2019 Survey on Business Conditions of Japanese …...companies becoming the top competitors for the first time in two years. Continuing from last year, Japanese companies were ranked

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2019 Survey on Business Conditions of

Japanese Affiliated Companies in Africa

March 2020

Japan External Trade Organization (JETRO)

Overseas Research Department

Middle East and Africa Division


Survey Categories for this Year

2

● Important Survey Findings 3

● Survey Overview & Company Profile 4

● Survey Target 5

1. Operating Profit Forecast and Future Business Outlook 6

2019 Operating Profit Forecast ① 7

2019 Operating Profit Forecast ② 8

Operating Profit Forecast Compared to Previous Year ① 9

Operating Profit Forecast Compared to Previous Year ②：Breakdown by Country and Industry

10

Operating Profit Forecast Compared to Previous Year ③：Reasons for Improvement

11

Operating Profit Forecast Compared to Previous Year ④：Reasons for Deterioration

12

Future Business Outlook: 13

Number of Employees ① 14

Number of Employees ②：Local Staff by Country and Industry 15

Number of Employees ③：Japanese Expat Staff by Country and Industry

16

Africa’s Position in Global Strategy 17

2. Changes to Investment Environment in Africa 18

Investment Environment Advantages 19

Africa Investment Risks ① 20

Africa Investment Risks ② 21

Competition With Third-Country Companies ① 22

Competition With Third-Country Companies ② 23

Collaboration With Third-Country Companies 24

3. Future Market Expectations 25

FTA and Customs Union ① 26

FTA and Customs Union ② 27

Reasons for Maintaining Presence in Africa 28

Promising New Business Fields in the future 29

Future Investment Destinations ① 30

Future Investment Destinations ② 31

Future Investment Destinations ③ 32

JETRO: Survey on Japanese Companies in Africa


Market expectations become clear, 80% of companies have entered the market in Africa

because of “future market potential”

- Increased Interest from the 7th Tokyo International Conference on African

Development (TICAD7) -

Important Survey Findings

[ Changes to Investment Environment ]

Although business management risks remain, companies seek to expand their business by

avoiding risks through new methods such as coordination with third-country companies.

[ Future Market Expectations ]

80% responded “future market potential” as their reason for entering the market.

There are also high expectations for consumer markets and regional integration.

[ Operating Profit Forecast and Future Business Outlook ]

More than half of companies maintain profitability, with 60% considering business expansion.

The importance of Africa in global strategies is increasing.1

2

3

3JETRO: Survey on Japanese Companies in Africa


4211 8 8 5 6 34 13

43

88

57

0

20

40

60

80

100

Priorto

1970

1971 -1975

1976 -1980

1981 -1985

1986 -1990

1991 -1995

1996 -2000

2001 -2005

2006 -2010

2011 -2015

After2016

Survey Overview & Company Profile

Number of Employees: Most are Small-scale Enterprises

2019 Survey on Business Conditions

of Japanese Companies in Africa

◆ Survey Period: September 24th - October 25th, 2019

◆ Response rate: 74.5%( Targeted 24 countries, 315 valid responses out of 423 companies surveyed )

*See details on the next page

◆ Survey target: Japanese companies in Africa※ A Japanese company in Africa, is a company that receives capital

contribution from any Japanese company, regardless of the investment

ratio or number of Japanese expats present.

※ Please note in graph ‘N’ refers to number of companies

Years of Establishment: Approximately Half of

Companies Expanded into Africa from 2011

Industry: 1/3 of Respondents were

Manufacturing Companies

N=315

(Companies) N=315

Manufacturing

32.1%

(101 companies)

Non-

manufacturing

67.9%

(214 companies)

4

1 - 10 employees or less45.0%

11 - 5030.1%

51 - 1007.4%

101 - 3006.8%

301 - 10004.9%

1001 - 30003.2%

3001 employees or more2.6%

N=309



Survey Target: 315 Companies from 24 Countries Responded

(Note 1) The component percentages in the tables and charts have been rounded off to the 2nd decimal place, therefore the percentage of each answer may not amount to 100%.

(Note 2) "N" written in the report is the number of valid responses (parameter).

5JETRO: Survey on Japanese Companies in Africa

# of Companies

surveyed

# of Companies responded

Valid response rate# of Valid Responses

( ) = Manufacturers% share

Total count 423 315 (101) 100 74.5

North Africa 112 72 (29) 22.9 64.3

Morocco 55 35 (17) 11.1 63.6

Egypt 45 29 (10) 9.2 64.4

Algeria 6 5 (1) 1.6 83.3

Tunisia 6 3 (1) 1.0 50.0

West Africa 52 50(15) 15.9 96.2

Nigeria 22 22 (8) 7.0 100.0

Ghana 12 12 (3) 3.8 100.0

Cote d’Ivoire 12 10 (1) 3.2 83.3

Senegal 5 5 (2) 1.6 100.0

Burkina Faso 1 1 (1) 0.3 100.0

East Africa 85 63 (20) 20.0 74.1

Kenya 47 38 (10) 12.1 80.9

Tanzania 13 6 (2) 1.9 46.2

Ethiopia 11 10 (4) 3.2 90.9

Uganda 7 4 (2) 1.3 57.1

Rwanda 7 5 (2) 1.6 71.4

Southern Africa 174 130 (37) 41.3 74.7

South Africa 123 91 (28) 28.9 74.0

Mozambique 22 18 (4) 5.7 81.8

Zambia 10 6 (2) 1.9 60.0

Angola 6 4 (0) 1.3 66.7

Madagascar 5 5 (0) 1.6 100.0

Malawi 2 2 (1) 0.6 100.0

Mauritius 2 2 (0) 0.6 100.0

Zimbabwe 2 1 (1) 0.3 50.0

Namibia 1 1 (1) 0.3 100.0

Botswana 1 0 (0) 0.0 0.0


1. Operating Profit Forecast

and Future Business Outlook

6


2019 Operating Profit Forecast

By Industry

By Country

（％）

7

54.452.3

56.4

50.8 49.8 50.3

25.7 25.2 24.4

24.1

30.0 27.1

19.822.4

19.3

25.1

20.222.6

0

10

20

30

40

50

60

2014 (N = 237) 2015 (N = 214) 2016 (N = 275) 2017 (N = 295) 2018 (N = 297) 2019 (N = 314)

Profit Break Even Loss

68.1

50.0

50.0

48.3

44.7

41.7

38.9

38.2

20.0

14.3

31.8

20.0

41.4

28.9

33.3

27.8

29.4

40.0

17.6

18.2

30.0

10.3

26.3

25.0

33.3

32.4

40.0

South Africa(N=91)

Nigeria(N=22)

Ethiopia(N=10)

Egypt(N=29)

Kenya(N=38)

Ghana(N=12)

Mozambique(N=18)

Morocco(N=34)

Cote d’Ivoire(N=10)


(Note) Excludes countries where less than 10 companies responded.

57.4

46.9

17.8

31.5

24.8

21.6

Manufacturing industry (N=101)

Non-manufacturing (N=213)


0 20 40 60 80 100(%)

0 20 40 60 80 100(%)

The percentage of companies reporting profit slightly increased from the previous year, at more than

50%. The percentage of companies reporting loss was 2.4 points higher than the previous year.

In South Africa, Nigeria, and Ethiopia, the ratio of profitable companies is more than 50%.

Cote d’Ivoire’s loss ratio was 40%, higher than that of other countries.

2019 Operating Profit Forecast ①：South Africa Sustains its Strong Performance with 70% of Companies Reporting Profit



（％）

(Note) Morocco was not covered 2013’s survey.

8

Looking at the ratio of profitable companies in major countries, at nearly 70%, South Africa showed a

strong performance and steady increase from the previous year.

Kenya has also shown a significant increase by over 10 points from the previous year, marking two years

of a major increase.

Egypt showed the most increase in previous years, but saw a major decrease from last year. Morocco

saw a decrease for the second consecutive year.

2019 Operating Profit Forecast ②：

67.4 66.7 67.6 69.9

64.6 62.5

68.1

33.3 33.3

41.2

47.6

50.0 47.6

50.0

38.7

43.6

53.1

50.0

48.6

58.8

48.3

47.4 44.0

26.7

51.6

25.0

34.4

44.7

50.0

50.0

52.6 61.1

45.5

38.2

0

10

20

30

40

50

60

70

80

2013 2014 2015 2016 2017 2018 2019

South Africa

Nigeria

Egypt

Kenya

Morocco

Companies Reporting Profit Trends in Major Countries


(%)


(Note) 2015 - 2019: Estimate; 2020: Outlook.

Operating Profit Forecast Trends2019 Operating Profit Forecast

(Compared to Previous Year)


（％）

9

Improving40.1%

No change51.8%

Deteriorating8.1%

N=307

23.0

34.5 33.2 33.9 34.5

40.1

51.2

38.8

43.1

50.0

46.0

51.8

25.8

26.6 23.7

16.1

19.5

8.1

0

10

20

30

40

50

60

2015 (N=209) 2016 (N=278) 2017 (N=295) 2018 (N=298) 2019 (N=313) 2020 (N=307)

Improving No change Deteriorating

Improving34.5%

No change46.0%

Deteriorating19.5%

N=313

When companies were asked to compare operating profit forecasts between 2018 and 2019, 34.5%

responded that it had improved.

At the same time, 40.1% of respondents gave a brighter outlook for the 2020 operating profit forecast,

saying that they expect it to improve.

8.1% of respondents selected “deteriorating” for 2020, which was much lower than 2019’s 19.5%.

Operating Profit Forecast Compared to Previous Year ①：“Improving” outlook is increasing towards 2020



50.0

50.0

41.7

40.5

38.9

38.2

38.1

35.7

41.2

50.0

50.0

56.8

55.6

51.7

52.4

57.1

8.8

8.3

2.7

5.6

10.1

9.5

7.1

Morocco(N=34)

Cote d’Ivoire

(N=10)

Ghana(N=12)

Kenya(N=37)

Mozambique(N=18)

South Africa(N=89)

Nigeria(N=21)

Egypt(N=28)


49.0

36.0

38.5

57.8

12.5

6.2

Manufacturing industry(N=96)

Non-manufacturing(N=211)


2020 Operating Profit ForecastBy Country

By Industry

(Note) Excludes countries where less than 10 companies responded. (Note) Excludes countries where less than 10 companies responded.

10

40.0

39.5

36.4

34.5

33.3

33.3

33.3

32.4

30.0

60.0

47.4

50.0

44.8

36.7

55.6

50.0

50.0

60.0

13.2

13.6

20.7

30.0

11.1

16.7

17.6

10.0

Cote d’Ivoire

(N=10)

Kenya(N=38)

Nigeria(N=22)

Egypt(N=29)

South Africa(N=90)

Mozambique(N=18)

Ghana(N=12)

Morocco(N=34)

Ethiopia(N=10)


42.0

31.0

37.0

50.2

21.0

18.8


Non-manufacturing (N=213)


0 20 40 60 80 100(%)

0 20 40 60 80 100(%)

0 20 40 60 80 100(%)

0 20 40 60 80 100(%)

In 2019, Cote d’Ivoire, Kenya and Nigeria had the largest number of companies who responded that

their operating profit forecast was “improving.”

For 2020, they were Morocco, Cote d’Ivoire, and Ghana.


Operating Profit Forecast Compared to Previous Year ②：Breakdown by Country and Industry


(Compared to Previous Year)


Operating Profit Forecast Compared to Previous Year ③：Reasons for Improvement

2019 Operating Profit ForecastReasons for improvement compared to the previous year

(multiple answers)

2020 Operating Profit ForecastReasons for improvement

(multiple answers)

11

63.6

39.3

30.8

15.0

10.3

8.4

7.5

5.6

0.9

0.0

14.0

0 10 20 30 40 50 60 70

Sales increase in local markets

Improvements in sales efficiency

Sales increase due to export expansion

Reductions in other expenditures (Administrative, utility andfuel costs etc.)

Reduction in labor costs

Reduction in procurement costs

Improvements in production efficiency(Manufacturing only)

Effects of exchange rate fluctuation

Benefits from own/other country’s trade restrictions

Benefits from own/other country’s trade promotion measures, such as abolishment of tariffs, FTP/EPAs etc.

Other

(%)

N=107

69.1

37.4

26.0

18.7

13.0

9.8

6.5

5.7

0.8

0.0

15.4

0 10 20 30 40 50 60 70



Improvements in sales efficiency

Improvements in production efficiency(Manufacturing only)

Reductions in other expenditures (Administrative,utility and fuel costs etc.)

Reduction in procurement costs

Reduction in labor costs



Benefits from own/other country’s trade promotion measures, such as abolishment of

tariffs, FTP/EPAs etc.

Other

(%)

N=123

Same as last year, the most common reason given by respondents for improvement of their forecast

was due to “increased sales in the local market.”

40% responded “improvements in sales efficiency” and 30% responded “increased sales due to export

expansion.”

The proportion responding “increased sales in local markets” was even higher for 2020, demonstrating

how companies are eager to see economic recovery in these local markets.



Operating Profit Forecast Compared to Previous Year ④：Reasons for Deterioration

12

60.0

30.0

30.0

25.0

23.3

23.3

21.7

10.0

3.3

1.7

33.3

0 10 20 30 40 50 60 70

Sales decrease in local markets


Increase in labor costs

Increases in other expenditures (Administrative,utility and fuel costs etc.)

Sales decrease due to export slowdown

Production costs insufficiently shifted to sellingprice of goods

Increase in procurement costs

Effects from own/other country’s trade restrictions

Rising interest rates

Effects from own/other country’s trade promotion measures, such as abolishment of tariffs,

FTP/EPAs etc.

Other

(%)

(N=60)

52.0

24.0

20.0

16.0

12.0

12.0

8.0

4.0

4.0

0.0

32.0

0 10 20 30 40 50 60 70

Sales decrease in local markets


Increase in labor costs

Sales decrease due to export slowdown

Increase in procurement costs

Increases in other expenditures (Administrative,utility and fuel costs etc.)

Effects from own/other country’s trade restrictions

Rising interest rates

Production costs insufficiently shifted to sellingprice of goods

Effects from own/other country’s trade promotion measures, such as abolishment of tariffs,

FTP/EPAs etc.

Other

(%)

N=25

For both 2019 and 2020, the most common reason for an estimated decline in operational profit was

“decreased sales in the local market,” then “effects of exchange rate fluctuations” and “increase in labor

costs.”


2019 Operating Profit ForecastReasons for deterioration compared to the previous year

(multiple answers)

2020 Operating Profit ForecastReasons for deterioration

(multiple answers)


71.4

52.0

34.3

31.4

21.1

17.1

6.9

2.9

1.7

1.7

1.1

11.4

0 50 100


High growth potential


Relationship with clients

Reviewing production and distribution networks

High receptivity for high value-added products/services

Cost decreases (procurement costs, labor costs etc.)

Deregulation

Ease of securing labor force

Benefits from own/other country’s trade promotion

measures, such as abolishment of tariffs, FTP/EPAs etc.


(increased tariffs, export amount restrictions, sanctions, industry policies such as import substitutes)

Other

80.0

66.7

60.0

59.5

58.6

55.6

54.5

50.0

50.0

20.0

33.3

37.1

35.1

41.4

38.9

40.9

41.7

50.0

2.9

2.7

4.4

4.5

2.7

1.1

8.3


Mozambique(N=18)

Morocco(N=35)

Kenya(N=37)

Egypt(N=29)

South Africa(N=90)

Nigeria(N=22)

Ghana(N=12)

Ethiopia(N=10)

Expand Remain the same Shrink Transfer to a third country/region

Business Outlook for Next 1-2 years Reasons for expansion (multiple answers)

By Country

(Note) Excludes countries where less than 10 companies responded.

13

Expand

56.2%

Remain the same

39.6%

Shrink 2.2%

Transfer to a third country/region 1.9% (%)

N=175

0 20 40 60 80 100

(%)

N=313

Approximately 56% of companies responded that they are considering expanding business over the

next 1-2 years. This trend has continued for the past six years.

Over 95% of respondents expressed their intent to expand or maintain the current level of business in Africa.

High percentages of companies in Cote d’Ivoire, Mozambique and Morocco responded that they are

eager to expand business.

Future Business Outlook：More than 50% seek to “Expand Business” for the sixth consecutive year



Changes to # of Local Staff Over Past Year

Changes to # of Japanese Expat Staff

Over Past Year Future Changes to # of Japanese Expat Staff

Future Changes to # of Local Staff

14

Increase27.2%

No change58.7%

Decrease14.1%

N=305

Increase11.0%

No change80.1%

Decrease8.9%

N=291

Increase38.7%

No change54.6%

Decrease6.6%

N=302

Increase12.4%

No change82.1%

Decrease5.5%

N=290

Nearly 30% of all respondents said they have increased the number of local employees over the past

year. This trend is expanding, as 40% of companies responded that they will increase the number of

local employees in the future.

For Japanese expats based in Africa, “no change” was selected the most, and no significant increases

or decreases could be seen.

Number of Employees ①：Nearly 40% of Companies Plan to Increase Local Staff



55.9

52.8

40.0

38.9

35.0

33.3

32.2

31.0

35.3

47.2

60.0

61.1

60.0

58.3

57.5

62.1

8.8

5.0

8.3

10.3

6.9

Morocco(N=34)

Kenya(N=36)

Ethiopia(N=10)

Mozambique(N=18)

Nigeria(N=20)

Ghana(N=12)

South Africa(N=87)

Egypt(N=29)

Increase No change Decrease

40.0

33.3

32.4

30.0

27.8

24.1

23.5

20.7

40.0

50.0

64.9

55.0

72.2

55.2

61.8

63.2

20.0

16.7

2.7

15.0

20.7

14.7

16.1

Ethiopia(N=10)

Ghana(N=12)

Kenya(N=37)

Nigeria(N=20)

Mozambique(N=18)

Egypt(N=29)

Morocco(N=34)

South Africa(N=87)


Number of Employees ②：Local Staff by Country and Industry

Changes to Local Staff Over Past Year Future Changes to Local StaffBy Country

By Industry


15

45.3

35.7

44.2

59.4

10.5

4.8




32.6

24.8

52.6

61.4

14.7

13.8




0 20 40 60 80 100(%)

0 20 40 60 80 100(%)

0 20 40 60 80 100(%)

0 20 40 60 80 100(%)

In the past year, 40% of companies in Ethiopia increased their employment of local employees.

More than 50% of companies in Morocco and Kenya responded that they are planning to increase their

number of local employees.



Number of Employees ③：Japanese Expat Staff by Country and Industry

Changes to Japanese Expat Staff over Past Year Future Changes to Japanese Expat Staff

By Country

By Industry

16

15.2

15.0

14.3

11.1

11.1

8.3

6.1

81.8

85.0

79.8

81.5

88.9

91.7

84.8

100.0

3.0

6.0

7.4

9.1

Kenya(N=33)

Nigeria(N=20)

South Africa(N=84)

Egypt(N=27)

Mozambique(N=18)

Ghana(N=12)

Morocco(N=33)

Ethiopia(N=10)


23.5

15.2

11.5

10.0

10.0

8.3

5.6

4.8

70.6

69.7

76.9

70.0

90.0

75.0

94.4

84.5

5.9

15.2

11.5

20.0

16.7

10.7

Kenya(N=34)

Morocco(N=33)

Egypt(N=26)

Nigeria(N=20)

Ethiopia(N=10)

Ghana(N=12)

Mozambique(N=18)

South Africa(N=84)



9.8

13.6

82.6

81.8

7.6

4.5




6.5

13.1

82.8

78.8

10.8

8.1




0 20 40 60 80 100(%)

0 20 40 60 80 100(%)

0 20 40 60 80 100(%)

0 20 40 60 80 100(%)



17

ImportanceIncreasing

61.8%

No change24.7%

Importance Decreasing

3.0%

Unsure10.5%

N=304

[Positioning Compared to Five Years Ago] [Positioning Over Next Five Years]

ImportanceIncreased

50.0%No change37.5%

ImportanceDecreased

6.6%

Unsure5.9%

N=304

50% of companies responded that the “importance of Africa had Increased” compared to five years ago.

More than 60% responded that the “importance of Africa will be increasing” over the next five years.

This showed an increasing focus on Africa.

Africa's Position in Global Strategy：Over 60% responded that importance of Africa will be increasing



2. Changes to Investment

Environment in Africa

18


Investment Environment Advantages

(Multiple Answers)

(Note 1) Figure highlighted in blue means it exceeds the average for this factor.

(Note 2) Excluding countries where only 10 companies or less responded.

Marke

t size an

d gro

wth

pote

ntial

Social an

d politic

al stability

Less diffic

ultie

s in

langu

age o

r com

munic

ation

Good in

frastructu

re

Good livin

g enviro

nm

ent fo

r Japan

ese

expatriate

s

Man

y busin

ess

partners in

the are

a (o

r purc

hasin

g custo

mers)

Easy to

hire

or re

tain

high

skilled e

mplo

yees

Good in

vestm

ent

prom

otio

n o

r tax in

centive

s (corpo

rate

incom

e tax,

impo

rt/expo

rt tariffs etc

.)

Vario

us pro

cedu

res

are pro

cesse

d in an

expe

dited m

anner

Man

y suppo

rting

indu

stries available

(e

asy to so

urc

e

locally)

Oth

er

Overall(N=312)

74.0 34.0 30.4 21.2 19.2 17.6 14.4 7.4 3.8 3.5 7.7

Nigeria(N=22)

90.9 4.5 9.1 0.0 4.5 9.1 4.5 0.0 0.0 4.5 4.5

Cote d’Ivoire (N=10)

90.0 30.0 10.0 50.0 10.0 20.0 20.0 0.0 0.0 10.0 10.0

Egypt (N=29)

89.7 24.1 13.8 13.8 6.9 20.7 13.8 6.9 10.3 0.0 3.4

Kenya(N=37)

83.8 27.0 67.6 16.2 32.4 8.1 10.8 0.0 0.0 2.7 8.1

South Africa (N=90)

73.3 16.7 42.2 24.4 22.2 30.0 10.0 8.9 2.2 2.2 3.3

Mozambique(N=18)

72.2 33.3 5.6 22.2 5.6 5.6 5.6 5.6 0.0 11.1 27.8

Ethiopia(N=10)

70.0 0.0 0.0 0.0 0.0 0.0 20.0 0.0 0.0 0.0 30.0

Ghana (N=12)

66.7 91.7 50.0 16.7 33.3 16.7 8.3 8.3 8.3 0.0 8.3

Morocco (N=34)

64.7 79.4 17.6 26.5 14.7 17.6 23.5 17.6 2.9 8.8 2.9

19

74.0

34.0

30.4

21.2

19.2

17.6

14.4

7.4

3.8

3.5

7.7

0 20 40 60 80

Market size and growth potential

Social and political stability

Less difficulties in language orcommunication

Good infrastructure

Good living environment forJapanese expatriates

Many business partners in the area(or purchasing customers)

Easy to hire or retain high skilledemployees

Good investment promotion or taxincentives (corporate income tax,

import/export tariffs etc.)

Various procedures are processedin an expedited manner

Many supporting industriesavailable (easy to source locally)

Other

(%)

N=312

Three-quarters of companies responded that they saw benefits relating to "market size and growth

potential."

Ghana and Morocco received much higher evaluations than the average due to “social and political

stability”

Investment Environment Advantages：High Expectation for “Market Size and Growth Potential”


By Country

(%)


Investment Environment Risks

(Multiple Answers)

(Note 1) Figures highlighted in red exceed the average for this factor.

(Note 2) Excluding countries where only 10 companies or less responded.

Developm

ent and Im

plementation of

Regulation or

Legislation

Social &

Political

Instability

Financial A

ffairs, Financing or F

oreign Exchange

Hiring and W

orkforce Problem

s

Poor Infrastructure

Trade R

egulation

No S

pecific Problem

s

Overall (N=311) 77.8 75.6 67.2 59.5 57.2 48.9 5.1

Mozambique(N=18)

100.0 83.3 88.9 72.2 77.8 66.7 0.0

Ethiopia (N=10)

100.0 100.0 90.0 70.0 100.0 90.0 0.0

Nigeria(N=22)

95.5 90.9 72.7 63.6 81.8 68.2 4.5

Ghana (N=12)

91.7 33.3 91.7 50.0 58.3 41.7 0.0

Egypt (N=29)

86.2 82.8 75.9 51.7 58.6 51.7 3.4

Kenya (N=37)

81.1 83.8 43.2 62.2 51.4 45.9 8.1


80.0 90.0 60.0 60.0 30.0 70.0 0.0

South Africa(N=90)

66.7 90.0 66.7 68.9 60.0 30.0 2.2

Morocco(N=34)

64.7 32.4 47.1 44.1 23.5 52.9 14.7

（％）

20

77.8

75.6

67.2

59.5

57.2

48.9

5.1

0 20 40 60 80 100

Development andImplementation of Regulation or

Legislation

Social & Political Instability

Financial Affairs, Financing orForeign Exchange

Hiring and Workforce Problems

Poor Infrastructure

Trade Regulation

No Specific Problems

(%)

N=311

“Development and implementation of regulation or legislation” saw a decrease of approximately 10

points over the previous year, but nearly 80% of companies continue to perceive this as a risk.

Morocco is below average for many items.

Africa Investment Risks ①：Great Challenge, “Despite Improvements in Development and Implementation of Regulation or Legislation”


By Country


21

(%)

Investment Environment Risks (Multiple Answers)

<FY 2016 Survey> <FY 2017 Survey> <FY 2018 Survey> <FY 2019 Survey>(%)

(N=314)

(%)

(N=307)

(%)

(N=311)

82.4

74.6

73.9

60.7

56.6

53.6

2.0

0 50 100

Development andImplementation of

Regulation orLegislation

Financial Affairs,Financing or

Foreign Exchange

Social & PoliticalInstability

Hiring andWorkforceProblems

Poor Infrastructure

Trade Regulation

No SpecificProblems

80.6

77.4

71.3

57.6

51.6

46.5

2.2

0 50 100





Foreign Exchange


Poor Infrastructure

Trade Regulation

No SpecificProblems

87.3

75.9

74.3

65.1

54.4

52.4

2.9

0 50 100




Foreign Exchange



Poor Infrastructure

Trade Regulation

No SpecificProblems

77.8

75.6

67.2

59.5

57.2

48.9

5.1

0 50 100





Foreign Exchange


Poor Infrastructure

Trade Regulation

No SpecificProblems

(N=295)

Although “development and implementation of regulation or legislation” continues to be high, over the

past three years it fell below 80% for the first time, with “financial affairs, financing or foreign exchange”

also falling to below 70% for the first time.

Africa Investment Risks ②：Improvement has been seen in some items



26.8

20.5

17.8

14.1

8.1

6.7

2.0

4.0

0 20 40

欧州系企業

日系企業

地場資本企業

中国企業

その他

アジア系企業

米国系企業

その他

競合なし

Trends in Percentage of Companies with the Most Competitive Relationship

<FY2007 Survey> <FY2012 Survey> <FY2018 Survey> <FY2019 Survey>

38.5

33.0

11.9

5.5

3.7

2.8

2.8

1.8

0 20 40

日系企業

欧州系企業

地場資本企業

米国系企業

中国企業

その他

アジア系企業

その他

競合なし

22.9

21.6

18.9

12.0

7.6

7.3

3.3

6.3

0 20 40

中国企業

欧州系企業

日系企業

地場資本企業

米国系企業

その他

アジア系企業

その他

競合なし

23.9

17.2

16.6

12.9

9.8

8.0

3.7

1.8

4.3

1.8

0 20 40

欧州系企業

日系企業

中国企業

韓国系企業

地場資本企業

米国系企業

その他のアフリ

カ系企業

その他新興国

企業

その他

競合なし

（％）（％）（％）

N=109 N=163 N=301

22

26.9

18.8

17.5

15.5

7.4

5.8

2.3

5.8

0 20 40

Europeancompanies

Chinesecompanies

Japanesecompanies

Local capitalcompanies

UScompanies

Other Asiancompanies

Other

No competitor

N=309

<FY2017 Survey>（％）（％）

N=298

Chinese companies saw a decrease of approximately 4 points over the previous year, with European

companies becoming the top competitors for the first time in two years.

Continuing from last year, Japanese companies were ranked 3rd. Local capital companies (4th) saw an

increase over the previous year.

Competition with Third-Country Companies ①：European Companies Become Top for the First Time in Two Years


Japanese

companies

European

companies

Local

capital

companies

US

companies

Chinese

companies

Other

Asian

companies

Other

No

competitor

European

companies

Japanese

companies

Chinese

companies

Korean

companies

Local

capital

companies

US

companies

Other

African

companies

Other

companies

in emerging

countries

Other

No

competitor

European

companies

Japanese

companies

Local

capital

companies

Chinese

companies

Other

Asian

companies

US

companies

Other

No

competitor

Chinese

companies

European

companies

Japanese

companies

Local

capital

companies

US

companies

Other

Asian

companies

Other

No

competitor


Competition with Third-Country Companies ②：

Impact from Companies of Competing Countries

(Multiple Answers)

Position towards China Strengthening Economic

Relationships with African Countries

23

58.1

37.3

3.2

15.4

0 20 40 60 80

Fiercer competition with importproducts from competing countries

in the target country market

Intensified competition seen inprojects and government

procurement

Fiercer competition in securingresources in the target country

Other

(%)

(N=279)

Feel the impact caused by intensified competition with

Chinese companies and product;40.5%

Irrelevant, see no impact opportunities

29.4%

See as oppotunity to expand business or

advantage23.0%

Other7.1%

N=309

Around 60% of companies responded “fiercer competition with import products” as an influence brought

by companies of competing countries.

When asked about their thoughts regarding China, while 40% of companies are worried about "fiercer

competition," over 20% see an "opportunity to expand business or advantage."



South Africa, 15.4%

France, 14.1%

India, 10.8%

China, 6.6%

Germany, 5.2%

Turkey, 3.0%UK, 2.0%US, 1.3%

UAE, 1.3%

Morocco, 1.3%

Portugal, 1.3%Lebanon, 0.7%

Mauritius, 0.7%

South Korea, 0.3%

Other, 6.2%

None , 29.8%

Partner Countries in the Third-Country

24

65.0

26.5

16.3

15.6

14.8

0 10 20 30 40 50 60 70

Able to leverage the networkincluding business connection

owned by companies of the futurepartner countries

Joint project with future partnercountries is either already showing

tangible progress or has thelikelihood of moving forward

Business related to project thatfuture partner countries are

responsible is either moving forwardor has the likelihood emerging

Using infrastructure networkdeveloped by future partner

countries

Other

(%)

N=257

N=305

South Africa, France and India were the top three answers for countries with which collaboration is made.

29.8% of companies responded “none,” a reduction from 38.3% in the previous year, revealing

increased interest in collaboration.

Collaboration With Third-Country Companies：Promising Alliance with South African, French, and Indian Companies


Opportunities and Advantages

(Multiple Answers)


3. Future Market Expectations

25


Current Usage of FTA & Customs Unions (Multiple Answers)

<Reference: FY2007 Survey> <FY2019 Survey>

26

5.6

5.6

78.5

10.3

0 20 40 60 80

Already using

Considering to use in future

Not using now/not considering touse in future

Not Sure

(%)

N=107

6 companies

6 companies

84 companies

11 companies

15.7

22.3

47.5

19.7

0 20 40 60 80

Already using

Considering to use in future

Not using now/not considering touse in future

Not Sure

(%)

(N=305)

48 companies

68 companies

145 companies

60 companies

A large increase was seen in companies utilizing FTAs or customs unions compared to 2007.

Combining this with companies considering use of these systems produces a total of approximately 40%.

The most used FTA was the Southern African Development Community (SADC).

The African Continental Free Trade Area (AfCFTA), which came into effect in May 2019, received the

highest number of choices for “considering use in future,” showing a high level of interest.

FTA & Customs Union ①：Approximately 40% Currently Using or Considering to Use FTA & Customs Union



FTA or Customs Union Currently Used

(Multiple Answers)

FTA or Customs Union Considering to Use

(Multiple Answers)

27

50.0

23.9

23.9

23.9

15.2

15.2

8.7

6.5

4.3

4.3

2.2

4.3

0 10 20 30 40 50 60

Southern African Development Community(SADC)

East African Community/Customs Union (EAC)

Common Market for Eastern and SouthernAfrica (COMESA)

European Free Trade Association (EFTA)/SACUFree Trade Agreement

Southern African Customs Union (SACU)

EU/SADC Economic PartnershipAgreement(EPA)

Economic Community of West African States(ECOWAS)

EU-Mediterranean Partnership Agreement(*)

Greater Arab Free Trade Area (GAFTA)

Agadir Free Trade Agreement (*)

West African Economic and Monetary Union(UEMOA)

Other Agreements

(%)

N=46*Egypt, Tunisia, Algeria, Morocco, etc.

23 companies

11 companies

11 companies

11 companies

7 companies

7 companies

4 companies

3 companies

2 companies

2 companies

1 companies

2 companies

43.9

34.8

28.8

21.2

21.2

16.7

15.2

13.6

13.6

6.1

3.0

3.0

1.5

0 10 20 30 40 50 60

African Continental Free Trade Area (AfCFTA)

Southern African Development Community(SADC)

East African Community/Customs Union (EAC)

Common Market for Eastern and SouthernAfrica (COMESA)

Economic Community of West African States(ECOWAS)

European Free Trade Association(EFTA)/SACU Free Trade Agreement

EU/SADC Economic PartnershipAgreement(EPA)

Southern African Customs Union (SACU)

West African Economic and Monetary Union(UEMOA)

EU-Mediterranean Partnership Agreement(*)

Greater Arab Free Trade Area (GAFTA)

Agadir Free Trade Agreement(*)

Other Agreements

(%)

N=66*Egypt, Tunisia, Algeria, Morocco, etc.

29 companies

23 companies

19 companies

14 companies

14 companies

11 companies

10 companies

9 companies

4 companies

2 companies

2 companies

1 companies

9 companies

FTA & Customs Union ②：High Interest in the African Continental Free Trade Area



Reference: FY 2007 Survey

(Multiple Answers)

FY 2019 Survey

(Multiple Answers)

28

81.7

35.6

15.4

14.1

13.8

13.8

2.2

11.9

0 20 40 60 80 100

Future market potential

Market size

Requests by business partner(s)

Profitability

Natural resources

Japan's Official DevelopmentAssistance

Requests by local government

Other

(%)

N=312

71.0

33.6

29.9

24.3

14.0

13.1

6.5

5.6

0 20 40 60 80 100

Future market potential

Market size

Natural resources

Japan's Official DevelopmentAssistance

Requests by business partner(s)

Profitability

Requests by local government

Other

(%)

N=107

More than 80% of companies answered “future market potential” as their reason for entering the African

market, revealing their aim to create opportunities in the market.

There was a marked decrease in the proportion answering “natural resources” or “Japan’s Official

Development Assistance” compared to 2007.

Reasons for Maintaining Presence in Africa：High Expectations for Future Market Potential



Promising Business Field in the Future

(Multiple Answers)Specific Category (Multiple Answers)

29

Specific Category (Multiple Answers)Specific Category (Multiple Answers)

53.6

50.0

43.5

40.3

32.1

31.2

25.6

12.7

5.5

0 10 20 30 40 50 60

Consumer Market

Good Infrastructure

Service Industry

Digital industry

Resources

Transport equipment(two/four-wheeled etc.)

Medical Devices

Sharing Economy

Other

(%)

(N=308)

56.8

47.9

43.8

11.6

8.9

0 10 20 30 40 50 60

Commodities

Babies/Children

Women

Japanese Food

Other

(%)

(N=146)

50.0

49.2

45.0

29.2

16.7

14.2

1.7

0 10 20 30 40 50 60

Information services industry

Medical industry

Road freight transportation business

Waste disposal business

Restaurants

Specialized services (Law Offices etc.)

Other

(%)

(N=120)

50.9

43.0

41.2

40.4

32.5

30.7

2.6

0 10 20 30 40 50 60

IoT

Big data

Fintech

EC

AI

5G

Other

(%)

(N=114)

One area of promise was “consumer market”. This was followed by “infrastructure” and “service industries”.

Amongst service industries there was particular interest in information services and medical services.

A high level of interest was also seen in IoT, big data and fintech amongst digital industries.

Promising New Business Fields in the future：High Interest in Consumer Market (Commodities)



12.6

16.9

17.5

21.3

22.4

25.7

27.3

32.8

35.0

37.2

0 20 40

Cote d’Ivoire

Ghana

Egypt

Ethiopia

Angola

Tanzania

Mozambique

South Africa

Nigeria

Kenya

Kenya, Nigeria, South Africa were ranked as the top 3 countries of note for 5 consecutive years.

Ethiopia moved up in rank from 5th to 4th place from the previous year, Ghana jumped up from 9th to

6th place, and Morocco climbed from 8th to 7th place.

30

Future Investment Destinations ①：Kenya, Nigeria and South Africa Rank Top 3 for 5 Consecutive Years

Top 10 Future Investment Destinations (Multiple Answers)

FY2015 Survey FY2016 Survey FY2017 Survey FY2018 Survey(%) (%) (%)

15.9

16.3

16.3

16.7

19.3

22.2

23.7

32.6

34.4

39.6

0 20 40

Zimbabwe

Ghana

Morocco

Egypt

Tanzania

Ethiopia

Mozambique

South Africa

Nigeria

Kenya

16.7

17.5

18.2

18.2

18.5

20.4

24.4

28.0

29.1

37.1

0 20 40

Uganda

Ghana

Mozambique

Cote d’Ivoire

Morocco

Ethiopia

Tanzania

South Africa

Nigeria

Kenya

15.1

15.9

18.3

19.1

20.7

21.5

23.9

29.5

31.9

35.9

0 20 40

Egypt

Angola

Ghana

Mozambique

Tanzania

Cote d’Ivoire

Ethiopia

South Africa

Nigeria

Kenya

N=183 N=251 N=275 N=270

FY2019 Survey

(%) (%)

32.9

30.3

28.3

24.0

20.4

18.8

17.4

17.1

16.8

15.8

0 20 40

Kenya

Nigeria

South Africa

Ethiopia

Mozambique

Ghana

Morocco

Tanzania

Cote d'Ivoire

Egypt

N=304

JETRO:2019 Survey on Business Conditions of Japanese Affiliated Companies in Africa


CountryShare

(%)Investment Destinations (Company Comments)

1 Kenya 32.9Emerging startup companies and potential for collaboration, expanding demand for infrastructure, potential of geothermal power,

the hub function of East Africa, economic stability, increase in middle class, the growth of the automobile industry, market size

and future potential growth

2 Nigeria 30.3Population increase and market size; overwhelming market scale, high potential of consumer goods market; enhancement of

personal purchasing power; abundant energy resources; increase in startup companies; growth of automobile industry

3 South Africa 28.3A base of economic, manufacturing and exportation in Africa; the most developed country in sub-Saharan Africa; a certain level

of infrastructure development; abundant mineral resources; industrial power in the development of the automobile industry; the

most mature market in Africa; expansion of consumer market

4 Ethiopia 24.0Population growth, inexpensive labor, cheap electric power, increase in companies in the textile industry, the development of

light industry, reform by Prime Minister Abiy, privatization of state enterprises

5 Mozambique 20.4The largest deposit of natural gas in the world, expanding demand for infrastructure including electric power, expectation for

economic development

6 Ghana 18.8Stable politics, economy, and legislative system; relatively good security; liberalization of economic management; good

entrepreneur environment; the hub of West Africa; expansion of market size and future growth potential; increase in middle

class; the progress of automotive policy

7 Morocco 17.4Development of automobile industry; a key country in North Africa, a base for manufacturing and exportation; access to

European markets; access to African markets; stable public security and business environment; implementation of policy for

introducing foreign capital and transparency of investment-related systems; expanding demand for infrastructure

8 Tanzania 17.1Progress of infrastructure development, expanding power demand, economic development utilizing natural resources, future

growth potential

9 Cote d’Ivoire 16.8A key country among French-speaking countries in Africa, entry base of land-locked countries, expanding demand for

infrastructure development, restoration of public security, expectation for economic growth, relatively developed infrastructure

10 Egypt 15.8Huge consumer market, traditionally active market that has been around for a long time, population growth, a regional hub,

geographical advantage, large scale urban development, expanding demand for infrastructure as urbanization progresses,

development of natural resources

N=304

JETRO:2019 Survey on Business Conditions of Japanese Affiliated Companies in Africa31

Future Investment Destinations ②：(Reference) Company Comments towards Investment Destinations Ranked 1 - 10 (Multiple Answers)


Future Investment Destinations ③：(Reference) Company Comments towards Investment Destinations Ranked 11 and below

32

Country NameShare

(%)Investment Destinations (Company Comments)

11 Uganda 13.8 Expanding demand for infrastructure, expansion of consumer market associated with population growth

12 Angola 10.5 Economic development supported by oil industry, future growth potential, strong infrastructure demand

13 Zambia 8.9Potential of agricultural industries, business opportunities related to ODA, rich resources, expectation for

economic growth

14 Algeria 8.6The development of the automobile industry, abundant resources, expectation for population growth and

economic development, improved investment environment due to policies created by new administration

15 Rwanda 8.2ICT prowess, the development of infrastructure, business opportunities related to ODA, stable public

security, expectations for economic growth

16 Mauritius 7.6 Stability of legal system and economy, excellent infrastructure development, hub of African finance/logistics

17 Zimbabwe 7.6 Future growth potential, expanding demand for infrastructure projects, quality of local staff

18 Madagascar 6.6Expanding demand for infrastructure development, the development of harbor, business opportunities

related to ODA, the development of mineral resources

19 DR Congo 5.3 Abundant resources, population increase and market size

20 Cameroon 3.6 Business opportunities relating to forestry and health/medical services, market size



Middle East and Africa Division

Overseas Research Department

6F ARK Mori Building, 1-12-32 Akasaka,

Minato-ku, Tokyo 107-6006

Tel: +81-3-3582-5180

Fax: +81-3-3587-2485

E-mail: [email protected]

Any use of information in this report shall be at the user's discretion and its own responsibility. JETRO makes every effort to provide

accurate information and data. However, JETRO cannot be held liable whatsoever for damages or losses arising from the use of

information in this report.

[Disclaimer]


Documents

2019 Survey on Business Conditions of Japanese …...companies becoming the top competitors for the first time in two years. Continuing from last year, Japanese companies were ranked