SINGAPORE - The Covid-19 pandemic serves as a reminder of the limitations of Singapore’s small domestic market, and underscores the importance of building business outside the country.
And while South-east Asia and China are natural markets for Singapore companies to expand into due to proximity and familiarity, other markets such as Africa offer untapped opportunities, Enterprise Singapore (ESG) chairman Peter Ong said on Monday (Aug 23).
Speaking at the sixth edition of the Africa Singapore Business Forum, he said there are now more than 100 Singapore companies in Africa, compared with about 60 in 2018.
The number of Singapore projects in Africa facilitated by ESG, a government agency that champions enterprise development, also doubled in five years between 2016 and 2020.
More companies have reached out to the agency to understand market opportunities, business norms and regulations in Africa, Mr Ong said.
He noted that despite the pandemic, ESG had supported 20 per cent more projects in 2020 compared with the year before.
Senior Minister Tharman Shanmugaratnam, one of two keynote speakers at the forum, said that in the medium to long term, Africa's growth profile and scope for investments will be on a very different trajectory from countries like the United States, which have large but slow-growth markets.
He noted that smaller Singapore companies have been venturing into Africa before the Covid-19 pandemic, and even in the midst of the crisis.
Said Mr Tharman, who is also Coordinating Minister for Social Policies: “(Africa) is actually a very open environment… (Singapore companies) go there, they feel welcome.”
He added: “No environment is free of risk, but you’ve got to choose your partners, understand the landscape, and you don't start off very big. Get a foothold, get the right partners, start striking relationships and start growing.”
The other keynote speaker, Dr Akinwumi Adesina, president of the African Development Bank, highlighted Africa’s renewable energy sector as having potential for investment.
“The challenges that Africa faces actually (present) opportunities. The deficit we have in energy is significant.”
Infrastructure, logistics, digital payments and financial services are also among areas worth looking into, Dr Adesina said.
ESG’s Mr Ong noted that Africa has strong fundamentals and growth potential.
“It possesses a strong agricultural base, and a faster-than-expected recovery in commodity prices has cushioned the continent from the full force of the pandemic.”
Digitalisation has also rapidly transformed the African economy, and the pandemic has accelerated the adoption of digital solutions, he added.
Mr Ong also highlighted the Africa Continental Free Trade Agreement, which will create the largest free trade area in the world based on the number of countries it unites under the pact, with a combined gross domestic product of US$3 trillion (S$4 trillion).
“The agreement will connect 1.2 billion African consumers… and support the movement of persons, labour, investments and intellectual property. It will enable African nations to develop clusters of production expertise and supply chains that feed into each country’s specialisation.”