Singapore: Africa's Strategic Ally

Published on 31st August 2012

A past Africa-Singapore business forum                  Photo courtesy
While Africa is still largely unfamiliar to Singapore companies, the region’s potential has grown evident. China, India and Southeast Asia remain top of mind due mostly to cultural factors and their close proximity. We are, however, at the crossroads of major changes in the global economy today. Companies need to constantly look ahead to new markets, and there is no denying Africa holds great potential. The Economist reported that seven out of 10 fastest growing economies in 2011 were African countries.

Over the last five years, world foreign direct investment into Africa grew by almost 50%, reaching US$570 billion (S$716.5 billion) in 20112. In the same period, Africa’s trade with the world grew at a CAGR of 9.2%3, reaching US$1.15 trillion (S$1.45 trillion) in 2011; higher than the world trade growth of 6.7%4. Today, Asia is playing an increasingly important role in Africa’s growth, coming in as Africa’s second largest trading partner last year5. Africa’s exports to Asia also tripled over the last five years, comprising natural resource-extractive commodities, as well as non-traditional items such as processed commodities and light manufactured products.

Closer to home, Singapore’s bilateral trade with Africa has similarly grown at a CAGR of 11.8% over the past five years, with exports recording a CAGR of 15%6. As of 2010, Singapore’s direct investments into Africa reached US$18.9 (S$23.8 billion), a 29% increase from US$14.7 billion (S$18.5 billion) in the previous year7. This made us the largest investor in Africa among ASEAN countries.

I believe there is a lot more room for growth. Situated strategically in Asia, Singapore can play an integral role in Africa’s development. As the agency driving Singapore’s external economy, IE Singapore is committed to educating the Singapore business community and helping them build capabilities to enter Africa.

The Africa Singapore Business Forum (ASBF) was a platform created in 2010 for top government and business leaders to collaborate, discuss issues, and exchange insights. While Singapore companies can share developmental experience relevant to Africa, Singapore is also a good base for African companies to expand into the region.

Interest for the region is clearly on the rise, with this second ASBF seeing a larger than expected turnout of more than 500 delegates, up from 400. International Enterprise (IE) Singapore’s Internationalization Survey  also shows that Singapore companies are bullish about the business outlook in Africa, following Southeast Asia and China.

Market knowledge and connections are key to successful market entry. IE Singapore plans to expand our physical presence in Africa, expand business missions to African countries, continue our engagement with African governments and the private sector, and partner embassies and trade associations to facilitate exchange of information.

Against this backdrop, IE Singapore will sign a Memorandum of Understanding (MOU) with the International Finance Cooperation (IFC), a member of the World Bank Group, to leverage IFC’s wide network, on-ground knowledge, and extensive experience in African countries. Our strategic collaboration to identify growth sectors and share business leads will pave the way for closer Singapore-Africa relations in the years to come.

By Mr Teo Eng Cheong,
Chief Executive Officer of International Enterprise Singapore.


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