Brazil’s failed Africa project

Condensed and translated by Beth McLoughlin from several articles on the Africa special reports section of LAB partner Pública’s website. To see the originals (in Portuguese), click here. “For every African problem, there is a Brazilian solution.” Those words by Kenyan professor Calestous Juma, highlighting the potential benefits toAfrica of Brazil’s expertise and experience in modernising its own nation, now have a bitter irony for many in the continent. Presented as an opportunity to develop Africa, Brazil’s investments there have not only failed to deliver on their promises but in many cases, have had devastating environmental, social and political consequences. Charges emerged this month against former president Luiz Ignacio Lula da Silva and Odebrecht, Latin America’s largest construction conglomerate, accusing them of operating a bribery scheme in Angola.  But both Odebrecht and Brazil’s involvement in Africa began long before Lula took office. While the Brazilian dictatorship was the first to invest significantly in African agriculture and industry, the process was accelerated under the government of Luiz Inacio Lula da Silva. Brazilian trade expanded exponentially in the region from $4.3 billion in 2000 to $28.5 billion in 2013 and it was regarded as a flagship policy of the Workers’ Party (PT). The Portuguese language shared by countries including Angola and Mozambique and a colonial heritage in common paved the way for promises such as improved energy access, mass employment and housing, but an investigation by Agencia Publica has revealed that these remain overwhelmingly unfulfilled. As the reign of the PT approached a dramatic close in Brazil with the impeachment of president Dilma Rousseff, two of the biggest companies to have enjoyed significant interests in Africa, mining firm Vale and construction giant Odebrecht, are embroiled in scandals of their own. Marcelo Odebrecht was recently sentenced to 19 years and four months in a corruption scandal linked to the Lava Jato, or Car Wash investigation which has implicated many members of Brazil’s parliament as well as some of its biggest companies. At the same time, Vale is behind one of Brazil’s biggest ever environmental disasters, after two of its dams collapsed in the Brazilian state Minas Gerais last year resulting in 19 deaths and contaminated waters for miles around.

Mozambique under the sway of Vale

Across the ocean in Mozambique, 220km2 (square kilometres) of Vale’s mines dominate the landscape, land which is further scarred by the railway built by Vale and Japanese firm Mitsui. Nacala Port in Mozambique The Carvao Moatize project alone cost $8.5bn, the equivalent of 60 per cent of Mozambique’s GDP. It also displaced 3,165 families, and “impacted another 10,000, who are being compensated under current Mozambique and Malawi laws,” according to a Vale spokesperson. Meanwhile, only 2,000 Mozambicans are directly employed by Vale, despite the scale of ventures such as Carvao Moatize  – it produces between 11 and 22 million tonnes of coal annually. According to the company’s own sustainability report from 2013, only 35 per cent of Vale’s more senior positions have been taken by Mozambicans. Evictions to make way for Vale’s mines have drawn attention of Human Rights Watch and Oxfam as communities have often been left in intolerable conditions after being rehoused. Rui Caetano of the NGO AAAJC (Association of Support and Judicial Assistance for Communities) said: “Vale’s resettlements were fraudulent. Organizations like ours weren’t allowed to take part. People were told they would get a new home, a new job.” Instead, he calculates that 12,000 ended up unemployed, many families were separated and in some cases, living on land without drinking water and where their traditional crops could not grow. Women in Lichinga in Niassa, Mozambique In Cateme, Jose Lapisson was among the rehoused. He said: “There wasn’t time to cultivate any crops. We went hungry.” Refusing to be rehoused and staying where they were was not an option, as the waters are now contaminated due to the mining works. Visiting the resettled communities to see the living conditions of the people is banned without an official permit, which is almost impossible to obtain. When Agencia Pública reporters visited a community in Cateme through local NGOs, they met Joaquim Afonso Chafatar. He took part in protests in 2012 against the resettlements, on which police opened fire. “They threw gas at us, and I couldn’t see where I was going,” he said. “They promised jobs for our young people, but they are all unemployed. What are we going to do here?” Though the GDP has grown by 7 per cent every year in Mozambique since 2007, the percentage of the population living below the poverty line – 54.7 per cent – has remained unchanged since 2003. Tax breaks, used as an incentive for investment, are one reason, according to researcher Fatima Fernandes Mimbire. “A company like Vale has around eight or 10 years to pay half of the IRPC [Income Tax for Collective People]. They also get a discount from the distribution of dividends, a deduction of tax losses, and a series of other benefits,” she said. That results in very little going back into the public pot for spending on necessities like health and education that might help take people out of poverty and help to develop the nation. Vale’s now deceased president Roger Agnelli was part of Lula’s presidential entourage in 2003 to Mozambique as Brazil’s leader sought to promote Brazilian business in Africa. A 25-year deal was signed by Mozambique’s president Armando Guebuza and Vale in 2007, and Agnelli continued to do business in the country after leaving Vale in 2011, joining the board of Guebuza’s companies. Children in the Gaiolas district in Luanda, Angola

In Angola, Odebrecht rules

Brazilian business giant Odebrecht also became very close to Angola’s ruling regime. The oil-rich country is one of the most corrupt in the world, but while 36 per cent of the population lives below the poverty line, the president’s daughter Isabel dos Santos is the richest woman on the continent. Jose Eduardo dos Santos has been in power since 1979, and the relationship between his regime and Odebrecht has grown to unprecedented levels over the decades. Since building the Capanda dam in 1984, Odebrecht has transformed itself into “a political power” in Angola, according to historian Pedro Campos from the Rural University of Rio de Janerio, a status which goes way beyond its engineering expertise. The company is now responsible for hundreds of projects in Angola, from supermarkets to diamond mines, far surpassing its original sphere as an engineering and construction company. It is the largest employer in the private sector in Angola, employing about 17,000 people. “The Angolan economy is entirely political, business opportunities don’t have anything to do with merit or ability, but with political access,” said Oxford University researcher Ricardo Soares de Oliveira, a leading Angola expert. Brazil’s dictatorship under General Ernesto Geisel was the first to recognise Angolan independence. His successor, Joao Batista Figueiredo, worked to strike a deal for oil from Angola in return for Odebrecht building the first big dam in the country. In the 1990s, Odebrecht even supported the regime which would eventually triumph in the 27-year civil war, giving food and supplies to troops, administering diamond mines that were key to funding the war, and even negotiating with OAS (the Organization of American States) as a messenger of the then socialist regime. When the war was over, the Brazilian government lent credibility to the new, ostensibly Marxist MPLA regime, at a time when it was ostracized by the international community, further cementing links between the two nations. Visiting Angola, Agencia Pública had the impression of a country in perpetual construction and reconstruction. Building sites are everywhere, and that is no accident according to researcher Mathias Alencastro. “It creates the impression of permanent reconstruction, that the country is changing, which is the great rhetoric that the MPLA created to suffocate the opposition… What matters is that the projects are announced, not that they are successful,” she said. The Odebrecht supermarket chain Rede Nosso Super is one such scheme. Touted as a way for local producers to reach consumers, the plan of 32 stores nationwide was launched in 2006 but the chain was forced to close in 2011, with frequent stock shortages and poor management being blamed. Catumbela international airport was another. Only 20km from the Benguela airport, also in the Benguela region, the new airport was launched to great fanfare in 2012, with the opening attended by the president himself, amid talk of flights to locations all over the world which would serve 900 passengers per hour. The reality was somewhat different. Despite a cost of $250m, half of which was provided in the form of a loan by the Brazilian Development Bank (BNDES), the airport never received official IATA certification, and two years after the launch, there was still no customs department, freight terminal or equipment maintenance area. It now only receives domestic flights from Luanda. Yet another project, the development of Luanda Bay, including new bridges, was never completed despite a financial injection of 21 million Brazilian reais, this time from the BNDES. The tractors were sent in, but despite starting work in 2012 part of the area resembles an apocalyptic scene, with the promised promenade still not built. Even the Capanda dam, built with promises of connecting the population to energy, did not deliver – more than two thirds of people in Angola still have no electricity at home. In 2014, $1 of every $10 spent by the government on infrastructure went into Odebrecht’s pockets.

Public projects for private profits

Funding from BNDES is common, and shows the extent to which the Brazilian state has encouraged Odebrecht schemes in Angola, which have questionable benefits at best for the population. BNDES’ biggest investment yet in Angola was $646.4m for development of the Laúca hydroelectric power station in the Malanje region, doubling the country´s energy supply.  The dam is set to be finished in record time – only 56 months of construction – well timed for the presidential election in 2016. Jose Eduardo dos Santos is set to be reelected once again, getting to 40 years in power. There have also been human rights violations associated with  Odebrecht projects in Angola over the years. A diamond mine which the company invested in was criticised in a report by Angolan investigative journalist Rafael Marques for brutal violations which included forcing workers to work naked and to have sex with each other in front of guards. An Odebrecht spokesman later said they had received no reports of such incidents at the mine, which was in an area known as Luzamba, in the Lunda Norte region. Forced evictions due to the urbanization of the capital, a project known as Luanda Sul, affected thousands of people and were carried out under the auspices of Odebrecht Servicos no Exterior, or Osel, an offshore wing of Odebrecht registered in the Cayman Islands. Osel formed a PPP with the Angolan government and engineering company Prado Valladares to carry out the works. According to the Operation Car Wash investigators, Osel was also used to transfer $6.3m to ex-directors of Petrobras, Brazil’s state-run oil company which is at the center of investigations into a money-laundering operation. Between 1995 and 2005, 2,000 people had their homes demolished for the Luanda Sul project, according to a report by the International Finance Corporation (a branch of the World Bank). Lourenco Prado Valladares of Prado Valladares put the figure at 3,300 people who were eventually rehomed. Human Rights Watch found these were often violent removals, many unnecessary, and often carried out without warning, though the companies denied this. But the urbanisation project was critical for Odebrecht’s strategy of getting close to the Angolan government. Luanda Sul now is a neighbourhood of gleaming condominiums and luxury shopping malls, with the price of an apartment fetching as much as $4million. Many are sold to oil companies active in the region, but according to Antonio Tomas of the Stellenbosch University in South Africa, a large number of government officials were given homes there which they went on to rent out at exorbitant prices. “The companies which rented them hoped that this favour would open doors,” he explained. The investigative journalist Rafael Marques believes the properties are also frequently used to launder money. “When a multi-national rents a house at this price, it doesn’t just legitimise highly corrupt payments, but also money laundering, because afterwards this individual can take his money abroad with properly verified documents that show he provided a service to a multinational,” he said. Ricardo Soares de Oliveira said that while the talk of Brazil’s forays into Africa has always been that it will bring public benefits, the reality is that the investment has all been in the private sector. “There is a great rhetorical investment in the brotherhood of the Portuguese-speaking people and a great, rich cultural proximity between Angola and Brazil, but in fact on the ground, the presence of the Brazilian state and of public initiatives is very small, and it is the private sector which is truly at the forefront of the Brazilian presence, not only in Angola but in the other countries too. “Therefore Angola, being perhaps Brazil’s largest trading partner in Africa, is just an advanced example of this logic in which President Lula definedAfrica as a priority, but the rest of the Brazilian state apparatus did not follow that priority.”