TICAD expected to prime Japanese investment push as Africa’s middle class swells

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The upcoming sixth Tokyo International Conference on African Development, or TICAD VI, is expected to accelerate Japanese investment in the continent’s increasingly attractive consumer markets.

A range of firms are already present or are about to enter, ranging from a motorcycle manufacturer to a chicken restaurant operator and a maker of mosquito nets.

The two-day TICAD summit in Nairobi starting Saturday will bring leaders together to discuss Japanese assistance for African development.

Africa is widely known as the world’s final frontier, given its huge potential for economic growth. In Sub-Saharan Africa, middle-income earners are on the rise and the population there is forecast to reach 2 billion by 2050.

More and more Japanese trading companies are shifting their African investment strategies from one-off natural resource development to projects that call for longer-term and multifaceted involvement in the region.

In December 2012, Toyota Tsusho Corp. acquired French trader CFAO SA, giving it access to 53 of the continent’s 54 countries.

Toyota Tsusho also plans to open 80 shopping centers in Cote d’Ivoire and seven other African countries by 2020, on the back of its collaboration with French retail giant Carrefour SA.

A company spokesperson points out that the continent’s large number of young people means it has a high potential for economic growth.

In Mozambique, Mitsui & Co. is engaged in coal mine development and infrastructure projects such as port and railway construction. The trading house intends to expand operations to launch initiatives for promoting agriculture in areas along railway lines and for developing human resources, in the hope of contributing to Mozambique’s nation-building efforts.

As Africa’s economy grows, demand will grow for motorcycles and automobiles.

Yamaha Motor Co. launched a motorcycle plant in Nigeria jointly with CFAO last November, a move that marked Yamaha’s return to the Nigerian market after an absence of 10 years, in anticipation of an expansion of its middle class.

The motorcycle operation and Yamaha’s outboard engine business will give it a strong presence in Africa, President Hiroyuki Yanagi said.

Sumitomo Rubber Industries Ltd. has decided to beef up its tire-manufacturing facilities in South Africa.

And in Kenya, Japanese restaurant chain operator Toridoll Corp. runs two Teriyaki Japan fast-food restaurants that serve grilled chicken, in a joint venture with a local company.

A Toridoll spokesman said the company is willing to consider transferring business authority if it can meet local needs by doing that.

Meanwhile, poverty and poor hygiene remain serious problems across Africa.

In an effort to tackle malnutrition among children, food maker Ajinomoto Co. is selling nutritional supplements in Ghana and Malawi.

And Sumitomo Chemical Co., which manufactures and sells Olyset Net mosquito nets in Tanzania, plans to develop a new product that confers higher protection against insects, in a bid to reduce malarial infection rates.

Source: The Japan Times