The signing of the Democratic Republic of Congo (DRC) – Zambia Memorandum of Understanding (MOU) has potential to create additional business for financial institutions with presence in both countries.
In April 2022, Zambia and DRC signed a Cooperation Agreement to manufacture electric batteries. This historical cooperation agreement is aimed at facilitating the development of value chains in electric battery and clean energy sector.
In part two of Financial Insight’s interview with Stanbic Zambia’s Managing Director Mwindwa Siakalima at the just ended Cape Town Mining Indaba 2022, this author discussed some of key highlights of why this deal was important for the Banking Sector.
The Opportunity in the MOU
With both countries possessing one of the largest stretches of boarder, compared to their respective neighbors, trade between DRC and Zambia is key, Mwindwa indicated.
Key issues the CEO picked out included the “Electric Motor Vehicle batteries side and renewable energy” as one aspect and “how do we add value to the raw materials as the two countries” as another.
The CEO was quick to point out that it was expected there would be other minerals from other countries beside DRC and Zambia, however it was important that both countries established their competitive and comparative advantages.
“The Minister of Commerce indicated that the two countries should not compete. Preservation of production capacity within countries should be encourage“. This is important as both countries will be expected to purse beneficiation in its mining sector.
Leveraging from the MOU
Spread over several African countries, the Standard Bank group enjoys favorable presence in the region. “The value that Stanbic would bring is that they are in both countries. If you have a company that is working off a component that is coming from Zambia into the DRC or vis-versa, the bank is able to facilitate trade quickly”.
The bank has been known to leverage off business linkages. “If there is something that we as a bank can do very well, is to facilitate any of these companies (large corporates, SMMEs) in terms of how they would trade across countries. When you have representation in both countries, the bank sees itself facilitating business linkages”. This will be something that undoubtedly will distinguish the bank from others.
