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The outlook for Japanese investment in Africa remains uncertain

NAIROBI, Kenya African leaders have expressed high hopes for Japan to expand its investment in Africa, but whether those hopes will be realized is an open question.

Twenty-two Japanese companies and groups sealed 73 memorandums of understanding at the Japan-Africa Business Forum, held in conjunction with the sixth Tokyo International Conference on African Development on Aug. 27-28.

At the forum, Japanese and African leaders discussed plans to develop advanced infrastructure, including high-speed communications networks and urban transport systems, across the continent. Underdeveloped roads, railroads and airports means travel tends to be costly and time-consuming, an impediment to doing business.

For Japanese trading houses and plant builders, Africa’s infrastructure needs are an opportunity waiting to be tapped, with power generation seen as a particularly promising area for development.

Marubeni plans to build a $1.89 billion fossil-fuel power plant in Kenya, and Sumitomo Corp. has plans for a $1.96 billion plant in Mozambique. Toyota Tsusho and Toshiba are aiming to provide additional capacity to geothermal power facilities in Kenya, with plans to expand their business beyond that market.

The Japanese government has said it will provide financial aid for projects like these.

Kenyan President Uhuru Kenyatta welcomed Japan’s cooperation in diversifying industries and creating jobs. He said Kenya aims to rapidly overhaul its economy, replacing its reliance on raw materials exports with production of high-quality industrial products.

LONG-TERM THINKING But Africa is still beset by serious issues. In addition to an economic slowdown caused by a sharp decline in natural resource prices, the continent continues to grapple with corruption, terrorism and other security concerns.

In Nigeria, Islamic militant group Boko Haram has continued to cause havoc through abductions and suicide bombings, while Somalia has become a hotbed of Islamic extremism.

But Hiroyuki Ishige, chairman of the Japan External Trade Organization, said Japanese companies are “watching Africa closely in terms of long-term business prospects” rather than short-term challenges and will step up operations on the continent.

 

Original article can be found here.

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