Japan raised its investment to Africa in 2014 with a pledge of $32 billion that included aid, loans and commercial projects over the following three years. From 2008 to 2012, the well-off East Asian country had put out just $9 billion for Africa, geopolitical intelligence service Stratfor Enterprises says. Two years ago Japanese Prime Minister Shinzo Abe said in Kenya that another $10 billion would be go toward an African infrastructure plan for advances in farming, energy, roads and ports. That amount was just one-third of a bigger amount that Japan and its companies will spend in Africa through 2019, this new report says.

We're talking about Japan, not China. The continent that’s rich in natural resources yet undeveloped compared to much of Asia, has traditionally looked to China for foreign investment over the past decade. China leads Japan, by most accounts, with figures varying from $32 billion in foreign direct investment from 2010 through 2014 to $66.4 billion spent on projects hatched since 2005. This report from a year ago notes a $60 billion commitment from China for capital projects in Africa.

Japan playing catch-up

The upswing in investments shows Japan is trying to catch up to China, according to analysts. Both countries are eyeing Africa’s natural resources and overseas opportunities for domestic companies. Both are chasing political alliances in increasingly far-off places to build positions that are good for trade as well as geopolitical influence, though China is unhappy with Japan’s ambitions for Africa.

“Japan is lagged behind China for sure,” says Yun Sun, East Asia Program senior associate at the Stimson Center think tank in the United States. “But Japan enjoys advantages in terms of the quality of its projects. China's strength lies in the government-led model and the scale of it.”

How China got so far

China leads at least for now because of its large, numerous, state-supported projects. The Chinese government or its state-owned firms come up with much of the investment. State support also lets China blur investment and official development aid. China's development aid to Africa totaled 47% of all Chinese foreign assistance in 2009 alone. From 2000 to 2012 it funded 1,666 official aid projects in Africa, the Brookings Institution says.

Taking investments alone, Chinese entrepreneurs have set up 293 projects since 2005 and created 130,750 jobs for Africans, according to the news website Africanews.com.

“Chinese ‘dragons,’ firms of all sizes and sectors, are bringing capital investment, management know-how and entrepreneurial energy to every corner of the continent,” McKinsey & Co. says in a mid-2017 report. “In doing so they are helping to accelerate the progress of Africa’s economies.”

China’s authoritarian rule, rather than a system of slow checks and balances, lets it mobilize projects relatively fast compared to Japan. That process, plus China's relatively early entry, put it ahead of Japan today, analysts believe.

“Since Beijing makes the decision as for where to invest and provide the financing for it, it is more effective compared to the process in market-economy and democratic countries,” Sun says. 'The scale of Chinese financing is also very large, making China a rare, capable, and willing financier of Africa infrastructure projects with merits or problems.”

China also attaches fewer "strings" to the investment projects, she says.

One signature Chinese project is the 756-kilometer (469-mile) electrified railway from Ethiopia to Djibouti. China Nonferrous Metal Mining (Group) Co. has three mining projects in Zambia alone, the Moroccan think tank OCP Policy Center says. China is a big miner in Africa -- and Chinese-funded infrastructure makes those projects more efficient.

What Japan is doing to accelerate investment

Japanese work in Africa started in 2004 with health, education and social development for the largely poor continent, according to this government website from Tokyo. That effort called for granting 90 billion yen ($858 million) over the next five years for some 15 million people.

Then over the years Japanese realized that Chinese leaders had made “strategic gains” in Africa by fostering “resource centers, political allies” and “centers for economic growth,” says Stephen Nagy, senior associate professor of politics and international studies at International Christian University in Tokyo.

That realization fueled the rush to increase investments since 2014. Investments from Japan now fund infrastructure such as a $270 million expansion of Mombasa Port in Kenya and power projects that would send electricity into three million African homes by 2022. Japan’s investments perform better and come with higher “social standards” than Chinese equivalents, Sun says.

Look for more increases in Japanese investment to Africa. For example, in 2016, Prime Minister Abe and his Indian counterpart Narendra Modi announced an Asian-African Growth Corridor to develop infrastructure, farming and people’s work skills over a swathe of countries.

To vie with China in Africa or anywhere else, Abe hopes recipient countries will see Japanese investments as higher quality than Chinese projects that are built with "perceived flaws," this commentary on the Foreign Policy website says. Japan is heavily investing as well in Southeast Asia, where it also vies with China for economic and political influence. Its outreach there usually starts with official development aid and then expands into investment.

“Japan has come to the investment game late compared to the Chinese but now have moved away from a sole focus on human capacity building to infrastructure and investment,” Nagy says of Japan's African ambitions. (Reporting by Ralph Jennings)

https://www.forbes.com/sites/ralphjennings/2018/03/25/japan-slowly-challenges-chinas-dominance-as-an-investor-in-africa/#6d06d27a3435