Tokyo Unlikely To Expand Influence In Africa

BMI View: Japanese Prime Minister Shinzo Abe's three-country tour of Africa is a sign that Tokyo is seeking to expand its political and economic links to the continent. While Japanese firms are influential in certain sectors of the African economy - notably automotives - we doubt that Prime Minister Abe will succeed in establishing his country as a major player in the region. Japanese demand for natural gas, however, could make the world's third largest economy a key customer for East Africa's new energy exporters.

Prime Minister Shinzo Abe's quest to reinvigorate Japan's flagging economy took him on a whirlwind tour of Côte d'Ivoire, Ethiopia, and Mozambique in early January 2014, all fast-growing economies with which the conservative premier is seeking to build closer ties. The visit follows a major Japan-Africa summit held in Yokohama in June 2013, and we believe it represents a concerted effort to address worries that Japan has fallen behind Asian rival China in expanding its economic and political influence over the fast-growing continent.

Despite this attempt, however, BMI believes that Japan will remain a relatively minor player on the African scene. Japanese firms will be key players in certain sectors, but total trade will be dwarfed by the strong economic links between African states and their existing commercial partners. Tokyo's political influence in Africa will be minimal, posing no threat to established powers such as France or rising ones like China or India. The area in which Japan-Africa ties are most likely to strengthen is energy; BMI's Oil & Gas team believes that Japanese demand for liquefied natural gas (LNG) will make the country a key customer for East African energy exporters.

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This article is tagged to:
Sector: Country Risk, Oil & Gas, Autos
Geography: Africa

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