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17 January 2019, Gateway House

India, Japan and the Asia Africa Growth Corridor

India and Japan, two countries wanting to enhance the quality of their engagement in Africa’s development, have historically taken fundamentally different approaches to the task. But now, both are being guided by geoeconomic imperatives in aligning their strategy in the region— and the Asia Africa Growth Corridor offers many opportunities for synergy at the B2B level

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India and Japan often coordinate their geoeconomic strategies in the Indo-Pacific region. Now they are trying to do the same in Africa, but to succeed they will have to address substantial differences in their traditional economic relationship with the countries of that continent.

For India, the India-Japan dialogue on Africa began in 2010 and ran for a period of three years before a hiatus ensued. It picked up momentum again, following the India Africa Forum Summit (IAFS) III in 2015. The announcement of the concept of an Asia Africa Growth Corridor (AAGC) in 2016, when India hosted a meeting of the board of governors of the Africa Development Bank, has further enhanced relations.

Japan had already been engaging with Africa through its five-yearly Tokyo International Conference on African Development (TICAD), launched in 1993 to promote Africa’s development.

The announcement of the AAGC Vision Statement was a new step forward for both India and Japan in Africa, a clear effort to align the priorities of all three nations.[1] It came also as a challenge to increasing Chinese economic activity in Africa, akin to efforts closer home in Asia. The October 2018 Modi-Abe Summit in Tokyo made clear that the two countries now have a similar outlook on projects, with a greater focus on India’s neighbourhood, viz. Myanmar, Sri Lanka and Bangladesh.[2]

This signals a political approach by India. Not having countenanced third party interest in her neighbourhood earlier, India is seeking that the Japanese partnership play a greater role in fulfilling the increasing demand for economic cooperation in many countries, including India’s own North East.

The African initiative does not yet show signs of this approach in practice; the statement of 2018 only discusses the merits of a business platform where Indian and Japanese companies can create a clearing house of interest. The concept is proving more difficult to achieve in the African context.

What form will the Asia Africa Growth Corridor take?

The Vision Document itself is holistic, and doesn’t identify specific avenues for trilateral cooperation that best employ India’s and Japan’s respective strengths in addressing the development priorities of African countries. The reason for this is clear: India and Japan historically have taken fundamentally different approaches to Africa – differences that can’t be resolved any time soon. For example, Japan’s lending programme is focused on eight or ten countries in Africa, most of which are in the high-investment category.[3] India’s expanding programme of Lines of Credit (LOC) has a much larger ambit, covering more than 40 countries in Africa, most of which are Heavily Indebted Poor Countries (HIPCs) and Least Developed Countries (LDCs).[4]

The countries to which India and Japan are both able to lend are few. Japan, through TICAD,[5] has focused on contributing to regional and international institutions for Africa, with fewer bilateral arrangements. For India, on the other hand, the bilateral engagements are stronger.

The Indian business footprint in Africa is deeper and more diverse than the larger brand visibility of Japanese entrepreneurship. Rarely have Indian and Japanese companies worked together in Africa. Their manner of doing business varies.

The differences between India and Japan extend to the AAGC too. Indian companies see the AAGC as a source of alternative funding to secure large projects in Africa as they did under the Indian LOC projects.[6] The Japanese companies are more focused on expanding trade and capacity building than investment for large projects on a trilateral basis.[7]

The short-term solutions perhaps lie in a B2B approach. While the B2B approach will be easier to achieve than a B2G approach, it will require far greater coordination than India and Japan have achieved in other arenas. The B2G needs government-led planning, funding and matching of procurement processes. The B2B approach can be led more by FDI, the private sector and focus on smaller projects without direct government funding.

In the medium term, the main focus of AAGC will have to be on infrastructure projects. Such projects need coordination between Indian and Japanese lending agencies and also African countries and their development priorities. The approach adopted by the IAFS and TICAD is more pan-African, with the African response too focusing on priorities, such as Agenda 2063, [8] the Programme for Infrastructure Development in Africa (PIDA) [9] and the Comprehensive Africa Agriculture Development Programme CAAP),[10] among others.

Pan-African and regional projects are more difficult to manage while a trilateral partnership in the infrastructure space can include the possibility of collaboration by Indian and Japanese agencies with an African government agency on a common project. Its design, implementation and operation can create a new matrix of engagement. Projects with a regional hinterland will serve a greater purpose.

Japanese agencies, their offices in India and Africa and Indian companies must work in tandem. An arrangement between the Japan International Cooperation Agency (JICA) and EXIM Bank to exchange information on tenders [11] issued is a good initial step.

Meanwhile, the two countries can attempt a greater B2B connect in areas like manufacturing, services and operations of infrastructure projects. Japanese companies in India look at Africa as an expanded market for what they produce in India. [12] Their focus is on automobiles, auto parts, parts for power plants, air conditioners and the like. Several Japanese companies have restructured their Indian operations and brought engagement with Africa, particularly East and Southern Africa, to their Indian offices: their European offices or Singapore handled them earlier. Yet others, which are engaged with Indian diaspora companies, are trying to expand their market in Africa—and this trend can only grow.

So how do Indian companies in India join the Japanese effort to expand business in Africa? The B2B engagement enables such ideas to be discussed. Indian companies’ primary interest in Africa is in infrastructure. They need to work with those who have invested in and trade in Africa and can bring them in closer engagement with Japanese companies so that a mutuality of interests can be established. The B2B connect among Indian and Japanese companies needs to be diversified, keeping Africa in focus. The Japan External Trade Organisation (JETRO) and the Confederation of Indian Industry (CII), among others, have tried to network companies through meetings in India, Uganda and Nigeria over the last year. The creation of the business platform, announced by both prime ministers in October 2018, is supportive, but to drive home the point that trilateral engagements can work calls for more effort from the chambers of commerce and industry and other bodies.

The B2B approach will require substantial adjustments in the way the Indian and Japanese governments coordinate their geoeconomic strategies. The ministry of external affairs in India has, until now, guided the AAGC’s course, with Research and Information System for Developing Countries (RIS), the New Delhi-based policy research institute, leading the Vision Statement effort. To improve the B2B engagement in the short term, the ministry of commerce and industry will also have to get more involved.

Similarly, in Japan, the ministry of foreign affairs took the lead initially, but the ball started rolling because of the promotional efforts by JETRO and the Institute of Developing Economies—both being agencies of the Ministry of Economy, Trade and Industry (METI). METI itself is now taking keener interest after meeting members of the CII Task Force on the AAGC with whom JETRO engages regularly.

The AAGC is an effort to provide an alternative model of doing business in Africa, using transparent and adaptive measures. India, Japan and other partners may do a great deal, but China has done much more and been Africa’s preferred partner well before the BRI’s appearance. Africa apart, several other countries too have found China’s easy provision of long-term credit with a turnkey approach and few OECD-type conditions, conducive to growth.

The AAGC’s aim is to provide greater funding for African development in a way that is more conscious of debt servicing obligations, climate issues and transparency. The idea is to elicit private-sector engagement rather than participation only by state-owned companies: this will call for some innovative coordination so that African countries and businesses are able to find more common ground, collaborating with companies from India and its partners. If this is achieved, several African countries will engage with AAGC as they are more at ease with well-planned projects that have business plans. They are also glad to deal with India or Japan, countries which do not assume a prescriptive pedestal when speaking of their development.

Gurjit Singh is former Ambassador to Ethiopia and the African Union. A Japanese speaker, he was part of the initial teams which started the IAFS processes. He is currently the Chair of the CII Task Force on the AAGC and Professor at the IIT, Indore.

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[1] Research and Information System for Developing Countries, Economic Research Institute for ASEAN and East Asia, Institute of Developing Economies, Asia Africa Growth Corridor Vision Document, <>

[2] Ministry of External Affairs, Government of India, India-Japan Vision Statement, 29 October 2018, <>

[3] Japan International Cooperation Agency, Data on Japan Africa Cooperation, <>

[4] Export-Import Bank of India, Lines of Credit, <

[5] TICAD 6 details at <>

[6] Discussion at CII conclave 2018: <> A special breakfast networking session was organised for Indian and Japanese companies to interact

[7] Enunciated during METI Minister Hiroshige Seko’s visit to India, May 2018, at CII/JETRO event

[8] African Union, Agenda 2063, <> This includes references to PIDA, CAADP and NEPAD

[9] African Development Bank Group, Programme for Infrastructure Development in Africa (PIDA), <> PIDA succeeded the NEPAD process and looked at regional and continental infrastructure development

[10] New Partnership for Africa’s Development, Comprehensive Africa Agriculture Development Programme (CAADP), <>

[11] Personal meeting with JICA representatives in Tokyo October 2018, and New Delhi, November 2018

[12] Deduced from Japanese companies’ presentations at the CII India West Africa Regional Conclave July 2018. Abuja. <>

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