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Tokyo Urges its Private Sector to Become more Active on the Continent

Japanese private companies have traditionally taken a cautious approach to investment in Africa, balancing the continent’s strategic importance with a careful approach to risk. In recent years, Japanese investment stock in sub-Saharan Africa has been declining, falling from $12bn in 2013 to less than $6bn in 2021, with South Africa accounting for 70% of it. The Japanese government hopes to change that. Tokyo has a longstanding ambition to create a “Free and Open Indo-Pacific” – including embracing African coastal states such as Kenya, Mozambique, Somalia and Tanzania – in a bid to counter China’s Belt and Road Initiative (BRI). Whereas Africa was once seen as merely a source of raw materials for Japanese industry, the government now sees Africa as an important market for the private sector to target. East Africa’s infrastructure and energy sectors have been particular areas of interest – in Kenya, the role of Japanese companies has been decisive in building the geothermal plant of Olkaria, which allowed the country to be among the world’s top 10 producers of geothermal energy. All of this represents a move away from traditional aid and development assistance to a much more productive private sector relationship. Japan’s development agency, JICA, has seen its role as an incubator of Japanese companies in Africa increase over the last few years, reflecting Japan’s call for more public-private partnerships.