Brazil’s Africa Exports Show Major Growth

By Ben Tavener, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Exports from Brazil to countries in Africa have increased five percent year-on-year, totaling US$5.53 billion in the first half of 2012. The figures mean demand from Africa now outstrips that from the Middle East, and the total is also greater than Brazilian exports to Germany and France combined, O Globo newspaper reports.

Demand has risen sharply in the past decade: in 2001, Brazil’s exports to Africa amounted to US$1.35 billion. In 2011, that figure was US$12 billion.

Experts believe the increased exports are down to greater political stability in Africa, which has allowed the continent’s wealth to swell, principally through exploiting natural resources.

Businesses, investors and government officials in Brazil have been collaborating to bring about greater interest in Brazilian goods in Africa, which currently accounts for 4.7 percent of demand for Brazilian exports. However, experts believe African appetite could soon reach ten percent of demand.

Carlos Abijaodi, Operations Director at the Brazilian National Confederation of Industry (CNI), says Africa is the ideal destination for Brazilian goods, highlighting the initial work on the ground in Africa put in by leading Brazilian companies such as mining giant Vale, and underlines the continent’s substantial growth potential:

“The Africans have always bought primarily from their former European colonies, out of tradition and factors such as agreements, but this is beginning to change. It is clearly not an easy market […] and despite hard-fought stability in the region, it is still considered a riskier market, but it is ideal for larger companies,” he told O Globo newspaper.

Ex-President Lula kick-started the trend for investing in Africa, traveling there twelve times during his eight years in office. However, in President Rousseff’s time at the helm, she has made just one trip to Africa, predictably visiting fellow BRICS member South Africa, and former Portuguese colonies Angola and Mozambique – which have clear historical and cultural ties with Brazil.

Some analysts have noted the limitations of focusing on these “obvious” countries, and point out that Egypt, for example, imported US$1 billion of Brazilian goods in the first half of 2012, almost matching the total that the continent as a whole imported in 2001 – US$1.35 billion.

Aklilu Shiketa of Ethiopia’s Ministry of Foreign Affairs told The Rio Times that Brazil is starting to go beyond this safe, ex-colony approach and should continue on this path.

He believes a visit by Brazil’s Minister of External Relations, Antonio Patriota, to Ethiopia this April set a milestone in broader Brazil-Africa relations – not only because Ethiopia is the headquarters of the African Union, but is also the continent’s fastest growing economy.

“Africa has been benefiting from its trade with Brazil, but what is important at this stage is to work together to expand and diversify the relation and make [it] beneficial to both sides.”

“If the trade balance continues to be increasingly beneficial to Brazil it will not be sustainable. [Instead] Brazil must expand such tools as credit lines, and export guarantee [programs],” he said.

The Brazilian government seems on this path: recently US$300 million was allocated for biofuel production in Mozambique, a US$2 billion credit line was set up for Angola, and other sizable investment funds – including one by Brazil’s top investment bank, BTG Pactual, have shown Brazil is ready to fund infrastructure, energy and agriculture projects throughout Africa.