Leadership (Abuja)
Justus Nduwugwe
1 November 2007
Abuja — China's drive into Africa's financial services sector has taken a fresh turn, with China Development Bank entering a partnership with United Bank for Africa, one of Nigeria 's biggest banks.
The deal, sealed last month is expected to expand the Chinese bank's ability to finance infrastructural projects in Africa .
News of the agreement follows last week's announcement that Industrial and Commercial Bank of China, another state bank, was buying a 20 per cent stake in South Africa 's Standard Bank for $5.56 billion.
CDB has not bought equity in UBA, which is listed on the Nigerian StockExchange, though the deal will help it expand in Africa .
The two deals, analyst opined, mark the start of a transformation in Africa 's banking industry, opening fresh channels for Chinese finance in a region which has previously been largely dependent on western companies and donors.
Chinese banks are seeking local operators to channel billions of dollars into African projects, in part to secure the oil and minerals needed to fuel China 's fast-growing economy.
CDB, provides much of the financial muscle for infrastructural developments in China.
Tony Elumelu, UBA's chief executive said the deal would provide us [with] an almost infinite amount of capital to execute projects." He added: "They will invest in any credit that we recommend."
By the CDB agreement, is expected to work with their counterparts at UBA's headquarters in Lagos to fund projects in West Africa .
Elumelu said he hoped by the end of March to strike an agreement with CDB to finance a power project that would help to tackle Nigeria 's chronic electricity shortages.
UBA, with a balance sheet of about $8bn, hopes to expand into as many as 12 African countries next year.
"It is no longer a question of funding capability, but about our ability to identify good projects," Elumelu said. " Africa is a huge untapped market - but it takes those who understand African markets and African risks to take advantage."
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