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23 April 2019
Africa Digest, Volume 2019-01

Africa Digest, Volume 2019-01

Bi-weekly summary report on the trends and issues in the macro-environment and industry to promote knowledge and raise understanding of business in Africa.

23 April 2019
African SEZs & GVCs in the age of automation

African SEZs & GVCs in the age of automation

Is the African dream of industrialisation via special economic zones (SEZs) hosting global value chains (GVCs) feasible? 

23 April 2019
Nigeria's business prospects, investment opportunities to grow in government's 2nd term

Nigeria's business prospects, investment opportunities to grow in government's 2nd term

Nigeria's President Muhammadu Buhari successfully secured a second term at the helm of Africa's largest economy. Despite the controversial circumstances surrounding the run-up to the February poll, this was a...

23 April 2019
Is Africa the next tourism growth frontier?

Is Africa the next tourism growth frontier?

Summary report of a panel discussion at the Africa CEO Forum, held in Kigali, Rwanda, on 25 and 26 March 2019.

12 April 2019
The Opportunity in Banking Consolidation in East Africa

The Opportunity in Banking Consolidation in East Africa

  The East African banking sector has made significant strides in the past several years. From an industry that was once blamed for its exclusion to now being praised for its...

22 March 2019
Belvie: Establishing a consumer goods business in West Africa

Belvie: Establishing a consumer goods business in West Africa

  BeIvie is a Niger-based non-alcoholic beverages manufacturing and bottling group founded in 2014. This case study looks at how, in a relatively short period, Belvie captured significant market share from...

22 March 2019
Trends and Events in Africa 2018

Trends and Events in Africa 2018

2018 has been an interesting year for Africa, with various events and trends becoming visible. 2016 saw the effects of the slowdown of China’s economic growth due to its rebalancing...

20 March 2019
Nigeria’s Opportunity to Enhance the CFTA

Nigeria’s Opportunity to Enhance the CFTA

  Synopsis: The Continental Free Trade Area negotiations should take the concerns of domestic stakeholders seriously, for its own sustainable development.

19 March 2019
Raising The Steaks: Africa’s booming meat industry

Raising The Steaks: Africa’s booming meat industry

  The rapid growth of meat consumption in Africa will provide attractive opportunities for investors, but making production more efficient, protecting the environment and improving the lot of smallholders, pose many...

05 October 2018
Cover story: Sudan: Lifeline for the banking sector

Cover story: Sudan: Lifeline for the banking sector

  Sudan, one of the largest countries in the heart of Africa, has been struggling to stay afloat economically since the US imposed crippling trade and investment sanctions in 1997. The...

04 October 2018
Involving youth in agriculture in Africa

Involving youth in agriculture in Africa

Africa’s youth bulge presents both an opportunity and a challenge. More must be done to involve youth in agriculture as a means of providing employment, say Johan Burger and MD...

27 September 2018
More Singapore firms venturing into “challenging” Africa

More Singapore firms venturing into “challenging” Africa

It is a “long-term” play, say experts, but there is potential in areas like services, infrastructure

27 September 2018
Manufacturing in Nigeria: Status, challenges and opportunities

Manufacturing in Nigeria: Status, challenges and opportunities

  According to the National Bureau of Statistics (NBS), the Nigerian manufacturing sector is dominated by the production of food, beverages and tobacco, with sugar and bread products generating the greatest...

24 September 2018
Africa Rising will Lift Singapore Boats Too

Africa Rising will Lift Singapore Boats Too

If there is one thing that the recent Africa Singapore Business Forum (ASBF) reminded me of, it is what a polarising prospect the continent remains.

07 September 2018
Unpacking South Korea’s engagement with Africa

Unpacking South Korea’s engagement with Africa

  Following the end of the Korean War in 1953, South Korea prioritised its alliance with the United States in pursuit of economic growth and military security. It took more than...

24 August 2018
Africa's a growth market, but it's a long-term play

Africa's a growth market, but it's a long-term play

    INVESTING in Africa is a long-term play, various experts have cautioned, even as one national strategist has identified the continent's digital economy as a brand-new growth area for Singapore.

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Africa is turning an important corner in its development path, embarking on what could be a decisive transformational journey in the direction of prosperity. Responding to a strong undercurrent of economic opportunity across Africa, Singapore has begun testing the waters as Europe, China and the United States double down on their endeavours. However, with 54 national markets of varying degrees of attractiveness and complexity entry into the Africa market requires patience, diligence and a highly customised local approach. Nevertheless, the verdict for many is that Africa will be one of the few regions globally presenting high double digit growth possibilities.

Singapore’s Growing Partnership with Africa

In 2015, cross-border M&A activity spiked to US$20 billion from only US$5 billion in 2014. Moreover, private equity investment grew by 51%, much of which was squarely focused on areas reinforcing long-term growth, such as telecommunications and financial services.

While the majority of foreign investment is originating from China and the West, Southeast Asian FDI into Sub-Saharan Africa is also on the rise. Investment reached US$18 billion in 2014, with Singapore emerging as a key player contributing over US$16 billion in FDI in 2013 and trade growth of 12 percent reaching around US$10 billion.

Singapore’s growing partnership with Africa may reflect a motivation to achieve greater diversification among trade and investment partners. With the highest trade to GDP ratio globally, Singapore’s disproportionate reliance on trade can exacerbate consequences during economic slowdowns among primary trading partners. Reducing this susceptibility is encouraging economic interaction with far corners of the world.

The recent surge with Latin America could be an indicator of the trade levels, investment and government engagement to be expected down the road in Africa.

At the strategic level, perhaps Africa and Latin America are not too distant cousins. Both regions present an opportunity to achieve greater economic diversification in regions characterized by an abundance of resources and emerging middle class. While on-the-ground dynamics can differ greatly, Singaporean companies will require a comparable budget and encounter similar entry barriers during the expansion process.

Downside: Lacking Robust Framework

Investment levels into Africa lag behind Latin America by about 15 years; however, activities attributed to accelerating economic ties with Latin America historically are being observed in nascent stages in the Africa context.

IE Singapore, the Singapore government agency promoting trade and overseas investments, has established country offices in 2013 in South Africa and Ghana. Similar to IE Singapore in Mexico and Brazil, these two Africa offices will be foundational in catalysing new investment activity.

In the case of Latin America, the Forum for East Asia-Latin America Cooperation was inaugurated under Prime Minister Goh Chok Tong in 1998 to establish a link between East Asia and Latin America. Several years later in 2004, IE Singapore established the ASEAN-Latin America cornerstone event, the Latin Asia Business Forum.

In the subsequent ten years, Singapore's bilateral trade with Latin America grew at a compound annual growth rate of 21.2%, reaching US$21.5 billion in 2013. During this period, Singapore also entered into free trade agreements with Panama, Peru, Chile and Costa Rica.

In comparison, there is a far less robust cooperation framework with Africa, but Singapore is beginning to move in a similar direction. Mirroring the successful Latin Asia Business Forum, IE Singapore also launched an Africa Singapore Business Forum in 2010 to help to connect and identify joint business opportunities.

Need to Leverage on Singapore’s Expertise

While Singapore has yet to enact free trade agreements with Africa, there have been bilateral investment treaties negotiated with Burkina Faso and the Ivory Coast, as well as an Air Services Agreement with Zimbabwe in 2014.

Singapore also shares developmental experience with African countries under the Singapore Cooperation Programme, recently signing a memorandum of understanding with Rwanda in 2015. Moreover, the Singapore Ambassador to the African Union recently suggested that Ethiopia and Singapore “should consider signing a cultural cooperation agreement”.

While Singapore does not match the level of scale as compared to the West or China, it does offer deep expertise that could address some of Africa’s most pressing challenges. World class capabilities in infrastructure, shipping, airports, energy, and water management, correlate with challenges in Africa responsible for severe economic bottlenecks.

According to IE Singapore, in 2013-2014 there were already more than 60 Singaporean companies operating in over 50 countries in Africa. Projects spanned a wide range of sectors from agri-business, food & beverage, and oil and gas, to eGovernment services, communications technology, and transport & logistics.

While Singapore’s engagement in Africa is not as familiar as the common narrative around Chinese, American and European investment, the growing interest and seriousness is promising.

Robert MacPherson is an adjunct researcher of the NTU-SBF Centre for African Studies at Nanyang Business School. The centre is a joint initiative of Nanyang Technological University and the Singapore Business Federation. He contributed this specially to RSIS Commentary.

NTU-SBF Centre for African Studies

 

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Singapore 639798

 

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