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Envoy to investors: Look outside conflict box, think fast

by Ayako Mie

Staff Writer

The government should encourage Japan’s private sector to invest more money and at a faster pace in Africa despite the security concerns that have plagued the continent, Ethiopian Ambassador Markos Tekle Rike said ahead of the fifth Tokyo International Conference on African Development, which kicks off Saturday.

Rike said sporadic conflicts in Africa do not mean the entire continent is unsafe to invest in.

“It’s not feasible to put the vast Africa in one box, as what’s happening in Mali isn’t happening in Ethiopia,” Rike told The Japan Times during a recent interview, referring to the Islamic militia insurgency in the northern part of the continent. “You can’t say you cannot go to Japan because North Korea has problems,” said Rike, whose home country chairs the African Union this year.

While the global community is focused on Africa’s economic potential, political instability is one of the biggest concerns for foreign investors, especially after the January hostage crisis at the Ain Amenas natural gas processing plant in Algeria that left 37 hostages, including 10 Japanese nationals, dead.

At the TICAD V ministerial preparatory meeting in Addis Ababa in March, Foreign Minister Fumio Kishida pledged $550 million for the fight against terrorism in Africa. Kishida also promised Japan will invest in the continent’s infrastructure, which is crucial to its sustainable growth.

Rike said that African nations recognize instability casts a grave threat to regional growth and that they are committed to root out the problem in unison.

He emphasized the urgent need for more private-sector investment and loans instead of official development assistance from Tokyo.

The ambassador said direct loans and investment from the private sector will allow recipient countries to use the funds at their disposal more effectively, compared with funds provided through ODA.

In fact, more flexible investment in both the public and private sectors has been increasing. The Japan Bank of International Cooperation pledged at TICAD IV a $2.5 billion investment package for the region in order to promote more private investment in Africa. The commitment has since increased to $3.3 billion, and Japan reportedly plans to give more.

Even though Ethiopia is one of 39 highly indebted countries, suffering from poverty and high debt levels and eligible for special assistance from the International Monetary Fund and the World Bank, Rike said countries like his are ready to receive loans because they need to make the social and economic transformations similar to what Japanese investment has brought to other parts of Asia over the last few decades.

Rike noted that Africa, which has the potential to be a labor-intensive market, needs more jobs and thus urged Tokyo to incentivize Japan’s private sector via more loans so businesses can expand on the continent.

He said Ethiopia has already embraced the “kaizen” philosophy developed in Japan that encourages continuous improvement in manufacturing, engineering and business management.

Rike said the introduction of the practice has improved the productivity and attitude of workers, contributing to Ethiopia’s gross domestic product, which has doubled since 2004.

“Africa is ready to customize and modify ourselves to seek more investment,” said Rike.

Africa is regarded as an attractive market for Japan, especially amid Japan’s desperate quest for nonnuclear energy sources amid the Fukushima No. 1 atomic crisis, which, coupled with the falling yen, have led to a surge in the costs of imported raw materials for generating electricity.

Rike said Japan needs to speed up its decision-making to compete with other countries flocking to tap the riches of Africa, particularly China.

While Japanese companies sit on the fence, taking five to six years to complete feasibility studies regarding entering Africa’s markets, the situation will have changed by the time they are ready to commit, Rike said, adding the continent has many young, skilled workers, and they are impatient and ready to lean toward the first comers.