BRAZIL AND ANGOLA: THE OTHER SPECIAL RELATIONSHIP

(Previously reported in The Inkerman Group’s blog)

One adage that often comes to mind when discussing the relationship between Angola and Brazil arises from the legendary words of an old friar by the name of Gonçalo João. According to historical tradition, in 1646 João, a Jesuit missionary, announced quite simply that “there is no Brazil without Angola”. Sadly, however, João was not referencing the “special relationship” in the vein of the purported economic, security and cultural ties described between that of the British and the Americans. João’s words were largely alluding to the horrific trade of human beings, taken from local villages in what is now modern day Angola, and shipped to the South American nation during the Portuguese Empire’s ascension to the Atlantic Slave Trade at the end of the 15th century. To be sure, the abhorrent sale of slaves from Angola became so prolific that at one point, the country was exporting human beings at a rate of “10,000” per year, the vast majority of whom eventually made their way to Portugal’s Brazilian colonies.

Thankfully, in the centuries since, the world and its norms have changed. Slavery is, of course, illegal in both Lucophone nations. Neither Brazil, nor Angola is a colony of Portugal. Indeed, given the influx of Portuguese migrants to both nations, some have even joked that the opposite may be true. Despite such significant developments over the years, the general meaning of João’s statement has not withered away. In fact, by most accounts ties between Angola and Brazil appear to be stronger than ever. Today, both countries have been glowingly labelled by financial wizards as “emerging economies”, with Angola and Brazil each enjoying sustained growth amid a global downturn. Both nations have also struck major security and infrastructure deals, with Brazilian companies in particular investing billions of dollars into developing the Angolan mining sector, among other industries. The two nations are even planning to establish the “South Atlantic Cable System” (as shown above), which, if implemented would speed up data transfers by bypassing Europe altogether.

Meanwhile, in what some might describe as another bit of economic “revenge”, both countries have been buying up shares in languishing Portuguese companies, with Angola infamously purchasing the formerly government-run Banco Português de Negócios for a measly 30 million Euros (US$39 million). It is these and other financial and political manoeuvres that have led their respective leaders to remark on their nations’ “brotherly” relationship. But, as with every ‘brotherly’ relationship, there comes sibling rivalry.

Angola vs Brazil

Whilst, without question, Angola and Brazil have enjoyed a largely positive economic, financial and cultural relationship – their shared Portuguese language and traditions not withstanding – the two countries have also effectively embarked on a competition over which Lucophone country is better placed to attract international investment. To begin with, whilst Brazil has often been hyped for its membership in the so-called BRIC economies (that of Brazil, Russia, India and China), Angola has recently undertaken a series of pro-business reforms as part of a larger effort to infuse much-needed foreign cash in its lucrative, if infrastructurally-challenged, mining sector. In order to further pique the interest of international extraction firms, last week Francisco Queiroz, Angola’s Geology and Mines Minister, confirmed that he has personally overseen the implementation of a pro-business strategy which involves, among other manoeuvres, a slash in taxes on foreign mining companies from the previous rate of 35% to the more manageable 25%, whilst Luanda officials have also allocated approximately US$900 million to be spent on development within the Cassinga iron-ore mine.

It is this range of decisions launched by the Angolan Government which Queiroz claims will not only benefit the major players in the world’s mining industry (particularly the Luxembourg-headquartered extraction giant, De Beers); it will also ease concerns of potential smaller foreign investors who have traditionally remained hesitant to embark in Angola over fears of the country’s historical “lack of business transparency”. As a result of these measures, some analysts are predicting that Angola will see an increase in the exportation of gems from its current rate of 8.3 million carats in 2012, to 9 million carats in 2013. In addition to potentially elevating the Angola’s already rapidly growing economy, the range of new pro-business measures has also led to a significant boost in the country’s business reputation abroad, with Brazilian leaders, in particular, taking “lessons learned” approaches from their Angolan counterparts.

Praise for Angola was notably highlighted on the eleven-year anniversary of the end of the Angolan civil war on 04 April 2013, when “impressed” Brazilian leaders extolled the southern African nation’s quick turnaround during Brasilia’s annual “Angola Week”. As if to further drive home the point of Angola’s economic success – on paper at least – the African nation has seen a more positive development overall in terms of its real GDP growth rate between 2010 – 2012. Indeed, whilst Brazil incurred a GDP real growth rate of 7.5% in 2010, this rate has since declined compared to Angola, with the Latin American nation sustaining a significantly smaller growth rate of 2.7% in 2011, and 1.3% in 2012. Meanwhile, Angola, which enjoyed a 3.4% real growth rate in 2010, has since seen this figure spike to 3.9% in 2011 and 6.8% in 2012. When combined with reports that that resource-rich Angola (it has a proven oil reserve of 12.6 billion barrels) is planning to launch its own stock exchange in 2015, it is no wonder that Brazilian Dilma Rousseff once described the “brother” nation as a “paradigm for other countries in Africa”.

Brazil: Winning the Economic Competition?

Despite the notable steps forward for Angola, the reality is that Brazilian leaders have (almost) nothing to worry about. In effect, Angola’s economic gains are simultaneously causes for praise for Brazilian interests. To begin with, Angola’s economic rise has come at the price of severe economic growing pains, especially when it comes to trading in the African nation’s long history of arguably backward, government-run (and often corrupted) ventures with more developmentally sound economic policies and projects. Indeed, Angola is still suffering from a lack of much-needed foreign investment as a result of its tradition of clamping down on privatisation. (Case in point: in 2012, the World Bank ranked Angola 172 out of 185 nations in its ease of “Doing Business” list, compared to 130 for Brazil).

In order to ameliorate this history of financial mismanagement, Angolan leaders often have to turn to outside help with large projects. Sadly, due to rampant corruption, and general fear of international companies, Brazilian investment usually comes only in the form of massive corporations which are capable of infiltrating Angola’s largely nationalised economic landscape. This leaves just Brazil’s big-name players, most notoriously that of construction giant, Odebrecht, as the only serious challengers in Angola. According to recent reports, after more than twenty-eight years operating in the country, Odebrecht has now become the largest private employer in Angola. Meanwhile, analysts have taken to describing Odebrecht as the new “empire” within Angola (a far cry from the Portugal of old) due to its ability to partner up with the country’s most powerful firms, including the powerful state-run oil company Sociedade Nacional de Combustíveis de Angola (Sonangol). In the end, the meteoric rise of Angola can only be a boon for Brazil. Indeed, if Brazilian firms manage to evade the very worst of the southern African nation’s corruption, as well as avoid any unnecessary blowbacks from the increasingly unpopular three-decade rule of President José Eduardo dos Santos, then perhaps João’s message can better be rewritten as the following: “there is no Angola without Brazil”.

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