Japan goes back to basics
In this time of deepening crises, Japan is going back to basics in its partnership with Africa. For Tokyo, the Covid-19 pandemic, the food crisis caused by the consequences of the war in Ukraine and the severe climatic conditions provide a relevant context for Japan to highlight a central concept of its development aid policy: human security. This gives the country the opportunity to build on its traditional strengths – such as human-centered development – and its long-standing commitment to health governance and food security. Moreover, these two sectors also offer new investment opportunities, according to Japanese companies.
The war in Ukraine and the ineffectiveness of the UN to deal with it have also revived one of Japan’s long-term projects: to reform the UN Security Council, with the ambition of becoming its one of the permanent members, as well as pushing for a permanent seat for Africa. A way for Tokyo to encourage African countries to support its proposal, but also more broadly, to commit to an order based on rules. Above all, last March, only 28 of the 54 African countries voted in favor of the UN resolution demanding an immediate end by Moscow to its illegal use of force in Ukraine. Critically, Japan fears the vote could foreshadow Africa’s tacit support for a Chinese takeover of the Senkaku Islands or even Taiwan.
Catch up with investments
Japan is continuing its efforts to shift from development aid to private investment. The late Prime Minister, Shinzō Abe, pledged a total of $60 billion in financial support (more than a third of which was to be covered by private investment) during the TICAD summits of 2013 and 2016. However, in 2019 , Tokyo’s investment targets had not been met, as Japanese foreign direct investment (FDI stock) in Africa amounted to $12 billion, half of that in 2013. Japanese companies are indeed still very reluctant to invest in a continent perceived as distant. and risky. The pandemic, in turn, has only made matters worse: according to the Ministry of Finance, annual FDI flows from Japan to Africa have fallen from $590 million in 2019 to $310 million in 2021.
To meet Kishida’s new commitment, Tokyo is banking on a post-Covid rebound effect for investments and capitalizing on already positive news such as the resumption of vehicle production by Mitsubishi Motors in Kenya. The implementation of the African Continental Free Trade Area (AfCFTA) is also expected to have a positive impact on investment and trade. In addition, Japan continues to provide opportunities for African and Japanese private sectors to meet and network through the Japan-Africa Public-Private Economic Forum as well as TICAD’s business-oriented side events, including with European partners.
The government has recently adopted tools such as financing and insurance frameworks to support investments in Africa’s energy transition. Electric power sources and renewable energies are indeed two of the most promising sectors for expansion according to Japanese companies in Africa. Finally, Tokyo encourages SMEs to invest in innovative sectors, including promising African start-ups. Between 2020 and 2021, JICA held the “NINJA Business Plan Competition in Response to COVID 19” in 19 African countries to support start-ups that create innovative business models and technologies and generate business interest. Japanese companies: 10 start-ups were selected from 2,713 applicants. While Japanese companies generally remain cautious about Africa, Japan is also helping to support and develop the skills of the African private sector. For example, it would train 300,000 professionals over the next three years. Through massive investments in human resources like this, Tokyo is also seeking to distance itself from Chinese investment practices.
Differentiate from – instead of compete with – China
Japan is seeking to differentiate its approach to development lending from that of China by emphasizing the quality – rather than the quantity – of its aid. Unlike Beijing, Tokyo applies international standards in infrastructure financing, supports good governance and democratic principles, and focuses on investing in African human resources by providing training instead of exporting its workers as it does. China.
Prime Minister Kishida’s references to Japan’s support for African countries as addressing “unfair and opaque development finance” is a clear reference to China’s disruptive lending practices. Even though China has reported some slowdown in its lending effort to Africa due to an unfavorable geopolitical and economic context (Beijing reduced its investment pledges from $60 billion at FOCAC 2018 to $40 billion dollars at the last FOCAC summit in 2021), Japan fears that the effects of the pandemic could weaken African economies and increase their dependence on Chinese aid and investment.
Tokyo says China’s economic expansion is progressing at the expense of human rights and good governance, allowing Beijing to leverage international support on key issues such as territorial disputes in the South China Sea . In addition, Japan fears that some African countries may be interested in boosting security cooperation with China, after Russia – their traditional military partner – was hit with sanctions.
As such, Japan wishes to support Africa’s recovery by preventing sovereign and private debt defaults and by strengthening the fiscal autonomy of African nations. Rather than competing with China, Japan is trying to provide an alternative to what Beijing has to offer. This is of interest to African countries, even if they do not wish to take sides and remain cautious about adhering to Japan’s vision of a free and open Indo-Pacific, only “taking note” of the initiative, as mentioned in the Tunis declaration of TICAD 8.
Going forward, Japan should continue to promote its balanced development assistance model based on quality rather than quantity, train personnel to take advantage of business opportunities, and expand cooperation with third-party partners such as the EU, India, Australia and the United States.
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