Brazil Strategizes to Expand Sales to Africa

[caption id="attachment_2282" align="aligncenter" width="615"] Map attributed to Nicolas Raymond, Free Grunge Textures/Creative Commons[/caption]

Portuguese Translation of the Week

This week, the Brazilian government will launch a grand strategy to increase exports of manufactured goods and promote the investments of Brazilian multinational companies in Africa. An agenda for action, adopted by the Council of ministers of the Chamber of Foreign Trade (CAMEX), formally began today with the arrival of a delegation of Brazilian authorities and businessmen in Nigeria, the first part of a tour that will cover over twenty-four countries in Africa by the end of 2014.

O governo brasileiro dá largada nesta semana a uma grande ofensiva para aumentar as exportações de produtos manufaturados e promover investimentos de multinacionais verde-amarelas no continente africano. Uma agenda de ações, aprovada pelo conselho de ministros da Câmara de Comércio Exterior (Camex), tem início formalmente hoje, com o desembarque de uma delegação de autoridades e empresários brasileiros na Nigéria, primeira escala de um giro que englobará mais de duas dezenas de países da África até o fim de 2014.

This article has been translated from Portuguese. Click here to read the original version on Portos e Navios.

The intention of the Brazilian government is to take advantage of Africa's rapid economic growth, which reached an average of 4.6% per year last decade, and to boost the sales of manufactured goods. After the outbreak of the global financial crisis, Brazil was not able to recover its exports of manufactured goods to Africa, which reached US$4.7 billion last year.  "In 2008, they amounted to US$6.5 billion," said the executive-director of the Ministry of Development, Industry, and Foreign Trade, Ricardo Schaefer.

Schaefer will lead the mission in Nigeria, a country that disputes second place with Egypt for largest GDP in the region, behind South Africa. He will run the meetings of the Brazilian delegation with five ministries of the Nigerian government. He will also be the main representative of the committee that will visit Algeria and Morocco in December. The Secretary of Foreign Trade, Dniel Godinho, will lead delegations in Angola, South Africa and Mozambique.

One of the highlights of all these visits is the Brazilian proposal to negotiate bilateral investment agreements – "but without all the unconscionable clauses of the past," notes Schaefer, differentiating the "facilitating" agreements that the Presidential office has an interest in closing. For these treaties, CAMEX wrote a proposal in partnership with the National Confederation of Industry (CNI) and the Federation of Industries of the State of São Paulo (Fiesp).

The secretary noted that these treaties bear no resemblance with the agreements signed by Brazil with more than a dozen countries – mostly European – in the 90's. The treaties were never approved by Congress. In those cases, for instance, they established arbitration by international courts and cash payments for expropriations.  This time around, the focus is to mitigate risks and facilitate investment by companies, with softer mechanisms.

Schaefer explains what the advantages are: these agreements can guarantee the issuing of documents and certificates to accelerate the implementation of investments, provide for the rapid process of obtaining work visas, and create a type of "ombudsman" to mediate disagreements. This would be a figure mutually agreed upon by the signatories to the agreement, similar to government agencies, with the objective of avoiding judicial disputes.

"These agreements will allow for a high-level relationship with African governments and a mitigation of risk for Brazilian investments. Today, we have no bilateral mechanism to address these issues," stated Schaefer.

Through its strategy, the Brazilian government was able to get the Union to guarantee the export credit insurance (SCE) for micro and small companies, with a gross revenue of up to $90 million reais per year, and foreign sales of up to US $1 million. The idea is to allow these companies to also participate more intensely in efforts to export manufactured goods to the African market.

The Ministry of Development is preparing to launch an "Africa Portal" in the coming weeks as a way of providing "business intelligence" to companies interested in doing business in the continent. This online system was created by Apex-Brazil. "It is a comprehensive guide with economic, commercial, corporate and investment information for about the 54 countries in the region."

In Nigeria, the first destination of the mission, exports of processed foods and Embraer aircrafts are among the priorities.

Article translated by Anna Cardenas, Staff Intern for the Brazil Institute at the Wilson Center.