China-Africa Partnership: The Role of the Banking sector
The private sector can play a huge role in increasing the volume of trade between Africa and China which currently stands at some US$55 billion, says ECOBANK Group Chairman, Mande Sidibé, during a workshop in Shanghai held on Thursday within the framework of the Bank Group’s Annual Meetings. The partnership between China and Africa based on a win-win formula looks promising. Africa offers a world of business opportunities, while China provides vast experience in social and economic development.
Speaking during the seminar, Mr. Li Anshan, history professor at the Beijing International School, indicated that his country was sincere in its dealings with Africa. Drawing on Chinese wisdom, he said "the long road knows the horses strength and the long time knows the strength of the human mind." By this, he implied that his country’s sincerity would be proven over time and the partnership would certainly stand the test of time.
Also speaking during the seminar, Ghana’s Minister of Economic Development and Finance, Kwadwo Baah Wiredu, called on African and Chinese leaders to have faith in the banking sector with a view to putting in place, as suggested by Mr. Sidibe, the necessary transportation and energy infrastructure. The China-Africa partnership calls for the involvement of the private sector, especially that of the banking sector to take care of financial transactions. This implies creating business opportunities in order ensure stability in trade and the availability of financial and human resources. However, the private sector’s dynamism will depend, in part, on the leaders’ political will in order to take maximum advantage of opportunities provided by the Africa-Asia partnership. The workshop, organized by the ECOBANK Group and the Financial Times to help participants share perspectives and experiences on the role of the banking sector, was attended by many participants, including ministers of finance from Ghana and Liberia, ADB Vice President Arunma Oteh and journalist from across the world.
The African Development Bank (ADB) Group places a lot of importance on the private sector’s role on the African continent. Speaking on Wednesday in Shanghai during the opening of the Bank Group’s Annual Meetings, ADB President, Donald Kaberuka, said the Bank would act as a catalyst in order to enhance the investment climate and to respond to demand in support of the Bank’s development goals. This, he said, would be achieved by rallying investors to look at opportunities in African countries differently, adding that the Bank’s strong financial position allowed for some increased lending without overstretching the its risk bearing capacity.
"We are aware that private sector operations entail significant risks. We remain fully conscious of the need for extreme management in terms of project selection, credit review, processing procedures, choice of partners, internal capacity. Our intention is to expand operations while avoiding any adverse impact on the overall risk profile of the Bank portfolio," he pointed out, adding that Africa’s economies, like Asia’s, would be private-sector- driven. That is where wealth is created and poverty ultimately eradicated. We have made encouraging progress under the private sector window whose operations totalled US$ 419.15 million up from US$ 274.35 million in the previous year, he said.
Speaking recently in an interview published in the China Daily, the Bank Group’s Private Sector Vice President, Mandla Gantsho, said the active portfolio of the institution as of the end of 2006 consisted of 106 operations with a cumulative Bank commitment of UA2.4 billion. The total cumulative commitments in the infrastructure sector amounted to almost UA10 billion (1UA=US$1.52418). The portfolio is currently concentrated in the transport sector, which accounts for 66%, while the energy sector accounts for about 25%. However, the backlogs remain enormous, which implies we have not won the battle, he added.
"Though we have done much as a Bank, there is still huge amounts of backlogs that are yet to be addressed and through new ambitious initiatives and partnerships, I believe the Bank will play an increasingly important role in supporting infrastructure development and we are supportive of the NEPAD Initiative. We have been appointed as the lead agency in the infrastructure development sector or a pillar of the NEPAD development program. We are also playing a secretariat role for the Infrastructure consortium for Africa. We know the history of the ICA which was launched at the Gleneagles Summit Meeting of G8 Head of States and Governments in 2005. We also want to focus on public-private partnerships (PPPs). There is a bright future for the role that the Bank is playing in the development of infrastructure on our continent," he concluded.