trade & investments
TRADE BALANCE 2008
The trade balance Brazil-Ghana of 2008 consolidated the main tendencies that always characterized it: slow decentralization of the list and inclusion of products of higher aggregated values. New fact is the fast growing of the Ghanaian exports to Brazil, which increased by 267%, thanks mainly to the sale of cocoa (91,28% of the exported total) and cocoa paste (8,10%). The surplus in favor of Brazil, one of the highest reached in Africa, however, has not been affected and even increased in relation to 2007, reaching about US$ 334 million.
As it has been predicted sugar and gasoline continue hegemonic among our exports, although the shipments of the latter had diminished by 29, 40%, in terms of value, and almost half, in terms of volume. Thus, sugar and gasoline, together, totalled more than 57% of the list, amount much lower than the 75% of few years ago. The shipments of sugar, in contrast to gasoline, for that matter increased 33, 50% and totalled more than US$ 145 million.
As for the second trend, corresponding to the aggregation of value, it is relevant to note that the two items which have increased significantly more, presented a high aggregated value. It is about Iron Rods as well as bulldozers and angle dozers. The former had its sales to Ghana increased by 296,95% and is today the fourth article more sold, after sugar, gasoline and chicken in pieces, with US$ 16,228,929 obtained in 2008. The latter – bulldozers - increased by 295,63% and sold US$ 1,689 million.
Finally, we must recognize that, in spite of the financial global crisis that affects strongly this country, the exports from Brazil to Ghana, increased, in 2008, by 7, 32% in relation to the last year.
HIGHLIGHTS OF THE BRAZILIAN ECONOMY 2007/8
With GDP growing above inflation, the Brazilian economy is experiencing its best moment and gaining international recognition.
GDP on the rise, inflation under control, international reserves greater than the external debt, record exports, businesses with factories abroad , the creation of jobs, a strong domestic market, and lower social inequalities.
With the best outlook in the last 30 years, the Brazilian economy is increasingly vigorous. The country, whose problems were as great as its wealth, has resumed its course of development, and finally reached the future.
The most recent indicator of this change was the announcement that the economy grew 5.4% in 2007, with GDP reaching 2.6 trillion Reais, surpassing both government and analysts’ projections, maintaining the trend of the last 21 consecutive quarters. This has been the first time in decades that GDP growth has been greater than inflation.
With an average expansion rate of 5.4% over the last four years, the country has shattered the myth that it is impossible to maintain an accelerated rate of growth without generating inflation. The growth of the aggregate product was greater than projected by most economic agents. Another important factor, on the supply side, was the reasonably homogeneous contribution of certain components of GDP: industry [4.9%], agriculture [5.3%] and services [4.7%].
Known in the news for its chronic crises and the impacts on its economy, Brazil has attracted the interest of international economists, drawn the media, and bolstered the confidence of investors. A survey conducted recently by ‘Exame’ magazine with 136 CEOs of foreign capital companies revealed an important change in their perception regarding the country’s future. Nearly 90% of the interviewees stated having increased their investments, and 76% plan to expand their operations over the next five years.
Investments have been one of the main factors supporting GDP growth. In 2oo7, these increased 13.4%, the best result since 1996, when gross fixed capital formation began to be measured.
External Creditor, international reserves and foreign solvency
The increase in reserves in 2007 was greater than in other BRICS – Brazil, Russia, India and China. The country became a net external creditor at the beginning of 2008 and, according the Deutsche Bank ranking, is now less vulnerable to international crises than countries such as Spain, Canada and India. Brazil is currently bolstered more than US$200 billion in international reserves, mainly as a result of the extraordinary performance of the Brazilian exports in recent years.
Besides the increase in international reserves, exports – which reached a total of 161 billion dollars in 2007, with a highly diversified portfolio, ranging from commodities to airplanes and software – were of fundamental importance for the reduction of external vulnerability. With one of the world’s leading agribusiness, Brazil is largest exporter of ethanol, sugar, coffee and orange juice. However, manufactured goods now represent 52.3% of exports, and the goal is to expand this share even further.
New partners, trade balance
In the last five years, trade with the Latin American Integration Association [ALADI] rose from 16.4% to 22.7% of overall Brazilian exports, while China’s share increased from 4.2% to 6.7%. The diversification of trade partners, one of the current administration’s priorities, has proven to be strategic in promoting exports.
In 2007, imports began increasing at higher rates, reaching US$121 billion, and it is estimated that this volume increase even more, to support the accelerated rate of economic growth with and, at the same time, help control prices. Overall, the projection for the coming years is that the robust trade balance be maintained.
Equally important is the new industrial policy. The measures called for include equipment and machinery acquisition incentives, funding increases for micro, small and mid-sized businesses, and the elimination of bureaucracy for exports. Also called for are the promotion of research and development and the use of new technology, to ensure competitive and scale gains for Brazilian companies, and to add value to exports.
After reaching self-sufficiency in oil in 2006, the new reserves found by Petrobras have opened up a new perspective. The Tupi oil field, the largest discovery, and the Jupiter field, both in the Santos basin, have reduced the dependence on natural gas.
Higher income, lower unemployment rate
The inflation targeting strategy is 10 years old this year. For the fourth consecutive year, the target is expected to be met. In 2007, if the seasonal effect of the increase in the prices of beans and milk were to be disconsidered, inflation would have been 3.9%. Certain products, such as TV sets, sound systems, and computers had negative variations caused by the increase in imports, demonstrating that inflation remains under control.
More than 5.6 million formal jobs were created between 2004 and 2007. This rate has been maintained in the first two months of 2008, with the creation of 347.9 thousand jobs, a record for the period. With the offering of new jobs, the unemployment rate has reached the lowest level in the time series. This trend, along with the increase in income – the minimum salary rose from US$76.7 in March, 2002 to US$243 in March, 2008 – and the expansion of the social protection is creating a mass market, further reinforced by a sharp increase in the supply of credit.
Between 2002 and 2007, a large portion of the population – 20 million people – has migrated from the lower income classes D and E to class C. Between June, 2006 and November, 2007, the total reached 14 million. Class C is now the largest, comprising 86.2 million individuals, as shown by a study recently concluded by two research institutes.
Source: Brazilian Ministry of Finance, April 2008.
other Trade News
Brazil is one of the 30 major exporters in the world. It sells diversified products in many different markets, leading among them the United States and European Union, which, together buy 50% of Brazilian exports. Brazil meanwhile has intensified its commercial relations with South America, Africa, Asia and the Middle East.
Manufactured products represent 55% of Brazilian exports, among which are aeroplanes, automobiles, engines, electro-domestic appliances, replacement parts, transmission aparatus and receptors and others.
Though raw materials represent only 28% of exports of the country, some occupy place of preeminence in the classification of the main products exported by Brazil, such as iron ore, soya, coffee and orange juice.
By restructuring the State, Brazil opted to open a larger part of its economy, encouraged competitivity and favored monetary stability. The need to penetrate the international market stimulated the establishment of Brazilian firms abroad. Nowadays, more than 350 Brazilian enterprise Groups operate with efficiency externally, with annual amount of business in the order of US$900 million.
TRADE BETWEEN BRAZIL AND GHANA: DATA & FACTS.
Prospective importers from Ghana, as well as partners to Brazilian companies may register their firm, free of charge, at the following address: www.braziltradenet.com, available in English, Spanish and Portuguese, or through the Trade Division of the Brazilian Embassy in Accra, and be provided with personal passwords after their registration with which they can subsequently access up-to-date trade and business information on Brazil and its trading partners.
More information at BrazilTradeNet, the Ministry of Foreign Relations´ trade portal.
The list of registered enterprises in the TradeNet as well as other importers from Brazil includes:
• ADS Ltd.
• Air Ghana Ltd
• Akataboa Ebterprise Ltd
• Askia Supplies & Services Ltd.
• Bra-Gha Trading Ltd
• CCTC Gh Ltd
• Chandiram Co. Ltd
• DODD TEE TRADING CO. LTD
• De Goull Ltd
• EPISTLE CONSORTIUM LTD
• Europa Import & Export
• F.O.N. Ltd.
• Fen wey enterprise
• Frabeg Imports Ltd.
• Great african sports marketing company
• Imexco Gh Ltd
• IYG Ventures Ltd.
• Jei River Farms Ltd.
• Kwatsons Impex
• Koala Shopping Centre
• M & K (Ghana) Ltd.
• Moon Traders Ltd.
• N & S Imports
• Nana Afram & Sons Ltd.
• Neoplan (Ghana) Ltd
• Nordic Motors
• Odaymat Brothers Limited
• Packrite Cartons & Packaging
• Papion Ltd
• Pee-Tay & Co. Ltd.
• Prefos Ltd.
• Primeer Steel Ltd
• ProVision Consultant Ltd
• Rainbow Trading Co., Ltd.
• Ransaddo Enterprise
• SPEARSON LIMITED
• TATLOCK LIMITED
• Tomorrow’s World Ltd.
• Unimech Machinery & Equipment Co. Ltd
• Unique Logistics Ltd
• Vishals Co. Ltd.
• Woodland Mechanical Company Ltd
INVESTMENTS
Brazil is one of the major emerging markets in the world, the most outstanding in Latin America. It possesses an industrial development base, efficiently growing export sector, as well as a sophisticated financial system.
With a population estimated at 187 million inhabitants, continental dimension, and abundant reserves of raw materials, Brazil demonstrated its capacity for absorption of big investments coming in all the sectors of the economy. Among the developing countries, it occupies the fourth position in the attraction of direct foreign investment. This position is the fruit of the dynamism of the Brazilian society, of the potential of its internal market, its political stability and economic maturity. It is the result of a policy in which national and foreign capital benefit from the same treatment. The Brazilian law does not impose limits regarding the remittance of profits and dividends out of the country.
In the Brazilian economy, the presence of foreign capital was always very significant and diversified, for both the investing countries and the receiving sectors. The participation of foreign firms performs active function in the increase and modernization of the immense and embracing Brazilian industry.
The major foreign investors in Brazil are the United States, Spain, Netherlands, France, Portugal, United Kingdom, Germany, Switzerland and Japan.
BRAZIL-GHANA BILATERAL TRADE
Amongst the 53 African countries, Ghana has been a major importer of Brazilian products. It was the seventh major buyer of Brazilian products by February 2008, behind only Nigeria, South Africa, Angola, Egypt, Algeria and Morocco.
The main Brazilian products sold are gasoline and sugar which, together, take a slice amounting to about 57%. The other 43% answers to sales of boneless meat, polyethylene, paper, automobiles, chicken, trucks, paints, floor and wall tiles, glasses, agricultural equipment/implements, etc.
Ghana has in recent years been gradually increasing its exports to Brazil, from a quantum of about US$450,000.00 in 2004 to about US$3million at the end of 2007. The major Ghanaian exports were cocoa products and non-prepared bauxite, and, this year, there are soon to be exported some large quantities of Sheanut butter. Possibilities are being explored also for the export of Salt and Cocoa beans as well.
The trade statistics between Brazil and Ghana confirm, in July 2008, three general exchange trends: the increase in volumes and values, diversification and sophistication in the list.
In the case of the first of the three characteristics, we can say that, in spite of the extraordinary increase in the balance of trade deficit between Brazil and Africa, which rose from US$934 Million to US$4,287 billion, the numbers of trade exchange with Ghana were positive. As a result, Brazilian exports increased by 16% in the first seven months 0f 2007, reaching US$208,808,809.00 This figure puts Ghana in the seventh position for the export of Brazilian products, just near to the next and sixth, which is Morocco. Regarding trade balance, despite the notable increase in Ghanaian exports to Brazil [about 381%], the Ghanaian market produced the third major positive balance on the continent [US$198 million] after South Africa and Egypt.
Regarding the diversification in the list of products, the variation continued in a slow but sustainable rhythm. While Gasoline and Sugar contributed 58.09% in value, in the first six months, in July the figure was down to 55.56%. This reduction was in spite of the importation of US$5 million more worth of sugar, which represents about a third of the total shipments to Ghana in the month of July.
Finally, the sophistication of the list, measured by the imports od googs like bars and rods of iron or nonalloy steel, today a fourth of Brazilian product, with sales more than US$ 16 millions, bulldozers, with increase of 523% in relation to the same period in 2007, polyester paints [218%], animal feed [327%], soluble coffee [184%], tractors [210%], etc.
TECHNICAL COOPERATION
Through the support of its Regional Office in Accra, EMBARPA-Africa [Brazilian Agricultural Research Company/Africa], situated in premises of the Council for Scientific and Industrial Research – CSIR, free transfer of technology to Ghana, a decision taken by the President of the Federative Republic of Brazil, H. E. Luiz Inácio Lula da Silva, aimed at reducing the country’s dependency in the production of food items. The bilateral cooperation will generate new employment and benefits to other African countries.
Since the year 1973, the projects of EMBRAPA have contributed in turning Brazil into a self-sufficient country in the production of agricultural produce and a main world exporter of soya, cotton, and chicken. Fifteen types of Brazilian soya are being tested by the above-mentioned Institution in the city of Kumasi in the Ashanti Region.
The cooperation between both governments has developed in the area of sugarcane for the production of Ethanol. In the private sector, for the cultivation of cassava, 3,000 acres will be cultivated in the future, along with increased bilateral exchange in the areas of forestry, biotechnology, production of bio-fuel, as well as resource application in industry and enhancement of capacity in human resource development.
The agreement for the establishment of the Regional Office of EMBRAPA was signed by the respective Heads of States in 2005, during the visit to the country by H. E. President Luiz Inácio Lula da Silva, who selected Ghana, among four African countries, namely Kenya, South Africa and Senegal for sitting the headquarters of the Brazilian Company.
The Brazilian Ministry of External Relations is to begin the training of Ghanaian Scientist in Brazil, with the costs of the respective projects supported by international financing agencies that will absorb a third part of the investment. According to the Resident Coordinator of EMBRAPA, Dr. Claudio Bragantini, the process of establishing the projects depends on the negotiations between the African countries and the financial institutions. EMBRAPA has pledged to intermediate with international financing for developing countries, to which it is transferring Brazilian technology. To facilitate assistance to other countries, the Brazilian Company intends to establish another office in South Africa or in East Africa.
It is expected that the establishment of the Regional Office of EMBRAPA in Accra will be a means to enhance the distribution of technical assistance in the entire African Region and which will transform Ghana into a major regional centre for agricultural research in Africa.
To know all about Embrapa in Brazil and around the world, visit the EMBRAPA homepage: