SCO and BRICS: SCO and BRICS: Russia - South Africa: Prospects for Cooperation
19 May 2021

Trade and economic cooperation between Russia and the Republic of South Africa has been developing quite dynamically in recent years, but taking into consideration the economic cooperation between South Africa and Western countries and China, the quantitative indicators of trade turnover look rather modest. At the same time, the potential for trade and economic relations development as well as investment projects implementation between our countries is very high.

Cooperation between the two countries is carried out in such areas as the development of natural resources, energy, industry, transport, agriculture, and the humanitarian sphere. Within the framework of the first Russia-Africa Economic Forum, held in Sochi in 2019, the President of the RF Vladimir Putin met with the President of South Africa Cyril Ramaphosa, where the RF President emphasized that Russia paid special attention to the development of relations with South Africa. Despite the fact that the trade between Russia and South Africa has reached almost a billion dollars, both parties are interested in developing progressive cooperation 

During the Forum, priority spheres of economic cooperation were identified: energy, including renewable energy sources; infrastructure development, especially the construction of railways and housing; mining and processing of minerals; agriculture, digital technologies, medicine, science and education. Taking into account the mutual interest of the parties, it was decided to hold the Forum on a regular basis 

According to the Federal Customs Service of the RF, in January-September 2020, trade turnover between the countries amounted to 794.8 million USD that is 9.12% less against the same period of 2019. The RF exports to South Africa amounted to 247.71 million USD (+ 7.47% by 2019). The main share of Russian exports fell on food and agricultural products - 45.05%, mineral products - 8.41%, chemical products - 25.12%. 

Russian imports from South Africa in the first 9 months of this year amounted to 547.09 million USD (-15.06% by 2019). The main share of Russian imports fell on food and agricultural products - 50.58%, mineral products - 20.56 %, machinery and equipment - 15.24%. South Africa occupied 64th place in terms of its share in the RF trade turnover.

During the BRICS Business Forum recently held at the RF Chamber of Commerce and Industry, it was noted that the crisis had a significant impact on the South African economy. GDP declined by 16% in the second quarter of 2020 (compared to 2019). The expected decline in economic growth rates in 2021 is 6%, the budget deficit in 2020 will be 13.3%. The Government of the Republic of South Africa adopted a state economic recovery plan. Today South Africa is open for investment, economic indicators and business activity indices are improving.

South Africa is practically the only state on the African continent with which Russia makes trade in non-raw goods. In the structure of Russian exports to the BRICS countries, the largest share of non-raw goods falls on Brazil (86%) and South Africa (93%). 

In the first half of 2020, Russia tripled the exports of grain to South Africa, as well as began deliveries of deeply processed products, in particular, flour, drinks and disinfectants. In the current economic situation, the volume of Russian supplies of cosmetics to South Africa has significantly increased, compared to the first half of 2019, the growth was 540%, the supply of soap and detergents doubled. 

Today Russia is implementing a number of joint projects on the territory of South Africa. In 2017, a ground station of the GLONASS system «Sazhen-TM-BIS» was put into operation in South Africa in the town of Krugersdorp by the «Roscosmos» state corporation. In 2021, a Russian space control station will be installed in South Africa; by the end of the year, a ground-based complex of an automated warning system for dangerous situations in near-Earth space will be put into operation.

In 2018, the Russian-South African Cooperation Program was signed in the field of exploration, production, processing, and enrichment of minerals for the period up to 2025. A separate «roadmap» for bilateral cooperation on platinum group metals has been adopted. 

Today, several large Russian companies cooperate with South Africa in the field of mineral resource complex. Thus «Renova Group of Companies» is engaged in the extraction of manganese ore as well as the production of manganese and ferroalloys. Together with its South African partners, the company plans to invest about 16.5 billion Rbls in African projects. 

Most part of the investments - about 12.7 billion Rbls will be directed to the construction of a coal-fired power plant for the «Transalloys» ferroalloy plant, where «Renova» is also a shareholder. At the «Transalloys» refinery a project of a new oxygen converter to the value of 20 million USD is implementing The company plans to invest another 2.5 billion Rbls in the South African manganese mining company UMK. UMK is the 5th largest mine in the world and the 2nd in South Africa.

JSC «Rosgeologia» signed an agreement with oil and gas state corporation «Petro SA» on cooperation in the exploration and development of hydrocarbons on the shelf of South Africa. «Polymetall» group is currently negotiating with a potential partner from South Africa to develop the Viksha platinoid deposit in Karelia. The name of the partner has not yet been disclosed, the implementation of the project is temporarily complicated due to the closure of the borders. 

«Transmashholding» has built a plant in South Africa and is currently supplying locomotives. For the sale of fertilizers to African countries, the UFCL company was established - the official distributor of «Uralkhem» ​​and «Uralkaliy» mineral fertilizers. Priority countries for cooperation are Nigeria, South Africa, Ghana, Tanzania, Cameroon, Ethiopia and Senegal.

«Tech Global» at the Russia - Africa forum has signed an agreement for the implementation of ICT projects between Russia and Africa, two of which are being implemented in South Africa: in the field of using drones to control ground infrastructure and in the field of employee working time monitoring. 

In September 2020, «Rosatom» State Corporation signed a Memorandum of Understanding with the African Commission on Nuclear Energy (AFCONE) in order to develop and strengthen mutually beneficial cooperation in the peaceful use of nuclear energy. In July 2020, «Rosatom» announced its decision to accelerate the implementation of mobile water treatment plants of JSC «Science and Innovations». Thus, the company will provide water treatment technologies to regions of South Africa suffering from water supply problems. 

The Russian Foundation for Basic Research and the National Science Foundation of South Africa jointly finance 16 projects in the field of astronomy and space technologies, high performance computing, IT, renewable energy, agriculture; humanities and social sciences. 

In accordance with the 2014 bilateral intergovernmental agreement on scientific and technical cooperation, a joint Russian-South African commission on scientific and technical cooperation was established, whose task was to coordinate issues of interaction between the parties in nuclear research, the development of medical and supercomputer technologies. 

At a meeting of the Commission held in the summer, agreements were reached on the preparation of a new edition of the Agreement on Cooperation between the Russian Academy of Sciences and the South African Academy of Sciences, as well as on the study of opportunities for South Africa to participate in the big Russian research projects. The organization of the first bilateral projects competition is planned for the first half of 2021. 

Currently, the programs of Russia and South Africa are being successfully implemented through the Research Computing Center of the Moscow State University named after M.V. Lomonosov and the Joint Institute for Nuclear Research (Dubna). In particular, works on digital modeling of microbiological processes is carried out by researchers of two countries on the Russian supercomputer "Lomonosov-2" in order to develop means to combat a new type of coronavirus. 

In August 2020, the Russian Direct Investment Fund announced the start of supplies to South Africa of the «Afavir» medicine for COVID-19. South Africa has become one of twenty countries to which the supply of Russian medicine has begun. The agreement provides for the supply of at least 150 thousand medicine packaging.

Cooperation between Russia and South Africa has great potential.

A distinctive feature of Russian-South African political contacts is a regular and trusting dialogue at the highest level. An active and regular dialogue between the foreign ministries contributes to the coordination of the actions of the two countries in the international arena - in the formats of the UN, BRICS and the G20. The proximity of the positions of the Russian Federation and South Africa on the formation of a world order based on the principles of multipolarity and respect for international law, the settlement of regional conflicts and the fight against terrorism create a solid foundation for the progressive development of further cooperation in the economy and trade.

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