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Former president Lula da Silva is often attributed with developing the increased economic relationship between Brazil and the African continent – 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 expansion and creation of a number of Brazilian consulates as well as other ties that were viewed as particularly important, considering the wide range of beneficial correlations.

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.  Below are some prominent examples:

• Nigeria, Algeria and Angola are key sources of imported oil;
• Brazilian producers of competitive foods have increased the value of exports to Africa from $US 1 billion in 2000 to US$ 8 billion in 2008.
• Camargo Corrêa, sees its role in an evolving Africa as ever important with an investment level that has already reached US$ 8 billion – principally in the development of cement production in Angola and Mozambique;
• Odebrecht received revenues in excess of R$ 4.2 billion in 2010 for its operations in Angola, principally focused in engineering, industrial / commercial construction, bio fuels and diamond mining and has recently initiated the construction of the Nacala cargo airport in central north Mozambique.  The conglomerate has also partnered with Vale for the exploration of coal with an investment of US$ 1.6 billion;
• Vale have an earmarked investment strategy of between $US15 and 20 billion until 2015 in the copper and iron ore sectors as well as in the continents railroad system and an electrical energy factory;
• Petrobras have active and developing interests in Angola – a country which has massive oil discoveries.

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 (who have 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 therefore been keen to gear up their activity in order to not fall behind with support of the government such as the BNDES $US 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’ (a subject which he regularly criticized during his term).  In his speech, he went on to state: ‘Brazil is a country that has no intention of dictating practices to anyone and always wants to learn with dignity from the wisdom of our brother countries.  Our success can serve as a stimulus for the construction of an alternative route for other nations in search of sustainable development with social equality.’

Indeed, the Brazilian government has been internationally 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 the fellow Portuguese speaking nations: namely Guinea Bissau, Mozambique and Angola – but ventures are spread across the continent.  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 – an issue that affected 11.5 percent of the population in 2010.  Embrapa are involved in the development of core infrastructural endeavors focused on improving capacitation, technical skills and agricultural security – such as the Cotton 4 initially focused in Mali, Benin, Chad and Burkina Faso.  According José Geraldo Di Stefano, engineer from the organization in an interview with the Brasileiros magazine: ‘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 regions where supply is low: ‘part of the area that we used to plant cotton is allocated to the growth of millet, sorghum, maize and groundnut.’  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 organization has also become increasingly involved throughout the continent – including a US$ 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 with Paulo Cordeiro from the Ministry of External Relations (Itamaraty) in May 2011 commenting: ‘the intention is, without doubt, to not only continue but also improve and deepen existing relationships with African countries.’  Itamaraty has also created a programme which gives the Brazilian Cooperation Agency more autonomy whilst removing some of the former restrictions on its effective functionality.  The main difference will be the ability to directly apply funding into the United Nations for Development fund which makes payments directly into Africa.  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.  In the Brasileiros magazine, Minister and Brazilian ambassador in Africa Nie Bitencourt poses: ‘is our role to be focused on cooperation and acting as a partner amongst equals or is it that we will be simply investors focused on economic and commercial results?  If Brazil chooses to focus on profitability – is there a risk that we will be viewed as egotistical?  If cooperation is the route to be taken, will our own development interests 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 US$ 300,000 which was passed through the Brazilian embassy in Harare, Zimbabwe.

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NIGERIA-BRAZIL INVESTORS FORUM:_June 14th to 16th 2011

Please click on the link above to access the programme of an event being run by the Nigeria-Brazil Centre for Business from June 14-16 in Belo Horizonte (Minas Gerais).  As having the fastest growing economy in the African continent, the event will serve to develop investment and trade relationships between the two nations and include talks by Mazi Sam Ohuabunwa (chairman of the Nigerian Economic Summit), Emmanuel Ikazoboh (director of the Nigerian Stock Exchange) and Ricardo Guimaraes (president of the BMG Banking Group).