This is Africa | 5 December 2013
Brazil’s development bank heads for Africa
By ADAM GREEN
BNDES will open its first Africa office as it looks to finance the expansion of Brazilian companies across the continent
The Brazilian development bank, BNDES, will open its first Africa office on Friday in South Africa’s commercial capital of Johannesburg. Only the third overseas office for Banco Nacional de Desenvolvimento Econômico e Social, after Montevideo and London, it signals growing ties between Latin America’s largest economy and the world’s fastest growing continent. Its goal is simple: to push Brazilian companies deeper into Africa.
“We feel we are latecomers. We should have been in Africa for some time, but now we are ready,” says Sergio Foldes, managing director of the lender’s international division. “By being close to institutions and decision makers, by being able to cover the region better, we can take better decisions.”
The move caps a decade-long strengthening of commercial and diplomatic relations between the regions. From 2000 to 2012, Brazil-Africa trade grew from $4.9bn to $26.5bn. Africa’s share of Brazil’s international trade has doubled from 3 percent in the 1990s to approximately 6 percent today. In the diplomatic sphere, Brazil now has 37 embassies in Africa, up from 17 in 2002. Since 2003, 17 African embassies have opened in Brasilia, adding to the 16 already there, making the Brazilian capital the largest concentration of African embassies in the southern hemisphere.
Much political energy came from Brazil's former president ‘Lula’ Da Silva, who visited 21 African countries during 12 visits under his tenure, an effort unprecedented among Brazil’s past leaders. Mr Lula`s successor Dilma Rousseff has crossed the Atlantic on a few occasions, but her sight line has been narrowed by Brazil`s economic troubles.
Nonetheless, Brazilian companies are building on the goodwill laid down by Mr Lula, and are responsible for some of the some of Africa's biggest investment plays. In coal and gas-rich Mozambique, the mining giant Vale and the conglomerate Odebrecht are collaborating on the $4.4bn Nacala Corridor – a BNDES beneficiary project that is critical to ensuring Mozambique’s huge resource wealth can be realised. In energy, Petrobras has a strong interest in south-western Africa, which shares similar geology to Brazil's pre-salt oil reserves.
In agriculture and biofuels, a joint venture between Odebrecht, Angola’s national oil company Sonangol and Demer are funnelling $400m into sugarcane projects, and Brazilian agencies are taking advantage of climatic and ecological affinities to bring know-how and technology gained from the lessons of Brazil’s fertile cerrado to African terrain, through collaborations in Mozambique, Senegal, Benin, Burkina Faso, Chad, and Mali.
BNDES’s goal is to provide loans and technical assistance to help Brazilian companies at home and abroad. It has disbursed $2.9bn to African projects since 2007, channelled to the Lusophone countries (Angola, Mozambique and Equatorial Guinea) as well as larger economies such as Ghana and South Africa. In 2008, a stimulus programme for Brazilian companies in Africa culminated in the disbursement of $265m, rising to $360.5m the following year
The development agency has been highly active in Angola, where post-war reconstruction and major oil revenues provide a perfect setting for Brazilian companies’ comparative advantage in infrastructure and energy. It has also financed a portfolio of infrastructure projects in the southern African region, spanning hydroelectric plants, ports, roads and housing, through the likes of Odebrecht, the conglomerates Andrade Gutirrez, and Queiroz Galvao. BNDES financed the sale of several Embraer aircraft to African airlines, and helped Marcopolo and Scania build the Johannesburg bus system for the 2010 World Cup.
Companies seem satisfied at the news of a ramped up African presence. "At Odebrecht we are very pleased with BNDES decision to set up an Africa office," says Gustavo Fontes, principal at the Odebrecht Africa Fund. "This decision shall enable an even more agile and mutually beneficial relation[ship] between Brazil and the African continent, and comes as an added recognition by the Brazilian government of the strategic relevance of such relations."
“The launch of BNDES Africa office is timely and comes to support and strengthen the trade and investment ties currently existing between Brazil and Africa,” says Olivier Rwamasirabo, Vale's general manager, corporate affairs for Africa and the Middle East. “We believe that this move will… be an important source of information on investment opportunities in Brazil for potential African investors.”
One hope for the new office, Mr Foldes says, will be to strengthen trade-related financing going forward, especially through local banks. BNDES also wants to help Brazilian manufacturers develop production and supply chains in Africa. "Companies are starting to discover the potential of Africa and over time this may result in a physical presence, where they will have more ability to know the local market," he says, highlighting agricultural capital goods, from tractors to trucks, as likely contenders.
While the new office will cover day-to-day funding issues – providing information on financing modalities for Brazilian exporters, and support instruments to internationalise Brazilian companies – it also provides a symbol of intent. With talks over the BRICS development bank entering a critical stage in early 2014, many thorny issues are left to be ironed out, but BNDES move helps bring two of the group’s member states a little closer.
The Brazilian development bank, BNDES, will open its first Africa office as it looks to finance the expansion of Brazilian companies across the continent. (Photo: AFP)
Brazil’s development bank heads for Africa
By ADAM GREEN
BNDES will open its first Africa office as it looks to finance the expansion of Brazilian companies across the continent
The Brazilian development bank, BNDES, will open its first Africa office on Friday in South Africa’s commercial capital of Johannesburg. Only the third overseas office for Banco Nacional de Desenvolvimento Econômico e Social, after Montevideo and London, it signals growing ties between Latin America’s largest economy and the world’s fastest growing continent. Its goal is simple: to push Brazilian companies deeper into Africa.
“We feel we are latecomers. We should have been in Africa for some time, but now we are ready,” says Sergio Foldes, managing director of the lender’s international division. “By being close to institutions and decision makers, by being able to cover the region better, we can take better decisions.”
The move caps a decade-long strengthening of commercial and diplomatic relations between the regions. From 2000 to 2012, Brazil-Africa trade grew from $4.9bn to $26.5bn. Africa’s share of Brazil’s international trade has doubled from 3 percent in the 1990s to approximately 6 percent today. In the diplomatic sphere, Brazil now has 37 embassies in Africa, up from 17 in 2002. Since 2003, 17 African embassies have opened in Brasilia, adding to the 16 already there, making the Brazilian capital the largest concentration of African embassies in the southern hemisphere.
Much political energy came from Brazil's former president ‘Lula’ Da Silva, who visited 21 African countries during 12 visits under his tenure, an effort unprecedented among Brazil’s past leaders. Mr Lula`s successor Dilma Rousseff has crossed the Atlantic on a few occasions, but her sight line has been narrowed by Brazil`s economic troubles.
Nonetheless, Brazilian companies are building on the goodwill laid down by Mr Lula, and are responsible for some of the some of Africa's biggest investment plays. In coal and gas-rich Mozambique, the mining giant Vale and the conglomerate Odebrecht are collaborating on the $4.4bn Nacala Corridor – a BNDES beneficiary project that is critical to ensuring Mozambique’s huge resource wealth can be realised. In energy, Petrobras has a strong interest in south-western Africa, which shares similar geology to Brazil's pre-salt oil reserves.
In agriculture and biofuels, a joint venture between Odebrecht, Angola’s national oil company Sonangol and Demer are funnelling $400m into sugarcane projects, and Brazilian agencies are taking advantage of climatic and ecological affinities to bring know-how and technology gained from the lessons of Brazil’s fertile cerrado to African terrain, through collaborations in Mozambique, Senegal, Benin, Burkina Faso, Chad, and Mali.
BNDES’s goal is to provide loans and technical assistance to help Brazilian companies at home and abroad. It has disbursed $2.9bn to African projects since 2007, channelled to the Lusophone countries (Angola, Mozambique and Equatorial Guinea) as well as larger economies such as Ghana and South Africa. In 2008, a stimulus programme for Brazilian companies in Africa culminated in the disbursement of $265m, rising to $360.5m the following year
The development agency has been highly active in Angola, where post-war reconstruction and major oil revenues provide a perfect setting for Brazilian companies’ comparative advantage in infrastructure and energy. It has also financed a portfolio of infrastructure projects in the southern African region, spanning hydroelectric plants, ports, roads and housing, through the likes of Odebrecht, the conglomerates Andrade Gutirrez, and Queiroz Galvao. BNDES financed the sale of several Embraer aircraft to African airlines, and helped Marcopolo and Scania build the Johannesburg bus system for the 2010 World Cup.
Companies seem satisfied at the news of a ramped up African presence. "At Odebrecht we are very pleased with BNDES decision to set up an Africa office," says Gustavo Fontes, principal at the Odebrecht Africa Fund. "This decision shall enable an even more agile and mutually beneficial relation[ship] between Brazil and the African continent, and comes as an added recognition by the Brazilian government of the strategic relevance of such relations."
“The launch of BNDES Africa office is timely and comes to support and strengthen the trade and investment ties currently existing between Brazil and Africa,” says Olivier Rwamasirabo, Vale's general manager, corporate affairs for Africa and the Middle East. “We believe that this move will… be an important source of information on investment opportunities in Brazil for potential African investors.”
One hope for the new office, Mr Foldes says, will be to strengthen trade-related financing going forward, especially through local banks. BNDES also wants to help Brazilian manufacturers develop production and supply chains in Africa. "Companies are starting to discover the potential of Africa and over time this may result in a physical presence, where they will have more ability to know the local market," he says, highlighting agricultural capital goods, from tractors to trucks, as likely contenders.
While the new office will cover day-to-day funding issues – providing information on financing modalities for Brazilian exporters, and support instruments to internationalise Brazilian companies – it also provides a symbol of intent. With talks over the BRICS development bank entering a critical stage in early 2014, many thorny issues are left to be ironed out, but BNDES move helps bring two of the group’s member states a little closer.
