Singapore shares many of the historical experiences of African nations, having been colonized before gaining its independence from British rule. K. Shanmugam (below) talked to African Business magazine about relations between Singapore and the continent.
How have the bilateral co-operation and economic relations between Singapore and Africa grown over the years?
Singapore, like many African and Asian countries, gained independence from colonial rule in the 1960s. A strong sense of South-South solidarity and a keen instinct for survival has brought us together.
As a small city-state, Singapore developed quickly from third to first world. Over time, we found it valuable to share our development experience with friends and created the Singapore Co-operation Programme (SCP). To date, almost 8,000 participants from Africa have visited Singapore through the SCP to take part in programmes such as Public Administration, Information Communications Technology (ICT), Urban Planning, Good Governance, and Water and Sanitation Management.
Apart from the sharing of our experience, Singapore’s relations with Africa over the past five decades have been founded on mutual economic interests. Africa’s decade of growth has brought about many opportunities for trade and investment. Over the past decade, our total bilateral trade grew by 13% annually to reach $9.8bn in 2014. This is remarkable progress in terms of the rate of growth. Singapore’s investments in Africa have been healthy, with cumulative investments rising by 70% to $17.4bn in 2013, from $10.2bn in 2008.
Last year, we hosted the inaugural sub-Saharan Africa High Level Ministerial Exchange Visit, which saw ministers from seven African countries (Angola, Ghana, Mauritius, Nigeria, Rwanda, Tanzania and Zimbabwe) coming to Singapore to discuss cooperation in areas such as water management, vocational training, urban planning and e-governance.
This meeting underscored the significant opportunities for Singapore companies to partner with Africa.
One area where we can work harder is air connectivity between Singapore and Africa. As a gateway to Asia, Singapore offers tremendous trade, investment and tourism opportunities for Africa. However, connectivity has to be enhanced, and it is in the larger interest of Singapore and African countries to be more closely connected.
Singapore Airlines currently has direct flights to Johannesburg, while Ethiopia Airlines is preparing to mount non-stop flights from Addis Ababa. A more liberal aviation policy among African countries will greatly benefit everyone, including the continent.
Singapore’s own development in the 20th Century was rapid and driven by trade and openness to business. What lessons can African nations learn from your example?
Singapore’s development in the 20th century was not achieved in isolation. In the early years after our independence in 1965, we turned to our friends in the developed world for help. For example, we sought assistance from UN Development Programme (UNDP) to develop an economic plan for Singapore, which included the creation of a one-stop investor agency - what we now call the Economic Development Board (EDB) - which proved the key to our success in attracting billions of investment dollars annually.
In setting out to achieve what we intended, it was important for Singapore to be willing to tackle competition head-on. For example, when we wanted to establish ourselves as a financial and business hub, we opened our doors to foreign investments and pursued greater connectivity.
We signed Free Trade Agreements and Air Services Agreements with other countries to encourage a favourable environment for economic growth.
Singapore is where it is today, in part because of our willingness to be open and competitive. Supporting this is our relentless pursuit of good governance, meritocracy and anti-corruption.
What are the commercial sectors that are best positioned to benefit from strengthening relationships between Singapore and African countries? Are there priority areas for the government of Singapore?
Last year, six out of the 10 fastest growing economies in the world were in Africa. The continent has become attractive to investors due to the growing stability and good governance structure of several African countries. As such, we are seeing greater awareness among Singapore companies of the opportunities that the continent presents. We have over 60 Singapore companies across more than 50 African countries today. Given the diverse interests of our companies, International Enterprise (IE) Singapore has opened two offices in South Africa and Ghana to provide greater support to our companies interested in Southern and Western Africa.
The sectors in which Singapore companies can add value in Africa are reflective of our own development experience. Africa’s rapid development has given rise to industrial needs to which our companies can provide integrated solutions. We have limited land and natural resources, so it is important for Singapore to develop in a sustainable manner. Hence, in Singapore, you will find partners such as Surbana, Jurong International and Hyflux that can offer a range of Urban Solutions, from water, waste and energy management, to urban planning and infrastructure development.
In growing our position as a leading hub in oil & gas, and transport & logistics in Asia, Singapore companies can offer Africa relevant expertise and supporting services. We have established ourselves as a market leader for oil and gas drilling units.
Several of our companies have been working with the government of Ghana on the conversion of the Floating Production, Storage and Offloading (FPSO) units for hydrocarbons processing and storage of oil.
Our capabilities in Information Communication Technology (ICT), and more specifically in e-governance, have been recognised in Africa. Companies such as CrimsonLogic have worked with governments in Ghana, Madagascar and Mozambique to implement the Single Electronic Window system, which was pioneered by Singapore to facilitate trade and streamline customs clearance.
Our companies can also offer products and services that support Africa’s growing consumer, and agriculture & agro-processing sectors. There are companies ranging from Olam International to Biomax Technologies and Asiatic Agriculture that provide green technologies. Singapore companies engaging in general trading, food & beverage distribution, automobile, textiles and garments can also help to meet Africa’s demands for consumer products.
Singaporean companies involved in food and agriculture and in the energy sector are engaging with Africa. Where does Africa sit as part of the government’s long-term strategy on food and energy security?
As a small nation with hardly any natural or energy resources, Singapore imports almost all of its fuel and food. This makes us vulnerable to supply risks. To strengthen food and energy security, we have to diversify our import sources.
Africa’s oil and gas potential could fulfil both Singapore’s - and Asia’s - growing energy demand. The recent oil finds in countries such as Ghana and gas finds in countries such as Tanzania and Mozambique have led to renewed optimism about the sector.
With increased infrastructure investments in gas projects, Africa can present itself as a viable source of support for Singapore’s energy security and growth as the region’s LNG trading hub.
With 60 percent of the world’s uncultivated arable land, Africa can play a role in strengthening our food supply resilience in the future. Our government agencies work closely with the relevant industries to conduct food sourcing missions to different countries, including South Africa. We import many perishables from Africa, including beans, cashew nuts, cloves, frozen fish and apples.
With the rising commercial and economic interest in Africa across the world, where do you see Singapore’s relations with Africa going?
I am confident that it will go up. It is good for the people of Africa that it is rising.
Across the continent, you can see countries at very different stages of development. For countries like Rwanda and Mauritius, they are small and have few resources but are strong in the services and financial sectors.
Other countries like Tanzania and Kenya are emerging economies with strong growth and a wealth of natural resources. Nigeria and South Africa compete to be the largest economy in Sub-Saharan Africa while the East African Community (EAC), as a regional community, has achieved customs union status and is gearing towards monetary union. The EAC has a vibrant and integrated market of over 140 million people, providing a strong impetus for foreign investors to explore opportunities. These are just a few examples. As you can see, the diversity and the dynamism in the continent create a lot of space that we can explore.
While some have credited Africa’s potential to its abundant natural resources, I would suggest that it is equally important to acknowledge the work of well-run African governments that focus on good governance and their commitment to maintain peace and stability in their regions. This sets the foundation to attract investments that can unleash Africa’s youth dividend, with almost 65% of Africans below the age of 35.
I believe Singapore can help to play a role in Africa, through sharing of our experiences, transferring relevant skills and knowledge to a young and hardworking workforce, and helping to attract value-added investments from our region to Africa.
This article was first published in African Business magazine, June 2015 issue. Copyright IC Publications 2015. Published under permission by IC Publications www.africanbusinessmagazine.com