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QUARTERLY EDITION • N°115 • APRIL - MAY - JUNE 2021

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LUSOPHONE AFRICA I

A reset opportunity 80

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

After a series of scandals, and with other countries upping their games in Africa, both Portugal and Brazil have the chance to refocus their ties with partners on the continent

INSIGHT

Angola’s President Lourenço and Portugal’s Prime Minister Costa usher in a new era for relations between their countries

ESTELA SILVA/EPA/MAXPPP

By MARIA MUSSOLOVELA in Luanda When Isabel dos Santos, daughter of Angola’s former president José Eduardo dos Santos, was in charge of the state oil company Sonangol, Agostinho Pereira de Miranda, CEO of Portugal’s top law firm in the oil and gas sector, refused to do business with her. In 2015, more than 20 of Miranda’s top lawyers decided they wanted in on the Sonangol deals, so they defected a kilometre across central Lisbon to rival firm Vieria de Almeida. But Pereira de Miranda was prescient. Six years on, with Isabel dos Santos under investigation for corruption following her exposure in the ‘Luanda leaks’ documents, and her stakes in Portugal’s top telecom firm, NOS, and energy utility Galp, among other companies, now claimed by the Angolan state, the Angola-born lawyer has been vindicated. Portugal is not the only country having to reckon with corruption revelations connected with Africa. In 2016 Brazilian firm Odebrecht admitted to paying $50m in bribes

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

LUSOPHONE AFRICA INSIGHT / A reset opportunity

in 11 countries, including Angola and Mozambique. The admission was part of a plea deal after Odebrecht was embroiled in Brazil’s biggest corruption investigation, nicknamed ‘Lava-Jato’ (‘Carwash’). How devastating have these scandals been for relationships with African countries? Pereira de Miranda survived the desertion of his partners, and today argues that Portugal-Angola ties will survive the collapse of Isabel dos Santos’s business empire. “Perhaps the image of Portugal has been affected in terms of the efficiency and the accuracy of its ‘compliance’ systems, but there is no relevant impact on the way the investors or business partners look at the country and the opportunities it offers,” he tells The Africa Report. Looking ahead, he says that Portugal’s small and medium-sized enterprises (SMEs) are wellplaced to adapt to evolutions in the Angolan economy, where diversification away from oil has become more urgent than ever. However, Portugal’s government and larger business groups have been unable to create new inroads in the most advanced African markets.

through private-sector investment. Francisco Mantero, chairman of BusinessEurope’s Africa network in Brussels, has a less optimistic outlook than Pereira de Miranda. “Portugal does not have a concrete policy towards Africa because it has neither the financial capacity nor the human resources,” he says. According to Mantero, Portugal does not do enough to help its companies access development funds in Brussels, which are set to grow under the new Africa-Europe Alliance, and that Portuguese investment and development aid in Africa have been steadily decreasing.

EU investment alliance

EXPORT OF GOODS TO AFRICA BY MEMBER STATE, 2019 % of Africa in extra-EU 25

26,910

EUR millon

23,809 18,625

17,305

10 5

3,700

0 France Germany

Spain

Italy

Portugal

IMPORT OF GOODS TO AFRICA BY MEMBER STATE, 2019 % of Africa in extra-EU 20

EUR millon 26,870

24,311 15

20,823

10 SOURCE: EUROSTAT

As of January, Portugal holds the six-month rotating presidency of the Council of the European Union (EU) and it has put Africa at the top of the foreign-policy agenda. Foreign minister Augusto Santos Silva travelled to Maputo in February to convey EU support for Mozambique’s government over the Cabo Delgado insurgency. Portugal will not be able, as it initially intended, to host the already twice-delayed EU-Africa summit because of restrictions around the Covid-19 pandemic. The summit, when it eventually happens, is due to approve the Africa-Europe Alliance, which aims to create jobs in Africa

Portugal needs to work harder to channel European funds for projects in Africa

3,952

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

France Germany

Spain

Italy

Portugal

Francisco Almeida Leite, a former Portuguese secretary of state for foreign affairs who is now the CEO of Normetal, a construction materials manufacturer with activities in Africa, also argues for the need to channel European funds for projects, particularly in Angola. “Angola has potential in many areas other than oil, mainly in agriculture and in some other industries,” he says. Almeida Leite recommends companies look at alternative sources of funding, such as AgriFi, a European fund focused on agriculture, and ElectriFi, which supports rural electrification: “Of course, we have the African Development Bank and the financing from the EU, but the operationalisation is sometimes so complicated that it ends up not being a solution,” he says. If Portuguese companies had better access to capital and were on a level playing-field with their European counterparts, investment in Africa would grow, Almeida Leite says. Portuguese businessmen “love the continent. They know many countries. They know how to do business and, above all, they love Africa and its people.” Angola currently has a lot of diplomatic heft. An Angolan, Georges Rebelo Pinto Chikoti, is secretary- general of the Organisation of African, Caribbean and Pacific States, which is negotiating a post- Cotonou Agreement framework for ties between the EU and its 79 developing-country members.

Visa-free travel Angola will also take over the presidency of the Comunidade dos Países de Língua Portuguesa (CPLP) in July. For the past few months, member countries – which also include Spanish-speaking Equatorial Guinea – have been negotiating a visa-free travel zone. This should be formally created at the next summit.

ALAN SANTOS/PR

Building BRICS: presidents Ramaphosa and Bolsonaro

According to Jaime Nogueira Pinto, a historian, political writer and CEO of Gaporsul business consultancy, Angola has a special identity within the Lusophone block. The country now ruled by President João Lourenço, he says, “has functional elites – political, military and cultural – in the ruling party and in the opposition, who understand the importance of national unity and strategic vision”.

Brazil needs a strategy What the CPLP needs, he says, and where its Angolan presidency could make a difference, “is to create an identity far beyond the friendly, politically correct speeches”. But he cautions that the pandemic, security issues in Mozambique or problems related to human rights in GuineaBissau will be major challenges. “A policy for Africa by Portugal is a matter that I have heard about for 40 years, but, unfortunately, the corresponding actions have been delayed,” adds Nogueira Pinto. Brazil also lacks a strategic focus. João Bosco, who heads the Brazil Africa Institute, worries about the

“short-sightedness of the current government” of President Jair Bolsonaro “in not identifying the great potential that Africa holds”. Under his predecessors, Dilma Rousseff and Michel Temer, there was already a downward trend after the historic trade and investment highs of Luiz Inacio ‘Lula’ da Silva. The Lula boom was, of course, in a large part fuelled by state financing, chiefly from the Banco Nacional de Desenvolvimento Econômico e Social, to companies such as the now discredited Odebrecht. According to Bosco, while Odebrecht’s image has been “tarnished”, this has not compromised Brazilian companies in the African context. “Today, the role of the government needs to be reviewed. Public funding should not be allocated to a

Unlike Portugal, Brazil has not focused its relations in Africa on Lusophone countries

specific counterpart. The scandal of Odebrecht has shown that state and private initiatives can and should combine, but with limited and very concrete actions, which are objective and appropriate,” Bosco tells The Africa Report. Unlike Portugal, Brazil has not focused its relations in Africa on Portuguese-speaking countries. Its major partners are South Africa, as part of the BRICS (Brazil, Russia, India, China and South Africa) group, and Nigeria. “There is a need for companies to see the potential on the continent as a whole. In all African regions, there are countries that can and should be targeted by Brazil,” Bosco says. He points out that the network of cooperation inherited from the Lula presidency is still operating. Such is the case with the Brazilian state research agencies for agriculture (Embrapa), pharmaceuticals (Fiocruz) and training (Senac and Senai), which are running multiple projects on the continent. “This is soft power in action in Africa,” says Bosco. “And a more important legacy for Brazil.”

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

LUSOPHONE AFRICA INSIGHT /

Ernesto Araújo INTERVIEW

‘Brazil became an exporter of corruption’ Brazil’s foreign minister wants to draw a line under the past, building a new relationship with African countries through private partnerships and security cooperation Interview by NICHOLAS NORBROOK

BLOOMBERG VIA GETTY IMAGES

The relationship between Brazil and Africa flourished under former president Luiz Inácio ‘Lula’ da Silva (2003-2011). “Brazilian society was built on the work, the sweat and the blood of Africans,” said Lula, as he spun through the continent, often with a large bevy of businessmen in tow. A decade or so later and the relationship has cooled. The epic nature of the Odebrecht construction company scandal can be felt across Africa, but also in Latin America, where Peru’s President Alan García committed suicide in April 2019, just as he was being implicated in the widening scandal. Ernesto Henrique Fraga Araújo, Brazil’s foreign minister under President Jair Bolsonaro, wants to change the trend and re-engage with Africa. “Even if you set aside

THEAFRICAREPORT /

the issue of the mismanagement of these construction projects, they are not long-term. They are oneshot,” says Araújo. He advocates a more sustainable approach based on partnerships between Brazil’s private sector and those of African countries. “That is really the transformation that we are trying to do in Brazil, to start a robust growth cycle based on private capital, at home and abroad,” he says.

A new model Moreover, the mismanagement issue must not be set aside. “The previous model of engagement with Africa was not successful – driven by the state, with a lot of state debt and a concentration of economic and political power, which meant Brazil became an exporter of corruption to other countries.” Brazil is due to sign a new agreement with the nine-member Comunidade dos Países de Língua Portuguesa to allow for visa-free movement of people and is bolstering educational ties with Africa. On his 2019 tour of five African countries – Cabo Verde, Nigeria, Senegal, Angola and Côte

d’Ivoire – Araújo signalled Brazil’s desire to move beyond its linguistic comfort zone on the continent, too. Governments are also discussing a potential trade deal between Brazil and the Economic Community of West African States. Beyond the economic engagement, Brazil wants to offer Africa cooperation in security matters. Partly this is about clearing up the mess created by Brazilian organised crime. In April 2020, one of the most notorious Brazilian drug smugglers, Gilberto Aparecido dos Santos, a.k.a. ‘Fuminho’, was arrested in Mozambique in a joint US/Brazilian operation.

Trans-continental crime The Primeiro Comando da Capital (PCC), Brazil’s largest crime syndicate, is a sprawling global operator that organises the transit of cocaine from Colombia via Brazil and West Africa to end up in Europe via the Sahel. “Boko Haram, indirectly, works for PCC,” says Araújo, who points to the multiple smuggling and money-laundering operations that operate across the Sahel, linking paramilitary organisations, Islamist rebels and criminals. A potential solution is a reboot of the South Atlantic Peace and Cooperation Zone, created via the UN in 1986, and repurposed to meet modern

DIPLOMATIC CREDENTIALS 15 May 1967 Born in Porto Alegre, Brazil 1991 to 1995 Worked in the foreign ministry 2007 to 2010 Was deputy chief of mission at the Brazilian embassy in Canada 2010 to 2015 Served as deputy chief of mission at the Brazilian embassy in the US 1 January 2019 Became Brazil’s minister of foreign affairs

security threats. “Seizures of cocaine have gone up,” says Araújo, “but it is not enough. We need to tackle the financial structures of these organisations.” It is fighting talk. For many years, Brazil has been known as the ‘homem cordial’ of international relations. With no communist hangover, and far more pluralist than China, Brazil has no great enemies or foreign disputes. “Being cordial is not enough”, says Araújo. He wants a more muscular engagement with the world, after what he sees as the lost years under Lula and his successor, Dilma Rousseff. Brazil is undergoing a sea change in its global diplomatic alignments – Israel has been a priority, but so, too, has been courting Gulf countries like

the United Arab Emirates and Saudi Arabia. Araújo points to ‘triangular’ cooperation projects under way between Brazil, Kuwait, Saudi Arabia and Sudan using capital from the Gulf, agribusiness know-how from Brazil and Sudanese arable lands to produce food. There are lessons, too, for African countries in the Brazilian relationship with China. For several decades, it had seemed a match made in heaven: Chinese demand for Brazilian soy beans and iron ore has made many fortunes. Latterly, critics have pointed to the de-industrialisation effects on the Brazilian economy, as banks found it more lucrative to finance agribusiness and mining than industry.

Missed opportunities “Increasing concentration of our trade with China had unintended consequences,” says Araújo. “But it was not so much the relationship with China; rather the lack of new initiatives with other partners. […] We missed opportunities to engage with the European Union, with the US, with Japan, with the main industrialised, highly technological partners – and that is what we are trying to catch up with.” The US and Europe are also the main sources of investment in manufac turing in Brazil.

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LUSOPHONE AFRICA INSIGHT / Ernesto Araújo

“Some people think you have to choose: we chose China before, now we are going to choose the United States. […] No, that it is not it at all. You need both,” says Araújo, who adds that African countries need to diversify partnerships as much as possible.

Stand up for your interests! On the siren call of selling raw materials – something that African countries find particularly hard to kick – Araújo points to some limited forms of economic nationalism as a good strategy. It is hard, he argues, for developing countries to stand up to large countries that can often lecture them on what they should or should not be doing. But he shies away from full-throated

endorsement of more authoritarian forms of economic nationalism seen in, say, Ethiopia or Rwanda. Despite the industrial progress under Brazil’s military dictatorship in the 1960s and 1970s, he says, development models are always changing. “Policies that are good today may not be good tomorrow; generals are always fighting the last war – economists too.”

‘GENERALS ARE ALWAYS FIGHTING THE LAST WAR – ECONOMISTS TOO’

Nevertheless, in the relationship with China, Araújo insists, African countries should be able to say: “We want to define our own interests.” That requires a certain amount of institutional strength and national cohesion – something South-East Asian countries have been remarkably good at. The scars of colonialism have made this harder on the continent, where many countries are not yet nations. Brazil has a role to play here, too, says Araújo, who has spoken to African counterparts on the subject. “We have been doing it for 500 years,” he says, pointing to the multicultural and multiethnic melting pot that is Brazil. “It is hard to do it in just 50 years, but you have to try.”

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LUSOPHONE AFRICA INSIGHT /

ANGOLA

Infrastructure boost from tenders The government is calling on private-sector investors to manage ports, roads and railways as it grapples with its high debt levels

DP World began working at Luanda MPT in March

Angola’s poor infrastructure is a major bottleneck for the economy, and the debt-troubled government is now launching a round of concession deals to bring in the private sector and increase investment. A first trial of the policy’s effectiveness will be the Multipurpose Terminal (MPT) at the port of Luanda, which Dubai Ports World (DP World) began operating in March. Next up should be the Lobito railway corridor, which connects the Angolan coast to Zambia and the Democratic Republic of Congo (DRC). Talking about the Luanda MPT, transport minister Ricardo Abreu says: “We believe that the Angolan economy will benefit a lot from the concession.” DP World won a public tender launched in December 2019 that attracted eight bids. Luanda MPT handles an estimated 70% of maritime cargo transported to and from Angola. “The modernisation of the MPT and the expected increase in the efficiency of the port operation in Luanda will bring advantages to foreign trade. We expect it to contribute to an increase in the capacity

$200m

DP World’s investment plan for Luanda Multipurpose Terminal, to bring it into line with international standards

GETTY IMAGES

By MARIA MUSSOLOVELA in Luanda

of the Angolan export sector,” adds Abreu, a former deputy governor of the central bank. “DP World, which already operates globally, will bring advantages to the whole logistics chain for goods shipped to or from the port of Luanda.”

End of an era For Angola, it is also about turning the page. The 181,000m2 facility was previously managed by Soportos-Transporte e Descarga, which is widely reported to be part of the business portfolio of General Manuel Hélder Vieira Dias (‘Kopelipa’), the former head of security for ex-president José Eduardo dos Santos. Vieira Dias says he was merely a representative for the main shareholder, who was in ill health, and that the MPT was handed back to the government with mutual consent. In July 2019, the attorney general’s office cancelled Soportos’s operating contract and took control of the asset. DP World, a major port terminal operator, will carry out an investment plan worth around $200m. It

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

will modernise the terminal to turn it into a crane-based operation in line with international best practice, according to Abreu. In a recent report on transport infrastructure, consultancy Eaglestone Securities stresses that reconstruction, rehabilitation and expansion of infrastructure “will be crucial” for Angola’s efforts to strengthen economic growth and end “its huge dependency on oil”. According to Eaglestone, Angola could become an international transport hub for DRC, Zambia and Botswana. The transport ministry confirms that several companies have expressed interest in managing the Lobito corridor. President João Lourenço authorised the tender process in September 2020. The winner will be in charge of the management and maintenance of the railway and related infrastructure, and transportation between the DRC border at Luau and Lobito port. In the ongoing effort to get goods flowing into and out of Angola, other concessions are expected to follow.

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MOZAMBIQUE

Total’s $20bn gas and security challenge The armed insurgency that has plagued Mozambique since 2017 is casting doubts on the future of a huge liquefied natural gas project By CHRISTOPHE LE BEC and HONORÉ BANDA Regular attacks in Cabo Delgado province are causing Total to rethink its commitment to a mega-gas project in Mozambique. In 2019, the French oil major announced it would invest $20bn in the project. After an attack in December 2020, Total withdrew its workers from the Afungi facility. A deadly attack closer to its operations in late March shows that the government is struggling to mount an effective response. Cabo Delgado, where most of the major gas discoveries have been made in recent years, has been subject to the armed insurgency since 2017. It is led by Ansar al-Sunna, which pledged allegiance to Islamic State in 2019 and is stepping up its attacks in the predominantly Muslim region. “Security issues are being discussed with the authorities, notably the ministries of defence, interior and energy. Total does not use private armed security

companies,” says Nicolas Terraz, head of the exploration-production branch in sub-Saharan Africa. Despite the threats from armed groups, and from Covid-19, 5,000 people, 80% of them Mozambicans, were working at the Afungi facility in December 2020. Once the project hits its peak in 2022, nearly 15,000 people will be working there. After an attack on Mocímboa da Praia on 12 August, Total and Maputo announced that they had strengthened their agreement to protect gas installations in this politically sensitive region, which also includes the Rovuma liquefied national gas (LNG) project, led by Eni and Exxon. A first version of this agreement was signed on 1 March 2019 by Anadarko.

Total and Maputo have strengthened their protection agreement

The new deal provides for an increase in Total’s financial contribution to the authorities, in exchange for better protection of its project infrastructures by the Cabo Delgado Joint Task Force. It is said the force was increased from 500 to 3,000 after the 12 August attack.

Human rights training ‘Mozambique LNG is providing logistical support to the public security forces […] in the form of vehicles, accommodation and food. Under this agreement, the operators pay the ministry of defence compensation for the protection missions carried out at the Afungi facility,’ said Total. Also in the agreement is that the personnel concerned receive Voluntary Principles on Security and Human Rights (VPSHR ) training. “Total is particularly vigilant about the proper application of these principles,” says Terraz. Total also works with several unarmed private security firms. In August, it had contracts with the British firms Blue Mountain and Control Risks, global security giants GardaWorld (Canada) and G4S (UK), and Arkhê Risk Solutions of Mozambique.

ALFREDO ZUNIGA/AFP

500 families who have fled the violence live in temporary housing

THEAFRICAREPORT / N° 115 / APRIL-MAY-JUNE 2021

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