South-South Cooperation and Strengthening of Brazil’s Relations with Africa

 Traditionally, Brazilian diplomacy has been divided between two main schools of thought. One advocates for maintaining Brazil’s political alignment with the United States with promotion of economic development reliant on foreign investment. A second more independent standpoint advocates for South-South cooperation[1] and distancing from the United States with diversification of alliances to promote Brazil’s economic development and political projection. Brazilian leftist movements traditionally favoured this diplomatic policy, pioneering Brazilian business and political interests abroad. They have been a driving force increasing South-South cooperation as a way to challenge the international system’s status quo.

In this light, Brazil’s relationship with the African countries was consistently strengthened under Brazil’s latest military governments; from president Médici’s government until the end of the Sarney’s mandate (1969–90). At that time, cooperative relations between Brazil and Africa focused on Lusophone countries. Yet, efforts stalled   from 1990 to the 2000s with the advent of the neoliberal governments of Fernando Collor de Mello and Fernando Henrique Cardoso (1990–2002). Momentum revived under President Luis Inácio Lula da Silva’s government (2003-2011).[2]

Lula’s government placed African relations to the centre of Brazilian foreign policy. The continent became a priority region for Brazil, representing not only a strategic trade route between South America and Asia but also a fast-growing development pole[3]. Brazil’s projection towards Africa soon became a key element of the South-South agenda for cooperation and development. It was accompanied by efforts to internally strengthen Mercosur, while promoting the bloc’s rapprochement with African countries.

Beyond economics, Brazilian diplomacy emphasized strong historical and cultural ties with Africa, consequently setting Brazil apart from other BRIC countries also present in the continent. In addition to being a former colony of Portugal, Brazil was the largest destination of slaves leaving Africa to the Americas; as such, 50% of its population is of African-descent. Furthermore, Brazil’s economic growth, development, and successful narrowing of social inequalities, offer lessons for African countries facing similar challenges[4].

Lula’s first presidential speech set the tone that guided Brazilian relations with Africa. He emphasised the importance of strengthening the historical ties with the continent and stressed Brazil’s willingness to help Africa developing its great potential[5]. Subsequently, during Lula’s two mandates, he led twelve diplomatic missions to Africa. These were often accompanied by entourages of businessmen from various economic sectors in Brazil, eager to expand their business in Africa. The Minister of Foreign Affairs, Chancellor Celso Amorim, made 67 visits to Africa spanning 34 different countries between 2003 and 2010. Seventeen new Brazilian embassies were opened in Africa, bringing the total up to 39 embassies. This made Brazil one of the five non-African countries with the largest diplomatic network in the continent.[6] At the domestic level, priority given to Africa was reflected in the restructuring of the Department of African Affairs and the Middle East to create a new Department for African Affairs, with three internal divisions and its own budget. Meanwhile, African countries opened 34 embassies in Brasília, the Latin American capital with the highest number of embassies of that continent; eighteen of these were established after 2003[7].

As of 2000, the Brazilian government established partnerships for sharing knowledge and technology in more than 20 African countries. According to the Brazilian Agency for Cooperation, the number of activities or projects in Africa has increased from four in 2000 to 253 in 2010; the majority focused on agriculture, tropical medicine, vocational training, energy and social protection[8].

The rise of trade was also a key feature of the new relation between Brazil and Africa. According to the World Bank, Brazil’s trade with Sub-Saharan Africa increased from US $ 2 billion to US $ 12 billion between 2000 and 2010.[9] According to the Brazilian National Bank for Development (BNDS), 25 Brazilian companies are now operating in more than thirty countries in Africa, investing in key development areas such as infrastructure, industry, energy and construction[10].

The Rebirth of Brazilian Relations with Democratic Republic of Congo (DRC) in the « Lula Era »

 The fast development of a multidimensional relation between Brazil and the DRC for the past ten years is part of the Brazil’s new Africa policy. Brazil first established diplomatic relations with Zaire, later to become DRC, in 1968. A Brazilian embassy was opened in the capital, Kinshasa in 1972. Two years later Zaire also opened its embassy in Brasília. The 25 years that followed reflected the importance of African relations to the Brazilian diplomacy in the period. Only two official visits were organised, one General Convention was signed focusing on Economic, Commercial, Technical, Scientific and Cultural cooperation (1972), followed by one Commercial Agreement (1973) and one Agreement on Technical and Scientific Cooperation (1973). The last agreement signed between the two countries was the Additional Protocol of the Convention on Economic, Commercial, Technical, Scientific and Cultural cooperation in 1987, formalising the opening of a gold mine known as ‘D7 Katanga’.

In 1997 Brazil closed its embassy in Kinshasa due to the first Congo War, which resulted in Mobutu Sese Seko’s fall from power, as he was overthrown by Laurent-Désiré Kabila. Brazil only reopened its embassy in the DRC eight years later under Lula’s government and amidst booming Brazilian interests in Africa. A country such as DRC, torn apart by years of violent conflict, represented an enormous potential in terms of economic and political projection for Brazil.

Unsurprisingly, the first years of the new Brazil-DRC cooperation were strongly influenced by DRC’s 2006 electoral agenda. Most cooperation was directed to training of observers and electoral experts, in addition to donation of 2950 voting polls to the Congolese government. The years to come witnessed diversification of cooperation between the two countries as agriculture, technology, education, training of diplomats and humanitarian aid entered the agenda. Brazil-DRC relations have flourished since 2004, with six agreements signed on scientific and technical cooperation and eighteen official visits, the most recent being Chancellor Mauro Vieira’s visit to Kinshasa in 2015 to discuss strategic areas of cooperation. According to a diplomatic source at the Brazilian Ministry of Foreign Affairs (Itamaraty), DRC was included in Chancellor Vieira’s itinerary to Africa due to its impressive growth over the last years, accompanied by visible progress in the country’s stability and seen with good eyes by the Brazilian diplomacy.

Moreover, as stated by Brazil’s Minister of Foreign Affairs at the UN General Assembly’s 65th meeting, through trade and investment, Brazil should help Africa reducing dependency on few centers of political power. Brazil has emerged as one of the world’s strongest economies under Lula[11], and seeks to play an important role in redefining ‘the global south’ in the changing world architecture. As such, DRC represents an important platform for Brazil’s political projection, ultimately benefitting Brazilian advocacy efforts to reform multilateral bodies, such as the United Nations Security Council (UNSC), an important topic in the Brazilian diplomatic agenda. Therefore, even though the DRC is not the first trade partner of Brazil in Sub-Saharan Africa, the fast development of their multidimensional relation since 2004 is an interesting example of the Brazilian charm offensive towards Africa and its welcoming reception by a post-conflict African regime. But the present challenges of the Brazil-DRC relation stem from both Kinshasa and Brasília and question the sustainability of this engagement.

I. Brazil’s Economic Motivation

  1. Trade Opportunities

 Following the commercial boom between Brazil and Africa, trade between Brazil and DRC witnessed a sharp increase under Lula’s two terms in leadership. According to data from the Brazilian Ministry of Development, Industry and Foreign Trade (MDIFT), Brazilian exports towards the DRC had grown from US $ 2.38 million in 2002 to US $ 50.8 million in 2010[12]. Nevertheless, the volume of trade between those two counties remained marginal if compared to trade figures with the entire continent, indicating that trade alone was not the leading force behind the new partnership between these two countries.

  During Lula’s first term, Brazilian imports from the DRC increased from US $ 0.45 million in 2002 to US $ 132 million in 2006.[13] Imports from the DRC fell to US $ 13.3 million by the end of 2010, Lula’s second term and experienced a sharp increase in the following year, reaching the volume of US $ 107 million. The same dataset shows that by 2011, Brazilian imports from the DRC mainly consisted of crude petroleum oils, which represented 84% of the total share of imports, only followed by oxides and hydroxides of cobalt, which represented 11.5% of imports. Despite the evolution in trade volume, crude petroleum oils imported from the DRC represented only 0.64% of Brazilian total imports of this product in 2011.[14] Brazilian exports to the DRC were also limited to three main products: sugar extracted from sugar cane or beets and sucrose (31.7%), raw sugar (16.8%) and beef and chicken (10.48%).

By the end of 2015, the trade between the countries reached the value of US $ 82.57 million, representing a 13.14% increase in the Brazilian exports. Brazil almost entirely exported animal products and most notably beef and chicken (US $ 8.58 million), products related to the food industry such as refined sugar (US $ 2.67 million) and industrialized beef and fish (US $ 2.2 million). By the end of 2015, copper alone represented 77% of the Brazilian imports and the value of US $ 31.2 million and 3.2% of Brazilian total imports of copper in that year.

Evolution of trade between Brazil and DRC reflects the progressive strengthening of their commercial ties and Brazil’s increasing trade with Africa under president Lula. If compared to the total increase in trade volume between Brazil and Africa, the share of Brazilian exports to the DRC grew from 0.1% to 0.67% of the total exports towards the continent between 2002 and 2010.

Brazilian Exports towards Africa and the DRC between 2002 and 2010

brazilian-exports

 

The volume of trade between Brazil and the DRC seems to be inexpressive if compared to the rest of the continent. Nigeria for instance, Brazil’s largest commercial partner in Africa, counted for 9.3% of the total volume of exports towards Africa by 2010, the amount of US $ 862.5 million[15]. The proportional volume of trade between Brazil and the DRC indicates that trade alone was not the driver of the rapprochement between these two countries; it primarily reflected Brazil’s increasing commercial ties with Africa under president Lula.

Still, Brazilian importers and exporters were dominantly large companies. According to data from the Brazilian Ministry of Development, 81.9% of the main Brazilian exporters to DRC were large companies with an annual gross operating revenue of over US $ 90.66 million[16]. According to the DRC Investor’s Guide published by the Brazilian Ministry of Foreign Affairs, 1471 Brazilian companies exported to DRC in 2011, the year with the highest trade volume since 2000 to today. The twenty main players in terms of export values are: Vale do Rio Doce, Piracoque and the Brazilian Company of Metallurgy and Mining for the mining sector; Brazil Foods and Sadia in the food industry and the Brazilian Cooperative of Sugar-cane Producers, Santa Terezinha Sugar Mill and Vale Agroindustrial Cooperative in the agricultural sector. Half of the twenty major exporters in 2011 were Brazilian private-owned companies, a few still family-owned businesses[17]. Yet, despite the influence of family clans in domestic Brazilian politics, lobbying for strengthening commercial ties with DRC comes from a different sector. As mentioned, President Lula was often accompanied by entourages of businessmen from the construction sector, a booming force in the Brazilian economy interested in expanding its business in Africa. Thus, the prospect of signing large infrastructure contracts in Africa had a significant influence on President Lula’s foreign policy in Africa.

2. The Infrastructure Market: Hopes but no Deal yet

Brazilian engineering, property and construction companies have been part of the African landscape for decades. Crisis in the Brazilian domestic construction market in the 1970s and 1990s pushed some of the nation’s largest companies abroad and over time they have expanded their operations, standing out in terms of technology transfer, international presence and volume of international contracts[18]. Norberto Odebrecht for instance, closed infrastructure deals in Angola, including roads, hotels and hydroelectric sites, while operating in the oil sector in Angola through its subsidiary Tenenge. In 1987, Andrade Gutierrez was behind the first commercial agreement signed between Brazil and Zaire for the construction and management of gold mining activities in the D7 Kanga mine. The agreement established that Brazil would co-fund the project by financing export of Brazilian goods and services. The amount was defined by a feasibility study and in accordance with conditions determined by the Foreign Trade portfolio of the Bank of Brazil. Zaire committed to obtain the remaining required funding for full implementation of the project.

Brazil’s construction business expanded by 9.7% per year between 1995 and 2009, accounting for almost 4% of Brazil’s GDP by 2009.[19] The industry experienced significant growth and international projection under Lula. Executives from key construction companies such as OAS, Queiroz Galvão, Camargo Correa, Andrade Gutierrez and Odebrecht accompanied the President on official visits. Moreover, recent investigations carried out by Brazilian federal prosecutors, indicated that corruption during Lula’s government was associated with the President’s lobbying in favour of Brazilian construction companies in Africa. Current investigations of Operation Lava-Jato (carwash in English) brought to light a number of elements regarding President Lula’s relations with these companies. However, construction companies’ interest in Africa and their influence in domestic politics came as no surprise for informed Brazilians[20]. In fact, data from the Brazil’s Superior Electoral Court in 2013 showed that 55% of the 2012 municipal elections in Brazil was financed by companies in the construction sector[21].

DRC was certainly not out of the sight of Brazilian construction companies, constantly looking for opportunities to expand their business in Africa and Latin America. DRC has a pressing need for developing its infrastructure, which was deteriorated during conflict and remains in dilapidated condition. World Bank quality indicators show that in terms of transport, DRC possesses more than 30,000 km of unpaved roads in serious disrepair, with only 42% in good or fair condition[22]. The absence of well-developed transport infrastructure, particularly with regards to roads and rail lines linking the main Congolese cities challenges the flux of goods and services among those regions.

In 2014, the Ministry of Transports purchased 500 buses from the Egyptian company Transco and was negotiating deals with other possible suppliers. According to diplomatic sources in Kinshasa, two executives from the main Brazilian bus body manufacturer Marcopolo visited Kinshasa to discuss two deals that are currently under analysis at the Congolese Ministry of Transports. One of Marcopolo’s proposals combined direct sell of vehicles with the creation of a production plant. A second proposal combined the direct sales of vehicles with an urban infrastructure project to adapt city roads to public transportation by creating exclusive bus tracks in partnership with specialized Brazilian construction companies. Both proposals were based in Marcopolo’s success businesses in other African countries, but seem to be on hold at the Ministry of Transports due to government budget cuts, following a fall in copper prices.

Regarding air transport, DRC has recently expanded Congo Airways fleet with a recent acquisition of bombardier Q400 aircrafts. Brazilian Embraer was also trying to strike a deal with the Ministry of Transports. According to diplomatic sources in Kinshasa, dialogue between the government and an Embraer executive in Paris was productive but did not lead to a deal due to governmental budgetary restraints. Nonetheless, Brazilian producers are aware that in both the medium and long term, DRC’s vast landmass and extensive boarders covered by rainforests will inevitably create the demand for commercial aircrafts. As such, Embraer remains attentive to future business opportunities.

Beyond air and road transportation, improvement in DRC’s infrastructure strongly relies on power generation; according to the World Bank, one of the country’s most immediate infrastructure challenges is to reform the national power utility, increase power generation and delivery[23]. Therefore the construction of Inga power plant assumed a strategic role in the development of DRC’s infrastructure. The Inga 3 is the first phase of a seven phase project for the construction of the Grand Inga, it was initially projected to cost US $ 14 billion and to generate 4,800MW on completion. In 2009 the DRC government decided to promote a Private Public Partnership (PPP) for the development of Inga 3. As of yet, the developer has not been chosen, it seems however that the Chinese and Spanish consortiums are at the forefront of the bidding. In the case that the Spanish consortium wins, Brazilian Eletrobras – a publicly traded company controlled by the Brazilian government and the largest company in the electricity sector in Latin America – would also participate on the project. An agreement between the Spanish and Brazilian parties in Kinshasa means that Eletrobras would participate in the power transmission project once the dam has been constructed by its Spanish counterpart. However, this mega-project seems now compromised as the World Bank pulled out its US $ 47,5 million funding.[24] The suspension “follows the decision by the DRC government to give the project a different strategic direction of that which was agreed in 2014”.[25].

In conclusion, DRC’s infrastructure needs represent a major attractive for Brazilian companies that have been active in the African landscape for several years and greatly influence Brazilian domestic politics. The Brazilian embassy often receives Brazilian businessmen from various sectors interested in knowing more about the country’s potential, yet none have opened offices in Kinshasa. Nonetheless, potential has not yet materialised in any specific agreement, a sign that Brazilian initiatives are not being reciprocated by the Congolese government. On top of that, the recent cuts in DRC Government’s budget make deals in the near future very unlikely.

Thierry Vircoulon & Carolina Fantini

The second part of this study is available here

 

[1] The concept of South-South cooperation dates from the mid-1950s, when newly independent countries in Asia were strengthening their relations under China’s influence and mediation. The fast-growing number of Conventions among these countries reflected recognition of mutual interests and shared problems as well as a need for policy coordination. The process culminated in the Bandung Conference in April 1955, which gathered 29 African and Asian countries and symbolized a dawn of newly independent countries, fully aware of their collective strength and the possibilities ahead (Soares Leite 2011, Pp.56).

[2] Danilevicz Pereira, A. (2014), “Brazil–Africa Relations: The Strategic Importance of the South Atlantic”, Insight on Africa vol.6 (1) pp.1–13, SAGE Publications, p.4.

[3] Danilevicz Pereira, A. (2014), “Brazil–Africa Relations: The Strategic Importance of the South Atlantic”, Insight on Africa vol.6 (1) pp.1–13, SAGE Publications, p.4.

[4] World Bank (2011) “Brazil and Sub-Saharan Africa: Partnering for growth”. Available at: www.youtube.com (Accessed: 1 August 2016).

[5] Danilevicz Pereira, A. (2014), “Brazil–Africa Relations: The Strategic Importance of the South Atlantic”, Insight on Africa vol.6 (1) pp.1–13, SAGE Publications, p.6.

[6] The countries with a higher number of embassies are the USA (49), China (48), France (46) and Russia (38). Among the African countries themselves, only South Africa (44), Egypt (43) and Nigeria (40) have a larger number of embassies located in Africa as compared to Brazil.

[7] Itamaraty (2014) “Semana da África”. Available at: blog.itamaraty.gov.br (Accessed: 1 August 2016).

[8] Brazilian Agency for Cooperation, List of Cooperation Activities with the DRC. Available at: www.abc.gov.br (Accessed: 28 June 2016).

[9] The World Bank & the Brazilian Institute of Applied Economic Research (IPEA) (2012), “Bridging the Atlantic Brazil and Sub-Saharan Africa: South–South Partnering for Growth”,  p.79. Available at: siteresources.worldbank.org (Accessed: 28 July 2016).

[10] Deborah Vieitas & Isabel Aboim (2013), “África: oportunidades para empresas brasileiras”, Revista Brasileira de Comercio Exterior (RBCE) N.116 June – September 2013. Published by Fundação Centro de Estudos do Comércio Exterior (FUNCEX).

[11] By 2011 Brazil had overtaken the UK to become the world’s sixth-largest economy in the World Economic League ranking by the Centre for Economics and Business Research, only behind the United States (1); China (2); Japan (3); Germany (4); France (5).  Source: Financial Times (6 March 2012), “Brazil becomes sixth biggest economy”. Available at: next.ft.com (Accessed: 30 July 2016).

[12] Brazilian Ministry of Industry, Foreign Trade and Services (2016), Foreign Trade Office Dataset – Historic Series per Country. Available for download at: www.mdic.gov.br (Accessed: 25 July 2016).

[13] Brazilian Ministry of Industry, Foreign Trade and Services (2016), Foreign Trade Office Dataset – Historic Series per Country. Available for download at: www.mdic.gov.br (Accessed: 25 July 2016).

[14] Brazilian Ministry of Industry, Foreign Trade and Services (2016), Foreign Trade Office Dataset – Imports list per product/value 1997-2016 (US $ FOB). Available for download at: www.mdic.gov.br (Accessed: 19 September 2016).

[15] Brazilian Ministry of Industry, Foreign Trade and Services (2016), Foreign Trade Office Dataset – Export Values by Continent and Countries (US $ FOB). Available for download at: www.mdic.gov.br (Accessed: 18 September 2016).

[16] Brazilian Ministry of Industry, Foreign Trade and Services (2016), Foreign Trade Office Dataset – List of main importing companies in value range (US $ FOB). Available for download at: www.mdic.gov.br (Accessed: 25 July 2016).

[17] Brazilian Ministry of Foreign Affairs – Trade and Investments Promotion Department (2012), “Guia de Negócios – República Democrática do Congo”, p.20. Available at: www.investexportbrasil.gov.br (Accessed: 15 July 2016).

[18] Ivo de Santana, (2003) “O Despertar Empresarial Brasileiro para o Mercado Africano nas Décadas de 1970 a 1990”, Rio de Janeiro Vol.25, p.172. Available at: www.scielo.br (Accessed: 28 June 2016).

[19] Brazilian National Bank for Development (BNDS) (2013), “The Construction Business in Brazil: Investments and Challenges”, pp. 301-354, p.312. Available at: www.bndes.gov.br (Accessed: 28 June 2016).

[20] For instance, investigations showed that in 2009 Marcos Wilson, an Odebrecht executive, was in direct contact with Brazil’s minister of Development Miguel Jorge. Marcos Wilson asked Miguel Jorge for help during President Lula’s meeting with the then President of Namibia, Hifikepunye Pohamba. Proofs indicate that President Lula lobbied in favour of Odebrecht for the construction contract of the Baynes hydroelectric, budgeted at US $ 800 million. Folha de São Paulo, (17/07/2016) “Lula ajudou OAS a obter obra de R$ 1 bi na África, diz mensagem”. Available at: www1.folha.uol.com.br (Accessed: 2 August 2016).

[21] G1 Brazil (2013) “Construtoras são fonte de 55% das doações a partidos em 2012”. Available at: g1.globo.com (Accessed: 2 August 2016).

[22] Vivien Foster & Daniel A. Benitez (2010) “Africa Infrastructure Country Diagnosis, Country Report:  Democratic Republic of the Congo”, Published by the World Bank, p.10. Available at: documents.worldbank.org (Accessed: 17 July 2016).

[23] Vivien Foster & Daniel A. Benitez (2010) “Africa Infrastructure Country Diagnosis, Country Report:  Democratic Republic of the Congo”, Published by the World Bank, p.8. Available at: documents.worldbank.org (Accessed: 17 July 2016).

[24] “World Bank pulls funding for Congo’s Inga-3 hydropower project”, Reuters, 26 July 2016.

[25] World Bank 2016, “Le Groupe de la Banque mondiale suspend le financement de son assistance technique au projet Inga-3 Basse Chute”. Available at: www.banquemondiale.org (Accessed: 14 September 2016).

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