Bank develops links between African buyers, Chinese suppliers

The South African company Prosep Chemicals, a water treatment supplier in Boksburg, lost about $14,000 in 2018 to some bogus manufacturers, who pretended to be based in Taiwan and had capacity to supply some goods.

This incident could be a thing of the past with the launch of Standard Bank's Africa China Agent Proposition initiative in Johannesburg, South Africa, over the weekend. The initiative will enable African enterprises to validate the quality of goods, safely and efficiently, from the most competitive suppliers in China before initiating full payment.

The initiative was previously launched in Nigeria on May 21 and three days later in Ghana.

Manessah Alagbaoso, the head of Africa China Integration at the Standard Bank, said that the move would revolutionize trade between China and Africa. It will leverage the capacity of Standard Bank. Alagbaoso said Zhejiang International Trading Supply Chain Co. Ltd has been nominated as the first Chinese trade agent.

"The initiative eliminates obstacles such as the lack of trust where importers are required to make advance payment before goods are manufactured, thereby putting pressure on the balance sheet of some African companies. The move has eliminated the risk of fraud whatsoever," said Alagbaoso.

African buyers can now deposit 20 percent of the total purchase price then clear within 90 days after receiving the goods. In the unlikely event where goods delivered are substandard or not as ordered, the agent will be liable. The initiative also removes language and cultural barriers.

Alagbaoso said, "The response has been excellent. In Nigeria and Ghana we have received an average of 100 clients in each country following the launch. We have also received an order from Lesotho where we have not launched it. This initiative is a game changer."

Steve Evans, the CEO of Prosep Chemicals, said last year he had participated in the pilot project, visited China in December and was impressed with the initiative. Two months ago he started using the initiative. Evans said he has received his consignment and sold the goods. He pointed out that the risk has been removed, as he can sell goods before paying for them.

Ralph Deng, general manager of Zhejiang International Trading Supply Chain, said they are proud to facilitate trade between African companies and their Chinese counterparts. He said they have vetted the manufacturers they connect with buyers from African countries. An order placed attracts a 5 percent charge if it is up to $3,333 and 3 percent when it's above that figure.

Alagbaoso stated that research has shown the charges are far less than what African enterprises would normally pay when going on their own. He stated that they would launch the initiative in July in Kenya followed by other African countries.