Japanese private companies have traditionally been cautious about investing in Africa, balancing the continent’s strategic importance with a cautious approach to risk. But the wary attitude of the Japanese private sector means that Japanese investors lag far behind their Western and Asian counterparts when it comes to the African market.

Japanese investment in sub-Saharan Africa has been shrinking in recent years, falling from $12 billion in 2013 to less than $6 billion in 2021, with 70% in South Africa. The Japanese government hopes to change that.

Japan is shifting to a private investment approach in Africa

Tokyo has long-held ambitions to create a “free and open Indo-Pacific region” – including encompassing African coastal states such as Kenya, Mozambique, Somalia and Tanzania – in a bid to counter China’s Belt and Road Initiative (BRI).

At the last TICAD held in Yokohama in 2019, Tokyo sought to shift from a policy focused on Official Development Assistance (ODA) to an approach based on private investment.

“The Japanese government will do everything possible to support Japanese companies expanding into Africa,” former Prime Minister Shinzo Abe told the conference.

While Africa was once seen as merely a source of raw materials for Japanese industry, the government now sees Africa as an important market for the private sector.

Nowhere is this shift in focus more evident than in Japan’s vital automobile industry. Japan’s commercial relationship with South Africa, one of its main partners, has historically been based on its needs for rare earth minerals and metals such as palladium and rhodium, which are key materials in the car manufacturing process.

But Africa itself has now become a major importer and production location for Japanese car companies, especially after the sales arm of Japan’s Toyota Group, Toyota Tsusho, bought French distributor CFAO in 2012. This made Toyota Tsusho the largest Japanese private investor on the continent, with a network covering all countries in Africa and a total of 22,000 employees.

The latest results should inspire confidence among investors: in the fiscal year ending March 2022, revenue (sales) of Toyota Tshusho’s African business reached 1 trillion yen ($7.4 billion) for the first time.

Where Toyota goes, other Japanese automakers follow. Companies such as component maker Yazaki and wiring firm Sumitomo recently announced plans to build more than $100 million worth of wiring and parts in Morocco.

Source by [author_name]

Previous articlePeople exposed to Covid may need up to three tests at home, FDA says
Next articleA Gauteng woman is demanding answers after her husband was killed by a truck that pinned him against a wall