Over two thirds of all Japanese-led deals over the past decade have focused on Nigeria, says global law firm, Linklaters LLP.
This would make Japan the biggest Asian investor in Nigeria.
The firm further stated that Japan now ranks as the most active Asian project finance sponsor in Africa as a whole.
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“Contrary to popular belief about China dominating Asian investments in Africa, Japan has made slow but significant inroads in growing its influence across the continent,” said John Maxwell, managing partner of Linklaters’ Japan office.
“This underpins why many in the market are expecting African countries to remain significant investment destinations for Japanese capital over the next decade.”
Maxwell added that it’s no surprise to see Nigeria feature so prominently in these Japanese-led deals.
“The investment appetite is huge, with opportunities and a level of return on investment across the energy and infrastructure sectors to match.”
According to the firm, over the last 10 years, the level of project finance investments sponsored by Asian funds in Africa has increased by over 160 per cent.
The amount of fresh capital poured into the continents’ projects such as roads, water sanitation plants and oil and gas pipelines in the last year alone stands at 4.16 billion dollars.
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Japanese investors, in particular, have ramped up their project finance commitments in Africa by 576 per cent – 3.54 billion dollars were invested last year alone as a result of a large focus on projects in Morocco.
Andrew Jones, head of Linklaters’ Africa group, said, “Africa has faced a number of challenges over the years and the level of political instability in parts of the continent has certainly hindered progress.”
“Yet, some Asian countries, such as South Korea and China, are not new to investing in emerging markets and are used to dealing with political risks or less sophisticated systems.”
Linklaters stated that China ranks as the second biggest Asian sponsor into Africa, committing in excess of 11.9 billion dollars of project financing over the past decade, almost half focused on South Africa.
The most attractive project finance investment destinations in Africa for Asian sponsors over the last ten years have been Nigeria, attracting 22.8 billion dollars, South Africa at 6.8 billion dollars, Mozambique at 5.9 billion dollars, Egypt at 5.48 billion dollars and the DRC at 5.36 billion dollars.
“For the majority of the continent, there is a strong macroeconomic growth outlook, improving business environment, abundant natural resources, and infrastructure development opportunities,” Jones said.
“We expect countries such as Nigeria, Mozambique and Kenya to continue to be attractive investment destinations.”