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FTAs Between Russia & Africa Can Be 'Important Pillar' of BRICS Payment System: Zimbabwean Expert

18:29, 21 May 2024

Christina Glazkova

Writer / Editor

Russian Deputy Foreign Minister Mikhail Bogdanov recently said that a reconfiguration of the parameters and mechanisms of interaction with African countries is required due to Western sanctions against Russia. Echoing him, Russian Prime Minister Mikhail Mishustin announced Russia's plans to prepare free trade agreements (FTAs) with African nations.

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As free trade agreements will bolster commerce between Russia and Africa in their national currencies, they will also facilitate the establishment of a BRICS payment system, Zimbabwe's Dr. Tafadzwa Ruzive, a research fellow at South Africa's University of the Free State with a focus on BRICS financial markets, told Sputnik Africa.

"The free trade agreements will strengthen trade between Russia and African countries in each of their own currencies, so they don't have to [use] the US dollar to trade [...]. The free trade agreement will actually serve as an important pillar of the BRICS payment system that is being developed. [...] Once that payment system begins to develop, it needs to be supported by a free trade area. So, [FTAs will ensure that] the exchange rates between the countries are set and credit can be extended to countries to enable investment. [...] It's strategically important," Ruzive underscored.

Engaging with BRICS, or Russia in particular, as well as using the benefits of the African Continental Free Trade Area and the Pan-African Payment and Settlement System could help African countries overcome Western sanctions, the research fellow suggested.

Aside from benefits for BRICS, FTAs between Russia and Africa can facilitate formalization of the technology and raw material exchange and are essential for overcoming limitations imposed by the current world economic order, Ruzive argued.

"This is needed for both parties to move forward out of the current constraints that we have in the current world economic architecture. So there's an opportunity there," he said.

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The benefits of such agreements could also spread throughout the whole Global South, as they can decrease the cost of raw material extraction.

"Russia, coming into the Global South, is going to expedite the development of natural resources, especially gas and oil that are being found in the global sector, creating energy security, both for the Global South and adding trade partners [...]," Ruzive pointed out.

Lastly, the expert noted that the biggest advantage of FTAs will be the ability for Russia to bypass Western sanctions, which have already "backfired" on the West in the form of an increased inflation, which in turn led to increase in interest rates that caused problems in the housing sector.

"So that is critical [...] [and] strategical [that] FTAs between Russia and Africa [...] lend their way [so that] countries can sell and buy from each other comfortably without the need to [use] the US dollar system," Ruzive concluded.