Japanese Prime Minister Shinzo Abe on Thursday reportedly cautioned African leaders against accumulating too much debt, in an apparent reference to Chinese infrastructure projects that some blame for damaging the finances of developing nations.
He said this as he addressed African Heads of government and state at the 2019 Tokyo International Conference on African Development in Yokohama. The Japanese Premier stressed that Tokyo was promoting “quality” infrastructure exports and investments, supported by Japan’s government-backed institutions.
“What should the government do to encourage (entrepreneurs) to exercise their skills?” Abe is quoted to have asked.
“If partner countries are deeply in debt, it interferes with everyone’s efforts to enter the market,” he said, introducing financing and insurance schemes by Japan’s government-baked institutions aimed at reducing risks to businesses and public coffers.
At the beginning of the Conference, Prime Minister Shinzo Abe pledged to aggressively promote private-sector investment in Africa in his opening speech but failed to set a new numerical target on funds to be funneled to the continent.
Facing dozens of top African leaders at the Tokyo International Conference on African Development, Abe claimed the Japanese private sector invested $20 billion in Africa over the past three years.
Japan is competing with many other countries advancing into growing African economies, in particular China, which last year pledged as much as $60 billion to extend economic assistance over the next three years.
African countries have shown a lot of interest for Chinese loans but some experts now worry that the continent is gorging on debt, and could soon choke.
Experts say that many of these loans are unlikely to be profitable for China. If these projects do not meet the conditions of the loan, China can directly control them and use them for its own interests. This tactic, known as “debt trap diplomacy”, has been used by China several times. One example is Sri Lanka. When the debt burden became unsustainable in 2017, the government was forced to give up majority control of the port of Hambantota instead of repayment. This port was handed over to Beijing for a period of 99 years.
Some say China is in Africa for the sake of China. China in contrast claims to be there for Africans.