Photo/IllutrationPrime Minister Shinzo Abe, third from left in front, U.N. Secretary-General Antonio Guterres, right of Abe, and other leaders pose for a photo at the Seventh Tokyo International Conference on African Development in Yokohama on Aug. 28. (Satoru Semba)

  • Photo/Illustraion

YOKOHAMA--Prime Minister Shinzo Abe renewed his pledge to support investments by Japanese companies in African countries during the opening session of the Seventh Tokyo International Conference on African Development (TICAD7) on Aug. 28.

It remains unclear, however, whether such a vision can be translated into reality, as the Japanese private sector continues to be apprehensive about investing in African markets, as illustrated by a sharp decline in trade value between both sides over the past decade.

"I make this pledge to you," Abe said during his keynote speech before 40 African leaders in attendance. "The government of Japan will put forth every possible effort so that the power of Japanese private investment of $20 billion (2.12 trillion yen) in three years should, in the years to come, be surpassed anew from one day to the next."

While Abe also touched on a Japanese government program to support African countries in the field of health care, it has become clear that Japan now places more importance on business investments rather than aid for economic development the government has provided in the past.

Behind the shift in Japan's approach is China's growing presence on the African continent, which has a population of 1.3 billion. The population is expected to continue its explosive growth in the future, and China has injected huge sums of money over the years.

In terms of economic prowess, Japan is no match for China in Africa. It cannot afford to provide more official development assistance than now to African countries owing to financial constraints.

As a result, Japan has been making efforts to bolster its presence through investments by Japanese companies.

Leading Japanese automakers, for example, have set up local factories in Africa.

Nissan Motor Co. operates a wholly owned assembly plant in the suburbs of Pretoria, South Africa. The plant rolls out about 40,000 units annually and sales are growing. The company is eager to export more vehicles to neighboring countries from the factory.

One of the workers at the plant said landing a job there is a source of pride, as the Japanese automaker is recognized as a global brand.

In April, Nissan announced a plan to invest about 21 billion yen to expand the plant so that a new pickup model, the Navara, can be built there.

South African President Cyril Ramaphosa appeared at the venue where the automaker announced the project to hail the additional investment by Nissan.

Nissan South Africa said there is great potential demand for vehicles in the African market, considering the sharp spike in the population on the continent.

"If Africa's economy expands steadily, we'll see an explosive growth in demand," said Shinkichi Izumi, managing director for Nissan South Africa.

The outlook, however, may not be as hopeful for Japanese businesses in other industries, which have yet to establish a strong presence in the African market.

The challenge is also complicated by the fact that African countries differ significantly in terms of their economic development, with South Sudan, for example, continuing to reel from the devastation brought by a civil war.

With the trade value between Japan and African countries in 2018 half of what it was 10 years ago, and less than one-10th of China's, an expansion of investments by Japanese firms is not without major hurdles.

An official of the Ethiopian government lamented the fact that few Japanese companies are willing to enter the local market.

Speaking to The Asahi Shimbun on Aug. 28, Zimbabwe’s President Emmerson Mnangagwa underscored the significance of Japan's aid for the country's faltering economy, saying that his country relies on the government's ODA for the construction of roads and agriculture, in particular.

Facing a host of obstacles to business investment, some Japanese companies in other parts of the continent have had to shut down or scale back their operations. An employee of one such firm operating in Western Africa said, "Many African countries do not have adequate infrastructure, for one. Completing paperwork required by local authorities is a time-consuming process. Some local officials demand bribes."

(This article was written by Takashi Ishihara in Johannesburg, Kosuke So and Yuka Takeshita.)