News & Updates
Results of JETRO’s 2013 Survey on Business Conditions of Japanese-Affiliated Firms in Africa
Feb 06, 2014
Supported by expansion of African markets, more than 50% of Japanese firms predicted to see an upturn in operating profits in 2014
- For 2013, 43.4% of respondents expected operating profits to have improved from the previous year (Fig.2) and 42.5% of respondents indicated in the survey conducted in 2012 that business performance over the past five years had improved. Meanwhile, for 2014, 53.7% of firms expect to see an improvement from the previous year.
- The predicted improvement for the 2014 operating profits is based on an increase of sales in local markets, which was the highest answer given with 75.9%, and many respondents mentioned expectations for an increase in sales through entry into new business fields (Fig.3).
Approx. 60% of firms expect to expand business and considering enhancement of sales functions in African markets
- Approx. 60% of firms intend to expand business operations in the next one or two years (Fig.4). When excluding Egypt, the percentage increases to approx. 70%.
- Among the functions to be expanded, 75.8% of firms indicated “sales function,” leaving the rest far behind, followed by “regional headquarter function” (18.2%) and “production of high value-added products” (16.7%) (Fig.5).
Business environment in Africa remains harsh. Insufficient communication with corporate headquarters in Japan also a problem.
Regarding management problems in Africa, 98.2% indicated “political and social instability” and companies noted problems in almost all items listed in the questionnaire related to the business environment including systems, employment and infrastructure (Fig.10). Regarding problems on the side of Japanese companies (corporate headquarters), “insufficient understanding from or communication with corporate headquarters” (34.0%) was indicated as the greatest problem (Fig.11).
European companies cited as significant competition in African markets
As the most significant competition, 21.8% of respondents cited European companies, which was next after Japanese companies (28.2%). In particular, 24.4% of manufactures indicated that European companies were the strongest competitors. (Fig.12).
Although more than 50% of firms working toward localization of management reported enhancing local human resource development, approx. 20% had done nothing to date. Meanwhile, the trend is for increased employment.
- Regarding approaches to promoting management localization, 52.7% of firms indicated that they are working on the enhancement of training and the cultivation of local human resources. However, 20.9% of firms reported not having worked on the localization of management (Fig.6). Asked about problems in localization of management, 43.5% of companies indicated “capability and awareness of local human resources” and 37.0% of companies indicated “difficulty in finding manager candidates” as issues (Fig.7).
- Regarding workforce, 48.2% of firms were planning to increase their local employees (Fig. 8), while 18.9% of firms were planning to increase Japanese expatriate employees, indicating an overall trend in expansion of employment (Fig.9).
For more information, please contact:
Middle East and Africa Division
Contact Person：Mr. Shintaro Matoba