Kenya is the most attractive destination for Japanese firms seeking to make new investments in Africa, a survey has shown, beating the continent’s larger economies like South Africa and Nigeria.
The survey, carried out by Japan External Trade Organisation (Jetro) on Japanese-affiliated companies in Africa, found that over a third (35.1 percent) of polled companies cited Kenya as their preferred future investment destination in Africa.
The East Asian country affiliated firms cited Kenya’s position as the economic hub of East Africa, with many emerging start-up companies offering big potential for collaboration.
The firms also pointed to expanding demand for infrastructure, potential of geothermal power, growing car industry and the existence of Japan’s Official Development Assistance (ODA) projects as other attractive points.
South Africa came second with 33 per cent of the companies citing it as an attractive destination followed by Nigeria (29.4 per cent), Ethiopia (21.3 per cent and Ghana (19.5 per cent). Tanzania closed top 10 preferred list at 15.6 per cent.
“Kenya was continuously ranked as the top country. The results of South Africa rose 4.7 points from last year, overtaking Nigeria, and ranked next to Kenya. Interests in Mozambique and Tanzania has been declining from 2018,” says the survey.
Jetro was established in 1958 as a Japanese government-related organisation that works to promote mutual trade and investment between Japan and the rest of the world.
The survey usually targets firms that receive capital contribution from any Japanese company regardless of the investment ratio or number of Japanese expats they have.
About half of the surveyed companies said the importance of African continent as a trading destination has increased compared to five years ago while another 60 per cent said they see its attractiveness rising further in the next five years.
“Many companies cited market expansion with the growth of population and expectations for the African Continental Free Trade Area (AfCFTA) as reasons for this,” said the survey.
About 40 per cent of the companies said AfCFTA will have a positive impact on their expansion of business opportunities due to reduction or elimination of tariffs.