Chinese Companies and Financial Institutions are making remarkable contributions to fostering sustainable and eco-friendly economic growth in the Middle East & Africa, said Standard Chartered Executives.
“We see an increasing level of awareness of sustainability and green development across the board in our region, and I would say that Chinese companies are playing a pivotal role in developing that,” said Sarmad Lone, regional co-head of global banking in Africa and the Middle East at Standard Chartered, on the sidelines of a recent meeting with Chinese financial institutions and companies in Beijing.
As mandated lead arranger for the financing of a $4.3 billion, 950 megawatt hybrid concentrated solar power and photovoltaic power plant in Dubai, Standard Chartered joined hands with a consortium of seven other Chinese and regional lenders, such as Industrial and Commercial Bank of China Limited, the largest State-owned commercial lender by assets in China.
Participants in the project include ACWA Power, a Saudi Arabian developer and operator of power generation and water desalination plants, the EPC (engineering, procurement and construction) contractor Shanghai Electric Group Co Ltd, and the Spanish renewable energy company Abengoa.
They collaborated closely to create a high-quality project that meets environmental, social and sustainable development standards
Supporting the Dubai Clean Energy Strategy that aims to provide 25 percent of Dubai’s energy from clean energy sources by 2030 and 75 percent by 2050, the project will deliver clean energy to 320,000 residences and will reduce carbon emissions by 1.6 million metric tons a year.
Similarly, an independent water and power project in Bahrain has attracted a range of global investors and the Chinese contractor SEPCOIII Electric Power Construction Co Ltd.
Standard Chartered is the mandated lead arranger and documentation bank to a consortium to finance the project, which entails the development, financing, construction, operation and maintenance of a 1,500-MW power plant and seawater reverse osmosis desalination plant with a production capacity of 50 million imperial gallons per day.
The project is of great significance for promoting local economic growth and improving people’s livelihoods.
In June, China’s Silk Road Fund, a State-owned investment fund established to facilitate the Belt & Road Initiative, signed an agreement to purchase a 49-percent stake in ACWA Power Renewable Energy Holding Ltd. This renewable energy platform of ACWA Power has a massive pipeline of renewable energy projects across the region.
The BRI, together with China’s rising middle-income group, joint ventures and new infrastructure projects, are expected to be key drivers of bilateral trade and investment between China and the United Arab Emirates, said Hamad Buamim, president and CEO of the Dubai Chamber of Commerce and Industry, in an interview with China Daily earlier this year.
Bilateral trade between the two countries is estimated to reach $70 billion by 2020, up from $45.92 billion in 2018
Since the BRI started, Standard Chartered has increased its partnerships with Chinese banks and companies to drive the initiative.
“As a bank, we believe in responsible business. We focus on environmentally sustainable principles and ensure that our partners also do the same … Our partnership is beyond just transactions. It also includes shared values and principles of banking,” said Bola Adesola, Senior Vice Chairman for Africa at Standard Chartered.
With outlets in 47 BRI markets, the bank has operated in 26 of them for more than 100 years. It has set up China Desks providing 24/7 Mandarin language banking services in up to 20 BRI economies to support the business expansion of Chinese companies.
The BRI has created huge opportunities for countries in the Middle East and Africa. Most of the airports in Africa have been renovated – in some cases, built afresh or expanded – by Chinese companies.
“It used to take more than 2.5 hours to get from the airport to the city centre of Kampala, the capital of Uganda, until China Communications Construction Company built an expressway from the airport to the city centre, which has cut the commuting time down to 30 minutes,” said Tejinder Singh, Regional Head of Global Subsidiaries in Africa at Standard Chartered.
In Kenya, it was difficult to travel from Nairobi to the coastal city of Mombasa. Therefore, a lot of tourism was focused on overseas tourists coming into the country as opposed to domestic tourists. With the completion of a 457-km standard-gauge railway, of which the prime contractor was China Road and Bridge Corporation, one can now go from Nairobi to Mombasa in 4.5 hours.
Standard Chartered offered the project participants a range of solutions including the issuance of performance guarantees, collection and payment solutions, and digital banking platforms.
“A lot of domestic Kenyans are now travelling to the coast, which has also provided a huge lift to the economy of that particular coastal region. Today, hotels are full and we are seeing a lot more infrastructure development taking place along the coast, thanks to the communication links and affordable travel having been enabled,” Singh said.
Despite the risks of investing in emerging markets, such as the risks associated with policy, geopolitics and foreign exchange, Standard Chartered still encourages its clients to take a long-term view in the countries where they operate.
“What we do is, we partner with the clients end-to-end once they enter a market – from contract negotiations all the way to repatriation of investments. We help them identify and mitigate the risks, and clarify rules and policies that apply to the business for them,” said Adesola.
“We found that Chinese companies do not just come in and go out. When they come into a country and are involved in a project, they are there for the long term. The longer they are in that type of situation, the more they benefit the community and uplift livelihoods in those countries.”