Japan – Africa: Retying the knot

Japan International Cooperation Agency
Further north, the agency has agreed to provide a $100m loan to help fund the construction of the $140m Second Nile Bridge in Uganda, which will connect the towns of Njeru and Jinja. The loan will be virtually interest free, with the first payment not due until 2024, although even then there is an option to extend it.

Japan’s own Zenitaka Corporation has won the contract to construct the 525-metre bridge in partnership with South Korea’s Hyundai Engineering and Construction Company.

The existing Nalubaale Bridge was built in the 1950s and is unable to cope with the volume of east-west traffic in the area. The new bridge, which will be located 80km east of Kampala, will improve links between the Port of Mombasa and the Ugandan capital, Rwanda, Burundi, and Democratic Republic of Congo as far as the Atlantic port of Matadi. As in Mozambique, JICA is trying to focus its development along specific transport arteries.

It is also funding the construction of the second container terminal at the Port of Mombasa. Demand at the existing terminal is rapidly approaching 1m standard-size containers – or TEU – a year, way beyond its design capacity and it suffers from periodic congestion problems.

Work on constructing the new terminal at Kilindini Port began in March 2014 following the conclusion of a Y26.711bn ($261m) loan from JICA. The facility will have handling capacity of 1.2m TEU a year. A spokesperson for the Japanese Embassy in Kenya commented: “The Mombasa Port Development Project is one of the biggest single ODA projects in Japan’s history of economic cooperation to Kenya.” The project is due for completion in 2016.

JICA is spending almost as much money on the construction of the Dongo Kundu bypass to connect the Mombasa-Nairobi road with the Mombasa-Lunga Lunga road. The new road will ease the movement of freight to and from the port, reduce demand for the Likoni Ferry and improve access to Moi International Airport.

In June, JICA signed a Memorandum of Understanding (MOU) with the New Partnership for Africa’s Development (NEPAD) regarding cooperation on infrastructural projects and agricultural development.

They issued a joint statement that revealed: “Priority areas of cooperation will focus on the implementation and monitoring of the Programme for Infrastructure Development in Africa (PIDA), in particular project preparation and evaluation.”

In agriculture, JICA will support the Coalition for African Rice Development, which is part of the Comprehensive Africa Agriculture Development Programme, in an effort to double rice production on the continent as a whole to 28m tonnes a year between 2012 and 2018.

JICA is also supported by a number of other state bodies, including the Japan Bank for International Cooperation (JBIC), which funded the construction of a 120 MW tranche of the Zafarana wind farm in Egypt in 2007 at a cost of $125m. JBIC signed a $150m loan agreement with South Africa’s Standard Bank in 2009 to improve trade finance on the continent and indeed has provided more than $1.2bn to South Africa over the past six years, including $470m to Eskom.

At the same time, Japan’s Ministry of Economy, Trade and Industry (METI) has been tasked by the government with promoting public-private partnerships with the continent.

Japanese private sector involvement is currently rather piecemeal. Anglophone markets are particularly attractive for Japanese car exporters because they prefer the right-hand-drive models that are produced in Japan. They also import construction equipment from Japan, including forklifts and bulldozers.

About one third of all Japanese investment in Africa goes to just one country: South Africa. Most recently, Nippon Telegraph and Telephone bought Dimension Data for $3.2bn. East Africa accounts for about another 20%, with investment in Tanzanian textiles, paper and furniture manufacturing.

Nigeria is not as popular a destination for foreign direct investment as might be assumed, although several acquisitions in food processing and electronics have been made in recent years.

For more information on the 2015 Africa-Japan Business Investment Forum, visit http://bit.ly/1IipRKz