By Dominique Pires and Emmanuelle Provent
Throughout the 80’s, Africa was absent from the diplomatic priorities of Brazil, more interested in the consolidation of Mercosul. Until then, the continent was perceived as a major source of national culture and with whom the country had a historic debt. But it was also associated with a region in permanent wars, and therefore unable to reverse the poverty and underdevelopment. The turning point in Brazil's external relations with Africa only came with the governments of Fernando Henrique Cardoso and Luiz Inácio Lula da Silva.
The strategy change coincided with the initiatives of Angola in the international community for funding that would allow the reconstruction of the basic infrastructure, destroyed by an armed conflict that lasted nearly three decades. The Angolan government sought in China and Brazil financial support that was, until that time, denied by Western donors. It already was a producer of oil country, but still modest.
Currently, after China (US$ 14 billion), Brazil is the country that provides more loans to Angola. The five lines of credit signed between the two countries since 2006 total $ 5.2 billion. These financing are at the origin of the significant increase in Brazilian exports to Angola and the privileged position of the Brazilian building companies in the public works launched by that country.
Today, Angola grows again in a more sustainable way. Macroeconomic forecasts of the IMF from October 2013, indicate a growth of the Angolan economy of 6.3% in 2014 - which expands the opportunities for investment
The largest Brazilian building companies (Odebrecht, Queiroz Galvão, Camargo Corrêa, and Andrade Gutierrez, this through Zagope, Portugal) contribute to the development in the Angolan construction and maintenance of roads, dams and sanitation and water treatment infrastructure and urban regeneration and of ports.
From 2008, there was a contraction in activity in the construction sector. The global financial crisis led to a sharp fall in the price of oil - the main source of revenue of Angola, representing 40% to 50% of GDP. The Angolan state debt with the Brazilian building companies reached $ 2.5 billion. But the measures adopted by the Angolan authorities in planning and financial management of public works, coupled with the resumption of the price of a barrel of oil from the third quarter of 2009, allowed the Angolan state to pay the debt and resume an ambitious public investment from 2012.
Today the country starts to grow in a more sustainable and controlled manner. Macroeconomic forecasts of the IMF, from October 2013, indicate a growth of the Angolan economy of 6.3% in 2014 - which expands the opportunities for investment and business for Brazilian companies.
According to UNCTAD, Brazil is responsible for approximately $ 4 billion of direct investments in Angola between 2001 and 2010, behind the United States, France, England and China, but ahead of Australia, Italy, Portugal, Germany and Spain. In foreign trade, over the last decade (2000-2010), the trade balance between the two countries has always been very positive for Brazil, except for the years 2001 and 2008, during which the country imported large quantities of Angola oil. Brazilian exports to the Angolan market reached, in 2010, U.S. $ 1.073 billion. Sugar and meat (36.7%) were the main goods exported.
The opportunities are in various fields. Petrobras is present as operator in several blocks in both deepwater and shallow water. In this sector, the reciprocity of treatment between Angola and Brazil has worked positively. In Brazil, Sonangol acquired in 2009 the Brazilian oil company Starfish, sixth oil producer in the country. Through this company and the Portuguese oil company Galp Energia, in partnership with Petrobras, Sonangol is present in 21 blocks of a total of 33 dispersed by the seven Brazilian basins.
Angola also has the largest reserves of uranium of Africa. It has copper, iron, manganese and rare ores, such as gold, lead, zinc, tin, tungsten, titanium, vanadium, chromium and mercury. The African country also has large deposits of granite, marble and quartz. Everything, or almost everything, is unexplored, except for diamonds, whose production represents 1% of Angola's GDP. In this activity, the only Brazilian company active in Angola, but in a modest way in the face of the potential the country has, is Vale, through its participation of Gevale.
Brazil could also assist Angola in geophysical and geochemical survey of the whole of Angola, through the Mineral Resources Company Research (CPRM). To date, this survey was conducted only in 25% of the territory, and in the days when it was still a colony of Portugal, with the techniques of the time. It is pending the signing of a memorandum of cooperation to define the technical assistance and the training of Angolan staff.
Another sector in which Brazil has marked points is of the electrical energy, through Furnas Centrais Elétricas, Alstom Brasil or Engevix (via Odebrecht), in the activities of generation and transmission. For renewable energy development field, it proceeds the development of the largest agro-industrial project associated with the production of biofuels in Pungo-Andongo, province of Malanje. The Biocom, bioenergy company of Angola, has a 40% stake in Odebrecht.
Luanda and Fortaleza will be connected by the end of 2014 by a submarine fiber optic cable to improve the transmission of voice and data between the two countries. The project is organized by Angola Cables, joining the five largest telecom operators in the country.
Angola has given unmistakable signs of the importance it attaches to Brazil as a strategic partner in its development. A recognition that government and Brazilian companies can mean more business in a country with which there are so many historical and cultural ties.
Dominique Pires is Manager of Business Development at Mazars Angola.
Emmanuelle Provent is a partner at Mazars Brazil.