ADDIS ABABA – The government of Japan and the African Development Bank (AfDB) have announced a $5 billion financial cooperation to provide support for the private sector in Africa.
The announcement was made at the Eighth Tokyo International Conference on African Development (TICAD8) held Sunday in the Tunisian capital, Tunis.
The funds – which finance their Enhanced Private Sector Assistance for Africa 5 (EPSA-5) initiative – consist of $4 billion under the existing window and an additional up to $1 billion that will be provided under a new Special Window.
Japan is expected to establish the Special Window to support “countries that are making progress in the enhancement of debt transparency and sustainability, and other reforms”, according to the AfDB.
The bank also said agriculture and nutrition will be added as a priority area of the EPSA-5 during its three-year lifespan, starting from 2023.
This will increase the priority areas that the initiative tries to address in Africa to four, including electricity, connectivity, and health.
“Under the severe situation caused by multiple crises, enhancing resilience and promoting human security are critical components of Japan’s support for Africa,” said Dr. Akihiko Tanaka, President of Japan International Cooperation Agency (JICA).
The EPSA 5 was launched at the first TICAD conference since the COVID-19 pandemic began
Under the initiative, the AfDB said Japan and the Bank will join forces to support countries that address enormous challenges, including food security, climate change, health, digitalization, and debt issues.
“Escalating climate change impacts, the Covid-19 pandemic, and the war in Ukraine mean that we must do even more than we already have done, to mobilize the private sector and create job opportunities in Africa,” said Dr. Akinwumi Adesina, the AfDB Group President.
“The newly signed initiative will positively impact millions of lives across Africa,” Adesina said.
The $5 billion is a part of a $30 billion fund that the government of Japan pledged at TICAD 8 to invest both public and private funds over the next three years in Africa.
This, Tokyo expects, will help Japan catch up with some western nations and China whose businesses have been actively investing in the continent in the recent past.
At the same time, Japan’s foreign direct investment (FDI) in Africa fell from $12bn at the end of 2013 to $5.8bn last year. That was even as FDI flows to Africa reached a record $83bn in 2021, as per AfDB.
