Japan Joins the African Investment Race
Japanese Prime Minister Shinzo Abe greets former-President of South Africa Jacob Zuma at the 2016 Tokyo International Conference on African Development. (Flickr)
As China increases its involvement in Africa through heavy investment in development projects in countries such as Kenya, Nigeria, and Angola, other East Asian countries have taken notice. Japan, in particular, is looking to challenge Chinese power in Africa by rolling out its own large-scale investment program. Dozens of African leaders gathered from August 28 to August 30 in Yokohama for the 7th Tokyo International Conference on African Development (TICAD 7), where Prime Minister Shinzo Abe promised an additional $20 billion in investment by Japan’s private sector into the continent. Specifically, Abe cited investments in technological innovation, industrialization, and institution-building as avenues for growth in Africa.
Africa is a rapidly growing market for companies and investors. The rise of investment in Africa is part of a worldwide trend as other nations start their own African development conferences, such as the China-Africa forum, the India-Africa forum, and the U.S.-Africa forum.
Japan started the TICAD in 2000, and it has become a major event for Japanese businesses, occurring three times a year since 2016. There are currently approximately 800 operations run by Japanese companies on the continent focused on three essential areas: Nacala (Malawi, Zambia and Mozambique), the East Africa Northern (Kenya and Uganda), and the West Africa Growth Ring (Ivory Coast, Ghana, Togo, and Burkina Faso).
Abe, in his opening remarks at the TICAD, claimed that Japan’s investment into Africa was based on “the double ‘E’s of entrepreneurship and enterprise, along with the double ‘I’s of investment and innovation.” Following this basis will help Japanese companies gain access to natural goods at cheaper prices in Africa, Abe said. Japan is looking for strategic allies by using foriegn investment projects as it advocates for UN Security Council (UNSC) reforms to become a permanent member. Doing so will allow Japan to continue its work to counter China’s power in the Indo-Pacific.
Japan is working to act as a counterweight to China’s rapid investment into the continent as well. However, China is still actively involved in Africa. On September 3, China’s Exim Bank approved a $5 billion loan to the Nigerian government to finance the Mambilla hydroelectric project. Moreover, Chinese President Xi Jinping announced $60 billion in investment into Africa in September 2018. Experts fear that this mass investment will push some African nations to the brink of financial collapse. According to the Overseas Development Institute, "Almost 40 percent of sub-Saharan African countries are in danger of slipping into a major debt crisis" as foreign loans burden the recipient countries with large debts that are difficult to repay.
In response to these global trends, Akinwumi Adesina, the president of the African Development Bank, commented at TICAD that “Africa should no longer be seen through the development lens. Africa should be seen from an investment lens.” She continued, “I encourage [the] Japanese private sector to form joint ventures in Africa for a win-win investment partnership.” This is critical as other, more developed nations across the world cannot hope to match pace with China’s rate of investment into Africa, even as China’s program has shown signs of a slowdown.
Ultimately, countries like Japan and conferences like TICAD will play a large role in Africa’s development in a number of different sectors, including defense, energy, and infrastructure. Japan may believe that its investments will provide a safer future for development than riskier Chinese loans, but large financial investments into Africa can still present threats to the well-being of African countries.