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Brazil to Join the Battle for Africa's Energy Riches

In October Brazilian President Dilma Rousseff made a state visit to Africa, consisting of South Africa, Mozambique and Angola.

Quick – what was President Roussef’s insider edge in Mozambique and Angola?

Two things.

First, Brazil, along with Angola and Mozambique, were originally Portuguese colonies.

Secondly, the three countries share linguistic ties, meaning that President Roussef’s team did not need interpreters to explain their agenda.

And an impressive agenda it is.

Later this month President Roussef plans to send a team from the country’s Agencia Brasileira de Promocao de Exportacoes e Investimentos (Brazilian Trade and Investment Promotion Agency, or APEX-Brasil) to South Africa, Mozambique and Angola, to discuss investment and trade opportunities. Aside from APEX-Brazil officials, the entourage will include Brazilian entrepreneurs. Heading the delegation will be Ministerio do Desenvolvimento, Industria e Comercio Exterior (Ministry of Development, Industry and Foreign Trade) Minister Fernando Pimentel, who, along with his entourage, will visit Mozambique on 21-22 November, then moving to Angola for 23- 25 November before concluding their visit in South Africa from 28 to 30 November.

APEX-Brasil is an independent agency that works in association with Brazil’s Ministry of Development, Industry and Foreign Trade, supporting foreign projects to both increase Brazilian exports and attract foreign investment into Brazil. The agency’s clout is substantial, as Apex-Brasil supports over 12 thousand companies in 80 sectors of the Brazilian economy.

Why should Africans listen to Brazilian representatives? Brazil, Latin America’s largest economy, is now the world’s ninth largest, whose soaring growth rate is expected to propel it to fifth place within a decade, and has a friendly market for foreign investment.

While up to now Brazil has prioritized its relations with its Latin American Mercosur trading bloc partners, the country’s booming economy is now generating an outreach program well beyond the nation’s traditional diplomatic concerns, especially Africa, as it seeks to become the world’s fifth largest economy by 2022, the bicentennial of its declaration of independence from Portugal.

Another insider edge? Over half of Brazil’s population is of African ancestry. Brazil has the world's second-largest black population after Nigeria.

And Africans will undoubtedly be willing to listen. Over the last five years Angola has managed to reach two-digit economic growth in practically half the decade, with a record in 2007, reaching 22.7 percent, according to World Bank figures.

Mozambique?

In 2001 the nation achieved a growth rate of 11.9 percent, but over the past half-decade has maintained a constant rate of growth of between 6 and 9 percent.

Bilateral trade between Brazil and Africa jumped from $4.2 billion in 2000 to more than $20 billion as of September.

Quite aside from trade deals, Brazil’s potential trade partners will undoubtedly seek to learn from the country’s dramatic economic turnaround. The Brazilian economic growth model has gone through three phases.

First came wage-led expansion, with income transfers and higher minimum wages leading to increased consumption and a recovery of investment. As the government under former President Luiz Inacio Lula da Silva tamped down inflation, the economy’s second phase was investment-led growth, including higher public investment and financial incentives to private investment. Now Lula’s successor President Rousseff is emphasizing education and innovation to spur long-term growth.

All of the above issues have given Brazil multiple inside edges, all valuable lessons that African nations cannot learn from the United States, the European Union nor China. Brazil is not interested in military bases (the U.S.), nor exploitative lopsided trade agreements (the E.U. and to a lesser extent, China.) Brasilia’s interest is trade, period.

According to data from the International Monetary Fund for the last decade Angola and Mozambique were among the world’s ten fastest economies. And a major factor in both cases was the rise of an indigenous energy industry. Angola is now China’s largest source of oil imports, and last month U.S. and Italian companies announced that they have found the natural gas equivalent of more than 4 billion barrels of oil offshore from Mozambique.

So, what does Brazil bring to the table? Its state energy company Petrobras, is a world leader in offshore energy development, having a number of major “ultra-deepwater” discoveries in the past few years, including the Lula superfield off the coast of Rio de Janieiro, estimated to contain 8 billion barrels of oil. Petrobras expertise would be of great use to Angola’s Sociedade Nacional de Combustiveis de Angola, E.P., or Sonangol, the Angolan state oil company, whose offshore fields are also "ultra-deepwater," discoveries, while Mozambique is still seeking the best deal for its offshore deposits.

Proof of the Brazilian value-added humanitarian agenda in Africa versus the straight business deal? On 9 November former Brazilian President da Silva received Africare’s Leadership Award at the 2011 Africare Bishop John T. Walker Memorial Dinner in Washington, D.C. for his efforts to strengthen economic and political cooperation across the African continent.

But Brazil’s agenda is not limited to assisting former Portuguese colonies improve their situation.  On 8 November Brazilian Finance Minister Guido Mantega said that Brazil was ready to help the International Monetary Fund tackle the EU’s economic crisis, remarking, “Brazil and other countries, including the BRICS are ready to strengthen the IMF. But this depends on them doing the tasks they set out to do.”

Africa’s energy riches, long thought to be stitched up by China, the EU and the U.S., have a new competitor, and one that speaks the language. And bureaucrats in Brussels are doubtless fighting over themselves to be among the elect to fly to Rio to negotiate a loan.

By. John C.K. Daly of Oilprice.com




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