Japan seeks to expand investment interests in Africa to wean off China

Business Insider

2 days ago

Japan is stepping up efforts to help its companies expand in Africa and strengthen trade ties across a continent where it has traditionally been viewed primarily as a donor.
Japan is increasing efforts to expand its business presence in Africa, shifting from being viewed mainly as a donor.
Renewed private sector interest in taking risks is driven by Japan's recovery from decades of deflation.
Africa is seen as a key destination for expansion due to its growing population and abundance of natural resources.
Takehiko Matsuo, vice-minister for International Affairs at Japan's Ministry of Economy, Trade and Industry, said the country's emergence from three decades of deflation has renewed the private sector's appetite for risk.
Matsuo told Bloomberg that this shift is fueling growing interest in African markets.
'Now the mindset of Japanese business leaders has changed dramatically and they are now much more proactive about expanding their business globally,' Matsuo said. 'Africa is one of the destinations where we expect Japanese companies' to grow their presence.
The United States and the United Kingdom are the main recipients of Japan's foreign direct investment. In contrast, Africa has attracted only a tiny share, receiving just 0.5% of Japan's total FDI to date.
Growing interest in Africa
Africa has caught Japan's attention for a few reasons. The continent of 54 countries has a rapidly expanding population, which presents a significant market opportunity, and vast deposits of natural resources.
Major sectors of focus for Japan include critical minerals, base metals, and rare earths, as Tokyo seeks to lessen its reliance on China, which happens to be Africa's biggest trading partner.
For example, Japanese trading house Mitsui & Co. emerged as the highest bidder for a stake in First Quantum Minerals Ltd.'s Zambian copper mines last year. Meanwhile, Hitachi Construction Machinery Co. Ltd. has been developing hybrid dump trucks to support greener mining operations.
For Africa, Japan's renewed focus on trade and investment comes at a crucial moment. The urgency to attract private capital has intensified following the return of President Donald Trump to the White House and subsequent cuts to U.S. foreign aid.