ODA fall poses Africa policy dilemma


The international African aid conference to be held in Yokohama in late May comes at a time when Japan’s official development assistance is in decline and rival China’s “resource diplomacy” is rising, putting Foreign Ministry officials in a quandary.

To supplement the ODA fall, Masato Kitera, director general for African affairs at the Foreign Ministry, said the government hopes to use aid to prod Japanese companies to invest more in Africa.

“I think there should be more cooperation between the government and private sector (to reflect their needs) before implementing ODA programs,” Kitera told The Japan Times in a recent interview.

“Risks and costs for Japanese firms entering Africa . . . are still high. We will extend ODA funds to programs that can help Japanese companies reduce such risks and costs.”

African countries, including resource-rich Angola, Zambia and Ethiopia, are enjoying high economic growth led by rising commodity prices. Annual GDP growth rates in 23 out of 53 countries averaged more than 5 percent between 2005 and 2007, with some even posting double-digit growth.

At the fourth Tokyo International Conference on African Development, one of the main agenda items will be how to accelerate and ensure sustainable growth through infrastructure development and investment and trade.

Japan has been hosting the TICAD meeting every five years since 1993, when the international community’s interest in Africa was fading. The United Nations, the U.N. Development Program and the World Bank also participate.

“Industrialization is the main interest of African leaders. To this end, investment from companies in wealthy countries is vital,” Kitera said.

But poor infrastructure and a shaky investment climate are disincentives for Japanese companies looking to make inroads into the continent.

In 2006, Japan accounted for only 2.5 percent of the total foreign investment in Africa.

Companies making forays into the area must be able to cope with unstable electricity supplies and poor transportation infrastructure.

Firms often must provide their own power generating equipment as well as a secure environment for their employees, including against infectious diseases.

Japan’s policy has long centered on extending untied ODA loans to first build infrastructure in developing countries and then lure private investment.

Although the Liberal Democratic Party-New Komeito ruling bloc is trying to boost ODA for Africa, Kitera said this is a difficult proposition.

“We really want to map out effective measures to continue our support to Africa (at this year’s TICAD), but given the tightened ODA budget, it will not be easy,” Kitera said. To make better use of ODA, businesses are calling for a private sector-oriented approach, arguing that aid funds should be allocated to support projects initiated by Japanese companies, and thus lead to increased investment in Africa.

Tightening the ODA budget has alarmed politicians and Foreign Ministry officials at a time when other countries, especially resource-hungry China, are rapidly stepping up their “resource diplomacy” with Africa, offering funds in exchange for oil and mineral resources.

Government officials and politicians are eager to promote TICAD to draw as many African leaders as possible and to challenge China.

“More than 40 African leaders are expected to attend TICAD, reflecting their high expectations for the meeting,” Kitera said.

The figure is greater than the 35 African national leaders China drew when it hosted the aid-related Forum on China Africa Cooperation in 2006.

Although China is emerging as an aid donor, its ODA policy is not transparent, Kitera said, noting Beijing gives financial assistance to African countries that are criticized for bad governance and human rights abuses. China also doesn’t cooperate with other donor countries.

Beijing is reportedly extending massive financial aid to Africa, targeting African nations with around 44 percent of its aid budget, although there is no official data. Japan allocated about $2.52 billion in ODA funds for Africa, or 34.4 percent of its budget, but most of the money was for debt waivers.

China meanwhile has more than 1,200 peacekeepers in Africa, whereas Japan has none.

Foreign Minister Masahiko Komura said in February that Self-Defense Forces elements may be dispatched to participate in U.N. peacekeeping operations in Sudan in an apparent effort to raise Tokyo’s profile in Africa.

Kitera said he hopes SDF personnel are sent to southern Sudan, but the Defense Ministry is cautious about the idea.

Nevertheless, he said TICAD is the only aid process that emphasizes thinking from Africa’s point of view to help create sustainable growth through capacity-building.

One prominent area Japan can differentiate its aid policy from that of other donors is to help Africa combat global warming. African countries are vulnerable to climate change even though they emit the least greenhouse gases.

“Japan can transfer its advanced environmental technologies to Africa to offer access to clean energy sources, and we can also help combat (desertification).”