3 May 2010

Japan invests in Africa

3.4 billion dollars is the amount that Japan is planning to invest in Africa by 2012. Japanese authorities and the Japan Bank for International Cooperation (JBIC) are investing in projects that respect the environment and are committed to fight against global warming.
Therefore, Japanese minister of finance has just granted a loan of 300 million dollars to Kenya. The loan is to be used for construction of two geothermal plants for electricity production by 2030. Each plant will generate 140MW out of 500MW that the country wants to produce with this underground resource.
The announcement came after the visit of the crown prince, Naruhito, in Sub-Saharan Africa in March this year and Japanese President of the African Development Bank, Mr Donald Kaberuka, who had urged Japanese banks to invest more in the African continent.

Japanese banks encourage private investments on the continent
Tokyo’s wish to reinforce its presence in Africa isn’t new. Based on the fact that it had invested 1 billion dollars, either five times less than Peking, Japan set two goals in 2008: intensify its help in Africa and double its investments on the continent in order to achieve 3.4 billion dollars by 2012.
1.8 million dollars, which are meant to help agriculture and infrastructures – the sector, which has long been funded by Japanese, are already available. The support is, however, less visible in the private sector. The archipelago has to adapt and reorient its strategy in order to be more competitive than China, whose prices are often unbeatable.
After many years of hesitation, Japanese government is now encouraging Japanese companies to invest in Africa thanks to the state banks’ loans. And it works, Toyota Tsusho’s commercial branch wants to develop its activities in Kenya and it also showed interest in the gas pipeline project between south Sudan and Kenyan coast. 1.5 billion dollars, which the Japan Bank guarantees to invest in the international cooperation reassured Japanese industrial group.
Japan is trying to compete with China in Africa
The Japanese private sector is present in Africa essentially in the form of extraction and construction of energetic infrastructures, just like the company Sojitz, which is present in Angola, Nigeria and Gabon, or Japan LNG Corp. The latter announced in March that it may construct a plant for natural gas liquefaction in Nigeria.
However, in Africa, Japanese industrials are facing Chinese competition. What they find difficult is to produce something new and at the same time affordable by African standards. In 2009, Africa achieved 11% out of its foreign trade with China against 2.5% with Japan.
As a consequence, the Japanese groups have decided to react: Panasonic promised to invest 28 million dollars in order to increase its sales in Nigeria, and Sony, which owns 14 shops in six African countries, is trying to increase its sales by 50% outside South Africa where the group is well-established.

Nollywood's Film Industry Second Only to Bollywood in Scale

For Dickson Iroegbu, the day he was almost killed by Nollywood began with an important decision. He could either say nothing and continue to look on as they made their trash films and shoveled money at each other, or he could put on a pinstriped suit and tell these Mafiosi that he wasn't going to play their game anymore.
Nollywood's Film Industry Second Only to Bollywood in Scale
A man walks past a store selling CDs and DVDs of Nollywood films in Abidjan, 16 June 2007. Nollywood... Expand
(Kambou Sia/AFP/Getty Images)
It was a Wednesday morning, and the sun was barely shining through the smog-covered skies over Lagos. The most important men in Nollywood, the filmmakers, were meeting near the National Theater to elect their president, when Iroegbu, 32, a filmmaker himself and winner of the African Movie Academy Award -- Africa's Oscar -- rushed past the heavily armed police officers, took a deep breath and, with a loud voice, crashed the event.
The invited guests, men and women, were standing in front of him in their sunglasses and suits, wielding their Blackberries. Iroegbu, a slight man with light-brown skin and glasses, grabbing and shaking their hands, said things like: "Let's make Nollywood happen. We don't need politics here. Why don't you just get back to work? Enough with the greed, enough with the power games." The filmmakers shook their heads, doing their best to ignore this man, a man they despised. Some said he should leave.

While small enterprises are the lifeblood of African economies, they often struggle for financing. but are things changing?

When Jacqui Sebageni launched Thousand Hills in 2005, the tour company consisted of two people operating out of a small room in the famous Hôtel des Mille Collines in Rwanda’s capital, Kigali. Today, the business, which organises package trips around the country, has 16 employees and its own premises on nearby Rue de l’Akanyaru. “I remember a banker coming to see us, and he caught us sitting two at a desk,” Ms Sebageni laughs.
At that time, she says, the banks in the country were very conservative. Although the sector has matured to begin offering leasing products – Thousand Hills leases its tour vehicles – small- and medium-sized enterprises in Rwanda still struggle to obtain financing. This is far from an old story – institutional weakness in Africa’s banking sector has been a brake on SME growth for many years – but international credit shortages over the past two years have bled into Africa, leaving financial institutions themselves struggling for funding.
However, reforms to the business environment in several countries, particularly Rwanda, and a degree of coalescence by international development financiers and investors around an understanding of the social and economic importance of SME development mean that increasing amounts of time and money are being spent on understanding and addressing the needs of this complex market segment. Together these businesses are more often than not the principal employer in any given country. They compose anywhere from 60 to 80 percent of most African economies, with the variance generally more a matter of definition than of structure. Furthermore, owner-entrepreneurs drive the creation of a middle class, a crucial factor in countries’ movement out of poverty and in their development as markets for international investment.
Earlier iterations of this SME agenda, principally coming from the donor community, explained the issue as a “missing middle” of financing – a gap felt by institutions too large for microfinance and too small for private equity. This is perhaps simplistic. Likewise, to characterise, as some have, the banking sector as disinterested in SMEs is disingenuous. Many have struggled with the appropriate model for capturing the segment’s business, but it is not for wont of trying.