TICAD V/UNIDO“Investment and Technology Promotion inAfrica: Case Studies”
Yokohama, JapanUNIDO Business and Investment Activities and Networksin Africa
02 June 2013
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Regional Investment Promotion
Programme in Africa

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WHY this Programme?
 Diversification and industrial structural change, leading towealth, depends on investment, but on quality investment
with impact
 Flow of investments into productive sectors in many
African countries are below expectations
 Anticipated development impact from foreign investments
not realized National institutions involved in investment promotion noteffective
 Lack of involvement of private sector
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AfrIPANet Programme

African Network ofInvestment
Promotion Agencies

Goal:
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Programme Validation•CAMI identified the programme as central to
implementation of industrialization strategy (CAMI
Declaration 2008)•EU-Africa Business Forum, 2010 recommended
expanding Programme to all of Africa• CEO conference called it “priority programme” thatcan facilitate and inform other projects.
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Programme Components

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Types of data available
Investor Characteristics

Performance Measures

Impact Indicators

Size (employment, sales, assets)

Profit, Profit rate before taxes

Employment

Motivation to invest (raw materials,markets, low cost & export)

Growth (investment, employment,sales, exports)

Wages

Market orientation/intention (local,regional, global)

Capacity utilization

Ownership (foreign, domestic, JV)
Investor Origin (North vs. South, region,country)
Type of Organization: Transnational
corporation (TNC), foreign entrepreneur(FE), Diaspora
Sector (main & disaggregated as ISIC)

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Past and future investment
Labor and capital productivity
Input costs

Local partnersLocal content
Supplier development
Training
R&D
Technology transferTaxes

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Investment Monitoring Platform

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Investment Monitoring Platform (IMP)… to quickly
research different
types of investors,
their performanceand development
impact.

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Investment Monitoring Platform (IMP)… to establish acommon data source
for the different
stakeholders in thearena of investment;… and unite themaround a commonshared vision topromote investment
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What is the IMP?
 Data visualization toolkit(histograms, bar-, pie-, bubblecharts, heatmaps).

Data visualization:

Platform to share findings andexchange ideas on investment; forinter-institutional and publicprivate dialogue.

Business Directory (currentlyDigital Library/
Knowledge Base:Business Directory:

thousands of verified companies
and investors operating in Africa).

Service efficiency tools: Investor
Inquiry Messenger, On-line report
generator, Newscast, etc.
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Investor as user of IMP• Understand differences between countries– Who is going where– Which policies are benefiting investor performance– Productivity, cost, profitability, incentives, quality of support services– Which sectors are strong and developing quickly– What attracted other investors to a location• Identify business partners• Benchmark their operational indicators against averages• Identify gaps that can provide investment opportunities• Get to know investor perceptions and needs• CASE STUDY: Japanese companies in Africa
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Benefits and Inputs of IMP Stakeholders
Alignment of Investment Promotion,
Data Collection, TRANSPARENCY!

Data and perceptions
Strategic planning,
identify opportunities,
investor support services• Evidence based Policies• Better Services forInvestors• Growth withemployment

Free company website,
Global visibility!

Support to private sector
driven development

Provide Data

MarketAnalysis

Transparency, informed
participation in the nationaldialogue
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TC Projectdesign

Growth with Employment
Needs Assessment and Gap Analysis
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Finding business
partners
IMP Business Directory

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Access the Business Finder
Click the link top right…

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Text Search

Simply enter a text string, e.g. Pharmaceuticals

The system retrieves all companies with “Pharmaceuticals” in their name,company description, product descriptions…
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View companies

Click the magnifying glass on the left for details …

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View companies… and retrieve information through different tabs

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Directly contact a businesspartner.
All listings are explicitly
approved through thesurvey.
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Advanced Search

Click the link next to the search box

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Advanced Search

Select various criteria: company size, sectors, ownership

The system retrieves all companies that match all selected criteria.
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Findings about
Investment in Africa
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Japanese Investors in Africa
Discoveries from UNIDO’sAfrica Investor Survey

Company Characteristics
Country Locations
Tanzania
ZambiaKenya
UgandaCameroon
Malawi
Nigeria
ISIC Subsector groups
Food, beverages and tobacco products
Paper and paper products
Rubber and plastics
Automobile, machinery and equipment
Office and electrical machinery; communication equipment; medical instruments
Trading companies
Hotels and restaurants
ICT
Consultancy and other services
Company age
0-5 yrs
6-10 yrs
11-20 yrs
21 yrsCompany size, Fixed assets
Small (< 100,000 USD)
Medium (100,00 to 1,000,000 USD)
Large (> 1,000,000 USD)
Organizational structure
Wholly-owned Enterprises - TNCWholly-owned Enterprises - Foreign Entrepreneurs
Joint Ventures - Foreign Entrepreneurs

Count32221111111141111334245642

Investment: Initial, Last Major, Planned
Initial investment:
Japanese firms had
double the average of allother foreign firms
surveyed

Conclusion: Japanese firms
came into the region withhigher initial investment,
made higher major
investments previously,
and also have higher
planned investments thanthe average foreigncompany

AllFDI

Size of last major
new investment:
higher for Japanesefirms than theaverage of foreigncompanies

Japanese investments
Planned New
Investment: higher forJapanese firms thanaverage

Investment Comparisons
Last Major Investment:
Last major investment
was significantly higher forJapanese firms

Initial Investment:
Japanese firms came into
the region with muchhigher initial investments
than China, India, andKorea

Conclusion: Overall
investments are much higherfor the Japanese firms
surveyed than China, India,and Korea
Planned New
Investment: Japanesefirms have plans to invest
higher amounts than its
peer investors

Business Growth
Median Sales
Growth: Higher forJapanese firms thanaverage

Size: Mean
employment growth issmaller than average

Conclusion: Japanese firms
have higher sales andexport growth than theaverage foreign company,
despite its smaller
employment growth
AllFDI

Japanese investments

Median Export
Growth: Higher forJapanese firms thanaverage

Business Growth Comparisons
Sales Growth: Japanesefirms have significantly
higher sales growth thanIndia and China, and only
slightly higher than Korea

Employment Growth:
Japanese firms have thelowest employment
growth compared to thethree other countries

Conclusion: Japanese firms
enjoy higher sales growththan its major competitors,
and have the second
highest export growth next
to Korea. It has the lowest
employment growth in thispeer group.

Export Growth: Higher
than India and China, but
significantly less thanKorea

Value Added, Employment and Productivity
Full-time
Employment:
Japanese firms
provide higher fulltime employment
rates

Value added: Japanesefirms have higher
economic value added
than the average foreign
firmConclusion: Despite having lower
mean output per worker,
Japanese firms provide higher fulltime employment and have higher
economic value added

AllFDI

Japanese investments
Mean Output per
Worker: Lower forJapanese firms than theaverageValue Added, Employment and Productivity
Value added: Japanesefirms have much higher
economic value added
than China, India, andKorea

Full-time
Employment:
Japanese firms
provide higher fulltime employment
rates

Conclusion: Despite having
the lowest mean output per
worker, Japanese firms
provide higher full-time
employment and havehigher economic value
added than its peers

Mean Output per
Worker: Lower forJapanese firms than itspeers

Sustainability: Profits, Liabilities, and Net-WorthNet Worth: Japanese firms arecapitalized with less equity than theaverage foreign firm

Gross Profits: Japanese firms havehigher gross profits than the average
foreign firm

Conclusion: The surveyed Japanesefirms seem to operate successfully
despite high debt levels

AllFDIJapanese
investments

Liabilities: Japanese firms surveyed
are highly leveraged, with adebt/equity ratio over 4 times theaverage foreign company

Sustainability: Profits, Liabilities, Net WorthNet Worth: Japanesefirms are capitalized withless equity than theaverage foreign firm

Gross Profits: Japanesefirms have had higher
gross profits than any ofits major competitors

Conclusion: The surveyed
Japanese firms seem tooperate more profitably
despite high debt levels

Liabilities: Japanesefirms are more highly
leveragedSupplier Development

Expenditures on
Improving Supplier
Relationships: Japanesefirms invest about asmuch as the average
foreign company

Number of Suppliers:
Japanese firms utilize
fewer suppliers

Conclusion: Despite receiving lessincentives than the average
foreign company, Japanese firms
spend just as much on improving
their relationships with local
suppliers
AllFDIJapanese
investments

Incentives: Japanesefirms receive lessincentives from thegovernment to improve
supplier relationships

Supplier Development
Expenditures on Improving Supplier
Relationships: China outspends
Japan in supplier development

Number of Suppliers:
Japanese firms utilize more
suppliers than China, India,and Korea
Conclusion: China spends the most on
supplier development, but Japan
spends more than India and Korea,
despite receiving the least amount ofgovernment incentives

Incentives: Japanesefirms receive the least
amount of government
incentives for supplierdevelopment

Agro and AgroProcessing
Are there investment opportunities
in Africa?
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Which sectors got surveyed?

Planned New Investments, by Subsector & Establishment era

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Where are the investments?

Median Last Major Investments, by Country

In all countries recent investments in these
sectors were recorded (including also Lesotho)!
Medians vary strongly, though.
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Performance of Ownership Types

Planned New Investments and Employment Growth

Joint ventures outperform theother ownership types in termsof planned investments andemployment growth

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Joint Ventures: Types

Planned New Investments and Employment Growth

Equal joint ventures plan toinvest most and have thelargest assets.

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Joint Ventures: Types

Last Major New Investments & Employment Growth… yet foreign dominated jointventures plan did invest the mostrecently and grew employment much
more dynamically.

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Joint Ventures: Company Size

Planned New Investments and Employment Growth

Large joint ventures invested most…

… yet small joint ventures grew
employment much more dynamically.

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Joint Ventures: Company Size
Profits and Productivity

Large joint ventures
have the highest sales
per employee…
… yet small joint ventures
are almost equally profitable!

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Joint Ventures: Company Size
Export performance

Medium size jointventures (US$ 100,000
to US$1m) have thehighest export growthand intensity…

… even if large joint ventures
have the highest export volume.

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Agrobusiness: Why invest?

Mean Output by Main motivation to invest

274 producers stated Market Access as
main motivation, and their Output is big.

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Agrobusiness: Market Strategy?
Gross Profits by Market Orientation

135 producers are Regional MarketSeekers. And they are most profitable.

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Agrobusiness: Org-Structure

Gross Profits, Market Orientation, and Organization
Except in the case of Wholly Owned TNCs, nomatter which organizational structure is chosen:
Regional Market Seekers are most profitable.

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Innovation

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Product Innovation: Employment boost

Companies who achieved
product innovation, invested
more recently, had higher
median sales, and higher
employment growth.

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Process Innovation: Efficiency gain
Companies who achieved product and process
innovation, had higher investment, but seem to haveeconomized on employment.

Companies who achieved product innovation without
process innovation, had less investment but
increased employment more strongly.

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Expenditure on Technology Upgrades
It is recently established companies
that spend most on technology
upgrades! The bigger the market
they seek, the more they spent ontechnology upgrades

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Want to find out more?
http://investment.unido.org

A Window for Analyzing Investments
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UNIDO INVESTMENT AND
TECHNOLOGY NETWORKS AfrIPANet . 45 Members
 ITPO Network African Private Sector Associations
 CEO Network to be established Sub Contracting and Partnership ExchangeNetwork Technology Centres

Wrap up and conclusion slide• How to register to the IMP for Business
opportunities in Africa• ITPO Japan focal point• Survey 2013 announcement – New Data will
be made available• Expansion of Programme to other Africancountries and beyond• Openess to partner with Japan to see how canthis Programme can benefit the Private sector
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THANK YOU!

Contact details:
Investment and Technology Unit
UNIDO
Email: T.Boye@unido.org

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