“Continue to Invest in Africa!”

原创 Li Lianxing 中国投资参考

——Interview with the CEO of Standard Advisory (China) Ltd, Standard Bank Group, ANDRÉ DU PLESSIS

By Li Lianxing

ANDRÉ DU PLESSIS

"For Africa, one of the pathways to achieve industrialization, we will need help of global multinational enterprises. Why? They have the advantages of capital, experience and management. Chinese enterprises, specifically more recently, say in the last 15 years, have demonstrated that they have the requisite skills to play a unique role in Africa's industrialization process. The low cost and technology utilization of Chinese enterprises are very applicable to the situation in Africa and can greatly promote the industrialization and advancement of Africa and its economy."

In 1862, the Standard Bank of British South Africa was founded, and in the following year established its first branch in Port Elizabeth, South Africa. Over the next century, the colonial bank has transformed itself into a truly South African bank and has grown to become the largest and most powerful commercial bank in Africa, with more than 15 million active customers. It has operations in 20 African countries, all of them in sub-Sahara Africa. By the end of 2022, the total assets of Standard Bank has reached 2.9 trillion rand (about 1.06 trillion yuan), and its market value is as high as 284 billion rand. In 2008, the Industrial and Commercial Bank of China acquired a 20 per cent stake in the Standard Bank Group, making it its largest single shareholder. Recently, China Investment conducted an interview with Andre du Plessis, head of Standard Bank's China Office, to share his insights and suggestions on topics such as Standard Bank's business development in Sino-African economic and trade relations, and the future development of Africa in the current international system.

⬆ This year marks the 15th anniversary of the establishment of a strategic partnership between the Industrial and Commercial Bank of China (“ICBC”) and the Standard Bank Group

China Investment: Can you briefly introduce the main business of the China office and your main responsibilities?

ANDRÉ DU PLESSIS：As one of the overseas subsidiaries of Standard Bank Group, we have 35 employees in our China office. We also have offices in New York, London and Dubai. Our main goal is to cover Chinese companies and entrepreneurs with business investment in Africa, and those who want to invest in Africa. The Standard Bank Group aim is then to provide them with relevant banking services in Africa, their extensive network in Africa can support Chinese operations in Africa. My main responsibility is to set up the Group's strategy and response for Chinese companies and investors in Africa to ensure that the needs of the Chinese customers and what can be offered in Africa can be matched. I also hope that through the business of our bank, we can expand a wider channel of business between China and Africa, so as to help Chinese enterprises maintain competitiveness in the African market.

China Investment: As one of the oldest and largest banks in Africa, Standard Bank has developed from South Africa to Africa. Can the continent meet the standard business ambitions?

ANDRÉ DU PLESSIS：Before the global financial crisis in 2008, we wanted to build a successful emerging market bank, but after the financial crisis, many banks lost their effective competitiveness in the global market. Standard Bank was naturally affected as well, so in order to maintain its vitality, we decided to reduce our global footprint, sold our Argentina business to ICBC, closed many regional offices, such as Russia and Turkey, and finally decided to refocus our energy on Africa exclusively.

China Investment: Volatile markets has not affected the expansion of your company's business. Standard Bank has developed from a simple commercial bank in a single market into a comprehensive financial services organization, providing retail banking, business and commercial banking, corporate and investment banking and insurance to its diversified client base. Among so many businesses, we can see from the financial report that the largest part of the income is from corporate and investment banking. What does this mean for Africa?

ANDRÉ DU PLESSIS：For us, it was relatively easier to build our expansion on serving corporate and investment clients. This is because we know the market and the client, as well as his needs so well that you can quickly build business around that. For retail banking, you need to establish different consumer positions, based on a large number of consumer needs, which actually takes a long time and it was relatively more difficult to complete, at least initially after entering a new market. Standard Bank Group attaches great importance to its banking business in different African countries, whether it is retail-, consumer- or corporate business. We hope to achieve a leading position in the country and highlight our advantages and capabilities.

China Investment: Do you have any preference in terms of investment? How do you make sure you get a good return on your investment in Africa?

ANDRÉ DU PLESSIS：We are an African bank. We invest in Africa only. In this regard we are committed to driving Africa’s growth. We have a very good sense of the African economies, their prospects and where to support clients. After all we have been around for more than 160 years. Standard Bank typically retains about a third of its earnings in our subsidiaries of the African markets. Where we think the market opportunities are good and the returns are promising, we will invest more. But he will balance and adjust over time in different countries. We look at our opportunities as a portfolio and manage it across all markets for its portfolio return. For example one year we invest more in Nigeria, the year in Angola and so on. It is all determined by the characteristics of our investable resources and the economic cycle and opportunities for growth in the African markets. Bank acquisitions and startups, for example, we haven't done that for a long time. The last bank startups we have done go back to Ivory Coast and Angola about a decade ago.

China Investment: Why did you set up an office in Beijing?

ANDRÉ DU PLESSIS：After ICBC invested into Standard Bank Group in 2008 we set up an office in Beijing and ICBC set up an office in Johannesburg, where we have our head office. In Beijing we assist ICBC to market to clients that operate in Africa. This has stood both ICBC and Standard Bank Group in good stead over the last 15 years and we are considered the leading banks in the China Africa corridor, as a result of this collaboration.

China Investment: When commenting on China-Africa relations, many people will mention the imbalance in bilateral economic and trade relations with China. As an African bank, you are looking for Chinese customers to help develop sales of African products in China. Does this mean that you want to change this imbalance? Is it difficult?

ANDRÉ DU PLESSIS：In fact, over the past few decades, Africa has been at a structural disadvantage in the international trading system, essentially being a net importer of goods. China has outstanding industrial and manufacturing advantages, so it exports a lot. If you want to balance this relationship, few African countries can reduce the trade imbalance with China quickly. Countries have low manufacturing and industry capability, low level of industrialization, have to rely on imports. I think this imbalance will remain for a long time. Our aim is to encourage more investment in manufacturing in Africa and also more exports, especially agricultural exports to China.

China Investment: Do you think it is possible for Africa to increase its investment in or exports to China?

ANDRÉ DU PLESSIS：With the exception of South Africa and possible Egypt, few African countries have the financial strength to invest directly abroad. If we have to talk about the possibility of balance, then it may involve the issue of export scale and market access from Africa to China. In fact, the expectation of most African countries in terms of export trade to China is to increase either the export volume of commodities, value-added or processed commodities and agricultural products. There are two exhibition platforms in China that helps us with this. The CAETE in Changsha and the CIIE in Shanghai. We are active supports and participants in both. We have invited many client to both these exhibitions to come and showcase their product to prospective Chinese buyers and clients.

China Investment: Since you arrived in China, is China and Chinese investors the same as you observed and expected?

ANDRÉ DU PLESSIS：Actually, we all know that investors in China are divided into state-owned enterprises and private enterprises, and it's interesting that they have different characteristics and qualities. Private entrepreneurs, for example, are very discerning and will react quickly to and launch business opportunities they see. For example, some of our customers used to be pure exporters, exporting some low value-added products from China to African countries, such as ceramic tiles or diapers, etc. However, in the process of trade, they then started to product locally in Africa. Sometimes to reduce the total cost of the product, sometimes in order to reduce the value chain. This is why they actually played a role in industrialization as they effectively transfer production from China to Africa. This whole process improved the reliability of supply and shortened the value chain in to their customers Africa, giving them competitive advantage. It can be said that this investment model is one that we encourage as it creates jobs, reduce costs of products and develops local businesses through developing the value chain locally. On the other hand, China's state-owned enterprises have an unparalleled advantage in terms of investment capacity, which is very important for Africa in many cases given the infrastructure gap on our continent. I have a lot of respect for both client groupings and I think they will bring different value to different industries and sectors in African countries.

China Investment: So it can be seen that Standard Bank plays a central role in identifying and recommending such business opportunities. What is your advice to people who want to go to Africa or invest in Africa?

ANDRÉ DU PLESSIS：In fact, for a lot of Chinese companies didn't even need our advice because they are so perceptive, and the management, the skills, the capital advantages of Chinese companies are so obvious given the scale and skills they have developed in their home market. I would advise them to continue to invest in Africa. Africa needs you, and sometimes you need patience, and you need to be able to adjust yourself to the different African market environments, and then according to the market demand and market size of Africa, you will be successful. To build a sustainable business over the long term you need to partner effectively in local markets. We are the matched Financial Services partner for you in sub-Sahara Africa. Please look us up and we will walk your journey with you.

China Investment: In fact, there are many cases of investment failure in Africa, in order to avoid such a situation, how will Standard bank cooperate with clients?

ANDRÉ DU PLESSIS：Yes, there are a lot of failures in Africa, not just by China, but by investors all over the world. From the bank's point of view, if you want to build a successful investment case, then your business plan must be realistic, down-to-earth, and can be implemented. Although we do not debt support to many projects directly from the beginning, we do provide very comprehensive business advice and market introduction and transactional capabilities to our clients.. In addition, in many African countries, currency shortage is a very serious problem, which will even affect the economic situation of the country, but in spite of this, there will be a lot of investors, including Chinese investors, looking for opportunity and an entry point to be able to take advantage of the future prospects of the country. At this time, we will cooperate with the public sector players of these countries to help provide professional currency management services and a sound regulatory advice for our clients. This actually avoids the later problems that many investors encounter in their initial investment in those places if they don’t follow the correct initial investment administration protocol.

China Investment: Speaking of currency, from the professional perspective of the banking industry, what is the current state of RMB internationalization in Africa？

ANDRÉ DU PLESSIS：First of all, from the perspective of RMB internationalization, there is a demand and market for RMB in Africa. However, for the existing monetary system, the liquidity of offshore RMB is still narrow compared with currencies such as the us dollar and the euro. From our own point of view we are prepared for RMB trading in our offices in 20 countries in Africa. Faced with the imbalance between supply and demand of RMB in the markets that we operate in, we are also working hard to promote this business and encourage our customers to use RMB in invoicing and cross border transactions. At present, some mining companies have begun to use RMB as a trading currency. The liquidity of the yuan can increase only when the number of customers and trading volume increase, so we are working with clients to achieve this.

China Investment: Speaking of troubles, what is your opinion on the current debt problems of African countries? Is it a real crisis and challenge for African countries?

ANDRÉ DU PLESSIS：Yes and no, the debt issue should be a hot topic right now. The sovereign integrity of African countries depends in part on their ability to maintain a solid financial and monetary system with sufficient funds to support their development. The currencies of African countries are generally vulnerable and has a depreciation and volatility bias against some of the major reserve and trading currencies. This can affect a sovereign’s credit if his debt has a high foreign currency component. In fact, talking about sovereign debt, most countries in the world are facing the problem of high debt. This will indeed put national sovereign finances at risk, which in turn will weaken investors' investment appetite. However, opportunities within those economies remain solid as they continue to grow, supporting ongoing investment need and opportunity. In many industrial or manufacturing investments, you invest in local currency, you make money in the local market, you continue to expand in the local market, and you become a true local market player. Your ultimate return comes through dividends of the profitable business you have built. This is the right, long-term investment model. For countries that have reached, or almost reached, the debt ceiling, and have a continued need to invest in infrastructure we are looking forward to a public-private partnership to address the sovereing’s challenges to sponsor these projects on his own.

China Investment: In fact, African countries are not only ones troubled by debt, many people are also worried that the current volatile international situation will make Africa more vulnerable, such as the Russia-Ukraine conflict, and Africa will face a more difficult situation in the geopolitical game between major powers. How do you think about this view?

ANDRÉ DU PLESSIS：I don't think the current international situation is going to have a major, substantive impact on Africa's future development. It is true that finance and economy will be affected by the current fragile situation, but we have to realize that when Chinese investors or American investors are affected, they will choose to return to their more familiar markets to avoid risks, but when the interest rate are gradually lowered, they will eventually have a demand for overseas investment again, and at that time, the market opportunity and population growth of African countries have always been a worthwhile and suitable place to invest. African countries have not been directly affected by these global conflicts, but have always needed foreign investment to change their development status and trading deficits. This need will always be there, so those who see the development opportunities in Africa and can be successful in local operations will continue succeed. The returns on these investments will be even more pronounced, especially as Africa moves to a higher level of regional integration. For many Chinese companies, you don't even need to convince them of this, they are very aware of the value of the African market and are very happy to fine-tune their development and investment strategies. For example, in Zimbabwe, a “failed state” in the West, there are many successful Chinese investments.

China Investment: If the development of African countries is difficult to be affected by the current international situation, then the industrialization process of African countries directly determines the quality of future development. What does the next decade mean for Africa’s industrialization? What does Africa need to do to further promote its own industrialization?

ANDRÉ DU PLESSIS：First, you need to know who you’re competing with, and second, whether your market has the right conditions to industrialize. To be honest, African countries are not competitive in industrialization compared to Asia, and especially very few markets can match the competitiveness of China. Therefore, for Africa, how to achieve the competitiveness of industrialization requires the help of global multinational enterprises, which have the advantages of capital, experience and management. We are especially interested in Chinese enterprises, which have such conditions to play a unique role in the process of industrialization in Africa. Africa can no longer export raw materials with zero or low added value, and the investment of many Chinese enterprises in Africa will help Africa change this situation. The cost effective and modern technology utilization of Chinese enterprises are very suitable for the situation in Africa and can greatly promote the industrialization of Africa.

Editor | Xiao Jingqiu

Design | Demi

本文刊于《中国投资》2023年11月号

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《中国投资》杂志每期覆盖包括上市公司在内的200多家央企国企和10000多家中国民营企业、1000多家中央与地方政府决策部门和机构、1000多家行业协会和商会、300多家主要金融机构等，是了解宏观经济环境、行业趋势前景和企业投资案例的重要参考。

China Investment, founded in 1985, is a monthly under the supervision of National Development and Reform Commission (NDRC) China’s macro-economic management agency, It’s jointly operated by Investment Research Institute under NDRC, China International Engineering Consulting Corporation. Enjoying an exclusive position under the central government, China Investment is the core journal which started the earliest among similar magazines to focus on the investment trend. Over the past 30-plus years, China Investment has been in line with theglobal market as its fundamental coordinate with a strategic focus on specific countries and regional markets and those major international propensities. China Investment is a key dialogue platform for officials from different countries, investment agencies, experts and scholars, business people and journalists.

原标题：《“Continue to Invest in Africa!”》

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