There is much to be done to build relations between Singapore and Africa. Shabbir Hassanbhai, chairman of the Africa Business Group at the Singapore Business Federation and non-resident high commissioner to Nigeria, talked to African Business about how to firm up ties.
Housed within a grand colonial façade and furnished with a smart wooden interior, the Singapore Cricket Club recalls a time when the city-state was a valuable but little-developed trading post in the far eastern reaches of the British Empire.
Yet despite the glittering skyscrapers now dwarfing its manicured lawns, the club has lost none of its relevance as a meeting place for the great and the good of the Singaporean business community.
Walking into the shaded bar past cabinets teeming with long-forgotten trophies, club member Shabbir Hassanbhai, one of Singapore’s most influential African go-betweens, tells African Business that the journey from imperial subjugation to thriving independent nation is one which resonates whenever he speaks to audiences of African policymakers.
“In my speeches in Africa, I show them a picture of Singapore in the 1950s. It’s like any country on the continent – chickens running around, water from the well, mud houses. And I show them the picture you see today… Singapore has a model to share of economic growth. We went through the same pain these African countries are going through,” he says.
It’s an optimistic vision that Hassanbhai is dedicated to helping bring about. As chairman of the Africa Business Group at the Singapore Business Federation and non-resident high commissioner to Nigeria, Hassanbhai straddles the worlds of business and politics, lobbying for a revolution in ties between the continent and the city-state. Those ties, long hampered by outdated views of Africa among Singaporeans, stronger opportunities in the Asian market and intermittent bouts of instability on the continent, finally began to firm up after a concerted push from 2008, according to Hassanbhai.
“In the span of seven or eight years there have been a lot of people working in a collaborative manner to ensure we get away from old perceptions of Africa… there was finally a difference in awareness, from government, business people and policymakers. All the building blocks are in place and it’s now a question of taking it to the next level,” he says.
Yet the statistics show that there is much to be done if the relationship is to emerge as a crucial one for either partner. According to government figures, Singaporean exports to Africa declined from $12.1bn in 2011 to $8.4bn in 2015. By contrast, China sent $102bn worth of goods to the continent in 2015, according to its customs office. To improve those figures, Hassanbhai is attempting to pull strings within government and convince policymakers that the continent must be labelled a priority area.
The need for political buy-in
“Our major problem first and foremost is that we must get political buy-in into the African story. It can only work to a certain extent without that. While we have told the government about economic engagement, there must come political will. If this is done, our financial institutions will start investing.”
Hassanbhai points out to bilateral investment treaties and double taxation avoidance agreements as potential new areas of cooperation. Yet attracting Singaporean financial institutions to the continent is also dependent on a sea-change in the opinions of top bankers and asset managers. Hassanbhai pulls few punches when describing the reluctance of Singapore’s financial sector to pursue African opportunities. Despite being named the world’s number three financial centre in a Z/Yen Group survey of over 2500 financial professionals in April, narrowly beating Hong Kong, Singapore has proved reluctant to reach out to Africa’s nascent financial sector. With Britain’s exit from the European Union potentially solidifying Singapore’s position as a leading financial centre, there is a residual feeling that the city-state can get by without seriously engaging with Africa. Hassanbhai says that this complacent view must be reassessed.
“Right now our major banks have no connections with Africa apart from Standard Chartered. So most business goes via other countries. Singapore is concerned about African banks coming here because of the balance sheets, regulations are very stringent, and most don’t reach the standards for setting up a branch. Our banks are too scared, they have no understanding of Africa, the management have no clue, no idea and are very happy in their comfort zone of doing business in Asia. Singaporeans generally do not want to uproot and go overseas and that’s a stumbling block not just in banks but other environments.”
In response, Hassanbhai and his colleagues at the Singapore Business Federation have embarked on an education drive to highlight the opportunities to be found on the continent. Working in collaboration with the NTU-SBF Centre for African Studies, which he helped found, Hassanbhai is hoping to train a new management corps that is both Africa-savvy and unafraid to go forth and base themselves on the continent.
Lack of connectivity
Yet he admits that the country will have to remove some of the more glaring barriers that prevent Singaporeans from travelling to Africa – notably a lack of air connectivity.
“To reach Africa takes 18 hours. Add a waiting time, and businessmen don’t like that. Without connectivity you won’t find a rush to get to Africa. There are things in the pipeline but nobody knows when and how. This is a major issue.”
A joint venture agreement between Singapore Airlines and Indian conglomerate Tata Sons could lead to India assuming the role of intermediary in future flights between Africa and Singapore. Until then, the hassle of travelling via the Gulf and other connection points is likely to continue to undermine business ties.
In the meantime, Singapore is busy building productive ties with Iran, which is opening up to investment after sustained geopolitical isolation, and Egypt, which is seeking investment after the chaos of its political upheavals. Beset by economic problems, sub-Saharan Africa suddenly looks less alluring. Yet Hassanbhai insists that the long-term trend will vindicate his efforts.
“Our FDI has grown, trade has grown, the number of companies operating in Africa is now about 60 plus. And there are those we can’t even identify, small traders, those in hardware, sometimes we don’t even know who they are. The long-term game plan is that Singapore loves free trade agreements. This is the way we’ll engage Africa more.”
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:3 October 2016