Implications from the Results of JETRO’s Survey
onBusiness Conditions of Japanese-Affiliated Firms in Africa

UNIDO Seminar
2 June, 2013
Mr. Shintaro Matoba
Director, Middle East and Africa Division, Overseas Research Department,
Japan External Trade Organization (JETRO)
Copyright © 2013 JETRO. All rights reserved. Unauthorized copying prohibited.

Survey overview
ObjectiveObjective To
To grasp
graspthethe status
status ofof businessbusinessoperations
operations ofof
Japanese-affiliatedfirmsinAfricaandprovide
Japanese-affiliated firms in Africa and provide thetheresults
results toto thethe public.
public.

Companies
Companies surveyedsurveyed Japanese-affiliatedJapanese-affiliated firms
firms operating
operating inin 24
24 countries:
countries:
Six
Six countries
countries inin North
North Africa,Africa, five
five countries
countries ininWest
WestAfrica,
sixcountries
inEastAfricaandseven
Africa, six countries in East Africa and sevencountries
countries inin Southern
Southern Africa
AfricaPeriodPeriod AugustAugust 11 -- October
October 31,31, 2012
2012

Response
Response raterate 168
168 valid
valid replies
replies received
received(a(a 50.5%50.5% responseresponse rate)
rate)
out
out ofof 333
333 companies
companies

RemarkRemark ThisThis was
was thethe third
thirdsurvey
survey following
followingthose
those conductedconducted
in1999and2007.
in 1999 and 2007.
 JETROJETRO sent
sent questionnaires
questionnaires written
written in
in Japanese,
Japanese,
EnglishEnglishor
or French
Frenchto
to thethe target
target companies
companies by
by mail,mail, fax
fax
ore-mail.
or e-mail.

NoteNote As
As thethe response
response rate
rate was
was roundedroundedtoto oneone decimal
decimalplace,
therearesometotalfigures
thatdon’tplace, there are some total figures that don’t amountamounttoto 100%.
100%.
 “N”“N” stands
stands forfor thethe number
number ofof valid
valid responses.
responses.
Copyright © 2013 JETRO. All rights reserved. Unauthorized copying prohibited.

1

Survey object【North Africa】
Tunisia 10(2)127（49）JETRO sent questionnaires to333 companies in 24 countries.
Morocco25(11)

Algeria
15(4)

Libya
10(2)

Egypt
65(30)Niger
1(1)Senegal4(1)Coted'Ivoire Ghana
2(2)
9(4)

Sudan
2(0)

Nigeria15(12)

Ethiopia3(2)UgandaKenya
2(0)35(21)
Rwanda2(0) Tanzania
11(5)【West Africa】
31（20）
Angola5(2)MozambiqueZambia6(4)3(2)
Zimbabwe Malawi Madagascar
3(2)
2(1)
6(2)

Republic of South Africa
96(57)
Note: The numbers are companies to whom we sent questionnaires,and those in parenthesis are valid replies.
Copyright © 2013 JETRO. All rights reserved. Unauthorized copying prohibited.

【East Africa】
59（30）

Swaziland
1(1)【Southern Africa】
116（69）2

Figure 1 - Changes to business performance in the past five years

N=91 InIn WestWest andandSouthern
Southern Africa,Africa, more
more
than60%offirms
repliedthat
theirthan 60% of firms replied that theirbusinessbusiness performance
performance had
had improved.
improved.
However,However, while
while 51.6%
51.6% ofofrespondents
respondents throughout
throughout Africa
Africa still
still
recorded
animprovement,
recorded an improvement, this
this waswas aa
decreasedecrease fromfrom thethe FY2007
FY2007 survey.
survey. TheThereasons
arepoliticalinstability
causedreasons are political instability caused
byby thethe collapse
collapse ofof longtime
longtime regimes
regimes ininNorth
North Africa
Africa andandfiercer
fiercer competitioncompetitionin
inobtaining
obtaining Official
Official Development
Development
Assistance
Assistance (ODA)(ODA) projects
projects inin East
East Africa.
Africa.
 MoreMore thanthanhalf
half ofof all
all manufacturers
manufacturers
answeredansweredperformance
performance hadhad improved.
improved.

N=126

Note: Does not include companies which entered theAfrican market within the past five years

By region(%)
020

406080100

By industry category
0North Africa
West Africa
East Africa

20(%)
406080100

Manufacturers

Nonmanufacturers

SouthernAfrica

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Fig. 2 Importance of business in Africa

 Throughout
ThroughoutAfrica,Africa,more
morethanthanhalf
halfofofthe
thefirms
firmsreplied
repliedthat
thattheir
theirhosthostcountry
countrygrew
grew
more
moreimportant
importantfor
fortheirtheirbusinessbusinessover
overthethepastpastfive
fiveyears.
years.The
Theproportion
proportionofof
firms
firmsstating
statingthe
theimportanceimportance ofoftheir
theirhost
hostcountry
countrywill
willincrease
increasein
inthe
thefuture
futurereachedreached67.3%.
67.3%.
InIn North
NorthAfrica,
Africa,43.8%
43.8%ofoffirms
firms statedstatedtheir
theirhosthostcountry
countryhad
hadgrown
growninin
importanceimportanceover
overthethepastpastfive
five years,years,
while
while71.4%
71.4%statedstatedititwould
wouldgrowgrowininimportanceimportancein
inthe
thefuture.
future.The
The latterlatterwas
wasespecially
especiallytrue
trueininMorocco,
Morocco,where
where 81.1%
81.1%(11(11firms)firms)statedstatedthis.
this.
 Comments
Commentsfrom
fromfirms
firmsininEastEastAfrica
Africaincludedincluded“We“Wearearenow
nowfocusing
focusingon
onnot
not
only
onlyresources
resourcesof
ofthe
thecountry
countrybut
butalsoalso
trading
tradingof
ofvarious
variousproducts,”
products,”and
and“Due“DuetotoaachangechangeininHeadquarters’
Headquarters’businessbusinessplans,
plans,East
EastAfrica
Africahas
hasbecomebecomean
animportant
importantstrategicstrategicregion.”
region.”

TheThe importanceimportance ofof thethe host
host country
country inin businessbusiness

N=159

N=159

During the past five years by region
020406080(%)

Future outlook by region

1000North Africa

North Africa

West Africa

West Africa

East Africa

East Africa

SouthernAfrica

20(%)
4060

80

100

72.
4

SouthernAfrica
Do not know

Copyright © 2013 JETRO. All rights reserved. Unauthorized copying prohibited.

Do not know

4Fig. 3 – Future business plans
Overall(%)(Multiple answers allowed)

By region(%)
020408060

North Africa
Planning/considering businessexpansion and/or new investment inthe country they are locatedWest Africa

Maintaining the current business scale

East Africa

Planning/considering to expand
to other African countries

N=155

Southern Africa

Considering reducing business(including withdrawal)

Planning/considering business expansion and/or new investment in thecountry they are located

By industry category
02040(%)
60

Maintaining the current business scale
Planning/considering to expand to other African countries
Considering reducing business (including withdrawal)

Manufacturers

Nonmanufacturers

Planning/considering business expansion and/or new investment in
the country they are locatedMaintaining the current business scale
Planning/considering to expand to other African countries
Considering reducing business (including withdrawal)

Copyright © 2013 JETRO. All rights reserved. Unauthorized copying prohibited.

 About
About 60%
60% ofof respondents
respondents inin each
each region
regionareare planningplanningor
or
consideringbusiness
expansion
and/ornewinvestmentin
considering business expansion and/or new investment inthe
thecountry
country they
they areare located,located, while
while 30%30% will
willmaintain
maintainthe
the current
current
businessbusiness scale.
scale. ManyMany firms
firms inin Egypt
Egypt andand Libya
Libya inin North
NorthAfrica,Africa, Cote
Coted’IvoreandSenegalinWestAfrica,Ethiopia
andTanzania
inEastd’Ivore and Senegal in West Africa, Ethiopia and Tanzania in East
Africa,Africa, andandMozambique
Mozambique andand Angola
Angola ininSouthern
Southern Africa
Africa areareplanningplanningor
or considering
considering businessbusiness expansion
expansion and/orand/or new
new investment
investment
inthecountry
theyarelocated.
in the country they are located.
 Fields
Fields ininwhich
whichmany
many companies
companies areare considering
considering expansion
expansion are
are thetheconsumer
consumer market,market, agricultural
agricultural development,development, telecommunication,
telecommunication,
medicalmedical care
care andand environmental
environmental technology.
technology.

5

Countries that attract attention *Multiple answers allowed
Countries drawing attention(N=151)

Number ofanswers

Points that draw companies’ attention (Comments)
Rich resources. Growing consumer markets driven by the emerging middle class. Political stability.
Established economic and infrastructure foundation. Function as a business hub in the Sub-SaharanAfrican region. Business hub for car exports to other African countries.
Economic growth triggered by the discovery of a large natural gas field. Infrastructure development
accelerated by promotion of resource development. Increasing demand for goods associated withresource development. Growing demand for construction. Possibility of agricultural development.
Advantageous location facing the sea.
High economic growth created by full-fledged oil development. Strengthened financial foundation.
Expanding infrastructure development. Future possibility of market growth in 15 years. High potential,growing market and limited competition with few entries by companies.

No. 1South Africa

53

2Mozambique50

3Angola46

4

Nigeria44

4Kenya

44

6

Egypt

37

Geographic advantage of the country with a central location between the Middle East, Europe andAfrica. Increasing opportunities created by the development of urban infrastructure (public transport).
Increasing revenue from tourism. Expanding markets driven by the emerging middle class.

7

Tanzania

34

Future economic growth driven by the development of natural gas. Political stability. Cordial
personalities. Growth potential of the durable goods market (automobiles and motorcycles).

8Morocco

29

Business hub in North Africa as a part of the European business bloc. Stabilized investment
environment. Market growth potential. An expanding automobile market supported by increasing
individual income levels. A world leading phosphate producer.

9The Ivory Coast

9

Business hub for French speaking countries in West Africa which draws attention for its rich resources(iron ore, etc.). Demand related to restoration from the end of political instability such asinfrastructure development.

9Zambia

9High growth rate based on natural and tourism resources. Growing demand for goods associated withresource development. Political stability. Future economic development.

Others－Libya (8), Algeria (7), Ghana (7), Uganda (6), Zimbabwe (6), Tunisia (6), Ethiopia (5), Namibia (5),Botswana (5), South Sudan (5).
* Excluding countries with 5 answers or fewer.

High economic growth accelerated by oil and gas development. Large population with a high growthrate. Growing demand for energy development. Increasing opportunities created by orders frommajor oil companies for plant-related equipment.
Business hub in East Africa. Increasing individual consumption associated with economic growth. A
certain number of ODA projects. Expanding repair and service markets supported by the large share ofJapanese cars (including used cars).

6Copyright © 2013 JETRO. All rights reserved. Unauthorized copying prohibited.

Fig. 4 - Challenges in business in Africa
 TheThe number
number ofof companies
companies thatthat cited
cited politicalpolitical andandsocialsocialstability
stability as
as aa challenge
challenge significantly
significantly increased
increased fromfrom thetheFY2007
FY2007 survey,survey, with
with 87.8%
87.8% out
out ofof 148
148 companies.
companies.
 About
About 70%
70% ofof respondent
respondent manufacturers
manufacturers consider
consider local
local
procurement
asachallenge.
Somepointedprocurement as a challenge. Some pointedout
out thatthat local
local
supporting
supporting industries
industries have
have notnot yetyet been
been developed
developed
enoughenough andandthat
that represents
represents an
an issue
issue forfor manufacturers
manufacturers inin
expandingbusinessinAfrica.
expanding business in Africa.
 AlthoughAlthough some
some commentscomments included
included“There“There isis nonoconsiderable
improvement
intheAfricanbusinessconsiderable improvement in the African businessenvironment,”
environment,” there
there werewere also
also those
those such
such asas “Through“Through aa
long-term
long-term businessbusiness commitment,commitment, we
we cancan findfindsolutions
solutions totoour
our challenges,”challenges,” andand “We“We adapt
adapt ourour businessbusiness plans
plans bybyanticipating
anticipating issues
issues likely
likely totooccur
occur locally.”
locally.”

By industry category

Political and social instability

Political and social instability
Legislation andimplementation ofregulations/laws

Fund procurement

Local procurement

Problems with
employment andlabor
Infrastructure environment

Copyright © 2013 JETRO. All rights reserved. Unauthorized copying prohibited.

Legislation andimplementation ofregulations/laws

Fundprocurement

Localprocurement

Problems with
employment andlabor
Infrastructure environment

7

Fig. 5- Challenges in business in Africa(Multiple answers allowed)

Politicaland social instability
政治的・社会的安定性

Inconsistent enforcement by differentgovernmental organizations

Social instability

Complex procedures

Political risk

Frequent revision

Corruption andbribery
Other

N=129

Other Many
Manycitedcitedsocialsocialstability
stabilityand
andpoliticalpoliticalrisk
riskasasissues
issuesin
inbusiness.
business.
 In
Inthe
theinterviews
interviewswith
withJapaneseJapanesecompanies,companies,somesomesaid
saidititadds
addscost
costtotopreparepreparesafety
safetymeasures,measures,andandothers
otherssaid
saidthey
theycannot
cannotmake
makelong-termlong-terminvestment
investmentplans
plansdue
duetotothe
theeffects
effectsof
ofpoliticalpoliticalchange.
change.

Problems
with
雇用・労働の問題
employment and labor(%)

Legislation and implementation
規制・法令の整備、運用
of regulations/laws

(%)

(%)

N=112


 In
Ininterviews
interviewswith
withcompanies,
companies,some
somepointed
pointedout
outthatthatthere
therearearesudden
suddenchanges
changesininsettlement
settlementprocedures
proceduresand
andforeignforeigncapitalization
capitalizationratios
ratioswithout
withoutpriorpriornotice
noticeofofact
act
amendment.
amendment.Also,
Also,others
otherssaid
saidthatthatrelated
relatedministries
ministriesdo
donot
notunderstandunderstandtheir
theirown
ownsystems.
systems.
 Other
Otherissues
issuescited
citedwere
were“arbitrariness“arbitrarinessof
oflegallegalinterpretation”
interpretation”andand“legal“legalcomplication
complicationof
ofcustoms-housecustoms-housebusinessbusinessand
andVAT
VATrefundrefundprocedures.”procedures.”(%)

Infrastructure
インフラ環境environment
Energy such as electricity
Telecommunication
Transportation
Water

Employee absenteeism rate

N=106


 About
About80%
80%ofoffirms
firmsconsider
considersecuring
securinghuman
humanresources
resourcesas
asaachallenge.
challenge.Some
Some
respondents
saidthat
even
when
local
employees
havehigher
respondents said that even when local employees have highereducation,education,sometimes
sometimes
their
theirbusinessbusinessability
abilityisislower
lowerthan
thanthetheJapaneseJapaneseof
ofequalequaleducational
educationalbackground.
background.
 TheTheproportion
proportionof
ofrespondents
respondentsthat
thatconsider
considerhigh/risinghigh/risinglabor
laborcosts
costsasasan
anissueissuewas
was
42.5%(86firms),
which
increased
from
24.4%
intheFY2007
survey.
42.5% (86 firms), which increased from 24.4% in the FY2007 survey.

Copyright © 2013 JETRO. All rights reserved. Unauthorized copying prohibited.

Insufficient land/office space
Other

N=88
 Energy
Energysuch
suchasaselectricity
electricitywas
wascitedcitedthethemostmostwith
withabout
about70%
70%ofofthe
thetotal,total,andandby
byabout
about80%
80%ofofthe
the24
24respondent
respondentmanufacturers.
manufacturers.
 Telecommunication,
Telecommunication,which
whichwaswascitedcitedthethemostmostininthe
theFY2007
FY2007survey
survey(N=71,(N=71,76.1%)
decreased
thistime.
However,energysuchaselectricity
76.1%) decreased this time. However, energy such as electricityincreased
increasedfrom
fromthetheprevious
previoussurvey
survey(N=71,(N=71,59.2%).
59.2%).

8

Key to successful business in Africa *Multiple answers allowed
By region

North Africa

West Africa
(%)

N=48

Southern Africa

East Africa(%)

N=19(%)

(%)

N=30

N=66

By
By region,region, “price”“price” ranks
ranks first
first withwithmore
more than
than 60%
60% ofof respondents
respondents inin allall regions,regions, followed
followed byby “securing“securing human
humanresources
resources ininthe
the local
localenvironment”
environment” (52.1%)(52.1%) in
inNorthNorth Africa,Africa, “relationship“relationshipwith
with local
local government/companies”
government/companies” (52.6%)(52.6%) in
inWestWest Africa,Africa, “quality”“quality” (56.7%)(56.7%) in
in EastEast
Africa,Africa, andand“quality”“quality” (54.5%)(54.5%) andand “securing“securing human
human resources
resources ininthe
the local
local environment”
environment” (50.0%)(50.0%) in
in Southern
SouthernAfrica,Africa, demonstrating
demonstratingthe
thedifferences
differences amongamongthe
the regions.
regions.
AsAs forfor Southern
Southern Africa,Africa, where
where thethe middle
middle classclass isis emerging,
emerging, there
there waswas aa commentcomment thatthat “A“A JapaneseJapanese brand
brand withwith highhigh quality
quality doesn’t
doesn’t always
alwaysbecomebecome aa big
bigseller.
seller. Wide
Wide spreadspread andanddeep
deep penetration
penetrationofof low
low price
price products
products andand services
services isis thethe key
key toto successfulsuccessful business.”business.” Other
Other statedstatedkeys
keys toto successsuccess included
included“collaboration“collaboration withwith third
third countries”
countries” (Kenya),(Kenya), “swift“swift businessbusinessmanagement”
management” (Egypt)(Egypt) andand “localization“localizationofof businessbusinessmanagement”
management” (Tanzania).
(Tanzania).
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9Reference

10
Copyright © 2013 JETRO. All rights reserved. Unauthorized copying prohibited.