Singapore – Africa, the ideal fit?

“In light of market growth and middle class consumption in Africa, bringing production closer to Africa is a major economic opportunity. If just 10% of Chinese labour-intensive manufacturing shifts to Africa, Africa can achieve a quantum leap in its markets and exports.”

However, he warned that getting to that level would require governance that attracted and sustained manufacturing over a long period, since investors need predictability in areas such as tax, land rights and labour laws. He noted that while there has been overinvestment in publicly traded assets, there has been underinvestment in productive businesses, new manufacturing plants and new industries.

‘In light of market growth and middle class consumption in Africa, bringing production closer to Africa is a major economic opportunity‘, said Minister Shanmugaratnan

One of the key aims of the forum was to encourage more Singaporean companies to invest in Africa. What could these companies bring to the table?

“The key refrain you will hear from Singaporeans,” said Shanmugaratnam, “is how can we add value?” He explained that since Singapore was a very small country, “we don’t think of opportunities around the world in terms of scale. It is always in terms of: how can I find a small niche for myself and by introducing new ideas, new approaches raise productivity? In short, how can I add value?”

The Minister said that the future of Africa depended on value addition and manufacturing for a growing market. Labour intensive manufacturing in urban centres would drive up productivity and value addition and efficiencies in agriculture could transform the continent.

“But one of the things we paid particular attention to and which is important especially at the beginning stages of industrialisation,” said Shanmugaratnam, “is matching education with jobs and jobs with education.”

Peter Matlare said there were very considerable opportunities in agriculture and agro-processing in Africa. He said the consumer sector was a very strong vector as “it traverses so many sectors, right from basic carbohydrates, and that is what you call food security in many respects, but it is also highly traded.” He said that moving that to branded products was a harder journey but certainly a necessary one.

He said that a host of African entrepreneurs had succeeded because they had “the gumption and the guts to manage a myriad of risks”. But while the question of risks was sometimes loaded against Africa, “They are no different from what you would have encountered 20, 25 years ago in Asia, in China – and in some parts of Asia still today.”

Both speakers urged Singaporeans to go to Africa and find out for themselves what was going on. “Don’t depend on The Economist,” said Matlare. “Many times you find that what could have been a good opportunity goes by the wayside because someone didn’t take time to walk the streets, talk to the people and get to know policy makers.”

Shanmugaratnam urged Singaporean entrepreneurs to think in terms of adding value and what new skills or business models can be exported, not just how to gain market share.