Brazil eyes Africa

Michael Dynes

Power and wealth generally accrue to those capable of spotting an opportunity that others have discounted or do not see. But foresight also needs to backed up with long-term planning and the financial resources needed to turn a hunch into reality

When Brazil began its gamble developing a sugar-cane-based ethanol industry in the 1970s, it was largely dismissed by the developed world as little more than a regional idiosyncrasy. Today, Brazil is the world's largest producer and exporter of ethanol - exporting nearly two billion litres a year to a dozen countries - in what is generally accepted as likely to be one of the great industries of the future.

To ensure the biofuel sector's continued growth Brazil needs to move beyond its own borders and cultivate new sources of feedstock - sugar and corn for bioethanol, and vegetable oils for biodiesel - and it has turned to Africa as the most promising source of supply.

The power-starved continent is endowed with huge reserves of energy - from hydrocarbons in the north and west to coal in the south. But it is the vast potential for biomass production between the tropics of Cancer and Capricorn that is attracting the attention of Petrobas, the Brazilian state-controlled energy giant.

Brazil has identified sub-Saharan Africa as a region with ideal agro-climatic conditions, and the socio-economic potential, needed to become a large-scale biofuel feedstock provider over the next decade and beyond. Through Petrobas Brazil has proposed a series of long-term investments across the continent offering African governments the financial, technical and agronomic assistance they need to get their biofuel industries up and running.

The offer has been received with open arms. Brazil now has biofuel development agreements with some five African states, Mozambique, Angola, Ghana, Nigeria and South Africa - and agreements with at least another ten are on the way - putting it years ahead of China, Europe and America in building the alliances and partnerships that will be required to transform Africa's embryonic biofuel potential into reality.

These deals seek to replicate Brazil's ethanol production by transferring its technologies and expertise in plant science, plantation management, and well as the refining, distribution and marketing of biofuels on the future global market. Moreover, they have been endorsed by two UN bodies - the Industrial Development Organisation and the Conference on Trade and Development - as appropriate to the African context and likely to augment rather than diminish the continent's food security.

Admittedly, these developments are taking place within the ideological context of a South-South partnership offering a "fraternal development model" to Africa that contrasts sharply with Western paternalism or Chinese mineral rapaciousness. Strip away the rhetoric and Brazil is, in the shorthand of the market, "talking up its own book."

Brazil's financial commitment to Africa remains modest. Petrobas' investment budget for biofuel development over the next five years is a little short of 2.8 billion dollars, and only 9 percent of that will earmarked for investment abroad. But we are seeing the beginning of the process, not the end.

Those budgets will grow. In five or ten years from now when you fill up with bioethanol imported from Mozambique or biodiesel imported from Angola, you will be able to take some solace from the realisation that Brazil saw the market first.