Africa has become the new frontier for Singapore’s start-up movement as more technology and venture capitalist firms eye the continent’s largely untapped market for the next wave of growth, despite the challenges it presents, experts say. From ride-hailing to e-commerce to trade finance and infrastructure, companies from the city state have in recent years been drawn by the sheer size of the African market of 1.2 billion people , and the opportunities it presents as it seeks to keep pace with Asia and the rest of the world. One such budding firm is Gozem, a Singapore-based transport company with ride-hailing services in West African nations Togo and Benin, and plans to enter 15 more African markets within five years. In both Togo and Benin, where owning a vehicle is considered a luxury, hailing a moto-taxi from the pavement has long been the only way to get around. But Gozem’s plan may well improve that, by bringing the pre-booking driver app to the tiny francophone countries. In a nutshell, the company wants to replicate Southeast Asia’s widely successful apps Grab and Go-jek . West and Central Africa have some of the world’s poorest economies. But it’s the unmet demands and the need for new digital infrastructure that partly drew Raphael Dana, co-founder of Gozem. “We targeted West and Central Africa first, as fibre optic and 4G systems are deployed; 90 per cent of phones sold are smartphones and an open regulatory framework for fintech services is in place,” he said. “Despite the boons, these regions are relatively neglected by investors and entrepreneurs yet present an equivalent potential as Africa’s top three economies.” Gozem’s decision to first enter Central and West Africa indeed stands out from other Singaporean start-ups, which tend to target the continent’s larger or rapid-growing markets. “Apart from Africa’s top three economies, namely Nigeria, Kenya and South Africa, Singapore also eyes Mozambique, Angola, Ethiopia, Tanzania, Rwanda, Ghana, Ivory Coast, Egypt and Morocco for growth,” said Rahul Ghosh, regional group director for Sub-Saharan Africa of Enterprise Singapore, a government agency that facilitates such investments. Kelvin Tan, secretary general of Africa Southeast Asia Chamber of Commerce, said there were numerous reasons Singaporean firms have so far preferred East African Commonwealth nations. They tend to shun Southern Africa partly due to concerns of corruption, safety, currency volatility and underdevelopment Kelvin Tan “They tend to shun Southern Africa partly due to concerns of corruption, safety, currency volatility and underdevelopment,” he said. More widely, however, Africa has all the hallmarks of a continent ripe for start-ups and new ideas, especially when it comes to e-commerce, cross-border trade and government administration. It has the world’s largest share of adults with mobile money accounts but poor cross-border payments; intra-African travel and trade is on the rise but government administration is poor; it has an aspirational working and middle-class population spurred on by the need for better infrastructure and resources; and regimes largely keen to improve their reputations on the world stage, according to Robert MacPherson, junior partner of M&A advisory firm Reciprocus International. “Several African governments are echoing international trends of reducing operating costs, improving communication quality with remote geographies and enhance transparency and accountability,” he said. For providers like CrimsonLogic, a Singaporean company that started working with Rwanda in 2014, Africa’s development at a government level has proved a boon for the firm and Rwandans alike. In 2015, the company launched IREMBO, an eCitizen portal helping Rwandan people to get more than 89 government services online, with the ultimate aim of turning the country into a paperless, knowledge-based economy by 2020. Another Singaporean firm, Thunes, a business-to-business cross-border payments network for emerging markets, in 2017 helped give millions of Africans the ability to top up PayPal and M-pesa accounts so they could access digital marketplaces. School of WeChat: China study tours teaching tech to Singapore “Africa is pivotal for us, as over 35 of our 80-plus global markets are expected to originate from Africa in 2019,” said Aik-Boon Tan, chief commercial officer for payments at Thunes. “The region is estimated to contribute 25 to 30 per cent of our global revenue, slightly shy of Asia, our top market.” In the finance world, Singapore-based CCRManager, a global fintech platform currently in over 26 markets worldwide, has similarly cast its eye to Africa where growing trade volumes have forced many local banks to tap secondary finance markets to ease capital strains. “As with other secondary markets, African banks are looking to create credit capacity on their balance-sheets and hence look to secondary markets to find buyers of their assets so that they can originate new assets,” said George Nast, board member of CCRManager. Following this surge towards African shores has been Singaporean equity investors, hoping to bet on the next big thing. Connect with us on Twitter and Facebook Nairobi-based Aaron Fu, managing director of MEST Africa, the continent’s largest tech incubator network and a seed investor, said though Asia is just beginning to explore the start-up ecosystem in Africa, “the pace is quickening”. “ China has been leading the charge regarding Asian venture capital interest, while funds from Japan and Korea have also actively experimented with a few deals. I think Singapore-based firms eye more partnerships to understand the space before diving in,” he said. Enterprise Singapore encourages a healthy level of caution for all firms thinking of entering Africa, stating that despite its huge potential much of the continent still suffers from a lack of regulatory certainty. But heeding the agency’s advice is a different story. How a presidential palace in Burundi fits in with China’s plans in Africa Antler Innovation, for example, a tech-focused start-up generator and early-stage venture capital firm, is one of the few Singaporean investors to go all-in on budding African firms. It is currently eyeing annual investments in 20 early-stage start-ups in Kenya and Ethiopia, with plans to expand to West and South Africa in 2020. ASEACC’s Kelvin Tan said there is good reason to be careful when entering Africa, but with opportunities abound, it’s a tempting market for Singaporean investors. “While African start-ups are novel, creative and can be potentially disruptive, new technologies developed to support novel business ideas still lack sophistication,” said Tan, who also serves as chief investment officer of venture capital firm GTR Ventures. “But African entrepreneurs also need to compete with a global community of talent and ideas, leaving Asian investors spoilt for choice.”