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Report by: SIMON MULI

It’s a story that has been told many times over; a country the size of Nairobi was able to remarkably transform itself from a third-world to a first-world country in a span of one generation (50 years). That country is Singapore. Today, the island city-state is a global financial powerhouse with trade numbers three times its Gross Domestic Product (GDP), and is one of the most preferred bases for multinationals. As the Asian economic tiger rises in influence, it is positioning itself to drive Africa’s economic transformation through a government agency promoting the growth of its overseas investments and trade. In June 2018, the agency known as Enterprise Singapore opened its Nairobi Overseas Centre, the third such office in Africa, after Johannesburg, South Africa and Accra, Ghana.  The three fall under the stewardship of our guest this week, the Regional Group Director of Sub-Saharan Africa, Rahul Ghosh. How can Singapore help Kenya and Africa walk the development talk?

Let’s cut straight to the chase; why Kenya and why now?

We have more than 35 offices around the world, spread across emerging markets and the developed world. Although we opened our offices in Nairobi in June, we had been working the ground three years prior. East Africa is the fastest growing region in Africa, relatively better integrated, has a fast growing consumer market and has a cluster of diversified economies. Kenya is a financial hub in the East African context, just like Singapore is in Asia. The financial market of Kenya is one of the most liquid and many companies in Kenya are regional ones. Similarly, Singapore is one of the top five financial centers in the world. Our trade numbers are two to three times our GDP and many multinational companies are based in Singapore. This is, therefore, a hub-to-hub relations and our objective is to create closer linkages between the two hubs. Today, we are connected by sea, but we want to connect by air. We want Kenyans to use Singapore as a gateway to Asia and we want to use Kenya to access other parts of East Africa. We need to have financial connectivity where banks can enable businesses transact directly.

Unlike other countries which employ a lot of flamboyancy and large entourages when announcing investments in this part of the world, you prefer a rather measured approach. Why do you think this strategy is most effective?

Sometimes we use big delegations like when the Singaporean Deputy Prime Minister, Tharman Shanmugaratnam, visited Kenya. But that is not the norm and neither is it enough. We elect to prepare the ground first, for those potential investors to come and see.  Also, if there are certain things, as a government, we see we can offer certain expertise to the host government, we do. For instance, with regards to the Big Four Agenda, we have been very good in developing affordable housing for Singaporeans. My job is to find out what the regulatory environment around that is. Then, identify a pool of potential local companies to work with. This reduces the time for an investor to come and do their own study, so that by the time they make a trip, it is worth their while. They are hitting the ground running and meeting the right people. Singapore companies want to do businesses for a long time. That is what informs our long-term approach.

Currently, there are over 60 Singapore companies operating in Africa, across more than 50 countries, with US$19 billion invested in the continent. With the opening of the third hub in the continent, what do you project this growth will be?

For us, success ultimately depends on how many more companies we have brought to the market or how many are deepening their presence. As an agency, these numbers are hard to project, because we are dealing with a number of sectors; the range of companies we help is broad, the market we deal with are diverse and the environment is different. From our experience, it is definite that the numbers will grow. I am very confident that we will see a lot more collaborations both, between enterprises and at the government level. If we can help bring our expertise around Public Private Partnerships (PPPs) and be able to structure projects in such a way that private financing is unlocked, we can create synergies around these collaborations. Moreover, in as much as we want Singapore investors to come and do business in Kenya, there needs to be some assurances in terms of investment protection. One of the treaties we signed during the Prime Minister’s visit is the avoidance of double taxation. This allows a Kenyan company doing business in Singapore and wants to repatriate some of the proceeds, only be taxed in one country. This is not only tax efficient for the company, but also beneficial to the government.

Singapore’s economic transformation story is inspiring, having moved from a third-world to a first-world country in less than a century. What are the hallmarks of such a transformation that can be replicated in Kenya?

In the 1960s, we were a third-world country with a very high unemployment rate and a non-existent public housing. For us to transform into a first-world country in a space of one generation, we have learnt to unlock private financing for public projects. Most of Singapore’s public infrastructure, for example, has been built around PPPs. But because Singapore is a small country (probably the size of Nairobi), we do not have a high volume of companies to justify an Exim bank. Therefore, as a financial centre, we have a highly liquid capital market and there are a lot of international funds and investments from China, India and Asia among others. The government approach has been to draw from that pool of capital. Through this, we were also able to create affordable housing for Singaporeans. Our public housing has a very significant social dimension too. Because Singapore is a mult-icultural and multi-religious society, we had to ensure there was integration amongst different communities. Left to market forces, some communities will typically cluster around one area. We have community spaces within the public housing to foster cohabitation.

Singapore is ranked as one of the least corrupt countries in the world. Is corruption an issue of concern to Singapore when investing in Kenya?

For any investor, there will always be a concern around corruption. Corruption is a global phenomenal. But at least, here in Kenya, the government is taking tangible action, which is commendable. That in itself makes Kenya more attractive. Singapore companies want to invest for the long term, so if they see that conditions are not right, the urgency to invest will reduce.

Singapore has maintained a sort of political stability since independence that Kenya and indeed many countries can only admire. Is politics always bad for business?

Any type of uncertainty in a country is bad for business anywhere in the world. For Singapore, the political mindset has always been to be practical. Government should not interfere in business. Its role is to create an enabling environment for business to flourish. Policies and regulations should be clear and the government’s role is simply to be a good regulator.

The balance of trade between Kenya and Singapore is an issue of interest to you, with the ideal scenario being that for every export there should be and import of equal value. What gives you the confidence that this can be achieved?

If there are more Singapore companies collaborating with Kenyan companies, technology will be transferred so that local enterprises level up, skillset bettered and so will their capabilities. The vibrancy of enterprises will increase and you will see a lot of products and services created in Kenya of international standards.  It is not going to happen immediately, but over time, there will be more business and people interaction as well as finance and capital flows between the two places.

You began your career as an engineer with a German multinational company, exposing you to a diverse mix of countries and cultures. What do you think local companies can do to provide the same edge to their employees?

The first way is through a program where, as an agency, we partly fund for students in universities and technical vocational schools to do internships at private companies in foreign countries. The second one is through conferences, where companies can send their representatives to interact with Singapore companies. We have a lot to learn from Kenya as well. We study and understand what other countries do and draw from those experiences.

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