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Regional challenges: what Japan can do to help

The second session dealt with Africa’s regional challenges and development in the overall African economy. Ambassadors Ito, Comberbach and Arrour were joined by Ambassador Wasswa Biriggwa of Uganda, chairman of the ADC TICAD Committee; Ambassador Godwin N. Agbo of Nigeria, vice chairman of the ADC Trade and Investment Committee; and Ambassador Joao Miguel Vahekeni of Angola, also a vice chairman of the ADC Trade and Investment Committee. Japan Times Managing Editor Kitazume continued as the moderator. Excerpts of their discussion follow:

Moderator: When we say Africa or the African economy, the fact of the matter is that it’s not one country. Every country has its own situation, prospects and challenges, and there will also be regional characteristics in the economy and its current development. Please tell us the current situation of each of your countries and in the respective regions.

Comberbach: My country is a landlocked nation in the middle of southern Africa. We are part of the broader Southern African Development Community, which is a bloc of 15 countries, which have been together for several decades. And the principal objective of this union that we have is to really forge regional integration.

The SADC region itself has a total population of around 260 million people, and we have a combined GDP of around $480 billion. We are also fortunate in that we have Africa’s biggest economy, South Africa, as part of our SADC grouping. And although that generates a number of challenges when you live next door to a very big economy, it also brings about a lot of opportunities as well in terms of the size or the South African economy and the diversity of it, attracting inward investment, attracting trade. But the regional integration program that we are embarked on is designed to make the impact of this kind of inward investment and trade felt right across the southern African region.

It’s a region that’s extremely wealthy in terms of natural resources, mineral resources in particular, but it has abundant agricultural land and potential. And so the potential for industrialization of turning agricultural produce into processed products for sale among ourselves and beyond the region is enormous.

The challenge for us is really to attract inward investment, which would help us to add value not only to our mineral resources but also to our agricultural resources.

Africa as a whole has 54 countries. It is divided into eight regional economic communities. They overlap in membership in some areas. SADC is engaged in negotiations with two other regional economic communities, the East Africa Community and COMESA, the Common Market for Eastern and Southern Africa, to create a common free trade area. Once that is in place, and we hope it will be in place by 2017, you will have a free trade area with a population of about 540 million and a combined GDP of around $660 billion.

Biriggwa: Uganda is located in the middle of Africa; it is neighbor to Kenya, Tanzania, Rwanda, Democratic Republic of the Congo and South Sudan. It is known as the “Pearl of Africa” because of its beauty formed by abundant natural resources, rivers and lakes, fauna and flora.

But probably the most captivating phenomenon in Uganda is its people, known for their warmth and friendly, welcoming nature. Uganda has a population of close to 34 million people, mostly young and energetic.

Recently, we were fortunate to have discovered vast amounts of oil and gas. We are inviting investors to come and participate with us in the area of refinery and building a pipeline.

We have quite a huge population of educated people. Uganda universities, led by one of the most prestigious and oldest universities in Africa, Makerere University, graduates more than 50,000 per year. Being in the middle of East Africa we are also a trading hub for the neighboring countries, a great opportunity to invest and trade with a population of more than 120 million people.

We have been fortunate that we have had a stable democratic government for the last 27 years. We have enjoyed peace and a sustainable economic growth averaging 6 percent for the last 15 years.

We are interested in fostering investments and trade; we have many investment opportunities in infrastructure, energy sector, value addition, telecommunications, finance, IT, tourism and agriculture.

Uganda is a member of the East Africa Community, the oldest regional bloc in Africa. It was started in 1967, initially with only three countries, Uganda, Kenya and Tanzania. Now we are five countries with Burundi and Rwanda, and soon we hope, South Sudan. Within the community members enjoy the economy of scale, access to a bigger market unhindered by tariffs and quotas, and soon its peoples will be able to work and live anywhere in East Africa and use the common currency. The opportunity for an investor is great: You invest in one country and have access to the rest.

Arrour: I would like to emphasize that Morocco is well known for its democratic institutions, its political stability and its comprehensive and legal framework.

Strategically positioned on both the Atlantic Ocean and the Mediterranean Sea, less than 14 km from Europe, Morocco is a regional center for trade, manufacturing, warehousing, redistribution, sales, call centers and an array of IT services reaching Europe, Africa, the Middle East, and the Americas.

We are very much grateful to many Japanese corporations who placed their trust and confidence in the Moroccan economic and political stability, and kindly came to Morocco and invested and promoted social and economic development in Morocco. We have about 35 Japanese corporations that are doing a win-win job in Morocco, utilizing the advantages of our fiscal stability, our economic growth. Over the last five years we have had 5 percent economic growth yearly.

In 2004, Morocco became the second Arab nation (after Jordan in 2000) to enter into a free trade agreement with the U.S. In 2005, Morocco joined the EU Neighborhood Association for trade, and in 2008 was the first Arab country in the MENA (Middle East and North Africa) region to be granted the coveted “Advanced Status” as a full trading partner. We have ties with Mercosur (the South American trade bloc) and ECOWAS (Economic Community of West African States), which makes Morocco one of the best countries to promote production bases for the domestic market and also for export. We naturally have free trade agreements with our neighbors and Arab countries. We are promoting business relations and trade relations with Africa.

The Maghreb Union, comprised of Algeria, Libya, Mauritania, Tunisia, and Morocco, offers a huge number of business opportunities. Some of the countries in the Maghreb Union are rich in oil and gas, others are rich in minerals like Morocco; we are first exporter in the world in phosphate and fertilizer products. Morocco is one of the leading exporters of agriculture and marine products in North Africa.

Furthermore, Morocco is blessed with a young, dynamic and well-trained workforce, capable of providing appropriate value-added performance in many sectors of industry, finance and service activities.

Agbo: Nigeria is the most populous country in Africa and the most populous black nation in the world. There are more than 250 ethnic groups and 250 languages. English is the official language.

The main economic activity was agricultural until the discovery of oil. Nigeria also has rich mineral deposits. Nigeria is strategically located and drives the economy of the West African region.

The West African region comprises 16 countries and has a total population of about 300 million. By 2020 that number is expected to rise to 500 million. Currently, Nigeria has 170 million people, which constitute more than half of the population of the entire sub-region. This represents a huge market for products from the West, including industrialized countries like Japan.

The region established an economic grouping, the Economic Community of West African States in 1975 to promote economic integration in industry, transport, telecommunications, energy, agriculture, natural resources, commerce, social, monetary and financial as well as cultural matters. ECOWAS is made up of 15 countries.

While ECOWAS deserves to be hailed for its achievements, there are several issues that have yet to be resolved, including the following: political turbulence has been a thorny issue troubling a few West African states; infrastructural deficits continue to hinder the region’s effort at enhancing trade and industrial development; West Africa remains vulnerable to events in Europe and the industrialized countries; a mismatch between skills demanded by employers and the types of education acquired by the youth; the existence of a large informal sector in most West African countries continues to hinder the region’s economic growth; and corruption in some government circles.

Vahekeni: Angola has experienced rapid and prolonged economic growth in the last six years. Social reforms are expected to have a great impact on our population. We are launching political reforms and must double our efforts.

Angola is reconstructing its infrastructure, including schools and hospitals damaged by the civil war. Angola needs to improve its public management systems. It needs to curb one of the sicknesses of the civil war: corruption. Angola needs to increase accountability.

In terms of our region, we are part of SADC, like Zimbabwe. Infrastructure in Angola is a way to create channels in the region for integration.

To achieve the shift to the next level of economic development, we have to shift the economic situation. It is highly dependent on oil revenues; though it is important, it employs less than 1 percent of the labor force. It becomes a constraint for the diversification of our economy.

We face social and economic problems. Reducing poverty is one of the biggest challenges, which has been helped by oil and diamond revenues.

One of the pillars of development is agriculture. Angola is endowed with fertile lands and water, about 26 percent of the water of Africa. Angola was the breadbasket of Africa. Three decades of war destroyed many of the infrastructures.

Another important sector is mining. A new mining law will allow those who want to invest in this sector in areas that are still dormant. We are also looking for partners from Japan.

Moderator: There have emerged some keywords, such as “value-addition,” “industrialization,” “infrastructure” in all the countries. These are areas where foreign investment plays a vital role in many cases. I would like Ambassador Ito to please give a followup comment from the viewpoint of the Japanese government’s policy of promoting Japanese private sector investment in Africa.

Ito: Generally speaking, Japanese companies’ expectations for African countries are greater than ever. For example, in a survey recently conducted by JETRO, about 60 percent of companies intend to expand or are considering expanding business with Africa. Particularly, many companies regard the middle class of Africa as a target of business.

At the same time, risks and challenges remain for investors who intend to operate in Africa. The investment climate in Africa will be improved through developing better infrastructure, a skilled workforce and improving the legal system or legal framework related to investment.

Conflict prevention, good governance and the rule of law are also very important factors for realizing a stable social order for an improved investment and business climate. So Japan will support efforts by African countries for improving the investment climate.

From the beginning of the TICAD process, generally speaking, we have promoted the so-called South-South Cooperation, which utilizes the Asian experience for African development. It is desirable that the international community, including emerging countries such as China, actively promote African development.

For Japan, in order to remove the bottleneck to economic growth in Africa, we will continue to support Japanese business activities in Africa, by improving infrastructure and developing a skilled workforce through ODA. Japanese business activities in Africa are contributing to the improvement of the living standards of the local people through the transfer of technology and the creation of employment. I think that it is highly appreciated by the African side as a Japanese type of assistance.

Moderator: I would like to welcome responses to Ambassador Ito’s statements.

Biriggwa: First of all, I would like to thank Ambassador Ito and the government of Japan for the work they have done through the previous TICAD. From TICAD IV to the upcoming TICAD V, there has been a huge improvement in our relationship with Japan, and I would like to thank the Japanese government for carrying through the promises that were made at TICAD IV. This is very rare, by the way, with many countries at the end of many international conferences promising so much, but at the end of the day we never receive anything.

In the case of TICAD, it has been a very good process, coming especially at times when Japan was undergoing very difficult times, the Great East Japan Earthquake and tsunami and all that. But they never cut what they had pledged to the African nation. And this is truly commendable, and I would like to thank the government of Japan and the people of Japan for their great sacrifice.

Having said that, there is quite a lot of room for improvement, and I’m sure my colleagues will agree with me as to what can be done in the area of investment.

We have not been very successful in attracting the activity that you see in North Africa. We see that now the government of Japan and the business community are engaged together in finding a solution to this problem.

I would like to add that what is missing in all of this is the media. The way Africa is portrayed should be that it is separate countries. If something happens in one country, it’s taken in Japan as if the entire continent of Africa is on fire. So the media have to do their part in explaining the various qualities of the different countries that we have.

The other aspect for us is that we are truly interested in trade and investment. ODA is very important and that is very good, but trade and investment is the key. And so we need Japan to help us and prepare so that we can receive investments so that we have a win-win situation, whereby the corporations of Japan come to Africa and they do what they have to do and we also benefit out of this.

But at the present moment, unfortunately, we have not seen that happening. We need of course technology transfer, development of infrastructure, which is pretty poor, and developing the energy sector, which is very important for industrialization.

Agbo: Regarding the ODA issue, it has been very important, especially in central Africa, but there should be a shift to trade and investment, and the transfer of technology to Africa.

I want to talk about what Ambassador Ito mentioned about the perceived challenges that may be hindering the movement of the Japanese private sector to Africa.

The issue is how to partner together. These concerns that he raised can be addressed by Japan and Africa working together. They can’t be solved by running away from it. We have to jointly confront these perceived challenges and work out acceptable solutions in the mutual interest of our economies and people.

In my opinion, if, for instance, the international community, including Japan, can contribute to Africa’s efforts to reduce conflicts and develop infrastructure to attract investments, Africa’s fortunes will undergo a favorable transformation. This is what we are looking for in partnering with Japan. Also, in the area of good governance, we want to partner with Japan in developing policies and projects that would improve the material condition of our people. In this regard, I am happy to say that the government of Japan has actively supported a number of nongovernmental organizations in the promotion of grassroots projects designed to empower rural dwellers in Nigeria. This is apart from the contributions of JICA in the field of educational and water supply infrastructure.

Vahekeni: I think one of the elements that can create a difficulty for the Japanese private sector to enter Africa is the bad perceptions they have in reading the newspaper and so on, but some of the bad perceptions, they are the same as in Europe.

So we need to create a new image of the relationship between Japan and Africa. Not only from us. We are ready to create those conditions, showing Japan where the private sector can be successful. We are ready to be in a win-win situation. We are not begging. We are saying, you have this and we want this, so let’s work together. But it is necessary to destroy the bad perception.

Japan, let us say, is part of the “Western vision of the world.” This is very negative for Africa. Just an example. We all give our solidarity to Japan for what happened in Algeria. But what happened in Algeria cannot represent Africa. Sorry. Absolutely not. Even it is not in Morocco and Morocco is near. But we read immediately in the media “Africa,” but it is not.

We are ready to open our countries and we want Japan to be there.

Moderator: We have heard that conflicts and security issues are some of the hindrances to the investment climate. I understand that this is an issue that cannot be generalized, it has to be seen in each country’s or each region’s context, and it’s not a simple issue. But overall, what efforts are required to reduce and stop those incidents from being a block to foreign direct investments? I think there needs to be some concerted effort among the countries of Africa and the international community, including Japan.

Comberbach: It’s a difficult question and quite a sensitive one as well.

We were shocked, all of us, by the terrorist attack that took place in Algeria. And we felt it very much here as ambassadors to Japan. Allow me, through this particular forum, to express our deep condolences to the government and people of Japan, and to the families of those who lost their lives in this terrible incident.

Of course, such an attack is an attack against Africa as a whole and indeed against the international community. You will have noted that the African Union strongly condemned it as such, whilst also declaring full support for the government and people of Algeria and commending the Algerian authorities for their prompt and firm response to the attack.

Although Africa has faced up to many challenges on its long path toward development, and apart, perhaps, from the U.S. Embassy attacks in Tanzania and Kenya in 1998, by and large, we have been spared the scourge of terrorism. However, it is now clear that there are extremist elements operating on our continent — and we have to address that. And yet, we need to be careful — and the media has a role to play here — that we do not succumb to the temptation of painting each and every incident which occurs on our continent in the colors of al-Qaida. In doing so, we may well be over-simplifying what is, in reality, a far more complex situation on the ground.

The reality, in part, is that there are a number of international criminal syndicates in operation in parts of our continent — smuggling weapons, smuggling drugs and smuggling people — and all taking advantage of the vastness of Africa to find ways and means of moving their contraband products into Europe, mainly, but to other parts of the world as well.

The African Union’s Peace and Security Commission — which has infrastructure in place at both regional and continental levels to monitor developments on the continent and to act early to prevent any difficulties which might arise from developing into conflict — has been warning for some time now that these criminal syndicates constitute a gathering problem, not just for Africa, but for the broader international community as well.

The commission has been warning, as well, that this is not a phenomenon which Africa can deal with on its own. This is part of a global threat and it has to be tackled in a holistic or comprehensive manner, by Africans, within Africa, but with the enhanced support of the international community, including Japan.

Africa has its own mechanisms and its own structures to deal with security problems of this nature, but we lack adequate resources, capacity and expertise. We also lack, perhaps, the practice of effective coordination between and among ourselves. So, I think what we need is more support, targeted support, to boost Africa’s own efforts in this regard, and this is what we look for from the international community, including our friends in Japan.

In this regard, we have to commend Japan, too. Within days of this terrible incident, there was a conference in Addis Ababa to discuss the situation in Mali and the broader Sahel region. Japan was the first to pledge a large amount of resources — some $120 million — as a commitment to support efforts to bring stability to Mali and to contribute toward the task of rebuilding the nation.

Such support can come in many ways. What is important is that it should be directed to supplementing Africa’s own efforts to respond to these sensitive situations, and to the challenges posed by international organized crime operations on the continent.

Ito: One thing we hope to do is reduce abject poverty and develop the security mechanism to combat terrorism. So one of the main themes of TICAD V is peace and stability as a foundation of growth.

Arrour: I would like to emphasize the importance of South-South Cooperation. In Morocco, South-South Cooperation is part of His Majesty’s government’s top priority. We feel if we do not help each other, if we do not help ourselves, nobody will invest in our continent, if we Africans do not first invest in Africa. Morocco is the second largest investor in Africa after South Africa.

This is why we promote the triangular cooperation, not only between and among governments, but also within the private sectors of Japan and Africa. And this is one of the agreements we would like as an outcome of TICAD V, creating a Japan-Africa economic forum.

We have to work together, not only ask the people or companies to come and invest. We have to show the way.

Regarding legal frameworks, I believe each one of our countries is working very hard to offer to Japanese partners the best legal framework. But you cannot have a legal framework by yourself. You need the cooperation of your partners.

Japanese investors, when they do business in Morocco, they do their best to empower the local manpower and to give responsibility to the local management. We have seen those examples in my country. I would like to take this opportunity to express our deep recognition and deep appreciation for those corporations who entrust not only the manpower but also the local management.

I can testify that in the automobile sector, the Japanese investors are the largest employers in the private sector in Morocco. This is thanks to their empowerment of the local human resources.

Ito: Personally, I agree with you about the triangular cooperation. In the case that the Japanese companies are a little reluctant to invest in some countries by themselves, I think it’s very useful for them to have much more experienced partners, jointly investing. So I would personally like to expand such kind of triangular cooperation.

Arrour: As you know, financial resources are abundant in Africa. Most African countries are rich in natural resources. Most of them have the financial capabilities and the human resources. What we need from Japan is cooperation in transfer of technology and knowhow. In fact, we need to put them together, the people with the opportunities and the Japanese technology, the Japanese knowhow for the sake of the development of relations between our nations and Japan.

The Japanese government and private sector have been very effective in the transfer of technology. Not all foreign corporations are as successful as Japan in doing so. Japanese transfer of technology has been very fruitful for our countries and we should applaud it and look for more cooperation in that sense.

Biriggwa: As for the TICAD process, from the African side, we feel that now there should be a transformation toward a Japan-Africa relationship rather than Japan, the international community and Africa all involved. At the present moment, we do not have a forum where Japan and Africa meet face to face, to speak candidly. And I think to show the maturity of our relationship to Japan, it’s now time to have an exclusive forum with Japan, so we can move to another stage. Because now, our relationship can have mutually assured benefit.

Agbo: Also, please tell more of the success stories of Africa, because that’s how you can change the perceptions of Africa.

Arrour: We should promote the human to human acquaintance by promoting tourism, education, cultural exchange. Business is very important, but nothing comes from zero. Everything should begin from history. They say that seeing is believing, so the more Japanese citizens visit Africa and see with their own eyes, and see for themselves the large diversity in scenery and beauty of the continent, the better they will understand our African way of life, what we can offer and what the opportunities for business are there. Africa is open and ready for business.

Moderator: This forum has been held ahead of the fifth TICAD conference coming up in June. The conference has itself evolved from the international community supporting Africa’s development into a forum where the international community and the African countries are working together, rather than an aid donor to aid recipient kind of relationship. We are now entering a relationship where private sector investments and business partnerships rather than government aid are taking center stage.

There was an observation made that Africa’s recent, rapid economic growth is coming partly from Asia’s greater demand for resources. That may be part of the explanation. But also, there was another observation that Africa’s growth is now a part of the global growth that countries like Japan will have to rely on to sustain its own growth. So I think this is a sign that the relationship between Japan and Africa or that of Africa and the rest of the world is entering a new phase.

Mention was also made of the role that should be played by the media to change people’s perceptions of Africa and African countries. I would hope that this discussion would contribute in some way to changing that perception and contributing to people’s greater understanding of what’s happening in Africa now and what will happen in the future.

Thank you very much again for participating in this forum.

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  • Guest

    At first, I am appreciate that I can read this amazing article about TICAD 5.
    I am a master student in African Studies, and I will participate in the meeting, if possible. Well, I have some comment about it.
    I really understand that Africa need investment by Japanese private sectors as well as ODA, however, as Mr. Ito mentioned, “insecurity” in Africa is the key to eliminate Japanese private companies’ decision for the investment. Although Most of the African ambassadors told that “technology” like infrastructure would promote their security in this paper, I suppose that we should consider what happened in Africa after technology introduced. Unfortunately, states did not manage them well and ruined since people including officers would not trust their state, and then they prefer private, NGOs(esp. international) and religion institution to state and public. I hope Japanese government would try to invest building “trust” though your support (infrastructure and agriculture, if it want). I believe that trust is important for every African State in order to drive their economic development involving their people who are responsible to the state future.

  • http://www.facebook.com/emi.natake Emi Natake

    At first, I am appreciate that Japan Times provided us this amazing article. I am a master student in African Studies, I would like to have one comment.
    According to African ambassadors’ comments, they believe that industrialization drives their development… but is it true? it is an old-fashion concept. I know GDP will grow by industrialization, but the gap between statistics and reality in people does not be filled.
    Of course I agree that japanese government increases investment to African countries, however, in fact, even if the infrastructure such as school, road etc, states did not manage them well and they ruined. This is because states unfortunately have not either capacity or been trusted by people(sometime states threaten people’s security), so they prefer private, NGO, and religious institution. I strongly hope that Japanese government should support building the trust between state and people though your ODA and private trade. Otherwise, the support would be waste of money and time, and also people could not reach any benefit, poor will be the poorest.