Africa Calling: #Brazil in #Africa: A new Atlantic alliance | The Economist

In 2001 Brazil invested $69 billion in Africa. By 2009... [it] had swelled to $214 billion.

Africa Calling

A new Atlantic alliance

             

IN THE sweaty heat of northern Mozambique, Vale, a Brazilian mining giant, is digging up coal at its mine near the village of Moatize. A 400,000-tonne mound sits ready to burn. The mine can churn out 4,000 tonnes an hour but the railways and ports cannot cope. Vale is working to improve a line through Malawi to take the coal for export. OAS Construtora, another Brazilian firm, has signed a deal with the miner to build part of a new port at Nacala, 1,000km (620 miles) to the north-east, to do the same.

The continent is an important part of Vale’s future, enthuses Ricardo Saad, the firm’s Africa boss. He is not alone in his excitement about Brazil’s prospects. Relations with Africa flourished during the presidency of Luiz Inácio Lula da Silva. He travelled there a dozen times and African leaders flocked to Brazil. His zeal was in part ideological: he devoted much of his diplomacy to “south-south” relations—at the cost, critics say, of neglecting more powerful (and richer) trade partners, such as the United States.

Lula stressed his country’s “historic debt” to Africa, a reference to the 3.5m Africans shipped to Brazil as slaves. Outside Nigeria, Brazil has the world’s biggest black population. Dilma Rousseff, Brazil’s current president, is continuing those policies—though with more emphasis on how the relationship benefits Brazil. There are many ways that it can. Africa needs infrastructure and Brazil has lots of construction firms. Africa sits on oil and minerals in abundance; Brazil has the firms to get them out. Its agribusiness giants are also eyeing up Africa. If the continent’s economy continues to grow as it has in recent years, it will produce millions of customers much like Brazil’s new middle class.

Brazilian businesses seem keen. In 2001 Brazil invested $69 billion in Africa. By 2009, the latest figures available, that had swelled to $214 billion. At first Brazilian firms focused their efforts on Lusophone Africa, Angola and Mozambique in particular, capitalising on linguistic and cultural affinity to gain a foothold. Now they are spreading across the continent.

So far a few large firms dominate. Vale’s coal mine in Mozambique is its biggest operation outside Brazil. Odebrecht has been building things in Africa since the 1980s. Early on it was involved in construction of the vast Capanda dam in Angola. It erected the country’s first shopping mall in the capital, Luanda. In Ghana, where demand for homes is so fierce that tenants have to pay up to two years’ rent in advance, OAS, a contractor of Camargo Corrêa, a big conglomerate, is putting up social housing.

Andrade Gutierrez, another construction firm, works on everything from ports to housing and sanitation projects in Angola, Algeria, Congo and Guinea. Petrobras, Brazil’s state-owned oil behemoth, is already pumping oil in Angola and Nigeria and is on the hunt for more in Benin, Gabon, Libya, Nigeria and Tanzania. Consumer companies are setting their sights on a growing market, too. O Boticário, a Brazilian cosmetics firm, has been peddling its products in Angola since 2006.

Brazil v China

Since Brazil cannot compete with the likes of China in the scale of its investment, it has to offer something extra: in particular, technical expertise. With similar climates, agriculture has been a fruitful field of collaboration. In 2008 Embrapa, a Brazilian agricultural-research institute, set up an office in Ghana. Through Embrapa, Brazil has provided technical assistance to the cotton industry in Benin, Burkina Faso, Chad and Mali. Brazilian companies that produce soya, sugar cane, corn and cotton were sniffing out investments in Tanzania earlier this year.

Brazilian firms hope that their reputation will ensure that opportunities keep coming. They are keen to distinguish themselves from competitors, especially the Chinese. They do not want to be seen as grabbing everything they can, says Rodrigo da Costa Fonseca, Andrade Gutierrez’s president in Africa. Whereas Chinese firms are lambasted for their working practices, their Brazilian counterparts emphasise that they play by the rules, are good employers and want to build enduring relationships by offering development aid as well as private investment.

In particular, Brazilians stress that in Africa they employ Africans (Chinese firms are often criticised for shipping in their own people). Around 90% of Odebrecht’s employees in Angola are locals, as are 85% of Vale’s employees in Mozambique.

The Brazilians have not managed to avoid all criticism. Vale has come under fire for its resettlement of over 1,000 families to make way for its coal mine. Most have been moved to a brand-new village at Cateme, 40km away from Moatize. Disgruntled villagers say the cost of living has soared because of the added expense of getting to Tete, the provincial capital. The ground is less fertile and water less plentiful at the new location, say inhabitants, and the houses provided by Vale are shoddily built. In January angry villagers blocked a nearby railway line in protest.

Vale says it is dealing with these problems—fixing the houses and putting on a bus into town. The company is paying the price for being first in, says Altiberto Brandão, who runs Vale’s mine at Moatize. Vale has a 35-year concession so it needs to keep locals on its side: “we don’t want 35 years of problems,” Mr Brandão insists.

Brazil is still enjoying its honeymoon in Africa, says Oliver Stuenkel of the Global Public Policy Institute, a think-tank. Still, Brazil should learn from the mistakes of others, he says. With its prominence in mining, there is always a danger that Brazil is seen as a new colonial power. Though its presence is growing, it is still paltry compared with China’s. Unlike China, Brazil does not need Africa’s resources but is more interested in diversifying its markets. There is no construction in Europe—there is nothing left to build there, laughs OAS’s Africa head, Leonardo Calado de Brito. “Africa is the place to be.”


See the article online here:   Brazil in Africa: A new Atlantic alliance | The Economist