The establishment of a joint financial institution will pave the way for broader cooperation between Russia and the West African country.
Burkina Faso, in West Africa, a member of the African Continental Free Trade Area (AfCFTA), has suggested creating a joint bank with Russia to facilitate financial transactions between the two countries and promote trade.
Russia is “determined to continue building a strategic partnership” with African nations, while multiple Russian state-owned and private companies are already actively investing on the continent.
The proposal is a logical one, and it should be noted that the Burkina Faso proposal is for the creation of a pan-African policy and trade bank, not a bilateral Burkina Faso-Russia bank. Africa is becoming more centralized, with the AfCFTA agreement adding value to investors as it has eliminated intra-African tariffs on goods transit between African nations. With a huge African domestic market, low labour costs and improving infrastructure, there is growing awareness that Africa is developing, albeit in patches, as a manufacturing, export, and domestic market.
What is missing is a viable pan-African trading bank, what exists have tended to be under-capitalized and subject to local market restrictions. Trade tends to be arranged via regional national banks where the financial regulations in place can make it hard to take money out of the country.
The way ahead with the Burkina Faso proposal will probably be up for discussion with China and other related BRICS+, Eurasian and Middle Eastern partners. India would also be interested in participation in such a project. A pan-African bank, based in Africa with a collective African equity membership with additional trade finance provided by China, Russia, the UAE, India, and offshore investment via Mauritius as a tax haven would appear to be a logical development.