Japan’s Engagement with Africa

In modern times, Japanese and African relations can be traced back to the 1960s when Japan started its Official Development Assistance (ODA) program to Sub-Saharan Africa with the aim of promoting economic development and welfare. The oil crisis in the 1970s made Japan shift its strategy in Africa by developing stronger links with a wider range of nations but keeping a focus on oil exporter countries such as Nigeria.
With the end of the Cold War and collapse of Soviet-sponsored states in Africa, Japan’s interest in locating strategic partners in the continent only grew. Its strategy remained fairly unchanged though, as Japan continued to use foreign aid and loans as a driver of foreign policy in Africa. From 1991 to 1997, Japan had ranked top amongst the OECD Development Assistance Committee (DAC) peers and became a leading donor for several states in Africa.

Is Africa facing an Imminent Debt Crisis?

Following 2008, Africa embarked upon a borrowing spree fuelled by cheap and accessible foreign capital. Developed markets that were thought to be risk-free and attractive had the seal of safe investment shredded into pieces as a result of the financial crisis. Policy-makers sought to rectify the damage done to financial systems and economies by enacting a large set of financial reforms, both at the international and domestic level.

The restructuring of the developed economies involved, among other measures, lowering interest rates. This measure, together with an increasing awareness that investment diversification was necessary, made investors with an appetite for higher yields look elsewhere. Africa appeared to be the most promising place. With increasing infrastructure projects and large revenues from the commodities market, the continent enticed many investors looking for the next pot of gold.