While the euro zone struggles to piece together what remains of prosperity in the region, Portugal is looking elsewhere for growth prospects. And where has it turned? Africa. It’s an ironic turn for any economy to look to Africa for alms.
But Portugal is not in a position to be choosy: commentators have said that it’s the next Greece.
In January, Portugal joined the UK and Germany in debt auctions, and Lisbon has asked for extensions on short-term bills due this month. It’s been forecast that a second bail-out, following the recent $105 billion (R806bn) International Monetary Fund handout, will be necessary.
Unfortunately, the solution doesn’t lie in short-term fixes, but in long-term plans for change. Ratings agency Moody’s has listed the country’s major challenges as the following: spending reduction, economic growth, improved tax compliance and a bolstered banking system.
But in the meantime, Africa has been hailed a possible source of assistance, and whatever the irony, the continent stands to gain in terms of trade and technology.
It might seem like a political move out of Bizarro World, in fact late last year, a critical Adam Nossiter wrote in the New York Times: “The world-turned-upside-down of the European debt crisis reached a new extreme last week when Europe came pleading for lucre where it once only seized it.”
But Portuguese Deputy Minister for Foreign and Co-operation Affairs Luis Brites Pereira, has defended the logic behind the change in tune, calling it a well-planned move with a win-win outcome.
According to Pereira, Portugal has much to offer in terms of renewable energy, while Africa can offer its support through competitive trade partnerships.
Speaking at UCT’s Graduate School of Business recently, he said that improving African relations was strategically aligned to turning the crisis around for Portugal.
Europe accounts for 75 percent of Portuguese exports. But an embattled Europe has forced the country to diversify relations in what is being called “global lusophony”: driving unity between lusophone countries to facilitate mutual support.
Angola accounts for 5 percent of Portuguese exports, making it Portugal’s number one trade partner in Africa. In contrast, Mozambique and South Africa combined account for a dismal 1 percent. South Africa, with over 400 000 Portuguese descendants, is ranked as Portugal’s 40th trade partner. Pereira spoke positively of the great opportunities that exist to further expand trade and investment between Portugal, South Africa and lusophone countries in Africa through bilateral or even trilateral partnerships. He highlighted investments Portugal made in South Africa and the potential to expand investment in the renewable energy, e-government and agri-food sectors.
Pereira believes strengthening the existing trade relations will be beneficial to all, and that there is already a deep connection between Portugal and Africa, owing to a shared heritage between the Portuguese-speaking countries. He emphasised the need to boost intra-African trade; noting the positive commitments made at the recent AU Summit in Addis Ababa to establish an African free trade area by 2017.
In return for increased trade with a continent all economists consider to be on the rise, Portugal, according to Pereira, has much to offer in terms of infrastructure and green energy technology.
Portugal is currently the global leader in green energy, with renewable energy accounting for 52 percent of its electricity generation in 2010. This system comprises hydroelectric stations with a combined capacity of 815 gigawatt hours a year; wind farms; solar energy – the Serpa Solar Power Plant providing energy for 8 000 homes and saves 30 000 ton of carbon dioxide emissions a year; geothermal energy in the islands, and, wave power.
“We were the last to modernise, so we jumped ahead,” said Pereira.
He said that not only would the Southern African Development Community and the proposed Africa-wide free trade zone benefit from these technologies, but South Africa would gain considerably in terms of skills development and job creation: things that “are vital in this country and that, right now, are holding back the economy”.
But global lusophony remains a potential minefield, with critics stirring up the cauldrons of colonial histories. And yet, with so much to gain either way, is there hope for it in Africa after all?