The ongoing crisis in Japan will have an “inevitable” near-term effect on Africa’s economy, a new paper claims.
Analysis written by Simon Freemantle and Jeremy Stevens, both economists at Standard Bank, notes that Japan has historically been an important partner for Africa in terms of trade, investment and aid.
The research claims that one of the most immediate economic effects of the earthquake will be that Japanese demand for African commodities will fall.
Reasons for this include a drop in manufacturing in the areas affected by the disaster and the general fall in consumer demand which is expected to be seen in Japan.
In addition, the amount of investment Japan channels into Africa is likely to fall as the country recovers.
Toyota, Nissan, Honda and Komatsu are examples of companies that have established a strong presence on the continent but are expected to reduce their investment in the short term, the paper adds.
Freemantle and Stevens also note that Japan serves as one of Africa’s most consistent Overseas Development Assistance partners.
However, Japan will probably cut this overseas aid in the coming years as it earmarks funds for domestic rebuilding.
The paper concludes that the “substantial” direct and indirect links between Japan and Africa mean the continent, and most notable South Africa, Tanzania and Sudan, will be significantly affected by the earthquake.