Harare – The COVID-19 pandemic had a significant impact on FDI into Africa as flows to the continent declined by 16 percent in 2020 to US$40 billion from US$47 billion in 2019.
Cascading economic and health challenges due to the pandemic combined with low prices of energy commodities weighed heavily on foreign investment to the continent, according to UNCTAD’s World Investment Report 2021.
However, last week’s Africa Singapore Business Forum revealed a positive side of investment activity.
According to Enterprise Singapore (ESG), over the last five years the number of projects by Singapore companies in Africa doubled. Many of these projects were in the information communication media (ICM), urban infrastructure and food sectors. In 2020, despite the pandemic, Enterprise Singapore facilitated 20percent more projects by Singapore companies in Africa compared to 2019.
“In Singapore, COVID-19 reminded us of the limitations of our small domestic market and underscored the importance of building business beyond our shores. While Southeast Asia and China are natural markets for Singapore companies to expand into due to proximity and familiarity, other markets such as Africa offer untapped opportunities,” said Mr Peter Ong, chairman of ESG.
The pandemic has accelerated the demand for digital solutions and opened up new opportunities for Singapore companies. In the first six months of 2021, close to half of the projects facilitated by ESG involved technology solutions in fintech, blockchain and artificial intelligence.
In addition, almost half of the 18 memoranda of understanding and agreements signed at the Africa Singapore Business Forum (ASBF) 2021 between Singapore companies and their African partners were technology-related.
“The African Continental Free Trade Area (AfCFTA) that came into effect on 1 January 2021 will create the largest free trade area in the world based on the number of countries it unites under the pact, with a combined GDP of USD$3 trillion3 and a single market of 1.2 billion African consumers.
“Manufacturers will be incentivised to set up plants in Africa to produce for the local market. For example, demand for pharmaceutical and medical consumables is expected to grow, in part accelerated by COVID-19. Africa currently imports more than 80 percent of its pharmaceutical and medical consumables. The manufacturing opportunity has drawn companies such as Ras Pharma & Biochem Pte Ltd.
“The Africa Singapore Business Forum (ASBF) organised by Enterprise Singapore (ESG) and held from 23- 24 August 2021, is another platform that was established to foster investment, trade and thought leadership between Asia and Africa. To date, ASBF has brought together 3000 high level business leaders and government officials from over 30 countries.
“The sixth edition of this flagship event featured insights from Mr Tharman Shanmugaratnam, Senior Minister and Coordinating Minister for Social Policies, Mr Alvin Tan, Minister of State for Trade & Industry and Community, Culture and Youth, Dr Akinwumi A. Adesina, President, African Development Bank Group and Dr Vera Songwe, Under-Secretary-General of United Nations and Executive Secretary of the Economic Commission for Africa.
“Delegates also heard from expert panels on urban solutions, digital opportunities and manufacturing and participated in virtual business matching sessions”, said ESG in a media statement.