StanChart poised to facilitate China’s Belt and Road Initiative

Standard Chartered Ghana Limited says for many years it has positioned itself to become the full financial services provider in Ghana for China’s ambitious Belt and Road Initiative (BRI) – also known as the ancient Silk Road initiative – which is aimed at connecting China with Asia, Africa, Europe and the Middle East with the aim of achieving mutual development.

According to the bank’s Executive Directive, the Belt & Road Strategy Execution Team Corporate & Institutional Banking in China, Sebastian Er – who is visiting Ghana for the first time as part of an Africa and Emirates, Asia BRI roadshow – although government to government deals are at the centre of the BRI through institutions such as the Silk Road Fund, China Exim Bank and China Development Bank, the bank plays an important role facilitating the BRI globally as well as locally due to its deep understanding of China and the countries which are partners of the initiative.

He said when large Chinese private sector companies are ready to play an active role as the BRI goes forward, StanChart could step in as a trusted banking partner to address the financing needs of those companies, while assisting them with the bank’s knowledge of legal and tax structures, environmental laws, and political sensitivities of countries on the belt.

“Most of these projects come with their funding already. Yes, we come in as a bank under the project to facilitate dispensing funds from the Chinese side like paying local suppliers; the companies do payments through their bank accounts with us.

“And this is one way the local economy is supported. The funding comes to us, and we do the disbursement on their behalf with regard to all those that need to be paid.

“Let me also state that – in terms of the projects that we as a bank undertake – its not just about the funding; we also paly a role in facilitating government to government loans for projects under the BRI, like a construction of the Ghana Gas plant,” he stressed.

Also, StanChart’s world-class banking team could help these companies with project and export financing, cash management, and foreign exchange hedging, Er pointed out.

StanChart has already set up a ‘China desk’ to address issues relating to the BRI, and formed executive and working committees to facilitate the initiative locally as well as globally.

Head Global Subsidiaries International Corporates at Standard Chartered Bank Ghana Limited, Jerry Agyeman-Boateng, told B&FT that the relationship between Ghana and China is crucial in the BRI, given its strategic geographical location and its ports – pointing out that in the last few years the relationship between Ghana and China has strengthened.

According to him, China over the years has become one of Ghana’s most important trade partners, with more funds coming from the Chinese side to support the Ghanaian economy.

Mr. Agyeman-Boateng said: “It’s noticeable that the Chinese presence in Ghana is increasing by the day. When you look at some of the big infrastructure projects – such as gas infrastructure, highways, ports, container terminals and so on – some of them are either funded by China or built through public-private partnerships with China.

“We ensure that even if the project is on BOT arrangement with the contractor being a Chinese one, he comes into Ghana with the requisite knowledge about the rules and regulations governing the Ghanaian market,” he stressed.

President Xi Jinping of China, sometime in the second quarter of this year, announced that China will contribute an additional 100 billion yuan (about US$14.5billion) to the Silk Road Fund to scale-up financing support for the Belt and Road Initiative.

Xi made the announcement when delivering a keynote speech at the opening ceremony of the two-day Belt and Road Forum for International Cooperation.

Designed to finance the Belt and Road Initiative, the Silk Road Fund was officially founded in December 2014 and jointly backed by China’s foreign exchange reserves, the China Investment Corp., the Export-Import Bank of China (China EximBank) and China Development Bank (CDB).

To provide more funding for Belt and Road cooperation, China will also encourage financial institutions to conduct overseas RMB fund business, with an estimated amount of about 300 billion yuan, Xi said.