly provides Political Risk, Credit Insurance and, Surety Insurance. Since inception, ATI has supported US$78 billion worth of investments and trade into Africa. For over a decade, ATI has maintained an ‘A/Stable’ rating for Financial Strength and Counterparty Credit by Standard & Poor’s, and in 2019, ATI obtained an A3/Stable rating from Moody’s, which has now been revised to A3/Positive.