Japanese Strategic and Economic
Partnerships with Africa in a Turbulent Era:
Achievements, Challenges, and Way Forward

Céline Pajon
Head of Japan ResearchCenter for Asian Studies, Ifri
GRIPS Development Forum
13 April 2021

Introduction
Under Abe, “Japan is back”(in Africa, too)
• $ 60 billion (in total): A record
amount of financial support forAfrica pledged at the TICAD 5 and
TICAD 6 (2013/2016).
• TICAD 6 (2016): 1st summit on theAfrican continent (Nairobi, Kenya)• Announcement of FOIP in TICAD 6in Nairobi• Abe’s vision also applies in Africa:
Japan is back to Africa too

Introduction
Japan's economic diplomacy in Africa under Abe pursued two objectives:
Economic aim

Geopolitical aim• Catching up with other Asian andWestern actors in the Africanmarket• Competing with China andoffering an alternative to the BRIin Africa• Moving from a focus on ODA to a
private investment-based
approach• Africa policy viewed as part ofJapan’s systemic rivalry withChina•  Profitability governs theinvestment decision• Political considerations
governs the investment decision

Introduction
Tokyo's objectives do not seem to have been met  significant disparity
between the political rhetoric and local realities.
Japanese companies are still very reluctant to invest in a continent: In 2019,Japanese investments to Africa totaled $ 12 billion, or half as much as in 2013.
In these conditions, the rhetoric on rivalry with China is also proving difficult tomaintain in Africa.
Two gaps:• between Japan’s Africa rhetoric and the reality of Japanese involvement,• between Tokyo's ambitions and its capabilities.

 A more realistic assessment of Japanese involvement in Africa by examining
the government’s strategic ambitions (1) and local realities (2).

The Strategic Priorities:
Attracting investors• The 2013 growth strategy – Catching up on African market• Attracting private investment as a priority• 2015-Development cooperation Charter-Economic cooperation more than ODACompanies are becoming key stakeholders in the TICAD process

2016: TICAD 6 in Nairobi:• 75 companies attended• Out of the $ 30 billion pledged as
development assistance package,$ 20 billion to be covered by private
investment.
Source: The Economist, August 5, 2014

Securing private investment is essential to keeping
Japan's promise of financial support for Africa.

The Strategic Priorities:
Japan’s economic diplomacy in action
Kantei – Strategic decisionmaking
High-Level politicalcommitments & visits
Various governmental agencies
implement the strategy

The Strategic Priorities:
Key actors and tools
JICA• Implement ODA• Favor PPP• Provide vocational training• Participate to financial packages to build infrastructures

JBIC• Infrastructure financing, providing loans, equity and guarantees forinvestment in energy and mineral resources

Nippon Export and Investment Insurance (NEXI)• Risk coverage (terrorist attacks and natural disasters and so on)

JETRO• Support companies (info sharing and so on)

The Strategic priorities:
Competing with China
The Chinese factor structures Japan's foreign policy, including in Africa.

Japan’s concern on Chinese presence in Africa

China’s growing economic presence

China’s political influence• Africa’s leading trading partner since2009• 2014: $200 billion in trade compared
to $ 27.5 billion for Japan• 3,000 Chinese companies in Africa(compared to 800 for Japan)• Since 2013 Beijing committed todevelopment assistance double theamount of Japan's ($ 120 billion intotal).

• BRI and risks of overdebness, low
standards for governance• China, Japan and the reform of theUN Security Council• China’s expanded military presence

The Strategic priorities:
CompetingFwith China
Japan’s reaction: more activism, and dissociating itself from China• 2014: TICAD gets a boost – its multilateral nature highlighted• Emphasis on quality, rather than quantity of Japan’s economic cooperation• 2016: The Free and Open Indo-PacificThis rhetoric on rivalry between
Japan and China in Africa
stemmed from the Abegovernment's geostrategic vision,but is also driven by the media

The message conveyed thatJapan should present itself as analternative to China in Africa
generates high expectations

Does it correlate with theinterests, resources andlimitations of the actors who canrealize this vision?

Local Realities:
Positive effects of the measures
on investments
FJapanese companies operating in Africa
Kenya attracted + 45% of Japanese investment between
2016 and 2019
Business are getting more diversified:

In 2019, 80% of Japanese
Kenya, Nigeria and South
companies set up in Africa
Africa the 3 most attractive
because of the prospects ofcountries since 2015.
the African market.

Natural resources anincentive for only 14% ofcompanies (30% in 2007)

Being part of an ODAfunded program anincentive for only 14%(24% in 2007).

Local Realities:
Disapointments on theF private investments
Japanese investment stock in sub-Saharan Africa(in millions of US dollars)Compiled by the author. Source: Jetro

TICAD 7:The Japanese government“will make every effort” toensure private investment
exceeds $ 20 billion.

Value of Japan-SubSaharan Africa trade (inbillion US dollars)Local Realities:
Disapointments on theF private investments
Why investments are not up to expectations?
Japanese companies’
perception of Africa.

• A distant, risky continent• Not a priority target for business• Africa already covered by Europeans, Chinese• Investment climate still challenging

The difficulty intransposing the model
applied by Japan in Asia toAfrica.

• Close cooperation between public authorities and the private
more difficult in Africa.
• Difficulty to rely on local supply chains and local workers.

The disconnect between
the governmental
priorities and companies’
economic interests.

• Illustration: the difficulty to attract private investment to buildinfrastructures.

Local Realities:
Rethinking the narrative
F of rivalry with China
Japan as a norm entrepreneur: Quality infrastructure and issue of debt
• Quality infrastructure agenda successfully promoted in OECD, World Bank, G7, G20• The issue of over indebtedness also raised in international settings

FOIP and Africa• FOIP mainly involves East African coastal countries in terms of maritime security, connectivity, blue economy• Is FOIP an efficient driver to promote joint investments? The AAGC

No direct competition: Significance of the rivalry narrative?
• Japan's rivalry with China in Africa at best “asymmetrical”• Tokyo is not able to match China's capacities in Africa, so there is no direct economic competition in Africa• Actually, cooperation with Chinese companies would to be more beneficial

For some actors in the Japan-Africa relationship,“the rhetoric on China-Japan rivalry in Africa is neither justified, nor useful”,
and the politicization of economic cooperation with Africa is causing frustration,
particularly in the business community.

Conclusion
FThe TICAD 7 summit (2019) could mark the end of a cycle by highlighting
the Japanese government's difficulty in mobilizing a large volume ofprivate investment in Africa over a short period of time.

The rhetoric on a rivalry with China in Africa has created expectations
and misrepresented the reality of Japanese cooperation in Africa,that is based on caution and within a long-term strategy.

Therefore, Japan could revert to a more pragmatic approach, foregoingits ambitious pledges, and focusing instead on measures to build a solid
investment base in Africa in the longer term.

Conclusion
FPartnerships with thirdcountries with extensive
business networks in Africa.

• The next TICAD will be held in Tunisia in 2022 and is an opportunity
to develop partnerships with European countries.

Encourage small and medium- • The digital sector, innovation and investment in African
sized enterprises (SMEs) andstart-ups, particularly in Kenya, are also identified as
young entrepreneurs to invest.
promising areas for the future.
Take full advantage of theTICAD as a platform forbusiness networking• The establishment of a Japan-Africa permanent jointcouncil, combining public and private actors and provided
with a Secretariat, is expected to create long-lasting ties.

Engage the next generation topromote Japan-Africa relations• Young entrepreneurs, who are less risk averse, are now thekeenest to invest in Africa.
• Young JICA volunteers sent to Africa form a lasting attachment
to the continent.
• The ABE initiative is expected to train more than 3,000 African
youngsters in Japan

Céline Pajon, pajon@ifri.org

27, rue de la Procession, 75740 PARIS CEDEX 15Tél. 01 40 61 60 00

www.ifri.org