Chinese financing model in Africa seen as an example in Brazil

Brazil plans to expand its exports to Africa beyond the Portuguese-speaking countries, where it is already well established, but needs a more attractive financing model, somewhat similar to China’s model, according to a recent Brazilian study.
In the study entitled “The Defense Industry and Brazil-Africa Relations: Achievements and Challenges,” recently published by the Brazilian Centre for International Relations (CEBRI), three researchers note that, according to official figures, Africa’s weight in the Brazilian balance of trade “is still modest” and that growth in recent years is not “stable.”
“There are several challenges to significant growth in the sector: competition from other countries, the shortage in some cases of adequate funding for exports and financial, technical and governance constraints in Africa,” said researchers Keith Martin, Beatriz Martins Carreta and Rafaella Yumi Terrano.
“It is well known that Brazilian companies from various sectors – including defense – have lost sales in Africa for lack of competitive funding,” they added.
China is seen as a successful example that offers attractive solutions in which, “companies, usually owned or closely linked to the government, put themselves forward with a previously-arranged financing package.”
“It is vital for the Brazilian government, particularly through the BNDES (National Bank for Economic and Social Development), to strengthen its ability to provide African governments with financing solutions that are competitive,” the study noted.
According to recent estimates, China’s loans to Angola since 2002 reached USD14.5 billion to fund the country’s reconstruction projects, typically carried out by Chinese companies, with competitive costs and lead times.
Previous studies point to lines of credit to Angola open since 2006 by BNDES totaling 6.4 billion reais (US$2.4 billion, at current exchange rates).
Among the main beneficiaries are Brazilian company Odebrecht (49 percent of total funding from credit lines), a conglomerate that is the largest private employer in the Angolan market, and Andrade Gutierrez (about 20 percent of the total).
Currently, amongst Brazil’s main export destinations in Africa are Angola and Mozambique, countries with which Brazil has signed bilateral cooperation agreements, but also others in North and sub-Saharan Africa, such as Nigeria and Ghana. MDT/Macauhub