Emerging economies and export promotion mechanisms_a case study of China and Brazil's operations in Angola

Policy Brief
Emerging economies and export
promotion mechanisms: a study case of
Brazil's and China's operations in Angola
June, 2012
Research Group of Development, Trade, Finance and Investiment
BRICS Policy Center / Centro de Estudos e Pesquisa BRICS

BRICS POLICY CENTER – POLICY BRIEF
Emerging economies and export promotion mechanisms:
a study case of Brazil’s and China’s operations in Angola
1

Lucy Corkin, Manuela Trindade Viana and
Leane C. Naidin
Emerging economies and export promotion
mechanisms: a study case of Brazil’s and China’s
operations in Angola
1. Abstract

In the light of the increasing
flows of South-South trade, this paper
sheds light to some of the mechanisms
fostered by Brazil and China, emerging
countries which are directly involved in
increasing the volume and diversity of
trade with African countries. This paper
compares the operations of China Exim
Bank and Brazil´s Export Financing
Program (PROEX, in Portuguese) in
Angola. It also examines the
implications of these credit lines vis-à-
vis trade and financial international
rules. Finally, with a view to
understanding Brazil’s and China´s
approaches to economic relations with
Angola, this paper points to some
areas of actual or potential competition
and cooperation involving Brazil and
China.
2. Introduction
The rise of emerging powers,
notably the BRICS (Brazil, Russia,
India, China, and South Africa)
countries has led to a corresponding
swell in South-South trade, particularly
as concerns Africa. However, the
growing significance of Africa in terms
of trade flows has recurrently obscured
the tools aimed at accelerating and
deepening these flows. This paper
sheds light to some of these
mechanisms fostered by two emerging
countries – Brazil and China – directly
involved and interested in expanding
the volume and increasing the diversity
of trade with African countries.
Of particular interest here are
the export credit agencies (ECA), which
seek to stimulate exports by providing
national companies with certain
incentives, often in the form of interest-
subsidized loans, in order to “level the
playing field” between competition with
other countries´ products in domestic or

2

third-party markets. Especially as
regards economies perceived as “high-
risk” – such as those of some African
countries –, mechanisms such as
Export-Import (Exim) Banks and
national financing institutions play a key
role in ensuring adequate credit flow to
the export sector. Whereas ECA were
initially a mechanism used by
developed countries to finance market
entry into developing countries, the rise
of emerging powers such as Brazil and
China have seen these institutions
being used increasingly to facilitate
trade with developed countries as well
as South-South commerce into
potentially lucrative markets, although
keeping their “high-risk” character. In
this regard, Africa´s significant
population, estimated to be close to 1
billion and growing middle class have
made the continent a key target for
export promotion and new market
capture (Freemantle, 2011; de Onis,
2000).
Both China and Brazil have
extensive export promotion
mechanisms, albeit in different orders
of magnitude, in order to support their
emerging “national champions” of
industry. As a case in point, Angola has
been a recipient of considerable
volumes of credit lines from both
countries in question (see Figure 1).
Figure 1: Cumulative state credit
pledged to Angola (2012)
Creditor
Country
Loan Value
(US$ millions)
China 14,400
Brazil 5,000
Germany 2,200
Portugal 1,900
Canada 1,16
Spain 600
South Africa 255
US 120
UK 70
India 50
Source: US State Department -
http://www.state.gov/e/eeb/ifd/2008/100819.htm.
China and Brazil rank as first
and second respectively in terms of
credit lines extended to the Angolan
government. Furthermore, the African
country is the largest recipient of credit
lines in the continent from both China
and Brazil (Cabral, 2011; Corkin,
2011). Being China´s largest African
trading partner and Brazil´s largest
African recipient of foreign direct
investment (CAITEC, 2010; World
Bank, 2011:82), Angola is thus of
significant relevance for both countries´
approach to economic relations with
Africa and merits examination as a
case study.
From a broader perspective, the
increasing use of credit lines has

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variously come under attack from
several quarters, as well as been
emulated by other countries seeking to
compete with the influence of these
emerging powers.
In the light of the context
outlined above, this article has two
goals. Firstly, it seeks to compare the
operations of China Exim Bank and
Brazil´s Export Financing Program
(PROEX, in Portuguese) in Angola with
a view to understanding these
countries´ approaches to economic
relations with this African country. It
also examines the implications of these
credit lines vis-à-vis trade and financial
international rules. Finally, with a view
to understanding Brazil’s and China´s
approaches to economic relations with
Angola, this paper points to some
areas of actual or potential competition
and cooperation involving Brazil and
China.
3. China “going global”: the role of
China Exim Bank
Beijing´s relations with Luanda
remained fairly subdued until the end of
Angola’s civil war in 2002 provided an
opportunity for closer interaction
between China and Angola.
Significantly, in 2004, during the state
visit of Vice Premier Zeng Peiyan to
Angola, it was announced that China
Exim Bank would lend US$ 2 billion to
the Angolan government to finance the
country’s reconstruction efforts. Credit
lines from China Exim Bank have since
been extended to US$ 10.5 billion.
China Exim Bank remains the most
prominent Chinese financial institution
in Angola, although other Chinese
banks have also shown interest in such
mechanisms (Corkin, 2011).
Angola is currently China’s
largest African trading partner, primarily
due to its importance as a supplier of
petroleum to the Asian country.
Bilateral trade amounts to some US$
25 billion, thus accounting for one
quarter of China´s total trade with
Africa (CAITEC, 2010). According to
the Angolan Ministry of Petroleum’s
(2010:29) latest available statistics,
39% of Angola’s crude exports went to
China in 2009, accounting for 15.7% of
China’s total oil imports (EIA, 2010).
This renders Angola a certain strategic
significance for China.
Angola is reportedly the fifth
largest African market for Chinese
exports (CAITEC, 2010: 10), but these
are dwarfed by Chinese imports of
crude oil (see Figure 2), resulting in
China running a large trade deficit with
Angola. The Chinese Embassy has
made it a priority to increase Chinese
exports to Angola in order to balance
trade figures (Exame Angola, 2010). As
a result, the procurement policies
linked to China Exim Bank’s loans take

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on a very strategic purpose in that they
are a concrete measure by which the
Chinese government can attempt to
reduce the trade deficit with Angola by
encouraging Chinese exports to
Angola.
Figure 2: China-Angola bilateral trade (2000-2010), US$ millions
Source: UN Comtrade.
China Exim Bank was
established in 1994 in anticipation of
China´s accession to the WTO, in 2001,
and has become instrumental in the
Asian country´s “going global” policies.
It is the sole agency for the provision of
Chinese government bilateral
concessional loans. The Chinese
Ministry of Finance is the lone
shareholder of the China Exim Bank (Li
and Zeng, 2007:144), but reports
directly to the State Council (Suzuki,
2008:20).
Chinese government
concessional loans are a relatively new
mechanism, piloted under former
Premier Li Peng in the early 1990’si
.
China Exim Bank began disbursing
concessional loans in April 1995ii
and
the bank´s profile has grown steadily in
view of its importance in fostering
China´s export-led growth and “going
global” policies. It is currently one of the
largest institutions of its kind in the
world (Moss & Rose, 2006). The China
Exim Bank conceptualizes these so-
called Chinese government
concessional loans as “the medium and
long-term, low interest rate credit
extended by China Exim Bank under
the designation of the Chinese
Government with the nature of official
assistance”iii
.
According to World Bank
estimates, by 2006 China Exim had
disbursed over US$ 12.5 billion for

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large-scale infrastructural projects in
Sub-Saharan Africa alone, although
China Exim Bank’s official reported
figures were much less (Bossard,
2007:2). More than 80% of these loans
were, according to Broadman
(2007:275) to resource-rich African
countries, such as Angola, Nigeria,
Zimbabwe and Sudan. Furthermore,
China Exim Bank reportedly accounted
for 92% of Chinese finance
commitments for infrastructure in Africa
between 2001 and 2007 (Foster et al,
2008:40).
Data in this regard is not
consistent, even between Chinese
sources. According to the Chinese
State Council Information Office (2011),
as of the end of 2009, only US$ 11.3
billion in concessional loans were
disbursed globally. Confusingly
however, according to China Exim Bank
vice president Zhu Xinqiang, as of
2010, the Bank had provided
approximately US$ 23 billion since its
inception in loans to African countries
aloneiv
. What is clear, however, is that
Chinese (state-owned) policy banks –
and China Exim Bank in particular – are
increasingly active globally (see Figure
3).
Figure 3: China Exim Bank Lending (1996 – 2009) US$ millions
Source (input data): Brautigam (2009:317)
In January 2011, Financial
Times reported that according to their
research, between 2009 and 2010
China Exim Bank and China
Development Bank (one of China´s
largest state-owned banks) had
collectively lent more than the World
Bank and the International Monetary
Fund (IMF) combined in the same

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period: US$ 110 billion versus US$
100.3 billion (Dyer et al, 2011).
According to the Chinese Exim
Bank, the concessional loan is designed
to “fund manufacturing projects,
infrastructure construction projects and
social welfare projects in the borrowing
country, which can generate promising
economic returns or good social
benefits” and “finance the procurement
of Chinese mechanical, electronic
products, complete sets of equipment,
technology and service and other goods
by the borrowing country”v
. In other
words, loans present a component that
resembles the activities of a
development bank and/or a component
that is properly directed to foment trade
in goods and services in general.
China Exim Bank concessional
loans must be greater than US$ 3
millionvi
, but loans in excess of US$ 50
million must be approved by the State
Council (Freeman, 2008:8). The loan
must be collateralised by a guaranteed
revenue source, in the case of Angola,
crude oil – as we have seen, an
essential item imported by China.
According to the China Exim
Bank’s concessional loan requirements,
Chinese contractors must be awarded
the infrastructure contract financed by
the loan. Furthermore, in principle no
less than 50% of the contract’s
procurement in terms of equipment,
materials, technology or services must
come from Chinavii
. In the case of
Angola, it was negotiated that up to
30% of the contracts could be sub-
contracted to Angolan firms, where
possible (Corkin, 2011).
Thus, at the same time the loans
aim at stimulating Angola’s imports, the
conditions under which these loans are
made also contribute to the
enlargement of Chinese goods and
services markets. While China Exim
Bank may engage in “development
financing”, its engagement with
infrastructure projects in developing
countries is principally to create a
conduit through which these countries
can buy the products and services of
Chinese companies – which
encourages the further
internationalisation of the latter. It is
noteworthy that this characteristic is no
different from any other Export-Import
bank in the world, except perhaps for
the size and volume of the projects the
Chinese institution is engaged in
globally.
The mechanism whereby the
contracted construction companies are
paid directly by China Exim Bank
ensures that this institution has full
control of project repayments, in an
attempt to mitigate the perceived risk of
the loan money entering the Angolan
financial systemviii
. As a result, the risk
for Chinese construction companies of
undertaking project in Angola is

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substantially reduced. These
companies dislike bidding for projects
financed solely by African governments
as often there are payment issues
(Chen et al, 2008:7). Thus, due to high
risk aversion, without the institutional
and financing stability provided by
China Exim Bank, there might have
been resistance on the part of large
Chinese companies to enter such
marketsix
.
4. Brazil’s Export Credit Facilities:
PROEX and BNDES

Brazil was one of the first states
to officially recognize the government
of newly independent Angola in 1975.
Such proactive diplomacy stood
Brasilia in good stead, and relations
with Luanda, both political and
commercial, have been extremely
positive since. With the election of Luis
Inácio Lula da Silva to the Presidency
in 2002/3, Brazil´s policy towards
Africa, particularly its lusophone states,
received new impetus.
Lula made state visits to Angola
in November 2003 and in October
2007, accompanied by Brazilian
businessmen. Credit lines from Brazil´s
state-owned National Bank of
Economic and Social Development
(BNDES, in Portuguese) at US$ 200
million in 2003 subsequently leapt to
US$ 1.75 billion. In June 2010, Angolan
President José Eduardo dos Santos
made a rare state visit to Brazil, and
returned with a strategic partnership
agreement, as well as an additional
US$ 1 billion in credit lines (Kiala and
Ngwenya, 2011:8). As of November
2011, Brazil has a credit line of over
US$ 5 billion, according to the Brazilian
Minister of Development, Industry and
Foreign Trade (MDIC, in Portuguese)
(Angolahub, 2011). This total includes
a US$ 2 billion credit line officially
ratified in April 2012, to be extended by
BNDES to fund Brazilian exports of
goods and services. As in the Chinese
case, the loan is also collateralized by
oil. The Angolan government has
pledged to provide 20,000 barrels of oil
per day to guarantee the loan.
In 2008, Angola was Brazil´s
second largest African trading partner,
comprising 16% of Brazil´s total trade
with Africa, after Nigeria (32%) (Tralac,
2009). Bilateral trade volumes between
Brazil and Angola dropped significantly
following the global economic crisis of
2008-2009 and have yet to recover
(see Figure 4); after reaching a peak of
US$ 4.2 billion in 2008, bilateral trade
volumes fell to a mere US$ 1.5 billion in
2011.

8

Figure 4: Brazil-Angola bilateral trade (2000 – 2011), US$ millions
Source: UN Comtrade
Brazil retains a trade surplus
with Angola, boosted largely by its
export promotion activities.
Furthermore, according to Angolan
Ambassador to Brazil Nelson Cosme,
Brazilian investment in Angola totaled
US$ 1.4 billion in 2011 (Macauhub,
2012).
Brazil´s PROEX is a set of
measures instigated since 1991 to
assist Brazilian companies involved in
export activities. PROEX undertakes
export financing, interest rates
equalizationx
and “PROEX Pré-
Embarque”, which provides financing
for resources required for goods and
services destined for exportxi
. PROEX
export financing facilitates buyers´
credit to foreign public entities and it is
under this program that the majority of
credit lines to the Angolan government
is given. The state-owned Banco do
Brasil acts as the financial intermediary
for the program which uses resources
from Brazil´s national treasury to
underwrite the financing. For exports to
developing countries, PROEX can
provide concessional credits up to a
ceiling of 25% of the total
disbursement. However, the Centro de
Estudos de Integração e
Desenvolvimento (CINDES) has
calculated that the level of
concessionality, based on the terms of
PROEX loans provided by the Ministry
of Industry, is actually 35%xii
.
Under normal circumstances,
PROEX financing is primarily directed
towards small and medium enterprises,
as only Brazilian companies with a
gross annual revenue of up to US$ 30
million are permitted to use PROEXxiii
.
However, under bilateral government
agreements – of which the credit line to
Angola is one –, large Brazilian

9

companies may also access this
financingxiv
.
PROEX has been active in
Angola for more than a decade. In
2001, according to an official memo
from the Brazilian MDIC, Angola was
the only country outside South America
to which PROEX financed exports, and
accounted for 78.1% of the Program’s
disbursements. Angolan government
debt to PROEX at the time stood at
US$ 1.041 billion, with US$ 42 million
for additional projects in the pipeline
(MDIC, 2002). Angola has continued to
be an important destination for
PROEX-supported exports: half of
PROEX disbursements in 2008 were
directed to financing Brazilian exports
to Angola (Nunes, 2009). Furthermore,
from 2007 to 2009, Angola received
32% of PROEX disbursements (Galetti,
2010).
Brazil´s state-owned BNDES
also provides export incentives for
companies larger than those normally
catered for by PROEX. Under the
BNDES “Programa Integração com a
África”xv
, developed specifically to
promote Brazil´s economic relations
with African countries, one of 20
mandates was to increase Brazilian
exports to Angola – BNDES´ largest
African recipient – via support of the
African country´s national
reconstruction program. Disbursement
goals of US$ 290 million and US$ 527
million were set for 2008 and 2010
respectively. By November 2009,
disbursements had reached US$ 649
million under this program (PDP, 2010).
In addition, under BNDES´ Exim-
Automático Program, whereby the loan
is operated through a network of banks
accredited by BNDES, as of 2011,
Angola has been extended BNDES
credit lines of US$ 3.2 billion, of which
US$ 1.7 billion has already been
disbursed (Cabral, 2011:25).
5. Expansion of ECAs, despite
criticism

The expanded boundaries of
both Brazilian and Chinese ECAs’
operations have raised questions as
regards the accordance of these
activities with international financial
rules.
Brazil’s and China’s ECAs have
been more strongly criticized by the
World Bank and the IMF, particularly as
regards the nature of the bank´s
financing. The World Bank, for
example, has argued that given the
China Exim Bank requirement for a
guaranteed revenue stream, the loan
should be commercial, and not require
a sovereign guarantee.
Both the World Bank and IMF
intervened directly a proposed US$ 9
billion resources-for-infrastructure deal
by a consortium of Chinese companies

10

led by China Exim Bank in the
Democratic Republic of Congo (DRC)
in September 2007xvi
. As preferred
creditors of DRC, the IMF and the
World Bank have managed to reduce
the size of the loan and remove the
sovereign guarantee requirement
(Reuters, 2009).
China Exim Bank´s ambiguous
role means that it treads a fine line
between structuring more
commercially-oriented deals and
retaining the privileges contingent on
remaining a politically-focussed policy
bank that extends soft loans. Whereas
as WTO requirements stipulate that
China Exim Bank´s operations must be
financially viable in the long run and
charge market-related interest rates,
the Chinese Ministry of Foreign Affairs
(and the World Bank) claim that rates
should be more concessional if China
Exim bank is to participate in the
disbursement of Chinese foreign aid
programmes to developing countriesxvii
.
Despite criticisms, Brazil’s and
China’s ECAs have not only continued
but expanded. This scenario can also
raise questions regarding an actual or
potential competition for markets in
Angola between Brazilian and Chinese
companies. However, the different
profile of the economic presence of
both countries in Angola makes it
challenging to develop such an
analysis with the data here gathered.
Undoubtedly, China Exim
Bank’s financing has facilitated
Chinese construction companies’ entry
into Angola, given the level of tied
procurementxviii
. However, despite the
large volumes of loan financing via
China Exim Bank, and the resulting
volume of contracts obtained by
Chinese contractors in Angola,
reported Chinese FDI to this African
country (i.e. those volumes external to
the credit line) is remarkably low (see
Figure 5).
Figure 5: Chinese FDI to Angola (2003-2008), US$ millions

11

Source: 2010 [2010b Chinese Ministry of Commerce Statistical Bulletin
on Chinese Outward Investment 2009]
This tends to suggest that
Chinese companies are as yet unwilling
to venture into the Angolan market of
their own accord outside of the Chinese
credit line. Indeed, Chinese state
companies, due to more bureaucratic
management, are in fact more risk
averse than private companies and will
only move into overseas markets once
the state has given them incentives to
do so (Zhou, 2010).
Generally large state-owned
enterprises (SOEs) hold an oligarchic
position in the domestic Chinese
economy. Consequently, cut throat
domestic competition – one of the
principal reasons that private Chinese
companies move overseas (Gu,
2009:572) – does not apply to them. It
was only after the introduction of the
China Exim Bank credit facility that
Chinese SOEs began entering the
Angolan market. This mechanism is
deemed to mitigate the risk of an
unknown market as the bidding occurs
in China.
China Exim Bank can also
arrange for export credit and other
financing required by the Chinese
SOEs at preferential rates. Most
importantly, the Chinese companies
are paid directly by China Exim Bank
rather than the Angolan government.
Although this did not solve payment
problems completely in the case of
Angola, it still dramatically reduces the
risk of non-payment.
If one contrasts this with the fact
that according to the Chinese Ministry
of Commerce (2010a), accumulated
contracts signed by Chinese
companies in Angola as of 2010
totalled more than US$ 22 billion, it
seems that China Exim Bank´s credit
line has contributed to offset the trade
deficit that China has accumulated
through its trade with Angola (see
Figure 2).

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The Brazilian picture is
somewhat different. While Brazil´s
trade with Angola (see figure 3) does
not rank Angola as one of Brazil´s
primary African trading partners,
Angola does rank as Brazil´s foremost
African destination for FDI (see Figure
6).
Figure 6: Brazilian FDI to Angola (2001 – 2009), US$ millions
Source: World Bank (2011) ´Bridging the Atlantic: Brazil and Sub-Saharan Africa – partnering
for South-South Growth´. December: pp. 82.
The significant increase in
investment from 2007, after a lull
between 2002 and 2006 is very
conceivably due to renewed credit lines
from BNDES and PROEX to Angola. In
contrast to the activities of Chinese
companies, these credit lines appear to
have stimulated investment from
Brazilian companies, rather than a
merely increase in contract-based
exports.
Momentum has continued under
Dilma Rousseff´s administration since
2010. Rousseff made a state visit to
Angola in October 2011. At a
conference on Brazil and Africa
relations sponsored by BNDES in May
2012, Brazil's largest investment bank
Banco BTG Pactual announced a $1
billion Africa investment fund from
which Angola (AFP, 2012) – currently
the largest recipient of Brazilian FDI –
will doubtless benefit.
This brief analysis illustrates the
differing results in Angola of Brazil and
China´s ECA programs. Despite such
contrasting profiles, the fact remains
that Chinese and Brazilian construction
companies are competing more closely
for market share in Angola and beyond.
Publicly, this has been denied by
diplomatic representation from both
countries, and the official view being
that Angola, and any other African
market for that matter, is big enough for
both players and more besidesxix
.

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In order to further investigate
possible tensions involving these
emerging countries, one would have to
begin by examining the privileged
sectors in the concession of loans.
However, China Exim Bank´s is
notorious for its lack of transparency
about its lending policies, with its
annual reports citing nothing more than
aggregate credit disbursements (Huo
and Yang, 2011:409). Similarly,
consolidated quantitative date for
Brazil´s export promotion strategies are
not publicly available (Cabral, 2011:24).
Meanwhile, the hypothesis remains
strong, as the emphasis on
infrastructure projects is likely to frame
the competition among goods and
services directly related to the
construction sector.
6. Final remarks
China and Brazil have both
employed ECAs as instruments to
increase their economic interaction with
Angola, as this form of economic
engagement mitigates the perceived
risk inherent in such operations.
While both China Exim Bank
and BNDES/PROEX credit lines have
been employed to create market space
for goods and services of their
respective countries, the results have
not been the same. China Exim Bank´s
credit lines, while having a moderate
effect on the increase of Angola´s
Chinese imports, have not encouraged
further Chinese FDI, as Chinese
companies are not willing to operate
outside of the relative safety of the
state-back credit line. Brazilian
companies, on the other hand, have
increased their investment significantly
since 2007.
Although this may be attributed
to several factors, Brazil´s increased
diplomacy towards Africa and the
implementation of export promotion
strategies in countries such as Angola
can only have facilitated this
phenomenon. Brazil´s cultural affinity
with Angola is also likely to have eased
Brazilian investors´ comfort in Angola´s
market environment.
Despite the contrasting profiles
of ECAs forwarded by Brazil and
China, it is likely that the infrastructure
prominence in the activities financed by
these mechanisms leads to an
increasing competition among
construction companies for market
share in Angola and beyond.
The increasing role of India
Exim Bank in Angola deserves further
attention. Although still a modest player
in Angola, until June 2009, India Exim
Bank had lent US$ 50 million to the
acquisition of construction equipments
(see Annex 1).

15

Similarly, South African-based
Development bank of Southern Africa
(DBSA) also signed a US$ 200 million
with Angola´s Banco de Investimentos
Africanos (BAI) in December 2010
(Time LIVE, 2010). Given South African
historical economic relevance in sub-
Saharan Africa, it seems plausible to
argue that the increasing presence of
Brazil and China in Angola may have
contributed – or even determined,
considering the massive resources
involved in Brazilian and Chinese
ECAs’ operations – to the displacement
of South African companies and banks
that were previously influent in Angola
(which is here suggested as an issue
for further research).
Although India’s and South
Africa’s interests were not subjected to
detailed analysis in this Policy Brief, the
hypothesis outlined above points to an
overlapping scenario involving
emerging countries’ various financial
and trade activities in Africa. As each
BRICS country individually places more
emphasis on its international relations
with Africa, national priorities may
create areas of tension within the
BRICS grouping as a whole.
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19

Annex 1

Annex 1: The terms of Angola´s loans and credit lines (June 2009)
DATE LENDER VALUE PURPOSE TERMS AND CONDITIONS
Interest Rate
Commission
s and Fees
Guarantee
Nov
2003
Deutsche
Bank - Spain
US$ 500
million
Public
investment
projects
Libor+ 1~5%
1% (flat)
arrangement
fee
1% (flat)
management
fee
Angolan
Finance
Ministry
Mar
2004
China Exim
Bank
US$ 2 billion
(1
st
tranche)
Public
investment
projects
3-month Libor
+1.5%
0.3%
management
fee
0.3%
commitment
fee
Contract of
Petroleum
Supply
Aug
2004
India Exim
Bank
US$ 40
million
5 contracts
for the supply
of equipment
for
Moçamedes
Railway
1.75%
Angolan
Ministry of
Finance
Nov
2004
Portugal
Cosec
EUR 300
million
Public
investment
projects
Euribor+
0.4~0.6%
0.1%
management
fee
Angolan
Ministry of
Finance
2005
China
International
Fund
US$ 9.8
billion
Projects
managed by
government
3-month Libor
+1.5%
0.3%
management
fee
0.3%
commitment
fee
Contract of
Petroleum
Supply
Mar
2005
Santander
Bank - Spain
EUR 100
million
Public
investment
projects
6-month Libor
+1~1.5%
0.5% (flat)
management
fee
0.25% (flat)
commitment
fee
Variable
insurance fee
Angolan
Finance
Ministry
Sept
2005
Fortis Bank -
Spain
EUR 250
million
Public
investment
projects
6-month Libor
+0.75~1%
2% (flat)
management
fee
0.5% (flat)
commitment
fee
Variable
insurance fee
Angolan
Ministry of
Finance
Dec
2005
Korea Exim
Bank
US$ 31.4
million
Rehabilitation
of cotton
project in
Sumbe
0.6%
0.1% (above
each
disbursement
)
management
fee
Angolan
Ministry of
Finance
2006 Proex
US$ 580
million
Public
investment
projects
Libor
0.5 % (flat)
management
fee
0.5% (flat)
arrangement
fee
Contract of
Petroleum
Supply
2006
Brazilian
Development
Bank
US$ 750
million
Public
investment
projects
Libor +1%
1% (flat)
management
fee
0.5% (flat)
arrangement
Contract of
Petroleum
Supply

20

fee
Jul
2006
India Exim
Bank
US$ 10
million
Acquisition
contract of
599 tractors
6-month Libor
+2.5%
0.5% (per
year)
management
commission
0.5% (flat)
arrangement
commission
Ministry of
Finance
Jul
2007
China Exim
Bank
US$ 500
million
(supplement
to 1
st
tranche)
Public
investment
projects
3-month Libor
+1.5%
0.3%
management
fee
1%
arrangement
fee (N/A)
0.3%
commitment
fee
Contract of
Petroleum
Supply
Sep
2007
China Exim
Bank
US$ 2 billion
(2
nd
tranche)
Public
investment
projects
3-month Libor
+1.5%
0.3%
management
fee
1%
arrangement
fee (N/A)
0.3%
commitment
fee
Contract of
Petroleum
Supply
Apr
2008
Deutsche
Bank - Spain
US$ 225
million
Public
investment
projects
Libor+ 1~5%
1% (flat)
arrangement
fee
1% (flat)
management
fee
Angolan
Finance
Ministry
Source: Economic Research Department, Japanese Embassy in Angola; Croese (2011:28)

i
Interview, Chinese Ministry of Foreign Affairs,
Beijing, 29 October 2009.
ii
National Development and Reform
Commission website:
http://203.207.194.3:82/gate/big5/wzs.ndrc.gov.
cn/gwdk/wgzfdkgbbxml/zdyh/t20081028_24310
5.htm [accessed 23 February 2010]
iiiiii
China Exim Bank website:
http://english.eximbank.gov.cn/businessarticle/a
ctivities/loan/200905/9398_1.html [accessed 29
September 2010]
iv
See :
http://www.focac.org/eng/zxxx/t770971.htm [21
April 2011]
v
China Exim bank Website:
http://english.eximbank.gov.cn/businessarticle/a
ctivities/loan/200905/9398_1.html [accessed 28
September 2010]
vi
China Exim Bank website, refer to:
http://english.eximbank.gov.cn/business/govern
ment.jsp [accessed 7 September 2007]
vii
China Exim Bank website, refer to:
http://english.eximbank.gov.cn/business/govern
ment.jsp [accessed 7 September 2007]
viii
This is particularly relevant in the context of
Angola, as following the economic crisis of
2008-2009, the government experienced severe
cash flow problems due to the dramatic drop in
the oil price. Construction companies were not
paid for months for projects already completed,
with severe implications.
ix
Interview, Beijing, 16 October 2009

x
The ´equalization´ comprises the difference
between the charges agreed to by the borrower
and the cost of raising funds. They are limited to
maximum reference rates as set the Brazilian
Central Bank Banco Central do Brasil. Interest
equalization, funded by a combination of
government bonds, treasury resources and
commercial banks´ financing, ranges from a 1%
support for credits up to 6 months to as much as
2.5% differential for periods of 9 years.
xi
For a more complete explanation of PROEX
activities, see
http://www.fazenda.gov.br/sain/temas_internaci
onais/proex.asp [14 May 2012]
xii
Conveniently, this is the minimum level of
concessionality permitted by the OECD
arrangement, discussed below (OECD,2008).
xiii
See
http://www.fazenda.gov.br/sain/temas_internaci
onais/proex.asp [14 May 2012]
xiv
See ´Revisão da Resolução CAMEX nº 33,
(16 December 2002).
xv
This programme forms part of the Política de
Desenvolvimento Produtívo (PDP), launched in
2008 and tasked with national economic
expansion in spite of the global financial crisis
(World Bank,2011:79).
xvi
The deal is widely believed to have been
modelled on the co-operation agreement signed
with Angola. The IMF eventually succeeded in
persuading China Exim Bank to retract its
requirement of a sovereign guarantee, but the
deal was reduced to US$ 6 billion for
rehabilitating the mining industry and the plans

21

for US$ 3 billion in ‘social infrastructure projects’
were scrapped.
xvii
Interview, Chinese Ministry of Foreign Affairs,
Beijing, 29 October 2009
xviii
Interview, marketing manager, Chinese
private construction firm, Luanda, 2 August
2010.
xix
Interviews, Luanda, 30 April 2010, 10 May
2010.

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