‘Our goal is to leverage experience to aid trade flows between Nigeria, partners’

Carmen Ling is the Managing Director, Global Head of RMB Internationalisation/Belt and Road for Corporate and Institutional Banking, Standard Chartered Bank. In this interview with Kingsley Jeremiah, she speaks on the importance of leveraging trade flows between Nigeria and other countries. Excerpts:

What is the One Belt, One Road initiative all about?
I will call it a global development strategy that is led by China and announced by the Chinese government in 2013. It is a global inclusive initiative to drive growth in a more sustainable way and it has expanded to more than 65 markets.  For Africa, it initially covered only east Africa because of the maritime route but over time it has included the whole of Africa and also some parts of Latin America as well. So I will call it a global development strategy aiming to be inclusive and to drive sustainable growth for the world economy. I think the belt and roads initiative has five themes; one is for infrastructure to be able to connect goods and people. The second is policy, because even though we build the infrastructure and we have a policy that limits trade, there is a challenge. The third is trade, designed to ensure that people trade on a fair basis. The fourth is people, and finally, financial connectivity, to drive funding to pull through all the initiatives.

What does this mean for Africa and especially Nigeria?
I think we are seeing first of all a lot of infrastructure investment in the infrastructure of Africa. As I said, the first phase started with East Africa because of the geographical location, but over time it has expanded into the whole of Africa. So infrastructural investment is definitely the first gain, and in terms of infrastructure, I think the first thing is to build roads and power; so transport and energy would be the first sector because without roads, without railway, without ports, I can’t reach you and the next thing is energy, you need electricity to create more commercial activities.

In this new phase of the program, are there opportunities for international investors?
Of course, that is why I keep saying that it is a global initiative and it is very inclusive. Eventually, if you have the roads and the electricity, it does not only can attract the Chinese investors but you can have other international investors that will come to the market. I was in Europe and I was asked by many of our European clients about the countries that have the most infrastructure projects so that this can become a new market for them to come or a new production place for them to set up their manufacturing plants. Similarly, I think some of the corporates in countries like Europe, US, are participating, joining in some of these projects; so it is not just about Chinese companies. So it is not as if it is a single China- driven initiative, but as we move on, it gets more and more global. And on financing as well, if you solely rely on the development bank from China, you won’t be able to drive the project, because the investment is so massive, so Standard Chattered also plays a role to bring in private sector capital into this investment as well.

Can you talk us through some of the projects that you have commenced or finished in Africa/Nigeria under this initiative?
We have been involved in quite few of these projects here in Nigeria, such as the road projects. We are involved in some of these projects, but not necessarily purely financing. Some of these projects we are involved in here in Nigeria include the Lekki road projects that the Chinese are involved in.
  
For some of the projects, the first phase will be in East Africa, because like I said the first phase started with East Africa, and then we are seeing more Chinese investors coming into West Africa only in the most recent years. I think a lot of the projects that the bank is involved in is not just about the financing, but we also involved in the initial stages where we do the big bond issuance, so as it moves on to become a project, we also help them look at financing and options on how to finance the projects. Subsequently, as the client moves on to start the projects, they also need basic banking services, advise on collections and repatriation of money, so those are also how we get involved with supporting our clients and then eventually when the clients get into the multiple market we also help with overseeing some of these accounts.

How would you access impact of this project so far?
I think we are seeing the trade flow; the trade flow between China and Africa is increasing, we can give you the number of growth. We also see the number of Chinese investments coming into Africa increasing and I think one of the signature project in Africa is the Nairobi Mumbasa rail. It started to operate this year and then we were seeing more other types of projects and investments will come along once you have the roads being built and operated. We don’t have specific numbers for Nigeria but when you look at the growth of trade in Africa, the number that I saw earlier was 52% increase over the last three to four years. It means that technically looking from a year-on-year basis, there has been a 52% increase in trade which is significant.

Are you planning more projects in the country?
For the bank, we are definitely getting involved in more and more projects in Nigeria. Like I said earlier it is also important that we don’t just get involved in the projects but we also want to facilitate the flow of international trade between Africa, Nigeria and other parts of the world, including China. This is needed because we need the trade flow to happen.

In the past year, China and Nigeria have reached preferential financing agreements to support five new large projects, can you speak to these projects and how the Standard Chartered Bank comes into all of these?
We may not be able to disclose what our involvements are because this is a commercial involvement but I think we are very involved because if you look around, not too many banks that these investors can look to when they want to find investment partners. The uniqueness of Standard Chartered is that we have that connectivity. In China, we have 160 years of history and we are one of the top foreign banks there and also in Nigeria; you don’t have many banks that you can find that have that kind of connectivity. So that is why when a client wants to go to Africa or Nigeria, they can leverage the relationship in China and then use us as banking partner and follow the same advisory for them in Nigeria because if they go to a new market to operate they need to understand the local regulations. Hence, they need to find someone with deep presence there that can provide them with the solutions and advisory, as well as having a close relationship with the head office.
We are an international bank, and we have operated for over 160 years; we maintain very high international standards in terms of social governance by making sure that these standards are also built in projects that we love, I think that is the role that standard chartered bank play.

So it is about financing?
Not just financing, there is advisory and also some very basic banking products, like cash management, like trade. A lot of the clients tell us it is about the depth of our knowledge and understanding of those markets and not just the presence in those markets. In-depth knowledge of those markets is key especially for the emerging market where regulations are sometimes changing, and because of the number of years we have been there, the relationship we have helps us to understand and we help the clients understand as well.

As much as the OBOR initiative has been lauded, China has also been accused of using this strategy to expand its influence and develop international clout. Is this a concern?
I guess that is what we see in the sustainable development of the initiative. We don’t participate in every single project because we do have a very high standard of screening these projects. We have been inexistence for 160 years and we have such a long history, we make sure that the projects we get involved in are sustainable and will provide sustainable benefits for the local economy and for the local communities. If we don’t, it is going to hurt us because we have a big franchise, and we also want Nigeria to develop because we also have franchise here. So, we facilitate and allow the project to happen. Before our participation, we have very stringent criteria to look at the projects and make sure that they are meeting our very high standards in terms of environment, in terms of social risks and we do decline projects that do not meet up that requirement.

What is really the interest of the bank in all of these?
We operate in this market not for any other reason, but for the opportunity for us and also an opportunity to meet our clients’ needs. It is also helping us expand our franchise. We didn’t start in 2013; we don’t just have the Chinese clients, there are Japanese, Korean and French clients. So the key thing for us is to ensure that it the project is environmentally friendly, with social gadgets in place and feasible for us to get across.
 
Can you speak to the fact that the bank just in 2017 has been involved in more 50 projects worth over $10 billion across a range of products and services?
Yes, half of the 50 projects that we have done, is from Africa actually. As we mentioned at the beginning, it is not as if we finance all the projects, there are a lot of projects in which we are involved. Across the globe, over 50 of our transactions is in Africa. I can’t remember the number in Nigeria, but Nigeria is actually amongst the countries that we are supporting for projects like this. Again we support projects from the outset, all the way to the end, and when they have projects in multiple countries, we help them to monitor the cash flows across the multiple countries. For 2018, we already finished 50 projects across the globe, or if I remember correctly it’s actually 50 percent for Africa, but I can’t remember the exact projects in Nigeria specifically. And the reason is also because of our foot print. We are connected to other international banks, our foot print is deep and then we become a very reliable partner for the investors who come to this part of the world.

Are there other projects that you are discussing?
Yes, many of them will be in infrastructure like oil refinery, in roads, in hydro, in ports as well for Nigeria. We are already in the process and it is being discussed with the customers.