Absa Group plans to open office in Beijing to serve Chinese firms with operations in Africa
- The Pan African lender, which expects to launch the advisory office by the year-end, is awaiting approval from South African authorities
- Absa signed an agreement for a three-year US$200 million working capital facility with China Development Bank last month
Absa Group, the South Africa-based lender, is poised to set up its first office in China by the end of this year, betting on the expansion of Chinese companies doing business on the continent, according to a senior executive.
The office in Beijing is currently awaiting approval from authorities in South Africa. It is expected to be first launched as an advisory office with fewer than 10 people, connecting the decision makers of Chinese companies doing business in Africa with the bank.
“We are quite committed to China,” said Zhu Kai, principal and head of China Corridor at Absa Corporate and Investment Bank. “I just finished a trip to China last week with our executives from Africa, visiting Guangzhou, Shenzhen and Beijing. We are optimistic towards the country’s further growth.”
China is Africa’s largest two-way trading partner. The country’s exports to Africa were US$164.49 billion in 2022, while imports reached US$117.51 billion, according to Chinese customs data.
Meanwhile, a number of China’s Belt and Road Initiative-related projects are still ongoing in Africa, including the building of a coastal railway line in Nigeria and mining infrastructure in the Democratic Republic of Congo.
“We are seeing strong growth of China business at our franchises [at home],” Zhu said, adding that Absa was seeing double-digit revenue growth for the China Corridor.
“We definitely want to do more to justify the growth story to our shareholders. We believe China is a good area for us to commit more financial resources and will give us strong returns in the next five or 10 years.”
The Johannesburg-headquartered lender, which controls banks in 10 African countries, including Ghana, Kenya, Botswana and Tanzania, and serves millions of customers on the continent, has been actively establishing its relationship with Chinese partners besides its soon-to-be launched office, paving the way for an increased presence to serve potential Chinese clients.
It signed an agreement for a three-year US$200 million working capital facility with China Development Bank (CDB) on April 19.
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“The transaction further progresses our funding diversification strategy and clearly demonstrates the confidence that CDB has in our business strategy and performance, as well as their commitment towards Africa’s economic growth and development,” said Parin Gokaldas, group treasurer at Absa Group.
On the bank’s decision to base the China office in Beijing, Zhu said that most mainland companies’ decision-making procedures are headquarters driven and “Beijing hosts most of the headquarters of state-owned enterprises and China’s leading banks”.
“Also Beijing is the hub for African embassies and consular offices. In addition to commercial deals, there will also be deals between governments. So ideally we chose Beijing as our first destination here,” Zhu said.
Absa Group separated from Barclays completely last September when the British lender sold its remaining 7.4 per cent stake, or 63 million shares, exiting an investment it made in 2005.
