Bank of China to open office in Kenya, eyes regional deals
Kenya’s central bank said on Tuesday it had granted the Bank of China approval to open a representative office in the country, signalling tightening trade ties between the two countries. File
Kenya’s central bank said on Tuesday it had granted the Bank of China approval to open a representative office in the county, signalling tightening trade ties between the two countries.
The Kenyan office, the third in Africa after South Africa and Zambia, will serve the wider East Africa and expected to serve the growing number of Chinese companies flocking to the region, drawn in mainly by infrastructure and mining projects.
“Through the Representative Office in Kenya, Bank of China Ltd seeks to explore potential business opportunities in the country with a view to evaluating the prospects of a long-term presence in Kenya and the wider East African region,” the Central Bank of Kenya (CBK) said in a statement.
Under the Kenyan law, representative offices can only engage in marketing and liaison roles in connection with the activities of its parent bank and affiliates, and are not permitted to engage in banking business as defined by the local Banking Act.
“BOC’s Representative Office will market the products and services of Bank of China Ltd to existing and prospective customers in Kenya and the East African region, conduct market research and act as a liaison between the Bank of China Limited’s head office and its customers,” the Central Bank said.
The bank is the fifth foreign bank to seek to establish a local representative office after Hong Kong and Shanghai Banking Corporation (HSBC), Indian based HDFC bank, and South African based Nedbank and First Rand Bank. Rwanda’s Bank of Kigali has also indicated it would be opening a representative office in Kenya before the end of the year.
The entry of Chinese and Indian banks into the Kenyan market reflects the growing economic influence of the two countries in the country, with government estimates showing trade between Kenya and the two countries had more than tripled since 2007.
In 2011, imports from India stood at Ksh148billion ($1.78 billion), while those from China stood at Ksh144billion ($1.71billion), up from Ksh56billion ($666 million) and Ksh45billion($535million) respectively in 2007. Exports to the two countries has however remained low, with Kenya exporting goods worth Ksh3.8billion($45.2million) and Ksh9.8billion($116million) to China and Indian respectively in 2011.
Indian and Chinese firms including Airtel, Foton, CCTV and Xinhua are increasingly setting up shop in the country are using it as a launch pad into the wider African market.
Kenya has over the last ten years deepened trade with the Asian giants as it tries to reduce economic dependence on its traditional partners, mainly the UK and the EU. Over the last five years, China has in particular emerged as major partner in the development of the country’s road infrastructure. China is also assisting Kenya in developing its geothermal power.
