The first ever Africa-Japan Business Investment Forum is currently taking place in Addis Ababa.
The three-day event has been co-organised by IC Publications, publisher of the pan-African Business magazine and Nikkei Business Publications INC, which calls itself the biggest media house in Japan. It recently purchased the major British newspaper the Financial Times.
Nobuyuki Tanaka, managing director of Nikkei Business Publications, said the forum was being held to take advantage of Africa’s economic growth, natural resource potential, rising population and depreciating prices of natural resources. These have increased investment opportunities for Japanese firms.
“Japanese firms look to long-term potential and are looking for a practical forum to showcase their quality know-how, especially in the infrastructure sector.”
But is it a case of too little, too late? While the forum had big hitters in the continent’s financial and intellectual elite, it was all too painfully aware of the dearth of Japanese business firms introducing their products in it.
Zemedeneh Negatu, managing partner of the Ernst and Young Ethiopia consulting firm, had some tough love advice for Japanese firms, which he said had been too cautious in taking advantage of the continent’s potential.
“Africans want value for money like just about anybody, and the stereotype that the Chinese are selling inferior goods to the continent and the Japanese come with all the quality product doesn’t hold,” he said.
While African buyers of goods, services and infrastructure have to be smart in their decisions, you couldn’t ask an African to sign a road contract financing agreement based on exorbitant interest rates rather than the same kind with lower interest rates offered by China
Despite the buzz at the summit that Japan was lagging far behind other countries, especially China, Ethiopian Prime Minister Hailemariam Desalegn said Japan still had much to offer, especially with regards to foreign direct investment, particularly into the country’s “very ambitious” rail, road infrastructure and renewable energy development.
While the summit’s official focus was on the overall Africa-Japan business relationship, which included total two-way trade of 25 billion US Dollars last year, two topics dominated discussion – infrastructure and China.
Negatu said certain infrastructure projects were easy to finance – such as energy, water, roads and airports – and were already receiving large-scale investments. But Japan could help in the more difficult task of mobilising investment in social infrastructure, though it should not expect much government incentive for that.
Gabriel Nigatu, regional director for East Africa of the African Development Bank, explained that while Japan had for decades been known for its efficient execution of excellent projects, it was now time to move up the value chain on infrastructure projects.
“Japan can’t be China or be everywhere, so when infrastructure projects come the country should be able to make technology-enabled interventions such as supervising, engineering and designing,” he said.
Citing the recent slowdown in the Chinese economy, Ernst and Young’s Negatu said that highly commodity-dependent African economies like Zambia, Angola and Nigeria were struggling because they had been depending for the last decade on just one country.
“The Chinese commodity supercycle coming to an end, coupled with the economic slowdown, means excess capital will not be spent on African projects,” he said. African countries had to look to other economic partners, as China would from now focus on major countries with major projects, to the detriment of smaller countries and projects.
Katsumi Hirano, chief senior researcher at the Institute of Developing Economies at the Japan External Trade Organization warned against big expectations from the forum.
The strong attendance of the Ethiopian business and state officials at the forum were encouraging signs that Ethiopia at least is very keen on boosting relations with Japan.
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