Japan pledges to spend $30B in Africa

Japan looks to boost its economic presence in Africa by spending over $30 billion in the continent over the next three years, adding to a $32 billion pledge it made in 2013.

Photo by: Reuters
Photo by: Reuters

Japan's Prime Minister Shinzo Abe (R) greets Kenya's President Uhuru Kenyatta as they attend Sixth Tokyo International Conference on African Development (TICAD VI) in Kenya's capital Nairobi, August 27, 2016.

In recent years discussion over investment in Africa has tended to be focused on China and the role the country’s companies have been playing in infrastructure and mining projects in the continent, such as the 45km-long Thika Superhighway in Kenya.

But there’s a new player in town – none other than China’s old rival, Japan.

Japan's Prime Minister Shinzo Abe joins African leaders for a group photograph during a break session for the Sixth Tokyo International Conference on African Development (TICAD VI) in Kenya's capital Nairobi, August 27, 2016. (Reuters)

On Saturday, Japanese Prime Minister Shinzo Abe told an audience of African leaders at the sixth Tokyo International Conference on African Development (TICAD) in Kenya’s capital Nairobi that his country will spend $30 billion on infrastructure development, healthcare and education projects in Africa over the next three years:

 "When combined with investment from the private sector, I expect that the total will amount to $30 billion. This is an investment that has faith in Africa's future, an investment for Japan and Africa to grow together"

Japan intends to spend some of the money on boosting Africa’s power generation capacity, training mathematics and science teachers, as well as assisting healthcare experts in developing the skills necessary to tackle outbreaks of disease.

Why is Japan interested in Africa?

Japan has, in fact, been steadily building up its economic presence on the continent for a while now. Only three years ago, at the last TICAD conference in 2013, Japan said it would spend $32 in Africa over a five-year period.

According to law firm Linklaters LLP, the level of project finance investments in Africa by Asian nations increased by over 160 percent in the decade of 2005 to 2015. A large part of that increase is due to the role played by Japanese investors.

Andrew Jones, head of Linklaters’ Africa unit, told Bloomberg TV in 2015 that Japan "has a much quieter and below-the-radar approach, less headline-grabbing than Chinese investment."

Chairperson of the African Union (AU) and Chad's President Idriss Deby attends the Sixth Tokyo International Conference on African Development (TICAD VI) in Kenya's capital Nairobi, August 27, 2016. (Reuters)

Both China and Japan seek to secure access to important resources in Africa – including oil, gas and minerals. This is especially important for Japan, which has few natural resources of its own.

By investing in Africa both countries are engaged in a competition to boost their "soft power" on the continent, meaning their diplomatic clout with African governments.

But both countries have different approaches to this investment. While China tends to spend big on loss-making projects in return for political influence, Japan has been taking a more business and profit-led approach, of which project finance investments – in which companies aim to recoup their investment with future earnings – are an example.

However, Japan’s pledge at this year’s TICAD shows that the Japanese Government is also willing to put its money where its mouth is in order to boost its soft power in Africa.

TRTWorld and agencies