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Mutually beneficial relationship with China offers increasing opportunities for Africa

Mutually beneficial relationship with China offers increasing opportunities for Africa
27-06-23 / Tau kaVodloza

Mutually beneficial relationship with China offers increasing opportunities for Africa

Johannesburg - Standard Bank’s relationship with the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, facilitated trade deals worth USD 600 million in 2022.

The relationship between ICBC has broadened since the Chinese bank bought an interest in Standard Bank about 15 years ago. It has evolved into the world’s largest Africa/China trade and investment platform, says Bill Blackie, CEO of Business and Commercial Banking at Standard Bank Group, as the bank prepares to attend the World Economic Forum (WEF) Meeting of the New Champions, taking place in Tianjin, People’s Republic of China, this week.

“Over the years, we have supported more than 3,500 Chinese commercial companies, corporations and state-owned enterprises (SOEs) in 15 African markets. This strategic partnership has broadened Africa’s working relationship with China and given the continent access to the world’s largest and most dynamic market.”

“The scale of Chinese investment across a broad range of African business sectors has been instrumental in enhancing Africa’s ability to import and deploy the technology and skills required to build its economies. While this investment has enabled many countries to upgrade and strengthen their infrastructures, it has also leveraged global investments from other markets.”

There is no doubt, says Blackie, that the impact of the relationship has played a part in the continent’s positive economic outlook, reflected in International Monetary Fund (IMF) estimates that the average growth rate of Africa’s markets will be 4.2% per annum in 2024, significantly more than the predicted global average.

Over 30 years, the most apparent signs of activity between China and Africa have been in the fields of mining and commodities.

“Enabled by massive Chinese infrastructural investment, African commodity exports have helped transform China into an industrial giant and global economic superpower. In this time, on the back of commodities and infrastructure, the increased investment has helped rapidly expand Africa’s export ability.”

What cannot be ignored is the IMF prediction that, by 2027, the African continent will replace Asia as the fastest-growing region in the world. With the vast majority of the continent’s people being young, opportunities will be created for commerce and industry to benefit from the new, technically empowered workers entering marketplaces.

“China, as its economy grows and matures, will increasingly be able to draw on Africa’s youthful demographics and increasing manufacturing capacity.”

“Simultaneously, African countries can increase industrial production and stimulate intra-African trade across traditional geographical boundaries. Already enabled by the Africa Continental Free Trade Area and various regional trade agreements such as the impactful East Africa Community, this could boost Africa’s rating as a global commercial force.”

An area that has lagged other China/Africa developments is agriculture, says Blackie. He elaborates that by investing in and enabling sustainable agriculture, Standard Bank has been helping enable Africa’s existing agricultural sector to leverage the continent’s abundant uncultivated arable land. This trade channel could supply China’s rapidly evolving consumer economy. To this end, Standard Bank has hosted 11 export matchmaking sessions for businesses from 15 African countries trading principally in raw and processed agricultural goods, via platforms such as the upcoming China Africa Export and Trade Exhibition (CAETE).

“Although there are shortcomings in trade-related infrastructure that must be addressed, the continent still has significant opportunities to attract more international investment. Undoubtedly, though, Africa and China will become more relevant to each other.”

“We can look forward to this relationship expanding into renewable energy technologies in which China is arguably already a world-leader. China could play a central role in Africa’s efforts to build energy ecosystems for sustaining growth and future prosperity.”

“As a bank that has led Chinese trading relationships with many countries across Africa, we look forward to being part of what could be the 21st century’s most powerfully transformative economic relationship, that will support our overall vision of driving Africa’s sustainable growth,” concludes Blackie.

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