Japan's Sh1 trillion charm offensive to tame Chinese influence

Japan has promised to invest Sh1 trillion on infrastructure projects in Kenya and Africa in the next three years. And as the first step to the deal, President Uhuru Kenyatta and Japanese Prime Minister Shinzo Abe will today sign an investment agreement.

“We will also be initiating negotiations on a tax treaty,” Mr Shinzo said of the pact expected to be signed before he leaves. A tax treaty is an agreement that helps enhance cross border trade, by eliminating double taxation for incomes earned in either jurisdictions. Mr Abe’s pledge will specifically be directed in infrastructure, which could include developing of the second berth at Mombasa Port.

The funds to be given as development loans and grants could boost Japan’s place in Africa - which is emerging as the biggest new market for developed nations. It could also reduce the dominance of its neighbour and rival China, whose footprint on the continent is unparalleled. Abe told 35 African presidents in Nairobi to try the high quality of commodities and services offered by firms from his country. “We have a feeling in our gut that in Africa, where possibilities abound, Japan can grow vigorously,” Abe said after making the $10 billion pledge.

The funds will be spent over the next three years, some of which will be channeled through the African Development Bank. Apart from the Japanese public investment in infrastructure, the Asian giant is also planning to enhance human resource capacity to enhance productivity.

Cumulative with investments by Japanese privately owned companies, Abe expects the inflows from his country could top Sh3 trillion ($30 billion).

Africa presents the biggest opportunity for developed countries including Japan, mainly on its underdevelopment and a huge youthful population.

Fertility rates in the continent are the highest in the World, while the population is growing nearly twice as fast as the global average of 1.7 per cent.

A third of the Japanese population is above the age of 60, prompting the search for markets elsewhere – specifically in Africa. Mr Abe made a case for Japanese firms outlining how much they were committed to quality.

“Our hunch is that the time has come to mae the best of Japan’s capabilities, Japanese companies’ capabilities, for the advancement of Africa, where you seek nothing but quality on your socio-economic development,” said the PM, even pleading with the African leaders not to let a good opportunity of engaging Japanese firms slip away.

Among the projects undertaken by Japanese firms include the Nyali Bridge in Mombasa, completed more than 30 years ago but still going strong. But Japan has fallen behind other nations in Africa’s rapid growth.