China-Africa: Time For China to Reap Profits From African Investments
China has been quietly investing in multiple business ventures in Africa. Millions have been pumped into various African countries in the form of aid and investment and millions have also been written off. The global economic downturn did not halt its investing strategies and it waited for them to yield returns. The returns have started flowing in , in the banking sector at least, with the Industrial Commercial Bank of China (ICBC) receiving 219 million dollars from Standard Bank South Africa. The ICBC is the world’s largest bank in terms of market capitalization, and has a 20% stake in Standard Bank South Africa. With this investment it has become the single largest shareholder of the South African bank and has 305 million shares in its name. The 7.7 % return has proved to be higher than what the bank’s overseas bonds have yielded. ICBC Bank and Standard bank South Africa are together involved in global financial markets, investment funding, investment banking, corporate and resource banking.
The two banks have together invested in 65 projects. They have also been selected by the government of Botswana as the principal loan providers for the Morupule B Power Station, which is Africa’s largest power project to date. ICBC is flush with funds and is eyeing global acquisitions at a time when the prices of assets are low and cash needed desperately by those putting up such businesses for sale. ICBC has been extremely supportive of Chinese business ventures in Africa, extending export credit, and wanting to earn lead bank status for export credit finance. The figures for export credit financing have already reached $1.1 billion till the first quarter of 2009.
ICBC and Standard Bank are interested in co-financing large mergers and acquisitions in African countries as well as infrastructure projects. It is interesting to note that the two banks have adopted this strategy at a time when the rest of the world’s banks have stepped back from lending abroad especially in potentially risky projects. These two banks are extremely optimistic about their investments in the African continent.
Source : Suppliers Africa