Blood Brothers: Brazil & Africa

Mon, 26 Apr 2010 11:12

Historical ties between Africa and Brazil date back many centuries, through the years of the African Diaspora and the Atlantic slave trade. From the 16th century, slaves were spirited away from Central and Western Africa across to North and South America to work as unpaid labour on sugar, coffee, cocoa and cotton plantations, as well as gold and silver mines.

This trade represented one of the largest migrations in human history, the effect of which was devastating to the African continent. Across the ocean, the African gene penetrated the Brazilian bloodline to such a degree that the Latin power is now home to the second largest black population in the world, outside of Nigeria. In fact, 90 million people within its population of 198 million claim direct African ancestry. By the middle of the nineteenth century, many former slaves had returned to West Africa, becoming prosperous merchants and entrepreneurs. Regular shipping lines were established and commerce between the regions began to grow. However Brazil kept a relatively low profile on African soil for the decades to come, only surfacing again in 1969, when Emílio Médici became President. In 1973, Brazil voted in favour of anti-colonialism measures in the United Nations (UN), which prompted numerous bilateral trade agreements and Brazil's participation in the African Development Bank (ADB).

Brazilian exports to Africa jumped from R705 million (US$90.4 million) in 1972 to R12.5 billion (US$1.96 billion) in 1981, while imports rose from R1.2 billion (US$152.9 million) to R15.4 billion (US$1.98 billion). Two important milestones cemented the relationship between Africa and Brazil, the first of which was large-scale South African investment into Brazil's mining industry. Leading this foray was Anglo-American, which took its deep mining expertise into the foreign goldfields.

The environment was very similar to South Africa's at that stage – politically constrained; business arenas that were defined by social connections; big family-owned businesses largely controlling the economy. The Oppenheimer Empire formed strong ties with like-minded families and enjoyed a variety of high-level connections. Brazil went on to become Anglo's most lucrative investment the world over, and helped it diversify away from the African continent. Anglo developed its own Latin-American company, recouping its initial investment in a matter of years.

The second milestone that tightened the bond was the Angolan War of Independence. What began as an uprising against forced cotton harvesting became a multi-faction resistance against Portuguese control. The three factions were:

• MPLA – The Popular Movement for the Liberation of Angola
• UNITA – The National Union for the Total Independence of Angola
• FNLA – The National Front for the Liberation of Angola (FNLA)

It sparked in 1961 and would only end in 1975, helped along by a Portuguese military coup in Lisbon, which ended the regime, eventually resulting in Angolan independence.

However, the peace was not to last. The three factions immediately began fighting between each other for the top post, with the MPLA emerging strongest. The revolutionary party officially signed Angola into independence in November 1975. However, a mass public exodus had already begun, and before the ink was dry, 300 000 people had left and civil war raged throughout the country – one that would last several decades and claim millions of lives.

Brazil, however, was the first Western nation to recognise Angola's independence under the MPLA. The reality was that Brazil was a far more relevant global player – economically and politically – than Portugal was, and the act forged a loyalty between the two ex-colonies that lasts to this day. In the same month, Brazil established ties with Mozambique, creating a firm foothold in southern East Africa and the Indian Ocean. Brazil placed huge value on its relationships with African countries, and with its political recognition came fervent commercial interest. Hard hit by the 1973 oil crisis, it developed a thirst for West African oil exports, and coupled with the diamonds and the vast, untapped potential of Africa, Brazilian firms flocked to the continent. In 1983, President Figueiredo became the first Brazilian president to visit Africa. Soon after, Brazilian construction companies, like Odebrecht, took on a variety of hydroelectric and infrastructure projects, and mining firm Petrobrás signed contracts for oil exploration. Over the next twenty years, Brazil built many close relations with Portuguese-speaking (lusophone) African countries. This cultural, and thus competitive advantage has stood the test of time, and is still today an advantage leveraged by Brazilian companies.

THE BIG HITTERS

Odebrecht's role in Angola was a muchdebated one. The relationship in question was a three-way between Odebrecht itself, Brazilian foreign policy in Angola, and the Angolan political dynamic. Many claimed that the construction giant simply became an instrument of foreign policy for Brazil. Over time, Odebrecht began to embed itself in the Angolan socio-political fabric, to such a degree that politicians were marrying off their daughters and sisters to the Brazilians. Today, the company is regarded as an integral part of the political economy in Angola. As a result, South African construction firms have long struggled to penetrate the region, mainly due to the competitive edge Odebrecht holds as a result of its dominance there for over 30 years.

Lyal White, Research Associate at the South African Institute of International Affairs (SAIIA), says, "South Africa will always compete with the Brazilian companies because they operate in the same 'sweet spots' as we do – construction, engineering and mining. South Africa either needs to team up with Brazil and take on China, or it can try to win little niche projects. The fact remains, China demands the biggest contracts, and neither Brazil nor South Africa will be able to compete while China keeps setting the price."

Vale, the second largest mining corporation in the world, is another huge Latin firm with its eye on Africa, including South Africa, Angola, the DRC, Zambia and Namibia. What started out as a stateowned steel and mining company is now a partially privatised giant leading the global production of iron-ore. Its main project in Africa is the Moatize coal plant in Mozambique, which is one of the biggest mining developments on the continent.

Lyal adds, "The reality is that these Brazilian firms are very astute in getting into difficult places and understanding very complex areas, because Brazil itself is a very difficult environment to work in. It's a huge country in terms of landmass; with 26 states, each of which operates under different laws, tariffs and barriers, and different rules and regulations. In that way, operating in Brazil is like operating in a continent of its own, and owing to that, its firms understand the African mentality and adjust to it well. The transition and relation between politics, economics and commerce in Brazil is quite similar to that of Africa. For example, if you're going to do business in Africa, you'll need to woo the politicians, and it's exactly the same in Brazil. Between the correlations and the language compliment in countries like Angola and Mozambique, it makes a lot of sense."

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