Brazil Announces Cancellation of $900 Million Long-Standing African Debt

Brazilian officials announced on Saturday that the Latin American emerging economy will be cancelling about $9 million worth of African debt. This move will benefit 12 nations in the African continent. This is reportedly part of a broader plan to boost ties with the African nations concerned.

All debts cancelled or restructured

The highest debt that will be cancelled is that of Congo-Brazzaville worth $352 million. The second largest debt is that of Tanzania at $237 million. Zambia’s outstanding debt stands at $113.4 million. Economists are saying that the crisis being experienced by the world’s biggest economies is pushing emerging ones to invest and trade amongst themselves. In terms of debt structuring, the terms would include longer terms for repayment and more favorable interests for the borrowers.

The debts in question were mostly accumulated in the 70s. There have been previous negotiations on these debts even before. Brazilian law is clear that long-term financial assistance and new loans cannot be offered to countries that have outstanding debts.

Making the rounds

President Dilma Rousseff of Brazil has been making the rounds in Africa, most recently attending the summit and 50th anniversary celebration of the African Union in Addis Ababa in Ethiopia. This is President Rousseff’s third visit to Africa in a span of three months.

President Rousseff’s spokesman, Thomas Traumann has announced that Brazil would also be making key announcements on new developments in the area of providing assistance to African countries.

According to the presidential spokesman, establishing a special relationship between African countries and Brazil is a key component of the Latin American country’s foreign policy. Traumann spoke to reporters at the sidelines of the AU celebrations.

South-South cooperation

Brazil is now the 7th largest economy in the world with US$2.425 trillion last year. This strategic move in foreign policy is a step towards boosting ties with African nations such as Tanzania, Zambia, and Congo-Brazzaville. Other African countries involved in this new policy are Sudan, Gabon, Mauritania, Cote d’Ivore, Senegal, Guinea Bissau, Sao Tome and Principe, Guinea, and the Democratic Republic of Congo.

New agreements

Brazilian President Rousseff has recently signed a set of agreements with Prime Minister Hailemariam Desalegn of Ethiopia. This series of agreements cover the areas of air transport, agriculture, education, and science.

Brazil is one of the fastest growing economies in the world and with economic growth comes the need for natural resources. In the last decade alone, trade between African nations and Brazil has increased five-fold. Brazilian investments in Africa are mostly focused on oil, mining, and infrastructure.

Assistance and technology transfer to Africa

Brazil, one of the BRICS group of nations, has already created an agency with the purpose of supporting investment in both Latin America and Africa. Brazilian aid is targeting social and agricultural programs as well as provision of direct financial support. Brazil is also keen on working towards technology transfer to the other major continent in the southern hemisphere.

The BRICS emergent economies, namely Brazil, China, India, and Russia are currently the major trade partners and investors in Africa.

Photo Credit: Brazilian President Dilma Rousseff