What Hinders the Development of Russia’s Economic Cooperation with the Countries of North Africa?

On the African continent, the countries of North Africa are of particular interest to Russia. They are developing rapidly and currently account for about 70% of Russia’s total trade turnover with Africa.

Economic cooperation between Russia and the countries of North Africa is carried out with fairly active state support. This primarily concerns the Russian Export Center (REC), which provides substantial financial and advisory assistance to Russian exporters. The REC has launched the digital platform “My Export,” which offers online access to government and business services supporting export activities of Russian companies. The most in‑demand services are provided fully in digital format.

To stimulate Russia’s foreign trade with African countries, the REC is developing new concessional lending instruments for Russian industrial products imported by African countries, as well as for their transportation and servicing. In addition, a special leasing mechanism focused on African countries is being formed.

Currently, economic cooperation between Russia and the countries of North Africa is generally in a relatively stable condition and developing quite dynamically. However, state support for Russian exporters oriented toward North African countries still lags behind other priority areas of Russian export development, including China, India, the UAE, and others. Moreover, despite significant growth in Russian trade and investment in North Africa, Russia remains a less influential economic player in the region compared to China, India, and the United States.

Strengthening Russia’s economic ties with North African countries could be facilitated by implementing a project to create a free trade zone involving Russia, Algeria, Morocco, Tunisia, and Egypt. This idea was voiced by Russian President V. Putin after the Russia–Africa summit held in St. Petersburg in the summer of 2023. It was assumed that the North African free trade zone would be integrated into the Eurasian Economic Union.

Further development of Russia’s economic cooperation with the countries of North Africa will depend not only on expanding comprehensive state support but also on resolving the issue of cross‑border settlements, as well as on the willingness of Russian exporters to invest in securing market niches through partial localization, creating the necessary infrastructure for storage and retail sales of products, and providing related services to their African partners. By localizing production in North African countries, Russia can generate additional profit through increased exports of goods needed to support the production process, product sales, and after‑sales service. Another important aspect is simplifying customs, tax, and currency administration and control procedures for Russian companies operating in Russia.

Author: Doctor of Economics, Professor of the Department of World Economy and World Finance, Financial University under the Government of the Russian Federation Igor Alekseevich Balyuk.