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Russian Investment in Africa: Results of the Sochi Summit

Article from AFRIC Editorial
The first Russia-Africa summit, held on October 23 and 24, 2019 in Sochi, marked a definite evolution in the progress of cooperation between the country of Tsar and those of the old continent. Alongside the 41 leaders present and more than 3,000 participants, Russian Presidents Vladimir Putin and Egyptian President Abdel Fattah Al-Sissi, the current President of the African Union, had the honour of opening the ceremony and leading the debates. While this unprecedented Summit has had the merit of consolidating 60 years of Russian-African relations, it has also resulted to many partnership contracts, to the point where the Egyptian president has qualified Russia as a reliable partner for the continent. Among these benefits, is the signing of several investment contracts between the host country and the African countries invited to the summit.

Ivory Coast of Alassane Ouattara, Benin of Patrice Talon, Burkina Faso of Roch Marc Christian Kaboré, Rwanda of Paul Kagamé or South Africa of Cyril Ramaphosa, were all able to negotiate important contracts with Russian investors. The main aspects discussed were industrial infrastructure, transport and logistics, energy, food, pharmaceutical and other important areas of development. However, two African countries derived the greatest benefits from this Summit.

Despite the noticeable absence King Mohammed VI, ruler of Morocco, the country was still able to sign the first major contract of the Summit. The North African country which is a major importer of Russian-made weapons was able to negotiate the construction of a petrochemical complex on its territory. For its part, the Democratic Republic of Congo, through her President, Felix Tshisekedi, left the city of Sochi with several important contracts including a lucrative over 500 million USD railway project.

DRC: the guarantee of the rehabilitation of the railway sector

Being a huge country of more than 2.3 million km2, the DRC has but a few passable roads and a 5000km long railway network, which was built during the colonial era. This railway network, broken into 4 disconnected zones, is in dire need of rehabilitation and as a result has led to several derailments, claiming the lives of many.  Following the realization of the “win-win” contract, the DRC railway network will be rehabilitated by the Russian company RJD. Contrary to the assertions of Thierry Vircoulon, a researcher for IFRI (Institut Français des Relations Internationales” specialized in specialist of Central Africa who paints this agreement totally “black”, President Tshisekedi sees it as the promotion of a new partnership which will lead to the modernization of railway the infrastructure of the DRC.

The signing of a memorandum of understanding

To materialize the discussions on the contributions that the new Russian cooperation with African countries will have in the continent, several contracts were signed. On the side-lines of this meeting, which brought together several African leaders, the Congolese government, one of the big winners from the meeting, in addition to the arms contracts signed with the Russian authorities, signed a “memorandum of understanding” with a Russian railway company, the RJD. It was President Tshisekedi’s spokesman, Kasongo Mwema Yamba, who announced it via Twitter. According to the announcement, the $500 million contract will help to completely reform the Congolese railway system. This will then allow several innovations including the installation of a locomotive assembly plant in DRC and staff training.

The benefits of signing the agreement with the Russian railway company RJD are numerous for the DRC; the first being the establishment of a locomotive assembly factory to be installed in the DRC. President Tshisekedi’s spokesman, Kasongo Mwema, made this very clear that this contract is not only aimed at the rehabilitation and the construction of the railway, but also for the training of the personnel. While such contracts, generally deal only with the mapped-out routes in the receiving countries, the stakes between Russia and DRC are different, this being installation of a locomotive assembly plant in the DRC an indicator of  success of such a contract. Such a factory will go a long way to solve the problems of unemployment in the country.

Such an initiative will have a very big impact on the financial situation on Congo’s national railway company which is as not doing very well at the moment, and on the economy of the whole country. For the more than 4,000 employees of the country’s railway company, such an agreement also promises to be accompanied by quality training that will ultimately facilitate the complete understanding of the management of this technology.

The eminent visit of a Russian delegation

At the opening of the Summit, the Russian authorities, who showed their ambition to double their exchanges with the continent within the next five years, also tried to make things more attractive by highlighting their respect for the principle of sovereignty of African states. In this light, the Russian President, Vladimir Putin, was keen to defend the USSR’s history of anti-colonial struggle, while reiterating the seriousness of the agreements that will be made during the Summit. To attest to the seriousness of the agreements signed between the parties, an official visit by the Russian authorities to Kinshasa was also announced by Kasongo Mwema. The Russian delegation was expected on November 10, in the capital Kinshasa, to finalize this partnership which will certainly give a boost to the obsolete Congolese railway network and the national railway company. In the end, everything leads us to believe that this is a mutually beneficial Russia-Africa partnership and more so for DRC which will be entitled to a complete modernization of its rail network.

Morocco: the signing of a project to build a petrochemical complex

For several countries of the continent, the first Russian-African summit held in Sochi was of immense value. Through her new offensive policy of investment and cooperation with Africa, Russia attracted the attention of many African leaders during the summit, advocating for an approach based on respect and sovereignty. Apart from DRC which signed an attractive project concerning the complete rehabilitation of its rail sector, Morocco also benefited for the summit, by negotiating the signing of a gigantic project for the construction of a petrochemical complex in Morocco.

A juicy contract

Evaluated at over two billion euros, this contract was signed between the Russian Development Bank and the Moroccan company MYA Energy, which was not known internationally until now. This contract was signed on Wednesday, October 23, 2019 by the CEO of MYA Energy, Moulay Youssef El Alaoui, the President of the Development Bank of the Russian Federation (VEB), Daniil Algulyan, and the Vice President of the Russian Export Center, Nikita Gusakov. Much more than the creation of a refinery, this project will above all help to create employment while bringing in a lot of modernization of refining equipment and the transfer of skills that are lacking in many African countries.

For the successful completion of this project, the expertise and the latest Russian technologies for the refining and storage of petroleum products will be greatly solicited as specified by an internal source. However, since in the end the development of this project will be destined to a total exploitation by the Moroccans by some, it was agreed that the realization of the refinery is carried out by the Moroccan company MYA Energy in partnership with various specialists from Russian in the field who will then provide the expertise, technology and equipment.

Reservations on feasibility

Despite the high expectations in terms of production, it is estimated that the refinery will be equipped with a refining capacity of 100,000 barrels per day at first phase and 200,000 barrels per day in its second phase. Morocco is keen to respect commitments taken at COP-22 that took place in Marrakech, by making sure that the terms of the project are environmentally friendly, so as to enable Morocco to contribute to the IMO 2020 regulation, which entails the reduction of sulphur emissions.

Despite the numerous advantages for the African continent portrayed by Russia in terms of opportunities that will come with the contracts which were signed at the Summit in Sochi, one must remain cautious because, like French researcher Thierry Vircoulon, many African researchers question Russia’s capacity to realize all these investments.

Article from AFRIC Editorial

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