Building Alliances in the South Atlantic: Brazil in Africa

In addition to nurturing its near-abroad by promoting Latin American integration, Brazil is also looking East to build partnerships in other regions of the world. One of the areas where this budding international diplomacy is most apparent is across the South Atlantic, where Brazilians are quickly making their presence felt along the African coast.

Economic Synergies:

There are several areas in which Brazil’s activities in Africa are focused. The first, and perhaps most important, is agriculture. As I mentioned in a previous post, Brazil in recent years has solidified its position as a major world player in agriculture with a clear competitive advantage and broad scientific know-how of how to build a successful farming sector in the tropics. As this chart shows, Africa is in desperate need of an agricultural revolution and Brazil’s remarkable success in this field over the last thirty years reveals a possible path forward:

(Source: The Economist)

José Graziano da Silva, a former Brazilian government official, now heads the UN’s Food and Agriculture Organization, which works to develop food security in Africa. Brazil is helping the continent to mechanize its agricultural sector to improve productivity, highlighted by a recent deal to provide equipment to Ghana. It is also improving research and development through the involvement of Embrapa, the state agricultural research institution, in Senegal, Mali, Ghana and Mozambique. With increased urbanization, changing climates (particularly in the Sahel), a booming population and voracious international appetites (primarily in Asia and the Middle East), Africa faces more food security challenges than ever before. Brazil’s partnership in this field could thus be critical to the region’s future.

The second area of importance is offshore oil and gas drilling. Petrobras has become an international leader in offshore exploration and development, and should continue to solidify its expertise in this area through the experience of drilling the pre-salt fields off the Brazilian coast. New reserves off the coast of Africa offer significant promise as well, as companies rush to invest in the offshore industries of Angola and West Africa. In addition, Mozambique, another Portuguese-speaking country, appears to have promising offshore gas resources that Petrobras is keen to develop. By ramping up investment in Africa’s nascent offshore industry at the same time that it begins to develop its own immense oil riches, Brazil may soon succeed in turning the South Atlantic into a new energy hub.

The third field of cooperation is in mining. After building a vibrant mining sector itself, Brazil has been eager to replicate its success in Africa. Vale, a former state-owned enterprise, has been aggressively expanding into the region since 2004, establishing operations in Gabon, Guinea, Angola, Mozambique, the DRC, and South Africa. The company announced a plan to invest nearly $2 billion on the continent in 2012, primarily in its bread-and-butter iron ore operations, but also in base metals, fertilizers, coal, and steel production.

The commodities boom has been a boon to the global energy and mining industries, and few regions have benefited as much as Africa, home to six of the last decade’s ten-fastest growing countries. There has been quite a lot of talk of Africa’s rise, and the next few decades may well bring about even more impressive developments. By establishing itself as a major partner in agriculture, energy and mining, Brazil is clearly trying to put itself in place to take advantage of this booming market.

Brazil’s banks have been increasing their investment in Africa as well. BTG Pactual, a Brazilian investment bank often called the Goldman Sachs of the tropics, announced last month that it would create a new $1 billion USD private equity fund for the region. BNDES, the state-backed development bank with a loan portfolio four times the size of the World Bank, has also been increasing its investments in Africa with a focus on infrastructure, logistics and social development projects. In a particularly high-profile agreement reached several weeks ago, the BNDES agreed to finance renovations to an airport in Northern Ghana. In general, the BNDES has made it a priority to promote investment that will facilitate trade across the South Atlantic, such as ports and roads. So far, things clearly seem to be moving in the right direction. Trade between Brazil and Africa skyrocketed from $4 billion in 2000 to $20 billion in 2010, and looks set to continue its upward trend.

Promoting Good Governance

Brazil’s potential in Africa, however, goes beyond investment in commodities. Brazil has much to teach the region in the realm of governance, an important factor in turning an economic boom into a true societal transformation. There is much concern in Africa that the current growth in commodity markets is not benefiting common people, but rather enriching the continent’s elite and worsening traditional inequalities. Many African countries, such as Equatorial Guinea and Angola, have long experienced stunning growth rates that have not translated into broad development.

Brazil has much to teach Africa in this regard. Over the last decade, it used commodity-based economic growth to reduce inequalities and build its middle class, creating the famous “Brazil Model” that has become the country’s claim to fame across the world. In addition to its success in creating a social safety net and solidifying its consumer base, Brazil experienced several major breakthroughs in public health initiatives that Africa is keen to replicate, namely in controlling population growth and combating AIDS.

Besides these specific policy areas, Brazil can offer guidance to African leaders on a topic that Western and East Asian advisers cannot easily relate to: shaking off a legacy of colonialism and entrenched inequalities in order to build capable governance structures and vibrant, inclusive democracies. Alongside its BRICS partner, South Africa (regarded as Africa’s natural leader), Brazil has moved forward in trying to strengthen the public sector on the continent, most notably through co-chairing with the United States the Open Government Partnership to promote transparency in governance. This advisory role is a good example of Brazil’s growing soft power on the African continent, which complements its growing economic influence.

One other area in which Brazil has provided support to Africa has been in promoting exchange programs, especially for students from Portuguese-speaking countries such as Angola and Mozambique. As Brazil’s universities continue to grow in stature, this may have the residual effect of improving tertiary education in certain parts of Africa as well.

What Makes the Brazil–Africa Partnership Unique?

Africa’s incredible growth story has been a popular topic for some time now and Brazil is certainly not the only country to make inroads into the region. There has been much focus on China’s growing role on the continent, but other actors such as India and the Gulf countries have also been increasingly active in Africa as they run into resource constraints at home and are eager to lock in supply chains across the world. Western countries are also maintaining their interest, with the former European colonial powers continuing to be involved in trade and security issues and the White House outlining a new engagement plan last week. With all of this international attention, Brazil may seem to be a relatively small player on the continent.

But to compare Brazil to these other powers largely misses the point of Brazil’s involvement in Africa. True, it does not have the financial power of China or the Gulf countries to finance massive infrastructure projects across the region. (In fact, it is having trouble overcoming its own domestic infrastructure challenges.) Nor does it offer the military security or the trade opportunities of the West. Brazil also lacks the demographic heft of China and India, who are able to export millions of workers to the continent and create large and influential diaspora communities. But Brazil does not need these advantages because its goals in Africa are fundamentally different.

As a country with immense natural resources itself, Brazil does not need Africa to keep its economy up and running. Three of Africa’s main potential strategic industries—agriculture, energy and minerals—are in fact the three areas in which Brazil already has a strong competitive advantage. Rather, Brazil hopes to use Africa as a way for many of its largest companies to gain a more international foothold. By expanding operations in Africa, companies such as Petrobras and Vale are able to move beyond their domestic market and consolidate their positions as major multinationals. Odebrecht, a large construction firm, has become the largest private employer in Angola and one of the largest employers in Mozambique.

Politically, Brazil is also seeking to build alliances in its quest to reshape the international order. No country has challenged the existing international structures in recent years more than Brazil. It has fought very publicly for reform of the UN, World Bank and IMF. It has tried (mostly in vain) to rally the BRICS countries around unified positions to challenge Western hegemony in these institutions. In perhaps the clearest sign of growing Brazil-Africa political unity, Brazil was the only major non-African country to vote for Nigerian finance minister Ngozi Okonjo-Iweala to become the new president of the World Bank. (Brazil was actually isolated in this decision as Russia, China and India all voted for the US-backed candidate, Jim Yong Kim.) Over the long term, Brazilians believe that an emerging Africa could become an important ally in this crusade to alter existing patterns of global hegemony.

Brazil has several unique ties to Africa that give it an advantage over the other powers vying for influence in the region. In many ways, Brazil has become the most vocal leader of the so-called “Third World” countries, which has helped it to win African support. (China, which used to occupy this role, has increasingly cast aside a solidary approach to dealing with its emerging market peers as it focuses on its own needs for maintaining its rapid industrialization.) Also, using the lessons from its own development experience, Brazil has tried to promote itself as an example for African countries to follow. In addition, Brazilian policymakers are quick to play up their country’s cultural affinities with Africa, pointing out the country’s large Afro-Brazilian population and cultural ties to their ancestral land. (The irony, of course, is that most of these policymakers are of white, European descent and more similar to their Western counterparts than they often dare to admit.) They have also focused strategically on the continent’s two main Portuguese-speaking countries, Angola and Mozambique, as a gateway to the rest of the region. These distinctive connections are slowly helping Brazil to cultivate its own special relationship with the continent.

Brazil will never be the game-changer in Africa that China is, nor will it rival the U.S. for influence any time soon. But the growing South Atlantic partnership is clearly important in many ways. Aside from the obvious benefits of trade relations, economic synergies, and international development cooperation, an increasingly strong Brazil-Africa alliance could ultimately become one of the most important political forces in international relations, providing both sides can continue seeing eye-to-eye on reforming world institutions. This is perhaps one of the clearest examples yet that the global order of the 21^st century will ultimately end up looking very different from that of the 20^th.