Africa has seen increased attention from Japan, part of it owing to Tokyo’s interest to counter China. This includes investment in the continent’s development, loans, infrastructure projects, and scholarships.
Furthermore, Japan is encouraging companies to partner with African startups to raise its profile in the continent.
While Japan’s interest in Africa dates back, the country is now championing more initiatives in the hope of catching up with China. Moreover, the country is switching tactics, leaning on technology and the private sector to establish its footing in Africa.
Some of Japan’s state-driven initiatives include the Enhanced Private Sector Assistance (EPSA) initiative. The initiative consists of lending initiatives through a co-financing scheme between AfDB and the Japan International Cooperation Agency (JICA) for sovereign guaranteed projects. Additionally, EPSA hosts credit lines from JICA to finance AfDB’s private sector projects. Lastly, it provides a Trust fund to offer technical assistance to African companies and governments.
Switch to private-led investments
Some crucial trends in Japan’s interest include migration from official development assistance to private sector investments. At the same time, Nikkei Asian Review states that the country is making advances in digital and Fintech to rope in customers without formal access to finance.
A few days ahead of TICAD 7, Katsumi Hirano executive vice president of the Japan External Trade Organization reiterated the importance of business relationships with Africa, especially for Japan. “By forming relationships with African startups, we want to create more business opportunities for Japan,” said Mr. Hirano.
Other Japanese private-led initiatives in Africa include planned partnerships with startups such as Kenya’s Bitpesa and Ethiopia’s Deliver Addis. Also, Japanese Itochu will start producing its apparel in Ethiopia in support of the country’s textile industry.
Japan still has a long way to go
Japan’s investment in Africa stood at $9 billion by 2017, as compared to China’s $43 billion at the same time. At the same time, its exports stand at $ 7 billion: a mere fraction of China’s excess of $100 billion in 2018. While Japan can provide better financial terms, Beijing supplies for Africa’s insatiable hunger for debt.
Perhaps, TICAD 7 will help cement Japan’s footing in Africa. However, the country still has a long way to go to snatch Africa from China.