By Hannah Edinger and Simon Schaefer
Among the BRICS members (Brazil, Russia, India, China and South Africa), Brazil enjoys the best reputation in Africa. This is chiefly due to the way in which the rapidly developing economy from South America markets its economic and political involvement on the African continent. Brazil refers frequently to its history and culture, which are closely entwined with Africa. A shared colonial past and cultural similarities link Brazil to the Portuguese-speaking countries such as Angola and Mozambique, in particular. Despite this common ground, Brazil's presence in Africa is a relatively new phenomenon. What interests is Brazil pursuing in Africa?
Although large Brazilian companies have been active here and there in Africa since the 1980s, Brazil's involvement on the continent has intensified significantly since the presidency of Luiz Inacio Lula da Silva (2003–2010). During his time in office, Lula da Silva encouraged Brazilian companies to enter and become economically active in African markets. During Lula da Silva's presidency, 19 new Brazilian embassies were opened in Africa. State visits to Angola, Mo- zambique, and South Africa in October 2011 and the creation of an Africa Group at her behest indicate that current President Dilma Rousseff is striving to continue her predecessor's Africa policy.
In order to boost Brazil's economic and political position in Africa, the Brazilian Development Bank (BNDES) and the Brazilian Cooperation Agency (ABC) provide both financial and technical support. Some 55% of Brazilian development assistance now flows to Africa. This commitment forms part of Brazil's strategy of internationalization and diversification, which has increasingly moved to the fore since Lula da Silva's term in office.
Brazil-Africa Trade
In the course of the global financial crisis, which strongly impacted the real economy of many countries, it seemed as if the Brazilian economy would def late somewhat. The local economy contracted by around 0.3% in 2009. It soon became apparent, though, that reforms in Brazil and the realignment of Brazilian trade relations were bearing fruit. While trade between the EU and Brazil only doubled between 2000 and 2012, trade between Africa and Brazil increased six-fold during the same period and totaled approximately USD 26.5 billion in 2012. At this point it should be noted that the volume of trade between the EU and Brazil is still around 3.6 times higher than the volume of trade between Africa and Brazil.
The extent to which the gap between these trade flows will close depends on factors such as the duration of, and the solution to, the crisis in the euro zone, as well as the growth of Africa's economic importance to other emerging markets. In this context it should not be ignored, however, that trade between Africa and Brazil is concentrated among a handful of countries and products. More than 80% of Africa's exports to Brazil come from Nigeria, Algeria and Morocco, with fossil fuels accounting for 83% of that. Almost half of all African imports from Brazil go to Egypt, South Africa and Algeria. The imports predominantly consist of agricultural products such as sugar, meat and cereals.
Development Partner for Africa
Lula da Silva positioned himself as a pioneer of South-South cooperation, aiming to create a counterweight to the hegemony of industrialized nations of the northern hemisphere. During the past decade, Brazil has itself undergone considerable economic and social change, emerged as a serious player on the global stage and sees itself as a suitable partner for the development of African economies. In 2010, the ABC invested some USD 22.1 million in development cooperation with Africa, more than double the amount of the previous year. Even though this seems a relatively low figure by international comparison, it must be taken into consideration that in 2005, the country's investment in development cooperation with Africa amounted to just half a million dollars.
Focus on Agriculture
In recent years, just short of 40 countries have benefited from this cooperation. Brazil pays special attention to the Portuguese-speaking countries Angola, Guinea-Bissau, Mozambique, S?o Tomé and Príncipe as well as Cape Verde. Unlocking Africa's agricultural potential is often at the forefront of these relationships. Based on similar climatic conditions, Brazil is increasingly drawing on its achievements in tropical agriculture and its expertise in the bio-fuels sector. One of the key Brazilian organizations involved in supporting agriculture is the Brazilian Agricultural Research Corporation (Embrapa). Reporting to the Brazilian Ministry of Agriculture, this research institution has been active in Africa since November 2006. Embrapa now runs projects in several countries including Angola, Benin, Chad, Gabon, Ghana, Mali, Mozambique, Kenya and Zambia. In addition, Lula da Silva continues to play an active role in strengthening Brazilian-African relations, despite having suffered from cancer. To this end, the Citizenship Institute was renamed the Lula Institute in order to bring successful development projects to Africa, such as the Fome Zero (Zero Hunger) program.
Brazil‘s Strategic Background
Brazil's commitment as a well-meaning development partner for Africa one should be cognizant of the fact that the country is also pursuing its own economic interests and continues to have its own socio-economic obstacles to overcome. Securing access to raw materials and tapping into new overseas markets are aspects of Brazil's economic policy which must not be disregarded, and which plays an important part in keeping the domestic economy on track.
In the past five years, the number of Brazilian companies in the Fortune Global 500–an annual ranking compiled and published by Fortune magazine of the top 500 corporations worldwide as measured by revenue–has doubled to eight. Of these companies, the energy companies Petrobas, Banco do Brasil and Banco Bradesco (both financial institutions), the mining giant Vale and the world's largest meat producer JBS, are active on the African continent. Besides these Fortune Global 500 companies, Odebrecht Group, Andrade Gutierrez, and Camargo Correa - three heavyweights in the Brazilian construction industry - are also prominent actors in Africa. The activities of these Brazilian construction groups include building transport infrastructure, commercial and residential real estate, along with mining, power and water supply projects.
Evidence of how important the African market is to Brazilian construction companies can for instance be seen in the rapid growth in Odebrecht's gross revenue on the continent. In 2006, the Brazilian group generated gross revenue of some USD 545 million in Africa. In 2012, that figure exceeded USD 1.32 billion. To date Vale, the second largest mining company in the world, has made one of the most substantial investments of all the Brazilian firms active in Africa. In order to tap into the coal resources of the Moatize mine in Mozambique, Vale has on its own admission invested more than USD 1.65 billion. Vale has also announced further investments to the tune of approximately USD 6 billion in Mozambique's coal mining industry, including transport infrastructure.
In contrast to other foreign corporations active on the African continent, Brazilian companies stress that employing local workers is of great importance to them. The Vale website, for instance, states that 90% of employees and contractors in Mozambique are Mozambicans. Odebrecht, one of the biggest private employers in Angola, employs more than 10,000 local people - only Brazil accounts for a larger proportion of Odebrecht's global workforce.
Vying for Africa
To assess how serious Brazil is about Africa's economic and social development, it is helpful to take a somewhat closer look at the fate of IBSA, the tripartite grouping consisting of India, Brazil and South Africa. Due to increasing competition among IBSA members with regard to their position on the African continent, this forum for dialogue seems to be slowly but surely diminishing in importance. Drawing parallels between the fate of IBSA and Brazil's pledge to support Africa's economic and social development alongside its own economic interests, poses the question whether Brazil's economic interest will outweigh its social commitment in Africa. This becomes especially relevant in the context of rising competition amongst the BRICS countries.
