Africa: The "final frontier"

Africa is often called the final frontier of the 21st century.In recent years, companies not only from Japan but also from all over the world have been expanding into Africa.In the technology field, such as fintech, the United Nations is also in a position to dominate the world.With the rise of technocrats, expectations are high for African business.This time, I would like to introduce the advantages and disadvantages of companies expanding into Africa.

What are the benefits of expanding into Africa?

The first benefit of expanding into Africa isExplosive population growth and abundant natural resources.Africa's population in 2021 is just under 1.4 billion, accounting for 18% of the world's population.The population is expected to reach 2.5 billion by 2050,It is predicted that Africa will account for one-quarter of the world's population.

While the median age in Japan is 48.4 years old,The median age across Africa is 18.6 years old.Compared to other areas, the area is youthful and has a large working-age population.

Africa as a whole is also considered a treasure trove of natural resources.In the north of Nigeria, natural gas and oil, in the south of South Africa, gold and platinum,Rare metals such as diamonds are produced here.

Furthermore, Africa is a region experiencing rapid economic growth along with explosive population growth.African countries are one of the world's fastest growing economies, with many of them ranking highly in terms of GDP per capita.This is a growth rate comparable to Japan's during its period of rapid economic growth.It is predicted to reach 4.5 trillion by 2050.

Another strength of Africa is its developed IT technology.In Africa, 220 million mobile devices are sold annually, and as of 2019, 480 million people use mobile devices.If we assume that Africa's population is 1.4 billion, half of which are adults, then the penetration rate would be approximately 70%.This region can be considered the birthplace of fintech, and the adoption rate of mobile services and mobile remittances is extremely high.

What are the disadvantages of expanding into Africa?

Next, the disadvantages.There are still areas in Africa where hunger and conflict are endemic due to political instability.The country is small, so there are political concerns.

There is also exchange rate risk. Foreign exchange reserve ratios are low in Africa.The dollar shortage is a serious problem.

The delay in infrastructure development is also a disadvantage when expanding into Africa.Africa has a vast territory, but air routes are of course underdeveloped.Railways are also underdeveloped on land.Many of the countries are landlocked and do not have ports, so shipping is also done by ship.This is difficult as we need to rent ports in neighboring countries.

And now China is strengthening its presence in Africa.Apparently, it is common to see Chinese people even on the streets of Africa.In contrast, Japanese companies are currently lagging far behind China in their expansion into Africa.

There are many benefits to expanding into Africa!

We have introduced the advantages and disadvantages of expanding into Africa.I think there are great benefits to expanding into Africa.Let's think about ways to resolve these disadvantages and aim to expand into Africa.

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