When are the Japanese investors coming? A conversation with the Japan Association of Corporate Executives
By Steve Kayizzi-Mugerwa
On the evening of March 16, 2015, I had a very insightful meeting with a high-level delegation of business executives from Japan on the sidelines of the Africa CEO Forum held in Geneva. Together they represented all the top brand names of that industrious country – the trading giant Marubeni, Toyota, Nippon Signal, Daiwa Institute of Research, Green Earth Institute, and Ernst & Young ShinNihon, accompanied by their Associates. The Group was also accompanied by the head of the Bank’s External Representation Office of Asia (ASRO), Masayuki Tamagawa.
This was the first time that such a large Japanese delegation (14 people in all) had attended the African CEO Forum and they were very eager to learn as much as they could about the business opportunities in Africa, on which they knew relatively little in commercial and economic terms. In business, Japan has traditionally emphasized links with the West and with countries within its “near-abroad” – notably members of the Association of Southeast Asian Nations (ASEAN) group of countries.
They requested to speak to African Development Bank officials, in this case the Acting Chief Economist and Joel Kibazo, the Communications Director, on a long list of issues on Africa – but the one that became the recurring theme of the evening was whether Africa was indeed the place to invest, as many other businesspeople in the world seem to be saying (they had visited Paris before arriving in Geneva). The questions were myriad: What about Africa’s long history of malfunctioning economies? What of political violence and the long-running civil wars? What of the widespread corruption? What of poverty, i.e. is there purchasing power to go around? They also underlined that the African market looks extremely fragmented and that efforts were needed to boost regional integration.
I told the delegation with a straight face, that all those things are of course of concern, including for the Bank, but that they are mainly narratives of Africa’s past. The African story today is not perfect, but is quite different from that of a decade ago. Many countries and businesses in the world have discovered this and are making Africa the place to watch for opportunities, and new possibilities for diversification. I mentioned that the last ten years of rapid growth in Africa has meant that the populations are slightly richer, the demand for basic consumer goods has gone up, as well as that for infrastructure and better social services. Moreover, the process of integration is strengthening by the day – with the private sector’s cross-border activities accomplishing much more in integrating Africa than the public sector efforts of yester-year. Bigger markets have brought a spark to the economies of Africa – while containing the downside, I gave examples from East and West Africa.
There is a host areas where Japanese companies could find a niche, from heavy industries, to trading and financial houses, and ICT companies: power generation, construction of urban infrastructure, factories for the production of basic equipment, medicine, ICT systems, tourism and leisure, etc. But there is also a role for enhancing technical education in Africa. Japan has introduced a program that attracts 200 African students a year to Japanese universities. I suggested that Japan could send experts to African Universities, especially in areas of technology and the biological sciences. Capacity for bio-technical research in Africa must be boosted if the continent is to attract new industries and cutting-edge manufacturing – all of which are possible but require investment and good planning.
Last, the delegation wanted to know what African governments and local companies are expecting from Japanese corporations. This was not an easy question – but has an easy answer in the form of another question: “When are the Japanese coming?” Many Asian, European and American companies are looking for opportunities on the continent, I argued. Yes, they all have their issues about risk, poor infrastructure and inefficient bureaucracies: still they come. Japanese corporations need to acquaint themselves more with the continent, by undertaking intelligent fact-finding tours, and learning as much as possible about Africa as a business destination. They will even begin to feel at home – as they will see millions and millions of cars (admittedly of older vintage and often overloaded) made in Japan on Africa’s roads.