ChineseandBrazilianPrivateFirmsinSub-SaharanAfrica

BRICS Policy Center Centro de Estudos e Pesquisas

Author:VictoriaWaldersee

Who,Where,andSinceWhen?

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razilian private investment in Sub-Saharan Africa began in the 1980s.However, Brazil's expansive foreign policy during Lula's administration,heightened domestic demand, and the growth of South-South Cooperationdialogueledtoanin�luxoflargecorporationsin2005and2006,quicklyjoinedbyanincreasingnumberofsmallandmedium-sizedenterprises(SMEs).

hina has been active in SSA since the 1970s, in a much-discussed tradeexchange focusing on extraction of natural resources to fuel China's economicgrowth. Recent data fromChina'sMinistry of Commerce (MOC) shows that atleast 55%of FDI inAfrica is conductedbyChineseprivate investors, involvednot in resource extraction but in labour-intensive manufacturing and serviceprovision.DatacollectedfromhostgovernmentsinSSAindicate�igures2-7timeshigher than China's MOC data, demonstrating the number of unregisteredChinesecompaniesactiveintheregion.

hisfactsheetoutlinestheexpansionanddiversi�icationofprivateinvestmentfromBrazil andChina inSSA,and theextent towhichprivatecompanies fromthetwocountriesareengagingincorporatesocialresponsibilityprojects.ItusesAngola and Mozambique as case studies. This should serve to illuminate thepotential of private investment to contribute to development goals and South-SouthCooperation.

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The opinions expressed herein are the sole responsibility of the author and does not necessarily reflect the position of the institutions involved.Special thanks to the International Cooperation for Development research group.

heChinesegovernment,state-owned

enterprises(SOEs),andprivate

enterprisesworkincloseconjunction

inAfrica.LargeSOEsandstate-owned

banks,provincialgovernmentcommerce

departments,andatleastonethousand

privatecompaniesarepresentinthe

region.

hestateretainsastrongin�luencein

sectorsrelevanttoChina-Africatrade

suchaselectricity,petroleum,coal,

telecommunications,construction,steel,

andbasemetals.

heBrazilianEconomicandSocialDevelopmentBank(BNDES)expectstodisburse$500millionforBraziliancompaniesinAfricain2014.98%offundsdisbursedinAfricasince2008havegonetoSSA.

heAgenciaBrasileiradePromoçaodeExportaçoeseInvestimentos(APEX)organisesbusinessfairsforBraziliancompaniesinSSA,themostrecentofwhichoccurredinJuly2014.

hegovernmentencouragesprivateinvestmentinSub-SaharanAfricathroughstimulusprogrammessuchasProgramIntegrationwithAfrica,whichdisbursed$360millionforBrazilian�irmsin2009.

Who'sbehindit?

SectorsofChinesePrivateInvestmentinAfrica

SectorsofBrazilianPrivateInvestmentinSub-SaharanAfrica

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ChinadoesnotpublishSSAinvestmentdatabysector.However,asasigni�icantportionofChineseinvestmentinAfricagoestoSSA,statisticspertainingtoAfricacanstillbeseenasindicativeofgeneraltrendofChineseinvestmentintheregion.

Shen,Xiaofang.2013.“PrivateChineseInvestmentinAfrica–MythsandRealities”.PolicyResearchWorkingPaper6311,ResearchSupportTeam,WorldBank.

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Pg.7http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-6311

Vieitas,DeborahandAboim,Isabel.2012.“A� frica–OportunidadesparaEmpresasBrasileiras.”RevistaBrasileiradoComercioExterior.http://www.bcgbrasil.com.br/Imprensa/Documents/Africa%20-%20oportunidades%20para%20empresas%20brasileiras%20_Revista%20Brasileira%20de%20Comercio%20Exterior.pdfThecategoriesforthisgraphwereamendedtomatchthecategoriesofChineseinvestment;fororiginalcategories,seeoriginalBCGBrazilReport.

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ChineseandBrazilianImportsfromAngola

ChineseandBrazilianExportstoAngola

ChinaandBrazilrank2ndand4threspectivelyinAngola'stopimportcountries.

ChinaandBrazilrank1stand19threspectivelyasAngola'stopexportdestinations.

BrazilianPrivateInvestment:DidYouKnow?

radewithAngolarepresents0.4%ofBrazil'stotalforeigntrade.

fthe2.8billionBNDEShasdisbursedforprivatefundsinAfricasince2007,Angolahasreceived96%.

hehighestnumberofBrazilianSMEsinAfricaisinAngola.

lmostallBrazilianinfrastructureprojectsinAngolaare�inancedby�ivelinesofcreditworth$5.2billion,ofwhich$2.7billionhadbeendisbursedin2012.Ofthe65projects�inancedbyBNDESin2012,32wereconductedbyOdebrecht,nowthelargestprivateemployerinAngola.

ChinesePrivateInvestment:DidYouKnow?

hina'stradewithAngolaiscurrentlyvaluedatover$120billion,thehighest�igureonthecontinent.

nwhathasbecomeknownastheAngolaModel,Chinesecommodity�irmsestablishatradedealonthebackofwhichaseparateinfrastructure�irmconductsconstructionprojectsviaarevolvingcreditfacility.heChinesegovernmentcommitted$12billionincreditlinestotheAngolangovernmentbetween2002and2011.Health,education,energy,andwaterwereprioritysectorschosenbytheAngolangovernmentforthedisbursementoftheseloans,withChineseprivate�irmsplayingasigni�icantroleinimplementingprojects.However,only30%ofthe$2billionand$2.5billioncommittedin2004and2007respectivelyhavebeendisbursed.Chineseprivateprojects,valuedat$73.6million,receivedapprovalfromtheNationalAgencyofPrivateInvestment[AgenciaNacionaldeInvestimentoPrivado]between2005and2007.

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Angola:ACloserLook3

MappedOut:BrazilianandChineseInfrastructureProjectsinAngola

ChineseCompanies BrazilianCompanies

-Rehabilitationandexpansionoftheelectrical

networkofLuanda.

-Rehabilitationofelectricitynetworksin

Lubango,NamibeandTombua.

-Rehabilitationofirrigationsystemsinthe

localitiesofLuena,Caxito,andWaco-Kungo..

Sinohydro:

-Investmentof$900millionin30projectsin

thecountryinhydropower,agriculture,hospitals,

schools,andtransportation.

Huawei:

-Expansionoftelecommunicationsnetworkto

coveralldistrictsofthecountry,inconjunction

withVodacomMozambique.

ChinaRoadsandBridgeCorporation:-Rehabilitationofthe444-kmLuandaRailway.

ChinaNationalMachineryEquipmentImport

ExportCorporation:

-Acquisitionof36large�ishingtrawlersand

3,000boatsforindustrialandartisanaluse,as

wellas10coastguardvessels.

ChinaConstructionBank&EximBank

fundedprojectscarriedoutbyprivate�irms

andSOEs:

-InvolvedinSpecialEconomicZonesinViana,Catete,Huambo,Negage,M´BanzaCongo.

Odebrecht:-HydroelectricprojectsinCapanda,Malange,andCambambe,CuanzaRiver.-Owns40%ofBIOCOM(Angola)anethanolproduction�irm.-FoundedandownsNossoSupersupermarketchaininjointventurewiththeAngolangovernment;37shopscountrywide.

Petrobras:-JointventurewithBTGPactual(Brazil)foroilandgasexcavation;partnerin6blocks,operatorin4.

Vale:-JointventurewithGenius(Angola)onresearchinminerals,particularlynickelandcopper.

AndradeGutierrez:-ConstructionoftransportnetworkstowardsInternationalAirportofLuanda.-RenovationandextensionoftheInternationalAirportofLubango.-RenovationofPortofLuandaContainersTerminal.

CamargoCorrêa(CC):-ConstructionofMaquelaAirport.-PartnershipwithEscomandGema(Angola)forproductionunitinBenguela.

Asperbras:

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Mozambique:ACloserLook

ImportsfromMozambique

ChineseandBrazilianExportstoMozambique

th thChina and Brazil rank 6 and 9 respectively in Mozambique's top import countries.

rd thChina and Brazil rank 3 and 26 respectively in Mozambique's top export destinations.

BrazilianPrivateInvestment:DidYouKnow?

ntermsofFDI,Brazilian�irmsinvestmorethananyothercountryinMozambique,accountingfor42.5%ofallFDIin2012.

rivateinvestmentisconcentratedinthesectorsofoilandgas,minerals,agroindustry,andconstruction.

alueoftradebetweenBrazilandMozambiquegrewfrom$110millionto$148millionbetween2009and2013.Exportsincreased14.6%andimportsbyover500%,withajumpfrom$4.1billionin2011to$24.2billionin2012.

ChinesePrivateInvestment:DidYouKnow?

hinaextendedits�irstcreditlinetoMozambiquein1989,worth$12billion.

$20millionfundwassetup1997/8bytheChinesegovernmenttoencourageChineseprivate

�irmstoinvestinMozambique.

heCentreforInvestmentPromotionDevelopmentandTradewasestablishedin1999by

Mozambique'sMinistryofCommerceandAnhuiForeignEconomicConstructionGroupCo.to

organizetradefairs,onoccasionincollaborationwithMacau,forChineseandMacaucompanies

workinginindustriesrangingfromsolarenergytoaviationengineering.

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ChineseandBrazilian

ChineseCompanies BrazilianCompanies

MappedOut:BrazilianandChineseInfrastructureProjectsinMozambique

AnhuiForeignEconomicConstruction

Group(AFECC):

-ExpansionofMaputoAirport.

-ConstructionofNationalSoccer

StadiumofMaputo`sZimpeto.

China Henan International Corporation Group:

- Construction of Chicamba Water System,

Manica, co-funded by Mozambique and Netherlands.

- Construction of bridge on the Incomati River.

- Water distribution network for Inhambane and

Maxixe.

- Construction of 154 km road between

Muxungue and Inchope.

ChinaMetallurgicalConstructionGroup:

-RefurbishmentofMaputowatersupplyinfrastructure.

Sogecoa(MozambicanbranchofAFECC):

-ConstructionofNationalParliament.

-ConstructionofMinistryofForeignAffairs.

-RefurbishmentofHotelPolanaSerena.

NanjingConstructionCCM:

-ConstructionofAuditorGeneral`sof�ice.

-RunstheMoatizecoalmine,containingreservesofover1billiontons,activesince2011.-Owns51%ofthesocietyfortheDevelopmentoftheNorthCorridor(CorredordeDesenvolvimentodoNorte)toexpandtheNacalaCorridor.

-CollaboratingwithValeonMoatizethroughconstructionservices.-ConstructedcontroltowerandpassengerterminalsinNacalaairbase.

-ConstructingthePortofNacalaforout�lowofcoalfromVale'sMoambaMajorDam.-Renovating230kmofroadworksinCaboDelgadoprovince.

-WorkingwithInsitec(Mozambique)andMozambiqueElectricityonahydroelectricityProjectinMphandaNkuwa,RioZambeze.-CollaboratingwithValeonMoatizecoalmine-Owns51%ofCimentosdeNacala,partofInsitec.

QueirozGalvão:

-InvestedinCompanhiadeSenasugarre�ineryinjointventurewithPetromoc,aMozambicanstate-ownedpetroleum�irm.

Vale:

Odebrecht:

AndradeGuiterrez:

Petrobras:

CamargoCorrêa:

-Sanitation,energy,andinfrastructureprojects.

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toofferajobtothebeststudentofengineering.Italsorunstechnicalcoursesinprofessionaltrainingon'ConstruindoTalentos'programmeworkinginpartnershipwiththeInstitutoSuperiorPolitecnicoPrivadodeAngolaandtheMinistryofEducation.

,trainingyoungpeoplefromCazenga,alow-incomecommunityinLuanda,forthejobmarketthroughcoursesinelectricity,IT,cookingandconfectionaries.AngolanprofessorsarebeinghiredtorunthecoursesinconjunctionwithServiçoNacionaldeAprendizagemIndustrial(SENAI).CCrenovatedtheCentreofProfessionalTrainingSantaBakhitatohosttheproject.SeveralstudentswerechosenforscholarshipstostudyatUNILINS,SaoPaulo.

includinghydropower,agriculture,hospitals,schoolsandtransportation.

inconjunctionwiththeMinistryofEducationandthemobileoperatorUnitel(Angola)eachstudentreceivesafreecomputerandrouterswitha625UTTinternetcreditspermonth.

TheGrowingImportanceofCSR

Increasingly, private investors across the globe are addressing issues of corporate social responsibility when investing abroad. Below are examples of Chinese and Brazilian projects in Angola and Mozambique.

MOZAMBIQUE in Cateme and 25 de Setembro, Maputo. They also ran a workshop on CSR in February 2014 on best practices, cooperation, and sustainable development for firms in Mozambique.

, a mining corporation, has rented 30 hectares of land in Gaza province, 200 km north of Maputo. It has designated 10 percent of the land as demonstration fields to teach farmers how to grow rice. This includes lessons on how to plant rice in the correct pattern and how to use fertilizer.

of Hubei Province was selected by MOFCOM to run an agriculture centre in Mozambique, training local farmers and bringing Chinese seeds for crops such as maize, rice, vegetables, and fruits.

has renovated football pitches, schools and health clinics in Nacala, where the cement factories owned in conjunction with Insitec are located.

Already, Chinese and Brazilian private firms have built upon each other's presence in Sub-Saharan Africa, demonstrating potential for South- South Cooperation in the region…

… in sustainable development: China and Brazil are cooperating on biofuel projects in Mozambique with EMBRAPA expertise and Chinese infrastructure investment.

… in investment projects:Mpanda Nkua dam, Mozambique`s biggest infrastructure project will be financed by China Exim Bank but constructed by Camargo Corrêa.

… in developing markets:Brazilian officials have pointed out that a positive effect of Chinese investment for Brazilian firms is the boost to local incomes, creating consumer demand for Brazilian manufactured goods.

Potential for South-South Cooperation?

ANGOLA

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Camargo Corrêa

Lianfeng Farm

Wanbao

Vale runs projects on food security, health infrastructure, microbusiness, technical capacity, and technology transfer

Huaweiisconductingprojecttoprovidefreeinternetaccessforhighereducationstudents

Sinohydroinvested$900millionin30projectsinAngola

CamargoCorrêarunstheKidimacajiproject

OdebrechtpartnerswithTheUniversidadeAgostinhoNeto