African market beckons global builders and sellers

The railway line runs between Moatize and Nacala via the neighboring country of Malawi. The line also carries grain, fertilizer and fuel. Mitsui aims to establish a transport network linking coastal areas and landlocked countries, and promote the development of agriculture and other industries in the region, including nearby Zambia and Zimbabwe.

This geothermal power plant in Kenya's Olkaria region was built with Japanese yen loans.

During his visit to Mozambique in 2014, Japanese Prime Minister Shinzo Abe pledged a total of 70 billion yen ($701 million) in official development assistance over five years. As part of the aid package, Japan will extend low-interest yen loans for the construction of a new terminal for general goods at the port of Nacala.

At the fifth TICAD in Yokohama in 2013, the Japanese government named 10 priority areas for wide-area development projects, including the so-called Nacala Corridor, a network centered on the port that spans several countries.

Despite headwinds for the development of resources in the form of low commodity prices, such integrated projects and new infrastructure should help the continent's economies become more self-sustaining. They will also create new business opportunities.

Others are joining the African infrastructure fray. Like in many others, China is active in Africa as part of its Belt and Road Initiative, an effort to create an economic network linking China with Europe and Africa by land and sea.

The Northern Corridor transport network project is a high-profile project. It links the Kenyan port of Mombasa, a gateway to East Africa, to the landlocked countries of Uganda, Rwanda and Burundi.

While Japan is assisting with the development of the port and the creation of a special economic zone with yen loans, China will build a 450km rail line between Mombasa and Nairobi.

Expanding middle

A large shopping mall opened for business in Abidjan in December 2015.

Many global companies are hungry for a piece of Africa's growing middle-class consumer market. In December 2015, a big shopping mall anchored by a Carrefour supermarket opened in Abidjan, the commercial capital of Ivory Coast. The Abidjan store is French retailer's first foray in the region. It plans to open outlets in eight neighboring countries as well.

The mall is operated jointly by Carrefour and CFAO, a French trading company acquired by Japanese trading house Toyota Tsusho in 2012. "Africa has a huge potential because of its population. The swelling middle class provides us with business opportunities," said Takashi Hattori, senior managing director with Toyota Tsusho.

Japan's Yamaha Motor, together with Toyota Tsusho, is assembling 110cc motorcycles in Kenya, targeting owners of the motorbike taxis widely used in the country. To hold prices down, Yamaha Motor imports parts and materials from a plant in India.

To capitalize on the African consumer market, global companies must develop products that meet local needs, sell them at suitable prices and establish sales channels.

Source: Nikkei Asian Review

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