'Africa risky but too crucial to leave'
2013-01-24 12:27
Tokyo - Japan's resource-hungry companies in Algeria and
beyond cannot contemplate withdrawing from Africa, despite the national trauma
engendered by the Sahara hostage siege that claimed at least nine Japanese
lives, experts say.
Africa's abundance of commodities and burgeoning markets - which
have also drawn Chinese firms in droves - mean Japanese companies can do little
more than tighten security amid a collective shudder over the bloodbath at In
Amenas.
More than a dozen Japanese companies have operations in
Algeria, including engineering firms such as JGC, whose employees perished in
the standoff, and trading houses, according to the government-backed trade
promotion body Japan External Trade Organisation (JETRO).
"The incident reconfirmed the risk of doing business in
Africa, but unfortunately for resource-poor Japan, resource-rich countries are
often politically and socially unstable," said Shintaro Matoba, director
of the JETRO's Middle East and Africa division.
"Japanese companies have to face the reality that there
are certain risks to doing business there," he said.
Japan has been badly shaken by the grim body count from the
siege - the highest so far confirmed for any one country and Japan's worst
terror toll since 24 Japanese died in the World Trade Centre attacks in
September 2001.
Aid and development projects
On Wednesday, Japan shuttered its embassy in Mali and
ordered the evacuation of staff because of the deteriorating security situation
in Algeria's neighbour, where French forces are helping to crush an Islamist
uprising.
Japan has a homogenous and often risk-averse population with
relatively few immigrants, which has yielded little exposure to - and even uneasiness
with - unfamiliar cultures.
However, a cramped archipelago with few mineral or energy
reserves of its own has pushed Japanese companies to venture abroad, and
Africa's well-endowed mines are rich pickings.
About 85% of the platinum Japan uses - mainly in the auto
industry - and 67% of manganese, a key component of batteries, are imported
from Africa, according to JETRO.
Tokyo's trade with Africa was a relatively small 1.8% of its
total $1.67 trillion in 2011, with direct investment accounting for $18 billion
of the nearly $1 trillion Japanese companies spent abroad.
But the government has done its part to support business,
pushing aid and development projects on the continent.
At the start of this decade Japan was the fifth biggest
donor to Africa among developed economies, according to the latest available
figures from the Paris-based Organisation for Economic Cooperation and
Development.
Since 1993 Japan has held a five-yearly meeting with African
leaders, known as the Tokyo International Conference on African Development
(TICAD). At its 2008 incarnation, Tokyo pledged to double aid to the continent
to $1.8bn by 2012.
Observers noted the drive comes as China's super-charged economy
searches out resources abroad, increasingly in competition with Japanese firms,
and lavishes aid on Africa in exchange for access to its raw materials.
Joint infrastructure venture
Before the crisis in Algeria, a JETRO survey found nearly
90% of Japanese companies operating in Africa were worried about political and
social instability.
But two-thirds of the firms said the importance of doing
business there will increase in the future. More than half said the continent
had become more important over the past five years.
"Even after the incident, many company officials I
talked with said withdrawing from Africa or even scaling back their operations
there was simply not an option," Matoba said.
Major Japanese construction firm Kajima, which is taking the
lead in a joint infrastructure venture in northern Algeria, said its
road-building project would continue and the 47 Japanese nationals working on
it would remain.
"We've taken safety measures based on the warnings that
the foreign ministry issues, and the warning level of northern Algeria and
southern Algeria where In Amenas is located are different," said a Kajima spokesperson.
"After the incident, we have ordered officials not to
go out unless absolutely necessary and have banned them from going out at
night," he said.
"But our business policy remains unchanged - we will
accept orders if they require our cutting-edge technology."
