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Policy Proposals  Middle East and Affrica Contributing to Sustainable Growth in Sub-Saharan Africa The Business Community's Africa Strategy towards TICAD V

January 22, 2013


I. Introduction

  1. 1. Sub-Saharan Africa (hereinafter "Africa") is regarded as a promising potential consumer market as well as a source of supply for commodities such as oil, natural gas, and mineral resources. Japan's assistance for Africa must be directed at specific strategically important countries, and applied individually in accordance with each country's characteristics and stage of development. Those countries encompass Southern Africa, East Africa, and West Africa, in which Japanese companies have already launched operations or are interested in doing business.

  2. 2. Achieving the sustained and stable growth of Africa requires wider development of infrastructure in a manner enhancing connectivity between landlocked countries and coastal countries. This will establish basic foundations for resource and energy development, attracting foreign direct investment and industrial development. Expanding trade and improving business environment would be important as well.

  3. 3. It is also essential to implement measures to eradicate poverty and raise living standards, by means of providing agricultural development assistance, developing human resources, addressing environmental problems, and increasing the level of healthcare.

II. Infrastructure Development to Accelerate Growth

1. Infrastructure development by public-private partnership

  1. (1) A master plan should be drawn to enhance connectivity for the regions in which Japanese companies establish operations, in anticipation of promoting regional economic integration. From the perspective of ensuring steady implementation of the master plan, a framework for follow-up policy dialogue between Japanese government and private-sector representatives and host countries should be established.

  2. (2) Fundamental infrastructure development will require enormous amounts of funds. In consequence, the strategy entails laying down a budget frame for TICAD V and broadening the scale of yen loans and grant aid. Supporting private-sector by providing JICA overseas investment and lending in a flexible manner, easing terms and conditions for JBIC loans, and expanding investment insurance would also be required.

    Borrowers' risk through the introduction of foreign- and local-currency-denominated loans, while project management and maintenance should be eligible for yen loans to actively promote the Special Terms for Economic Partnership (STEP).

  3. (3) The functions of infrastructure project specialists stationed at Japanese embassies in African countries should be strengthened, for example, by making use of experts from the private sector. Also, sales activity by Japanese Ambassadors should be enhanced.

2. Improvement of legal systems in host countries

There is a pressing need for appropriate design and operation of legal systems in host countries related to bidding systems, including introduction of evaluation focusing on technology and life-cycle costs, laws related to contracts for purchasing electric power, and steady implementation of land expropriation.

The Japanese government should step up cooperation by assisting with the development of countries' legal systems in above fields.

III. Facilitation of Trade and Investment

1. Promotion of liberalization of trade in goods, services and investment

  1. (1) Early conclusion of bilateral investment treaties (BIT) with Mozambique and Angola must be pursued. Efforts should also be made with a view to concluding economic partnership agreements (EPAs) with regional economic communities in Africa, such as the Southern African Development Community (SADC) and the East African Community (EAC) etc.

  2. (2) Proper application and operation of customs and tariff systems helps facilitate trade. This should be explained through EPA negotiations and other channels and improvements be encouraged.

  3. (3) Steps should be taken to foster the elimination of non-tariff barriers such as delays in customs procedures and lack of transparency in the application of laws and regulations.

  4. (4) With regard to the fields of investment and services, efforts must be made to conclude bilateral investment treaties for the purpose of eliminating barriers such as restrictions on foreign capital, excessive local-content requirements, technology-transfer and other performance requirements, and controls on remittances of royalties.

2. Improvement of business environment

  1. (1) Forums must be established to conduct bilateral public-private policy dialogue concerning improving the business environment, and to resolve problems caused by the opacity of domestic laws, excessive domestic regulation, and deficiencies in institutions concerned with intellectual property rights and the tax system.

  2. (2) Bilateral tax treaties should be concluded with major African countries for the purpose of preventing double taxation.

  3. (3) Support should be given for the development of industrial parks equipped with infrastructure essential for business and preferential measures.

IV. Contributions to Agricultural Development

1. Development of the agricultural base

The Pro-Savannah: Japan-Brazil-Mozambique Joint Project, a replication of Japan-Brazil cooperation in development of the Brazilian Cerrado, should be used as a model for agricultural development in other African regions.

2. Development of irrigation infrastructure

Grant aid should be used to increase the size of land areas under irrigation and to enhance capabilities in the field of water-resource management.

3. Improvement of market access

In order to sustain stable production of agricultural produce, measures should be devised and implemented to ensure its reliable supply to markets. It is essential to promote comprehensive policies covering entire value chains, including the improvement of post-harvest techniques (upgrading of processing techniques, reduction of distribution losses, strengthening of marketing promotion). The ODA budget for technical cooperation should fund the use of experts from Japanese private-sector to enhance these techniques.

V. Building Foundations for Sustainable Growth

1. Human resource development

It is essential to nurture and train industry personnel to equip them with availability to work in each locality, thereby increasing employment. Through collaboration between JICA and the Overseas Human Resources and Industry Development Association (HIDA), a program to accept corporate trainees that is attuned to Japanese company and local needs would be expanded and operated flexibly.

Japanese administrative officials and company personnel should be dispatched as policy advisers to the African countries, where they will deploy their expertise in the fields of industrial and fiscal policy, based on Japan's own experience.

2. Addressing environmental and energy issues

Support should be given to independent power producer (IPP) projects for renewable energy that are underway in African countries. For example, since the unstable generating efficiency of solar and wind power has placed a major burden on power lines, yen loans could be used to introduce smart grids to address this issue.

3. Cooperation in the field of healthcare

Support should be given for the establishment of public medical insurance systems to widen access to healthcare services. Under ODA technical cooperation schemes, hubs for cooperation in the field of healthcare should be built in major African countries, where advice should be given for the training of doctors and nursing staff in the areas of hygiene and nutrition.

4. Strengthening measures for public safety

In order for African countries to maintain and expand trade and investment relations, it is important for them to improve public safety and to assure the security of sea lanes that link them with other countries. With regard to the urgent problem of piracy, Japan should collaborate with the countries affected and step up its cooperation with measures to preserve maritime security along the African coast.

Regional Affairs