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chinadaily (chinadaily)
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China keen on developing Africa infrastructure

China's CDB seals Nigerian deal

(FT.com)

China's drive into Africa's financial services sector has taken a fresh turn, with China Development Bank entering a partnership with United Bank for Africa, one of Nigeria's biggest lenders.

The deal, sealed last month but not yet officially announced, expands the Chinese bank's ability to finance infrastructure projects in Africa.

News of the agreement follows last week's announcement that Industrial and Commercial Bank of China, another state bank, was buying a 20 per cent stake in South Africa's Standard Bank for $5.56bn.

CDB has not bought equity in UBA, which is listed on the Nigerian stock exchange, though the deal will help it expand in Africa.

The two deals mark the start of a transformation in Africa's banking industry, opening fresh channels for Chinese finance in a region which has previously been largely dependent on western companies and donors. Chinese banks are seeking local operators to channel billions of dollars into African projects.

CDB, which provides much of the financial muscle for infrastructure developments in China, refused to comment on Tuesday. Tony Elumelu, UBA's chief executive, told the Financial Times: "It provides us [with] an almost infinite amount of capital to execute projects." He added: "They will invest in any credit that we recommend."

By the CDB agreement, a copy of which has been seen by the Financial Times, Chinese staff from the bank will work with their counterparts at UBA's headquarters in Lagos to fund projects in West Africa.

Mr Elumelu said he hoped by the end of March to strike an agreement with CDB to finance a power project that would help to tackle Nigeria's chronic electricity shortages.

UBA, with a balance sheet of about $8bn, hopes to expand into as many as 12 African countries next year.

"It is no longer a question of funding capability, but about our ability to identify good projects," Mr Elumelu said. "Africa is a huge untapped market - but it takes those who understand African markets and African risks to take advantage."

CDB has more assets than the World Bank and Asian Development Bank combined, with $281bn of loans outstanding by the end of June.

2007-10-31 11:06 AM

tongluren (tongluren)
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What is Most Valuable

What is most valuable is that the CDB funded projects will come with Chinese expertise in actually getting the projects built,

ON TIME, and UNDER BUDGET.

What a refreshing change for our African friends. If you read the "Economic Hitman," you would come to a better understanding of why and how the more the Western powers "helped" Africa, the poorer Africa got. The World Bank and the IMF routinely come into Africa with ridiculously rosy projections on projects, and then mandate that Western contractors be hired to build the projects. Empirically, for the last 25 years in Africa, NO project funded by the World Bank or the IMF was EVER built on time or within budget. All the projects were so late and so inflated in price when they are done (if they ever get done) that the poor natives have no hope at all of ever generating enough financial results from the projects to fund the financing, let alone paid them back. So year after year the Africans got deeper in debt to the Westerners. The bloodsucking is truly sickening.

But there is now new hope. Chinese construction teams are famed for being on time and on budget. They actually get projects done ON TIME.

2007-10-31 11:19 AM

interesting (Steven Schreiber)
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It's starting to come together: Tong reads nothing but Chomsky-esque literature.

2007-10-31 11:26 AM

chinadaily (chinadaily)
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and more!

ICBC (the world's biggest bank in assets ) 's stake in Standard Bank, South Africa, comes without the kind of baggage, no political strings attached. The 20% ownership of the Africa's largest bank shows China is now making real bets on Africa's economy.

meantime, Standard Bank is gaining access to the fastest-growing major economy of China, and fattening its capital base. And, China is getting a foothold into Africa's nascent investment-banking and insurance industries. It's also a way for China to use its growing cash piles overseas rather than making fresh domestic loans that may go bad or fuel inflation.

All this is stellar news for Africa, which usually suffers from the ``paradox of plenty.'' All too often, inhabitants of resource-rich nations fail to prosper while corrupt politicians and their western cronies get wealthy and ignore the development needs of the struggling masses.

One interesting element of ICBC's deal is how different it is from the usual overture from Western banks. It didn't come laden with demands about how much control ICBC will have over Standard Bank. It didn't require pledges for financial change. It's merely one bank buying a piece of another with transparent terms and conditions. It's a sign Chinese managers are willing to treat Africans as peers.

The West hasn't learned that lesson with its aid programs and lecturing. By trying a new tack, China may be testing what development economists have argued for years: Africa doesn't need more aid, it needs more genuine investment and trade.

Obviously, China is the new hope for the advancement of a continent.

[ Last edited by chinadaily at 2007-10-31 11:45 AM ]

2007-10-31 11:38 AM

interesting (Steven Schreiber)
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CD,

Actually, when you buy large stakes in a company, especially one that needs capital, it is standard to demand ways to ensure that your investment comes to appropriate profits. That China is not doing so indicates that this is primarily a political move, probably influence-shopping, a point bolstered by the fact that this is a state-owned, not private bank. Nigeria and other African states are rich in resources that China wants and are prone to "protecting" those resources. It's simply realpolitik.

2007-10-31 11:45 AM

caringhk (O Sweetie&Me go laojia. ..)
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QUOTE:

Originally posted by chinadaily at 2007-10-31 11:38
ICBC (the world's biggest bank in assets ) 's stake in Standard Bank, South Africa, comes without the kind of baggage, no political strings attached. The 20% ownership of the Africa's largest bank ...

Less pain in Africa is China's Gains................

........

2007-10-31 01:18 PM

chinadaily (chinadaily)
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Time will tell whether China's rising capital investment in the long-neglected African continent serves only as a political gesture, or a beginning of a new era in which China & Africa will win -win.

I will keep my fingers crossed for the prospering of African residents.

2007-10-31 01:50 PM

caringhk (O Sweetie&Me go laojia. ..)
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QUOTE:

Originally posted by chinadaily at 2007-10-31 13:50
Time will tell whether China's rising capital investment in the long-neglected African continent serves only as a political gesture, or a beginning of a new era in which China & Africa will wi ...

If Admiral Zheng Ho of Emperor Yung Lo time did it BEFORE(landed at East Africa), i think history will REPEAT the SUCCESS soon

....................

2007-10-31 01:54 PM

ready1022
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see what you see, depict what should be depicted

2007-11-15 12:31 PM

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