Otavio Veras, a research associate at the NTU-SBF Centre for African Studies, looks at how Singapore-based CrimsonLogic successfully established a presence on the continent.
Singapore is the home of CrimsonLogic, an information and communication technologies (ICT) company founded in 1988. Within only six years of its creation, it was already taking its first steps on the African continent.
In 1994, CrimsonLogic opened an office in Mauritius, the first move of what has become a series of successful stories in the e-government and ICT sectors in Africa. The company has conducted projects in nine sub-Saharan African countries, including Kenya, Namibia, Botswana, South Africa, Ghana and Mauritius, and currently has set up offices in Rwanda and Botswana to better take care of local projects.
Exporting Singapore efficiency to Africa
Mike Yap, senior director for Africa and Middle-East, explains CrimsonLogic’s main goals: “Our solutions streamline processes and bring efficiency to public administration through the reduction of the cost of compliance. Specifically, on trade facilitation solutions, we transformed how the trade community interacts with government agencies for cargo clearance by adopting modern techniques and initiatives promoted by the World Customs Organisation (WCO) and the World Trade Organisation (WTO). This resulted in the creation of a conducive environment for trade and investment that greatly improves government revenue collection and transparency.”
CrimsonLogic noticed that many countries in sub-Saharan Africa were trying to reach the standard of efficiency for government processes found in Singapore: “There is a clear interest from the governments to learn and emulate the Singapore experience.”
With close to 30 years of expertise in providing a range of solutions for trade, legal and digital government, CrimsonLogic is able to adapt and perfect Singapore’s best ICT practices to fit emerging markets. According to Mike, “we help emerging markets to leapfrog their growth and meet their aspirations to have world class solutions.”
What makes CrimsonLogic’s trajectory different from other Singaporean companies, is that it gained a large footprint in Africa before approaching Asia. “We sold in Africa first before landing our first sale in the southeast Asian region,” says Francis Huan, head of corporate communications.
The company is sensitive to the particular challenges of working in markets with very different cultures: “Having been exposed to diverse cultures and different maturity levels of the environment that we work in, we learnt not to enter a project with any preconceptions. It is important to assimilate into new cultures and environments, while maintaining the key principles and intent to stay on the right course,” Mike says.
One of the main challenges the company faces when expanding in Africa, is the precarious logistics and intra-regional transport infrastructure. “The main challenge is the lack of inter-trade between African countries, which is reflected in the current financial and banking network, and logistics and transport infrastructure. Thus, you will find it common that you can only do business in one African country at a time,” Mike says. In this sense, Asia has an advantage due to its well-connected metropoles. This integration helps to lower the start-up cost when a company expands to the next country.
For CrimsonLogic, four sub-Saharan African countries feature as the bright spots in ICT: Rwanda, Nigeria, South Africa and Kenya. These countries are considered the African hotspots for start-ups and small and medium enterprises (SME) in the ICT sector and they attract entrepreneurs for different reasons. “The availability of qualified human resources and a good logistics network create an exciting environment for service-oriented ICT companies,” Francis says. “In the last decade, many African countries introduced various incentives to attract investors. The challenge is to scrutinise these incentives and pay more attention to the unspecified. To us, it is interesting to note that we have not had any challenges in collecting money.”
Sense of adventure required
Growing a business in Africa comes with many challenges and, for small companies, this decision has to be made with proper planning: “Africa is not Asia. Foreign companies need to be prepared for a slightly different level of comfort. For an SME to thrive in Africa, it will need people with a sense of adventure and not pampered employees that are used to luxury comforts,” Mike says.
Setting apart the personal challenges, regulatory compliance is a work-in-progress for small and medium foreign investors in Africa if they plan to adhere to similar ethical principle practices adopted in Singapore. Another challenge is the expatriation of funds, which can become expensive when considering exchange rate risks.
However, for CrimsonLogic the opportunities compensate for the risks: “The potential to develop unique Africa-specific solutions really excites us and have catalysed our investment in manpower, a graduate training programme and operations and sales offices in Rwanda and Botswana,” Francis adds.
CrimsonLogic is tapping into the digital revolution taking place in Kenya and Rwanda: “One thing that had it going for Africa is the great mobile connectivity and the relatively cheap cost of using mobile data. Kenya is taking the lead with mobile money and payments, and building infrastructure to support the digital economy. Similarly, Rwanda has rolled out a citizen e-services portal – iREMBO – where a significant number of transactions, ranging from renewing drivers’ licences to getting a birth certificate, can be carried out with mobile money,” says Francis. The company also implemented other sector specific e-government solutions like trade facilitation and e-judiciary projects across seven countries in the Africa region.
For small and medium companies planning to venture into Africa, Mike has some advice: “Sufficient time should be given and you need to be there on the ground to understand, interact and make things happen. If things happen too fast, you need to know why. If takes too long, move on. Lastly, plan how much you are prepared to invest and have the discipline to walk away.”
The NTU-SBF Centre for African Studies is a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University and the Singapore Business Federation.