Trading house Toyota Tsusho and export credit agency JBIC team up on project
Trading company Toyota Tsusho and the Japan Bank for International Cooperation are joining forces on a port project in Angola that will be the largest of its kind for Japanese businesses.
The plan is to raise 70 billion yen ($643 million) from both public and private lenders in Japan to help the African country fund the endeavor. The move comes as China steps up infrastructure development in Africa amid concerns that it is saddling developing countries with excessive debt.
Japan’s businesses and government say they prioritize profitability and will ensure host countries’ debts remain sustainable, aiming to establish a model for infrastructure exports to emerging economies.
In Angola, Toyota Tsusho is to take on the port order in the south of the country, where development is lagging. It plans to use Japanese equipment and materials to construct the facility through a contract with the Angolan government, which will receive loans from export credit agency JBIC and other entities.
Angola, which relies heavily on oil exports, needs to upgrade its ports. It also aims to ship iron ore from the new Japanese-backed one. A deal is to be signed by Friday.
JBIC intends to set up a credit line capped at about 70 billion yen for the Angolan government. The lender will provide half that amount and raise the rest from private-sector banks.
To encourage private lenders to participate, Nippon Export and Investment Insurance is to insure the amounts they offer.
China, which continues to push its sprawling Belt and Road Initiative for infrastructure investments, is behind numerous projects in Africa. It moved into Angola around 2002, at the end of a civil war there, bringing economic reconstruction assistance.
China is now believed to account for more than half of Angola’s external debts.
In some cases, emerging countries are having difficulty repaying their hefty obligations to China. And given fears that declining emerging-market currencies could destabilize the global economy, Japan’s government plans to bring up the development debt issue when it hosts the Group of 20 summit of advanced and emerging nations in Osaka this June.
Source: Nikkei Asian Review