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.