The scale of the challenges facing the global economy means 2023 is proving to be yet another uncertain year. Yet, there are positive prospects for global trade, a vital component of economic growth and driver of development.
Our research into high-growth trade corridors shows long-term opportunities in ASEAN and Africa for companies that are prepared to seize them. Whether firms are looking East from Africa or West from ASEAN, these markets on opposite shores of the Indian Ocean have much to offer.
By 2030 we forecast that trade expansion between ASEAN and Africa stands to outpace the average global annual growth rate1
There are also some landmark examples of multilateral trade co-operation that will support trade growth. One is the African Continental Free Trade Agreement (AfCFTA), the world’s largest free trade area, measured by the number of countries participating.2 The 10-member ASEAN grouping, meanwhile, is part of the world’s largest trading bloc – the Regional Comprehensive Economic Partnership (RCEP), which covers one-third of global GDP, trade and population.3
ASEAN – a key gateway to Asia
ASEAN boasts numerous advantages for firms from Africa. For one, it is a gateway to the continent, with Singapore particularly well positioned financially and logistically. In August, Singapore hosted the Africa Singapore Business Forum 2023 to discuss bilateral and multilateral growth opportunities.
At the same time, global trade is shifting towards Asia. Here, ASEAN is set to lead, with intra-regional trade growth between its ten members predicted to reach nearly 9 percent annually over the coming decade.4 With ASEAN’s 660 million-strong population generating rising income levels and Africa’s growing consumer market backed by the AfCFTA, there is enormous business potential in areas like digitisation, innovation and sustainable investment.
Unsurprisingly, market potential in ASEAN and the wider Asia region has not gone unnoticed by Africa-based businesses. Aspen Pharmacare, a global specialty and branded multinational pharmaceutical company headquartered in South Africa, has a presence in both emerging and developed markets. Getting established in new regions requires, among other things, a strong partner that can offer on-the-ground expertise and a range of financial solutions, including cash management services. For Aspen, in markets such as China and Malaysia, Standard Chartered is that partner.
Africa – a growing market for ASEAN
For ASEAN firms looking west, two African nations in particular stand out. We call them Accelerators – fast-growing economies whose export sectors fuel economic growth.
The first is Kenya. Its focus on manufacturing and infrastructure development means it continues to grow its position as East Africa’s logistics hub, with annual export growth projected to reach 9 percent by 20305 due to improved manufacturing, growing SMEs’ digital literacy and international competitiveness, as well as climate-adapted agricultural practices.
Kenya’s potential has piqued the interest of companies from Singapore, among others. The two nations have more than doubled trade since 2017, with Singaporean companies operating in sectors including logistics, hospitality, port management and fintech.6
The other Accelerator is Nigeria, where strategic diversification and improvements to infrastructure are among the reasons it is projected to have 9.5 percent average annual export growth.7
One ASEAN firm that has blazed a path in Africa is Singapore’s Tolaram – a diversified consumer goods to fintech to infrastructure conglomerate with operations across the continent, including in Nigeria, Ghana, Egypt and South Africa. Its approach is a model for other ASEAN firms interested in Africa as a market.
Building together, sustainably
Tolaram’s diversified business illustrates the breadth of opportunities for interregional trade, which are set to grow. In addition, there lies much potential for collaboration in the development of the net zero agenda. In May, Singapore and Kenya signed three trade-related deals, including a sustainability agreement that will see the two nations cooperate on carbon credits to cut emissions and slow global warming.8
This is set to enable Kenya to access the funds it needs to finance mitigation and adaptation measures to deal with climate change9; and will benefit firms with expertise in areas like infrastructure as well. Given Africa’s immense infrastructure needs, such agreements can bridge the gap and boost access to innovative financing solutions.
This drive towards attaining net zero chimes well with Standard Chartered’s sustainability approach, underpinned by our US$300bn commitment supporting green and transition financing. Though there is no one-size-fits-all solution in financing a just transition, the principle remains the same: to accelerate the reduction of carbon emissions through innovative financing solutions, and ensuring projects are both sustainable and make a positive impact on communities and environments.
As the largest international bank supporting infrastructure projects in Africa, and a market leader in climate financing, Standard Chartered is well positioned to support capital inflows, ensuring clients gain from our international balance sheet and specialist knowledge derived from the complex financial products we provide across our network.
Joining hands for a brighter future
There are numerous other ways that countries like Singapore, Kenya, Nigeria and their neighbours can come together to promote trade. Areas where collaboration can make an impact include ensuring trade policies promote exports while nurturing infant industries, improving infrastructure to boost cross-border trade, and reducing the costs of cross-border payments.
Looking ahead, we see a bright future for ASEAN and Africa, and recognise the need to be adaptable, innovative and sustainable in our approach to trade has never been greater.
By availing the necessary funding to support strategic partnerships, we can help businesses transform, foster greater supply chain resilience and improve trade to ensure business owners and firms of all sizes can seize the abundant opportunities in ASEAN, Africa and beyond.
The author is the Regional CEO of Standard Chartered Africa and Middle East.
1 Future of Trade: New opportunities in high-growth corridors, Standard Chartered (2023). See: https://www.sc.com/en/banking/banking-for-companies/future-of-trade-2023/
2 The African Continental Free Trade Area, The World Bank (2020). See: https://www.worldbank.org/en/topic/trade/publication/the-african-continental-free-trade-area
3An expert explains: What is RCEP, the world’s biggest trade deal? WEF (2021). See: https://www.weforum.org/agenda/2021/05/rcep-world-biggest-trade-deal/
4 ASEAN to drive the next decade of global trade, Business Times (June 28, 2023). See: https://www.businesstimes.com.sg/international/global/asean-drive-next-decade-global-trade
5 Future of Trade: New opportunities in high-growth corridors, Standard Chartered (2023). See: https://www.sc.com/en/banking/banking-for-companies/future-of-trade-2023/
6 Singapore and Kenya sign three new deals, move investment treaty forward, The Straits Times (May 18, 2023). See: https://www.straitstimes.com/singapore/singapore-and-kenya-sign-three-new-deals-agree-to-ratify-investment-treaty-soon
7 Future of Trade: New opportunities in high-growth corridors, Standard Chartered (2023). See: https://www.sc.com/en/banking/banking-for-companies/future-of-trade-2023/
8 Singapore and Kenya sign three new deals, move investment treaty forward, The Straits Times (May 18, 2023). See: https://www.straitstimes.com/singapore/singapore-and-kenya-sign-three-new-deals-agree-to-ratify-investment-treaty-soon
9 Singapore and Kenya sign three new deals, move investment treaty forward, The Straits Times (May 18, 2023). See: https://www.straitstimes.com/singapore/singapore-and-kenya-sign-three-new-deals-agree-to-ratify-investment-treaty-soon