Saturday, August 12, 2023

what are the potential challenges of establishing a free trade zone between Russia and Africa?

 Establishing a free trade zone between Russia and Africa could face several potential challenges. Here are some of them:

  1. Political instability in Africa: Many African countries suffer from political instability, armed conflicts, and civil wars, which can disrupt trade and investment. For example, the war in Ukraine has disrupted Africa's promising recovery from the COVID-19 pandemic by raising food and fuel prices, disrupting trade of goods and services, tightening the fiscal space, constraining green transitions, and reducing the flow of development finance in the continent
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  2. Limited foreign direct investment from Russia: Russia accounts for just 1 percent of foreign direct investment into Africa, and its trade with Africa represents only 5 percent of the European Union's total trade with Africa and no more than 6 percent of China's total
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     This lopsided trade relationship could discourage Russia from investing more in Africa, especially in countries with high political risks.
  3. Lopsided trade relationship: Africa imports five times more than it exports to Russia, which has produced a $12bn trade imbalance. Russia pledged in 2019 to double its trade with Africa in five years but has failed to achieve its target
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     This could lead to a situation where African countries become overly dependent on Russian imports, which could harm their domestic industries and economic development.
  4. Barriers to trade with Russia: The sanctions imposed on Russia by Western countries will further exacerbate commercial flows between Russia and Africa due to the closure of vital port operations in the Black Sea
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     This could increase the cost of trade and reduce the volume of goods exchanged between Russia and Africa. Additionally, some African countries rely heavily on critical imports from Russia, such as wheat, fertilizers, and steel. A disruption in these imports could adversely impact African countries
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In conclusion, while a free trade zone between Russia and Africa could bring significant benefits to both parties, it could also face several potential challenges, such as political instability, limited foreign direct investment, a lopsided trade relationship, and barriers to trade with Russia.

Citations:
[1] https://www.atalayar.com/en/articulo/economy-and-business/russia-includes-morocco-in-north-african-free-trade-zone-project/20230807141634189233.html
[2] https://www.un.org/africarenewal/magazine/may-2022/how-russia-ukraine-conflict%C2%A0impacts-africa
[3] https://www.africanews.com/2023/07/27/russias-trade-with-africa-increased-by-35-in-the-first-half-of-2023/
[4] https://carnegieendowment.org/2023/02/28/russia-s-growing-footprint-in-africa-s-sahel-region-pub-89135
[5] https://www.russia-briefing.com/news/a-2023-russia-african-trade-summary.html/
[6] https://carnegieendowment.org/politika/90294
[7] https://news.un.org/en/story/2023/05/1137017
[8] http://en.kremlin.ru/events/president/news/71719
[9] https://www.russia-briefing.com/news/russia-africa-2023-24-trade-and-development-prospects.html/
[10] https://www.un.org/africarenewal/magazine/february-2023/one-year-later-impact-russian-conflict-ukraine-africa
[11] https://www.aljazeera.com/opinions/2023/7/27/africa-beware-of-russias-money-promises
[12] https://www.usip.org/publications/2022/07/counter-russias-aggression-invest-africa
[13] http://country.eiu.com/article.aspx?Country=Egypt&articleid=1561950939&subtopic=Ope_2&topic=Economy
[14] https://www.usip.org/publications/2022/06/russias-war-ukraine-taking-toll-africa
[15] https://africacenter.org/spotlight/decoding-russia-economic-engagements-africa/
[16] https://www.gisreportsonline.com/r/africas-window-of-opportunity-on-trade/

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