Encouraging Rwandans to consume locally-produced goods as well as putting in place strategies that boost people’s purchasing power are crucial in attracting more foreign investors into the country.

According to Tatsuya Narahara, the director for Africa, Middle East and Asia at Mayekawa, a Japanese firm that manufactures construction and mining equipment, increasing local consumption is an essential ingredient that serves as an incentive to woo investors in any given country. 

He, however, said boosting local consumption requires investing in the sectors that would help increase the per capita income and purchasing power. Rwanda has for the past two years been encouraging consumption of locally-produced goods under the Made-in-Rwanda campaign. 

The initiative aims to help reduce the trade deficit and boost the local manufacturing sector, particularly the small-and-medium enterprises (SMEs). 

It also seeks to enhance quality, standards, branding and packaging of local products. The country seeks to raise the per capita income to $1,240 by 2020, up from $644.

Narahara said increasing people’s purchasing power will assure investors of a ready market. 

He pointed out that Mayekawa is targeting to increase its presence in Africa, and considers Rwanda as best option. 

“We are looking at Africa as a potential market and are ready to work with local investors to expand our presence on the continent,” Narahara said. 

He noted that the decision for many investors to commit to the continent is informed by market availability. 

According to Japanese experts, low demand and low purchase power on the continent scare away investors, noting that increase in local consumption is what largely developed Japan after the Second World War and trade embargo. 

“Therefore, what countries like Rwanda are doing in regard to encouraging local consumption is critical for economic sustainability of the continent as it will attract more investments to Africa,” Narahara said in an interview with The New Times in Osaka, Japan.

According to Yuuichi Itou, the general manager of Komatsu Limited, which produces refrigerators and air conditioners, low purchasing power partly explains the minimal foreign direct investments in Africa. 

“Therefore, by championing consumption of locally-make products, Rwanda is helping create a bigger market that will attract more investors to the country,” he said. 

Meanwhile, at the sixth Tokyo International Conference on Africa Development in Nairobi, Kenya, scheduled to open on August 27, Rwanda will be looking to market its investment potential to more than 300 Japanese firms expected to attend the summit.

The summit, which will be co-hosted by JICA and the African Union, is expected to bring together over 6,000 trade experts, investors and policy-makers from across Africa, Japan and elsewhere to deliberate on strategies to promote industrial development for sustainable growth.

Many of the investors, according to Noria Maruyama, the director general in charge of African affairs at the Japanese Ministry of Foreign Affairs, will be seeking investment opportunities in countries like Rwanda to widen their presence in Africa.

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JICA global chief tips Africa on sustainable industrial development

Africa will host the sixth Tokyo International Conference on Africa Development (TICADVI) in Nairobi, Kenya on August 27,  the first such meeting to be held in Africa. The summit will be co-hosted by JICA and the African Union, and is expected to bring together over 6,000 trade experts, investors and policy-makers from Africa, Japan and elsewhere to deliberate on strategies to promote industrial development for sustainable growth.

Prof Shinichi Kitaoka, the global president of the Japan International Cooperation Agency (JICA), discussed the opportunities the TICAD initiative offers to Africa, and what Africa can do to achieve sustainable and inclusive growth with The News Times’ Peterson Tumwebaze in Tokyo, Japan last week:

Africa will host the Tokyo International Conference on Africa Development (TICAD) for the first time. What is the contribution of the initiative toward Africa’s development?

Through the TICAD initiative, we hope to strengthen and foster trade relations with Africa as one of the efforts to support development on the continent. Remember, the world’s stability partly depends on the economic strength of this continent.

Many African countries have sustained high growth rates for a decade, weathering the global financial crisis of 2008 that wrecked havoc on many economies, including the US and Europe. Yet, despite this performance, Africa still faces various economic challenges affecting its growth potential.

The continent, therefore, needs to accelerate the pace of poverty reduction, narrow income gaps, create more jobs, especially for the youth, as well as build infrastructure, and promote intra-regional trade. Reliance on commodity price booms for growth has also emerged as one of the main challenges facing many African countries. Therefore, to address these development challenges, the continent should promote strategies that ensure transformation and build economic resilience.

Therefore, the sixth Tokyo International Conference on Africa Development (TICADVI) in Nairobi, Kenya next month will be seeking ways, including pursuit of industrial development that will help transform and strengthen the resilience of African economies. We are encouraged by the international community’s recognition of the pivotal role industrial development and trade can play in Africa’s development agenda, especially under the Sustainable Development Goals (SDGs) framework.

These targets will enable the continent to achieve inclusive and sustainable industrialisation by 2030 as envisaged under Goal 9 (Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation).

How can Africa achieve these industrialisation targets?

First of all, there is need to increase efforts geared at poverty reduction and narrowing income inequality, particularly by increasing labour productivity. This, however, calls for reallocation of labour and capital from subsistence agriculture and informal service sectors to more productive sectors, like manufacturing.

The second aspect is to create more jobs, especially for the youth. Africa needs to meet growing demand for youth employment. In fact, the IMF estimates that 18 million new jobs need to be created every year in Africa between 2010 and 2035. There are few sectors, besides labour intensive manufacturing, that are capable of absorbing such large numbers of workers.

Thirdly, the continent needs to mitigate the impact of external economic shocks, such as sharp declines in commodity prices, like oil and metals.

The mining sector has been the main driver of Africa’s economic growth over the last decade, but falling commodity prices over the past year have affected growth. Such challenges can be addressed by emphasising economic diversification, as well as promotion of value addition in agriculture, and manufacturing sectors. Therefore, industrialisation will play a big role in helping African countries address these challenges. African policymakers and development partners can pick a leaf from the Asian Tigers’ journey to become industrial powers. Otherwise, TICADVI will be held on African soil is a clear indication of our commitment to fostering development in Africa. Toward TICADVI and beyond, JICA and partners will remain dedicated to working with Africa to turn the continent’s long-term development vision into reality.

TICAD was launched, what  is your assessment of the initiative’s performance so far?

Japan launched TICAD in 1993 to promote political dialogue between Africa and development partners through mobilisation of resources for the continent’s development initiatives. Japan was the first country to start dialogue with African countries after the cold war to strengthen  economic and bilateral relationships. It was not until we launched TICAD that America and the European countries started similar dialogue with Africa.

At the 5th Tokyo International Conference on African Development in Yokohama in 2013, the Japanese government committed to supporting Africa through stronger public-private partnerships.

Prime Minister Shinzo Abe also announced the African Business Education Initiative for the Youth, a five-year strategic plan to give 1,000 African youths opportunities to study at Japanese universities, and do internships at Japanese enterprises to foster sustainable industrial development on the continent.

The TICADV targeted increasing private sector investments and private capital flow to Africa which has also encouraged more investors to invest in Africa. We hope to continue supporting Africa on its development and industrialisation journey.