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China Urged to Up Investment in African Lenders

Pubdate:2012-07-12 11:07 Source:lijing Click:

One of Africa's leading bankers has called on Chinese banks to increase their shareholdings in their counterparts on the continent.

Jean-Louis Ekra, president and chairman of the board of directors at the African Export-Import Bank, said that although China's economy is slowing down, its growth rate is still at an enviable level compared with those of other large economies.

Speaking at a media briefing in Beijing, where he was holding talks with shareholders, Ekra said it is important that China continues to support growth in Africa by increasing trade ties and cooperation opportunities.

But he described the current shareholding of Chinese banks in African lenders as "limited", and added that he hoped in the future there would be increased shareholdings made, as China and Africa continue to develop mutual economic ties.

China became Africa's largest trading partner in 2010, and financial services provided by Chinese lenders to facilitate trade and investment in Africa are "beneficial" for the continent, Ekra said.

The amount of trade between China and Africa reached $160 billion in 2011, an increase of 28 percent from the previous year, according to data released by the Ministry of Commerce.

African exports to China increased by a third last year, from $67 billion in 2010 to $93 billion.

African goods now account for more than 5 percent of China's total imports, up from 1.8 percent in 2002.

The continent provides China with 30 percent of its tobacco, 25 percent of its pearls and precious metals, 20 percent of its crude oil and cocoa, 10 percent of its ores, and 5 percent of its iron and steel.

In contrast, African exports to advanced economies are still at 2008 levels and are only growing slowly, said Jeremy Stevens, a researcher at Standard Bank Group Ltd.

Ekra added: "It is clear that Africa's traditional partners are experiencing some financial difficulties, and so it's important for Africa to rely more on the financial sector of countries like China to continue to grow."

The Export-Import Bank of China, one of the country's major lenders, holds about 2.5 percent of African Export-Import Bank's shares.

In 2008, the Industrial and Commercial Bank of China Ltd, the world's largest lender by market value, acquired a 20 percent stake in Standard Bank, Africa's biggest lender by assets.

The South Africa-based bank said in March that it will strengthen strategic cooperation with ICBC this year.

While a moderation in Chinese growth will have a more widespread effect globally, Africa will be the hardest hit because of its dependence on commodity exports to China, according to Stevens.

"Clearly, Africa is gaining market share. But, much like Africa's exports to other partners, African exports to China are primarily raw materials," he said.

"Risks are sitting in the economic system, and they are now threatening to cause turmoil in the Chinese financial system.

"Africa definitely has to pay particular attention to these developments."