Alexander Firanchuk and Dmitry Kuznetsov on the prospects of expanding exports to the african continent

Experts of the International Trade Department of the Gaidar Institute -- Alexander Firanchuk, Senior Researcher and Dmitry Kuznetsov, Research Associate -- shared their views with RBC on the outlooks for the development of trade relations with Africa.
According to the data of the RF Federal Customs Service (FCS), Africa has become a higher priority export destination for Russia than North and South America since 2023. Russian exports to Africa increased by 43% in 2023, while exports to the Americas decreased by 40%. As Dmitry Kuznetsov has pointed out, Russia’s most important trading partners are located in the north of the African continent, which is geographically much closer than the countries of America and there are no unfriendly countries on the continent. The share of African countries in the Russian trade turnover (4.2% in exports and 1.2% in imports according to the data for January-February 2024) generally corresponds to the contribution of the African continent to the global economy and trade (less than 3 %), says Alexander Firanchuk. Since the spring of 2022, exports to the United States have decreased by about six-fold and this substantiated a decline in the importance of the entire Americas region, Alexander Firanchuk notes. According to the expert, in Russian exports to North and South America the United States used to account for more than half of the supplies until 2022. According to Dmitry Kuznetsov, the redirection of Russian exports to the markets of neutral countries of the American region was rather limited and could not make up for a considerable drop in exports to the United States. Russia’s main export goods to African countries traditionally included wheat, petrochemicals, chemical products and machinery and equipment, says Dmitry Kuznetsov. “As seen from indirect data, this list did not undergo any significant changes in 2022–2023,” the expert notes. In addition, in 2023 the exports of Russian oil products to Africa almost doubled, and wheat supplies increased considerably, as well, Dmitry Kuznetsov notes. “Also, exports of machinery and equipment and chemical goods remained strong, but did not demonstrate impressive growth rates,” Dmitry Kuznetsov added. However, Alexander Firanchuk emphasized the following: the prevalence of raw materials in Russian exports leads to the fact that value volumes are volatile owing to price fluctuations, and the geographical pattern of exports is quite flexible because raw materials can be quite easily rechanneled to other markets. In 2023, there was actually a considerable increase in petrochemicals supplies to African markets (but also to Latin American countries). However, further dynamics in these exports are difficult to predict, as Russian exporters can easily switch over to other markets in case of a change in the market or political situation, the expert noted. “The supplies of Russian food (grain) to the markets of African countries seem more stable. No considerable changes are expected in this part of Russian exports, especially considering the fact that grain supplies are not subject to sanctions,” Alexander Firanchuk notes. On the other hand, the expert regards the prospects for Russian equipment supplies (including weapons) to African countries, which were important buyers in previous years, as relatively vague. At present, Russia's share in the overall trade of African countries is equal to about 3%. According to Dmitry Kuznetsov, this share can double by 2030 under the most favorable circumstances, but the target value of 4%–5% looks more realistic. Specifically, as the economies of African countries grow, the pattern of their imports will be increasingly shifting towards consumer industrial goods, however, on these markets it is still more difficult for Russian manufacturers to compete, the expert explains. According to Alexander Firanchuk, the trade imbalance (in addition to known problems related with infrastructure and institutions) is the main constraint on expanding the presence on the African continent. “The continent has little to offer the Russian economy, except for fruits and coffee,” Alexander Firanchuk said. As a result, African partners receive little money from their exports to Russia and this, along with restrictions on the use of reserve currencies, can lead to the need for constant lending to these partners, untimely payments for goods or simply delays in payments, the expert summed it up.