Doing business in Africa? It's similar to S-E Asia, and English is spoken by many
Singapore
THE common perception of Africa is that it is backward, dirty and politically unstable. But this couldn't be further from the truth in most parts of the vast continent, at least according to those in the know.
Kasiviswanathan Muthiah, deputy CEO of port and warehouse operator Magerwa, told The Business Times that anyone who goes to Rwanda where he is based is often surprised at what they encounter.
"You come to Kigali (Rwanda's capital) and you wonder if you're in Africa. It really opens your eyes," he said. "What we Singaporeans look for is cleanliness, order, safety - and you can find all that in Rwanda."
Of course, there is the occasional electrical outage, but it isn't a major issue said the 42-year-old who has also worked in France, Switzerland and Algeria.
Concurring, Alexander Benard, who spent two years in Ethiopia to set up the business there for his company Schulze Global Investments, said the region is "surprisingly similar" to South-east Asia in terms of the business landscape.
"The same types of sectors and consumption are skyrocketing, presenting very similar opportunities," said Mr Benard, now chief executive officer of the private equity firm focused on emerging and frontier markets.
Like South-east Asia, many of the businesses are family- or government-owned, and there is a lot of red tape to work around with bureaucratic government structures, he added. "It's not too different from what you would encounter if you were to do business in Cambodia or Vietnam."
What helps is that many of these countries are former British colonies with similar legal systems and structures, said Mr G Jayakrishnan, group director for Middle East and Africa at IE Singapore. English is also widely spoken, thus doing away with the need for translators, he added.
Still, Africa is a vast continent, with each region and country bearing its own traits. "Africans are not all the same. It depends on where you are going - you need to understand the challenges and the risks in that particular country," said Mr Muthiah.
Rather than focus on landlocked countries in the centre of the continent, IE Singapore has decided to focus on Southern Africa, East Africa and West Africa for now.
Specifically, it will zero in on 10 countries: Nigeria, Ghana and Ivory Coast in West Africa; Kenya, Tanzania, Ethiopia and Rwanda in East Africa; and South Africa, Mozambique and Angola in Southern Africa.
"But obviously if there are opportunities that take place in one of the other markets, we will still follow up, (albeit) more opportunistically," said Mr Jayakrishnan.
The internationalisation agency will drill further into specific sectors and sub-sectors that Singapore companies can serve. "We are going to look very sharply at immediate needs of some of these major economies and provide solutions to them."
For instance, in Nigeria which still imports the bulk of its food for its population of 190 million, the government is creating incentives for local food manufacturing. This provides opportunities for Singapore firms to produce drinks and packaged foods, or even food packaging and cold-chain logistics services.
In East Africa, where there are opportunities in the transport and logistics sectors - ranging from Customs and tracking solutions to freight forwarding, ports and warehousing - IE can take a consortium of companies to develop infrastructure across the seaboard, said Mr Jayakrishnan.
But the transfer of knowledge and products is not all one way. Africa is more advanced in certain technologies such as fintech services and mobile payment. Mr Jayakrishnan says "there are more mobile wallets in Africa than there are regular bank accounts" and these can be brought back into Singapore and South-east Asia via partnerships.
For companies that are interested in expanding to Africa, he advises that they first break down the very large market into "bite-sized opportunities".
This can be done by understanding which countries or cities might be best positioned to use the interested firm's existing products and services, or by specifically developing a product or service to meet a demand.
The next stage is to identify local partners. "Today, information about credit worthiness is not that readily available . . . Having someone to help shortlist potential customers is very important, it cuts short that process" he said.
Singapore companies should also enter the markets ready to hedge against currency risks, especially as many of the countries there are dependent on commodities and could have their currencies devalued in a commodity downcycle. In such times, customers may not be able to pay for what they have ordered, said Mr Jayakrishnan.
Mr Muthiah's view is that there are challenges that companies and Singaporeans will have to prepare themselves for, but these are not as difficult as some would imagine.
"You cannot have misconceptions of Africa or African countries," he said. "There's a lot of potential - you just have to come out, spend some time and see what you can do."
READ MORE: Singapore searches for growth in 10 promising African countries
