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Vol 6 (AAC) No 8

Published 1st June 2013

TICAD V: An agenda for business

TICAD attendees will discuss how to get the Japanese private sector involved in African development and how to fight against piracy and instability

TICAD V, Yokohama, Japan 2013Japan will roll out its plan for the next five-year phase of African engagement at the Fifth Tokyo International Conference for African Development in Yokohama on 1-3 June. Boosting the role of the private sector is a critical goal, not least because it is becoming more difficult to finance Japan's development promises from only state coffers.

Ahead of the conference, Japan Oil, Gas and Metals National Corporation, a state-run company, announced that it will commit US$2 billion to African resource projects over the next five years. In Yokohama, Prime Minister Shinzo Abe will remain mostly on the sidelines, attending bilateral meetings with 40 African delegations during the three-day conference. Former Prime Minister Yoshiro Mori will serve as Acting Chairman. Mori will be a steady hand at the till: he chaired TICAD III in 2003 and, in 2001, was the first Japanese premier to visit sub-Saharan Africa.

At TICAD IV in 2008, Tokyo committed to doubling its assistance to Africa by 2012. In 2012, it reached the target of $1.8 bn. But officials at Japan International Cooperation Agency admit that such goals will be difficult to uphold. The economy is still reeling from the twin blows of the 2008 financial crisis and the 2011 tsunami, though early data from the first quarter of 2013 suggest Prime Minister Abe's economic policies may be having a positive effect: annual growth is forecast to be 1.5% in 2013-2014, according to the Organisation for Economic Cooperation and Development.

To stimulate commercial interest in Africa ahead of the Yokohama conference, the Ministry of Economy, Trade and Industry (METI) sponsored a series of events. On 16-17 May, METI hosted the Japan Sustainable Mining Investment and Technology forum in Tokyo. The forum, which brought together Japanese firms and mining companies and representatives of African ministries, served as a showcase for Japanese mining technology.

The following day, METI convened the Japan-Africa Ministerial Meeting for Resources Development, co-hosted by METI Minister Toshimitsu Motegi and Susan Shabangu, South Africa's Minister of Mineral Resources. The two said that both sides would accelerate a joint programme of rare earth metal exploration in South Africa. Fifteen African countries were represented, most at the ministerial level, at what will become a biennial forum on infrastructure and resources development. Ministers from Angola, Botswana, Congo-Kinshasa, Gabon, Lesotho, Madagascar, Malawi, Mozambique, Niger, South Africa, Tanzania and Zambia were in attendance.

After Fukushima
At this event, JOGMEC gave some details about its plans to spend $2 bn. over the next five years toward African exploration and development, as well as the training of 1,000 personnel in the resource sector. The financial package will include loans and equity in resource-extraction projects. With nuclear power projects politically unpopular, the Abe government is looking for new sources of liquified natural gas. Osaka Gas revealed in April that it is looking at Mozambique and other countries in the region as potential investment targets.

Japanese companies will need plenty of encouragement, says Kimihiko Inaba, Executive Director of the Johannesburg office of the Japan External Trade Organisation. At a conference on the sub-Saharan business environment in March in London, Inaba presented the results of a survey of Japanese-affiliated companies operating across Africa. In 2012, more than 50% of companies reported improved business performance. This was a decrease from 2007, when 60% felt their operations were on the upswing.

The pessimism stems from the recent instability in North Africa and also reflects the growing competition from Chinese and South Korean firms, as well as the emergence of rivals from Brazil, India and Turkey. Political and social instability ranked as the first of several concerns. Although many respondents noted improvements since 2007, weaknesses in the legal and regulatory environment remained a challenge for three-quarters of the companies surveyed. Still, the report found that a majority of the businesses recognised the importance of their African operations to their bottom lines, and about 60% planned expansion or additional investment in African countries.

The TICAD summit will also discuss a Japanese proposal to send former employees of Japanese trading houses as advisors to African governments to help them to implement business reforms and attract more international investment. Weak infrastructure is another complaint of Japanese companies operating in Africa, and the Japan International Cooperation Agency says it will maintain its focus on projects that facilitate cross-border trade. In early April, JICA and Tanzania signed a $79 million concessional loan to improve the 188-kilometre Dodoma-Babati road, a part of the proposed Trans-African Highway to link Cape Town to Cairo.

The policymakers organising the TICAD conference sought to downplay questions of politics. Britain said it would only have 'essential' contacts with the Kenyan government, which is led by International Criminal Court indictees President Uhuru Kenyatta and Deputy President William Ruto, but Tokyo accepted, without comment, Ruto as Kenya's representative at the summit.

Anti-piracy efforts and peacekeeping commitments will be more prominent at this year's TICAD. Japan is the second-largest financial contributor to United Nations peacekeeping missions, after the United States. In 2009, a contingent from Japan's Self-Defence Forces (SDF) were stationed at the US Camp Lemmonier. The troops opened their own base in Djibouti for anti-piracy operations in 2011. Tokyo is expected to offer more patrol boats to fight piracy.

Security took on a new urgency for Japan after the deaths of its ten nationals in Algeria in January. An assault, led by Mokhtar Belmokhtar of Al Qaida in the Islamic Maghreb, on the Tigantourine gas processing facility near In Amenas left 40 people dead. In March, Foreign Minister Fumio Kishida offered $550 mn. for counter-terrorism efforts in Africa. Japan's government will roll out a raft of new security sector programmes targeting North Africa and the Sahel. Early signs are that the aid will focus on improving border controls and anti-terrorism activities. Abe also committed to providing $2.2 bn. in aid to Middle Eastern and North African states to strengthen stability at a talk in Jeddah, Saudi Arabia, on 2 May.

Elsewhere, the SDF is expanding its activities. Officials announced on 28 May that the 330 troops in South Sudan would widen their geographical reach following a request from the UN, and that Tokyo is considering sending more soldiers to take part in engineering and other projects.

Now overshadowed by China, it was Japan that set the trend for this sort of Africa-Asia confab. The first TICAD was held in 1993, seven years before China launched its own triennial Forum on China-Africa Cooperation, last held in 2012. The landscape has since become more crowded. India has offered $5 bn. in loans in 2011-14. South Korea has offered $590 mn. in aid for 2013-14. Turkey's trade with Africa, at $20 bn., is approaching the level of Japan's $25 bn.

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