Brazil’s Foreign-Aid Programme - Speak Softly and Carry a Bank Cheque

[19 July 2010] -- One of the most successful post-earthquake initiatives in Haiti is the expansion of Lèt Agogo (Lots of Milk, in Creole), a dairy co-operative, into a project encouraging mothers to take their children to school in exchange for free meals.

 

Without attracting much attention, Brazil is fast becoming one of the world’s biggest providers of help to poor countries. Official figures do not reflect this. The Brazilian Co-operation Agency (ABC), which runs “technical assistance” (advisory and scientific projects), has a budget of just 52m reais ($30m) this year.

 

But studies by Britain’s Overseas Development Institute and Canada’s International Development Research Centre estimate that other Brazilian institutions spend 15 times more than ABC’s budget on their own technical-assistance programmes. The country’s contribution to the United Nations Development Programme (UNDP) is $20m-25m a year, but the true value of the goods and services it provides, thinks the UNDP’s head in Brazil, is $100m.

 

Add the $300m Brazil gives in kind to the World Food Programme; a $350m commitment to Haiti; bits and bobs for Gaza; and the $3.3 billion in commercial loans that Brazilian firms have got in poor countries since 2008 from the state development bank (BNDES, akin to China’s state-backed loans), and the value of all Brazilian development aid broadly defined could reach $4 billion a year (see table on next page). That is less than China, but similar to generous donors such as Sweden and Canada—and, unlike theirs, Brazil’s contributions are soaring. ABC’s spending has trebled since 2008.

 

This aid effort—though it is not called that by the government—has wide implications. Lavishing assistance on Africa helps Brazil compete with China and India for soft-power influence in the developing world. It also garners support for the country’s lonely quest for a permanent seat on the un Security Council. Since rising powers like Brazil will one day run the world, argues Samuel Pinheiro Guimarães Neto, the foreign ministry’s secretary-general*, they can save trouble later by reducing poverty in developing countries now. 

 

Moreover, aid makes commercial sense. For example, Brazil is the world’s most efficient ethanol producer, and wants to create a global market in the green fuel. But it cannot do so if it is the world’s only real provider. Spreading ethanol technology to poor countries creates new suppliers, boosts the chances of a global market and generates business for Brazilian firms.

 

The effort matters to the world’s aid industry, too—and not only because it helps offset the slowdown in aid from traditional donors. Like China, Brazil does not impose Western-style conditions on recipients. But, on the whole, western donors worry less about Brazilian aid than they do over China’s, which they think fosters corrupt government and bad policy. Brazilian aid is focused more on social programmes and agriculture, whereas Chinese aid finances roads, railways and docks in exchange for access to raw materials (though Brazilian firms are busy snapping up commodities in third-world nations, too).

 

Marco Farani, the head of ABC, argues there is a specifically Brazilian way of doing aid, based on the social programmes that have accompanied its recent economic success. Brazil has a comparative advantage, he says, in providing HIV/AIDS treatment to the poor and in conditional cash-transfer schemes like Bolsa Família. Its tropical-agriculture research is among the world’s best. But Brazil also still receives aid so, for good or ill, its aid programme is eroding the distinction between donors and recipients, thus undermining the old system of donor-dictated, top-down aid.

 

And all this has consequences for the West. Some rich-country governments cautiously welcome what Brazilians call “the diplomacy of generosity”, just as they do the soft-power ambitions of which aid is part. After all, if (as seems likely) emerging markets are to become more influential, Brazil—stable, democratic, at peace with its neighbours—looks more attractive and tractable than, say, China or Russia.

 

But if aid is any guide, a lot will have to change before Brazil occupies the place in the world that its president, Luiz Inácio Lula da Silva, aspires to. Brazil seems almost ambivalent about its aid programme. The country still has large pockets of third-world poverty, and sending money abroad could be controversial. Brazilian law forbids giving public money to other governments, so legal contortions are inevitable. The ABC aid agency is tucked away in the foreign ministry, where its officials are looked down on as “Elizabeth Arden” diplomats (London–New York–Paris), not the “Indiana Jones” adventurers required. At least some aid, for example to Venezuela, seems to have been inspired by Lula’s soft spot for leftist strongmen. And the exponential increase in aid—the value of humanitarian contributions has risen by 20 times in just three years—means that both people and institutions are being overwhelmed. Stories abound of broken promises, incompetence and corruption.

 

Slowly, though, things are changing. Dilma Rousseff, the presidential candidate from Lula’s party, is thought to be mulling over the idea of a new development agency to raise aid’s profile, if elected. As Mr Farani says, Brazil needs more aid officials, with more operational independence and a greater emphasis on policy aims, not just piecemeal projects. Until it gets those, Brazil’s aid programme is likely to remain a global model in waiting—a symbol, perhaps, of the country as a whole.

 

*Correction issued by The Economist 16 July: In a recent article (“Speak softly and carry a blank cheque”, July 17th), we mistakenly referred to Samuel Pinheiro Guimarães Neto as the secretary-general of Brazil's foreign ministry. Since last year he has been minister for strategic affairs; Antonio Patriota is the secretary-general of the foreign ministry. Our apologies to both men.