17.12.2012. Two Ex-Portuguese colonies, Angola and Brazil, have intensified their relations. What is the role of Brazil? Is it only interested in a market with language similarities? Or rather, is it another emerging economy attempting to tap into Angolan natural resources?
Brazil, the dominant economy in Latin America has strengthened its relationship with African countries. In 10 years the number of embassies on the continent increased from 17 to 37. Trade between the 6th world’s largest economy and Africa has reached US$ 27.6 billion in the same period. Lusophone Africa, ie. African Portuguese speaking countries, is responsible for most of this share.
Angola and Brazil have developed a solid partnership since very early stages. Interestingly, Brazil was the first country that formally recognized Angola as an independent state. Today, Angola is the principal destination for Brazilian investment and franchising in Africa.
Brazil has engaged in multiple types of investments in Angola, ranging from construction to cultural activities. Odebrecht, for example, has been highly involved with infrastructural project, such as: dams, hospitals and housing. Odebrecht has carried out 16 projects in Angola and has currently 47 in process. The same company has also demonstrated interest in oil, biofuel and diamond, making itself the biggest employer in the Angolan private sector. Petrobras, the 10th world’s largest oil company, has focused on the exploitation of oil, and last but not least, Vale has been focusing on the mining sector.
The two biggest Brazilian private televisions, TV Globo and Record, have been increasely active in Angola in terms of spreading the Brazilian culture and lifestyle. Hence, many Brazilian companies, from small to medium-sized enterprises, have not encountered any serious obstacles in the Angolan market, as both countries are culturally and historically tied, and do not face any language barriers.
Not surprisingly, Brazilian foreign direct investment in Angola is concentrated in the construction and natural resources sectors. This can be attributed to the fact that, mostly, the only Brazilian companies which are financially prepared to invest abroad operate within those sectors. Therefore, The Brazilian Development Bank – BNDES - has strived to stimulate less powerful Brazilian companies to invest in Africa, mainly in Angola. Thus, it has granted credits to enterprises which are affiliated with beverages, clothing, foods and etc. In 2007 this credit line amounted to US$ 149 million, increasing to US$ 766 million in 2009.
It is to be argued that this outward investment from Brazil to African countries, principally Angola, is only “awakening”. True, a partnership was settled considerably long ago. On the other hand, investments were intensified during Lula’s Government, who strived to engage Brazil in more South-to-South cooperation, weakening the importance of the United States and Europe.
Skeptics argue that this partnership is “the light in the end of the tunnel” and that Brazil, as an emerging economy, wants to be perceived as a “consensus builder” for development, and thus, win a permanent seat at the United Nations Security Council. On the other hand, it should not be forgotten that the so called South-to-South cooperation strengthens southern solidarity and in the case of Angola, can allow the development of projects based on Brazilian development experiences.
Sources: www.chathamhouse.org, www.mundorama.net