Retying the knot – Bringing Africa to Asia

From the archive: first published in the June 2014 issue of African Business.

One of Tokyo’s most innovative strategies in recent years has been the Tokyo International Conference on African Development (TICAD). The first TICAD was held in 1993, as a result of the Japanese government’s decision to play a greater role in international affairs following the end of the Cold War. At the first conference, Japan pledged to increase the proportion of its aid budget that it spends in Africa as successive Japanese governments had previously focused the bulk of their aid expenditure closer to home, particularly in the countries of Southeast Asia.

Since then, the conference has been held every five years, most recently in 2013, with the aim of promoting sustainable development, security and good governance in the process. The focus of TICAD began to move away from aid and towards private sector trade and investment at TICAD IV in 2008.

The fifth TICAD in 2013 was a three-day conference in Yokohama that was attended by the leaders of 50 African countries. At Yokohama, Prime Minister Shinzo Abe announced a total of $32bn in Japanese public and private investment to be made in Africa over five years. The money will include $14bn in official development aid and $6.5bn in infrastructural investment. Tokyo argues that it has consistently delivered on its aid promises, even in the face of domestic opposition following the Fukushima nuclear disaster.

TICAD should not be seen in isolation but as part of a more general increase in Japanese interest in Africa. Prime Minister Shinzo Abe toured the continent in January, just a month after taking office, visiting Côte d’Ivoire, Ethiopia and Mozambique. He has also pledged to introduce a more proactive foreign policy. Speaking at a meeting in Addis Ababa, he said: “The African nations are no longer in need of aid. The region’s human resource development and infrastructure improvement are both attractive investments for the future…They are made for Japan to grow together with the African countries.”

It is important that Tokyo allows African governments to suggest where help can best be provided. For instance, during Abe’s visit, the African Union requested Japanese support in ocean management. The chair of the African Union Commission, Nkosazana Dlamini-Zuma, said: “Africa, in addition to land resources, also has vast oceanic resources, and therefore is exploring more sustainable and inclusive ways of expanding and protecting its Blue economy, yet another area where we can share experience with Japan.”

Abe suggested that Japan could become “the African partner of the 21^st century”. In addition, Japan’s Prince Akishino and Princess Kiko visited Tanzania and Zambia for 12 days in June and July, partly in order to visit national parks but also to meet the Presidents of the two countries and to mark the 50^th
anniversary of diplomatic ties between Zambia and Japan.

At a summit in Tokyo in April, US President Barack Obama asked Abe to use the Japanese Self-Defence Force (SDF) more often on UN peacekeeping operations in Africa, particularly on counter terrorism projects.

The Japanese military has played a very limited role in the world since the end of the Second World War. However, in tandem with a similar process in Germany, Tokyo is slowly coming around to the idea of allowing more overseas operations by its forces. At present, the SDF are only involved in one out of nine UN missions in Africa: the UN Mission in the Republic of South Sudan. After their meeting, the two leaders issued a joint statement that they were “committed to promoting peace, stability, and economic growth throughout the world, including in Africa”. Abe has since pledged that Japan will play a bigger role in global peacekeeping operations.

This growing interest in Africa could be seen as part of a more general shift in Japanese relations with the rest of the world. The Japanese economy is currently mainly orientated towards North America, East Asia and Southeast Asia but needs to become more diverse in order to re-energise an economy that has been largely stagnant for the past 15 years.

While Japan imports huge volumes of raw materials and energy commodities, its services and manufacturing imports are much more limited. At the same time, immigration is low by global standards, but all this may be about to change as the country starts to become more outward looking.

Japan has an ageing population and current demographic trends suggest that the population will sharply contract over the next 50 years. The government is keen to avoid this and so mass immigration is being considered for the first time and this could help to
engender a more appreciative view of the rest of the world, including Africa.

Sino-Japanese rivalry

Japanese interest in Africa is also a function of its rivalry with China. Japanese-Chinese relations are rarely warm but have been particularly cool in recent years. Chinese GDP is now greater than that of Japan and this has given Beijing more political and diplomatic confidence. Tokyo is worried about its much larger neighbour, while sovereignty disputes over islands and maritime territory in the East China Sea have seen the two countries come close to military conflict on several occasions over the past five years.

At the same time, mass protests by Chinese people over atrocities committed by Japanese forces during their occupation of Manchuria and other parts of China during the Second World have given a sharp edge to their rivalry. Relations between Tokyo and Beijing could be seen as similar to those between Washington and Moscow during the Cold War but for the fact that the two trade massively with each other. It is the likely impact on commercial ties that makes war unlikely.

As in the Cold War, however, this rivalry could find an outlet overseas. According to data from Beijing and Tokyo, Chinese foreign direct investment in Africa is about seven times greater than that of Japan. Chinese trade with Africa reached $179bn in 2012, compared with just $25bn for Japan. However, Tokyo has pledged to close this gap and the two governments have begin to criticise each other’s African strategies. Tokyo claims that China has merely bought off African governments with “lavish gifts”.

Abe’s official spokesperson, Tomohiko Taniguchi, told the BBC that “countries like Japan, Britain and France cannot provide
African leaders with beautiful houses or beautiful ministerial buildings and added: “Japan’s aid policy is to really aid the human capital of Africa”.

However, Beijing counters that Japan’s diplomatic initiatives in Africa are merely part of its campaign to become a permanent member of the UN Security Council. Chinese officials also cite China’s much bigger aid expenditure in Africa, which is scheduled to reach $20bn a year by 2018. Moreover, while Chinese companies are active in every African market, Japanese involvement is more limited. There is little prospect of Japan catching up to China’s influence in Africa in the near future.

The energy angle

Japan’s interest in African natural resources intensified after the Fukushima nuclear disaster in March 2011 prompted the government to shut down the country’s entire fleet of nuclear reactors. Some have been brought back on stream but there is no doubt that nuclear energy will play a far more limited role in Japanese power generation than was previously expected. Most of the shortfall will be made up by increased imports of coal and liquefied natural gas (LNG), much of which will be sourced from Africa.

With most global LNG output tied up in long-term supply contracts, Tokyo is particularly interested in new sources of production. Mozambique is on the verge of becoming an LNG and coal supplier of global importance and so Tokyo is obviously keen to cement its relations with Maputo. In October 2012, the governments of Japan and Mozambique signed a wide ranging memorandum of understanding on the production and export of both commodities.

Japan currently relies on Australia to supply about 60% of its thermal coal and the government is keen to widen its supply base as the national dependence on thermal power increases in the wake of the nuclear crisis. The Minister of Economy, Trade and Industry, Isao Matsumiya, said: “Mozambique could be one of the most important suppliers of mineral resources for our country.”

Nippon Steel & Sumitomo Metal already buys coking coal from Vale’s Moatize project and holds a 33.3% stake in the Revuboè mine project in the same area, which contains both thermal and coking coal. The Revuboè consortium is currently in talks with the government of Mozambique over a likely development plan. Mitsui already holds a stake in the planned LNG project in the far north of Mozambique and much of the plant’s output is expected to be shipped to Japan.

Coal projects are also planned in Zimbabwe and Tanzania to export coal across the Indian Ocean. Zimbabwe’s long-running political and economic crisis has deterred investment in that country but Harare announced in 2013 that it is in talks with Japan Oil Gas and Metals National Corporation over mine development to supply the Japanese firm with 15m tonnes of coal a year. The Deputy
Minister of Mines and Mining Development, Gift Chimanikire, said: “Obviously, we are going to have a big challenge but they are prepared to work with us on the production side and also enhancing the railway system to have the product move faster to the port of Beira in Mozambique.”

Japanese and other Asian companies are also likely to buy the lion’s share of LNG production from Mozambique. Anadarko’s vice president of LNG, Steve Hoyle, said: “We’re hopeful that the policy uncertainty around nuclear power and US exports does not cause them to miss out.” The Japanese government has asked that any LNG contracts not be linked to oil prices because high global oil prices have pushed up the cost of LNG imports on existing contracts. The Minister of Economy, Trade and Industry said: “We hope the resource will be supplied to Japan in a stable manner and at a fair price.”