Singapore-Africa ties primed for take-off

Singapore, a city that owes its prosperity almost entirely to its position as a hub for international trade, is constantly on the lookout for the next frontier. And now, as Singaporean businesses scour the world for opportunities, Africa is increasingly attracting the Lion City’s attention – though the Singapore-Africa relationship remains relatively nascent. Since independence in 1965, Singapore has naturally concentrated much of its energy on becoming a hub for the Asia-Pacific region. Until recently, Africa was, at best, an afterthought for most Singapore-based investors – but, in a city always seeking new growth opportunities, it was inevitable that Singapore would eventually turn its gaze towards Africa.

“Singapore tries to make itself useful to economies that are far bigger than itself,” says Amit Jain, director of the Centre for African Studies at Nanyang Technological University in Singapore. Policymakers have consistently viewed free trade as critical to the city state’s prosperity; and while ties with regional giants such as China and India remain important, the country has increasingly recognised that Africa represents the world’s “next growth engine”.

While Singapore’s economic ties with Africa are “starting from a low base,” Jain says the country is “preparing the ground” for the relationship to expand. Trade in goods between Africa and Singapore amounted to $12.4bn in 2023, according to Enterprise Singapore figures, while there are now more than 100 Singaporean companies operating in Africa.

Wy Mun Kong is CEO of Singapore Cooperation Enterprise (SCE), a public body charged with building partnerships with overseas governments to help create opportunities for Singapore. He tells African Business that his organisation focused primarily on the Middle East when it was established in 2006. Africa barely figured in Singapore’s calculations at the time.

Diversifying partnerships

This began to change later in the decade as SCE started building a relationship with the government of Rwanda. SCE consultants returned from a visit to Rwanda with a “glowing report” about the country’s progress, Kong says, while Rwandan President Paul Kagame proved to be “very keen on the Singapore model”. SCE and Singaporean company Surbana Urban Planning Group (now part of Surbana Jurong) were selected as consultants to develop a master plan for central Kigali in 2008, following Kagame’s state visit to Singapore.

From the initial engagements with Rwanda, Singapore’s footprint in Africa has grown considerably. SCE has now worked on projects in around 20 African countries. Major Singapore-headquartered companies such as consumer goods group Tolaram, agribusiness giant Olam and shipping and logistics conglomerate Winning International Group have all expanded their operations in Africa.

Alvin Tan, Singapore’s minister of state for trade and industry, tells African Business that merchandise trade with Africa has been growing at a compounded annual rate of 10.6% over the last five years. “More Singapore companies are now looking towards Africa as a strategic destination for diversification,” he says. “Commercial interests are moving beyond trading, to long-term investments in sectors such as ports and logistics, infrastructure, and urban services such as township master-planning and smart city solutions.”

And Tan adds that Singapore-Africa relations are a two-way street, with Singapore welcoming investment from Africa. “Singapore’s role as a gateway for African businesses into Southeast Asia is compelling. Our strategic location, world-class infrastructure, and extensive trade networks make us an ideal base for African companies looking to expand their Asian presence. We are already seeing success stories – companies like TymeBank, Sasol, and Sonangol have chosen Singapore as their headquarters for Asian operations.”

A model for development

Kong points out that Singapore’s own development experience can provide a “good model” for others to follow. Rapid industrial growth after independence catapulted the city state into the ranks of the “Asian Tiger” economies, as it lifted much of its population out of poverty and became an international business hub. Today, Singapore is ranked as the thirteenth most developed country in the world on the UNDP’s Human Development Index, level with Britain, its former colonial master.

Singapore enjoys powerful advantages due to its location at the hinge of one of the world’s most important trade routes. But some of the other enabling factors behind its rise could be transferable to Africa. Kagame’s long-held vision for turning Rwanda into the “Singapore of Africa” is based on improving infrastructure, embracing technology and maintaining purposeful, if authoritarian, leadership.

As Singapore looks to further expand its ties with Africa, its businesses have to find ways to help tackle the continent’s challenges. “Singapore has a lot to offer,” Kong says. He lists urban planning, infrastructure development and digital innovation as key strengths that the country can export to Africa. “That’s where Singapore can definitely come in to offer its expertise, to offer its know-how, and offer its solutions.”

Jain also emphasises that there is space for the Singapore-Africa relationship to grow. In particular, he points to the potential for greater financial links between Singapore and African markets. “One of the big perennial problems for enterprises in Africa is finance,” he says. “Singapore could help mitigate the cost of acquiring finance for many countries, just by being partners.”

In October last year, Afreximbank signed a deal with Enterprise Singapore to provide greater access for finance for Singaporean companies that expand into the continent. Afreximbank’s executive vice president for Global Trade Bank, Haytham El Maayergi, said at the time that the deal would help “support the growth of Singaporean businesses while driving Africa’s industrialisation and trade development”.

Other African finance institutions are also looking to Singapore-based investors as sources of capital. “Singapore is another very interesting market,” says Modupe Famakinwa, head of corporate funding and investor relations at the Africa Finance Corporation. She notes that AFC has “constant, ongoing engagement” with Singaporean entities including Tolaram and state-owned investment firm Temasek as it seeks to access global pools of liquidity.

Next steps

Despite recent progress, there is still much to be done to strengthen Singapore-Africa ties. As prime minister Lawrence Wong pointed out in a recent speech, Singapore has just two diplomatic missions in Africa today. The prime minister promised to increase its diplomatic presence on the continent as part of the country’s effort to boost economic relationships.

And there is only one direct flight currently in service between Singapore and Africa, an Ethiopian Airlines route to Addis Ababa. Improving transport links will be vital if trade is to flourish.

Meanwhile, many Singaporean businesses still have limited knowledge and outdated perceptions of Africa. “The very mention of Africa as a place to do business raises more questions than excitement,” says Jain, although he notes anecdotal evidence that Singaporeans are becoming more interested in Africa as a place to do business.

Kong echoes this point. “When you talk to companies about Africa, I think the first thing that comes into their mind is risk,” he says. More work is needed to “bridge the gap” so that Singaporean businesses are more familiar with the realities and opportunities available in Africa, a market of more than 1.5bn people.

This year’s edition of the Africa Singapore Business Forum will therefore provide an important chance to educate Singapore-based businesses on investing in Africa and seizing the moment to support the continent in its development journey.

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