In a significant development, Japanese cumulative FDI in Africa increased from US$3.9bn in 2007 to US$10bn in 2016. Some of these big ticket investments have happened after the launch of the Tokyo International Conference on African Development (TICAD), which is being held in every five years since 1993.
With the seventh conference a few days away from now, the task before Japan is to diversify the range of the country’s trade partners in Africa. Beyond a few countries like South Africa, Morocco, Kenya, Egypt, Ghana and Nigeria that Japan partnered till date, it has to reach out to more nations in the region . Recently, a few countries in the region have become oil and gas rich improving their growth potentials. These include Angola and Democratic Republic of Congo. But Japan’s exposure is practically nil in these countries, whereas the other Asian giant –China- has considerably upped their presence in these geographies. India is also having encouraging presence in these countries in various avenues like energy, construction, port development , improving civic amenities etc.
Japan exported goods worth US$7.5bn to Africa in 2017, including US$2.5bn to South Africa. It has imported US$8.3bnillion from Africa. Of that, 57% came from South Africa, including iron ore and platinum. Japanese investment in Africa is mainly in sectors like mining and hydrocarbons, particularly in Mozambique. The Japanese company Mitsui & Co has invested billions of yen in coal and gas projects in Mozambique. The other major Japnese investors are Japan Oil, Gas and Metals National Corporation (JOGMEC).
Motor vehicles top the list of Japanese exports to Africa over the past decade, followed by electronics items. Japanese automobile brands like Toyota and Nissan dominate African roads. Second-hand cars are also exported to many African countries, especially to Anglophone Africa. TV sets manufactured in Japan are in huge demand there.
Tokyo is in the forefront in the expansion of Japanese SMEs and startups in Africa. Big Japanese firms investing in Africa is also increasing. Major investors are NTT in the IT sector and Kansai Paint in the paint and coatings sector.
The number of Japanese companies operating in Africa has increased from 520 in 2010 to 796 in 2017.In the run-up to TICAD 7, a lot more Japanese corporations are evincing interests in the largest continent in the world.
