In late October, the city of Sochi on Russia’s Black Sea coast hosted a successful Russia-Africa Economic Forum. For the first time in the history of Russian-African relations, the summit brought together such an impressive number of high-level officials from the African Continent.
Mutual Russian-African prospects in the fields of energy, including renewable energy, and infrastructure were, of course, in focus; but also in the limelight were opportunities for Russia’s high technology to make inroads into Africa’s mineral & mining, digital, medical and other advanced sectors.
Marchmont Capital Partners Founder and CEO Kendrick D. White participated in the Forum as guest. A business-minded pragmatic person, he found the event to be very valuable:
“My general impression of the forum was very positive. The African nations have a certain history with former colonial powers, and they have a history with Chinese investors bringing in infrastructure which may or may not be really needed for the population. Russia however takes a different position, and I highly appreciate this. I think that Russia wants to offer itself as a partner for the development of the nations without any political requirements to follow some “historical communism” — but rather “just do business together”.
This message was very well received; the audience members and session speakers and dignitaries were highly positive about Russian mineral and mining equipment and farming equipment, and forming partnerships with universities. I think it’s a very good strategic development for Russia and for the African nations.”
At the Russia-Africa Forum
Kendrick White was invited to participate in the Forum by one of the event’s co-organizers, the Investment Russia not-for-profit. Investment Russia provides a platform for stakeholders to study the best practices in investor relations and propagate those across the country. The organization seeks to establish dialog between entrepreneurs and authorities, and to look for and attract investors. The project is aimed at helping solve such deep-rooted problems as the lack of comprehensive investor interaction mechanisms, poor awareness of how investors could find projects and vice versa, legal hurdles, etc. To address the issues, Investment Russia is working to build bridges for government officials at all levels, business communities, companies, and individual stakeholders across Russia’s regions.
One of the organization’s most important goals is improvement of the investment climate in Russia. Investment Russia Vice President Dmitry Veselov shared with Marchmont his outlook on how the global investor could be encouraged to look favorably at Russia—especially after the Michael Calvey case, minority shareholder rights breaches and other developments that scared investors:
“Developments that spook investors occur always and across the planet. In this country, it’s the specific nature of power structures and the ruling class that determines the conduct. Such developments do undoubtedly dent the image of Russia for the global investors. Nonetheless, our U.S. colleagues we inked a cooperation agreement with at the Russia-Africa Forum communicated to us American investors’ willingness to invest in Russia despite sanctions and the above-mentioned negative occurrences. Unfortunately, the investors have very few means and ways to actually do so. Our organization offers a venue to build unofficial channels of public diplomacy in the field of investment, an activity international investors are growing increasingly interested in.
There’s a three-pronged strategy to encourage the global investor to look favorably at Russia, I believe. For example, a systemic effort to promote Russia’s positive image and establish dialog with everyone who wants to interact with Russia would help and be on friendly terms with Russia. There are many areas with the potential and dynamics for market growth; and a return on investment which is higher than on any Western or even Asian market, a key criterion of the investor, should not be overlooked. It’s a range of measures, including public diplomacy we’re actively involved in, that could help build trust with international investors and help them safely invest in Russia.
Another way of improving the situation is stirring up the willingness of the authorities of a certain Russian region to attract investors. If the governor there is personally on fire for new investments in his region, and has brought together a team of like-minded professionals to painstakingly work on attracting investors, there will be opportunities for safe entry into the region, and investors will come.
Finally, I think what is imperative here is improvement of legislative and judicial practices for non-resident shareholder rights protection. It’s mandatory to at least protect minority stakes by enabling the investors, if a calamitous situation occurs, to sell their shares to other shareholders at par, thus returning their investments with minimal loss possible. This should be stipulated in a corporate agreement, and in case litigation starts, such shareholders’ cases must be heard on a priority basis.”
Kendrick White signs an agreement with Investment Russia
Both Marchmont and Investment Russia believe Russian high tech developers could benefit from the outcome of the Russia-Africa Forum as much as politicians could.
“As I see, African nations want to develop their own indigenous companies in mineral & mining, in agriculture and technology to be able to effectively compete against foreign companies who’ve already been operating for decades there. In this regard, they need technology. They need agricultural technology, biotechnology, artificial intelligence technology; they need a new generation of mineral and mining equipment incorporating automation and robotics.
Russia is strong in all of these areas; and if Russia’s ready to work in partnership with the African nations who need strong long-term partners, I feel this is a hugely mutually beneficial relations which can develop over the next decades and help Africa achieve the tremendous growth potential which it’s had for a very long time but I now feel is within the African nations’ grasp—in case they choose to work in partnership with Russia.”
“Russia traditionally has advanced technologies and R&D solutions in the defense, energy, extracting, education, medical, and other science-intensive sectors. In addition, Russia stands a good chance of developing telecommunications, mobile networks and broadband Internet access in Africa; other areas may include health care, payment systems, agriculture, and environmental protection.
Russian entrepreneurs get increasingly interested in African market opportunities, looking for ways of establishing joint ventures. In fact, Africa is the only undiscovered market on the planet and, if we look at impressive GDP growth data in some of the African nations, this market is likely to burgeon in the next couple decades. We’re currently collecting data from African countries on their investment and trading opportunities and from Russian companies regarding their Africa-focused wish lists. There’s an important thing to note, though. The Russian investors will enter Africa only if investment activity is safe there and a money return is fully guaranteed. This can only be achieved if both Russian and African government officials guarantee full support. We in Investment Russia believe such relationships should be fostered by employing all possible communication channels, hosting business missions to African countries, and introducing Russians directly to their African business and government vis-à-vis.”