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28/08/2014

Is Singapore upstaging the West and China in Africa?

Most African leaders are familiar with the Singapore story. They in fact would like the continent to emulate much of the successes of Singapore. The story of rising from a backwater Third World country, to a First World country, is a story that resonates with many African leaders. Many have in fact drawn up policies to ensure that Africa does draw crucial lessons from this success. However, even though the story of Singapore is well known in Africa, the fact remains that China is the dominant player in Africa. It has signed huge multilateral deals with several African countries, mainly in the area of minerals and infrastructure development. However, the trade is mostly one way, and African countries are beginning to question the deals that Africa conducts with China. For example, early last year, the immediate former Nigerian central Bank Governor, Lamido Sanusi, warned that China was dumping substandard industrial goods on the African continent, and in the process, killing the African manufacturing sector.

In an attempt to upstage China in the continent, this week, the government of Singapore will be hosting its third Africa-Singapore business forum. The forum will bring African private and public sector leaders to
Singapore to discuss investment opportunities across the continent.  But the forum could also serve a more strategic purpose by encouraging a broader evaluation of Singapore's relationship with Africa.

China's trade with Africa will total almost US$300 billion this year.  Accurate figures for foreign direct investment (FDI) are more difficult to find, but here, too, the numbers are surely quite high - with multi-billion dollar investments in infrastructure, resources, and manufacturing spread over a large number of African markets.  And this does not include the more than US$75 billion Beijing has committed to Africa over the past decade.

Singapore's brand, by contrast, is very strong.  Most African leaders are familiar with Singapore's story.  Many have even explicitly stated that they would like their country to become the Singapore of Africa.  Their desire to do so makes sense: the top priorities for most African countries include achieving rapid economic growth, maintaining political stability, and ensuring a safe environment in the face of terrorist threats, crime, and regional conflict.  In the context of such goals, the Singaporean model seems very attractive.

Singapore is a small country, African leaders do not view it as posing a strategic threat.  They would therefore not be concerned if Singaporean companies won tenders for projects of strategic significance, such as deep-sea ports and other vital infrastructure. 

Of course, it is not as though Singapore is unaware of Africa.  Indeed, Singapore's trade with Africa has been growing at over 10 per cent per year, and reached approximately US$11 billion in 2013.  Singaporean FDI into Africa now stands at over $16 billion. 

The point, however, is that Singapore has the potential to put in place a strategic partnership with Africa that could go far beyond merely achieving incremental increases in trade and investment. For African leaders, diversifying trade partners will be the most pragmatic view, and in the process, the African leaders should ensure that they get the best deals for the African people.

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