The President of the African Development Bank Group (AfDB), Dr. Akinwumi Adesina, has called for a significant increase in Japanese investment in Africa, saying the continent is the world’s best investment destination now and in the future.
Besides, he called for more venture capital and private equity funds to tap into Africa’s huge potential.
Adesina said this as he leads the bank delegation on a five-day visit to Japan during which he will meet senior government officials, large Japanese companies, development partners and members of the African diplomatic corps in the country.
Delivering a lecture at the Japan-Africa Investment Ecosystem Co-Creation Forum Tokyo, Adesina said Africa offers enormous investment opportunities and gave examples of Japanese companies that have been running profitable businesses on the continent for decades.
The forum was organised by Keizai Doyukai, a private, non-profit and nonpartisan organisation that brings together nearly 1,400 top executives of some 1,000 corporations.
Adesina pointed out that Japan’s foreign direct investment (FDI) in Africa declined from $10 billion in 2016 to just $4.7 billion in 2020 during COVID-19 but recovered to $6 billion in 2021.
Africa accounts for only 0.003 per cent of Japan’s $2 trillion global FDIs.
In terms of trade, the volumes of exports and imports between Africa and Japan remain lower than two per cent.
Adesina said there was every reason to change the trend. He mentioned the state-owned Japan Bank for International Cooperation (JBIC), which, together with other investors, including the African AfDB, co-financed the $24 billion Liquified Natural Gas project in Mozambique – which will make it the third largest in the world.
JBIC and Mizuho Bank, along with the African Development Bank and nine other financial institutions, invested $2.7 billion to build the Nacala corridor railway and port in Mozambique.
Adesina cited Japanese multinationals such as Toyota Tsusho, Mitsubishi Corporation, Hitachi and Komatsu, whose businesses make billions of dollars in profit every year.
“These companies will tell you investing in Africa pays,” said Adesina, adding: “There is now a greater pulse and excitement for more Japanese investments in Africa.”
The bank’s chief said the successes of large Japanese companies operating in Africa are spurring a new generation of young Japanese to turn their eyes to venture capital and private equity funds to support small- and medium-sized enterprises.
He gave the example of a startup company, Kepple Africa Ventures, which has raised $43 million and is investing along with African private equity funds in 100 seed-stage enterprises in 11 African countries.
The Uncovered Fund, founded only in 2019, is another Japanese venture capital fund that has invested in 26 African startups.
Adesina reassured investors: “Africa is also not as risky to investments as many perceive,” and added, “Let’s ramp up Japanese private sector investments in Africa. Let’s do more together in Africa, faster and at scale.”
Vice Chairperson of the Africa Project Team at Keizai Doyukai, Ken Shibusawa, said a new company, &Capital Inc, was formed earlier in the year to promote Japanese investments in Africa.
The Chairperson of the Japan-AU Parliamentary Friendship Association, Ichiro Aisawa, described Africa as a continent of hope with population power. The parliamentarian announced that with the Covid-19 pandemic under control, the association will embark on a grand tour of Africa to raise Japan’s presence.
While the number of Japanese companies in Africa increased from 520 in 2010 to 900 in 2020, Adesina called for more venture capital and private equity funds to tap into the continent’s huge potential.
