Africa aid should factor debt sustainability, Japan says

Posted on Oct 8 2018 - 7:43pm by Editor

NIKKEI ASIAN REVIEW

7 October 2018

A China-built rail link between Ethiopia and Djibouti opened in 2016. There are concerns about how deeply indebted Djibouti is to China.   © Reuters

TOKYO — Japan will focus on high-quality infrastructure investment in its aid to Africa, the country’s foreign minister said Saturday, seeking to build its profile on the continent while distinguishing itself from China, whose massive contributions have stirred fears of debt traps.

“I would like to reiterate the importance of sound debt management in order to enable sustainable development for Africa with African ownership,” Taro Kono told counterparts from at least 50 African countries at the start of two-day ministerial meetings of the Tokyo International Conference on African Development (TICAD).

A major theme in the talks was Beijing’s lending practices, which often involve saddling borrowing countries with huge debts and then extracting concessions, including the right to use key infrastructure. In one such case, Sri Lanka ceded control of an important port to China for 99 years. Concerns have grown over ballooning debt to China in African countries such as Djibouti, which is already home to the People’s Liberation Army’s first overseas base.

China provided funding support and led construction on a now-completed rail link between Djibouti and neighboring Ethiopia in eastern Africa, and is advancing broad plans for other rail projects, including one connecting Kenya and Uganda.

“International assistance should be provided in accordance with international standards such as transparency, openness, and economic efficiency, in view of life-cycle costs as well as debt sustainability of recipient countries,” Kono said.

This weekend’s ministerial meeting, co-hosted by the Japanese government and parties including the United Nations, is aimed at preparing for the seventh TICAD summit, set to take place in August 2019 in Yokohama, near Tokyo.

Japan launched the TICAD conference in 1993, with the first summit hosted in the Japanese capital by then-Prime Minister Morihiro Hosokawa. It was seen as an effort to drum up support for Japan to become a permanent U.N. Security Council member by promoting African economic development.

But since then, China’s emergence as a major player in African aid has changed the landscape. Mindful of Beijing’s push in the continent, Japanese Prime Minister Shinzo Abe used the last TICAD summit in 2016 to pledge $30 billion in investment in African countries over three years.

Beijing has rapidly upped the ante. Since launching the Forum on China-Africa Cooperation in 2000, the Chinese government has stepped up its aid to the continent, in loans and other forms, across meetings held every three years. It pledged $10 billion to Africa in 2009, then $20 billion in 2012 and $60 billion in 2015.

At this September’s summit in Beijing, Chinese President Xi Jinping told heads of state and top officials from 53 African countries that the entirety of the previously promised $60 billion package had either been furnished or arranged. He announced another $60 billion over the next three years.

Since its aid pales next to Beijing’s sums, Japan’s government aims to set itself apart through a quality-over-quantity approach. Tokyo will focus on points like high-quality infrastructure projects and the building of health care systems, with an eye to winning broader support among African countries by supporting healthy economic development.

One Japanese official in the Ministry of Foreign Affairs opined that the country “ought to be cooperating, not competing, with China in fields like infrastructure investment in Africa.” In such a scenario, Japan could bring its knowledge on topics like infrastructure maintenance to bear. The choice of whether to compete or cooperate could impact the countries’ efforts to thaw relations.

Late last month, Japan and China held the first meeting of a committee geared toward reaching agreements on joint infrastructure efforts in other countries.

 

https://asia.nikkei.com/Politics/International-Relations/Africa-aid-should-factor-debt-sustainability-Japan-says

 

About the Author