Why StanbicIBTC is staking $15m in Nigeria’s cocoa business, by Polkinghorne

source: guardiannewspaper.com

THE Standard Bank has said the $15-million cocoa financing deal by Stanbic IBTC in Nigeria was inspired by the desire to boost the efforts of government to diversify its oil dependent economy.

The bank, on November 26, announced the completion of a $15-million Cocoa Financing for Agro Traders Limited (ATL), to fund procurement of cocoa beans for exportation to Europe in the 2009/2010 harvest.

Speaking with the News Agency of Nigeria in Johannesburg, yesterday, Mr Craig Polkinghorne, Global Head and Director, Structured Trade and Commodity Finance of Standard Bank, said the bank was not deterred by the volatility of the Nigerian market.

He said that Nigeria’s economy, which had good prospects in the long term, would be placed on a better footing if its diversification was fruitful.

Polkinghorne said Standard Bank was supporting the agricultural sector in Africa and was building on its success story in Ghana.

“Our success in Ghana is being applied to Nigeria. Agriculture is one of the sectors we support and Nigeria has efforts to build on its oil revenue,” Polkinghorne said.

He said the bank was also looking into Nigeria’s mining sector and was holding talks with government functionaries on ways to support development in the sector.

“We have good linkage with the Industrial and Commercial Bank of China (ICBC) and they are interested in mining in Africa,” Polinghorne said, explaining that there were plans to see how Nigeria could benefit from this.

ICBC, the world’s largest bank by market value, has 20 per cent shares in Standard Bank.

He said though the financial crisis had indirect effect on its banking operations, it was weathering the storm in Nigeria due to effective management of its operations.

“We manage our Nigerian banks as we manage all we do in Africa and think there has been some volatility in the markets, but we think we are well capitalised,” he said.

Polkinghorne said its operations had done reasonably well in Africa this year in spite of the global financial crisis and it was not thinking of shedding staff weight, but desired to grow them.

The bank, had last week, said its $15 million deal was “the first structured trade finance transaction originated and closed by Stanbic IBTC”.

It said that the development was another fruit of the Standard Bank group’s trade expansion across Africa in which it had set up a new structured trade Finance unit in its Nigerian Bank.

ATL, beneficiary in the deal, is based in Akure and reputed to be one of the largest cocoa exporters in the country.

It is estimated to handle over 15 per cent of the country’s cocoa output yearly.

The bank said DRUM Resources Nigeria Limited, a subsidiary of DRUM Resources UK, will act as collateral manager to the transaction.