Nanyang Technological University’s Centre for African Studies is encouraging reluctant businesses to seek African opportunities.
Underfunded and understaffed, Africa’s crumbling universities have long struggled to nurture the ambitions of their most talented students. But as the continent increasingly forges strong geopolitical ties with Asia, the previously neglected academic community is experiencing unprecedented opportunity.
China’s decision to offer an estimated 30,000 scholarships a year to African students is the most visible sign that Asian partnerships view bright students as a useful tool in developing business and political alliances. The opening of the Centre for African Studies at Nanyang Technological University (NTU) in 2014 was Singapore’s more modest attempt to build academic ties.
“When you talk to the people of Singapore about Africa you get the impression that they’re going to see a dentist. They’re missing out on opportunities,” says the Centre’s South African director, Johan Burger. “My mandate is bringing Africa into Southeast Asia, especially Singapore, and taking Singapore into Africa.”
This business-first approach is built into the DNA of the Centre, a partnership between NTU, the Singapore Business Federation and five major Singaporean corporate donors. Burger says that one of its key roles will be harnessing the successful experiences of these large donors, among them Wilmar and Olam, in a bid to redress Singaporean misconceptions about Africa.
“The founding donors have been around in so many places in Africa – they understand it, but the general public don’t,” he explains. “You have SMEs looking for opportunities and they don’t understand Africa so they hesitate to grasp the opportunities that it presents. Africa’s challenges are opportunities for Singapore. When you look at electricity, water, these are problems for anyone outside looking in.”
In a bid to redress the balance, the Centre has teamed up with Nairobi’s Strathmore University and Lagos Business School to initiate an exchange of experiences and information among business people from both regions. Burger says that the Centre will minimise its output of academic articles “read only by a researcher and their mother” in favour of building practical business-to-business ties.
Shifting the focus
Yet there is much work to be done in persuading businesses that Africa offers more promising terrain than the Association of Southeast Asian Nations (ASEAN), the booming region on Singapore’s doorstep. According to McKinsey, the 10 countries of ASEAN together will rank as the world’s fourth largest economy by 2050, while the region’s consuming class – those able to make significant discretionary purchases – could double to 125m by 2025. Furthermore, ASEAN’s geographical proximity makes local expansion far more convenient than a move to occasionally unstable markets almost 7,000km away.
“The primary focus of this part of the world is in ASEAN and China – the risk is lower, and let’s face it, the returns are higher. It’s on the doorstep, so it takes some doing to get guys here convinced that Africa is the best place to be,” says Burger.
Unfortunately for Singapore, few of the city-state’s Asian counterparts are quite so laid back. In May, President Park Geun-hye of South Korea led a business and government delegation to Africa, visiting Ethiopia, Kenya and Uganda and signing deals on health, the environment, aviation, security and double taxation avoidance. By contrast, the fruits of Singapore’s bilateral labours have amounted to a handful of investment treaties and double taxation agreements in Africa, despite an increase in visits dating back to 2009. Trade between the regions continues to lag. There is a distinct feeling that Singapore out to be doing more to build bridges.
“In the long term it’s crucial that they do, because at some stage the market in Asia will be more mature and will slow down, and at that stage, whoever’s first in Africa will benefit. If Singapore doesn’t wake up, they might find that in 10 years that opportunity has been taken up, and that loyalty has been attached to Indian or Chinese companies,” says Burger.
For Burger, the answer lies in aggressively promoting Singapore’s USP – its state-controlled metamorphosis from a relatively undeveloped trading port to a global financial hub. At the heart of this model is the strong performance of efficient state-owned enterprises, some now privatised, in everything from house building to city planning and sanitation. Burger says that Singapore’s expertise in these areas will prove attractive to African governments plotting their own transformations.
“The government efficient is striking, Africa is not used to this kind of thing. Africans fly over Singapore to China to learn from its state-owned enterprises, and a number of these are failing. They could have saved themselves half the airfare, stopped here and learned from the best in the trade. When you look at how well run the SOEs are – that’s the opportunity that exists.”
Yet this state-run development model also has its drawbacks. Companies under government control have often lagged behind private-led peers when seeking out foreign opportunities. Waiting for government to give the go-ahead for commercial expansion can be an invitation to risk-averse ennui. For Burger, the Singaporean government will have to provide greater policy leadership if successful state-owned enterprises – and indeed private sector operators – are to go forth and claim African business.
“Unless government formally says Africa is the new target, you won’t get that kind of mood. In a certain sense the ministers need to say, ‘we’re going in.’ Until government gives unequivocal directions, not a lot will happen.”
The government could start by increasing its diplomatic presence on the continent. Singapore currently only has a permanent ambassadorial presence in Egypt and South Africa, while nations as significant as Nigeria and Kenya are only served by non-resident ambassadors. That, says Burger, could be a vital first step in a complete overhaul of political and trading relationships.
“I hope that the maturation of the ASEAN environment will get Singapore to realise at some stage that there’s so much business in Africa that they cannot afford not to be there. Whether it will happen depends on the political direction the country will give to the business community. More visits, a permanent political or diplomatic presence, these are clear signs to locals – guys, here’s Africa, let’s go.”
This article was first published in African Business magazine, August 2016 issue. Copyright IC Publications 2016. Published under permission by IC Publications www.africanbusinessmagazine.com.
Published:4 October 2016