Tell us about the Africa Singapore Business Forum and the motivation behind it?
Enterprise Singapore (ESG) is the Singapore government agency championing enterprise development. In addition to supporting the capability building efforts of enterprises, ESG encourages Singapore companies to diversify their reach to new markets such as Africa.
We see good opportunities for African and Singapore companies to work together. Before COVID-19, Africa’s average annual GDP growth has consistently outpaced the global average and was expected to remain at least 6% until 2023. Africa is also home to seven of the world’s 10 fastest-growing economies.
But like all economies, Africa was impacted by COVID-19. However, strong agricultural growth and a faster than expected recovery in commodity prices cushioned the continent from the full force of the pandemic, with real GDP in Africa projected to grow by 3.4% in 2021 once pandemic-induced restrictions are relaxed and tourism resumes.
There have been other factors at play that have sparked excitement and interest amongst Singapore companies about doing business in Africa. The digital revolution that was well underway in Africa, sped up considerably during the pandemic. In addition, 2021 saw the successful launch the African Continental Free Trade Area (AfCFTA) which will unite the continent’s 54 countries and offer a single market, with reduced trade barriers. These factors coupled with Africa’s young population – more than a billion people below the age of 15 years presently – present immediate opportunities for Singapore companies.
African businesses are also known for their ingenuity, creativity and resilience. Singapore companies have learnt a lot from collaborating with African partners. Some of our companies have had the opportunity to pilot new technologies that would not be applicable in Singapore’s operating context when in Africa. For example, Singapore startupInfoCorp is working with a Kenyan partner to collateralise cows of smallholder dairy farmers through an identification and traceability platform. Farmers would be able to unlock the value of their assets and access loans based on the health of their cattle.
These are the motivations behind our efforts in encouraging Singapore companies to venture into Africa. To promote trade and investments between both countries, Enterprise Singaporeorganisesthe Africa Singapore Business Forum (ASBF) bi-annually. This year, we will be organising the sixth edition of ASBF from 23 to 24 August 2021, where we will bring business and government leaders from both Asia and Africa to explore partnerships and growth opportunities.
African businesses can look forward to meeting new partners from Singapore to expand the operations or business offerings in Africa and in Asia as well. Singapore is strategically located in the centre of Southeast Asia and provides excellent global connectivity to serve fast growing markets in the Asia Pacific region and beyond.
The key highlight for Day 1 (23 August 2021) is an in-depth conversation on the opportunities in Africa between Mr Tharman Shanmugaratnam, Singapore’s Senior Minister and Coordinating Minister for Social Policies and Dr Akinwumi A. Adesina, President, African Development Bank Group. On Day 2 (24 August 2021), Mr Alvin Tan, Singapore’s Minister of State for Trade &Industry and Community, Culture and Youth will be having a fireside chat on strengthening connectivity and supply chain resilience through diversification. There will also be expert panels on urban solutions, digital opportunities and manufacturing featuring industry leaders from on sectoral developments. Participants can also network over virtual business matching sessions.
Are there any specific sectors that Singapore is interested in within Africa or that you are looking to tap into?
Digital applications
Pre-COVID-19, digital applications were already increasing production efficiency and generating new income opportunities for millions of people in Africa. In the last fifteen years, the growth of digital technology, mainly driven by the mobile revolution and associated innovations, has been one of the bright spots for Africa’s development. More than 80 per cent of Africa’s population has a mobile phone subscription and digital economy is becoming a key driver of growth.
For example, through their mobile phones small-holder farmers can now make payments, aggregate supply, bypass intermediaries and deal directly with wholesalers, the same way in which they can price their crops and get information on the weather and other conditions.
Similarly, digital trade has led to Fintech services becoming a powerful lever for growth and financial inclusion by providing a range of services to people previously excluded from basic financial services. Singapore companies are interested in being part of the continent’s digital economy and we are already seeing Singapore companies forging partnerships in Healthtech, Edtech and Fintech in various African markets.
Manufacturing
AfCFTA: Exporting within Africa used to cost more than exporting overseas, and only 17 per cent of African exports are intra-continental compared with 59 per cent for Asia and 68 per cent for Europe. The AfCFTA, which came into effect in January 2021, has created the largest free trade area in the world, based on the over 50 African countries it unites under the pact, with a combined GDP value of USD$3 trillion. For Africans and businesses in Africa, the AfCFTA will connect 1.2 billion African consumers in a single market and support the movement of persons, labour, investments and intellectual property. The greater intra-Africa collaboration offers many opportunities in transport and digital connectivity to companies including those from Singapore.
With the AfCFTA, distribution networks will be enhanced and opportunities in manufacturing, consumer & lifestyle goods, transport and logistics and real estate are set to grow significantly. Companies for example can better source for materials, while localised planning will allow them to manage their local operations more effectively.The presence of AfCFTA can help to reduce non-tariff measures and encourage greater intra-Africa trade.
Manufacturers similarly are keen to set up plants in Africa to produce for the local market. By 2050, Africa will be the second largest region by population (2.2 billion), housing 22% of the world’s population. Domestic food production and packaging will have to grow to meet the continent’s population.
Demand for pharmaceutical and medical consumables is also expected to grow, in part accelerated by COVID-19. Africa currently imports more than 80% of its pharmaceutical and medical consumables, but many companies in Africa have already started to innovate and increase localised manufacturing capabilities in the area of sanitisers and generic drugs to help meet local demand. Such established local firms have been exploring partnerships with other firms and ESG has been working with them to match Singapore firms with relevant solutions that are able to address their needs, especially on the medical consumables front.
Looking back at the ASBF journey, what are the major accomplishments?
The Africa Singapore Business Forum aims to identify collaboration opportunities and update on trends in both Africa and Asia. The flagship event is a culmination of engagements and events that Enterprise Singapore organises for African and Singapore/Asian business communities to deepen business networks and strengthen ties. In addition to sharing insights through ASBF and webinars, our overseas centres also identify potential in-market partners and facilitate the necessary discussions.
Collectively these efforts have led to increased interest among Singapore companies for the region. This can be seen from the steadily growing number of projects facilitated by Enterprise Singapore in Africa over the last five years.In 2020 and early 2021, ESG organised a series of eight webinars that highlighted opportunities in Africa. Over 60% of the attendees were Singapore companies that have no presence there. This illustrates the growing interest among Singapore companies to diversify into new markets. Many are currently finetuning their market strategy and exploring options available to first entrants into Africa.
It is also evident in the trade growth. Trade between Singapore and Africa has been steady with CAGR growth of +7.6% over 5 years and Singapore is amongst the top 10 investors in Africa.
How has Singapore overcome the hurdles towards establishing a strong presence on the African continent?
The African continent continues to adopt pro-enterprise policies that drive enterprise and startup activity and investments. All these efforts complement Singapore’s efforts in supporting the market diversification strategies of Singapore companies.
Singapore and Africa have a network of Bilateral Investment Treaties, Avoidance of Double Taxation Agreements and Air Services Agreements. These agreements have encouraged greater trade flow between Africa and Singapore. There are 10 BITs between Singapore and African countries that are in force and/or signed. There are 13 DTAs between Singapore and African countries that are in force and/or signed.
In addition to ASBF, ESG provides Singapore companies with insights into Africa, emerging sectoral opportunities, tips on navigating the market and available schemes to support their internationalisation efforts. Our overseas centres in Kenya, Ghana, Dubai and South Africa identify potential in-market partners and facilitate the necessary discussions in the East, West, North and Southern Africa respectively.
Enterprise Singapore is excited to organise Africa Singapore Business Forum and other initiatives because Africa is a continent that is brimming with opportunities. Through collaboration and innovation, we can strengthen our resilience and drive global recovery together.