Brazillian President Dilma Rousseff and South African President Jacob Zuma, 2013. Courtesy of Brazilian Foreign Ministry
Ideas for Leaders #300

The 'Brazilian Way': The Future for Africa?

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Key Concept

Recent years have seen increased investment and activity in Africa from newly industrialised countries. While China leads the emerging-power pack in terms of trade and investment, Brazil could be the one to watch. A policy of development co-operation, begun in the early 2000s, means that the future of the South American country and the future of countries in Africa are closely linked.

Idea Summary

Africa’s growth and development prospects over the past decade have attracted the attention of investors, development agencies and governments across the world. ‘Traditional partners’ — i.e. the Americans and the Europeans — have been joined by new ‘players’ from Asia and Latin America.

China, unsurprisingly, leads the emerging-power league: trade between the country and the African continent reached more than $120bn in 2011; Chinese investment in Africa is reported to have stood at around $50bn in 2012.
With estimated FDI inflows of less than $20bn, Brazil trails by comparison. Despite this, the country’s activities in Africa are worthy of special attention — and are likely to exert a powerful influence on the continent. There are several reasons why. They include history and culture and geography and politics.

Africa and Brazil are, in many ways, ‘natural friends’. More than half of Brazilians claim direct African ancestry (largely because of the slave trade of the 17th century); several African countries — for example, Angola, Guinea-Bissau and Mozambique — are, just like Brazil, Lusophone.

Like Russia, but unlike India and China, Brazil is not entirely reliant on African resources for growth: it has significant energy and commodity resources of its own, making its approach in Africa seem generally less compulsive or commodity-driven.
Then there are Brazil’s political and diplomatic ambitions. Keen to become the leader of the developing South, it wants to consolidate links with other Southern countries — and increasingly relies on the African vote in forums such as the World Trade Organization and the G20. 

The principal reason, however, is an attitude to investment in Africa that is unusual, if not unique. Since the presidency of Luis Inacio ‘Lula’ da Silva (2002-2010), Brazil has encouraged, or even manufactured, a seamless link between business interests and development initiatives in Africa. This sets it apart from other investors. The ‘Brazilian way’ rejects the donor-led approach of the US and Europe, in which commercial activities and development aid typically remain separate, in favour of policy coherence. It brings together external ‘actors’ such as the Brazilian foreign ministry, major commercial players, development partners such as the Brazilian Agricultural Research Corporation (EMBRAPA) and the Brazilian National Development Bank (BNDES), and investment incentive programmes.

Brazilian companies in Africa are as competitive and as interested in healthy profits as their Chinese and Indian counterparts, but they have explicitly pursued an agenda in line with a foreign policy of development co-operation. Relative to China and India, for example, they employ a larger contingent of local labour and claim to adopt a longer-term and more sustainable outlook. (Brazilian construction-to-retail conglomerate Odebrecht, in Africa for 30 years, is now the largest private sector employer in Angola, and so established it’s almost seen as a local company.)

Brazil does not, it should be pointed out, have an exemplary record in Africa. The country has attracted criticism for its failure to push for greater democratic freedoms — and some of its commercial activities have attracted controversy.

Overall, however, its approach may be described as one that combines self-interest with an increased sense of responsibility as an emerging global leader and a progressive brand of ‘state capitalism’. 

Business Application

There are, it could be argued, three main implications for business:

  • Competition with and between emerging powers will help shape the commercial landscape of Africa.
  • Understanding the ‘Brazilian way’ will be one of the keys to understanding Africa and its development trajectory in, say, the next five to ten years.
  • Joint venture deals and partnerships with Brazil could be critical for companies wanting to ‘tap’ the African market — particularly, but not exclusively, in Portuguese-speaking countries
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Authors

Institutions

Source

Idea conceived

  • April 2013

Idea posted

  • January 2014

DOI number

10.13007/300

Subject

Real Time Analytics