Joint Webinar With AUDA-NEPAD PBT: Perception of Risks and Approaches to Doing Business in Africa in the Case of Japanese Companies

On Aug. 21, 2024, a seminar addressing the perception of risks and approaches to doing business in Africa, particularly by Japanese companies, was co-hosted by the African Union Development Agency-New Partnership for Africa’s Development Policy Bridge Tank (AUDA-NEPAD PBT) and the JICA Ogata Sadako Research Institute for Peace and Development (JICA Ogata Research Institute). Opening the event, Pamla Gopaul, Senior Programme Officer for Economic Analysis and Foresight Unit at AUDA-NEPAD and Lead Coordinator for AUDA-NEPAD PBT, emphasized the importance of strategic partnerships and collaboration with Japanese companies to support Africa’s economic growth through public sector interventions and the development of private enterprises.

In her presentation, Ogo Tomoko, Consultant, Asia Africa Investment and Consulting (AAIC) Japan Co., Ltd., focused on the perception of risks and approaches to doing business in Africa from the perspective of Japanese companies, drawing from her research and experiences in Rwanda, Tanzania, Ethiopia, and Uganda. She emphasized the importance of business investment for Africa rather than aid support. Ogo highlighted key factors for successful business expansion, such as addressing misconceptions about Africa by understanding the local context through first-hand information and adopting a Corporate Social Entrepreneurship (CSE) framework. For example, Rocket Battery, a Japanese company that manufactures forklift truck batteries, saw successful sales in Rwanda due to direct market engagement, the dedication and passion of a local promoter, strong management support, and a reliable partnership with a committed local partner. Similarly, Japanese company Saraya, a leading global manufacturer of hygiene products, expanded in Africa through their involvement in CSR activities with the United Nations Children’s Fund (UNICEF), strong CEO commitment to long-term engagement, proactive networking, and investment in local training and development. Ogo concluded by emphasizing that Japanese companies must explore and verify their business plans through flexible organizational structures while procuring necessary skills that might not be available in-house. Ogo also highlighted the essential role of promoters and management teams in creating efficient and transparent operations, which are crucial to successfully expanding in African markets.

Suzuki Momoko, Chief Representative of the JICA Ghana Office, discussed the characteristics of Japanese companies operating in Ghana, noting their success due to factors such as political stability, the country’s English-speaking environment, and strong grassroots interactions between Ghana and Japan. She emphasized the importance of the Kaizen approach in improving quality and productivity, which is a key strategy for the industrial development of micro, small, and medium-sized enterprises (MSMEs) in the region. Suzuki also discussed significant risk factors, including Ghana’s recent IMF bailout, high inflation rates, and trust issues with government partners, as well as the heavy tax burden on imported goods, which poses a challenge for businesses engaged in trade. To navigate these challenges, she underlined the importance of risk mitigation strategies, such as bringing on board local personnel with government connections, partnering with companies experienced in Africa, and hiring third-country personnel for middle management to bridge cultural and operational gaps.

Rose Ngugi, Executive Director of the Kenya Institute for Public Policy Research and Analysis (KIPPRA), noted a range of organizations that play key roles in innovation incubation, private sector investment, and quality control—such as the Kenya Bureau of Standards and the Kenya Investment Authority. At the regional level, Ngugi discussed the benefits of regional initiatives— like the African Continental Free Trade Area (AfCFTA), the Africa Credit Rating Agency, and the upcoming Business Ready Index implemented by the World Bank—in improving the investment climate. Noting that youth unemployment remains a significant challenge, she highlighted the importance of incubating youth engagement to foster economic growth and strengthen the stability of the country.

In the discussion session moderated by Homma Toru, Senior Advisor to the CEO of AUDA-NEPAD and Senior Advisor on Private Sector Development at JICA, the focus was on practical approaches to mitigating risks for Japanese companies operating in Africa. Homma highlighted the importance of collaboration between Japanese and international public institutions to reduce business risks and discussed the role of African governments and regional bodies like AUDA-NEPAD in supporting these efforts.

There was a question from a participant in Madagascar on how African businesses can build trust and long-term relationships with Japanese companies, especially given the difficulty of starting without existing connections. Suzuki responded by suggesting that African businesses connect with existing Japanese companies already established in Africa. She emphasized that these companies have extensive networks and experience. Suzuki recommended utilizing hubs in countries such as Egypt, Ghana, Kenya, and South Africa, where Japanese companies are already present. These hubs can serve as valuable sources of information and support for new business ventures.

In her final comments, Gopaul emphasized the importance of continued dialogue and webinars to address key challenges in doing business in Africa, such as value chain issues and energy supply. She highlighted the need for ongoing efforts to improve policy and investment conditions while also underscoring the significance of talent, skill transfer, and high-quality standards for successful Japanese-African business partnerships.

The discussion session was moderated by Homma Toru, Senior Advisor to the CEO of AUDA-NEPAD and Senior Advisor on Private Sector Development at JICA (top left) and the closing remarks were delivered by Pamla Gopaul, Senior Programme Officer for Economic Analysis and Foresight Unit at AUDA-NEPAD and Lead Coordinator for AUDA-NEPAD PBT (top right).

The video recording is available by clicking the link below.