October 29th, 2011 | China Daily CDB to issue another $1b loan package to African firms
State-owned China Development Bank (CDB) will provide another special purpose loan worth $1 billion over the next two years to support small and medium-sized enterprises (SMEs) in African countries, an official with the bank said on Thursday.
The loan is a continuation of the measures established by China during the Forum on China-Africa Cooperation in 2009, when the first special purpose loan, also worth $1 billion, was approved as part of an aid basket aimed at supporting Africa’s economic development.
“The special purpose loan is aimed at broadening the financing channel of African SMEs, vitalizing local economies, adding employment and promoting export,” said Liu Hao, deputy head of CDB’s international cooperation bureau.
He made the comment at the 1st Meeting of the China-Africa Think Tanks Forum, which was sponsored by CDB, in Hangzhou, Zhejiang province.
“The second loan will further improve Africa’s industrial structure and enhance local enterprises’ access to foreign currency exchange,” Liu said.
As of the end of September this year, the first loan has provided contributions totaling $632 million to 24 projects in 25 countries across Africa.
The special purpose loan, which mainly went to the agriculture and manufacturing sectors, has created 6,000 jobs and $288 million in export volume for Africa, according to CDB.
In Ethiopia, the bank helped create 500 jobs in one of Africa’s most under-developed economies by extending credit to China-Africa Overseas Leather Products Shave Co.
The loan also supported the lighting company Wonder Light Egypt Co in Egypt, which has an annual capacity of 1.5 million fluorescent tubes and employs 216 workers.
The loans are extended through both direct-lending and local financial institutions.
Each direct-lending loan is worth more than $1 million and has a maturity of less than five years.
CDB is the world’s biggest development lender with more than $920 billion in assets.
The bank, which first began its Africa operations in 2005, has issued $7 billion in loans in the region as of the end of the third quarter this year. Liu said the figure will hit $10 billion by the end of this year.
In addition to extending credit, the bank has also been active in equity investment in Africa.
In 2007, CDB established the China-Africa Development Fund, the first Chinese equity investment fund to focus on equity investments in African industries, including agriculture, manufacturing, infrastructure and resources.
The bank said in 2007 that the fund will eventually reach a size of $5 billion. The fund is one of the eight measures announced by President Hu Jintao at the Beijing Summit of the Forum on China-Africa Cooperation in November 2006.
By Gao Changxin