Lessons from Singapore on growth for local firms

From a third world country, Singapore managed to transform into a first world country with a vibrant economy, future-ready infrastructure, and quality public and private housing.

While the operating contexts are different, we hope to be able to share and bring to Africa Singapore’s experience in developing our economy, and exchange the expertise and knowledge of our companies.

The economic and development needs of Africa are similar to those of Asia. Made up of 54 states, Africa requires a tailored approach much like the 48 nations in Asia. Singapore shares its lessons to drive Africa’s economic transformation.

The Africa-Singapore relationship is on the up. Trade between the two regions stands at $7.15 billion. This presents opportunities for both African and Singapore companies to develop new capabilities, create innovative solutions and produce scalable business models which can then be replicated in both markets.

As the fastest growing region on the continent, East Africa’s future will be an interesting one to watch.

Our government agency, Enterprise Singapore, under Singapore’s Ministry of Trade and Industry, is responsible for growing Singapore enterprises locally and globally.

This includes deepening the trade and investment linkages between Africa and Singapore. Given the healthy interest of Singapore companies in East Africa, our Regional Overseas Centre in Nairobi will strengthen our engagements with East African governments and catalyse collaboration opportunities within the domestic private sector.

We believe in four main key drivers of growth for the East Africa that Singapore companies can partner with Kenya and East African enterprises for economic development; from infrastructure development, economic diversification, regional integration and trade connectivity to urban planning solutions.

Africa is urbanising more rapidly than any other region in the world. A 2017 World Bank Report projected that the urban population numbers are expected to double over the next 25 years, hitting one billion by 2040. This has created huge demand for infrastructure funding that the African Development Bank estimates at close to $130-170 billion a year.

Such vast infrastructure financing can only be achieved by intensifying private sector participation. As one of Asia’s infrastructure hubs, Singapore’s expertise in structuring successful public-private partnership projects in Asia, having a pool of experienced project developers and a mature financial sector could address some of East Africa’s infrastructure challenges.

The cyclical nature of resource-based economies and the plunge in commodity prices have had a negative impact on African economies and governments have had to step up through economic diversification via policies that require local value-addition and import substitution. Manufacturing has therefore become a key economic growth strategy to primarily drive exports, level-up domestic enterprise capabilities, and create higher-skilled employment.

This is similar to the playbook of many Asian nations. Ranked at an average of 1.4 in World Bank’s Ease of Doing Business, Singapore is in a good position to share our experience with the region. Our institutions have been working with African governments on several fronts including investment attractiveness, long term city planning, and establishment of Special Economic Zones.

Africa has made important progress in regional integration and has taken steps to establish the Continental Free Trade Area. This will help African countries to trade more easily with each other and with the rest of the world. Trade can spur industrial development by opening African markets to a variety of new products and services and this in ripple effect raises domestic competitiveness and gainful employment.

However, to capitalise these integration gains, African countries should also focus on modernising their trade facilitation systems to efficiently connect with the world, and establish a single system that integrates countries within regional blocks.

With a proven track record in trade connectivity, Singapore can be a feasible partner in actualising regional integration for the benefit of East Africa’s businesses.

CrimsonLogic, a Singapore company, rolled out the Kenya National Electronics Single Window System to help streamline the clearance process for international cargo shipments transiting in and out of Mombasa port. This not only increases East Africa’s largest port’s efficiency but also reduces transaction costs.

With the rise of the urban consumer, improving our digital capabilities will see the region reap handsomely from the vast e-commerce market.

We are optimistic of East Africa’s stellar rise and Singapore companies are in a good position to offer technology transfer, management and governance expertise, and job creation opportunities for inclusive growth of all locals and the region’s economic development.