Brazil looks to Africa
Rio de Janeiro - Brazil is launching a top-level drive to
expand its economic ties with Africa, a sign of how crises in the rich world
are pushing faster-growing emerging economies to trade and invest among
The new initiative, ordered by President Dilma Rousseff
after her three-country trip to Africa last month, comes as nervousness grows
in Brazil over the impact in the coming months of Europe's debt crisis and
lurch towards recession.
Europe's woes, combined with anaemic growth in the United
States, are already dampening demand for Brazilian exports and will make it
more difficult for Brazil to rebound from disappointing growth of about 3% to
4% this year.
In contrast, the eight most promising emerging economies in
sub-Saharan Africa, not including South Africa, have grown by an average of
6.6% per year over the past decade, according to Deutsche Bank. That is about
the same rate as the Bric group of big emerging countries - Brazil, Russia,
India and China - and faster than emerging Asian economies.
Africa's total share of Brazil's trade remains small at just
over 5%, but Brazil has rapidly grown its footprint in the region in recent
years as it tries to catch up with China's burgeoning investments and influence
Rousseff ordered the creation of an "Africa group"
this month led by her Trade and Industry Minister Fernando Pimentel to refresh
its push in the region.
"The crisis has accelerated this strategy,"
Pimentel told Reuters. "There will be a dispute for economic space in
Africa, and Brazil has to be positioned there."
Pimentel will lead government officials and business
executives this month on a 10-day mission to explore opportunities in the three
countries that Rousseff recently visited - Angola, Mozambique, and South
The new thrust builds on progress made under former
president Luiz Inacio Lula da Silva, who visited at least 25 African countries
and doubled the number of embassies in the region as he looked to establish
Brazil as a leader of the developing world.
Brazil's overall trade with Africa has quadrupled since 2002
to $20.6bnn last year, compared to its $82bn trade with the European Union. The
fast-growing ties are overwhelmingly based on the exploitation of commodities
as Africa taps Brazilian firms' expertise in mining, oil exploration and
Mining giant Vale opened a $1.7bn coal mine in Mozambique in
May that Pimentel said would give a $1bn boost to Mozambique's trade balance
Brazilian construction firm Odebrecht is the largest private
employer in Angola, with activities including food and ethanol production,
factories and supermarkets. Petrobras, Brazil's state-controlled oil company,
is active in Angola in deep-water drilling.
Brazil sees a growing market for its services and goods
related to such investments.
Brazil's trump card - being nice
Almost half of sub-Saharan African exports now go to
emerging and developing markets compared with less than a quarter in 1990,
according to the International Monetary Fund. China alone accounts for about
17% of the region's trade, with India and Brazil accounting for 6% and 3%
Sceptics say Africa's low level of business diversity and
its relatively small economic output limits its potential to become a major
trade and investment partner for Brazil.
"It's still a very small market, income is very
concentrated and the space for advance is small," said Bruno Lavieri, an
economist at Sao Paulo consultancy Tendencias.
"Even in the long term it will take decades for Africa
to be really an important player in Brazil's trade."
Brazil has also struggled to match China's financial clout
in the region as Beijing backs its companies with generous subsidised loans.
Jinchuan Group, China's dominant nickel producer, outbid Vale this year when it
bought South African mining firm Metorex for more than $1.3bn.
Pimentel said his group would be looking at creating new
financing mechanisms to support Brazilian projects.
But Brazil believes it has a trump card against China that
it intends to play in its new economic push - put simply, that it treats
Africans better. Chinese firms have been accused of flouting worker safety laws
in some African nations and have also been criticised for importing Chinese
workers rather than hiring locally.
"This is our big selling point - that we are arriving
in these countries doing more than just selling products and services,"
"Brazilian companies have a good image in Africa. This
compensates for our fragility in financing compared to China."
Brazil's shared Portuguese language with countries like
Angola and Mozambique, ethnic ties, a common history of colonialism and
Brazil's success in alleviating poverty and hunger at home also help its brand
on the continent.
Embrapa, Brazil's agriculture research agency, has
operations in four African countries where it is transferring its technology
and expertise in raising crop yields that helped turn Brazil into a tropical
Rousseff said during her trip that a pharmaceutical plant
being financed and assisted scientifically by Brazil should start next year
making cheap anti-retroviral drugs to help Mozambique's fight against Aids.
Even with competition from China, Africa's rich and largely
untapped resources mean Brazil still has huge potential to expand its presence,
said Jorge Heine, the CIGI chair in global governance at Canada's Balsillie
School of International Affairs.
"Given Brazilian needs and the abundance of natural
resources in Africa, it is by no means evident that we are near the limit of
the volume of trade between Africa and Brazil," he said.
Africa's growth is great but rememeber this is coming of a low base so getting excited about the numbers is really silly. The real interesting "battle" will be between the BRIC nations. Russia literally has Europe checked, CHina and India (somewhat) has the US and Africa checked and now Brazil moving in on Africa, so theres bound to be heads knocking. South Africa has a huge part to play in this....being African and also part of BRIC! Forget the West, we know whats best!