Emerging powers in Africa: Is Brazil any different?

Abstract

Africa's economic rise and growing prosperity over the past decade has attracted the attention of investors, development agencies and governments from across the globe. Brazil has joined this charge of established and emerging powers in Africa. Recent activities across the continent and the development of certain bilateral agreements suggest an alternative approach from other emerging powers in Africa, underpinned by development cooperation between Brazilian and African partners in key sectors. The ‘Brazilian way’, building on its positive image in Africa – primarily through development cooperation – while accumulating core commercial and strategic assets, appears to be aiming at sustainable engagement with long-term objectives. The explicit role of business in Brazil's development agenda in Africa sets it apart from traditional European and US counterparts, which have typically relied on donor-led aid and development. However, criticism has also crept in around Brazil's general reluctance to use its influence and commercial leverage to push for greater democratic freedoms in some of the African countries where it operates. While Brazil's commercial interests on the African continent are slightly different from commodity-starved players like India and China, which are explicitly reliant on extractive motives linked to price and efficiency, the question remains, ‘Is Brazil's interest and engagement with Africa any different from the rest?’

Keywords:

• Brazil
• Africa
• emerging powers
• development

Notes

1. See White L, ‘Understanding Brazils new drive for Africa’, South African Journal of International Affairs, 17, 2, August 2010, pp. 221–242. This article builds on the previous research for the Development Bank of Southern Africa and the South African Institute of International Affairs for that article.

2. The Chinese approach, often referred to as ‘Chinese exceptionalism’ also claims a unique development orientation. While this may rhetorically appear to have some similarities to the approach assumed by Brazil, in practice – and especially with regard to the close interplay between Brazilian development agencies and business – it is clearly different in implementation and objectives. This will be demonstrated in the discussion that follows.

3. These are discussed in some detail in a World bank/IPEA study titled, ‘Bridging the Atlantic: Brazil and Sub-Saharan Africa – South–South partnering for growth’, <http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/0,,contentMDK:23061951~pagePK:146736~piPK:226340~theSitePK:258644,00.html>.These commercial and development activities – and their partners – are discussed later in this article.

4. See for instance White L, ‘Understanding Brazil's new drive for Africa’, The South African Journal of International Affairs, 2010, pp. 221–242, and detailed in Brainard L & L Matinez-Diaz (eds), Brazil as an Economic Superpower? Understanding Brazil's Changing Role in the Global Economy. Washington, DC: The Brookings Institute, 2009.

5. See White, L, ‘Africa: The West and the rest’, in Games D, Business in Africa – Corporate Insights. Penguin: South Africa, 2012.

6. See White, L, ‘Africa: The West and the rest’, in Games D, Business in Africa – Corporate Insights. Penguin: South Africa, 2012.

7. ‘This is Africa: A global perspective’, FT Business, April/May 2011.

8. These figures are based on Davies A, ‘The new commercial actors in Africa’. MasterCard Worldwide Insights, 2012 and Stevens J & S Freemantle, ‘BRIC and Africa: New sources of foreign capital mobilising for Africa complementing and competing with traditional investors’, Standard Bank Economics, 4 August, 2010.

9. Davies A, ‘The new commercial actors in Africa’. MasterCard Worldwide Insights.

10. In October 2012 these came to a head in demonstrations of social unrest by locals who had been displaced by Vale's expanding mining operations. Such implications of Vale's expansion and the associated challenges for poor societies and subsequent political dialogue will be crucial for Vale going forward and for Brazil in general, if it is to maintain the positive momentum it has built across the continent.

11. This is based on a presentation made at VALE to a visiting group of MBAs from the Gordon Institute of Business Science in October 2011. The title of the presentation is ‘Vale: A Brazilian Global Leader’.

12. ‘Huawei Reports FY11 revenue of CNY 203.9 billion, R&D investment of CNY 23.7 billion and embarks on business transformation’, <http://www.huawei.com/en/about-huawei/newsroom/press-release/hw-131149-2011financialresultssalesrevenuesgrowthnetprofitso.htm>.

13. Games D, ‘Emerging rivalries’, SAIIA Policy Briefings, April 2010.

14. This is evident when evaluating the employment contingent of companies like Odebrecht in Angola and Mozambique and in statements made by the executives from companies like Vale and Odebrecht in descirbing their operations across Africa.

15. This is described in various reports and articles, as well as in interviews with executives from Brazilian construction firm Odebrecht and South African construction firms Group Five and TWP Basil Read, all of whom are competing with Chinese firms in Africa. A balanced and realistic view is offered by Haroz D, ‘China in Africa: Symbiosis or exploitation’, The Fletcher Forum of World Affairs, 35, 2, Summer, 2011.

16. For a detailed analysis of Brazilian foreign policy over time with a clear description of the concept ‘autonomy through diversification’, see Vigevani T & G Cepaluni, ‘Lula's foreign policy and the quest for autonomy through diversification’, Third World Quarterly, 28, 7, 2007. Also see Doelling R, ‘Brazil's contemporary foreign policy towards Africa’, Journal of International Affairs, 10, Spring 2008 for a reference of this concept in the context of Brazil in Africa.

17. The unrest is covered somewhat in a few news articles published in the international media. One in particular, Polgreen L, ‘As coal boosts Mozambique, the rural poor are left behind’, The New York Times, 10 November, 2012 provokes various questions around how the influx of investment in countries like Mozambique is being managed by government, supranational agreements and companies like Vale and others. In essence, the problem in Tete is less around a possible resurgence of unrest and violence (as suggested by some in the international community) and more about revisiting the issues that emerged from the poor management of society in the region. The resettlement from the new Vale mining sites proved seriously problematic. In short, the farmland people were awarded to replace their old area is of uneven quality and is largely poor, water supplies are inadequate and people have lost access to alternative income streams because they are so far from any viable market. Vale, along with other mining companies like Rio Tinto, who have also had to resettle local communities, are actively looking to solve the issue and provide some economic alternatives for the population. This will surely be an important case study for Vale vis-à-vis Africa as they grow into new markets across the continent.

18. See White L, ‘Understanding Brazil's new drive for Africa’, South African Journal of International Affairs, 17, 2, 2010, p. 224.

19. The Common Market of the South (Mercosur) and the Southern African Customs Union have a preferential trade agreement, which was under a long process of diplomatic discussions and negotiations spanning nearly a decade.

20. The Common Market of the South (Mercosur) and the Southern African Customs Union have a preferential trade agreement, which was under a long process of diplomatic discussions and negotiations spanning nearly a decade.

21. In countries like South Africa and even some Asian nations, the divide between the ‘haves’ and ‘have-nots’ has increased in recent years; the World Bank's Gini Coefficient Index (see <http://data.worldbank.org/indicator/SI.POV.GINI>) and described in more comparative detail by Patel K, ‘Brazil and South Africa: United in inequality’, Daily Maverick, 15 August 2012.

22. These figures are based on data from the World Trade Organization, 2009.

23. See ‘Bridging the Atlantic: Brazil and Sub-Saharan Africa – South–South partnering for growth’. The World Bank and IPEA, 2011.

24. These figures are based on various findings by the African Development Bank in 2011.

25. See Brainard L & L Martinez, ‘Brazil as an economic superpower? Understanding Brazil's changing role in the global economy’. The Brookings Institute, 2009.

26. Thirteen of the 100 largest firms are still clearly state-owned today, including Petrobras. In the rise of so-called ‘state capitalism’ even companies like Vale, which were privatised in the late 1990s, are said to be strongly influenced and even controlled by state entities. This was most obvious in the forced departure of Vale President and CEO, Roger Agnelli, in 2011, who, despite his excellent record at the helm was criticised by powerful leftist factions in government or his overly ‘outward’ view for Vale and the lack of commitment towards retaining jobs in Brazil.

27. See in particular, Vargas Llosa A, Liberty for Latin America: How to Undo Five Hundred Years of State Oppression. New York: Farrar, Straus and Giroux, 2005.

28. See Sotero P, ‘Brazil as an emerging donor: Huge potential and growing pains’, Development Outreach, February 2009, <www1.worldbank.org/devoutreach/articleid526.html>.

29. These include the much-discussed social programmes like Bolsa Familia, developed in Brazil, which involve conditional cash transfers and incorporate education, healthcare and poverty alleviation, and which are now being exported to other parts of the developing world in Latin America and Africa. They also include specialised training for policy-makers and operational practitioners employed by Brazilian firms in Africa.

30. These include the much-discussed social programmes like Bolsa Familia, developed in Brazil, which involve conditional cash transfers and incorporate education, healthcare and poverty alleviation, and which are now being exported to other parts of the developing world in Latin America and Africa. They also include specialised training for policy-makers and operational practitioners employed by Brazilian firms in Africa. President Lula's foreign minister, Celso Amorim, made 67 official visits to 34 African countries during his time with the Lula government.

31. See De Fretas Barbosa A, Narciso T & M Biancalana, ‘Brazil in Africa: Another emerging power on the continent?’, Politicon, 36, 1, 2009.

32. Davies A, 2012, ‘The new commercial Actors in Africa’, MasterCard Worldwide Insights.

33. Davies A, 2012, ‘The new commercial Actors in Africa’, MasterCard Worldwide Insights.

34. Stolte C, ‘Brazil in Africa: Just another BRICS country seeking resources?’, Briefing Paper, Chatham House, November 2012.

35. Brazil's 10 leading trade partners in Sub-Saharan Africa include (percentage of total trade with Brazil): Nigeria (32%), South Africa (11.5%), Angola (9%), Ghana (1.5%), DRC (0.8%), Senegal (0.7%), Côte d'Ivoire (0.7%), Cape Verde (0.45%), Benin (0.4%) and Mauritania (0.4%).

36. Odebrecht has separate offices in Lisbon for its international opperations and Angolan opperations, suggesting that its operations in Angola are treated differently from other international operations. This was also alluded to by Julio Brant and other executives from Odebrecht in Rio De Janeiro at a workshop titled ‘Brazilian foreign policy toward the South: IBSA, Africa and Latin America’, hosted by CEBRI, in collaboration with SAIIA, on 28 August 2009.

37. Roger Agnelli made these comments in a presentation delivered to an MBA group from the Gordon Institute of Business Scienc, University of Pretoria in São Paulo, October 2012.

38. This is by no means complete, but does give an indication of the geographical and project spread of Brazilian companies in Africa.

39. This is by no means complete, but does give an indication of the geographical and project spread of Brazilian companies in Africa.

40. This can be inferred from statements and interviews conducted by the writer over the past three years in South Africa, Angola, Mozambique, Zimbabwe and Zambia with some government officials and general public who have expressed a more positive sentiment towards Brazilian activities in their countries. Discussions and informal interviews were conducted with a respect for confidentiality. Government officials from Mozambique and Angola preferred not to be quoted since it might be interpreted as showing favouritism towards the Brazilians. ‘General Public’ in this case refers to acquaintances, taxi drivers and truck drivers, informal workers, etc.

41. This was the impression created following discussions with top executives like Roger Agnelli, former president and CEO of Vale in Sao Paulo in October 2012, and policy advisors and policy-makers in Brasilia, who are direclty engaged in African relations.

42. ‘Bridging the Atlantic: Brazil and Sub-Saharan Africa – South–South partnering for growth’. The World Bank and IPEA (2011).

43. That has been referred to in various studies, most notably in ‘Bridging the Atlantic: Brazil and Sub-Saharan Africa – South–South partnering for growth’. The World Bank and IPEA (2011).

44. Brazil is the world's top exporter of sugar, beef, chicken, orange juice, green coffee, soya, meat and oil, and the forth largest exporter of maize and pork. See Freemantle S & Stevens J, ‘Brazil weds itself to Africa's latent agricultural potential’, Standard Bank, Economics: Bric and Africa, 1 February 2010.

45. Brazil is the world's top exporter of sugar, beef, chicken, orange juice, green coffee, soya, meat and oil, and the forth largest exporter of maize and pork. See Freemantle S & Stevens J, ‘Brazil weds itself to Africa's latent agricultural potential’, Standard Bank, Economics: Bric and Africa, 1 February 2010.

46. This was reaffirmed by Roger Agnelli the former CEO of Vale, in a presentation to the visiting MBA group from the Gordon Institute of Business Science, delivered in October 2012. Agnelli's new company (AGN) and its African investment arm (B&A) are focusing on agriculture and energy – alongside mining and infrastructure – as key drivers of African growth. See Terzian F, ‘Os novos Vales de Agnelli’, Forbes Brasil, Outubro, 2012.

47. This was reaffirmed by Roger Agnelli the former CEO of Vale, in a presentation to the visiting MBA group from the Gordon Institute of Business Science, delivered in October 2012. Agnelli's new company (AGN) and its African investment arm (B&A) are focusing on agriculture and energy – alongside mining and infrastructure – as key drivers of African growth. See Terzian F, ‘Os novos Vales de Agnelli’, Forbes Brasil, Outubro, 2012.

48. This was reaffirmed by Roger Agnelli the former CEO of Vale, in a presentation to the visiting MBA group from the Gordon Institute of Business Science, delivered in October 2012. Agnelli's new company (AGN) and its African investment arm (B&A) are focusing on agriculture and energy – alongside mining and infrastructure – as key drivers of African growth. See Terzian F, ‘Os novos Vales de Agnelli’, Forbes Brasil, Outubro, 2012.

49. This was reaffirmed by Roger Agnelli the former CEO of Vale, in a presentation to the visiting MBA group from the Gordon Institute of Business Science, delivered in October 2012. Agnelli's new company (AGN) and its African investment arm (B&A) are focusing on agriculture and energy – alongside mining and infrastructure – as key drivers of African growth. See Terzian F, ‘Os novos Vales de Agnelli’, Forbes Brasil, Outubro, 2012.

50. This was the title of a ‘Brazil in Africa’ report by Stolte C, ‘Brazil in Africa: Just another BRICS country seeking resources?’, Briefing Paper, Chatham House, November 2012.