Dancing Samba in the Savanna
By Dan Black
Brazil and Africa have always had a lot in common. Salvador, with its nearly 90% Afro-Brazilian citizenry, resembles countless colonial African cities. The city is living, drumming, capoeira-dancing proof of a massive African diaspora. In addition to demographics, the regions’ climates, geographies, and demographics are also starkly similar. Two countries, Angola and Mozambique, even share Brazil’s Portuguese Heritage. If Brazilian President Dilma Rousseff gets her way, the two regions will share even more.
For the past decade, an increasingly substantial amount of trade has crossed the Atlantic between Brazil and Africa. What was just $4.2 billion in 2002 is nearly $30 billion today. While historical Brazil-Africa trade was highly concentrated in the slave market, today’s relationship is the opposite, with far more exports leaving Brazilian shores than African. And as an even greater divergence from the past, today’s trade is constructive, humanitarian, and mutually beneficial.
As a member of the global south seeking to invest in fellow members of the same league, Brazil stands to greatly expand its influence while also expanding its markets. Many of these firms were founded during the corporatist “Estado Novo” presidencies of Getulio Vargas and Juscelino Kubitschek, and then hardened during a subsequent period of dictatorship. Today, after fifty to sixty years of near-monopolies in their domestic markets, companies like mining giant Vale have mastered their trades and are looking outward for expansion.
These corporations aren’t simply opportunistic entities looking to profit off a cheaper region. Besides, Brazil’s labor costs mean that Brazilian products are artificially expensive. As a result, most Brazilian exports are unfinished goods or services. Odebrecht, a construction conglomerate, and Petrobras, an oil and gas company, are among a handful a multinationals leading the expansion.
Despite being executed by corporations, many of the trade links to Africa are the product of an official Brazilian state decision. Behind every large investment is a large investor, and in the case of these Brazilian corporations, that investor is National Bank for Economic and Social Development. Known as BNDES, the bank is 100% controlled by the federal government and holds nearly the same assets as the World Bank, but grants five times the disbursements. Although BNDES made its first Africa-bound disbursement just seven years ago, the bank, and by association, Brazil’s federal government, is not shy about its plans for the region. BNDES has increased Africa-bound disbursements to over $750 million in recent years and just inaugurated a branch in Johannesburg, its third outside of Brazil. Until recently, BNDES’ efforts were concentrated in Lusophone countries, where they could leverage the common tongue and cultures. By opening an office in Africa’s largest market, BNDES is making a clear and calculated push for expansion.
Aiding the expansion are Brazilian corporations’ habits in Africa, which diverge significantly from those of the region’s current largest trade partner, China. Whereas Chinese corporations invest primarily in extractive industries for their insatiable domestic market, Brazilian companies have a different motive. They seek to grow the market, not suck it dry of resources. Their investments, largely concentrated in the infrastructure and energy sectors, are congruent with this goal, and allow Brazil to leave a positive legacy. Chinese companies, in contrast, leave vacuums.
Brazilian politicians, led by President Dilma Rousseff, are betting on their distinctly Brazilian development model to succeed in Africa. In negotiations with African partners, Brazilian politicians and businessmen stress their similar business culture and shared African roots. Nothing is more compelling, though, than Brazilian multinationals’ offers of employment. Chinese corporations are notorious in Africa for winning massive contracts and then importing entire Chinese workforces. When they do hire Africans, they are known to be abusive managers. There have been reported shootings of African workers by Chinese managers. Brazilian corporations leverage their benevolent approach to development by pledging to fill the ranks of their projects with locals and by making significant efforts to educate their host countries’ workforces. One company, Odebrecht, has even become Angola’s largest employer. This is no small feat.
Brazilian corporations, BNDES, and private lenders alike take massive risks when they operate in certain African countries. Compounding the risks are the massive sizes of these investments. In Mozambique, a Lusophone country, investments made by Vale alone approach the entire nation’s GDP. Mozambique represents the high risk and high reward associated with investments in Africa. While Vale has invested several billion dollars in their Moatize Coal mine and its associated transportation infrastructure, they must remain cognizant that Mozambique, like many of its neighbors, was recently embroiled by major civil war. The AK-47 on its flag is a vestige of that era. The war may have ended, but as long as an assault rifle adulterates Mozambique’s flag, any peace and stability within the country’s borders can be shaky, at best. Angola, the continent’s other Lusophone country and the largest African recipient of Brazilian exports, was also in an extended state of conflict, theirs lasting from 1961-2002. Wounds from such massive wars do not heal quickly, and it makes these countries difficult to operate in. As altruistic as companies like Odebrecht may seem, they will only remain in a country if there is money to be made. They owe their shareholders a dividend and they owe BNDES their loan payments.
As with any unprecedented international development, there are many questions surrounding Brazil’s relationship with Africa. Angolans reading “Feito em Brazil,” on a product tag doesn’t imply a strong diplomatic and cultural relationship between both countries, but we must consider the extent to which Brazil plans to extend its influence beyond trade. And should Brazil’s economy experience a recession, should countries like Mozambique expect an influx of Brazilian labor, akin to the recent Spanish diaspora to Latin America? Will a heavy presence of constructive Brazilian multinationals be enough to discourage conflict? After all, peace is what allows the money to flow.
Since Brazil seeks an advisory role in these nations’ development, it is also worth wondering if African countries will follow Brazil’s lead adopting similar import substitution industrialization policies and relying heavily on unions, both of which would significantly increase the cost of doing business. While we can draw plenty of doubts on the future of Brazil-Africa partnerships, one thing is overwhelmingly clear today: from a development standpoint, Brazil’s flavor of south-south partnerships could offer Africa the square deal it’s never been dealt.
Dan Black ’16 is a Political Science and Latin American Studies double major. Contact him at email@example.com.