Countries have been trying to shift toward an investment-based approach toward Africa for at least a decade.
African countries face a $100 billion annual shortfall in infrastructure financing. And while the Chinese Belt and Road Initiative outperformed the world, Chinese lending has been in decline since 2016.
Thus, the various “Africa+1” summits held in 2022 placed significant emphasis on investment and trade deals. The summit between Africa and the United States, which took place in December 2022 after an eight-year hiatus, was a result of the reframing of Africa’s importance to the United States. The Deal Room at the summit struck private sector investments and partnerships worth $15.7 billion. The UK-Africa Investment Summit emphasized the role of British businesses in enabling Africa to reap the benefits of the green industrial revolution. India, the fifth-largest investor in the continent, views the green economy as a source of new opportunities. Furthermore, in March, at the second International parliamentary Conference “Russia-Africa” in Moscow, President Putin said that Russia “has always given and would continue to give to cooperation with African countries,” with an Africa summit planned in July.
Notably, Japan also stepped up. At the Eighth Tokyo International Conference on African Development (TICAD) summit in Tunisia last summer, Japan made a $30 billion pledge, to be financed by both the public and private sectors over the next three years, surpassing its previous commitment made in 2019. The new Green Growth Initiative with Africa (GGA) was launched with a dedicated fund of $4 billion combining public and private financing, aspiring to steadily expand climate change mitigation and adaptation business through proactive investment. The initiative was accompanied by a series of memoranda of understanding (MOUs) between Japanese and African partners.
Despite Tokyo’s political commitment to Africa, trade relations with Africa have been sluggish since the beginning of the 2010s as China and India grew as economic powers. Japan’s market share fell from seventh (over 4 percent) in 2000 to seventeenth (less than 2 percent) in 2018. In 2020, Japanese Official Development Assistance (ODA) to sub-Saharan Africa accounted for only 7.8 percent of all Japanese ODA and has been on a downward trend for the past two decades. While there has been debate over increasing ODA to sub-Saharan Africa in response to the international security environment, with the larger infrastructure gap to fill today, ODA will still remain a limited tool for the growing green infrastructure financing in Africa.
The silver lining for Japan is revamped private interest toward green growth for Africa and the more flexible role of the public in incentivizing and structuring such interests.
