Significant Room for Japanese Companies' Growth in and with Africa
On the occasion of the 2019 Tokyo International Conference on African Development (TICAD7)* taking place in Japan at the end of August, Societe Generale Japan hosted its first "Japan-Africa Seminar" for Japanese clients on 27 August. In Africa, which has been dubbed "the Greatest Frontier of the 21st Century", the population is expected to double to 2.5 billion by 2025, and in Japan, as elsewhere, both public and private sectors interest in the continent are growing.
To help cater to this growing interest, Societe Generale, having in-depth knowledge and strong track records in African markets, ran a seminar to discuss the opportunities and challenges faced by Japanese companies developing or planning to develop business in Africa. During the seminar, executives of Societe Generale introduced to clients the bank's expertise in Africa with its years of operations on the continent, and shared successful case studies.
Raphael Cheminat, Group Country Head, Japan opened the seminar which was attended by Japanese companies, primarily corporates engaged in export or overseas ventures, such as trading companies, manufacturers, and engineering firms. It was followed by a session from Japan Chief Economist Takuji Aida, who discussed the outlook on the African economies.
Earlier this year, Societe Generale announced its partnership with a mega African bank, ABSA. Between them, the Group and ABSA currently operate locations in 27 countries across the continent. With both banks operating in Africa for over a century, representatives from Societe Generale Ghana and ABSA presented to the attendees their financial services, as well as their expertise in assisting Japanese companies. They cited four areas of current focus in their efforts to help Japanese companies develop African businesses and their sustainable economic growth in Africa: support for local SMEs, infrastructure financing, financing for the agricultural and energy sectors, and retail finance.
Philippe Le Roch, Head of Export Finance, Africa, also remarked Africa's huge business potential in sectors ranging from basic infrastructure, including water and healthcare, to more innovative sectors such as technology, where Japanese corporates have a great deal of expertise.
Creditworthiness of Japanese corporates to aid their developments in Africa
Thierry Magnan, Head of Structured Finance, International Retail Banking, Africa, Mediterranean Basin & Overseas Business Unit, commented that although approximately USD 80 billion has been raised in project finance across the continent over the past five years, demand for financing was estimated to be double, indicating a large gap between demand for funds and actual financing, and suggested there is significant room for growth in the finance business.
In response to this, Katan Hirachand, Co-Head, Energy Advisory and Project Finance, Societe Generale London, expressed the view that Japanese companies have some compelling advantages when it comes to being counterparties for African projects, because they can help attract funding, whether equity or debt, thanks to the excellent credibility of Japanese corporates in terms of reliability, long-term commitment, underlying demand and last but by no means least, contract sanctity.
While Japan maybe a latecomer to African investment compared to the west and China, the announcement at TICAD7 that the Japanese government will be investing over USD 20 billion in the African private sector over the next three years suggests that Japanese companies are also set to boost their presence and investment in Africa. As a result, Societe Generale – with its extensive networks across the continent and equally wide-ranging track record in Africa – is well positioned to support Japanese companies operating in the continent.
* TICAD refers to the Tokyo International Conference on African Development launched by Japan in 1993 as a forum for discussion on a variety of issues, ranging from economics to security. The seventh TICAD was held this year from 28-30 August in Yokohama, and attended by representatives of 42 African nations, the highest number to date. Led by the Japanese government, TICAD is co-hosted by the United Nations, United Nations Development Program, World Bank, and African Union Commission.