Japan announces US$30 billion financial support for Africa

5 September 2016

Japanese and African leaders and delegations met on 27-28 August in Nairobi for the sixth Tokyo International Conference on African Development (TICAD VI). Japan’s Prime Minister Shinzo Abe as well as 34 African heads of state and government – including those of Ivory Coast, Kenya, Nigeria, South Africa, and Uganda – attended the summit, among over 11,000 participants.

The sixth edition of the TICAD, which in a symbolic move marked the first time the event was held in Africa since its creation more than 20 years ago, saw close to 50 Japanese and African companies and organisations sign a total of 73 memoranda of understanding (MoUs). These MoUs cover a variety of sectors, including infrastructure, trade, investment, energy, ICT, education, health, and mining.

During the event, Japan’s Prime Minister Shinzo Abe also announced that his country will allocate US$10 billion for infrastructure development on the continent in the coming three years. Part of this amount will be allotted through cooperation with the African Development Bank (AfDB).

When combined with private sector investments, Abe expects the total support from Japan to reach US$30 billion over the next three years, which will be in addition to the US$32 billion support already pledged at the last TICAD in 2013.

“The pledges my government announced three years ago in Yokohama still have two years remaining before they fall due, and yet 67 percent of them have already been carried out. Today’s new pledges enhance and further expand upon those launched three years ago,” said Abe during his opening speech.

“This is an investment that has faith in Africa’s future, an investment for both Japan and Africa to grow together,” he continued.

The conference adopted, during its closing session, the Nairobi Declaration which lays down the broad lines of Japan-Africa cooperation for the upcoming three-year period, as well as a related implementation plan. The declaration focuses on the three main themes considered during TICAD, namely promoting structural economic transformation through economic diversification and industrialization; promoting resilient health systems for quality of life; and promoting social stability for shared prosperity.

“The Nairobi Declaration covers a wide range of issues, which in its full implementation will contribute to the development of the Africa and contribute immensely to improving the standards of living of our citizens,” said Kenya’s President Uhuru Kenyatta at the event, explicitly mentioning aspects such as continental infrastructure, clean energy generation and distribution, modernisation of health systems, enhanced food security, increased access to clean water, and better irrigation technologies.

From aid to trade

Since its inception in 1993, the TICAD has gradually moved from an approach exclusively focused on official development aid (ODA) to one incorporating bilateral economic ties through trade and investment. This shift took place, as noted in a recent post by Elizabeth Sidiropoulos and Neuma Grobbelaar from the South African Institute of International Affairs, in response to African countries' demands in that regard.

“In another indication of the shift away from aid as the focal point of the relationship, Prime Minister Shinzo Abe has established through his office a Conference on African Economic Strategy which acts as the co-ordinating mechanism for all ministries, thus emphasising that relations with Africa have a strong economic focus and are not solely defined by the Ministry of Foreign Affairs,” wrote the two analysts from SAIIA.  

However, as some comments suggested during the conference, more still needs to be done to boost trade and investment relations between Japan and the African continent. According to Ghana’s President John Dramani Mahama, while it is commendable that the total amount of Japanese ODA loans have been multiplied by ten since 2000, aid alone will not allow Africa to succeed in its efforts towards economic transformation.

“We have to move away from aid to trade. Japan has never failed Africa and we are confident it will rise up to the challenge,” said Mahama during a high level plenary session held at the TICAD.

The responsibility for realising this however, stressed the Ghanaian president, should not be borne only by Japan. African countries should also strive to put in place the appropriate policy, legal, and regulatory framework so as to promote trade and investment. This would allow the continent to take greater advantage from its partnerships with Japan.

As far as Kenya is concerned, Kenyatta emphasised that the government is deploying important efforts, in close consultation with regional partners, to provide economic actors with a business- and investment-enabling environment.

Some of the MoUs signed during TICAD VI constitute clear steps in the direction of fostering more trade and investment between Japan and African economies. For example, the Japan External Trade Organization (JETRO) – Japan’s government-related agency in charge of promoting international trade – signed a series of MoUs with the investment-promotion authorities of six African countries, namely Egypt, Ivory Coast, Kenya, Mozambique, Nigeria, and South Africa.

Other trade- and investment-related deals inked by JETRO during the conference include a MoU with the United Nations Industrial Development Organization (UNIDO) for the promotion of inclusive and sustainable industrial development through the promotion of trade and investment; a MoU with the AfDB and the African Development Fund on supporting infrastructure development in African member states; and a MoU with the Development Bank of Southern Africa on supporting infrastructure development in South Africa and Southern Africa.

Speaking at the signing of the deals, Kenyatta urged African business leaders and other stakeholders to take full advantage of partnership opportunities with Japan, with the ultimate goal of accelerating the economic transformation of African economies and boosting the manufacturing sector.ai

“We urge you to use Japan’s valuable experience and technical knowhow to build an African Private Sector that is not only more dynamic but also effectively integrated into the global market,” he said, stressing the role of entrepreneurship as a crucial driver of economic growth, socio-economic transformation, job creation, and social inclusion.

ICTSD reporting; “73 MOUs to Boost Trade Between Africa and Japan Signed at TICAD VI,” Footprint to Africa, 31 August 2016; “Japan-Africa must be driven by trade, not aid,” The Herald, 30 August 2016.

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