Brazilian connections

 Of the three emerging powers – China, India and Brazil – whose engagement with Africa is rising fast, Brazil’s foreign policy involvement in Africa is the least developed. But regional cooperation and stronger Brazilian connections in agriculture, finance and construction of infrastructure, African countries that straddle the Guinea Savannah can adopt and adapt lessons from Brazil’s Cerrado region and turn Africa into a regional and global food basket.

At the forefront of Brazil’s commercial foray into Africa are Vale, a mining company, and Odebrecht, one of the world’s top contractors. BTG Pactual, an investment bank, launched a $1 billion investment fund, the second largest exclusively Africa-fund, which will invest in infrastructure assets. Ernst & Young describes it as “one of the largest funds aimed at the region since the global economic crisis began”.

Historically, Brazil’s origin is tied to Africa. Apart from ethnic ties, there are linguistic ties as well; there are five Lusophone (Portuguese speaking) countries in Africa: Angola, Mozambique, Equatorial Guinea, Guinea-Bissau and Sao Tome and Principe. Total trade between Brazil and Africa increased by 575 percent from $2 billion in 2000 to $27 billion in 2011 (Mozambique is the biggest beneficiary).

However, beyond culture and history, the geography is a more promising tie that should be explored and exploited today. Geographical similarities between Africa and Brazil offer huge lessons for developing a Green Revolution in Africa. 

Brasil’s Cerrado region, at 204 million hectares, represents 30 percent of the country – just like the Guinea Savannah (600 million hectares) makes up 30 percent of sub-Saharan Africa, 25 percent of farmers rely on it and it is regarded as “one of the major underutilised resources in Africa”; only 7 percent of it is utilised.

In 30 years, the Cerrado was turned from a wasteland into Brazil’s bread basket providing for 50 percent of soya bean, 33 percent of maize and 25 percent of rice production. This has placed Brazil as the global leader in agriculture with the opportunity of being the largest agribusiness superpower. R&D, appropriate business models and farming practices, and technology have made Brazil the supplier of diverse products from beef to soybean oil. 

Benefits gained from the Cerrado include significant contribution to GDP (25 percent), employment (37 percent) and global leadership in the export of soya bean. The Guinea Savannah, too, supports a variety of crops: maize, sorghum, millet, cotton, cassava, soya beans, cowpeas and yams. Though cassava, cotton, maize, rice, soybeans, and sugar are regarded as competitive commercial crops in Africa, Nigeria spends N674 billion to import rice, sugar and fish. 

In Brazil, agribusiness is yielding fruits for large scale and smallholder farmers, shareholders and the poor. Pro-poor policies coupled with business incentives have made agribusiness a major stimulus of Brazil’s economic growth. Several Brazilian agribusinesses have listed on Novo Mercado, a section of Bovespa, the Brazilian stock exchange. Novo Mercado offered local and foreign investors a new asset class where self-regulation and corporate governance converged. Several of these agribusinesses have annual sales of more than $1 billion and are part of Brazil’s “billionaires’ club”.