It had been some time since Japan was at the forefront of development in Africa.  Back nearly 25 years ago, Japan was the first Asian country to recognize the importance of Japanese-African economic cooperation by establishing the Tokyo International Conference on African Development (TICAD).  The conference was so successful in attracting international leaders and effecting change, that it has been held religiously every three to five years since then.

Things changed somewhat in 2000, however, when China – soon followed by India – began to take a major interest in the region, investing heavily in everything from energy and mineral stores to financial, telecommunications and manufacturing services.  In fact, between the years 2000 and 2011, China is said to have invested about $75 billion in Africa – outpacing Japan’s level of investment several times over, according to Forbes magazine.

The tide changed again in 2013, however, when Japan took a major step forward in its support for Africa by announcing a $32 billion aid package.  This investment coincided with a weakened economy in China, drawing the attention of its political and economic leaders inward to deal with the crisis, and decreasing its involvement in African development.

With Japan’s renewed engagement in Africa, all signs point toward Japan taking on a more involved role in building out Africa’s infrastructure and investing in industry development.  According to a report by Linklaters LLP in London, “Japan now ranks as the most active Asian project finance sponsor in Africa, investing almost three times as much as China, which is often regarded as the most active Asian investor on the continent.”   

Importantly, Japan professes to view its aid to Africa differently than in the past: with Japanese Prime Minister Shinz? Abe stating that he now views Africa “no longer as an aid recipient but rather a partner for growth.”  Japan is perfectly positioned to aid Africa, as China takes a step back to focus on its own economy, and Japan is expert in precisely what Africa needs to accelerate its economic growth and diversity into additional regions and industries: infrastructure, construction, electric power generation, and heavy manufacturing.   

Moving forward, other, more specialized types of skills will be needed as Africa moves from building out its infrastructure to develop jobs in areas like financial and banking services, advanced healthcare, and education.  Here again, Japan is an ideal partner because of its highly skilled labor force – particularly the population of Japanese ex-pats currently residing in Africa – which is able to train African workers in any number of industries. 

Of course, Japan just may have another reason for renewing its investment interest in Africa: its dramatically shrinking population.  According to an article in The Economist, Japan’s population began decreasing in 2004, and has since become the oldest population in the world, with 22% of its citizens currently 65 or older.  Projections call for a drop in population from 127 million to about 87 million by 2060, with 40% aged 65 or older.

Many Japanese are looking outside the country for new investment opportunities, with Africa emerging as the perfect partner because of its abundant supply of raw materials, expansive land, plentiful workforce, and growing levels of infrastructure and technology.   

While Japan says it has made the switch from considering Africa an aid recipient to a true development partner, time will tell if it backs up that claim.  On his trip to Mozambique in 2014, for example, Abe announced a $570 million assistance package for northern coastal development.   Perhaps Japan will recognize that now is the perfect time to make Africa a true partner in its development – the time is ripe for investing in industries and workers across-the-board and harnessing the tremendous potential the rich and  varied continent has to offer.

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