The government of Japan has set its sights on deepening ties with Ghana and other African countries, with the development of trade insurance that is aimed at enhancing economic relations and increasing private sector investment in Africa.
According to the Prime Minister of Japan, Shinzo Abe, the Asian giant is keen to drive investment in Africa with enhanced trade insurance.
“Japan will offer enhanced trade insurance to boost private sector investment in Africa,” Prime Minister Shinzo Abe said on Wednesday, as his country competes with rival China for influence in the resource-rich continent.
The enhanced insurance is expected to fully cover loans to African governments, their affiliated institutions, or private companies buying Japanese goods for infrastructure projects in Africa, according to government briefing materials and a state-run firm offering trade insurance.
“For example, our cooperation with local financial institutions will create a new trade insurance that could cover 100% of your transactions,” Abe said in his speech.
TICAD 7 is also more business-oriented than previous iterations, as the Japanese private sector is “finally becoming serious” about the African economy, said Shigeru Ushio, director-general of the African Affairs Department of Japan’s Foreign Ministry in a recent interview.
“The (Japanese) private-sector businesses have requested (the Japanese government) to let them take the driver’s seat and speak during a plenary meeting of TICAD for the first time,” he said.
Representatives of the private and government sectors were engaged in a business dialogue session on the sidelines of TICAD 7 on 29 August, to further foster trade-ties between the two continents.
In the past, such a session was organised as a side-event – but now it will be upgraded to a plenary meeting for the first time. There are clear reasons for Japanese firms to be more serious about business in Africa.
Japan’s foreign direct investment stocks in Africa stood at just US$8.7bn at the end of 2017: meanwhile, France made the largest direct investment in Africa with US$64bn the same year, followed by the Netherlands with US$63bn, the US with US$50bn, Britain with US$46bn and China with US$43bn.
On the sidelines of government’s trip to Japan, Alan Kyerematen – Minister of Trade and Industry, signed an MoU between the Ministry and Toyota Tsusho Corporation of Japan at a short ceremony in Yokohama, Japan, on the margins of TICAD7. The ceremony was witnessed by President Akufo-Addo and other senior government officials.
The company is determined to establish its Ghana Plant to take advantage of the new Automobile Development Programme that was recently launched in Accra.
According to World Bank data, Ghana’s growth target for 2019 was pegged at 7.4% – mainly to be driven by the industry sector, especially oil, gas and mining. Manufacturing is also expected to post higher growth. In the medium-term (2019-2022), overall GDP is projected to grow on average at 7.0%, as the effects of oil on growth declines and non-oil growth strengthens
Many African countries are starting to look toward Asia to develop deeper economic relations and tap into the region’s abundant investment resources for funding development needs.