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

A Singapore tech start-up that makes it easier for businesses to set up online marketplaces is aiming to help farmers in the Cross River State in Nigeria sell their cocoa beans and products domestically and to the world.

Arcadier, as the firm is called, is quick to acknowledge that this ambitious project will be challenging.

“We are working with the government and it takes time,” co-founder Kenneth Low told the The Straits Times, citing issues the local authorities have to consider, like creating cooperatives, accreditation for farmers, and looking into how the supply chain moves.

More Singapore businesses like Arcadier have ventured into Africa over the years, with experts warning that it is “long-term play”.

The number of Singapore companies doing business on the continent has almost doubled since 2010, with 60 operating in more than 40 countries, said Enterprise Singapore. This is similar to reported numbers in 2016, despite Africa’s e-commerce market being projected to be worth US$75million (S$102 billion) by 2025, with opportunities in other areas ranging from manufacturing to construction to retail.

The director of the NTU-SBF Centre for Africa Studies at Nanyang Technological University, Mr Johan Burger, said the number of Singapore firms may not have increased faster given the distances, a lack of infrastructure and an insufficient understanding of Africa.

“Asean’s 600 million or so people are on Singapore‘s doorstep… The proximity and knowledge that companies enjoy create a greater sense of comfort for them to move into regional markets,” he said. “Africa is far its risks are less known and people here may not be familiar with the different countries”

Some, like conglomerate Tolaram Group, however, have seen success by doing homework on each area before moving in, he added. Such success stories such spur others to take the first step.

Over 30 years ago, Tolaram brought instant noodles –Indomie- to Nigeria. About 20 years ago, each person in Nigeria consumed around one pack of Indomie a year. Today, it is 20 packets per person a year,” said Tolaram Group’s managing director for Africa Haresh Aswani.

“We created an eating habit, as no one there had noodles in those days. It took us almost 12 years to create a market for noodles commercially.”

The firm has not stopped there. It has expanded its joint venture with American food manufacturing firm Kellogg’s and plans to manufacture and distribute Kellogg’s noodles to countries like Kenya as well.

Mr Burger said: “That is how we should be approaching Africa, not just looking at this monolithic giant and saying: “We’re not going there; it’s too big, too dangerous.””

He added that constraints seen in agriculture, manufacturing and infrastructure, among other areas, are also investment opportunities.

Some of this has to do with the continent’s growth trends. Africa’s population is set to 4.8 billion in 2100, and it is seeing urbanization, with an expanding middle class.

Mr Aswani predicts rapid growth in packed products in households, especially in food and beverages. There will also be growth in the infrastructure, energy, and service sectors.

Mr Collin Wee, director for international business at construction firm Well & Able Holdings, said acceptance of new technology takes time and education. This was the case for its prefabricated building techniques. It ventured into Mauritius to build the island’s first mega-mall after a decade ago and has since moved to Uganda and South Africa, in line with demand and acceptance of its speedier building methods.

“Africa is a growing department for Well & Able,” said Mr Wee, who foresees it making up 18 per cent of the firm’s business by next year.

Interest in Africa continues to grow, with 600 delegates, up from 450 two years ago, attending the Africa Singapore Business Forum this year. At the forum, Trade and Industry Minister Chan Chun Sing urged African firms to see Singapore as a launch pad for opportunities in South-east Asia and beyond.

On the other hand, Mr Aswani said: “Most African countries need new investments in the next 25 years to build their infrastructure, just to be on a par with what we have in Asia. The potential for growth is probably similar to that of China 20 years ago.”

Written by Seow Bei Yi for The Straits Times Business Section on 24 September 2018, Monday. Republished with permission.

 

 

 

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