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Brazil Forging Strategic Alliance with Africa

RIO DE JANEIRO, May 7 2012 (IPS) - The Brazilian government of Dilma Rousseff is taking firm steps towards stronger relations with Africa, such as the creation of a special fund to finance development projects together with multilateral lenders like the World Bank.

South America’s giant is keen on establishing a strategic association with Africa, and the tool for doing that is its powerful national development bank, the National Bank for Economic and Social Development (BNDES), which will work in conjunction with the multilateral African Development Bank (AfDB).

“There is a 40-billion-dollar shortfall in financing for a spate of 50 projects, which means the African Development Bank will have to scale up its capital and its activities,” said BNDES president Luciano Coutinho. He added that not only public bodies need to be involved in this cooperation, but also private banks in the capital markets.

The alliance was announced at an Apr. 3 seminar on “Investing in Africa: Opportunities, Challenges and Instruments for Economic Cooperation”, organised by the BNDES in Rio de Janeiro, which drew delegates from development institutions, business leaders, and personalities like former Brazilian president Luiz Inácio Lula da Silva (2003-2011).

André Esteves, the president of the private Brazilian bank BTG Pactual, also announced the launch of a one-billion-dollar risk capital fund for investment in Africa.

“This will be the biggest private sector contribution for investment in that continent, and a show of the (Brazilian) business community’s affinity with the government strategy,” he said.

Makhtar Diop, World Bank vice president for Africa, listed some of the enormous challenges in Africa: integrating the continent in terms of transportation, ports, railways, and telecommunications; managing natural resources like water; energy development; and the struggle for food security.

To boost the continent’s competitiveness in the global market and address the infrastructure deficit, Africa needs at least 68 billion dollars in investment up to 2020, according to the Programme for Infrastructure Development in Africa (PIDA).

The World Bank particularly supports PIDA, a joint initiative of the African Union Commission (AUC), the New Partnership for Africa’s Development (NEPAD), and the AfDB.

“We are working together to grow the programme, which is a window of opportunities for the poorest countries,” Diop said.

AfDB director Alex Rugamba explained to IPS that “PIDA covers the sectors of transport, energy, water resources and information and communication technologies (ICTs).”

“It was designed for a period of 30 years, because without infrastructure we will not be able to reach the goal for the continent of six percent economic growth,” he added.

Rugamba said the programme must be given priority, in order to maintain steady growth over the next few decades. Forty billion dollars in investment will be needed in the energy sector alone, he added.

Brazil’s exports to Africa climbed from 2.4 billion dollars in 2002 to 12.2 billion dollars in 2011, while total trade – exports and imports – soared from 4.3 billion dollars to 27.6 billion dollars in the same period.

Diop and Rugamba both said that Brazil would play an important role in boosting investment in infrastructure in Africa.

“Brazil has experience in the process of harnessing water resources,” said Diop. “It has been a pioneer in clean energy from this source, with large dams already operating and under construction, and it has an excellent track record in mining and oil production.”

Africa is a new market, said Maria das Graças Foster, the CEO of Brazil’s oil giant Petrobras, who noted that the company is active in Angola, Namibia, Libya and Nigeria.

She pointed out that “important oil reserves have been found in Ghana and Uganda, while production now stands at 58,000 barrels a day in Nigeria, and at 2,000 barrels in Angola.”

Murilo Ferreira, the CEO of Brazilian mining firm Vale, stressed that the company has 7.7 billion dollars in investments in nine African countries, in copper, coal, iron ore and nickel mines.

Ferreira also said 900 kilometres of railways and a deep-water port are being built in Mozambique.

“It’s a long-term vision, and we want to achieve environmentally sustainable and socially responsible ways of doing things,” he said.

“We need to increase dialogue with local society, because we don’t want to come across as imperialists,” he added. “We are willing to address the demands of each population (in the countries) where we are active, because we aren’t perfect, and sometimes we make mistakes. It’s necessary to be humble enough to admit one’s errors.”

Former president Lula praised his country’s efforts in forging closer ties and cooperation with the economies of Africa. This is “a moment that requires audacity, to build a new Africa,” he said.

“Peace, democracy, growth and distribution of wealth are Africa’s watchwords for the 21st century. This is a time for unity and solidarity. Today there is a wealth of opportunities to be exploited by Brazilians, other South Americans, and Africans.”

Lula said “Africa cannot be looked at like it used to be seen, as a simple supplier of minerals and gas…We have to find African partners. We don’t want hegemony; we want strategic alliances.”