Irony of Size as Singapore Invests In Africa

Illustrative Graphic: Seah Moon Ming (L), group chief executive officer of Pavilion Energy, looks at Tanzania where his company is investing $1.3 billion

Illustrative Graphic: Singapore’s Seah Moon Ming (L), Group Chief Executive Officer of Pavilion Energy, Looks at Tanzania where his company is investing $1.3 billion


Size does not  seem to matter so much as a factor of national economic success. The island city-State of Singapore, which is about 26.3 kilometres  long and 26.3  kilometres wide is among giants in the search for investment opportunities in Africa, defying the odds of  its size.

The African Report website says the State Owned Singaporean corporation Temasek,  has recently committed  itself to two major investments in Africa, and yet they are not the only investments.

In April  of  2014, it acquired a $150m stake in the Nigerian firm Seven Energy. The acquisition followed an announcement in November 2013 that it had invested $1.3bn in three gas blocks in offshore Tanzania through its subsidiary Pavilion Energy, and the hunt for investments in African is still on.

From the rice fields of Nigeria’s Nasarawa State to water treatment plants in Algeria, Singapore companies have been quick to spot opportunities in Africa. There are more than 50 Singaporean companies operating in Africa, spanning sectors such as oil, transport and construction.

“Trade has been, is and continues to be the lifeblood of Singapore,” said G. Jayakrishnan, group director for the Middle East and Africa at International Enterprise (IE) Singapore, organisers of the Africa Singapore Business Forum which took place on the island between 27 and 28 August 2014.

In 2013, Singapore’s trade with Africa hit $11.1bn, an 11.7%  annual growth rate increase since 2009, according to the state-run agency.  It was the largest investor in Africa of the members of the Association of Southeast Asian Nations, whose investments totaled $15.9bn, in 2012.

To help companies find the potential in Africa, IE Singapore opened its first sub-Saharan African centre in South Africa in January 2013, closely followed by a second one in Ghana in July of the same year. The Singaporean government has been accompanying investors to Africa. Foreign minister Mas- agos Zulkifli travelled with a business delegation to Kenya in early June.

Meanwhile the private sector has been organising its own activities. Officials from the Singapore Business Federation and a dozen companies were in Gabon and Equatorial Guinea in early July to prospect for deals.

Singapore-listed Olam has a 30-year presence on the African continent. The agricultural trading giant has ventured into large-scale rice farming in Nasarawa State in central Nigeria.

“The state government was ready to provide us with the requested land, about 10,000ha, and we started our project in late 2011/2012,” says Venkatramani Srivathsan, Olam’s managing director for Africa and the Middle East. “We have now done about 4,000ha of levelling and almost 3,600ha of planting. By next year we feel that we will be able to achieve the full scale of 6,000ha,” he adds.

Nigerian Women Preparing Grain (Photo Credit: Africa Report)

Nigerian Women Preparing Grain (Photo Credit: Africa Report)

Business activity concentrates on areas of strength for Singaporean firms. With Singapore dependent on desalination for its water supplies, Hyflux has become an internationally competitive firm. In April, it signed an agreement with South Africa’s Murray & Roberts to scout for joint projects in Africa.

Entry point to asia

The Southeast Asian country has also capitalised on its strategic location at the “transport and logistics nerve centre for the Asia-Pacific,” IE Singapore’s Jayakrishnan says.  African companies are using Singapore as an entry point in the Asian region.

“Getting into […] Singapore opens other opportunities in Asia,” says Ghana’s Derrydean Dadzie, chief executive of the tech company DreamOval, which has partnered with Singaporean companies.  “The structures are well laid down, the foundations are well done and […] Singapore offers the platform to learn the ropes and easily move about in the Asian region,” he says.

Other major African companies operating in Singapore include South Africa’s Grindrod, Sahara Energy from Nigeria, Angola’s Sonangol and Algeria’s Sonatrach.  The picture is not all bright however. Singapore’s trade with Africa still faces steep hurdles. Counter-party risk, underdeveloped transport and logistics, payment and visa delays are challenges hampering trade growth.

Jayakrishnan remains optimistic nonetheless: “If we spend enough time on the ground in Africa getting to know our partners – getting a good sense of the market, talking to more people in the industry – we should be able to fill the gaps.”