NRI Papers
No. 198 September 1, 2014
  The Changing Middle Eastern and African Markets
--Why the current emphasis on the Middle East and Africa?--
 
Junji KOIKE

Economic growth in the Middle East and Africa has been driven by a natural resource boom. In the Middle East and Africa, some countries are already as wealthy as are some of the ASEAN (Association of Southeast Asian Nations) member countries in terms of the number of high income earners. In the future, Africa's young population will greatly exceed that of China as well as that of India. The number of young people in the Middle East is predicted to continue to surpass that of the United States. These growing young populations are expected to contribute to market expansion.

Against this background, European and U.S. companies have already been fully committed to their efforts to enter the Middle Eastern and African markets, with several having achieved sales levels of several hundred billion yen to as much of one trillion yen.

For many Japanese companies, the Middle Eastern and African markets seem very distant, causing misconceptions about doing business in these markets. For the Middle East, common misconceptions include: (1) the "Arab Spring" makes the region politically unstable, (2) the markets are limited to those related to oil and natural gas, (3) the Gulf countries are a collection of small states, and (4) living under the influence of Islam results in harsh living conditions. For Africa, those include: (1) only specific industries participate in the markets, (2) the market scale of each country is only about several million to several tens of millions of people, (3) the market is only for low-quality, low-priced products, and (4) the market is only for "rehashed" products and services.

What is required of Japanese companies is to dispel their misconceptions and correctly recognize the realities of doing business in the Middle East and Africa, and then to pursue the business opportunities that these markets present.

Contents
I Why the Current Emphasis on the Middle East and Africa?
II Misconceptions and Realities of Doing Business in the Middle East
III Misconceptions and Realities of Doing Business in Africa

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