LatinFinance - March/April 2013 - 32

South-South report: Africa

Height of the sky
By Thierry Ogier

T

he gap over the south Atlantic
is being bridged – “slowly, but
surely,” says Mthuli Ncube, chief
economist of the African Development
Bank (AfDB).
On one side is Africa’s fast growing
economies and emerging middle class:
every year in the past decade, 12 million
people have enjoyed an increase in
purchasing power while today a third
of the continent’s billion people are
considered middle class, according to the
AfDB.
On the other side is Latin America,
where Brazil stands out for its global
aspirations, its trade diversification
and its investment strategy. The World
Bank now even talks of a “new Africa”
coinciding with a “global Brazil”.
Few Latin American countries aside
from Brazil have yet tapped opportunities
in Africa. But as economies boom on both
sides of the Atlantic, the potential for
trade and investment between the two
regions has scarcely been so great.
Brazil’s development bank BNDES has
been leading the push. “There is clearly
a plan of broader engagement between
the BNDES and the AfDB,” Ncube tells
LatinFinance. “Brazil has a very big
intention to develop links with Africa.”
BNDES has already forged links
with private sector banks in Africa, in
fields from agriculture to aeronautics.
“Multilateral banks naturally have
a greater appetite for structural,
comprehensive projects that foster other
investments in the economies of the
region,” says Luciene Machado, head of
foreign trade at BNDES. “Meanwhile,
local banks are actually rather interested
in the private sector, or in small
operations …. We are far from these
markets and we need their expertise to
co-finance projects.”

32 LatinFinance March/April 2013

As economies boom on both sides of the south Atlantic, the potential
for trade and investment between Latin America and Africa has
scarcely been so great

Great expectations: Africa rises
BNDES has been negotiating a
contract with Standard Bank to guarantee
Brazilian exports, particularly agricultural
equipment, to several African countries,
says Machado.
“We are talking relatively small
value and not very long maturity deals,”
she says. “The idea is to support the
commercial activities of Standard Bank in
the region when Brazilian export interests
are involved.”

Flying high

Standard Chartered, meanwhile, offers
larger structured and project finance
deals, and has particular expertise in

aeronautics, says Machado.
“We have an important aeronautics
industry in Brazil, and [the Brazilian
aircraft manufacturer] Embraer has been
trying to take advantage of opportunities
in the African market,” she says. “But in
order to do this it is important to know
who the buyers are and their business
plans to see how these aircrafts can be
financed.”
The contribution of a local partner
has been pivotal. Embraer, which
manufactures mid-range aircrafts for
regional flights, hopes regional airlines
will need its products as connections
between African cities increase. “More
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