THE JAPAN External Trade Organisation (JETRO) plans to release a report next year listing 100 promising African startups, as part of efforts to help Japanese companies gain access to the vast, “once-invisible” potential market, its Chairman Hiroyuki Ishige said on December 13.
In recent years, the business environment in Africa has undergone significant change on the back of the rapid spread of mobile communication devices. Startup companies, including mobile phone-based financing service providers and digital business platform operators, have been a driving force in creating new businesses in the region.
“Japanese companies have traditionally focused on resources, energy and infrastructure when doing business in Africa, but I believe we should broaden focus areas by exploring new business opportunities with local startups,” Ishige said at a press conference at the JETRO headquarters in Tokyo.
JETRO believes linking Japanese companies with African startups has great business potential because the startups have access to vast amounts of data through their services, particularly on so-called base of the economic pyramid (BOP) consumers – generally defined as those with annual incomes below $3,000 (Bt98,340) in local purchasing power.
In Nigeria, for example, those with annual incomes of $3,500 or less accounted for 76.8 per cent of the population in 2016, according to a document compiled by JETRO. Japanese companies have mainly targeted higher-income earners, which comprised about 20 per cent of the population that year. “This [BOP] segment used to be invisible due to the lack of market data,” Ishige said.
“By working with the startups, Japanese companies can reach difficult-to-approach consumers.”
JETRO is currently selecting up-and-coming firms in nine African countries, including Kenya, Nigeria and South Africa, with the potential to become business partners or investment destinations of Japanese companies. These firms possess innovative technologies |in fields such as agriculture, |medicine and finance.
The report on 100 startups, which also have the potential to impact society, is scheduled to be released in February ahead of the next Tokyo International Conference on African Development (TICAD), a Japan-initiated forum to be held in Yokohama in August.
JETRO plans to set up a “help desk” at its headquarters where individual Japanese companies seeking to work with African startups could obtain information and assistance. It also intends to widely disseminate such information through its about 50 offices across the nation.
“Japanese participants in business in Africa have mostly been major companies, but we want to expand and diversify participants by also encouraging small and midsize companies to look to Africa,” Ishige said.