Inside Japan’s plan for Africa ahead of TICAD

Japan Ambassador to Kenya Tatsushi Terada.

Japan’s interventions in Africa have mostly been under the radar, attracting little fanfare. Yet, it was the continent’s largest Asian economic partner until 2000, when China took the lead. In 1993, Japan pioneered Asian countries’ efforts to engage directly with African leaders by launching the Tokyo International Conference on African Development (TICAD), with the United Nations Development Program and the UN’s Office of the Special Advisor on Africa.

The Chinese followed in 2000 with the launch of the Forum on China-Africa Cooperation (FOCAC). India joined the bandwagon in 2010 with the India-Africa Business Forum (IBF). Often attended by a majority of African leaders, as well as investors and development experts, these gatherings have been opportunities to negotiate international trade and to attract investors and official development aid (ODA).

GLOBAL INTEREST

Japan’s decision to hold the sixth TICAD in Kenya this weekend, which makes it the first ever in Africa (previous conferences were all held in Japan), will likely stoke global interest in Japan-Africa relations.

A prior visit to Africa by Japan Prime Minister Shinzo Abe in 2013 (with stops in Côte d’Ivoire,Ethiopia and Mozambique), the first by a Japanese leader since 2005 and the first ever to a francophone country, highlighted the interest Japanese firms have in Africa’s investment opportunities.

The prime minister’s visit also triggered a scrutiny of Japan’s strategic intent and its policy towards Africa. During this trip, in 2013, Mr Abe announced a whopping $32 billion (Sh3.3 trillion at current exchange rates) five-year support for Africa’s development projects.

Not many know that Japan’s cumulative foreign direct investment (FDI) in the continent rose from $758 million (Sh76 billion) in 2000 to $10.5 billion (Sh1.1 trillion) in 2014, according to Forbes.

Stratfor, a US-based geopolitical intelligence firm, suggested Japan is making investment forays into Africa because it is experiencing “resource insecurities” even as its “economic growth challenges have become more urgent after the 2011 disasters and nuclear shutdown.”

Africa’s untapped resources and its resilient economy are a powerful magnet for investors. The continent’s GDP growth averaged 5 per cent in the past decade, according to the World Bank, while its economy was resilient against the global financial crisis of 2007–2008.

This prompted Abe to express the view that Africa is “no longer an aid recipient but rather a partner for growth.” Increasing investor confidence has led to a quadrupling of cumulative FDI since 2000 to about $470 billion (Sh48 trillion). In short, Africa seems like a beautiful maiden attracting the attention of investment suitors worldwide.

All the same, a feeling exists that Africa’s economic growth has also forced a subtle change in the international rules of engagement. Forbes notes that China and India now concentrate on the construction of roads, bridges, railways and other commercial activities, rather than offering only ODA, as was the case in the past.

The rationale is that infrastructure projects, often commissioned with fanfare, can be touted as evidence of constructive relations.

TRUE PARTNER

Unlike China’s and India’s, the majority of Japan’s flows to Africa continue to be “focused on development assistance rather than on commercial investment by Japan’s private sector,” notes Harry G Broadman, the director of US-based Johns Hopkins University’s Council on Global Enterprise and Emerging Markets in Baltimore, Maryland.

Due to the volatility in commodity prices, Africa’s developing economies need Japan’s support, says Stratfor. However, Japan has mainained “a traditional aid-for-Africa approach” argues Mr Broadman.

His critique is, however, dismissive of Japan’s somewhat new pragmatic approach to its relations with Africa. Japan’s Foreign Ministry notes that its prime minister wants Africa to “choose Japan as its true partner” because Africa needs “Japanese assistance and the organizational culture of Japanese companies which value human resources and place importance on creative ingenuity.”

Japan’s competitive advantage is its high-quality products, concurs Broadman, and Africa can gain in Strategic interests: Analysts say Asian giant is looking to tap into the continent’s consumer base, resources.

Inside Japan’s plan for Africa ahead of country’s historic meeting in Nairobi areas such as transport, power generation and distribution and the manufacturing of construction equipment and machinery.

He adds that Japanese firms are “notable for sharing know-how and technology transfer.” While addressing the African Union in Addis Ababa, Ethiopia, Abe recalled that one of the African leaders told him: “Only the Japanese companies teach us the morals of what it means to work and what the joy of labour is.”

The PM’s pitch reiterates Japan’s eagerness to support Africa’s transformation through quality projects and transfer of knowledge. His speeches indicated a strategy consisting of a mix of ODA and empowerment.

The African Business Education Initiative for Youth, which offers opportunities for Africans to undertake graduate studies in 58 Japanese universities, is one of Japan’s human resource development programmes for Africans.

The first batch of 156 African students began degree programmes in September last year. “We want to utilise our huge and excellent technology to support African countries to transform,” Abe said in the margins of the UN General Assembly debate in New York in September.

Relations between Africa and Japan cannot be one-way traffic, says Broadman, meaning that opportunities exist for both. The plunge in the price of oil and other commodities, and the slowdown of the Chinese economy may stem FDI flows to Africa, offering Japanese companies much-needed space to operate.

“Japan would certainly benefit from increased access to African oil,” suggests Broadman. And rather than buying copper from Latin America, Japan may now opt for Zambian copper.

ECONOMIC RIVAL

Tsuneo Kitamura, the parliamentary vice president at Japan’sministry of economy and trade, admits his country is cautious in its approach to foreign investments. The Mail & Guardian, a South African publication, quotes Mr Kitamura as saying, “Japanese companies take time to decide where to invest, but they never give up in the middle.” Christophe Akagha Mba, Gabon’s mining minister, says that while the Chinese are taking advantage of falling commodity prices, “The Japanese are still at the same stage. They have not even started significant investments yet”.

About 20 top Japanese business executives accompanied the prime minister on his visit to Africa. “Japan, with economic rival China in mind, is looking for new overseas markets where it can sell its cars, power plants and generators, and buy fuels and other raw materials,” writes the Wall Street Journal, a US daily.

Meanwhile, hundreds of Japanese peacekeepers are in Juba, South Sudan, providing engineering and logistical support to United Nations peacekeeping operations.

The Asian giant is also actively co-ordinating with Ethiopia and other regional players to end hostilities in South Sudan.

In addition, it plans to support conflict resolution and disaster mitigation efforts in Africa with $320 million (Sh3.3 billion). Cultural and sporting ties are also being strengthened. Ahead of the 2020 Olympics, Japan is conducting a ‘Sports for Tomorrow’ programme and enlisting the participation of African youths.

As Japan and Africa prepare for the sixth TICAD summit, Kenya’s President Uhuru Kenyatta says Africa will use the occasion to “showcase our own growth initiatives and expose to Japan the available opportunities for co-operation, trade and investment.” — Africa Renewal