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Vol 1 (AAC) No 9

Published 1st July 2008

Competing to finance Africa

The slow motion revolution sweeping across China as the state-owned banks assert their independence from Beijing's directives will mean a much wider range of financing available to Africa. Commercial rivalries and diminishing coordination may make it harder to work with the banks, which remain at the core of China's Africa strategy.

China Exim Bank and Sinosure are together expected to become the world's largest export credit agencies by 2010, according to the Export-Import Bank of the United States, just two decades after Beijing was able to boast just a handful of state-owned policy banks that bled the state coffers dry due to non-performing loan rates of more than 60%. But the pace of financial sector reform, prompted in the mid-1990s by China's ambitions to join the World Trade Organisation and rapid export-led growth, has also generated new competition. Sinosure, established in 2001 as an export credit insurance agency to streamline China Exim Bank, set up seven years earlier, has expanded rapidly and the functions of both institutions now increasingly overlap.

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