Brazil and Other BRICS Compete in Africa

By Ben Tavener, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Five of the world’s biggest emerging economies, which together make up the BRICS group – Brazil, Russia, India, China and South Africa – have met in Durban, South Africa, to take part in the fifth annual BRICS Summit. While the event is aimed at cementing relations between the countries in a show of strength and unity that presents an alternative to Western economies, it is also expected to highlight growing competition.

President Dilma Rousseff arrives in South Africa for the Fifth BRICS Summit, Rio de Janeiro, Brazil News.

President Rousseff arrives in South Africa for the Fifth BRICS Summit, photo by Roberto Stuckert Filho/PR.

The five BRICS nations now account for seventeen percent of global trade and direct foreign investment in the grouping has tripled in the last decade, according to a UNCTAD report released on Monday.

The summit held on March 26th and 27th, announced the creation of a BRICS crisis fund, the Contingent Reserve Arrangement, with an initial pledge of US$100 billion. Brazil and China have also signed a deal for a line of credit worth US$30 billion, shoring up trade between the two economies.

The fact that this year’s summit is taking place in Africa is significant: trade between the BRICS and African nations has increased tenfold in the past decade, the report says.

Trade between the BRICS and African countries has now reportedly even outpaced inter-BRICS trade, meaning fierce competition for influence over the fast-developing continent’s natural resources.

Due to China’s acute reliance on importing huge quantities of commodities and foodstuffs to keep its economy booming, it is by far Africa’s biggest business partner, with India a distant second. Although Brazil has reported to have ramped up its rapprochement with various African countries, direct investments in Africa remain low.

Despite the fact that demand for Brazilian imports across Africa has also risen sharply in the past decade – from US$1.35 billion in 2001 to US$12 billion in 2011 – Brazil has focused predominantly on Mozambique and Angola. Locations where major Brazilian companies such as Vale, Petrobras, Andrade Gutierrez and Odebrecht have set up African bases.

Brazilian President Dilma Rousseff in Mozambique in 2011, Rio de Janeiro, Brazil News.

President Rousseff underlined Brazil’s natural alliance in Lusophone countries when she visited Mozambique in 2011, photo by Roberto Stuckert Filho/PR.

Yet China has made inroads into these countries as well, and therefore Brazil now has to compete for lucrative infrastructure, mining and exploration project bids.

The president of the Brazil-India Chamber of Commerce, Robert Paranhos do Riobranco told the BBC that Brazil was losing out, “Compared to India and China, Brazil is passing up many opportunities in Africa because of entrepreneurs’ fears of exploring the continent.”

Luiz Carlos Prado, professor of economics at UFRJ, told O Globo newspaper that Brazil needs to use the international ties it has forged in recent years, “[Brazil] needs to take stock: either its businessmen do not know how to take advantage of the opportunities that have opened up, or it is somehow not in line with their business strategy.”

However, in an interview with The Rio Times, Neil Shearing, Chief Emerging Markets Economist at Capital Economics, questioned whether Brazil should be investing heavily in Africa, “Both Brazil and African countries export large quantities of commodities to China, and therefore Africa can even be seen one of Brazil’s competitors.”

However Mr. Shearing also said Brazil’s recent slowdown is the legacy of being overly reliant on commodity exports – price rises for which, in the recent past, brought significant income with very little work. The government must now focus on building a strong, resilient and flexible manufacturing sector, and an attractive business environment.

8 Responses to "Brazil and Other BRICS Compete in Africa"

  1. Pingback: Brazil and Other BRICS Compete in Africa | Radar

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  4. Pingback: Brazil Urges Inter-BRICS Investment: Daily Update | The Rio Times | Brazil News

  5. emmanuel  April 2, 2013 at 1:06 PM

    before Nigeria used to go Brazil buying new motors spare parts, but now china don take over Brazil in nigeria, and in all Africa, Brazil Need large production for all Items, Brazil product is a very GOOD Quality, who is china to in Production before, wee need Brazil to start Large Production againe plaese, Brazil Motors spare parts is a very GOOD product in Nigeria and the world. Thank and God bless you

  6. Pingback: BRICS Summit Takes Place in South Africa | The Burton Wire

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  8. Pingback: Brazil to Cancel US$900 Million in African Debt | The Rio Times | Brazil News

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