In a recent visit to Japan, Dr. Akinwumi Adesina, the president of the African Development Bank Group, called on Japan to increase its investment in Africa. According to Adesina, Africa is the world’s best investment destination now and in the future, offering enormous opportunities for investment in various sectors.
Adesina led a delegation from the African Development Bank Group on a five-day visit to Japan, where he met with senior government officials, large Japanese companies, development partners, and members of the African diplomatic corps in the country. He delivered a lecture at the Japan-Africa Investment Ecosystem Co-Creation Forum in Tokyo, where he urged Japanese investors to take advantage of Africa’s potential.
Despite the significant investment opportunities, Adesina noted that Japan’s foreign direct investment in Africa declined from $10 billion in 2016 to just $4.7 billion in 2020 during Covid-19, but it recovered to $6 billion in 2021. He also highlighted that Africa accounts for only 0.003% of Japan’s $2 trillion global foreign direct investments, with the volume of exports and imports between Africa and Japan remaining lower than 2%.
Adesina said there was every reason to change this trend and pointed out that Japanese companies such as Toyota Tsusho, Mitsubishi Corporation, Hitachi, and Komatsu have been running profitable businesses in Africa for many years. These companies, according to Adesina, have demonstrated that investing in Africa pays off, citing the billions of dollars in profit they make annually.
The African Development Bank chief mentioned the state-owned Japan Bank for International Cooperation (JBIC), which, together with TOTAL and other investors, including the African Development Bank, co-financed the $24 billion Liquified Natural Gas project in Mozambique, making it the third largest in the world. Japan will buy 30% of its production. JBIC and Mizuho Bank, along with the African Development Bank and nine other financial institutions, invested $2.7 billion to build the Nacala corridor railway and port in Mozambique.
The Africa Development Bank chief said the successes of large Japanese companies operating in Africa are spurring a new generation of young Japanese to turn their eyes to venture capital and private equity funds to support small- and medium-sized enterprises.
He gave the example of a startup company, Kepple Africa Ventures, which has raised $43 million and is investing along with African private equity funds in 100 seed-stage enterprises in 11 African countries.
The Uncovered Fund, founded only in 2019, is another Japanese venture capital fund that has invested in 26 African startups.
Speaking during the Forum, the Vice Chairperson of the Africa Project Team at Keizai Doyukai, Ken Shibusawa, said a new company, &Capital Inc, was formed early this year to promote Japanese investments in Africa.
The Chairperson of the Japan-AU Parliamentary Friendship Association, Ichiro Aisawa, described Africa as a continent of hope with population power. The parliamentarian announced that with the Covid-19 pandemic under control, the association will embark on a grand tour of Africa to raise Japan’s presence.
While the number of Japanese companies in Africa increased from 520 in 2010 to 900 in 2020, Adesina called for more venture capital and private equity funds to tap into the continent’s huge potentials.
He thanked the Japanese government for recognizing Africa’s strategic importance and showing a strong political will to invest in Africa.
