Luiz Inácio Lula da Silva, the president of Brazil, said this Tuesday
(June 30) that Brazil is willing to establish partnerships for
investing in Africa. Lula was the guest of honor at the opening session
of the African Union (AU) heads of state assembly, July 1st, in Sirte,
"Brazil is willing to establish partnerships, be it with the European Union, be it with the United States, in order to invest in Libya," said the president during a press conference held at the Corinthia Bab Africa hotel in Tripoli, a few hours after he arrived in the capital of the Arab country.
To Lula, more than money, African countries need projects that will ensure its development. To that extent, the Brazilian government is going to sign three cooperation agreements with the AU: one for extending to other nations the initiative of a model cotton farm in Mali, which currently also favors Benin, Burkina Faso, Chad and Mali; another on social development; and the last one on agricultural cooperation, with special emphasis on training to small farmers, sales techniques, and market access.
The key theme of the AU summit will be "Investing in Agriculture for Economic Growth and Food Security," a field in which the government believes that Brazil may contribute a lot. The invitation was extended to Lula by the AU Commission's chairperson, a position equivalent to that of a secretary general, Jean Ping, from Gabon.
To the Brazilian diplomacy, it is an acknowledgement of the country's efforts for strengthening relations with the continent. "It is a sign for the entire world to see that Brazil is regarded as an important player in Africa," said the Brazilian ambassador to Tripoli, Luciano Ozório Rosa.
Along those lines, the president mentioned a series of projects that have already been initiated involving knowledge transfer and investment, such as the building of a medication factory in Mozambique, the model farm in Mali, and a training program for teaching the Portuguese language (spoken in Brazil) to teachers in African countries.
"We have a strong cooperation policy with Africa," he stated. "And there is a possibility of strengthening it even further," he added.
He also said that the Brazilian initiatives in the continent are a two-way street. Aside from helping the development of Africa, according to him, the country also profits from it. As an example, the president mentioned the expansion of trade between Brazil and Africa, which increased from around US$ 5 billion, as of the start of his first term in office, in 2003, to US$ 25 billion as of last year; and of trade with the Arab nations, which rose from US$ 4.9 billion to more than US$ 20 billion over the same period. All of the Arab countries in Africa, except Morocco, are members of the AU. The organization has 53 members.
Lula said once again that Brazil, the United States and Europe have a historic debt to Africa that is "impossible to settle from the financial point of view," the former two due to the slaving of African blacks up until the second half of the 19th century, and the latter because of colonization.
In this respect, he asserted that Brazil has technology to offer in order to aid development, particularly in the agricultural field, because parts of the African continent have a similar weather to regions of Brazil in which the sector is strongly developed.
The Brazilian Agricultural Research Corporation (Embrapa) already has an office in Ghana, Africa. According to the Brazilian foreign minister Celso Amorim, who accompanies the president, Brazil has a differential, namely offering training to African populations without asking for anything in return.
Presently, developed and emerging countries, such as China and India, have keen commercial interest in the country. According to ambassador Luciano Rosa, Brazil does not show a voracious appetite for the continent's natural resources, and is thus regarded with less distrust.
"The developed world can also establish partnerships with African companies for developing the continent," said Lula. He cited the biofuels sector, in which African nations may operate to supply other markets at cheaper prices than those charged by Europe and the United States, where ethanol, for instance, is manufactured from beet and maize, respectively.
The head of the Americas Department at the Libyan Ministry of Foreign Relations, Mohamed Matri, former ambassador of Libya in Brazil, said that other matters of regional and international interest are going to be discussed during the AU summit.
The summit, which will continue until Friday (July 3), should be attended by heads of state and government from more than 40 African nations, as well as the secretary general of the League of Arab States, Amr Mussa, and the UN secretary general, Ban Ki Moon. The Libyan leader, Muammar Gadafi, has also invited the president of Iran, Mahmoud Ahmadinejad, and the Italian prime minister, Silvio Berlusconi, both of whom have confirmed their attendance.
As for Italy, ambassador Rosa recalled that the European country and Libya have put an end to the animosity that persisted because of Italian colonization and signed agreements that forecast, on the Libyan side, aid against illegal immigration in Europe and, on the Italian side, investment of US$ 1 billion per year in Libya, over the course of five years, including the construction of a road linking the country's Egyptian border to its Tunisian border.
Business in Brazil
The government of Libya is establishing a holding company to take care of investment that the country intends to make in Latin America, particularly in Brazil. The head of the Americas Department at the Libyan Ministry of Foreign Relations, Mohamed Matri, who is a former ambassador to the Brazilian capital, Brasília, said this Tuesday (June 30), in Tripoli, that the company should be established by the end of the year.
The company will have a capital of US$ 500 million, he said. Such is the figure that Libya intends to invest in Latin America, as announced by the vice-prime minister of the country, Imbarek Ashamikh, during a visit to Brazil last February. "Brazil has strong ties with Africa and wants to help (the continent). We are also looking for ways to cooperate and reap the benefits together," said Matri.
According to him, just as Brazil may convey its successful experiences to Africa and Libya, as well as make public and private investment, the Arab country may also do business in Brazil. The main field of interest is the agribusiness industry.
"The processes for Libya to invest abroad are well underway," said the Brazilian ambassador to Tripoli, Luciano Ozório Rosa. "The main area of interest in Brazil is agribusiness, but they are diversifying their investment portfolio and seeking safe, long-term opportunities," he added.
Matri underscored that Libya aims to do business in Latin America by means of joint ventures, because, in addition to fertile land, it needs know how in order to operate in the agriculture and livestock sector. One of the goals is to produce foodstuffs abroad, so as to cater to the Libyan market itself.
According to him, the country needs to import approximately 80% of the food it consumes and, besides, land there is too costly. Matri stated that the price of one hectare of land in the vicinities of Tripoli may be as high as US$ 200,000. A significant share of the Libyan territory is occupied by the Sahara Desert, and the weather is very dry.
According to Matri, the new holding company will be a subsidiary of the Libyan sovereign fund, established around two years ago with a capital of US$ 60 billion.
Currently in a visit to the country, the Brazilian president, Luiz Inácio Lula da Silva, declared that Brazil is interested in Libyan investment. "If Libya is interested in our knowledge, then it is very important for them to invest in Brazil to produce what they need to produce," he said.
According to Lula, trade between Brazil and Libya went from US$ 36 million, in the beginning of his first term in office, in 2003, to US$ 1.7 billion last year. "The potential for growth is very high," he stated.
He also claimed that he expects the Libyan leader, Muammar Gadafi, to visit Brazil still this year, on the occasion of his trip to Venezuela, to attend the 2nd Africa- South America Summit.
Construction company Andrade Gutierrez has just won three contracts in Libya, with a total value of US$ 600 million. Thus, the company will be become the third large building company from Brazil to operate in the Arab country, in addition to Odebrecht and Queiroz Galvão. The information was disclosed to ANBA this Tuesday (30th) by the Institutional Relations director of the company, Flávio Machado.
The executive is currently in Libya to accompany the visit of president Luiz Inácio Lula da Silva. According to him, the contracts are for urban infrastructure projects in the vicinities of Tripoli and range from sanitation to roads. This is the company's first incursion into the country. It operates in other North African nations, such as Algeria and Mauritania.
According to Machado, the company started seeking opportunities in Libya approximately one year ago, and already has a local office. "We are also participating in the tender for building a train system in Tripoli," he stated. "We are the only Brazilian company taking part," he added.
Infrastructure and civil construction rank among the most promising sectors ever since Libya started a process of economic opening early this decade, funded mostly by oil production.
The Brazilian ambassador in Tripoli, Luciano Ozório Rosa, said that eight new hotels are now being built in Tripoli, for instance. The city's commercial area, next to the coastline and the historic center, is filled with construction sites for roads and buildings.
According to Brazilians involved in the industry, such as the president of Odebrecht, Marcelo Odebrecht, who is also visiting the country, new opportunities should come up. The company, which has been present in Libya longer, is in charge of building a beltway and the new Tripoli airport, which the local government wants to turn into a hub linking Europe and Africa.
Marcelo Odebrecht underscored that Libya, with around 6 million inhabitants, presently has the highest per capita income in Africa, and therefore a strong construction sector demand.
The businessman also stated that his sector has been little affected by the international financial crisis. He claimed, for instance, that Odebrecht has hired approximately 15,000 employees since the worsening of the crisis, in the second half of 2008, and 10,000 this year.
Along the same lines, Flávio Machado said that Andrade Gutierrez' revenues in 2009 should surpass those of last year. He explained that large Brazilian construction companies operate mainly in developing nations, which were less affected by the crisis than major economies.
Ambassador Luciano Rosa added that the oil industry is still going strong, with 45 international enterprises operating in the country. He said that the cost of local onshore production is low, averaging at around US$ 5 per barrel.
One such enterprise is the Brazilian state-owned oil company Petrobras, which is drilling for oil off of the Libyan coast under a five-year contract which, according to the ambassador, may be extended for another five and, should the company find the commodity, it will retain production rights for 25 years.