Japan turns focus on African Investment

Japan has been an often unsung and understated friend of Africa for a long time. Although the level of Japanese aid, mainly through its development arm, JICA, has been declining since its peak in 1997, it is still set to double from roughly $0.9bn over 2003–7 to $1.8bn this year. JICA has focused on practical solutions in water, agriculture, SME development, capacity building and creating conditions for peace and security. The agency, as this publication has regularly reported, has been doing excellent work.

But what is much more exciting in the context of Africa’s transformation is that the Japanese government has been shifting its focus away from aid to increased trade and investments into Africa.
In 2008, the Japanese government said it wanted to double the level of its FDI, then around $2.5bn, by 2012. In fact, FDI increased to $6bn and there is scope for more. Unfortunately, many companies in Japan, as in other parts of the world, are still victims of the negative publicity that surrounded the continent for so long.

Add to this the lack of clear information about the various countries in Africa, ignorance of the opportunities now readily available and suspicion over regulatory and legislative regimes, and one can understand the reluctance of these companies to commit to the continent.

But this might well be a thing of the past if the aims of the forthcoming Tokyo International Conference on African Development (TICAD) are realised. It is interesting that the first TICAD was held as far back as 1993, soon after the end of the Cold War. Since then it has been held every five years in Tokyo. This year’s event will be held in nearby Yokohama in early June.
The overarching theme is ‘Hand in hand with a more dynamic Africa – Transformation for quality growth’. While the previous conferences were more concerned with developmental issues, this one will seek to galvanise the private sector into taking a fresh look at Africa as the preferred investment destination.

Japan’s own economy has been going through very straitened times as its traditional export markets, the US and Europe, have been battling their own growth doldrums. It needs to expand its footprint in more virgin territories and Africa, on its current transformation curve, offers one of the best possibilities.

Exactly how this can be done, where and in what areas, will be discussed during TICAD V. The conference, for the first time, is also being co-hosted by the African Union Commission. This gives ownership of the discussions back to Africa – an admirable, noble and intimately pragmatic move as Africa has to be fully involved in all planning if the talks are to bear fruit in the near future.

Japanese attitude
It also reflects very well on the Japanese attitude towards Africa that a series of seminars was held in various African capitals to work out the agenda and direction of TICAD V. There was, in fact, considerable discussion whether the conference should be held somewhere in Africa rather than in Japan. In the end, given logistical and other considerations, it was decided to stick to tradition and hold it in Yokohama.
During the seminars, Ambassador Makoko Ito, in charge of TICAD V, pointed out, rightly, that Africa cannot tackle the enormous challenge of transformation on its own. Japan’s experience in this endeavour will be invaluable.

The question is still how to entice more Japanese companies to become involved in Africa. There are only 227 Japanese companies currently operating in Africa, compared to 800 Chinese firms. The official policy will be to graft private sector investment onto Japanese development aid; in other words, aid and the private sector should work in tandem to achieve quality growth.

TICAD V will also make a concerted effort to reach out to the wider public both in Japan and in Africa. In the past, this series of conferences has received very poor coverage in the media, mainly because it was not easily accessible to the main channels of communication in Africa. It has fallen victim to the old adage that a conference unreported on is a conference that does not exist. All going well, TICAD V will make the headlines it deserves.

Finally, I would like to say bon voyage to the excellent Kimiaki Jin who ran the JICA UK operations so admirably. He takes up his new post as JICA’s chief representative in Ethiopia and will be replaced by Hirotaka Nakamura. Jin has been a friend and an excellent companion on the many trips to Africa we have made with him and his staff.