Japan’s Investment in Africa Is on the Rise

Japan’s Investment in Africa Is on the Rise

Recently, the warming up of China to African economies has received much attention; however, Japan has been steadily picking up pace with its investments across the African continent as well.

Japan has had a long history of investments in Africa. When the Japanese economy was fast rising back up post the 2nd world war, Japanese firms were quite keen to invest in the continent. They set up a number of production and sales subsidiaries there. However, the constant political instability and the fall in the natural resource prices by the 90s diminished the charm African investments had held for Japanese investors. Furthermore, Japanese firms had established a firm foothold in the western markets of Europe and the US and the Asian markets had begun to build up economic momentum. Their operations shifted back to Asia as a result.

Japanese investment activity across Africa picked up again at the turn of the century as the resource prices went back up, and the population grew.

Today, Japanese investment is once again on the rise in the African continent across various industries. There are about 750 Japanese firms with operations spread across oil and gas, automotive, infrastructure, and FMCG sectors.

The Japanese government is actively encouraging its private sector to make investments in the continent. The Tokyo International Conference on African Development (TICAD) is an example of the government’s initiative to encourage the private sector to invest in Africa. Since 1993, the government has organized this five-yearly conference in collaboration with UNDP and the World Bank. The private sector has started paying more heed to the call since 2008, after the 4th edition of the conference.

At the 6th edition of the conference in 2016, the Japanese Prime Minister announced a $30 billion investment package for Africa. These included both private and public investments that will be made over a period of 30 years.

Japan’s private sector is increasingly looking to make investments in Africa today. The continent is home to a huge, increasingly young population which is more tech-savvy than ever before. There is huge potential for investments in a number of sectors across the continent.  Japan has committed to increasing its investment footprint across a set few areas for a start. These include infrastructural developments and investments in financial services, agriculture and ICT, boosting the local startup and business landscape as well as promoting business partnerships between local and Japanese businesses.