Japan pledges $30 billion in aid to Africa

Comments (0) Africa, Featured, Trade

Japan recently promised $30 billion in aid to Africa, a pledge that comes in the face of a spate of major investments on the continent by rival China. Japanese Prime Minister Shinzo Abe announced the commitment at the sixth Tokyo International Conference on African Development in Nairobi, Kenya, Aug. 27. The meeting, previously held in Japan, was staged in Africa for the first time this year at the request of the host continent. Abe said the aid will be spread over three years and comes on top of $32 billion Japan pledged to Africa over five years starting in 2013. He said about two-thirds of that money had been put to use. With longstanding trade ties, Japan has a keen interest in Africa’s resources. That interest has intensified since the island nation began to import more oil and natural gas after the 2011 Fukushima disaster shut down nearly all of its nuclear reactors. In recent years, Japan has found a growing rival in China, whose One Belt, One Road trade policy focuses squarely on Africa, Central Asia, and the Middle East.

Funds for infrastructure, education and health care

The latest round of Japanese funding will be used to develop infrastructure and improve health care and education on the continent, Abe said. About $10 billion for infrastructure will be allocated in cooperation with the African Development Bank. It will include roads, ports, airports and power plants that are expected to increase the continent’s electric capacity by 2,200 megawatts.

The money will also be used to train 20,000 mathematics and science teachers throughout the continent, as well as 20,000 experts on how to handle infectious diseases. “Today’s new pledges will enhance and expand on those launched three years ago. The motive is quality and enhancement” Abe said.

Chinese promise $60 billion

Abe’s pledge comes on the heels of a Chinese promise of $60 billion in aid, much of it loans from Chinese banks or export credits rather than direct aid. With its One Belt, One Road policy of establishing trade routes in the West, China has stepped up its investments on the continent in recent years, although the Chinese economic slowdown has reduced trade and posed challenges for African economies that rely heavily on oil and commodity exports.

Still, China has continued to announce large investments on the continent. It plans to build a naval base in Djibouti along with expansions of port facilities and new airports at a cost of more than $12 billion. China will also fund a $4 billion rail link with neighboring Ethiopia. However, with its economic slowdown, China’s investment in Africa decreased by about 40 percent last year.

China dwarfs Japan in trade

Six years ago, China surpassed the United States as Africa’s largest trading partner. The Asian giant has also eclipsed Japan in financial importance to the continent. China’s total trade with Africa of about $179 billion last year dwarfed the approximately $24 billion in trade with Japan.

Japan’s overall direct investment in Africa totaled $1.24 billion in 2015, down from about $1.5 billion a year earlier, according to Japan’s External Trade Organization. China made a single investment of $2 billion in oil-rich Equatorial Guinea in the month of April 2015 alone.

Geopolitics in play

“Japan has a sense of rivalry with China, which has provided large-scale assistance,” Koichi Sakamoto, professor of regional development studies at Toyo University, said. “Since Japan can’t fight China in terms of cash, it needs to stress quality.” Abe said Japanese direct investment totaling $10 billion will begin to flow this year, along with another $20 billion in investment from Japan’s private sector.

In addition to it’s interest in Africa’s resources, Japan has strong political motives on both regional and global fronts for strengthening ties with Africa, according to Seijiro Takeshita, an economist and professor at the University of Shizuoka. For one thing, Japan is seeking support to become a permanent member of the United Nations Security Council. Japan and other nations in the region also see China as an aggressor. “This is basically (seeking) to ward off continuous aggression the neighboring nations feel from China,” Takeshita said.

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African Union launches electronic passport for the continent

Comments (0) Africa, Featured, Trade

Seeking to boost trade, tourism and investment, the African Union has launched a common electronic passport that the organization hopes eventually will give holders visa-free access to all of the organization’s 54 member nations. The African passport initially is being made available to heads of state and diplomats. The goal is full use by all citizens by 2018, although because of complicated logistics that aim is far from guaranteed. The passport, launched in July at the 27 th African Union Summit in Rwanda, is part of the African Union’s Agenda 2063 plan to develop a more unified “One Africa” economy on the continent in order to boost development and growth. Officials say the common passport is aimed at facilitating free movement of people and goods around the continent as a way of fostering intra-African trade and development.

One step toward economic integration

The passport “is a steady step toward the objective of creating a prosperous and integrated Africa,” outgoing African Union chairman Nkosazana Dlamini-Zuma said at the launch. The African Development Bank has been a strong advocate for the common African passport, noting that cumbersome visa requirements in many countries limit intra-African tourism and make trade between African countries cumbersome and expensive. “African countries are closed off to one another, which makes travel within the continent difficult,’’ the development bank said, noting that the continent has some of the toughest visa restrictions in the world. Moreover, restrictions are particularly high from Africans traveling within the continent compared to European or North American visitors, the bank said, noting that business visas are more difficult to obtain than tourist visas. The cost of visas places a burden on citizens who would travel or do business across borders. According to the bank, Central Africa, the region with the highest use of traditional visas, is the least connected to other regions. At the same time, East Africa, with the highest number of visas available on arrival, is among the most open regions in the world.

Benefits in Rwanda cited

Rwanda, which allows entry visas for all African citizens who come to its borders, has seen a 24 percent increase in tourist frequentation from other countries on the continent since it loosened requirements in 2013. The African Development Bank estimated that easing visa requirements could generate an additional $200 billion in the tourism sector and create as many as 5 million new jobs. The bank also said visa restrictions limit the ability of businesses to attract and retain the best African talents, saying that the lack of mobility of professionals is impeding economic growth. Emerging fields such as banking, mining and information technology in particular require more flexibility to compete in the marketplace. A new Visa Openness Index developed by the bank in support of easing restrictions concluded difficulty for business travelers was underscored. According to the index report, more than half of the 55 countries ranked require visitors to obtain visas in advance. Only 20 percent do not require visas and only 15 percent offer visas on arrival. Moreover, many of Africa’s strategic hubs have more restrictive visa policies while smaller nations tend to be more open.

10 countries stand out for openness

The top 10 nations for openness posted an average score of 0.86 (out of 1) on the ADB index, twice the overall average. The top 10 countries are Rwanda, Seychelles, Mali, Cape Verde, Togo, Guinea-Bissau Mauritania, Mozambique, Uganda, and Mauritius. At the bottom of the rankings were Eritrea, Ethiopia, Sudan, Angola, Gabon, Libya, Egypt, Equatorial Guinea, São Tomé and Príncipe, and Western Sahara.

Access to biometric systems not assured

While the African Union wants full implementation of the new passport by 2018, the logistics of that timeline are daunting. Each country can decide when to begin accepting the new passport. But many nations do not have access to biometric systems that are required to access the electronic passports. Despite the challenges, advocates say the transition to a common passport is a vital part of the goal of “One Africa,” embodied in Agenda 2063. Visa “restrictions harm our integration efforts, negatively affecting tourism, investments and trade. A more relaxed visa landscape could help push our shared vision of one competitive African market,’’ said Moono Mupotola, manager of integration and trade at the African Development Bank. “To encourage intra-African trade, without a doubt, we need to work on visa openness.”

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