A Masaai herdsman looks after his cattle near wind turbines southwest of Kenya’s capital Nairobi. Japanese banks are chasing financial services deals in Africa. © Reuters TOKYO — Japan’s trio of leading banks will form collaboration agreements this week with various African financial services providers, paving the way for greater Japanese corporate investment on the continent.
Africa’s potential beckons Japanese companies, not only for resource and infrastructure projects but also its growing consumer markets. Yet Japan’s banks have made few inroads into the continent, until recently.
Sumitomo Mitsui Banking Corp. looks to sign five memorandums of understanding during the seventh Tokyo International Conference on African Development, a three-day gathering that starts Wednesday in Yokohama.
The Sumitomo Mitsui Financial Group unit’s partners will include Kenya Commercial Bank.
These deals at TICAD will help Japanese businesses open accounts and gain financing in local currencies. The collaborations also cover letters of credit, making it easier to do business with African companies.
SMBC currently offers financial services in 42 African nations, and these agreements will lift the number to 48, or nearly the entire continent.
Mizuho Bank plans to partner with South Africa’s Standard Bank Group, Africa’s largest private-sector financial institution, to form a team catering to Japanese corporate clients. Mizuho will sign a memorandum with Morocco’s Attijariwafa Bank as well. This will grant Japanese companies access to lending denominated in the local currency.
These pacts will extend the services of the Mizuho Financial Group bank to 33 African countries, a 50% increase.
MUFG Bank wants to help Japanese companies set up shop in African markets, but also intends to develop demand locally. Last month, the Mitsubishi UFJ Financial Group bank signed a memorandum with the Africa Trade Insurance Agency, an organization with 14 member countries.
The arrangement makes it possible for MUFG Bank to take on higher-risk companies and projects.
Japanese banks had extended a total of $15.5 billion in credit to African nations through the end of March, data from the Bank of Japan shows, double the sum from a decade ago.But Japanese companies lag their Chinese peers in terms of presence in Africa. Japanese direct investment totaled $8.7 billion at the end of 2017, according to the Japan External Trade Organization, well below China’s $43 billion.In June, Japanese trading house Mitsui & Co. reached an agreement with Mozambique to produce 12 million tons of liquefied natural gas in the country. Earlier this year, it was revealed that Nissan Motor plans […]