Africa to Receive $30 billion in Crucial Funding from Japan

Japan pledges its support at the Tokyo International Conference on African Development

j1Asian economic superpower Japan is looking to tap the resource-rich African continent and strengthen its trade and economies ties with the continent. Japan is keen to strengthen economic ties with African countries because of its own limited resources. Japan has become even more reliant on oil and natural gas imports after the 2011 Fukushima nuclear disaster shut down almost all of the country’s nuclear reactors.

On Saturday, August 27th, 2016, Japanese Prime Minister Shinzo Abe pledged $30 billion in public and private support for infrastructure development, education and healthcare expansion in the continent, as reported by Reuters. Abe, who attended the sixth Tokyo International Conference on African Development (TICAD) in the Kenyan capital Nairobi, said that the fund infusion would be spread over three years and include $10 billion for infrastructure projects, to be executed through cooperation with the African Development Bank. Part of the funds would also be used for industrialization, creating jobs for women and youth, improving health care, and continuing the fight against terrorism. The Japan-led TICAD was set up 20 years ago and has always been held in Tokyo.

Japan’s $30 billion commitment is in addition to $32 billion that it committed to Africa over a five-year period at the previous TICAD meeting held in 2013. Abe said 67% of that had already been put to use in various projects, including infrastructure projects such as roads, ports, and airports to power plants. A major part of Japan’s fund infusion will also be used for various power projects to increase production capacity by 2,200 megawatts across the continent, according to the Japanese Foreign Ministry. Part of the funds will also be used to train 20,000 mathematics and science teachers throughout Africa, as well as 20,000 experts on how to handle infectious diseases.

Rising Sino-Japanese competition in Africa

In recent years, Japan has increased investments in Africa as part of its long-term plan to source various natural resources from the continent for its booming industrial sector. Japan’s overall direct investment in Africa totaled $1.24 billion in 2015, down from about $1.5 billion a year earlier, according to the Japan External Trade Organization. While Japan’s total trade with Africa was $24 billion in 2015, rival China’s trade with Africa was a massive $179 billion in the same year. Japan has been looking to strike ties with oil-rich countries to outdo rival China, which invested a whopping $2 billion in Equatorial Guinea in April 2015. With China’s economy now witnessing a slowdown, the Japanese investment in Africa could present Japan with an opening to expand its political influence.

Japan seeks African support for UN membership

j2Japan is also seeking the support of African nations to fulfill its long-cherished dream of becoming a permanent member of the UN General Assembly. Toward this goal of improving relations with African countries, Japan’s Ministry of Foreign Affairs plans to establish a mission to the African Union (AU) and assign an ambassador there. The AU has over 50 members, making it a significant voting bloc in the UN General Assembly. African countries have been and continue to be important to Japan because their support is critical to accomplishing UN Security Council reforms, especially given Japan’s concerns about Chinese activities in the East and South China Sea.

Japan seeks to deepen economic ties with Russia

j3Apart from Africa, Japan is also deepening its economic ties and strengthening strategic relations with the world’s largest oil producer, Russia. In early May 2016, Russia and Japan signed many agreements, including oil and nuclear energy deals, as reported by Reuters.

Japanese Prime Minister Shinzo Abe also met Russian President Vladimir Putin to discuss closer economic cooperation in core areas like energy and technology. Japan has been eyeing closer ties with Russia to counter China’s growing clout as Asia’s powerhouse, as well as its interest in Russia’s natural resources. Japan is also looking for an eventual resolution of the territorial row over islands in the Western Pacific since Russia’s energy resources and Japan’s technological expertise and investments are seen to complement each other.

Back home, Abe’s recent growth-boosting measures, from announcing an economic stimulus package worth more than 28 trillion yen and higher government spending, to delay a sales tax hike until 2019, are all aimed at achieving a 2% inflation target in the 12 months through March 2018. It remains to be seen whether these measure can help the Japanese economy to propel growth over the next few quarters.

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