Photo credit: PresidencyZA, Twitter
Singapore Prime Minister Lee Hsien Loong's first official visit to South Africa and Kenya has illuminated potential business opportunities for Singaporean firms across various sectors including agriculture, renewable energy, carbon credits, digitisation, and logistics.
In a press briefing following talks with South African President Cyril Ramaphosa, Lee noted a robust growth in Singapore-South Africa trade, registering a jump of over 60% since 2018. Total bilateral trade in goods stood at US$1.09bn in 2021. Key exports from Singapore included petroleum, chemical products, and machinery, while South Africa's major exports were metals and minerals. The visit saw discussions aimed at promoting new areas of trade, particularly agricultural goods, as well cooperation in renewable energy. South Africa has had a power crisis for many years, but the situation has deteriorated since 2022, with scheduled electricity cuts of as long as 10 hours per day.
“South Africa is a very important economy in Africa. It is one of the biggest … it is one of the most advanced in terms of its IT, its financial services, its telecoms infrastructure. It is not a developed economy yet, but it is working to head in that direction. And there are opportunities here – companies which are here have found niches, and they are able to grow and prosper,” PM Lee commented. He pointed to several Singaporean enterprises already doing business in South Africa, including in industries such as agribusiness, urban solutions, hospitality, manufacturing, ports and logistics, and innovation and technology.
In tandem with his visit, a business delegation led by the Singapore Business Federation (SBF) provided Singaporean business executives a chance to familiarise themselves with local business environment in South Africa and Kenya. One of these businesspeople that came across a potential opportunity in South Africa was Kanan Packrisamy, the CEO of Singaporean health supplements company Herbal Pharm. The Straits Times reports that during a business roundtable, hosted by the two leaders, Kanan met with the chairman of a major South African pharmaceutical firm, who expressed interest in producing Herbal Pharm's supplements due to spare production capacity at the company’s factories. This prospective collaboration could offer Herbal Pharm a foothold in the African market without having to incur import tariffs.
During his visit to Kenya, PM Lee underscored the opportunities for increased bilateral commerce, with figures for 2021 showing trade between the two countries standing at S$219.7m (US$162.3m). He noted that Kenya, due to its strategic location, could act as a gateway for Singaporean businesses into East Africa, and vice versa, with Singapore as a portal for Kenyan businesses into Southeast Asia. Additionally, he pointed out Kenya's potential to become a more significant supplier of fruits, vegetables, and flowers to Singapore, as well as an appealing tourism destination for Singaporean travellers. In a meeting with Kenyan President William Ruto, the two leaders explored the prospect of Singapore serving as a gateway for Kenyan agricultural produce into the wider ASEAN region.
Lee and Ruto have committed to implement a bilateral investment treaty and a double taxation avoidance agreement, both signed in 2018 during former Deputy Prime Minister Tharman Shanmugaratnam's visit to Kenya. These agreements set the stage for increased trade and investment between the nations. The investment treaty secures protections for Singapore investors, including non-discriminatory treatment, safeguard against unlawful property seizure, and the liberty to move capital and returns across borders, among other benefits.
In another significant move, a memorandum of understanding (MoU) centred on carbon credits collaboration was signed by the two leaders. Lee stated Singapore's aim to lessen its carbon footprint, in part via carbon credits, and recognised Kenya's production of these credits as an opportunity for joint efforts. “This will encourage, develop, and facilitate collaborative carbon credits projects of mutual interest,” he added.
The Nairobi Securities Exchange (NSE) last year forged a deal with ACX, a Singapore-based carbon credits trading platform, and the Nairobi International Finance Centre (NIFC), to launch Kenya’s first carbon offset exchange. The NIFC initiative is aimed at drawing companies that operate in green finance and fintech as well as attracting investment funds and multinational corporations to establish headquarters in Kenya. Currently, the NIFC operates as a virtual platform without a fixed physical location. PM Lee and President Ruto explored the potential role of the NIFC in serving sub-Saharan Africa, notably its eastern and central regions, in the realm of green financing, and how Singapore could contribute to this endeavour.
Highlighting the importance of technology in their bilateral ties, the two leaders also inked an MoU on ICT. This agreement is set to promote collaboration in areas such as cybersecurity and the digitisation of government services. Following the signing, Ruto stressed his administration's goal to digitise the Kenyan economy and government services. An example of a Singaporean company already active in this field is GUUD, which has implemented a Single Customs Territory platform that streamlines customs clearance procedures in Kenya and its neighbouring countries.
Expanding on potential areas for partnership, President Ruto extended an invitation to Singapore’s private sector to consider investment in Kenya's transport and logistics industries. He also expressed Kenya's eagerness to learn from Singapore's expertise in housing development. Noting that approximately 6.5 million Kenyans are in need of affordable and decent housing, he drew attention to Singapore's successful public housing programme as a potential model for emulation.
‘GUUD facilitates trade in Africa’, NTU-SBF Centre for African Studies, 20 May 2022
‘Kenyan bourse brings carbon exchange to East Africa’, How we made it in Africa, 13 July 2022
‘PM Lee Hsien Loong at the Q&A segment of the joint press conference with South African President Cyril Ramaphosa (May 2023)’, Prime Minister's Office Singapore, 16 May 2023
‘PM Lee Hsien Loong at the joint press conference with South African President Cyril Ramaphosa (May 2023)’, Prime Minister's Office Singapore, 16 May 2023
‘PM Lee Hsien Loong at the Q&A segment of the joint press conference with Kenyan President William Ruto (May 2023)’, Prime Minister's Office Singapore, 18 May 2023
‘PM Lee Hsien Loong at the joint press conference with Kenyan President William Ruto (May 2023)’, Prime Minister's Office Singapore, 18 May 2023
‘Singapore and Kenya sign three new deals, move investment treaty forward’, The Straits Times, 18 May 2023
‘Singapore firms find opportunities, build confidence to do business in Africa’, The Straits Times, 19 May 2023
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