Friday, March 4, 2011

Bank: China’s Africa Investment to Jump 70% by 2015.

Think China’s pumping a lot of investment into Africa? You ain’t seen nothing yet.

According to a forecast statement from South Africa’s Standard Bank, Africa’s largest bank, investment from China into Africa is likely to hit $50 billion by 2015, up 70% from 2009.

Outward investment by Chinese businesses has only started to ramp up in recent years, with capital generally flowing into the world’s second largest economy as a much faster clip than it flows out. In January the Ministry of Commerce said total overseas investment by Chinese companies in nonfinancial sectors was $59 billion last year–barely larger than Standard Bank’s 2015 forecast for Africa alone.

Meanwhile the bank forecasts China-Africa bilateral trade to double in four years to $300 billion from $150 billion last year. In the past 15 years, China-Africa trade has doubled every three years, the bank said in the statement .

It also predicts that Africa’s gross domestic product, or the total value of good and services produced in a region, is likely to double to about $3 trillion in 2015 from $1.5 trillion now.

“Trade and investment routes into Africa are being recalibrated as economic momentum shifts to the East,” said George Fang, Head of Mining and Metals, China. “Through trade and direct investment, China is broadening its resources supply base with Africa as one of its key partners.”

Mr. Fang’s enthusiasm is understandable. China’s banks have only a handful of branches between them throughout Africa. Moreover, Standard Bank is in a unique position to take advantage, with Industrial & Commercial Bank Ltd. holding a 20% stake in it. Standard Bank’s investment banking operations are already benefiting from that relationship, and it looks like they may even benefit a tad more down the road.

Source: WSJ