Beyond the Big Three: Africa’s Economic Relations with Brazil, India, the Gulf States, Turkey, and Japan
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On April 4, 2018, the Wilson Center Africa Program held the first event of the Brown Capital Management Africa Forum in 2018. The topic of discussion was “Beyond the Big Three: Africa’s Economic Relations with Brazil, India, the Gulf States, Turkey, and Japan.” Dr. Robert Litwak, Vice President and Director of International Security Studies at the Wilson Center, offered welcome remarks. Mr. Eddie Brown, Founder, Chairman, and CEO of Brown Capital Management then offered his opening remarks, which outlined the objectives of the Africa Forum in general and the specific goals of this discussion. Dr. Monde Muyangwa, Director of the Wilson Center Africa Program, made introductions and set the scene for the event. Experts who spoke at the event included Dr. Subir Gokran, Executive Director for Bangladesh, Bhutan, India and Sri Lanka at the International Monetary Fund; Dr. Elem Eyrice Tepeciklioğlu, Faculty Member at the International Law Implementation and Research Center at Yasar University in Turkey; Mr. Payton Knopf, Advisor at the United States Institute of Peace; Mr. Carlton Jones, Agriculture Leader at Deloitte Africa; and, Dr. Christina Stolte, Assistant Professor at the Chair of International Business and Society Relations at the University of Erlangen-Nuremberg in Germany. The purpose of this event was to assess the nature, scale, and scope of Africa’s economic engagement with countries outside of the “big three” partners: China, the European Union, and the United States. Furthermore, the event delved into the fundamental motivations for economic engagement, the policy and institutional frameworks for supporting economic engagement for each of the countries discussed, and the socio-political and economic challenges to and opportunities for increasing mutually-beneficial economic and business relations with the continent.
Dr. Subir Gokarn opened the discussion by outlining the context of the economic relationship between India and Africa. While noting that talking about Africa in the aggregate can be misleading, as the Continent is made up of many countries and diverse markets, Dr. Gokarn also emphasized that the relationships between African countries and India have been long-standing. There are over two million people of Indian origin living on the Continent, and there is a historical basis to the partnerships between India and Africa. Following Indian independence, Indian foreign policy focused on trading solidarity with newly-independent countries, including many in Africa. There is also a more “soft” side of the relationship, including around healthcare and education. While the various aspects of the relationship have shifted overtime, it has generally been robust. There is the sense that African countries offer new opportunities for Indian businesses, particularly in tele-communications and agriculture. Recently, Indian economic diplomacy has moved from being ad hoc towards being more strategic in nature, as Indian businesses have worked to identify their niches in engaging with Africa. While India cannot necessarily compete with the “big three” partners, India has been particularly strong in terms of soft skills, diplomacy, and the ability to be more nimble. Likewise, African partners must work to identify the specific advantages that engaging with India has to offer, and work to leverage these advantages for mutual benefit.
Dr. Elem Eyrice Tepeciklioğlu offered an overview of the growing relationships that Turkey has been forging with Africa countries. While Turkey’s engagement with North Africa dates back to the time of the Ottoman Empire, Turkey is starting to see more opportunities, particularly with trade and business, with countries south of the Sahara, including with South Africa, Kenya, and Tanzania. Further, the Turkish Government is making it more of a priority to engage with Africa, and it has helped facilitate the growth of business and trade relations. Small- and medium-sized Turkish companies have particularly started to invest as African markets have become more accessible. The Turkish Government has used development aid to help facilitate commercial interactions, and the Turkish image and presence has been enhanced by the engagement of private companies (like Turkish Airlines, which has routes to 40 destinations in nearly 30 African countries), NGOs, and the opening of Turkish schools. In addition, Turkey has helped to create a significant number of jobs in Africa, unlike some other partners who bring their own workers to Africa. In 2015, for example, Turkish projects provided employment for 30,000 people in Ethiopia, which is the largest number of people employed by a foreign country. In order to build on existing relations, there is a need for more Turkish-African cooperation in the energy sector and in the security sector, particularly in combatting terrorism and violent extremism.
Mr. Payton Knopf provided background on how security and political dynamics between the Gulf States and Africa interact with the economic relations, concentrating specifically on the Horn of Africa. The United States is no longer the primary political and security guarantor in the Horn region, as the Gulf States have assumed a larger role. On the Gulf side, economic self-interest is the largest motivation, and there has been a concerted effort by these states to create a linked chain of ports and security bases throughout the Horn. Retail relationships are animating engagement on the Horn side. Yet, an argument could be made that the clientelistic approach that the Gulf is pursuing in the Horn and its involvement in regional politics has been fomenting more instability in an already volatile region. The single largest recommendation for setting the stage for more mutually-beneficial relations and for creating an investment environment would be more regional integration and cooperation in the Horn, but there remain many factors that would hold back this development. The United States could help the situation by developing a more coherent political strategy towards the Horn, and it could potentially affect outcomes by leveraging its contributions to development aid and peacekeeping missions. Other key partners, including the European Union, China, and Turkey, must also work to coordinate their activities. Unless there is a more sophisticated coordination mechanism, it will prove difficult to manage the short-term, transactional relationships between the various countries engaged in economic relationships with the Horn. In addition, it is vital to remain cognizant of the fraught security environment, plethora of armed groups, high population growth, and importance of the Red Sea region as a gateway to trade for the United States, Europe, and Asia.
Mr. Carlton Jones discussed the scope and approach of Japan’s engagement with Africa, emphasizing the long time horizon of Japan’s outlook and its focus on risk mitigation. Japan’s economic engagement with Africa includes infrastructure, the automotive industry, and growing trade in the agriculture sector. Japan has recognized that the infrastructure space is crowded and that it does not have the comparative advantage in more traditional forms of infrastructure like roads, rails, and ports, so it is now moving in the direction of industrialization. The Tokyo International Conference of African Development (TICAD), which was launched in 1993, was held in Africa for the first time in 2016. In addition, Japan’s Prime Minister dedicated 30 billion dollars to trade with Sub-Saharan Africa, opening a new era of heightened engagement. Japan typically has negative interest rates, and so there is a willingness to invest. As such, the Japanese tend to take a long-term view and rather than seeking immediate returns on investment. In doing so, they emphasize risk mitigation, in contrast with some of the other countries doing business in Africa. Mr. Jones’ recommendations for the way forward include twinning development assistance with business, creating job and wealth generation opportunities, and focusing on areas where Japan can offer advantages compared to other larger countries and partners such as the “big three.”
Dr. Christina Stolte outlined the long historic ties between Brazil and Africa, going back to when they were united as an ancient super continent. Africa and Brazil also share a history of four centuries of brutal slave trade and significant immigration: Brazil has been called the largest African nation outside of Africa, which underlies the number of people of African origin living in Brazil. She noted that the political and economic ties between Brazil and Africa grew significantly under President Lula da Silva, including the opening of 17 new embassies in Africa, resulting in Brazil having the most embassies on the Continent. Brazil’s engagement with Africa is not one-sided, as there is significant trade from both sides. Brazil has focused on the extraction natural resources from Africa, as this is an area in which it has the most expertise, being a natural resource-rich country itself. On the other side of the equation, as one of the world’s major meat and poultry producers, Brazil relies on the growing middle class in Africa as a market for its products. Africa is considered a continent of great potential to Brazil, and the Brazilian Government has been promoting Africa as a productive business environment. Yet, beyond the larger state-supported Brazilian companies, not many companies have tried to enter the African market as they find it difficult to gain a foothold. Dr. Stolte predicted that Brazilian engagement with Africa might decrease in size in the coming years, as it is not a strong competitor against the “big three” due to ongoing economic problems. However, she noted that Brazil’s relatively weaker position opens up opportunities for cooperation and joint ventures between Brazil and other international partners, which has been becoming more frequent. Brazil has much to offer in terms of expertise in agriculture, mining, and other areas where it can help Africa tap into its potential and set the stage for more mutually-beneficial economic engagement into the future.
Launched in September 2015, the Brown Capital Management Africa Forum provides a premier platform for substantive and solutions-oriented dialogue on key trade, investment, and development issues in Africa, and in U.S.-Africa relations. Convening business leaders and policymakers, as well as subject matter experts from the United States and Africa, the Brown Capital Management Africa Forum sponsors a series of public events designed to support the development of economic engagement and policy options that advance mutually beneficial economic relations between Africa and the United States. The Brown Capital Management Africa Forum is made possible by the generous support of Brown Capital Management.
“While the high volume of trade between Africa and the European Union, China, and the United States has gotten much play in government and policymaking circles [and] academic circles, increasingly, some less traditional partners are establishing significant economic and business relationships with the continent.”
“According to the African Development Bank, India is now the fourth-biggest bilateral trade partner with Africa. The Gulf states, which have long had relationships with North Africa, have been widening the scope of their engagement southwards, and toward non-oil trade as well. Further, countries like Japan have shifted some of their focus from aid to development projects.”
Eddie C. Brown
“We hope to spotlight the changing dynamics and relationships that African countries are forging with Brazil, India, the Gulf states, and Japan – as well as the potential opportunities to set the stage for mutually beneficial trade and development going forward.”
“For most of the countries that were discussed here, one of the strategic goals is to get the African vote in the UN [on the Security Council]. I think we can take it as a given that getting that African vote in terms of UN decisions is something that all of these countries are concerned about.”
“What we heard today is a clarion call to African countries to step back and understand their own strategic interests and figure out how best to engage… I’m not even sure that from an African perspective your ordinary African citizen would want these new and upcoming partners to replicate what the bigger partners have done in Africa. I think that’s a key point. Just because someone’s doing it doesn’t mean it’s necessarily the best approach.”
“The Indo-African relationship is longstanding... and that has created one sort of platform, one basis for stronger business and trade relationships, because a large part of the population essentially [is] motivated by trade – their livelihood is still derived from trading and entrepreneurship activities.”
“None of these relationships are smooth or stable, but they’re important, complex, and to a large extent, I think they are robust.”
“I think the key to Indian strategy in the African region – which is still evolving, still being talked about, and hopefully, taking shape in some form as we go along – is niching. What is the best niche you can occupy as a small player? You cannot compete with the three big players, so how do you take advantage of the niches you have?”
Elem Eyrice Tepeciklioglu
“Africa, for Turkey, is actually a new area, and the interest was not always there… It was mainly after the adoption of the action plan for opening up to Africa in the late 1990s. Although trade with Africa is on the rise, it is still not at expected levels.”
“Turkish enterprises, especially small and medium-sized companies, now see that Africa can offer them more opportunities in order to meet their economic interests. In the search for more business opportunities in the continent, the investment [through these companies] has reached $6 billion in 2016.”
“I believe that Turkey should cooperate with African countries in the fight against terrorism… Turkey has significant military capabilities, and this might help African countries to develop their capabilities in this field. Such cooperation may lead to the development of commercial relations as well. I see this as a very important area of cooperation, where both sides can mutually benefit.”
“One of the primary trend lines you’ve seen in the last couple of years is that the United States is no longer the primary security guarantor in the Horn of Africa and the broader Red Sea region... This has created quite a volatile security and political picture, into which the economic considerations and calculations of these various states play.”
“On the Gulf side, what’s animating their interactions – political, security, and economic – in the Horn of Africa is certainly economic self-interest and wanting to explore new markets and investment. But what you’re also seeing is an attempt by all of the states in the Gulf to build a new security architecture that they believe responds to their perceptions of the shifting threat environment.”
“One of the things that underlies a lot of the political and security calculations is the debate within the Gulf about the role of political Islam and governance, not just in the Gulf, but in the Horn… You’ve seen that conflict play out as a zero-sum game in the Horn. That has had detrimental impacts on the states and reinforced some fairly negative dynamics that existed there already.”
“Many Sub-Saharan African countries, as they want to move into modernity, realize that they can either go the slow route – that is, become an agrarian society, become an industrial society, and then become a knowledge society – [while] other countries, like Rwanda, which doesn’t have that many natural resources, has tried to jump [or] leapfrog into modernity, already by becoming a knowledge economy. Others are somewhere in between.”
“Brazil’s relations with Africa, despite often being seen in the light of BRICS engagement on the continent, are far from being a recent phenomenon... Four centuries of abominable slave trade also links Brazil with its neighboring continent and laid the foundations for Brazil’s economic wealth and contributed to the fact that Brazil can call itself today the biggest African nation outside of Africa. While this cultural link has not really played a major role for Brazil’s national identity before the presidency of Lula da Silva, it has been one of the cornerstones of Brazil’s political and economic rapprochement with Africa since the early 2000s.”
“Encouraged by the political and financial support of the Brazilian government, major Brazilian companies also started to look towards Africa. Trade with Africa quintupled in the first decade of the 2000s, with petroleum dominating Brazil’s imports and resource-rich countries like Nigeria, Angola, and South Africa leading the list of Brazil’s most important trade and investment partners on the continent.”
Dr. Subir Gokarn
Mr. Carlton Jones
Mr. Payton Knopf
Dr. Christina Stolte
Elem Eyrice Tepeciklioğlu
The Africa Program works to address the most critical issues facing Africa and U.S.-Africa relations, build mutually beneficial U.S.-Africa relations, and enhance knowledge and understanding about Africa in the United States. The Program achieves its mission through in-depth research and analyses, including our Africa Up Close blog, public discussion, working groups, and briefings that bring together policymakers, practitioners, and subject matter experts to analyze and offer practical options for tackling key challenges in Africa and in U.S.-Africa relations. Read more