Japan PM warns Africa about debt as China grows presence

Japan's Prime Minister Shinzo Abe has cautioned African countries about taking on too much debt (AFP Photo/TOSHIFUMI KITAMURA)

Japan's prime minister on Thursday warned African leaders against accumulating too much debt, in an apparent reference to Chinese infrastructure projects some blame for damaging the finances of developing nations.

Addressing leaders from several African nations at a development conference in Yokohama, Shinzo Abe stressed Tokyo was promoting "quality" infrastructure exports and investments, supported by Japan's government-backed institutions.

"What should the government do to encourage (entrepreneurs) to exercise their skills?" Abe asked the Tokyo International Conference on African Development (TICAD).

"If partner countries are deeply in debt, it interferes with everyone's efforts to enter the market," he said, introducing financing and insurance schemes by Japan's government-backed institutions aimed at reducing risks to businesses and public coffers.

Japan plans to train experts in 30 African countries in the next three years on managing risks and public debts, he said.

Abe aims to boost Japan's presence in the African market, but businesses are wary of financial and other risks.

However China, with its ambitious Belt and Road Initiative, has a massive presence, having announced $60 billion in African development funding last year.

Beijing has faced criticism for favouring Chinese companies and workers over local economies, saddling nations with debts, and ignoring rights and environmental issues.

Japan stresses its loans and projects come with fewer strings attached, and with sound financial advice and support.

Shoji Takamatsu, a veteran consultant on African investments, said it was difficult for Japan to compete with China's economic might and zeal for building its presence in Africa.

"Japan has (Africa) policies, but the size and the scope of China's national efforts to promote investments in Africa are enormous and difficult to match," he told AFP.

"Some potential (Japanese) investors come to us with proposals that are too costly for local users. Then a typical response we hear is 'Well, we offer high quality.' This only creates difficulty," Takamatsu said.

But Japanese firms do enjoy greater consumer confidence in fields like food and healthcare, he added.

Takamatsu said markets around the world were becoming saturated, and Africa was a market "with potential".

Since 1993, Japan has partnered with African countries to hold the TICAD conference around every five years to promote aid and business opportunities.

Japan, with its own government funding problems, has struggled to increase its foreign aid money.

It has also shifted its focus on encouraging the private sector to invest in Africa.