As business leaders gather in Singapore this week for the Africa Singapore Business Forum, it is vital that they commit to investing responsibly in Africa. If Singapore is to uphold its reputation as a beacon for good business practices, it should prioritize responsible investments that create jobs and foster new skills, technology and know-how.
Singapore is Southeast Asia’s leading investor in Africa, according to the UN World Investment Report 2013. At the forum, Singaporean companies are likely to discuss strategic partnerships in African sectors such as agribusiness, oil and gas, food and beverages, e-government services, transport and logistics, and telecommunications.
Despite the credentials of their home country, some foreign investors have not always done business in Africa in the most ethical way. Asian businesses should make sure their tax practices, for example, meet the highest standards. Tax justice has emerged as a critical issue for Africa. The continent loses US$50 billion every year to illicit financial outflows, including tax evasion by foreign companies, as the Africa Progress Report 2013 notes.
Some companies, including businesses listed in the United States, have seen how failure to disclose all shareholders fully can lead to dramatic losses in share value when the identity of certain investors is revealed.
Africa welcomes responsible and sustainable investments – investments that benefit not just company shareholders, but local communities, too.
Our Africa Progress Report 2014 urges the global community, including the governments of Southeast Asia, to boost transparency in the extractive and agribusiness sectors, for example, by publishing contracts, and to tackle tax evasion and avoidance, money-laundering and the use of anonymous shell companies.
Investment that brings jobs is welcome. All parties benefit. And a contract that is mutually beneficial is more likely to stand the test of time. Some companies have found that failure to work well with local communities or workforces has damaged trust and reputation, and even triggered expensive strikes.
Reputation is becoming major issue for foreign companies working in Africa, just as it has become an issue worldwide for multinationals such as Google, Starbucks and Amazon.
In the midst of the current challenges and business opportunities, Singapore — famous for its effective business regulations — is well placed to lead the way to more transparent and responsible business practices in Africa. This week’s forum is a chance for leading companies to show how they intend to export Singaporean expertise and know-how, so that Singapore’s beacon can shine in Africa.
Photo credit: William Cho