Brazil’s economic ties with Africa continue to flourish

Former President Lula da Silva is often attributed with developing the increased economic relationship between Brazil and Africa – forming what is now known as the ‘south-south’ cooperation after visiting 27 of the 53 countries in 2003. It was this extensive trip that initiated the creation and expansion of a number of Brazilian consulates as well as other ties that were viewed as important.

According to the Financial Times, Brazilian commerce levels have reached US$25 billion in 2010 and there are now 500 Brazilian companies in operation in the continent (compared to 13 in 1995), many of whom see the region as not only an important export/investment destination but also as ways to use knowledge and expertise in fields such as hydro electricity, energy production and construction.

From a commercial perspective, the country is finding itself in increased competition with other nations with a strong desire to invest and boost trade links – particularly from China (that has double the level of commerce across the continent compared to Brazil); India; North America and Europe (although the latter two have slowed down their pace as a result of the global economic crisis).

Brazil’s leaders have been keen to gear up their activity to not fall behind with support of the government such as the BNDES $1.75 billion credit line for infrastructural construction firms (used by both Odebrecht and Camargo Corrêa).

The Bank of Brazil, Bradesco and the Espírito Santo bank have also stated their cooperative intention to actively search for opportunities, particularly in Mozambique, Angola and Cape Verde.

In February 2011, Lula revisited the continent to attend the World Social Forum in Senegal – largely in his post-presidency role to boost diplomatic relations –and heavily criticised the current model of international finance management, stating: “We must change the pages of the models from the outside”.

He said: “Brazil has no intention of dictating practices to anyone and always wants to learn with dignity from the wisdom of our brother countries.” Indeed, the Brazilian government has been commended on the co-development of programmes tied to the ministry of Social Development such as the auxiliary initiatives to the Bolsa Família (Family Grant) and the Zero Fome (Zero Hunger).

Such projects serve to resolve some of the core issues facing the African continent including food supply, HIV cure / prevention and other social / environmental issues.

A significant proportion of such investment has been witnessed in Portuguese speaking nations: Guinea Bissau, Mozambique and Angola.

But according to the United Nations, there are 300 Brazilian initiatives spread across 37 African nations (in 2002 there were 21 projects in 7 countries). One notable example is a project driven by the Oswaldo Cruz Foundation (Fiocruz) for the production of HIV treatment in Mozambique.

Embrapa organization is involved in the development of core infrastructural endeavours focused on improving capacitation, technical skills and agricultural security in Mali, Benin, Chad and Burkina Faso.

According José Geraldo Di Stefano, an engineer from the organization, “with a strong Africa, Brazil also stays strong because we can fight against the World Trade Organisation with regards to the subsidies being given to rich countries for the production of cotton.”

Di Stefano further states that the programme’s complementary intention is to develop the provision of food production essentially in rural areas where crop supplies are low.

Embrapa is also bringing its wide knowledge of rice production to Senegal which is expected to be used as a model throughout the continent as well as a partnership with the Japanese government entitled ProSavana that will work on developing the vast grasslands in Mozambique.

Brazil’s Senai organisation has also become increasingly involved throughout the continent – including a $20 million employment training programme, a police training school and educational establishments in Guinea Bissau which will be used as models in other African countries.

For the future, the Dilma Rousseff government looks firmly set to continue the momentum created in recent years.
Brazil’s ministry of External Relations has also created a programme which gives the Brazilian Cooperation Agency more autonomy whilst removing some of the former restrictions on its effective functionality.

In April 2011, the four BRICs (Brazil, Russia, India and China) in addition to South Africa announced the creation of a working group that will ease trade relations and create a cross lending system for mutual investment agreements to be made in local currencies.

However, amongst all the excitement, many questions remain with regards to the practically of expansion.
If Brazil chooses to focus on profitability – there is a risk that it will be viewed as egotistical.

If cooperation is the route to be taken, Brazil has to make an assessment whether its development interests will be fulfilled. It is difficult to say what will happen but it is certain that these decisions will have to be made.

Issues have also arisen with regards to transparency of funds being transferred between countries with the recent investigation being initiated into the disappearance of $300,000 which was passed through the Brazilian embassy in Harare, Zimbabwe.