There is growing interest in Japan by the government, parliamentarians, mega companies and startups to invest more in Africa. Source African Development Bank Group
Construction of Mozambique’s multibillion dollar gas project to restart in Q3 2023
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There is growing interest in Japan by the government, parliamentarians, mega companies and startups to invest more in Africa. As a delegation from the African Development Bank Group led by President Dr Akinwumi Adesina visited Japan to showcase the enormous investment opportunities on the continent, the Prime Minister of Japan Fumio Kishida, was leading his country’s charge with a tour of four countries, namely Egypt, Ghana, Kenya, and Mozambique.
In Japan, Dr Adesina accompanied by three Vice Presidents, Dr Kevin Kariuki, Dr Beth Dunford and Solomon Quaynor, and Executive Director Takaaki Nomoto, held a series of meetings with senior government officials including the Minister for Finance Shunichi Suzuki, Vice Minister for Finance Masato Kanda and the Director General in the Ministry of Finance Atshushi Mimura.
They met with the top leadership of global mega brands including Mitsui & Co Ltd., Sumitomo Corporation, Mitsubishi Corporation and Toyota Tsusho, as well as Japan’s leading business community, the Keizai Doyukai, that brings together more than 1000 business executives.
The result of this high-level engagement could see Japan’s net Foreign Direct Investment to Africa rebounding to pre-Covid19 levels when it amounted to $10 billion compared to $6 billion in 2021.
In this write up we take a look at what the companies are looking for and a keynote message delivered by Bank President Dr Adesina.
One of the largest investors in Africa, Mitsui & co Ltd, announced plans to resume the construction of the multibillion-dollar Mozambique LNG project which was stopped in 2021 following an insurgent attack on the facility in the country’s northern region of Cabo Delgado.
A combined deployment of the Mozambican army, troops from Rwanda and members of the South African Development Community (SADC) has since brought the situation under control.
“The security situation has been significantly improved. We want to restart construction work in summer,” announced Koji Asanuma, General Manager, Mozambique Project Dept(link is external).
He said preparatory work was continuing and they will soon be contacting lenders to kickstart construction.
The African Development Bank has invested $400 million in the project.
Mitsui & Co Ltd has five 5 offices in Africa: Ghana, Kenya, Morocco, Mozambique and South Africa.
In addition to Mozambique’s LNG project, the company has also invested in Mozambique’s Nacala Rail and Transport project and Egypt’s Refining Company. It’s involved in renewable energy projects in Morocco, South Africa, Kenya, Nigeria, and Uganda.
TOYOTA TSHUSHO:
Toyota Tshusho Corporation is one of the front-runners among Japanese companies doing business in Africa. It is present in all 54 countries with businesses covering automobile, pharmaceutical, beverages and energy. Across the continent it employs about 22,000 people.
The Executive Vice President of Toyota Tsusho Corporation Toshimitsu Imai said the company is looking for more projects for wind power in North Africa, solar energy in West Africa and Geothermal in East Africa. Globally it is aiming to generate 10 GW.
The company is keen to discuss with the Bank the possibility of investing in Green Hydrogen. It’s carrying out studies in South Africa, Kenya and Egypt. “We will come to the Bank to discuss financing,” said Imai.
In terms of local manufacturing of lithium-ion batteries used in electric vehicles, Imai saw possibilities in South Africa which has a huge automobile industry or DRC which has some of the world’s largest deposits of minerals needed for lithium-ion batteries.
The Toyota Tshusho Executive Vice President also expressed interest in the Africa Pharmaceutical Technology Foundation, an Africa-led and Africa-centered initiative that will significantly enhance the continent’s access to the technologies that underpin the manufacture of medicines, vaccines, and other pharmaceutical products.
MITSUBISHI CORPORATION
The company is present in 11 countries in Africa: Algeria, Cote d’Ivoire, Egypt, Ethiopia, Kenya, Morocco, Nigeria, Senegal, South Africa. Tanzania and Tunisia. Since entering the African market in 1954, Mitsubishi Corporation has spread its investment wings mineral and metal resources, automotive & mobility, natural gas, food industry and power solutions.
During a meeting with Dr Adesina, it was clear Mitsubishi Corporation is hungry for more. It’s Senior Vice President Tetsuya Shinohara, said the company had limited activities on the continent.
“Africa is a tough region,” he said, “We are figuring out areas to invest in, in the future. We are asking for suggestions about the way to follow.”
The Deputy General Manager for Global Strategy and Coordination Department Jun Fujino said there are stereotypes about doing business in Africa because of political instability, unpredictability of regulatory frameworks and that the consumer market may take too long to develop.
Another large Japanese general trading house, Sumitomo Corporation with investments in mineral resources, energy, chemical & electronics, real estate, media & digital, transportation & construction system is eager to expand its business on the continent.
“We want to grow together,” Masayuki Hyodo, President and CEO, Sumitomo Corporation said as discussions with the Bank delegation begun, adding, “We have started new business in Egypt, and we want to expand further.”
And the response was commensurate. “You are in the right place,” Dr Adesina told Mr Hyodo, “You are with the right partner. On infrastructure, we are trying to expand in green infrastructure in terms of roads, water and digital. We are trying to mobilize $10 billion to invest in green infrastructure.”
Sumitomo has offices in Algeria, Ethiopia, Ghana, Kenya, Madagascar, Morocco, Mozambique, Tanzania and South Africa.
ROUNDTABLE DISCUSSIONS
During the visit, the Bank delegation held roundtable discussions with about ten Japanese companies and Venture Capital funds operating in Africa. The discussion focused on new technologies related to energy and decarbonization such as next-generation solar power, hydrogen/ammonia, and storage batteries. They also discussed how Japanese technology and innovation can contribute to solving social issues in Africa. The roundtable featured a presentation by the Bank’s Vice President for Power, Energy, Climate Change and Green Growth, Dr Kevin Kariuki.
The second session featured Japanese entrepreneurs and investors with interest in the agriculture sector.
They were joined by venture capital companies to highlight the significant role startups play in the development in Africa. The session had presentations from two Bank vice presidents – VP for Agriculture, Social and Human Development Dr Beth Dunford, and Private Sector, Infrastructure and Industrialization VP, Solomon Quaynor.
The roundtable discussions culminated in a keynote address by Dr Adesina. The roundtable discussions were organized by Keizai Doyukai and the United Nations Development Fund. Keizai Doyukai, a private, non-profit and nonpartisan organization that brings together nearly 1,400 top executives of some 1,000 corporations.
Participating firms included:
Toshiba Energy Systems & Solutions Corporation: has invested in generation of thermal and hydropower projects across 10 countries.
Hitachi Energy: another global technology leader with significant investments in generation of renewable power including hydrogen. It has a presence in more than 20 countries with main hubs in Cairo and Johannesburg.
Kawasaki Heavy Industries Ltd: a manufacturer of motorcycles, aerospace and defense equipment, robots, gas turbines and other industrial products.
Tsubame BHB: is a startup company involved in the production of green ammonia fertilizer for small-scale farmers in Africa.
NEC Corporation: began operating in Africa in 1963 delivering technologies behind establishing national ID and biometric authentication systems in South Africa, laying telecommunication infrastructure such as the 6,200-km-submarine cable between Angola and Brazil.
Kepple Africa Ventures: launched in Africa in 2018. It is the largest Japanese Venture Capital fund based in Nigeria and Kenya. It led 15 Japanese companies such as Mitsubishi UFJ Financial Group, Toyota Tsusho Corporation and Yamaha to make direct investment into African startups.
Degas Limited: is a startup company based in Japan and Ghana where it is providing agricultural inputs, knowledge and digitalization support to 3,000 farmers.
Uncovered Fund: established in 2019 in Tokyo, has invested in 26 African startup companies particularly those that provide financial services essential for daily life and economic activities, sales promotion of retail stores, logistics in distribution and supply and urban transportation. It’s based in Egypt, Nigeria, Kenya and South Africa.
The Asia-Africa Investment & Consulting (AAIC): aims to invest in fast-growing companies within the healthcare sector in Africa. Among other activities, it is investing and managing agribusiness in Rwanda via the Rwanda Nuts Company.
Sasakawa Africa Association activities go back 36 years when it was established by Japanese Philanthropist Ryoichi Sasakawa, Nobel Laureate Dr Norman Borlaug and former US President Jimmy Carter.
The association focuses on agriculture and especially smallholder farmer development in 12 countries across sub-Saharan Africa. President Makoto Kitanaka spoke about the association’s increasing use of technology in the delivery of its services.
Dr Adesina meets with University of Tokyo
The University of Tokyo is investing in startups, with more than 400 already up its sleeves. Wassha, one of the startups associated with the University of Tokyo has developed an electrical power service business to reach people in rural Tanzania who do not have access to electricity. Beneficiaries rent LED lanterns which are offered on a Pay As You Go system.
The University of Tokyo President Dr Teruo Fujii and Dr Adesina discussed ways their two institutions could collaborate including the possibility of establishing a joint Japan Africa Entrepreneurship program. This would bring together venture capital funds, establish joint businesses and establish a staff exchange program between the University of Tokyo and selected universities in Africa.
The two leaders also spoke about the possibility of collaboration between the University’s School of Pharmacology and the Rwanda-based African Pharmaceutical Technology Foundation
The Bank delegation also held meetings with Japanese Bank of International Cooperation(link is external) and Japanese International Cooperation Agency(link is external) which signed a $350 million funding agreement with the Bank to support Africa’s private sector.
Before his departure Dr Adesina met with diplomatic representatives of more than 30 countries in Africa. He shared with them the achievements the Bank had made over the past seven years and the urgent need to attract more foreign direct investments to Africa.
Following the five-day roadshow to showcase Africa’s enormous investment opportunities, the message was clear: The door and the road to Africa for Japanese investors is wide open!