Magazine article African Business

Japan and Zimbabwe Rekindle Their Relationship: After Years of Strained and Effectively Stalled Relations between the Two Countries, Economic Cooperation Is Ramping Up

Magazine article African Business

Japan and Zimbabwe Rekindle Their Relationship: After Years of Strained and Effectively Stalled Relations between the Two Countries, Economic Cooperation Is Ramping Up

Article excerpt

In its hunt for natural resources, new markets and better relations, Japan's interest in Africa continues to shift from a traditional humanitarian aid approach to one including investment, potentially signifying a more proactive engagement between Japan and African states that, under the right conditions, could be mutually beneficial.

This month, the Tokyo International Conference on African Development (TICAD) will be hosted on the continent for the first time, in Kenya, and it seeks to move beyond the traditional aid policy objective (our special report on TICAD starts on page 65).

With the assistance of the UN, World Bank and African Union, TICAD has been held every five years between African and Japanese heads of state to steer development cooperation approaches, but since TICAD V in 2013, Prime minister Shinzo Abe has announced Japan would add another dimension to its relations with Africa. At TICAD V, $16bn was earmarked for private development. This year promises more engagement, with a platform for at least 100 potential Japanese investors to consider ventures in African industry, agriculture and infrastructure development.

South Africa traditionally ranks as Japan's biggest trading partner in the region, but in recent years, Japan's investments in Mozambique's gas industry, Ethiopia's tobacco markets and even Zimbabwe's automobile industry have been signs of a significant shift in Tokyo's tone.

After more than a decade of strained relations, in March, Abe welcomed Zimbabwean President Robert Mugabe's state visit to Japan with a $5,301 grant to support road construction. Due to allegations of human rights abuses of the political opposition, as well as the state-sanctioned violent seizures of white-owned commercial farms, in 2002 the European Union imposed targeted sanctions on Zimbabwe and the US followed suit in 2003. While Japan did not implement any measures, relations with the Mugabe government cooled and bilateral support was largely restricted to relief assistance.

Upward trend

With the improvement of the political situation and the easing of EU sanctions in 2012, Japan's engagement with Zimbabwe has been on an upward trend, particularly this year as the two countries have negotiated a number of potentially significant trade agreements. A special economic zones bill offering competitive concessions to foreign investors in industry and finance recently passed its second reading in Zimbabwe's parliament.

The measure authorises pilot projects in three cities to be funded by Japan and offers foreign investors an exemption from indigenisation, a controversial empowerment law that mandates 51% black ownership in all foreign companies worth over $500,000.

Raised as a strong concern by business people during President Mugabe's March visit, the Japan International Cooperation Agency in Zimbabwe confirmed to African Business that an exemption was made and this is one of the projects Zimbabwe could market at TICAD VI.

On the back of President Mugabe's March visit, a Zimbabwean trade delegation visiting Japan in June clinched a major automobile trade deal to ship 10,000 new and second-hand tractors to Harare. As part of a skills transfer agreement, 40 Zimbabweans would be trained by Tokyo on how to make and recondition vehicles and tractors.

Japan's billion dollar global used-car industry has found a market ready and waiting in Africa, particularly in Kenya, Tanzania and Zimbabwe, where the low-priced Japanese cars are popular despite government attempts to ban sales. …

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