A Concrete Step towards the Pan-Africa Cooperation between Societe Generale and Absa
On 24 May 2019, Societe Generale and Absa Group co-hosted the very first client seminar in Beijing as a concrete development after the signing of Memorandum of Understanding (MOU) in January 2019.
Under the theme of "Navigating Africa: A Unique Pan-African Offering", more than 80 corporate clients from China state-owned enterprises as well as large private-owned enterprises attended the event. The seminar was designed to create a platform to inform and exchange with clients on topics close to their hearts like business environment, investment and trade trends in the African continent.
In his opening speech, Pierre-Yves Bonnet, Group Country Head and Chairman for Societe Generale in China made ambitions to accompany our clients in their development journey in Africa clear:
"Thirty-Seven African countries and the African Union Commission have signed the BRI cooperation agreement with China, outnumbering the Asian countries that did so last year. With its long presence in Africa, Societe Generale is pleased to offer corporate clients a wider range of banking offerings under the commercial agreement with Absa to address increasingly sophisticated banking needs of Chinese companies."
Yann De Nanteuil, Deputy Head of the Africa region at Societe Generale added:
"Societe Generale is delighted with the success of this first event with Absa dedicated to Chinese corporates. By leveraging our Group's expertise in providing a wide range of banking solutions in Africa including corporate and investment solutions, we are convinced this joint offering will allow us to better service Chinese corporate clients in expanding their business across the African continent."
During the seminar, senior management, financial experts and economists from both Societe Generale and Absa gave views on the opportunities and challenges faced by Chinese corporates in their business development in Africa. In the economic outlook sharing sessions presented by Clement Gillet, Senior economist for Africa in Societe Generale and Jeff Gabel, Head of research in Absa, they both addressed the long-term positive trends and the continuous business dynamics in Africa in terms of real GDP growth - more than 30% of the African countries have been seeing real GDP growth above 5% since 2016.
Opportunities and challenges for Chinese companies in Africa
Representatives from Societe Generale and Absa also highlighted that substantial business opportunities foreseen in the infrastructure, power and energy industries where there are huge needs and in which Chinese investors are interested in the huge African continent. However, there are also political, economic and environmental implications to be noticed when making a business decision. This is why more and more corporates started to consider direct investment or choose the Public Private Partnership (PPP) model to rationalize the risk responsibility instead of choosing the Engineering Procurement Construction (EPC) model in which the risk has to be borne by the contractor.
How to adapt to the specific African market?
With China becoming the largest trading partner of Africa, the total trade amount in the continent reached around 120 billion Euros. Throughout the economy, the small and medium enterprises (SMEs) account for 80% of the total amount, which play a vital role in the entire trade. That said, SMEs still face many trade financing problems because of their low solvency and credit levels. Representatives from both banks shared views on the gaps in trade financing sector especially in some emerging fields of those SMEs, which shows SMEs need trade financing support even more than those multinational companies. And they need more customized, specific and innovative solutions to better respond to local market changes.
Through the MOU and with the objective to help Chinese clients in their development in Africa, Societe Generale and Absa aim to provide a unique, truly pan-African wholesale banking offering, leveraging both banks' geographical complementarity and diverse wholesale banking offerings such as export finance, infrastructure financing advisory and capabilities on trade and cash management solutions as well as expertise on cross-border business risk management.