East Africa Chasing Silver Linings in Asia – Part II – Japan

East Africa has been at a crossroads in its quest to industrialize, grasping at diverse straws of foreign aid inflows towards the realization of this endeavor.

Countries in the region have been looking West and East, to fulfil their respective national developmental goals and finally lift their nations out of poverty. However, partnerships with the latter have swiftly gained momentum, and in tandem Asian countries have been positively responding to this call, with most having been in the same position decades ago. These Asian countries have experienced a robust economic revolution, fueled by rapid industrialization.

Ties between Asia and East Africa, were cemented during the 1955 Asian-African Bandung conference held in Indonesia, originating from a shared colonial past.

Just why have East African countries been looking more to the East for support?

There are numerous reasons such as the non-interference policy that comes with aid, the untapped market for African exports in Asia, the terms of the grants and loans, together with the diversity in aid; whereby most Asian countries concentrate on providing Africans with knowledge and access to technologies, which includes scholarships and specialized training courses.

In the long run, this is more valuable because then, these knowledge and skills can be passed down to future generations and create a culture of self-sufficiency. Most Asian countries seem to abide by the Chinese proverb, “If you give a man a fish, he will be hungry tomorrow. You teach him to fish and you give him an occupation that will feed him for a lifetime.”

One of the key partners the East African region has engaged with is Japan which has been on a quest to re-establish its inconsistent ties with countries in the region, and Africa on the whole, seeking to regain lost ground to China. The highlight of this flourishing partnership was demonstrated in 2016, when Japan chose East Africa’s economic powerhouse, Kenya, to host its 6th Tokyo International Conference on African Development (TICAD VI) summit. It was the first to be held on African soil, since the inaugural conference in 1993.

A key figure that has spearheaded the region’s relations with Japan, has been the late Prime Minister Shinzo Abe. Abe is famous for strengthening diplomatic and economic ties; up until his fatal assassination that shocked the world in July 2022. East African countries have been named strongholds of Japanese investments in Sub-Saharan Africa, pertinently Kenya, Ethiopia, Uganda and Tanzania. A survey by Japan External Trade Organization (Jetro) in 2021 saw Kenya ranked first as a top future investment destination for Japanese investors with at a 35.1% preference. Jetro is a Japanese government organization promoting trade and investment between Japan and the rest of the world.

Additionally, the ‘Japan Self-Defense Force Base’ in Djibouti is the first Japanese overseas military base since World War II. It is specifically designed to support counter-piracy operations in the immediate vicinity of the Gulf of Aden. Hitherto, Japan has left an indelible mark on the region’s development track record; through loans and grants contributing to a plethora of sectors from infrastructure to automobile, education, hydropower and agriculture among many others.

Historical overview of Japan East Africa relations

The genesis of Japan’s engagement with East Africa started with the Official Development Assistance (ODA) programme to Sub-Saharan Africa in 1966 when Japan commenced disbursing Yen loans to Kenya, Uganda, Tanzania and Nigeria. (MOFA 2004).

The following years’ relations remained muted due to the global oil crises and with most countries in the region possessing only a meagre proportion in terms of oil and gas reserves. Japan thus sought to develop relations with other leading oil-producing countries in the continent. However, the Japan East-Africa relations began to shift in the 1980s and 90s culminating in the initiation of TICAD which over the years has served as a diplomatic tool for Japanese engagement with the African continent. Currently, TICAD is hosted every three years, co-organized by the African Union Commission, UNDP and the World Bank. August 2022 saw the 8th edition of the conference held in Tunisia, making it the second time for the conference to be held in Africa.

Review of Japan’s engagement with East Africa

  • Private Sector Development

The Japanese government has been a critical contributor to the African Development Bank (AfDB) through its concessional lending arm, the African Development Fund. Together, they spearheaded the Enhanced Private Sector Assistance for Africa initiative, whose components are accelerated co-financing; non-sovereign loans; the Private Sector Investment Finance scheme and the Fund for African Private Sector Assistance. All the four support the implementation of the AfDB’s private sector development strategy.

  • Trade and automobiles

The Asia-Africa Growth Corridor (AAGC) is a great initiative that is yet to materialize, formed by Japan and India in 2017, with an aim to develop cooperation in Africa and foster integration. The Plan proposed the development of sea corridors, linking East African ports to India and Japan; together with the construction of industrial and transport infrastructure in Asia and Africa. Some of the benefits of the AAGC, which was to rival China’s Belt and Road Initiative (BRI) include; building quality infrastructure and institutional connectivity; boosting exports, expanding existing value chains, enhancing capacities and skills, creating new production channels, and the overall achievement of sustainable growth.

Japan has additionally greatly invested in the automobile industry; for instance, Kenya has witnessed significant FDI flows with companies like Toyota Tsusho, Isuzu, Mitsubishi, Nissan, Cooper Motor Corporation, General Motors, Simba Colt, DT Dobie and Honda establishing assembling plants in the country.

Japanese car manufacturing companies dominate East Africa’s automotive industry.Image Source-ABC.

  • Hydropower Generation

Japan has been contributing to the region’s power generation and distribution to provide electricity for millions of citizens. Kenya ranks among the world’s top producers of geothermal energy, thanks to Japanese backing, pertinently through technology, as the Asian country is a leading global supplier of geothermal turbines. The Olkaria Geothermal Plant, which was the first geothermal power station in the continent, largely supplies electricity in the country.

At the TICAD VI, the government of Japan signed a memorandum of cooperation (MOC) with Power Africa programme, an initiative launched in 2013 by the then incumbent President Barrack Obama, to leverage private and private sector partnerships, with the goal to add at least 60 million new connections to electricity in sub-Saharan Africa by 2030.

As its first commitment in support of Power Africa, Japan aided in bringing to reality the 168MW geothermal project, Olkaria V in Kenya. In 2018, through its donation arm, the Japan International Cooperation Agency (JICA), the Asian country offered the Ugandan government a US$ 125m loan, for the construction of the Kampala Metropolitan transmission line, for electricity from the yet to be completed Karuma dam. Into the bargain, Japan provided ODA for the development of a 300MW gas turbine power plant and transmission lines in Tanzania, through funding by JICA; towards the country’s vision 2025 of having 10,000MW generation capacity, and having 85% electrification rate in the country.

  • Infrastructure Development

Japan has been a major financier, contributor and constructor of infrastructure projects, famed for high quality construction and engineering. For instance, through JICA, the country financed the US$ 140m bridge over the Nile in Jinja, Uganda, a major link between the Northern Corridor Route and landlocked East African neighbours like Burundi, Rwanda and eastern DRC with the Port of Mombasa in Kenya. The Northern Corridor Route is the busiest and most important transport route in East and Central Africa, which provides a gateway through Kenya for Central Africa.

In 2017, the Kenyan government signed a US$ 112m loan with JICA, to improve logistics infrastructure around the Port of Mombasa. This investment followed the completion of a new container terminal at Mombasa port in February 2016, also with support from JICA with a Japanese ODA loan. In January 2018, Kenya’s government secured a US$ 340m loan from Japan, to increase the container handling capacity of the port. The project is due to be completed in 2022, and will include the construction of one more berth, the procurement of equipment and dredging work.

East Asia’s rapid economic growth has been largely attributed to the critical role played by special economic zones (SEZs). Similarly, East African countries have been seeking to replicate this model, to advance development of their respective nations. In light of this, JICA signed a grant agreement with the Kenyan government in Mombasa, to provide grant aid to develop the Dongo Kundu Area, special economic zone. The chief objective of the project is to improve the investment environment of the County, increasing private investment and promoting logistics, in line with goal 8 of the UN SDGs on decent work and economic growth.

Former President Uhuru Kenyatta at the launch of Dongo Kundu special economic zone financed by Japan’s JICA

In 2021, JICA funded the extension and modernization works of the Port of Bujumbura, in Malawi which was built in the 1950s, to the tune of US$ 31M. The renovations are projected to be complete by 2023, increasing the ports capacity to beyond 500,000 tonnes from the previous 200,000. This opened up Burundi, as Bujumbura is strategically positioned at the crossroads of the Central and North transport corridors.

Into the bargain, earlier in February, JICA signed a grant agreement with the government of Tanzania in Dar es Salaam, to give a grant of US$ 36,000 for the Kigoma Port project, which is the largest terminal in eastern Tanzania, serving as the primary entry point for commerce, and makes for a critical focal point for the Central Corridor, which connects Tanzania, Burundi, Rwanda, Zambia and DRC.

  • Information Communication Technology (ICT) & Agribusiness

Information Communication Technology (ICT) is another area that Japan has been contributing to in the region. For instance, Rwanda signed an agreement with the Japanese city of Kobe in 2016, to recruit over 1,000 ICT engineers from Rwanda. Consequently, Kobe city funded the establishment of K-Lab, an ICT incubation hub in Kigali, where several young Rwandan techpreneurs have successfully developed and sold ICT products.

In addition, the two cities agreed to collaborate and exchange innovations in industries, and research findings from their academic institutions. Japanese companies have similarly invested in agribusiness in East Africa. For instance, Toyota Tsusho completed its first fertilizer blending plant in Kenya in 2016, designed for Kenyan soil types to curb low harvests and acidification of farmland. This was aimed at reducing the 600,000 tonnes of fertilizer that the country imports annually, as well as boosting agricultural production.

  • Education and humanitarian assistance

Being accustomed to investing in people, Japan through the African Business Education Initiative for Youth (ABE), based on the Japanese principle of ‘Kaizen’ which means continuous learning, provides education and training to African foremen, plant managers, worksite leaders and 30,000 student engineers, while 1,500 business executives will receive training in Japan. The first batch of 156 African students began their degree programmes in September 2015, which includes students from East Africa region. Japan has maintained humanitarian and relief assistance to East Africa, as was seen in 2016 when the Asian country granted US$ 6.3m as emergency relief from the damage caused to the East Africa region by the El Nino. JICA also gave a US$ 26m grant for renovation, equipping and staffing of several hospitals in Uganda.

  • Peace-Keeping Operations (PKO)

With the devastation of the effects of World War II, Japan values preserving peace and prosperity. This has informed their involvement in peace keeping operations in Africa, as seen in South Sudan and Ethiopia, among other African countries. Japan sponsored the development of the Ethiopian International Peacekeeping Training Center (EIPKTC) to support efforts on conflict prevention and resolution, peace-building and post-conflict reconstructions.

The Centre’s vision is to become a center of excellence in training programmes on conflict management and prevention; peace and security research. This represents clear commitment, to support regional peace building and stabilization efforts. International trainees are mainly drawn from Rwanda, Kenya, Tanzania, Burundi, Somalia, Ethiopia, Mali, Sudan, Liberia, South Sudan, Djibouti, CAR, Egypt and Uganda. Since 2013, it has conducted 10 international level courses.

Furthermore, Japan has also been carrying out capacity building through the support for peacekeeping as seen in South Sudan, additionally providing vital engineering and logistical support to the UN peacekeeping operations in Juba. Moreover, it helps mitigate anti-piracy activities off the Coast of Somalia and the Gulf of Aden.

Future prospects

Looking to the future, the partnership between Japan and East Africa is set to deepen. As opposed to China, Japanese presence in East Africa appears to indicate a long-term commitment and is more holistic, as it targets to build skills, improve health and education, which are key ingredients known for the formation of thriving economies. Furthermore, East Africa will also be a beneficiary of the commitments made during the TICAD VII.

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