Japan – into Africa

ticadMany Japanese companies have set up European regional headquarters, largely in the UK, Germany or the Netherlands and use this as a base for consolidating their administrative activities across the region.  Increasingly these days the designated region covered is not just Europe, but EMEA – Europe, Middle East and Africa.  The historical ties that the UK in particular has with Africa and the Middle East, means that it is not only easy to access the Middle East and Africa from London, but also that it is relatively easy to get hold of information about countries in those regions in the UK as there are many expatriates and experts on those countries based in the UK.

One such expert is Professor Sir Paul Collier, a professor of economics at Oxford University, whose speech to a group of Japanese businesspeople in London I attended a while back. Sir Paul had met Shinzo Abe at a G8 meeting, and his speech was largely in support of the recent initiatives by Abe and Japanese businesses to become more involved in Africa, recently reinforced by the TICAD meeting in Nairobi.

He is realistic, however, saying that “I am not going to tell you Africa is wonderful.  Africa is complicated and has a small economy, but it has got significant opportunities.”  The opportunities fall into four main areas – natural resources, the infrastructure needed to exploit those resources, growth in sectors such as electric power, construction, consumer goods and the “e-economy” such as payments by mobile phone.

He also pointed to the specific attractions that Africa would have for Japan.  Firstly that as African growth is very commodity price dependent, and Japan is a big commodity importer, having investments in Africa is a useful “hedge” against commodity price movements.  Secondly, Japan is apparently welcome in Africa.  “Africa is tired of Europe and doesn’t like being told what to do”.  The USA behaves like a colonial power but does not have any money to invest into Africa.  China was hugely popular in Africa 10 years ago, but apparently many African leaders are now feeling frightened of becoming too dependent on China and are trying to push back on deals.

The biggest negative for Japan, in Sir Paul’s opinion, is that culturally, “Africa is Japan upside down.  Japanese society is one of very high trust and very high social cohesion, and Africa isn’t”.   And of course, Africa isn’t one country but 54 countries and the levels of opportunities and risk vary considerably from one country to another.  Sir Paul’s recommendations were to focus on Lagos and Nairobi, with possibly a sub office in Rwanda.  With regard to corruption, the risk is reputational rather than financial, and he recommends having a policy and making it very clear to counterparts what that policy is.

He also reinforced the view that approaching Africa from the UK was a good tactic.  “The UK, public and private sectors, have the knowledge, network and the contacts but not the products that Africa wants.”  Japan has those products, so, teaming up with the British should bring plenty of mutual benefit.

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