Going south

A new geography of international trade called "South-South" - that is the ambitious goal of Brazilian President Luiz Inácio “Lula” da Silva. The former trade union leader wants to better connect his country with other developing and emerging nations, a vision he already announced back in 2004 at a UN trade conference in Sao Paulo. While he wanted to continue to export to industrial nations, he also emphasized that he was looking for new opportunities. "We want to foster partnerships, which enable better cooperation between the economies of the South," Lula said.

That strategy seems to work. Today Brazil sells more goods to developing and emerging countries than to countries in the northern hemisphere. China has become Brazil's third largest trade partner, after the US, and close behind neighboring Argentina. Aside from China, Brazilian companies have increasingly focused on Africa, a continent, which in the past was regarded mainly as the home of former slaves.

Lula himself already has travelled to Africa eleven times and doesn't get tired of repeating that Brazil is home to the largest population of African descent outside of Africa. The official export agency APEX has also intensified its efforts and earlier this month a delegation of Brazilian businessmen visited South Africa. Maurício Manfré, who leads the project within APEX, doesn't view himself merely as a representative of Brazilian companies. He is also on the look out for products, which he can import. "We want to expand and intensify this relationship," he says.

Rapid increase in exports

In the past ten years Brazilian exports to sub-Saharan Africa have increased almost eightfold. Last year they reached more than ten billion US dollars, five percent of all Brazilian exports. Angola was Brazil's number one export destination with two billion US dollars, followed by South Africa with 1.8 billion dollars and Nigeria with 1.5 billion dollars respectively.

Especially in the midst of the global financial and economic crisis new markets in Africa are more than welcome, says Jorge Duarte de Oliveira, the director of Exportaminas, the export agency of the South Eastern Brazilian state of Minas Gerais: "The emerging countries have suffered considerably less from the international crisis," he explains. "They offer very attractive markets to small companies, which produce consumer goods here in Brazil for the middle and lower class." Jorge Duarte de Oliveira is convinced that those smaller Brazilian producers will find the same kind of customers in Africa and the Middle East.

Wide range of Brasilian exports to Africa

While two thirds of Chinese imports from Brazil are commodities like soy and iron ore and Bejing has little interest in industrial products, Brazil's range of exports to Africa is more diverse. Only one third are commodities, two thirds consist of assembled products, from textiles and furniture to agricultural machines.

"Africa hasn't been able yet to develop its own industries. That's why the Africans buy a large part of Brazil's industrial exports," says Carlos Abijaodi, a trade expert with the industrial association of the federal state of Minas Gerais. That is the reason why Brazil's range of products is broad, he explains Brazil is also closely related to Africa, adds Abijaodi and says that he noticed that through his international contacts. "They have similar customs and in the Portuguese speaking countries in Africa like Angola and Mozambique we share the same language."

Brazilian multinationals invest billions in Africa

Brazil's most important trading partner in Africa is Angola. The oil-rich country which boasted double-digit growth rates in recent years has attracted investments by many Brazilian companies. Petrobrás, the state-run oil concern, is surveying Angola's coast for possible oil fields while construction firm Odebrecht maintains roads and Brazilian conglomerate Camargo Corrêa builds a 370 million dollar cement plant in Angola.

But in the near future, Mozambique, Africa's most populous Portuguese speaking country, is likely to also become more attractive for Brazil. Vale, the leading Brazilian mining company, invests 1.3 billion dollars there to exploit coal near Moatize in central Mozambique. Moatize is considered to be one of the largest unexploited coal reserves in the world. It could provide high quality coal for more than a hundred years.

Author: Johannes Beck

Editor: Patrick Vanhulle/Michael Knigge