African Integration from theJapanese Perspective
July 7 th, 2021
Masafumi Sugano
Ministry of Economy, Trade and Industry (METI)/ Japan External Trade Organization (JETRO)1. Corporate Japan goes African Japanese companies in Africa are no longer obviously Japanese.
African executives

Ownership(whole)(From left to right)
Prejay Lalla, CEO, Kansai Plascon
Johann van Zyl, Executive Vice President (Europe & Africa), Toyota
Gbenga Oyebode, Chairman, Yamaha CFAO Motors Nigeria

Partnership
Example: Roofing Rolling Mills in Uganda(10% ownership and technical alliance with Yodoko)(partial)1

2. Limits to intra-African trade Trade within Africa is weak – and this hurts Japanese companies, too.

Proportion of intra-regional trade

The little intra-African trade thatexist is non-industrial profucts

Africa(Source) UNCTAD, Mechandise: Inter-trade and extra-trade of country groups
by product, 2017

(Source) tralac AfCFTA Guide fourth edition, February 2019,calculated from ITC Trademap 20192

3. High intra-African tariff rates (outside of RECs) High MFN tariff rates – most industrial products taxed at 20%-plus.

（Custom Unions）
EAC: East African Community
ECOWAS: Economic Community ofWeest African States
SACU: Southern Africa Customs
Union(Source) tralac AfCFTA Guide third edition, August 2018 and fourth edition, February 20193

4. Africa’s position in Japanese business strategy(From the Survey of Business Conditions of Japanese-Affiliated Companies in Africa, JETRO, December 2020)

 About 50% of companies responded that the “importance of Africa increased” compared to five years ago.
 About 60% responded that the “importance of Africa will increase” over the next five years. Many companies cited"market expansion with the growth of population" and "expectations for the African Continental Free Trade Area(AfCFTA)" as reasons for this.
Positioning compared to five years ago

Positioning over next five years

Not sure
5.7%

Not sure
13.1%

Importance decreased…
Importance decreasing…

N=282
No change
36.5%

Importanceincreased
49.3%"Importance increased"
・ Growth market, population growth, rising labor costs in Asia
・ Strong demand for resource development and infrastructure development
・ Increased attention within the company through growing number of
expatriates
・ Stabile employment situation due to political stabilization"Importance decreased"・ Market growth is slower than expected, sales scale did not grow, etc.

No change
24.1%

N=282

Importanceincreasing
59.6%"Importance increasing"・Expect an increase in demand with population growth and AfCFTA・ Leapfrog innovation will continue to happen.
・Manufacturing transfer from European bases will increase“Not sure”
・ Unable to forecast the future due to COVID-19
・ Economic and political stability of African countries is unclear, etc.

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5. What’s in it for Africa?
 Japan can be a steady, long-term partner for Africa’s industrial andcommercial development.

 Skin in the game: equity rather than debt (although wedo engage in highly concessional lending through JICA).
 Competitive, cutting-edge capital equipment for use by
African industries (as an alternative to the Europeans).

 Marketing know-how in markets outside of Africa.
 Reliance on local executives, managers and workers(therefore taking HR development seriously).

56. Japan’s strategic objectives in Africa
 Three overlapping objectives – partner, earn and contribute.
PartnerEarn

academiccollaboration

minority stakes
startup investment

UN reform

G20

B-to-Bbusiness

institutional
investors

auto manufacturing
ABE Initiative(internships for
African students)

commodity
trade
support for AfcFTA

cybersecurity
security
cooperation

infrastructuredevelopment

agriculture
traditional aid

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