Address by H.E. Mr. Victor I. Sibilev, Ambassador Extraordinary and Plenipotentiary of Russia to Botswana at Russian-Botswana Business Seminar, 23.11.2015
Esteemed representatives the Ministry of Foreign Affairs and International Cooperation,
Heads of parastatal and business entities here present,
Captains of Industry,
Today we are taking part in a very important event that will be marked in the history of bilateral relations between Russia and Botswana. At last we managed to bring together the people who are deeply interested in developing economic ties between Russia and Botswana. The forum we are attending today may not be very large, but it is one of the first steps that one day may elevate our economic cooperation to a new level. I would like to thank Botswana Trade and Investment Centre for their valued contribution in organizing the event and the Chamber of Trade and Industry of the Russian Federation for their assistance in inviting Russian participants. I also express my gratitude to all those who managed to come here today. Some of our guests have travelled a very long distance but I sincerely believe that it was not in vain.
This forum was spurred by the agreements reached at the political consultations between the Minister of Foreign Affairs and International Cooperation of Botswana Pelonomi Venson-Moitoi and the Russian Deputy Foreign Minister and Presidential Envoy for Africa and the Middle East Mikhail Bogdanov in March this year. The participants agreed to intensify trade and investment cooperation, which can be achieved, inter alia, via organizing business missions. We hope that the next mission will take place in Russia and can coincide with the visit of a Botswana high-level governmental delegation that might take place in the near future.
However strange it may seem, the Russian and Botswana economies have a lot in common. Both of them are over-reliant on export commodities. In the case of Russia, these are, primarily, oil and gas. In the case of Botswana – diamonds and base metals. And recently both our countries have experienced economic slowdown.
The Russian economy continues to adjust to the 2014 turmoil amid a tense geopolitical context marked by ongoing sanctions imposed by the US and its European allies. These sanctions illegal in terms of international law as they have not been authorized by the Security Council of the United Nations. Oil and gas prices remained low through the first half of 2015, further underscoring Russia’s dependence on volatile global commodity markets. However the weakening of the Russian national currency created a price advantage for some industries encouraging investment in a certain sectors. Besides, economic hardships and the regime of sanctions may give an impetus to the diversification of Russia’s economy and develop import substitution industries. This is our main task for the foreseeable future.
As one might see, it goes in line with Economic Stimulus Package announced recently by the President of Botswana Seretse Khama Ian Khama. The leadership of Botswana want to see the country more stable, more industrialized and less dependent on trading partners across the oceans. I think Russia and Botswana can help each other in this regard through setting up mutually beneficial business partnerships. We deem important to focus on ways to strengthen cooperation in the area of trade and economy. In recent years, the Embassy facilitated participation of Botswana delegations in a number of bilateral and multilateral fora.
In 2011 representatives of Botswana Export Development and Investment Agency visited Moscow for talks with Chamber of Trade and Industry of Russia. In 2012 BEDIA took part in Business Forum “Russia – Africa”, which was held in the framework of the joint initiative of Special Representative of the Russian President on cooperation with African countries and the late Prime Minister of Ethiopia Mr. M.Zenawi. In 2013 Assistant Minister of Trade and Industry Mr. K.Rakhudu participated in the Russia – Africa Business Forum “Ural – Africa” in Ekaterinburg. This time we managed to attract not only governmental representatives but also the business community itself, which reflects a very positive development.
Trade and economic cooperation between Russia and Botswana is based on the Trade Agreement of 1987 and the Agreement on Economic and Technical Cooperation of 1988. The Convention between the Government of the Republic of Botswana and the Government of the Russian Federation for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income was signed on April 8, 2003. There is also an initiative to work out an agreement on mutual protection of investments.
Speaking about commercial ties between Russia and Botswana, one has to admit that there is yet a large potential to be realized. Russia supplies to Botswana mainly industrial equipment, television cameras and other devices. At the same time, the volume of imports from Botswana to Russia is very small. Nevertheless, this situation can change for the better. In 2012 Russia officially joined the World Trade Organization to become its 156th member (in a chronological order). This lays a solid legal basis for the development of trade of Russia with foreign countries including Botswana. Both countries are open to the outside world and consistently follow the path of integration.
Botswana is a member of Southern African development Community, Sothern African Customs Union. Russia, on its part, is a founding member of The Eurasian Economic Union, which was established in 2014 to create an integrated single market of 183 million people and a gross domestic product of over 4 trillion U.S. dollars. The multilateral CIS Free Trade Zone Agreement established a free trade area between the member states of the Eurasian Economic Union, Ukraine, Uzbekistan and Moldova. The Union and its member states have furthermore signed an agreement with Vietnam. Given the globalization trends prevailing in the modern economy, we should expect the growth of commercial ties between countries, especially middle-income countries that are rapidly industrializing.
Investment cooperation between Russia and Botswana has been more fruitful. Until recently, the main Russian investment partner of Botswana was OJSC Norilsk Nickel. In the period from 2007 till 2015, industrial activities of the company in the country focused on the mining and processing enterprise «Tati Nickel Mining Company» (TNMC), which was co-owned with the Government of Botswana. In October 2014, it was announced that the capital of "Norilsk Nickel" in Africa would be sold to BCL, a mining company owned by the Botswana government. At the same time, under the agreement with BCL, all nickel matte still will be sent for processing to the refining complex Harjavalta in Finland, which belongs to Norilsk Nickel.
Given the leading positions of Russia and Botswana in the extraction and production of diamonds, there are broad prospects for bilateral cooperation through the Joint-Stock Company "Alrosa". The Russian corporation has been working with the British diamond company «Botswana Diamonds» through a joint venture for the second year now. According to the partnership agreement, Alrosa is conducting extensive diamond exploration near Orapa, with ground samples showing a geological anomaly. It may be indicative of substantial diamond deposits in the area. Alrosa obtained a license from the Government of Botswana for exploration works in new districts up to September, 2018.
After sorting, aggregation and marketing operations of De Beers were transferred from London to Gaborone, there has been a significant increase of interest to Botswana as one of the centers of the global diamond trade. Production Association "Crystal" from the Russian city of Smolensk, which specializes in diamond polishing, regularly participates in Gaborone rough diamonds sales. Recently, "Crystal" extended its sightholder agreement with De Beers for the period 2015 - 2018.
Over the past year, a number of Russian companies from various regions were studying the possibility of investing into the local economy or supplying their products to the Botswana market. In this regard, the Embassy was addressed by such companies as Gazprombank Global Resources, Ecolab, Group of companies "Trust", "Solarus Energy" and others. Representatives of "Gazprombank" visited Gaborone in March this year and held several meetings with the Embassy’s assistance including those in the Ministry of Finance and Development Planning, Bank of Botswana and BITC. Representatives of Botswana private sector also demonstrate their interest in establishing ties with partners in Russia.
Taking into consideration impressive results Botswana has achieved on its path to economic prosperity and social well-being, it comes as no surprise that the country is attracting an increasing number of investors from all over the world. As for now, Russian companies find it hard to compete with foreign business entities. The scarce presence of Russian investors in the country can probably be explained by factors such as shortage of information, lack of convenient transportation and established patterns of interaction between the two countries. Obviously, it is necessary to raise awareness among Russian business people about investment opportunities in Botswana and enhance interest to the local market. Here we remain hopeful that our local partners will actively engage in this process in terms of sharing information and fostering direct links between the private sector of Russia and Botswana. In our view, intensification of business cooperation can be expected in such areas as mining, energy, transport infrastructure, banking and tourism.
Ladies and gentlemen, thank you for your attention. May you have interesting and fruitful discussions during the Russian-Botswana business forum.