Chinese banks support S.Africa's development

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03:13

‍Li Tianshu, deputy head of liaison business of China Construction Bank, Johannesburg office, had a routine meeting with a local loan recipient Aberdare.

It is South Africa’s biggest cable manufacturer.

Li and her team have checked the company’s financial performance after the loan was given last year.

She said the post-loan management has aimed to avoid bad loans caused by inappropriate use of the money, asset sales, equity changes, and so on. It has been an important part of their financial services package.

Funding is important especially for companies like Aberdare’s, since it has salaries to pay and raw materials to buy.

The cable manufacturer, with over 1,500 employees, was purchased by a Chinese company in 2015.

It’s production relies primarily on aluminum and copper. But the prices are always fluctuating on the international market.

So large sums of money are needed to ensure a steady material supply.

The facility for Aberdare Cable is just one example of the Chinese financial institutions helping the Chinese enterprises expand their overseas businesses. While other financial services from China have touched upon South Africa’s key state department.

Eskom, South Africa’s top electricity generator, was on the brink of bankruptcy last year. But it was saved thanks to funding from some foreign financial institutions, including the Bank of China.

According to Eskom’s spokesperson, the funding is mainly used for the installation of power transmission networks across the country.

Gavin Bouwer, Bank of China’s business development manager who is in charge of post-loan management has witnessed changes in Eskom since they received the new funding.

He said there has been an improvement on the company’s internal governance and management after being given the loan and it has accelerated Eskom’s expansion program, such as helping other African countries like Nigeria build and improve their power grid.

Aberdare and Eskom are two success stories of African manufacturing and infrastructure development being helped by Chinese companies.

Zhang Jinguo, CEO of China Construction Bank, Johannesburg office said the bank has funded more than 10 billion US dollars for southern African countries over the past 18 years. And they will further offer over 750 million US dollars for South Africa’s industrialization process.

Cheng Jun, head of the Bank of China’s Johannesburg office, said they are now helping South Africa attract foreign businesses and investments to their economic zone.