Business in Africa

(by Juan Manuel Pérez, Patricia Vlaicu, Blanca Ribas, Larissa Duarte and Eduardo García)

Good news for the African continent; several Brazilian companies have been launched to open their companies lured in many cases by a common culture and the extraordinary wealth of these lands. The spirit of former Brazilian President Lula da Silva to diversify his country’s markets, thus increasing the influence of Brazil in other developing nations, has been mirrored in the new Brazil President Dilma Rousseff.

In 2005, President Lula, established the first foundations to create diplomatic and trade ties with Africa; Since then the relationship between the two countries has been strengthened enormously, clear examples are the various meeting between the Presidents of both countries or the opening of 16 new Brazilian embassies in Africa.

It should be noted that Brazil has found in Africa support to his campaign to get a permanent seat on the UN Security Council, so nobody dismisses the geopolitical goals as the real trigger for the cultivation of these relationships. Dilma Rousseff faces “accusations” highlighting the historical ties between both countries for centuries, being the port of Gorée the starting point for thousands of Africans sold into slavery and brought to the New World.

The truth is that whatever the intentions, the Brazilian multinationals have been in search of business opportunities in various parts of Africa.
Ranging from veterans with extensive experience in the continent, as the construction company Odebrecht, Marcopolo bus maker (auto bodies ´factory pioneer in Africa; started its activity in 1999 after buying a factory in South Africa and since then it has not stopped growing, reaching double the capacity of its operations during the year 2010 coinciding with the World Cup Championship) and the State-owned company Petrobras (this famous oil company plans) invest around 3 billion dollars in Africa between now and 2013, mainly in Angola and Nigeria. (After the discovery last year of vast reserves in the waters of ultra deep off the coast of Brazil, some experts believe that it is possible that there are similar deposits along the West coast of Africa), even novice players as the Vale mining company (the largest producer of the world iron ore, is investing 1.3 billion dollars in a project of coal in Mozambique; as he has declared the President of vale Roger Agnelli: “Africa is the next frontier in the industry of natural resources in the world”) or the sugar company Açúcar Guarani (which is knowing exploits the advantages offered to them by the former Portuguese colony Mozambique. “We consider Africa favorably due to geographical and cultural proximity and the great potential of growth of consumption”, said Jacyr Costa, executive director of Açúcar Guarani. “One of the advantages of operating in Mozambique is that African sugar has preferential access in the common market of the European Union”, he said).

Açúcar Guarani joins the growing flow of Brazilian companies that are focusing on the African continent for trade and investment. This growing group of corporate giants and smaller firms Brazil are betting in Africa is powered by a national strategy in which formerPresident Lula da Silva and currently President Dilma Rousseff have played a key role. 

Imports and exports grew from 5 billion dollars in 2002 to 26 billion dollars in 2008 and today represent 7 % of total world trade in Brazil. One third of trade with Africa is with Nigeria, oil country. Brazilian companies are particularly active in Angola, another former Portuguese colony where about 100 Brazilian firms currently have operations and where it is estimated that they live and work 25,000 Brazilians. Brazilian entrepreneurs find it relatively easy to do business in Africa, partly owing to cultural ties as both have a language in common with several former Portuguese colonies.

However, Brazil came relatively late to the region, compared to a country like lack of direct flights China. The lack of direct flights is a significant disadvantage. The South African Airways airline offers daily flights from Rio and São Paulo to Johannesburg, but the air link between Brazil and the West coast of Africa is scarce.

Despite this, the Brazilians say they are committed to Africa in the long term. “I want to sell more to those who never bought anything our continent to be 700 million in the next 25 years,” said Dilma recently.


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Students of Foreign Affairs doing a project on Africa's current news.

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