After the G20 meet in London, the G20 nations promised a US$ 5 billion amount for financing new trades in Africa. This was followed by an announcement made by International Finance Corporation to give the first lot of money to the Standard Bank in South Africa.
This exercise was done because the importers and exporters of the emerging markets are facing the global crisis. The banks are not really willing to give help to the local exporters. Actually this is a wave effect in which if the first world buyers are unable to secure loans, how will the emerging markets get it. Therefore a need was there to inject money in the economy of Africa and Standard Bank was the best option since it is the biggest bank in Africa with a huge presence.
China has also come to the rescue of this situation and last year the Industrial and Commercial Bank of China (which is the world’s richest bank having around US$ 1.3 trillion), bought 20% stake in the Standard Bank at US $ 6 billion. This has eased the flow of trade relations between China and Africa. The CEO of Standard Bank Africa has been sent to Beijing to ensure that trading continues to be smoother.
The Standard Bank has large presence in the local African mineral trading. It has helped people in the agriculture sector also. With China’s stake in the bank, it would be easy for it to tap these markets too. With IFC injecting so much money in Standard Bank, the China – Africa trades went up by 45% last year. China on the other hand has promised to give US$1.5 billion to the IFC’s trade liquidity program. Now this is an excellent gesture from China. China also provides finance through African Development Bank and Development Bank for East and South Africa.
The Kenyan trade with China went up 7.5 times, between the period 2003-07, from KES 6.6 billion to KES 45.7 billion. This is just an example of one of the country and China’s trading has increased in more African countries over the past few years. The demand for trading Africa is on a rise; hence this demand will not decline despite the global crisis. Thus China will continue trading and the African traders will continue obtaining the finances they require.
Source : Manufacturers Africa
