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Japanese Aid and Investment in Africa



Historically, Japanese aid to Africa was split rather evenly between North Africa and Sub-Saharan Africa. Japan has multiple reasons for maintaining involvement in both of these sub-regions. However, the pattern of Japan's donations has changed since the global financial crisis. Not only has the aid come in bursts rather than a steady stream, but since 2008, Japan has shifted the bulk of its aid away from North Africa toward nine Sub-Saharan states, most of which are located in eastern and southern Africa: Kenya, Tanzania, Uganda, Mozambique, Zambia, Botswana, Mauritius, Cameroon and Cape Verde. Kenya and Tanzania have always been among the top beneficiaries, but in the past five years Kenya has received nearly half of the aid -- well above its historical average -- and Tanzania's share has grown considerably. Uganda, Mozambique and Mauritius have seen a much greater share of aid in the past five years than their historical average.

South Africa has long been Japan's major investment destination in Africa, but Japan is working on expanding connections to nearby Botswana and Zambia with aid. By contrast, in West Africa traditional focal points such as Ghana and Nigeria have dropped off and only Cameroon and Cape Verde received significant aid after 2008. These trends underscore Japan's growing concentration on vibrant economic pockets and emerging extractive industries in eastern and southern Africa and the Indian Ocean Basin, where maritime connections and access to the interior have piqued foreign interest. Clearly, one of the reasons Japan invests in the eastern states is to get access to natural resources: Entirely aside from its dominant partner, South Africa, it imports copper and cobalt from Zambia and from the Democratic Republic of Congo via Tanzania; diamonds from Botswana; and coal, titanium and soon natural gas from Mozambique.

The sectors Japan has been targeting also reflect a shift in its strategic aims in Africa. Before Japan's 1990 financial crisis, development aid consisted overwhelmingly of commodity loans. Since then Tokyo has increased the already substantial shares going to transport and telecommunication, while surging aid for electricity and natural gas and building a respectable presence in irrigation, flood control and a range of social services. Increasingly Japan has focused on building African "human security" and social development, with projects in health care, water, sanitation and education. Since 2009, commodity loans have plummeted in frequency, while financing for transportation, electric power and natural gas, irrigation and flood control have surged. These sectors reflect Japan's interest in building steadier and more sustainable consumer bases and transport corridors that are less vulnerable to disruption from power shortages, poor public services and inadequate road and rail.

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