A key emerging market is extending a friendly hand to Africa – and it’s not China.
BY THIERRY OGIER
SAO PAULO -- First it started because they shared the same language. Then it prospered thanks to then-President Luiz Inácio Lula da Silva’s political vision towards the developing world, and Africa in particular. President Dilma Rousseff has since followed Lula’s footsteps and visited various African countries. Now, Brazil has become a net donor country and its food experts are active across the continent, from Accra to Dakar, as well as Maputo and Luanda. As a result, Brazilian investors are also benefiting from a positive perception across Africa.
The Latin American giant is currently active in 38 African countries through development aid as well as trade and private investment, says Marco Farani, president of the Brazilian Cooperation Agency (ABC). Over half of the $400 million that the ABC expects to disburse this year is directed towards Africa. Moreover, Brazil canceled some $1 billion of debt in Africa during the Lula years (2003-2010).
Trade between Africa has jumped from $4 billion in 2000 to nearly $27.7 billion last year (up 35 percent compared to 2010). Brazilian multinational companies such as Vale, Odebrecht and Petrobras have expanding their positions there. But the focus on technological assistance and technology transfer is a relatively new phenomenon, which includes the set up of anti-AIDS retroviral drug plant in Mozambique and efforts to boost rice growing in Senegal ($3 million being invested over three years to help the West African country to reach food security). “We provide solutions that work better in Africa,” Farani says in a veiled reference to the old colonial masters – but also to China, which is often accused of land grabbing and importing Chinese workers instead of hiring local staff.
This new approach has won praise from The World Bank. Brazilian firms that are engaged in Africa generally “hire locals for their projects and develop local capacity, which improve the quality of services and outputs,” it says in a recent report. “African countries are therefore increasingly seeking Brazil’s cooperation, technical assistance and investment. Brazilian international enterprises … are including Africa in their plans. In other words, the new Africa coincides with a global Brazil.”
The Getulio Vargas Foundation, a business school that has set up its own agronomy center in São Paulo, GV Agro, has partnered with Deutsche Bank’s private equity arm DWS to invest in food and biofuels projects in Africa, benefiting from the Brazilian expertise. “Brazilians are ready to invest in Africa as long as there is some financing,” says Cleber Lima Guarany, coordinator of international projects at GV Agro. “We hope to raise $1 billion for the first fund by the first half of the year,” he says.
The main target is Mozambique, where a vast area in the north of the country (around 6 million hectares) has remained unexplored. GV Agro has been trying to mobilize those farmers that have “an experience in exploring new agricultural frontiers”, says Guarany, such as the savannah in the central western region, or even the Northeastern area of Brazil known as Mapito, at the border between the states of Maranhão, Piaui and Tocantins.
A special “pro Savannah” program was recently set up in Africa in partnership with the Japan International Cooperation Agency (JAICA) to boost local agriculture there and to introduce new technologies to improve productivity. Brazil is contributing $7 million during the first stage of the 20-year program, while Japan is putting forward $15 million. Agronomists say that areas of Brazil and the African savannah have similar climatic conditions. Brazilian experts have also introduced new cotton seeds in four poor countries in the Sahel countries to boost their revenues. “This involves a lot of technology transfer. New laboratories are being set up. This is going to help the whole of Africa,” says Farani.
MORE TO COME
While traditional donors are in crisis in Europe and in the United States, Brazil has been stepping up its efforts. The ABC, which is controlled by Brazil’s ministry of external relations, says the volume of aid and technical assistance has more than doubled within three years and is due to exceed $400 million this year. “We are working more at the heart of the problem and look for concrete results than say, countries from the Northern hemisphere whose aid effort is more focused on financial flows and budget support,” says Farani.
“Brazil’s profile has been changing. In some aspect it is a typical developing country. It is facing a series of social challenges and shortages. But at the same time, it is quite developed in some respects,” he says. “Little by little Brazil is becoming a provider of development aid.”
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