: Large consumer pool, demand for tech draw Singapore firms to Africa
SINGAPORE - When the Singapore-based Tolaram Group first introduced instant noodles to Africa in the 1980s, the food was new to the people there and did not take off as hoped.
The continent’s fast-growing and predominantly young urban population had been expected to quickly take to an inexpensive, easy-to-prepare meal, said a spokesperson for the family-run group.
“Instead of focusing on distributing the product, we switched tack to teaching Africans how to cook and eat the noodles. We set up stalls in crowded marketplaces and bus stations, demonstrating step by step how to make a quick and simple, delicious complete meal,” the spokesperson said.
Tolaram Group is known in Africa for the local manufacturing of Indomie instant noodles and the marketing and distribution of Kellogg’s products, among other consumer goods.
Singapore companies are breaking into Africa, drawn by its large consumer market and the demand for tech and digital solutions.
About 100 Singapore companies are operating across 40 countries in Africa currently.
Africa’s large population of 1.4 billion is young, vibrant and entrepreneurial, said Mr G. Jayakrishnan, executive director for South Asia, Middle East and Africa, Enterprise Singapore (EnterpriseSG).
“The continent is rich in natural resources, and many countries boast a vibrant private sector. These factors create a conducive environment for trade and investment, given the sizeable consumer market, availability of land and raw materials, talent and partners,” he said.
EnterpriseSG helps Singapore companies enter the African market in a number of ways, such as by providing market insights and facilitating in-market partnerships.
Through activities such as webinars, seminars and roundtables, EnterpriseSG facilitates the sharing of industry developments and regulatory requirements for different markets and sectors, said Mr Jayakrishnan.
Participating companies also get to join business missions to Africa, which provide them with on-ground exposure to the market by arranging business-to-business matchmaking sessions and participating in trade shows.
Construction management software firm Novade Solutions entered the African market in 2018 with EnterpriseSG’s help.
The firm develops cloud and mobile applications for construction industries to use on work sites in order to streamline work processes and enhance safety measures, for example.
Consumers widely use mobile devices in Africa, said Mr Denis Branthonne, founder and chief executive of Novade Solutions. This makes Novade’s mobile apps suitable for the customer base.
“Our plans include further collaboration with local stakeholders to continue refining our solutions and contribute to the advancement of construction and real estate industries across Africa,” he said.
Another company that has entered the African market is Newmatic, which specialises in the distribution of built-in kitchen appliances. It went there in 2018.
One of the obstacles Newmatic faced then was that many of its East African consumers were first-generation modern appliance users who were often unfamiliar with products like cooker hoods, or how to use and maintain them, said its director, Mr Dave Choy.
“EnterpriseSG gave us access to financial support, educational programmes and networking opportunities,” he said.
“For example, we have received their help in securing bank loans, underwriting trade lines and subsidies for company expenses, such as company registration fees, online advertising, overseas office rent and staff salaries.”
With the support of EnterpriseSG, Newmatic is making plans to expand to Somalia, Zimbabwe and Nigeria next, said Mr Choy. Newmatic appliances are currently being distributed in Singapore, Kenya, Tanzania and Uganda, as well as New Zealand.
Africa is a huge, diverse continent, made up of 54 countries with different cultures and languages and at different stages of development, said Mr Jayakrishnan.
“The continent is not homogenous; each country has different laws and regulations, infrastructure, workforce composition, and business norms. It is crucial for companies to first do research on different aspects of the African market they are considering – study the business conditions, regulatory landscape and market demand,” he said.
The operating environment in Africa is also less predictable than in Singapore, he added.
“Policies and regulations may change without much notice. Foreign exchange risk has to be factored in, and inflation tends to be high,” he said.
“Companies have to be aware of this, build in sufficient margins, and be ready to regularly adjust their business model over time.”
Source: The Straits Times © Singapore Press Holdings Limited. Reproduced with permission.