Thursday, July 08, 2010

Brazil's Lula Ends Final African Tour With New Deals

Brazil's Lula ends final African tour with new deals

Lula expanded ties with Africa

* S.Africa hope to deepen relations with Brazil

* Wants African role after leaves presidency

By Stuart Grudgings and Jon Herskovitz

RIO DE JANEIRO/JOHANNESBURG, July 8 (Reuters) - Brazil's Luiz Inacio Lula da Silva winds up his final presidential tour of Africa with a clutch of deals after dramatically expanding ties during eight years in power.

Lula has worked hard to increase trade with other emerging economies as they play an ever greater global role and has taken advantage of Brazil's strong cultural links with Africa. He has visited more than 25 African countries, six on this trip.

Lula landed in South Africa on Thursday after signing a defence accord with Equatorial Guinea, a biofuels agreement with Kenya, a deal on environmental cooperation with Tanzania and a series of other pacts on the fast-growing continent.

South Africa said the signing of a strategic partnership during Lula's visit should deepen economic and diplomatic ties.

Lula, a former metal worker, has said he is interested in some kind of Africa development role after he leaves the presidency. He must step down after October elections.

Brazil, with the world's largest black African population after Nigeria, has doubled its number of embassies in Africa to 34 since Lula came to power in 2003. Exports to Africa have more than tripled to $8.7 billion in 2009.

"We have a genuine interest in solidarity with the African countries," said Roberto Jaguaribe, undersecretary for political affairs at Brazil's foreign ministry.

"We think that Africa, besides, has a gigantic possibility of growth in several areas, especially agriculture."


Yet, Brazil has lagged China's expansion drive in Africa. Critics say that despite the big increase in exports, there has been a much smaller rise in trade as a share of Brazil's total business.

"I don't think that to travel six or seven times to Africa opens markets to Brazilian products or markets," said Rubens Barbosa, a former Brazilian diplomat who is president of the council on foreign trade at Sao Paulo business group FIESPI.

"Brazil in general pays very little attention to Africa."

The proportion of Brazil's trade taken up by Africa dropped from 7 percent in 2008 to 5.6 percent as of May this year.

Its trade with Africa is still dominated by a handful of countries such as Nigeria, Angola, and South Africa and by a few large companies such as miner Vale and oil firm Petrobras.

Brazil nevertheless sees Africa as key to its aim to create a bigger world market for the sugar-cane based ethanol of which it is the world's largest producer.

In 2008, Lula inaugurated an Africa office of government agricultural research arm EMBRAPA in Ghana.

Kenya agreed this week to cooperate with Brazil in developing and promoting biofuels, but was short on specifics.

Experts say a lack of funding compared to Chinese rivals has also hindered Brazilian firms looking to expand in Africa.

That could result in Brazilian firms tapping the debt market in South Africa for the first time, said Eduardo Centola, the Brazil-based Americas head of South Africa's Standard Bank.

"There are clear opportunities for Brazilian companies issuing bonds in South African rand," he said.

Roger Agnelli, president of Brazilian mining giant Vale who travelled with Lula's delegation, stressed Africa's importance.

"Brazilian companies have to come here and invest. Africa is the future in natural resources, just as Brazil and Latin America are the present," he said.

Vale, the world's biggest iron ore miner, is investing $1.3 billion in the Moatize coal mine project in Mozambique. In Zambia it announced plans to invest $400 million in a copper project. [ID:nLDE6671GV] (Editing by Marius Bosch and Matthew Tostevin)

2010-07-08 18:31:25

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