Brazil’s fields of dreams

2012-11-24 14:11

Brazil’s incredible economic turnaround holds valuable lessons for SA and Africa. Simon Freemantle reports

Luiz Inácio Lula da Silva’s list of achievements during his two terms as Brazilian president between 2003 and 2010 is deeply inspiring.

During his eight years in power, 28 million Brazilians were lifted out of extreme poverty, almost 40 million joined the middle class and 15 million new formal jobs were created.

Also during his tenure, Brazil’s gross domestic product swelled fivefold and per capita income fourfold. Having inherited an unemployment rate of more than 12%, by the time Lula made way for his successor, Dilma Rousseff, Brazil’s unemployment rate stood at 6% (and has since dipped lower).

It is certainly true that Lula inherited policy momentum from his predecessor, Fernando Cardoso, and for much of his term the global economy was broadly supportive of Brazil’s resurgence.

Yet the country’s transformation has been too dramatic to assign to these exogenous and legacy factors.

Lula’s influence has been clear and powerful. At the end of his second term, 87% of Brazilians felt Lula had been either a “good” or “excellent” president.

A range of common challenges mean there is much that African economies can learn from Brazil and from Lula specifically. Three core aspects of Lula’s speech last week seemed most prescient in this regard.

First, Lula placed Brazil’s poor at the centre of his economic policies. Perhaps the most prominent initiative in this regard has been the Bolsa Familia (Family Allowance) social welfare programme, which provides funds to 13 million Brazilian families.

At the core of this approach, Lula claims, is a belief in the principle that it makes moral and commercial sense to provide protection and support for the country’s poor.

Grants to the poor almost immediately flow back into the economy in the form of consumption, providing broader support. Lula also rejected the idea that wealth must first be created before it can be redistributed.

The two processes are, and should be, simultaneous.

In Africa, growth across many fast-paced economies is worryingly unequal. South Africa’s notorious income gap is rapidly manifesting across urban centres in Nigeria, Angola and Kenya. For Africa’s recent growth momentum to be sustained (and sustainable), a focus not just on the pace of change, but on the distribution of its benefits, is critical.

Second, while there are clear similarities between the weight of agricultural potential in Brazil and across many African countries, the divergence in current output is dramatic.

For the most part, Africa remains food insecure, and a host of factors – not the least of which include underinvestment in agriculture, political instability and poor supportive infrastructure – have conspired to turn the continent into a net importer of food.

Meanwhile, Brazil is one of the world’s largest exporters of soft commodities.

Key to this, Lula asserted, has been the complementary balance between small-scale and commercial farming.

During his terms, Lula provided land and credit to thousands of small-scale farming families in Brazil, while simultaneously supporting the development of the country’s powerful agribusiness sector.

Today, roughly 70% of all food consumed by Brazil is provided by the country’s 4.5 million small-scale farmers. Better use of technology means that cereal yields in Brazil are four times greater than in Nigeria.

Core to this approach has been Lula’s belief that the provision of food security is the “minimum” that can be expected from a government.

Failure to provide this basic need erodes the government’s credibility. Using this metric, most African governments today would falter.

Looking ahead, Africa’s growth can only be sustained amid rapid population growth (the continent’s population is expected to double to 2 billion by 2050) if its people are provided with adequate nourishment to enable them to contribute to economic output.

The need is more critical when one considers the social imperative and the risk for major instability (a harbinger of which has come with two recent global food-price hikes since 2008) should food production remain as cyclically vulnerable on the continent.

Third, Lula’s focus on infrastructure as a means to support domestic growth and regional integration has clearly been potent.

During his term, Lula oversaw the building of the first bridges linking Brazil to Peru and Bolivia, and today with almost 100 000MW of installed generation capacity, Brazil has more electricity than the whole of sub-Saharan Africa.

More robust economic growth and regional integration in Africa cannot be achieved without dramatic improvements in the continent’s infrastructure stock. Here, foreign investment is critical.

Last year, Brazil alone received inward foreign direct investment of $67 billion (R600 billion), compared with $43 billion into the whole of Africa.

A correlated point is the focus placed on economic diplomacy as a means to deepen African engagement. During his two terms, Lula placed unprecedented focus on improving relations between Brazil and Africa, visiting 32 countries and overseeing the opening of 19 new Brazilian embassies on the continent.

South Africa’s economic diplomacy model in Africa is largely dysfunctional, with limited coherency between state and private sector initiatives certainly impinging on more fluid commercial engagements in the rest of Africa.

In contrast to Lula’s ambitious African travel agenda, since 2009 President Jacob Zuma has paid official state visits to just seven African countries, five of which are in the country’s existing arc of influence within the Southern African Development Community.
 
Africa’s recent growth momentum has undoubtedly been inspiring, yet a consideration of the ingredients critical to Brazil’s success suggest that fundamental improvements are still required for growth to become more inclusive, internally viable and ultimately more sustainable.

Meanwhile, the Brazilian example equally displays the powerful effect bold and innovative leadership can have in socioeconomic prosperity.

Governments unable to provide “democracy, dignity and hope”, Lula stated, are of no use. As Africans we should hold this dictum to heart as we gaze ahead at an exciting, though uncertain, future.

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