Against the backdrop of Africa's risk-and-demand dilemma, this article examines why it is difficult for Japanese companies to expand into Africa, drawing on firsthand experience and statistics.
This article is the fourth installment in a series examining why it is difficult for Japanese companies to expand into Africa from the perspectives of risk and demand, and outlines the current state of and challenges facing expansion into the region. Building on trends discussed in previous installments and differences from other regions, it explores why past successful models cannot simply be applied in Africa. This installment focuses on risk as an external factor facing Africa and the challenges surrounding demand, providing practical considerations for decision-making.
Factors that symbolize the difficulty of doing business in Africa include the region's generally high-risk profile based on Cofas's business risk assessment, as well as the complexity of regulations, tax systems, licensing and permits, and customs clearance. A country-risk perspective is also presented, covering the macroeconomy and fiscal sustainability of Africa's 54 countries, governance, and climate-change risks, with emphasis on the substantial differences between individual countries. In addition, demand varies significantly from country to country in African markets. While some countries have populations exceeding 100 million, the reality is that it is difficult to pursue a strategy that broadly covers surrounding markets.