Huge Trade Finance Opportunities in Africa

Windhoek — There is a big drive on the African continent to increase manufacturing and industrial base and shift away from an economy that is commodity driven, says Standard Bank’s Head of Corporate and Investment Banking (CIB) in Namibia, Amit Mohan.

Mohan maintains that Africa has over a billion people and a large percentage of young people who are familiar with what is happening in technology, which provides a big opportunity from a manufacturing and industrialisation base.

“We really believe that the labour force from a cost perspective is becoming increasingly competitive globally. We see that with multi-nationals opening up shop on the Continent and also big Chinese conglomerates opening textile and clothing factories in Africa,” he points out, adding that with that will come investment into power, telecommunication, water, primary infrastructure and more that is needed for conducive economic growth.

He is convinced that all these big infrastructure investments will lead to big financing opportunities in Africa. The Standard Bank’s CIB Head welcomes partnerships with various banks including development banks in the SADC region and beyond, “because we see these partnership indications and joint agreements and incorporations that will eventually lead to the success of key infrastructural development on the Continent, in SADC, in the (African) region as well as in Namibia.”

Mohan says that Standard Bank facilitates straightforward transactions and have a ray of trade finance instruments to offer to customers; they can provide trade solutions to customers because of their presence, expertise in the sector and can also arrange working capital facility with their sisterly banks in the region that could assist their clients.

He further states that Standard Bank has one of the biggest trade finance book in Namibia, where they facilitate infrastructure investment from contractors to the actual client, which could be terminal expansion, construction, oil storage facility and more.

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Across Africa, Standard Bank has associations with many banks and are the largest bank on the continent in terms of assets; they are widespread in regional presence and it is second nature to them to finance trade transactions.

In the SADC region, Mohan says that Standard Bank has a strong footprint in every country and recently the bank provided a loan facility of N$500 million to the Zimbabwe Power Corporation for the 300 MW extension of the Kariba South Hydro Power.

“The Zimbabwean power transaction speaks to our strength from a sector and regional perspective how we are able to facilitate and also conclude what is a regional milestone transaction in that sector,” he points out.

Mohan adds that power is quite a contemporary topic in the region and because the region is facing a shortfall, Standard Bank’s strength and expertise in the sector cannot be over-emphasised.

In Namibia, Standard Bank also landed a landmark transaction in 2013 to be the lead arranger and lender of a US$60 million facility for Debmarine Namibia for the acquisition of the largest marine diamond production vessel of its kind in the world.

Standard Bank further partnered with the Namibian government as the appointed joint lead manager and book runner in the issuance of Namibia’s second Eurobond in October 2015 worth US$750 million.

The bank was also the arranger and book runner for Nambia’s first successful Eurobond in 2011.

“It (Africa) is a big and very relevant region. This gives an indication of how Standard Bank facilitates development and growth,” he adds.

Mohan says that the economic slowdown and depreciation of the (South African) Rand brings in a lot of volatility, but Standard Bank’s size and expertise in the global market, allows them to manage volatilities and provide clients with appropriate solutions.

“Namibia is still seen as a key investment hub from global investors. Namibia is in a very fortunate position. We continue to maintain our investment growth grading,” he adds, saying that while there is a lot of volatility and shortfalls in various other economies, the Namibian economy has the strong possibility to flourish.

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Furthermore, the CIB Head says that Namibia has one of the best infrastructure in Africa and is an investment rated country which is economically and politically stable.

“It (Namibia) has come out of 2008 in the midst of global economic crisis pretty much unscathed. We have shown that we can wither certain storms for a number of reasons,” he says.

When it comes to trade with China, Mohan is adamant that China is a dominant force in global market, also synonymous trading partner with Africa in terms of understanding.

He discloses that the Industrial Bank of China is Standard Bank’s largest single shareholder owning 21 percent shares.

“We understand China, because we have a huge presence in Beijing. There’s huge synergy of Chinese clients coming to do business in Africa and vice versa. Without doubt, in Namibia we have the most significant portfolio with the Chinese,” says Mohan, adding that Standard Bank can offer Chinese banking solutions, where just in January this year, they launched their Chinese Yuan Renminbi (RMB) platform, where RMBs can be exchanged for Namibian dollars without having to first change into US dollars.

Mohan says that there are institutions and people within and outside Africa who make the mistake of assuming that in Africa, “one shoe fits all”, while the Continent has 54 different jurisdictions, different cultures, different political and economic systems, different regulations and every country has a different identification and blue print.

This, he says, makes cross-border trade quite challenging from a financial perspective. (Reported by Magreth Nunuhe)

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