Africa is becoming a lucrative investment destination for Asia’s leading economies — primarily China, India and Japan.
This month, Nairobi is hosting the 6th Tokyo International Conference on African Development (TICAD), which will focus on creating a favourable environment for Japan-Africa economic co-operation.
In this forum, Japan hopes to cement its diplomatic and economic clout on the continent. This follows similar Summits with the Chinese and India last year. In November, Delhi hosted the India-Africa summit that saw it commit to $10 billion in funding, 50,000 scholarships and infrastructure projects for Africa.
A month later, in Johannesburg, China hosted its own Africa summit that resulted in a $60 billion pledge to develop Africa’s infrastructure, education and health sectors.
The conference, from August 27-28 will offer Tokyo a chance not only to lobby for its bid for a UN Security Council permanent seat but also seek to secure African mineral imports while seeking a market for its products in exchange for infrastructure and development aid to the continent.
Japanese Prime Minister Shinzo Abe, who will attend the Nairobi summit, is expected to seek Africa’s support for Japan’s push to reform the United Nations Security Council (UNSC) to increase the number of permanent members.
Tokyo has long pushed for reforms at the UN, saying the current UNSC does not fully meet the needs of the international community.
“It is time for action, and Japan is ready to work with other countries. When the UN was formed, there were only 51 member countries, with five of them having the permanent membership status. This hasn’t changed despite the organisation currently having 192 members.
We need to change this,” Mr Abe said in March, adding that his country has demonstrated that it has the capacity to take on further responsibility as a permanent member of a reformed Council.
Tokyo is currently the second-largest contributor to the UN budget among the member states, bearing 12.5 per cent of the total budget.
Lack of representation
Africa accounts for more than a quarter of the member states. But it does not have a permanent seat, with only three countries having served as non-permanent members on the UNSC so far.
This is the ammunition Mr Abe expects to use to charm countries like Senegal, South Africa, Nigeria, Kenya, Egypt and Libya, which have expressed the same interest, in exchange for economic co-operation.
Jonathan Berkshire Miller, director of the Council on International Policy, said that Japan’s efforts to join an expanded permanent Security Council have forced it to cast its diplomatic wide net in Africa where numerous countries support UNSC reforms.
“Japan is using the economic carrot to win more support for reforms at the UN body to earn itself a permanent seat,” Mr Miller said.
It hopes to achieve this through infrastructure funding, loans and grants to several African countries.
According to Bloomberg, Japanese companies accounted for more than $7 billion investment in Africa compared with China’s $20 billion.
“Japan is still in the backseat with regards to engagement with the continent as China continues to pour billions into Africa. For it to catch up, it will need to rethink its policies on development assistance and, investment and offer stronger political-security co-operation with Africa,” Mr Miller said.
Prof Peter Kagwanja, chief executive of the Africa Policy Institute, said that despite Japan’s engagement with Africa having been longer and more consistent compared with other Asian nations, it has remained low profile.
“We now need to see a policy shift in the engagement with Africa. We are at a point for a one-on-one engagement rather than through agencies,” Prof Kagwanja said.
Through TICAD, Japan will be pushing for a quicker absorption of the $32 billion it has earmarked for investment in infrastructure, mineral development, education, healthcare and human resource development.
Tokyo will also be hoping to strike several trade deals with mineral producing countries, as it relies on Africa’s mineral imports for the metals it needs in car manufacturing. Japan is one of the world’s biggest producers of automotive and electronic products.
In April, Japan’s Vice-Minister for Economy, Trade and Industry, Yoshihiko Isozaki, unveiled a new $3.2 billion assistance package for Africa’s mineral producers, which it is banking on to fight off stiff competition for the continent’s mineral resources from China. In 2014, China committed a $6 billion investment in Africa’s mining and infrastructure.
“Africa is the starting point of the supply chain for the raw materials we need to produce cars and electronic appliances. We are looking for security of supply for these metals as this will help us retain the global market share in hybrid cars, which is the future,” Mr Izosaki said.
At TICAD, Tokyo is expected to push for economic zones exclusively for Japanese companies, more trade and investment agreements and other co-operation deals.
“We are looking at how to create a favourable environment for Japanese companies looking to enter African markets. This includes creation of industrial parks, providing generous tax benefits and easing regulations,” Mikio Mori, deputy chief of mission, at the embassy of Japan in Kenya said.
Japan signed a bilateral investment treaty with Mozambique in June 2013, has concluded a similar treaty with Kenya. The country is also currently in negotiation with five African countries for investment protection and promotion agreements.
In the past three years, it has provided $700 million through its Enhanced Private Assistance for Africa (EPSA) non-sovereign loans.
“We expect to sign several investment agreements and trade pacts. This will allow us to expand financing for the continent’s private sector, including small and midsize companies,” Mr Mori said.