With the Tokyo International Conference on African Development (TICAD) being held in Africa for the first time, the African nations are hoping that Japanese private-sector investment will expand. However, it will not be easy to compete with China to expand Japan’s share. It is necessary for Japan to proceed strategically in responding to the needs of the African countries, which are showing signs of economic slowdown.

After the last TICAD held in Yokohama in 2013, Japan has indeed shifted from aid to investment. However, the African nations have great expectations for investment from the third largest economy in the world to “increase manifold,” says a senior Kenyan diplomat.

Africa’s population is projected to increase to over 2.5 billion in 50 years, so it is expected to become the biggest consumer market in the world. While the U.S., European countries, and India have also been expanding business operations there, China’s presence stands out. A Kenyan government official notes that “China’s presence prompted Japan” to hold the first TICAD in Africa in its 23-year history.

Japanese companies face formidable obstacles in expanding their market share. Many African countries have backward infrastructure and they do not necessarily require high technology. They tend to be attracted by China’s generous financial aid.

However, the high quality of roads built by Japan has also been lauded by Ethiopia, a country that has achieved economic growth.

Prime Minister Shinzo Abe will highlight Japan’s “provision of high quality infrastructure” at the upcoming TICAD, but the African countries are counting on the new development bank set up by China and four other newly emerging countries (BRICS) or the Asian Infrastructure Investment Bank (AIIB) for funding. It is reckoned that there will be competition in terms of loan conditions and other factors. (Slightly abridged)