Standard Bank intends to take advantage of China-Africa trade-economics ties

With growing trade between Africa and China, Standard Banks aims to take advantage of the growing economic links between both sides.

Standard Bank Group Ltd. is seeking to benefit more from the growing trade and investment between China and Africa, expanding its Africa business and looking for ways to cut spending outside the continent, it said Thursday.

“The biggest opportunity, the fastest growing opportunity, is the burgeoning Sino-Africa trade and investment relationship,” Deputy Chief Executive Sim Tshabalala said in an interview.

Standard Bank, Africa’s largest lender by assets, said earlier this year that it would realign the bank to put more resources in Africa while reducing businesses outside the continent that don’t feed into the Africa growth goal.

In 2009, China passed the U.S. to become Africa’s biggest trading partner. In 2011, Standard Bank estimates merger-and-acquisition activity from China on the continent totaled $5 billion, of which the bank said it advised on about 30%. Mr. Tshabalala said he expects investment from China to grow further in 2012 with a number of deals already in the pipeline that should be announced this year.

The Industrial & Commercial Bank of China Ltd. is a 20% shareholder in Standard Bank, with the latter aiming said to benefit more from that relationship.

Reducing balance sheets outside the continent will be “gradual,” said Jacko Maree, the bank’s group chief executive. In 2011 Standard Bank sold a majority stake in its Argentina operations to Industrial & Commercial Bank of China for $600 million. The sale is still in progress and subject to some regulatory approvals. The bank also completed a stake sale in Troika Dialog Group in Russia, for which it received an upfront consideration of $372 million.

“Where we get opportunities to shed investment bank or universal opportunities outside Africa, we will,” Mr. Tshabalala said.

As part of the bank’s aim to grow business with Chinese companies doing deals in Africa, it said it would increase its presence in Beijing and downsize in Hong Kong.

Recent Africa-China deals that Standard Bank advised on include the $1.3 billion Africa-focused miner Metorex Ltd. sale to Chinese nickel company Jinchuan Group Co. The bank also advised on the 25% stake sale of South Africa’s Shanduka Group to China’s sovereign-wealth fund China Investment Corp. for 2 billion South African Rand ($263.4 million), completed in December.

On Thursday, Standard Bank reported that net profit for 2011 rose 23% to 13.27 billion rand from 10.77 billion rand.

With the emergence of China as the worlds economic growth engine, there many opportunities to take advantage of. This is another sign of the growing importance that Africa will have economically.

Chinese President Hu Jintao visits new African Union headquarters financed and built by China

Chinese President Hu Jintao

The new African Union headquarters was inaugurated by China’s President after being built and financed by China.

Chinese President Hu Jintao is expected to visit Addis Ababa this month to inaugurate a new African Union headquarters financed by China and built largely with Chinese labor.  The project was launched when Moammar Gadhafi was maneuvering to move Africa’s diplomatic capital to Libya.Official African Union and Ethiopian sources confirm that President Hu will be in Addis Ababa January 28 to open what is being called “China’s gift to Africa.”  The inauguration ceremony will be held the day before African heads of state hold their January meeting at AU headquarters for the first time. According to custom, African heads of state meet every January in Addis Ababa. But the summit previously has been held at the city’s United Nations conference center because the AU headquarters building was too small. Construction of new facility began in June 2009, when Addis Ababa’s position as Africa’s diplomatic capital was in doubt.  The city has been home to the continental body since its founding, largely due to the influence of the late Emperor Haile Selassie, who was one of the driving forces behind creation of the Organization of African Unity in 1963.But in 2009, the late Libyan leader Moammar Gadhafi was the AU chairman, and he made no secret of his desire to build a grand new headquarters in his hometown of Sirte.  That plan was thwarted, however, when China agreed to pay for a $200 million facility in Addis Ababa. It was built by the China State Construction Engineering Corporation, largely with Chinese labor. Ethiopian Prime Minister Meles Zenawi toured the new facility last week and hailed the close cooperation with China.  He revealed that he had lobbied Chinese officials to build the new headquarters, donated land adjacent to the old AU campus, and exempted taxes on all imported construction materials. His remarks were reported by Chinese and Ethiopian state media, which were invited to cover the event. AU Projects Director Fantahun Hailemikael says the new facility will vastly improve the African Union’s institutional capacity. “Almost 48 years after foundation of the OAU (Organization of African Unity), the African Union is now able to have such a big facility that can fulfill its requirement in terms of office and in terms of conference,” he said. “The Chinese government generously has given this facility as a gift to Africa and the African Union.”The complex features a 2,500 seat amphitheater and a helicopter landing pad so visiting dignitaries can be flown in from the airport, eliminating the need for motorcades that tie up traffic. The office tower will become home to 700 of the 1,300 African Union staff members.  The other 600 will remain in the old section.The new facility symbolizes China’s growing involvement in Africa, and individually with most of the 54 AU member states.In 2010, China moved ahead of the United States as Africa’s largest trading partner.  The Chinese State Council, or Cabinet, reported trade with African nations reached $114 billion in 2010, as compared to $10 billion in 2000.Industry experts say 70 percent of the continent’s oil exports go to China.

This is a continuation of China’s soft power projection Africa.

Here’s video report about the grand opening:

Chinese navy flotilla heads for escort mission in Gulf of Aden

Chinese Destroyer "Qingdao".

The 11th Chinese naval escort flotilla, consisting of destroyer “Qingdao”, frigate “Yantai” and comprehensive supply ship “Huishanhu”, departed from Qingdao on Feb 27 for their escort mission in the Gulf of Aden and help  in the fight against Piracy in Somali waters to protect commercial ships from pirate attacks.  This is now common practice to have Chinese naval ships patrol in African waters. The activity has grown steadily the past few years as we have covered it.

China recognizes Libyan National Transitional Council

China has recognized the Libyan National Transitional Council, following the such countries as Germany, Turkey, France, U.K, U.S., Russia and institutions like the United Nations.

China has officially recognised the National Transitional Council as Libya’s ruling authority, the foreign ministry in Beijing has announced. It is the last permanent member of the United Nations security council to do so. China’s relations with the NTC were strained last week when it emerged Chinese arms firms had talked to Muammar Gaddafi’s representatives about weapons sales. The statement, released late on Monday – a public holiday in China – added that Beijing respected the choice of the Libyan people. Spokesman Ma Zhaoxu said China hoped all signed treaties and deals would remain in force and be “implemented seriously”. It cited an unnamed NTC representative as saying: “Libya welcomes China to engage in the country’s reconstruction and jointly push forward the steady and sustained development of bilateral ties”. China had already held talks with the NTC and said it valued its “important role”, but had held off full recognition. “They have taken their time in recognising the rebels,” said Steve Tsang, professor of contemporary Chinese studies at Nottingham University. “I would have thought they really should have done this much earlier. I suspect the timing was simply determined by the practical issues of negotiations with the National Transitional Council and that now they have something they think will be satisfactory from their perspective.” But he added China’s behaviour would affect how it was seen by the rest of the world. “You will have quite a lot of people concluding China is much more interested in protecting its own national interests than performing its duties as a leading power in the international scene. As [one of the] P5 [permanent members of the UN national security council] there are certain expectations and moral responsibilities … The way the post-Gaddafi situation has been handled, [people] have not been giving China a particularly high mark,” he said. Chris Zambelis, a researcher at US consultancy Helios Global who focuses on the Middle East, added: “They saw the writing on the wall … Some countries are still holding out, but one by one they are lining up [behind the NTC].” He said while China’s energy interests in Libya were not as great as those elsewhere, it wanted to protect them. An official with a rebel oil firm suggested last month it might freeze out countries that had not supported it. There was embarrassment when it emerged that Chinese state-owned arms firms met Gaddafi’s representatives in July – despite a UN weapons embargo. Beijing’s foreign ministry said the government did not know of the meetings and that no contracts had been signed or weapons delivered. But Zambelis added: “Whatever rebel government emerges, China already has a place in the country business-wise. It wouldn’t make sense to start shutting it out … We will still see China in Libya.” China surprised some by supporting the UN arms embargo and abstaining on the vote on Nato airstrikes – though it later condemned the bombing. Its investments in Libya are thought to be worth about $20bn (£13bn).

China has been reluctant to recognize the NTC since it would go against its “non-interference” policy.  The changing regional dynamics and winds of change have made China grudgingly change its stance. Like Russia, China had business interests in Libya that it wanted to protect, hence its timidness in supporting the Libyan uprising against Qaddafi.

Malaysia seeks to tap African market

Malaysia following the foot steps of other Asian nations, seeks to increase its economic presence in Africa.

Malaysia is the latest nation seeking to tap into the African continent’s massive economic potential – following the success of countries such as China and India. Speaking prior to the launch of the Langkawi International Dialogue (LID) on 19th June 2011, Malaysian Deputy Prime Minister Tan Sri Muhyiddin Yassin, described Malaysia and Africa as “natural partners” due to their abundance of natural resources and their relatively young population. “It is thus only natural that we work together to build on the opportunities and potential available,” he said. In 2010, trade between Malaysia and Africa stood at US$8.2 billion, a 39 percent increase from the previous year. However, trade and investment levels between the two regions remain relatively “untapped” with further partnerships and bilateral cooperation required. “There are tremendous opportunities for Malaysia. We need to explore the various opportunities” said Malaysia’s Deputy Foreign Minister Kohilan Pillay. Malaysian Deputy Prime Minister Tan Sri Muhyiddin Yassin also expressed his disappointment at the present lack of economic activity between Malaysia and Africa while emphasising the enormous potential that Malaysia could potentially tap into with the African market, “Contrast this with the US$12 billion trade Malaysia had with Germany last year, a country one per cent the size of Africa. These figures speak for themselves. As such I urge you (Malaysian investors) to be proactive.” Former Malaysian Prime Minister Dr. Mahatir Mohamad believes that the LID will open up new avenues for Malaysia in Africa. “After the dialogue, Malaysia would have a higher visibility in the African market and Malaysian businesses could expect to do better there.” The LID was the brainchild of Dr. Mahatir and aims to bring together leaders of developing economies from Africa and the Caribbean in order to discuss and promote economic collaboration. More than 500 delegates from 15 African and Caribbean countries are attending the event that is seen as an important outreach program for Malaysia to Africa. According to Malaysian Deputy Prime Minister Tan Sri Muhyiddin Yassin, the move would help build sustainable economic prosperity by synergising Malaysia-Africa business partnerships. However, the event has also met up with criticism over the attendance of Zimbabwean President Robert Mugabe as well as Malaysia’s invitations to other controversial African leaders such as Sudan’s Omar al-Bashir. Malaysia’s Prime Minister Datuk Seri Najib Tun Razak has deflected the criticism by citing that Malaysia was not yet a member of the Rome Statute of the International Criminal Court (ICC) and therefore did not break any international laws by inviting Omar Al-Bashir.

Africa is prime opportunity for Malaysia to look for growth. South Korea, India, Japan and of course China have made moves to tap the growing and expanding African market.

Kenya looking to attract Chinese investors

Kenya looking to attract Chinese investors.

Kenya plans to attract more companies from China to set up shop locally to help bridge the balance of trade gap that is in favour of Beijing. Increased investment in infrastructure would be complemented by investors from China, said a Kenya Investment Council director, Mr Derrick M’Mbijjewe. “We want to take stock of Chinese investments in the country. China is ready to fund companies that want to set up base in Kenya,” he said. Mr M’Mbijjewe spoke at a workshop on China’s impact investment at Norfolk Hotel. Bilateral trade between Kenya and China increased from $1.5 billion in 2009 to $1.8 billion in 2010, which is heavily skewed in favour of China. He said the country should use its strategic position to attract investors from the Far Eastern country. With the most developed capital market in the region and trained personnel, Kenya was suited to attract more companies, he said. Have local partner The model preferred by most companies from China is to have a local partner to mitigate “political risks” though some local outfits are unable to raise the required capital. There is therefore a need to encourage more direct foreign investments. Companies investing in Africa from China are partly or entirely owned by the government. Capital Markets Authority chief executive Stella Kilonzo said ways to attract venture capitalists to mobilise resources would be explored between regulators in the two countries. Over concerns of China undertaking nearly all the infrastructure projects, experts said, it was about providing the most competitive technical and cost elements during the tendering. Mr M’Mbijjewe said companies from China mostly provided better prices for implementation of projects compared to those from the West. “Chinese are investing cautiously in Africa knowing they will benefit into the future. Even when there is a problem in Kenya, they do not slow down their projects. They are more flexible to risk than the West,” he said. In 2006, Kenya and China signed six agreements on economic and technical cooperation that included concessional loans and air services that allowed national carrier, Kenya Airways, landing rights in the country. China has also set up a fund to encourage companies to import black tea, coffee, rose seeds and sisal.

While not much can be done to decrease or slow down trade that is in China’s favor (supply and demand economics), Kenya needs to look at reducing barriers for multinationals whether that is taxation and or tariffs. With China, maybe Kenya needs to use some Chinese methods and demand that Chinese firms train and hire local workers just as the China does to any foreign company wanting to enter the Chinese market.

Graph of the day: China-Africa Trade

Hat tip to afrographique.

China building military base in Zimbabwe

President Mugabe and his Chinese counterpart Hu Jintao inspect a Chinese presidential guard of honor.

China is building a multi-million dollar military base at Chitamba Farm in Mazowe Valley, Zimbabwe. Touted as an intelligence academy, the new facility is the largest investment in a military base here in a decade, and the biggest spend on military infrastructure in decades.on dollar intelligence academy in Zimbabwe.

The so-called Robert Mugabe National School of Intelligence, named after the veteran President, is being bankrolled by the Chinese.

“The important role of defending our country cannot be left to mediocre officers incapable of comprehending and analytically evaluating the operational environment to ensure that the sovereignty of our state is not only preserved, but enhanced,” Mugabe said at the launch of the building of the academy in October 2007.

Military sources described it as “a techno-spy and communication base”. The imposing intelligence facility is conspicuous from the Mazowe Road and is adjacent to a massive farming operation.

The facility is the largest such complex in the country, and will be operated by the Chinese and its foreign intelligence service in conjunction with Zimbabwe’s spy organ, the CIO and local military intelligence.

The facility covers several square miles. It is also here where there is the Mazowe Earth Satellite Station, Zimbabwe’s primary international telecommuncations gateway. Chinese engineers, technicians, and military personnel are working at the base. Our source claimed the base has multiple groups of tracking dishes and its own satellite system, with some groups used to intercept telephone calls, faxes, and computer communications in general, and other groups used to cover targeted telephones and devices.

He said the facility will also monitor diplomatic, domestic, commercial and military communications, but we could not independently verify these claims.  However, China does have a strong presence in many sectors in Zimbabwe, and Chinese companies ZTE and Huawei have supplied most of the country’s internet equipment.

The academy is expected to train members of the Zimbabwean army, CIO and police, as well as operatives from other southern African countries. A local farmer said: “It’s scary to have your area just taken over by the military. It’s a game changer in this place.”

Ties between the two countries date back to the 1960s – when the Chinese supported Zanla, the military wing of Zanu, with training and equipment. The ties have deepened since Zimbabwe’s political isolation from the West more than a decade ago.

China has been described as the “only major international supporter” of Zimbabwe, due to its willingness to turn a blind eye to human rights abuses. Zimbabwe’s “Look East” policy has expanded bilateral and trade relations and China is now the biggest buyer of Zimbabwean tobacco. It is also especially interested in our platinum and diamond deposits.

The government has used military hardware from China to wage war against its own people. It has purchased massive amounts of military hardware from China, including a $13 million radar system, six Hongdu JL-8 jet aircraft, 12 JF-17 Thunder fighter aircraft, and more than 200 military vehicles since June 2004 – with the latest acquisition said to have been bankrolled by revenue from the new-found diamond wealth.

This isn’t surprising given the close relationship between China and Zimbabwe.  Zimbabwe, a country that has literally mortgaged many of its key assets to China as it attempts to pull its economy out of free-fall, has come at a cost. Which many Zimbabweans are asking whether it’s a fair exchange as this report indicates.

Video: PLA Navy makes port call to Hong Kong after patroling Gulf of Aden

After 6 months on the seas off the coast of Somalia, PLA Navy Type 054A missile frigates FFG 529-Zhoushan and FFG 530-Xuzhou sailed back into Chinese waters for a port call to Hong Kong.

The two advanced ships were part of a task force on anti-piracy missions in the Gulf of Aden and are sailing back to their home port in Zheijiang province. The historical task force is the PLA Navy’s first overseas combat mission.

The move underlines the growth in Chinese naval power. And with a number of Chinese workers employed in potentially unstable countries around the world, the evacuation likely serves as a dress rehearsal for future crises.  Recently the FFG 530-Xuzhou has been sent to Libya to help evacuate Chinese nationals.

China sends air force to Libya

China has sent its airforce to help in the evacuation of Chinese nationals.

China has sent four military transport planes to help extract the last of its citizens from Libya—even though most have already left—marking the first time that the Chinese air force has participated in a civilian evacuation mission overseas.

The deployment of the Russian-made IL-76 aircraft is another milestone for China’s armed forces, which have been rapidly developing the capabilities to protect the country’s interests far from its own shores over the past decade.

Last week, China took the unprecedented step of diverting a Navy missile frigate that was taking part in antipiracy patrols in the Gulf of Aden and dispatching it to the Mediterranean Sea to provide support and protection to the evacuation mission.

It was unclear, however, if the transport planes or the frigate will arrive in time as official Chinese media reported that by Monday morning 29,000 of the 30,000 Chinese who were in Libya had already been rescued.

The frigate on Sunday passed through the Suez Canal, which links the Red Sea to the Mediterranean, and isn’t expected to reach waters off Libya’s coast until Wednesday, according to China’s state-run Xinhua news agency.

Some military analysts have suggested that China is using the evacuation operation partly as a training exercise for its armed forces, which have not seen live action since a brief border war with Vietnam in 1979.

China’s leaders are also under pressure to show that they are able, and willing, to protect the rapidly growing number of Chinese businesses and citizens operating in foreign countries—especially in unstable regions where China is seeking oil, gas and other industrial raw materials.

The risks in Libya are real nonetheless: a British C-130 military transport plane was hit by small arms fire as it tried to land there to help evacuate British and other foreign citizens, according to the BBC. It said one bullet ricocheted off the pilot’s helmet.

The Chinese transport planes departed Monday, China’s Defense Ministry said in a brief statement without giving details about their destination, arrival time, or when they planned to return.

But the state-run People’s Daily newspaper said on its website that the planes took off from Urumqi, the capital of the northwestern region of Xinjiang, shortly before noon Monday and were flying to the town of Sabha in central Libya.

It also said this was the first time China’s Air Force had taken part in an operation to rescue Chinese citizens overseas.

China has bought several long-range transport planes from Russia since the early 1990s to enhance its ability to provide logistical support for combat aircraft and ground forces far from its shores. It is also developing two indigenous transport planes, called the Y-9 and the Y-20.

Yes, the PLA is without a doubt using this situation as a good training experience for its pilots and crew, but thats not the main reason why the airforce is being sent.  The current leadership in Beijing, like all leaders want to be seen as competent and doing whatever possible in helping their fellow citizens.  This comes after the Chinese navy was sent to help with the evacuation of Chinese citizens.