China is not the only Asian country that shows interests in African capital markets. The Japanese too have started to show interest in African capital markets, especially in certain technical sectors such as healthcare, mining, and manufacturing. Indeed, there is growing interest in Japan by the government, parliamentarians, large corporations, and startups to invest more in Africa. A delegation from the African Development Bank Group led by President Akinwumi Adesina visited Japan to showcase the enormous investment opportunities there are on the continent, the Prime Minister of Japan, Fumio Kishida was leading his country’s charge with a tour of four countries.
Delivering a lecture at the Japan-Africa Investment Ecosystem Co-Creation Forum in Tokyo, Dr. Adesina said Africa offers enormous investment opportunities and gave examples of Japanese companies that have been running profitable businesses on the continent for many years. To be precise, there is a total of 563 Japanese companies doing Business in Africa. As a matter of fact, South Africa is the country with more than 100 Japanese companies. Nigeria, Kenya, Morocco, and Egypt, all have more than 30 Japanese companies each. However, Japan’s foreign direct investment in Africa declined from $10 billion in 2016 to $4.7 billion in 2020 during COVID-19 but recovered to $6 billion in 2021. Africa accounts for 0.003% of Japan’s $2 trillion global foreign direct investments.
The healthcare sector is one economic sector that has been very attractive to Japanese businesses. Thus, this interest in healthcare has been projected on African healthcare systems as well. There is particularly one Japanese investment firm that showed a keen interest in the African healthcare market, and sees a ton of opportunities to not only improve the whole market but to revolutionize it all together. This investment firm is Asia Africa Investment & Consulting, short for AAIC.
Susumu Tsubaki, CEO of AAIC Investment, expects that a trend directionally similar to Japan’s experience with the expansion of health insurance will occur in many African countries where insurance coverage is currently low but increasing. AAIC currently manages two investment funds that back healthcare-related startups in Africa. In 2020, AAIC co-led a $10 million fundraising round for Helium Health, a Nigeria-based company that began in 2016 by offering a digital system for hospitals to replace paper-based patient records. Since then the company has expanded to other African countries and added a range of services, including telemedicine platforms for remote consultations, a medical billing and practice management system, and a patient portal for accessing medical records and communicating with healthcare providers online.
Japan’s investment interests aren’t only limited to healthcare. The manufacturing sector is also a sector that seems very promising since many African countries have now begun processing their own commodities. The continent holds the key for the world as it transitions towards electric vehicles with its abundant deposits of minerals and metals such as platinum, lithium, cobalt, copper, and graphite. Since the manufacturing of lithium-ion batteries is the most competitive in Africa, Japanese investors are considering making substantive investments in this sector to secure these markets and potentially control the trade flow within these markets. For African countries, these investments could help them increase their bargaining power in the global market.
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