Beyond the Big Three: Africa’s Economic Relations with Brazil, India,... https://www.wilsoncenter.org/event/beyond-the-big-three-africas-econ...

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Wed. Apr. 04 2018

2:00pm — 4:00pm
6th Floor, Woodrow Wilson Center
Directions to the Wilson Center

Trade and Development

Beyond the Big Three: Africa’s Economic

Relations with Brazil, India, the Gulf States,
Turkey, and Japan
Webcast available

Webcast Recap

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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

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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”

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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.

Selected Quotes

Robert Litwak

“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.”

Monde Muyangwa

“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.”

Subir Gokarn

“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.”

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“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.”

Payton Knopf

“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.”

Carlton Jones

“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.”

Christina Stolte

“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.

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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.”

Speakers
Introduction

Robert S. Litwak

Senior Vice President and Director of International Security Studies

Mr. Eddie C. Brown, CFA

Founder, Chairman and CEO, Brown Capital Management

Moderator

Monde Muyangwa

Africa Program Director

Speakers

Dr. Subir Gokarn

Executive Director for Bangladesh, Bhutan, India and Sri Lanka, International Monetary Fund

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Mr. Carlton Jones

Agriculture Leader, Deloitte Africa

Mr. Payton Knopf

Coordinator, South Sudan Senior Working Group, United States Institute of Peace and U.S.
Liaison, European Institute of Peace

Dr. Christina Stolte

Assistant Professor, Friedrich-Alexander-Universität, Germany

Dr. Elem Eyrice Tepeciklioğlu

Faculty Member, International Law Implementation and Research Center, Yasar University,
Turkey

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