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Japanese firms eye African opportunities

10th December 2012
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JICA

The Japanese government is putting in place strategic mechanisms aimed at expanding its investments in Africa, Tanzania being one of the key targets, as more foreign powers rush for the continent’s resources.

For the past several years, Japanese multinationals have concentrated their investments in the developed countries and some few parts of the developing world including Africa.

Among the reasons for the Japanese global investors to direct their capital to other parts of the world and pay less attention to Africa is the unreliable investment climate triggered by repeated and prolonged conflicts in the continent, according to David Ohito Aol, a Kenyan journalist.

Speaking at a special programme organised by the Japanese International Cooperation Agency (JICA) for journalists from developing countries, Aol said: “I think the Japanese global investors are not risk-takers. That’s why they hesitate to invest more in Africa,” he said.

“They still have that negative perceptions that Africa is a conflict zone…but global economic dynamics are changing so fast, and Africa is now seen as potential and fast-growing economy where serious and visionary investors would like to be…there is no question about that,” said Aol.

Toru Tukushige, founder and Chief Executive Officer of Japan’s emerging SMEs company, “Terra Motors”, which manufactures state-of-the art electric-driven motorbikes, motorcycles and tricycles, said: “The big problem with many Japanese large corporations is that they are not aggressive enough…they still use old fashioned operational and business management models. That’s why most of them have collapsed, as a number of them currently operate at a loss.”

Tukushige, who is determined with his small company, to transform the global transport sector by providing solutions to sustainable urban and metropolitan transport added: “If they don’t change, they would be outsmarted by Chinese companies.”

But the current pace and dynamics of economic growth coupled with abundant natural resources in Africa, which attract massive investments from giant economies, including China, US and Europe, have opened the eyes and ears of the Japanese government.

It is now drawing up focused and strategic mechanisms geared to expand their investments in Africa.

The Japanese International Cooperation agency (JICA) has introduced radical reforms, which re-incorporate private sector investment promotion drives, seeking among other things to support national companies in tapping Africa’s lucrative investment potentials.

JICA officials said under the present investment promotion drives: “We want them (Japanese firms) to change their mindsets and establish operations in the fast-growing economies.”

“The world is changing fast…we want our companies to be adoptive and start investing aggressively in Tanzania and in other parts of Africa, setting up manufacturing, construction, agri-business and other industrial ventures in these countries,” said Wakabayashi Jin, Director of Private Sector Partnership Division at the JICA headquarters when presenting a paper on the agency’s scheme for private section promotion.

Already Japanese firms, of course with the support JICA, have set up investments in some developing countries, according to Jin, who noted: “We want to do more on that, broadening the presence of Japanese investments in many African countries.”

SOURCE: THE GUARDIAN