Changing geopolitical environment offers growth opportunities for businesses — Standard Bank

STANDARD Bank of South Africa, the parent company of Nigeria’s Stanbic IBTC Bank Plc, has called on African businesses to leverage the growth opportunities offered by the changing geopolitical realities triggered by Brexit and the trade tension between the United States and China.

The bank noted that beyond the growing division and unilateralism behind the US, China trade tension and Brexit, there is increasing shift towards integration and multilateralism in the developing world, which present opportunities for partnerships and growth.

“Every corporate and every country needs to be aware of changing geopolitical realities and the opportunities that these present for new partnerships and growth,” says Vinod Madhavan, Head of Trade at Standard Bank, in a presentation entitled, “Technology steadily deepening international trade as global multilateral leadership shifts East”. He noted, “the United States–China trade war has already seen China, the world’s largest consumer of soya beans, halt imports from the United States. This presented a huge opportunity for countries like South Africa. While Australia, in the end, was the main beneficiary of this shift, other opportunities are likely to arise for Africa. Similar opportunities are also likely to emerge with both the United Kingdom and the European Union following Brexit. African businesses and governments would do well to begin positioning themselves to leverage these opportunities.”

Citing the opportunities offered by emerging market credit stress, he said: “This is especially so for financial services organizations to be able to help corporates distribute risk across both their own balance sheets while also broadening distribution to other development and trade finance institutions. Standard Bank for example, uses its South African balance sheet as credit risk intermediary for trade across the continent. Beyond its balance sheet the bank is also able to broaden distribution by working with multilaterals such as the African Export-Import Bank, African Development Bank or the International Finance Corporation.

“Emerging market credit stress also presents an opportunity to re-configure lending and risk distribution relationships within the developing world. The signing of the African Continental Free Trade Area, AfCFTA, agreement increases the opportunity for the continent to significantly increase intra-African lending and risk distribution. Botswana’s recently announced $600 million Zimbabwe loan provides an example of how, post-AfCFTA, local African markets will more likely be even better positioned to understand and manage African debt and risk. “When one overlays these developments with technology, even more of what we currently consider risks could, in fact, become opportunities.”