a japanese perspective on business development in kenya...

A Japanese Perspective on Business Development in Kenya and East Africa

February 24, 2016Japan External Trade Organization (JETRO)

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《Disclaimer of liability》Responsibility for any decisions made based on or in relation to the information provided in this material shall rest solely on readers. Although JETRO strives to provide accurate information, JETRO will not be responsible for any loss or damages incurred by readers through the use of such information in any manner.

Copyright © 2016 JETRO. All rights reserved. Unauthorized copying prohibited. 禁無断掲載

Overview: Africa enjoying trade surplus

Graph: Japan’s trade b/w EAC, Republic of South Africa and Sub Sahara for 20 years

Source: JETRO based on Ministry of Finance (Japan customs)

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EAC still marginal, meaning much room left for expansion

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1994 1999 2004 2009 2014

(M) R.S.A (M) EAC

(M) S.S.A (X) R.S.A

(X) EAC (X) S.S.A

EAC

(Million USD)


Japan’s import from SSAYear 2000 → 2014$3,537 mil → $14,545 mil

(3.3 times)

from EAC$81 mil→ $302 mil

(3.7 times)

2013 2014 Composition % change

Export in total (FOB) 910.6 955.4 100.0 4.9

Vehicles, not railway 541.9 638.0 66.8 17.7

Passenger motor vehicles 341.5 375.4 39.3 9.9

Trucks 163.5 218.3 22.8 33.5

Chassis fitted with engines 19.2 26.5 2.8 38.0

Iron and steel 177.7 148.3 15.5 △ 16.5

Flat rolled iron 148.0 125.4 13.1 △ 15.3

General machinery 89.2 38.5 4.0 △ 56.8

Self-propelled bulldozers, graders etc. 4.1 11.4 1.2 178.0

Synthetic filament tow 16.7 21.0 2.2 25.7

Import in total (CIF) 46.2 60.0 100.0 29.9

Live trees and plants incl. cut flowers 15.9 13.9 23.2 △12.6

Spices, coffee and tea 12.4 12.0 20.0 △3.2

Coffee 5.3 7.2 12.0 35.8

Tea 7.1 4.8 8.0 △32.4

Miscellaneous food 8.9 8.7 14.5 △2.2

Tea extract 8.9 8.6 14.3 △3.4

Vehicles dominate but sharp rise in auto-parts

3Source: JETRO based on Ministry of Finance (Japan customs)

Table: Japan’s trade with Kenya and major items (Unit: Million JPY)


Overview: 657 companies in Africa (as of Oct 1, 2014)

By country (change in five years):・Republic of South Africa 280 (+86)・Egypt 49 (+9)・Kenya 47 (+15)・Morocco 37 (+16)・Ghana 22 (+19)・Nigeria 21 (+11)

Graph: Japanese-affiliated companies in Africa

Source: JETRO based on Ministry of Foreign Affairs of Japan

By area (% change in five years):Total: 68,573 (21.5 %)

Africa: 657 (35.7%)Asia: 48,203 (21.5%)North America: 8,584 (25.6%)South America: 1,102 (52.0%)Western Europe: 5,577 (9.4%)Middle East: 713 (13.4%)

＞100＜100 ＞10＞1

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Japanese companies increased by 36% over five years


Types of business growing more diversified

• (2015), MOU with Kenya Investment Authority

Banking/Finance

• (2015) Opened a fast-food restaurant in Nairobi CBD

Fast-Food Restaurant

• (2014) Opened a rep. office

Machinery

• (2014) Opened a rep. office, covering whole of Africa from Kenya

Automobile

5Copyright © 2016 JETRO. All rights reserved. Unauthorized copying prohibited. 禁無断掲載

Kenya is stepping forward. So is Japan.

Table: Announced cases of Japanese companies doing business with Kenya

Private sector developing trust and confidence in Kenya

Rwanda

Kenya2.6, 6.9, $1,432 Uganda

Tanzania

Burundi

(cf. Cambodia1.5, 7.2, $1,140)

2.5

3.5

4.5

5.5

6.5

7.5

8.5

1.5 2.0 2.5 3.0 3.5Source: JETRO derived from IMF [2015] WEO (Oct.) Population growth (%)

Graph: Growth in population and real GDP (CAGR: 2015 to 2020), and nominal GDP per capita in US dollars (2015,bubble size)

Comparable to emerging Asia?

Copyright © 2016 JETRO. All rights reserved. 禁無断掲載

Population growth (X) Tanzania＜ Burundi＜Rwanda＜Kenya＜UgandaReal GDP growth (Y) Burundi ＜Uganda ＜Kenya＜Tanzania＜Rwanda

Real GDP growth (%)

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High growth potential as main attraction

Japanese companies: Expansionary stage in Kenya

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• 44% in Kenya (estimation for 2014), which is below the average of total respondents for all Africa (54.4%).

• 52% forecasted an increase in 2015, expecting sales increase in local markets.

Operating profit

• 73% have intention to expand their business in Kenya in the next few years • “High growth potential” and “increased sales” are two major reasons.• Sales function is to be enhanced.

Businessoperations

• 69% have plans to increase the number of Kenyan employees in the future, that is far above the average (50%).

• Two major challenges in localization are “ability and awareness of local staff” and “difficulty in hiring manager candidates” (no difference by country)

Managementlocalization

• The fifth survey was conducted from September to November 2014 so the downward pressure arising from oil and commodity prices were not fully felt among respondents yet.

• 26 companies responded from Kenya which comprised of 10.4% of the total. The majority is from the “non-manufacturing” line of business in Kenya. 15 out of 26 companies started their operations after 2011.

2014 Survey on Business Conditions of Japanese-Affiliated Firms in Africa

Findings from JETRO’s survey (Kenya)


JETRO’s Action Plan for Africa “Four Wheels”

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JETRO’s Action Plan for Africa

“Four Wheels”

1. Facilitating investment in Africa by Japanese companies

2. Two-way trade promotion

3. Supporting African infrastructure development by Japanese companies

4. Contributing to local industries and human resource development

One Village, One Product Market (March 2006-)

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＜Outline＞・Introducing products of emerging countries in

Asia and Africa to Japanese consumers

・Results of FY2014 in shops of Narita International Airport and Kansai International Airport：

・Number of visitors: Approx. 98,000・Number of products in 2 shops: 315・Sales volume: Approx. 26 million yen (218,000 USD)

Supporting Inclusive Business in Africa

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＜JETRO’s Activities＞・Assigning BOP Coordinator (Kenya, Tanzania, Ethiopia)・Market Research and Household Survey by BOP Coordinator・Antenna Shop in Kenya (February, 2014 and 2016)・Antenna Shop in Ghana (February, 2014)・Dispatching Inclusive Business Mission (October, 2013@Ethiopia)

Capacity Building for investment promotion

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＜ JETRO’s Activities ＞・Training for Kenya Investment Authority (KIA) (July 12-17, 2015)・Training for Centre for Promotion of Investments In Cote d’Ivoire (CEPICI)

(December 7-11, 2015)

- Contents of training program: Learning knowhow of JETRO’s activities for investment promotion and operation of IBSC (Invest Japan Business Support Center) as well as visiting Japanese companies.

Training for invest promotion officers• Date: July 2015• Invitee: 3 persons from Kenya Investment

Authority• Program: On-site training and discussion over

management issues incl., day-to-day operation of incubation office (IBSC Tokyo) and company visits.

Background• Kenya Investment Authority (KIA) is a member of

the AIPF (African Investment Promotion Forum), which JETRO helped establish in 2014 with 7 investment promotion agencies in Africa. The AIPF aims at sharing their experience to accelerate flows of mutual investment among members.

Test marketing• Date: January 2016 (tentative) • Venue: Premium market places and traditional

kiosks• Items: Food, stationary and consumer goods

Background• Three distributers were invited in September

2015. Following a seminar for self-introductory presentations, four-day business meeting took place with Japanese business persons.

• The aim is to establish business linkage by introducing both willing buyers and sellers.

JETRO’s efforts as business facilitator

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Business matching event in Kenya Capacity building with Kenya

Monitoring (2014)

Learning each other

JETRO’s Roll in TICAD 6 @ Nairobi

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＜Japan Fair＞・JETRO plan to organize “Japan Fair” with various Japanese

companies to present our latest technology and products to African VIPs.

＜Japan-Africa Business Conference＞・JETRO plan to hold the business conference for the private

sectors to discuss how to encourage the cooperation between Japanese companies and African companies.

Thank you very much

February 24, 2016Japan External Trade Organization (JETRO)

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《Disclaimer of liability》Responsibility for any decisions made based on or in relation to the information provided in this material shall rest solely on readers. Although JETRO strives to provide accurate information, JETRO will not be responsible for any loss or damages incurred by readers through the use of such information in any manner.


Asante Sana

a japanese perspective on business development in kenya...

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