«The higher the risk the greater the return on investment»: the memorable first economic forum Russia — Africa

«The higher the risk the greater the return on investment»: what would you remember from the first economic forum of Russia — Africacanada link
20:23

Elena Zibrova
Thursday, October 24, ended the first economic forum Russia — Africa. Delegations from 54 countries of the African continent have discussed with Russian representatives of business and government investment activity and the increase of the turnover. What decisions were taken at the summit at RT.

  • RIA Novosti
  • © Ilya Pitalev

In Soviet times, Russia has actively helped countries in Africa, but this assistance was based on ideology. In 90-e years Russia, according to forum participants, «arose and went» from the continent. And only now the government is ready to cooperate with the region, and on mutually beneficial market conditions. And this is understandable: according to experts, by 2050 the combined GDP of African countries will reach $29 trillion. In this vein, the participants of the two-day forum «Russia — Africa» discussed new opportunities in the financial and economic cooperation with Africa.

The head of VTB Andrey Kostin said that some African countries, the sanctions pressure, but the region is very developed FINTECH. For example, the Kenyan system of quick payments is considered one of the best in the world. The top Manager of the state Bank also stressed the need for the expansion of non-dollar payments. On the joint construction of their own monetary infrastructure, said the Minister for integration and macroeconomics of the Eurasian economic Commission Sergei Glazyev.

However, Russia has already achieved success in working with the continent. President Vladimir Putin stressed that in five years the trade turnover of our country and African States has increased twice and exceeded $20 billion, Russia is among the ten countries — suppliers of food to the region. Thus, the volume of agricultural supplies (over $25 billion) exceeds the amount of arms deliveries ($15 billion).

The main statement of the head of the state has become write-offs by Russia of debts of some African countries in the amount of $20 billion.

Resources to $4 trillion

Now the largest project of Russia in Africa is the construction of nuclear power plants in Egypt, which, by calculations of experts of «Rosatom» will create 13 thousand new jobs and will increase GDP of the Arab Republic tens of millions of dollars.

However, Russia is working with the States of the continent and in the Humanities. The head of Rossotrudnichestvo Eleonora Mitrofanova said that the amount of humanitarian aid to Africa is now about $1 billion.

But even this is not enough, according to some forum members. Thus, the Chairman of the Supervisory Council of the International Agency of independent development Konstantin Malofeev delivered a report on «the Conspiracy against Africa: breaking the chains of colonialism». He said that the untapped resources of Africa is estimated at $4 trillion. One of the attractive assets for investors Malofeev believes the sovereign debt of Africa. Agrees with him Director General of the African Finance Corporation investment portfolio which is estimated at $6 billion, Camila Subaru, confirming that Africa is ready to work with risky projects, because the States of the continent low interest rates by default.

In conversation with RT, the Director of the Institute of Asian and African studies Irina Abramova explained that when investors construct their portfolio, it needs to be varied. «There is one General rule: the higher the risk, the higher the value and return on investment. Here is the task of the investor is to understand investments, including in risky securities,» — said Abramov.

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In turn, Malofeev also believes that the priority for investors should be the infrastructure. For example, only 44% of the continent’s population have access to electricity. In Africa South of the Sahara, excluding South Africa, the density of Railways is 27 times lower than in India, and 50 times — than in China.

But the problem is not only the lack of Railways, but also in the high cost of transportation. For example, the founder of Africa Development Solutions Samba Bathily told that the cost of shipping from the capital of Senegal Dakar to the Mali capital of Bamako (about 1400 km) is $3 thousand, while in France for this distance is necessary to pay $600.

One of the main problems in building successful African economies rests on the high interest rates (in Uganda, it is 27%) and corruption, said Bathily.

However, the head of the Ministry Maxim Oreshkin in an interview with RT was optimistic about the prospects for cooperation with Africa.

«Russia today has the competencies that are needed by Africa. We are talking about such areas as human capital development, health, education, digital technology, infrastructure and energy. Thus, we have what you are interested in African countries,» said Oreshkin.

As the Minister said, in joint projects with African countries, Moscow is trying to achieve mutual benefits for all parties of the partnership. Assessment Oreshkin, this business approach distinguishes Russia from other competitors in the market.

«It is important that as we build relationships with our African partners. We do not impose their services and not trying to sell to. We are working to implement joint projects that will contribute to the development and improvement of the quality of life in Africa», — said Maxim Oreshkin.

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