Kester Kenn Klomegah
Africa-Press – South-Sudan. After two historic Russia-Africa summits, several conferences and bilateral meetings intended to move Russia’s relations from stagnation to growth, from low-level to another stage within the context of geopolitical competition and rivalry, has hit institutional obstacles including political bureaucracy and lack of prioritizing official policies. Russia’s decision to quit the investment landscape could largely be attributed African leaders inability to create favourable climate, un-preparedness to change rules and regulations for foreign corporate businesses to operate in Africa.
Despite its tectonic desire to raise investment in energy and food security, infrastructure and industrial projects, Russia has still lagged behind in implementing its Action Plan Agenda 2023-26 approved during St. Petersburg summit. Policy researchers and experts have also underlined the empirical fact that African leaders have to be blamed for Russian businesses quitting Africa. During these previous years of exploring the question of Russia’s economic presence and the long-term implications, the discovery has been fantastic and mixed, while at times presented some complications and contradictions.
At least, since the first Russia-Africa summit held in 2019, Russia has significantly reset its focus on investing in Africa’s economy, engaged in appreciably resonating public relations. The loudest was the planned construction of nuclear energy plants in Burkina Faso located in West Africa, and in South Africa. Now African leaders, policymakers, business leaders and investors have started rethinking alternative dynamic development models within he context of changing situation in the global economy.
There are many contributing factors to the policy mindset. And moreover African leaders are establishing hidden leverages and adopting a new psychology towards success that are connected to economic development in the continent. A few studies have shown that African business directors entrepreneurial attitudes have changed over these decades, in spite of the geopolitical challenges by moving away from reactive to proactive positions in order to improve bilateral situation with Europe and the United States.
The leaders are more concern over growing demographics, rising youth unemployment and social standing of the population. Across Africa, 50-60% of the population is below the age of 25, according to United Nations reports. Leaders are also worried over their political campaign promises and their economic manifestos delivered to the respective electorates, and consequently, rhetoric and popular slogans usch as ‘international solidarity and friendship’ are now geopolitical tools of the past. Understandably, these are the stark realities of the present times.
Such emerging trends, as mentioned above, have far-reaching implications particularly for Russia. Under this circumstances, it could still develop an integrated strategies for re-asserting visible economic influence in Africa, but a few reports below equally have some negative connotations. In late May 2025, the Russian media Interfax reported, quoting the press service of Russian state bank VTB, that the shareholders of Banco VTB Africa voted at a general meeting to approve a decision to liquidate the bank. “Work is now being done with the regulator (the National Bank of Angola) to make the relevant decisions on the arrangements for working on the liquidation in accordance with the legislation of the Republic of Angola,” VTB said.
It was really anticipated as VTB first deputy CEO Dmitry Pyanov said, initially, in February that the Angolan subsidiary’s license was to be terminated finally in this summer. Report explicitly shows that VTB previously owned 50.1% of Banco VTB Africa and the president of Angolan state company Endiama, Antonio Carlos Sumbula, owned the other 49.9%.
Worth noting here that VTB focuses on work in Russia and in countries with which there has a large volume of foreign trade, above all China, trade with which reached US$290 billion in 2022. In early March, Russia’s VTB head Andrei Kostin, also said in an interview with the French newspaper Les Echos that the VTB would sell its subsidiary bank in Angola due to sanctions. VTB was one of the first to be added to the United States and European Union (EU) sanctions lists, which hit the bank’s international business hard, following the launch of the military operation in Ukraine in February 2022.
Similarly, there is also the historical fact that Russia contributed tremendously during South Africa’s political struggle until it attained independence. The outlook of bilateral relations looks excellent, both staunch members of BRICS association (Brazil, Russia, India, China, and South Africa), but Russia’s low level of economic investment is noticeable. In comparison, Russia accounts for a paltry 2% of South Africa’s trade, while the United States, United Kingdom and the European Union account for a combined 35%, with China around 9%. Energy deficit has crippled industrial operations, often described as unjustifiable and unacceptable as South Africa waves its baton, signaling power, on international stage but currently experiencing the worst economic crisis of its history. South Africa and Russia have lately drawn criticism, while the basic question focuses on the reasons why Russia has terribly failed with the planned construction of nuclear power plants under former President Jacob Zuma.
Mark-Anthony Johnson noted in his opinion article of early August 2023, published in Business and Financial Times, that “South Africa risks becoming bankrupt for its relationship with Russia, which adds virtually nothing to the economy, state revenues, economic growth, job creation, socioeconomic stability, and investor sentiment.” South Africa has been hit with problems ranging from energy deficits, collapsing industrial production and rising tensions among the large labour force.
Despite consistent assurances made by high-ranking Russian officials that Africa is “in the mainstream of Russia’s foreign policy” have not been substantiated by systematic practical activities, and worse serious lack of state support for sustaining effective Russia-African economic ties has necessitated the pulling out of several Russian companies from Africa.
Undoubtedly, several Russian companies have largely underperformed in Africa, which experts attributed due to multiple reasons. Most often, Russian investors strike important investment niches that still require long-term strategies and adequate country study. Grappling with reality, there are many investment challenges, including official bureaucracy in Africa.
In order to ensure business safety and consequently realize the target goals, it is necessary to attain some level of understanding the priorities of the country, investment legislations, comply with terms of agreement and a careful study of policy changes, particularly when there are sudden changes in government. It is important to study the African market structure, the investment climate, the capabilities of potential business partners and the characteristics of African customers.
While Asian states, Europe and the United States often refer to Africa as the continent of the 21st century. A general analysis shows that corporate Russian companies have shown interests in investing in the region. In practical terms, those corporate companies that managed, at least, to make inroads there, a few have already exited, citing “technical and operational” reasons. At the same time, the business leaders demonstrate negative attitude towards Africa.
Several reports further confirmed that Russia has abandoned its lucrative platinum project contract that was signed for US$3 billion in September 2014, the platinum mine in the sun-scorched location about 50 km northwest of Harare, the Zimbabwean capital. Reasons for the abrupt termination of the bilateral contract have still not been made public, but Zimbabwe’s Centre for Natural Resource Governance pointed to lack of capital (source of finance)for the project.
Foreign Minister Sergey Lavrov launched the US$3 billion Russian project back in 2014, after years of negotiations, with the hope of raising its economic profile in Zimbabwe. The development of the platinum deposit in Darwendale involves a consortium consisting of the Rostekhnologii State Corporation, Vneshekonombank and Vi Holding in a joint venture with some private Zimbabwe investors as well as the Zimbabwean government.
According to Bloomberg, the Darwendale has been tied to Russia since 2006, when former Zimbabwe president, Robert Mugabe took the concession from a local unit of South Africa’s Impala Platinum Holdings and handed it over to Russian investors. The first venture to try and tap the deposit was named Ruschrome Mining – it included a state-owned mining company, the Zimbabwe Mining Development Corp., Russian defence conglomerate Rostec, Vnesheconombank and Vi Holding.
The Darwendale project was not tendered, according to available information from official government website sources monitored both in Russia and Zimbabwe. With its cordial relations, Russia was simply offered the lucrative mining concession without participating in any tender. After the project launch, Brigadier General Mike Nicholas Sango, Zimbabwe’s Ambassador to the Russian Federation, told me in an email that “Russia’s biggest economic commitment to Zimbabwe to date was its agreement in September 2014 to invest US$3 billion in what is Zimbabwe’s largest platinum mine”.
“What will set this investment apart from those that have been in Zimbabwe for decades is that the project will see the installation of a refinery to add value, thereby creating more employment and secondary industries. We are confident that this is just the start of a renewed Russian-Zimbabwean economic partnership that will blossom in the coming years. The two countries are discussing other mining deals in addition to energy, agriculture, manufacturing and industrial projects,” Ambassador Sango added.
President Emmerson Mnangagwa said his government would soon open up the platinum sector to all interested foreign investors. Zimbabwe has the world’s second-largest platinum reserves after South Africa. With the rapidly geopolitical changes, Mnangagwa has been committed to opening up Zimbabwe’s economy to the rest of the world to attract the much-needed foreign direct investment to revive the ailing economy and make maximum use of the opportunities for bolstering and implementing a number of large projects in the country. That Zimbabwe would undergo a “painful” reform process to achieve transformation and modernisation of the economy.
Zimbabwe has various sectors besides mining. There is a possibility of greater participation of Russian economic actors in the development processes in Zimbabwe, and wider in southern Africa. Most often officials speak about Russia, claiming that Zimbabwe has had good and time-tested relations from Soviet days. Diplomatic relations between Zimbabwe and Russia have already marked the 40th year and yet not a single industrial facility to boast of in that country. Zimbabwe is a member of the Southern African Development Community (SADC).
Prior to holding the first Russia-Africa summit, Norilsk Nickel terminated its deal with Botswana’s BCL Group. According to TASS News Agency, quoting the company’s media release in December 2018, Norilsk Nickel terminated its agreement to sell African assets to Botswana’s BCL Group, including a 50% stake in the Nkomati joint venture.
It said that the Russian company would continue to seek damages from the BCL Group for the losses it suffered due to BCL’s failure to meet the terms of the agreement. The termination of the agreement would also enable Norilsk Nickel to pursue its own strategy for the African assets, Michael Marriott, Norilsk Nickel Africa’s Chief Executive, said as quoted by the press service.
In East African region, Russia’s RT-Global Resources and Rosneft quit Ugandan President Yoweri Museveni’s oil refinery project and many major infrastructure deals. Russia had pledged US$4 billion, but later disagreements over terms and frustration over in-fighting, intrigue, and lobbying forced them to pull out of the country. The Ugandan government team noted that the Russian consortium exhibited inadequate assurance and availability of preferred alternative foreign contractors with comparatively high bidding terms.
Museveni, at first, favored the Russians because, apart from considering access to weapons, the Ugandan leadership was also counting on Russia’s world superiority as a counterweight to both western powers, mainly America and China. With Russians and the South Koreans out of the negotiations, Uganda appeared somewhat desperate, which was back in 2014.
Similarly to remind that Rosneft also abandoned its interest in the southern Africa oil pipeline construction, soon after its delegation in Angola had discussed the possible participation of the Kremlin-controlled company in exploration and development projects there. That project never appeared despite Russia has excellent relations with Angola, Mozambique, South Africa, and Zimbabwe. From business and political perspectives, the region is considered as a unique regional power, put together with South Africa.
In addition, Lukoil, one of Russia’s biggest oil companies, like many Russian companies, has had a long history of shuttling, forward and backward, with declarations of business intentions in tapping into oil and gas resources in Africa. Besides technical and geographical hitches, Lukoil noted explicitly in an official report on its website that “the African leadership and government policies always pose serious problems to operations in the region.” It said that the company has been ready to observe strictly its obligations as a foreign investor in Africa.
Lukoil pulled out of the oil and gas exploration and drilling project that it began in Sierra Leone. According to Interfax, the local Russian news agency, the company did not currently have any projects and has backed away due to poor exploration results in Sierra Leone. It was reported that drilling in West Africa, including in Ghana, Côte d’Ivoire and Sierra Leone, did not bring Lukoil the expected results, as preliminary technical results did not demonstrated commercial hydrocarbon reserves. Vice-President Leonid Fedun ruled Lukoil’s complete withdrawal from almost all projects in West Africa.
Over the years, Russian trade experts and business consultants have been discussing ways to improve economic cooperation with Africa. One analytical report indicated that a number of large Russian companies operating in Africa managed to establish themselves negatively in African countries. This is primarily due to ignorance of cultural peculiarities of the region, lack of social responsibility, failure to completely fulfill contractual obligations. These cases damage the image of Russia and Russian companies with entering the African market.
All these developments, more or less, have degraded Russia’s image of Doing Business in Africa. In December 2018, a year prior to the first African leaders gathering in Sochi, the Valdai Discussion Club hosted an expert discussion on Africa. Oleg Barabanov, Program Director of the Valdai Discussion Club, highlighted the investment prospects and their influence by foreign players, and further analyzed perspectives and challenges for potential Russian investors.
In her contribution, Nataliya Zaiser, Chairperson of the Board of the African Business Initiative (ABI) – a Moscow-based business NGO, stressed that economic cooperation with African countries is not only an initiative, but also a response to requests from African partners. Despite this mutual bilateral interest and potentially fruitful projects, Nataliya Zaiser said that there were still only few successful Russian business cases on the continent.
Andrei Maslov, Coordinator of the work/project on the Russia Africa Shared Vision 2030 report, Integration Expertise Analytical Centre, explained in comparison with the situation a decade ago, that Africa is not only the main initiator of dialogue with Russia, but it is much more ready for it. If earlier the economic landscape of the continent was determined by Western companies with their colonial approaches, now Africa is ready to become an equal partner, according to the Valdai report.
However, there are problems: Maslov echoed Nataliya Zaiser by saying that about 90% of the projects end in failure. In order to overcome this discord, the coordinating role of the state is needed, which, together with the private business, should prepare a clear-cut roadmap and set targets for the development of various industries. The driver of economic cooperation, according to Maslov, can be private rather than top-down state initiatives.
“For us, Africa is not a terra incognita: the USSR actively worked there, having diplomatic relations with 35 countries. In general, there are no turns, reversals or zigzags in our policy. There is a consistent development of relations with African countries,” according to Oleg Ozerov from the Ministry of Foreign Affairs of the Russian Federation.
Signing bilateral agreements is not absolutely the best ultimate guarantee to the success of investment, however, it provides legal basis. As the situation develops and interest continues to rise, Russian investors have to allocate part of the financial budget for private consultancy services, as many foreign players do, and be prepared to learn more about the culture of investing in Africa.
According to expert policy narratives, Russian-African economic cooperation and partnerships continue to face challenges and obstacles, including inadequate knowledge of Africa’s investment landscape and lack of appreciable state support, while Moscow seems to increasingly prioritize anti-Western rhetoric and political confrontation in the context of the great power competition in Africa. African leaders largely prefer to play neutral positions and act in strategic balancing ways.
In this final summary, a thorough research shows Russian companies have been exiting Africa primarily due to geopolitical shifts, economic challenges, and changing investment climates. As a practical matter of facts, Russia’s decision would be in the right direction over allocating financial resources for specific projects by setting up a Development Fund under the African Partnership Department at Russia’s Foreign Ministry. This ultimate step offers the possibility to gain the status as a recognizable key player in the continent. And in this case, Russia’s investment partnerships and economic collaborations would become visible in the future across Africa.
source:pressenza
For More News And Analysis About South-Sudan Follow Africa-Press
