The Japanese government is strongly backing trading companies and manufacturers who are exploring sub-Saharan Africa in a bid to pursue minerals and oil and target the growing consumer markets in the region.
According to fDi Markets, while China has invested more than $32bn into the African continent since 2003, Japan has so far lagged behind, with only $11.7bn-worth of investment in the past seven years. However, the situation is likely to change over the next decade.
In March, Japan’s Tokyo Tsusho, Toyota’s trading arm, announced it was contemplating investing in a $1.5bn pipeline from southern Sudan to the coast of Kenya, while Altech, which provides outsourcing services in engineering, technical services, nursing care and human resource services, announced it would be investing $10m in a data entry centre in Kenya.
Meanwhile, Japan’s LNG Corporation announced it might be investing in the construction of a Nigerian liquefied natural gas plant, and Hitachi Construction Machinery has announced plans to establish a facility in Zambia which will be engaged in the refurbishment and recycling of construction machinery.
Despite these investments, however, there are, according to the Financial Times, persistent questions about whether Japan has the will to achieve its goals, “in a continent where business conditions do not always play to the strengths of its bureaucrats or executives”.
Over the past few decades, Japan has become increasingly keen to provide aid for infrastructure and agriculture projects in Africa. However, following in the footsteps of the West, trade is gaining more emphasis over aid, meaning that the Japanese companies have had to reconfigure plans to become more competitive. “At the beginning, we used to hear comments from the Japanese government such as: ‘That’s private sector stuff, we can’t force them to go to Africa’,” Dennis Awori, the chairman of Toyota East Africa and former Japanese ambassador to Kenya, told the Financial Times. But Mr Awori says the mindset had changed by the fourth Japan-Africa conference for heads of state in 2008, when Japan and several African nations agreed to work together in approaching the private sector.
As the Financial Times reported, one of the goals of the Japanese government is to encourage investments through loans from the country’s state-controlled banks. A key factor for success of the Sudanese/Kenyan pipeline will be obtaining financing from the Japan Bank for International Co-operation.