'Huge opportunities' for Singapore businesses in Africa: Experts
Africa is on the cusp of a digital and green revolution. Money Mind looks at the opportunities this presents for investors.
SINGAPORE: Singapore-based artificial intelligence startup Sqreem was already present in South Africa, when the COVID-19 pandemic broke out.
As such, it was able to leverage on technologies it had been working on since 2014 to develop a real-time contact tracing and COVID-19 communication system for the South African government.
"We built a COVID-19 tracking and tracing platform, and then we introduced it to some of the companies which were working for the South African government in contact tracing," said Mr Ian Chapman-Banks, CEO of Sqreem Technologies.
"We are in the process of building out the contact tracing into more of a pandemic early response, which we will absolutely want to roll out."
Sqreem is one of many Singapore companies riding the digital wave in Africa.
“There is a great respect and regard for technologies emanating from Singapore,” said Mr G Jayakrishnan, global markets executive director at Enterprise Singapore, whose remit is to help Singapore companies internationalise.
He said that almost 60 per cent of the projects that Enterprise Singapore has facilitated this year have been in the digital space.
Africa as a continent offers businesses many digital opportunities.
The mobile phone opened up opportunities for banking, money transfers and payments on the continent.
According to the African Development Bank, 20 per cent of Africa’s 1.4 billion population owns mobile accounts. Eighty per cent of SMEs have mobile accounts, which allow them to make digital payments.
It is estimated that only about a third of those mobile phones are smartphones, so there is potential for further growth in the sector.
"They leapfrogged to mobile, but only about 35 per cent to 40 per cent of those mobile phones are smartphones. And I think that as you get more cheap mobile phones and smartphones, that again will increase," said Mr V Shankar, CEO of Gateway Partners.
Africa is unique in having a large unbanked population, while also having a mature electronic payment system.
In 2007, M-Pesa was launched in Kenya. It allowed subscribers to send cash to other phone users by SMS.
This made Kenya one of the earliest countries in the world to have this capacity – and it all took place at a time when more than 80 per cent of the population was excluded from the traditional financial sector.
The growth of this tech and startup infrastructure has earned areas like Nairobi, Kenya the tag of “Silicon Savannah”, offering a myriad of opportunities for companies to tap.
"We see huge opportunities for Singapore firms that are providing solutions, be they fintech solutions, edtech solutions, health tech solutions, or even solutions that are related to track and trace situations," said Mr Jayakrishnan.
There will also be opportunities as sustainability increasingly becomes a business catchphrase, said industry watchers.
Investors say resource-rich Africa has the minerals needed for the batteries in electric vehicles.
The challenge is to mine these resources in a sustainable manner. This includes considerations such as labour welfare and the choice of power generation and transport.
Africa is also the fastest urbanising region in the world, and this brings with it opportunities for smart building solution, smart city planning, and related technologies, said industry watchers.
Singapore can export its expertise in urban sustainability solutions to the continent.
OPPORTUNITIES FOR COLLABORATION
Singapore is among the top 10 investors in Africa. Trade between Singapore and Africa has also been growing steadily over the past five years, except for a 4.7 per cent dip in 2020.
Other big investors include the Netherlands, the UK, France, China, and the US.
The African Continental Free Trade Area agreement will provide more opportunities for collaboration and growth.
As one of the world’s last frontier markets, Africa still presents many opportunities for investors.
“We see opportunities for local production, for manufacturing to be done in Africa for the African market," said Mr Jayakrishnan.
"Companies that are in the business of producing goods, food products, electronics or providing services that support manufacturing, plant design, engineering design, plant equipment supply and logistics. All of these will see opportunities in the years going forward.
"There's still room for new entrants, and that means Singapore firms, be they large or small, have the space to play.”