JAPAN'S ECONOMIC ACTIVITIES IN AFRICA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001600010098-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 22, 2016
• Document Release Date: October 1, 2009
• Sequence Number: 98
• Publication Date: November 1, 1968
• Content Type: IM

Approved For Release 2009/10/06 CIA-RDP85T00875R00160001009 -3 O C/
Secret
DIRECTORATE OF
INTELLIGENCE
Intelligence Memorandum
Japan's Economic Activities in Africa
Secret
ER IM 68-148
November 1968
Copy No. 75
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WARNING
This document contains information affecting the national
defense of the United States, within the meaning of Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
November 1968
INTELLIGENCE MEMORANDUM
Japan's Economic Activities in Africa
Summary
Japan's economic stake in Africa,* although
still relatively small, will almost certainly rise
in the next few years as the Japanese attempt to
diversity their sources of raw materials. Trade
activities are expanding rapidly in those areas
of the continent rich in mineral resources. Sharp
increases in private investment by Japanese firms
will also expand trade greatly in the future.
Japan's foreign aid to African countries will
remain very small, confined primarily to technical
assistance.
Japan is almost completely dependent on over-
seas sources of industrial raw materials and, in
order to assure stable supplies in times of world-
wide shortage, it is now seeking long-term supply
contracts and direct investments in overseas pro-
ducers. Japanese firms have already agreed to
provide funds for expansion of copper output and
exports in Zambia and Congo (Kinshasa) and are
investigating similar arrangements for other
metals elsewhere on the continent.
Japan's increasing economic activity in Africa
currently is confined to those few countries --
South Africa, Zambia, Congo (Kinshasa), Angola,
* Including the entire continent.
Note: This memorandum was produced solely by CIA.
It uuas prepared by the Office of Economic Research
and was coordinated with the Office of Current
Intelligence.
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and Swaziland -- which are established producers
of the kinds of raw materials that the Japanese
need. Several others, with proven but largely un-
exploited reserves of metals and minerals, will
become increasingly important in the future. Most
of the remaining 40-odd countries in Africa, how-
ever, will remain unimportant to Japan economically.
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Growing Japanese Interest in Africa
1. In recent years, Japan has clearly shown
an interest in furthering its economic relations
with Africa as part of a policy of diversifying
its sources of raw materials. The Japanese depend
on foreign sources to supply their large industrial
complex with nearly all of its raw cotton, wool,
crude petroleum, tin, zinc, copper, iron, bauxite,
manganese, and nickel. Most of Japan's foreign
sources of supplies are owned by US and Western
European companies, but the Japanese have begun
to invest in overseas sources of raw materials,
especially minerals, to insure adequate supplies
at acceptable prices. Japan's imports from Africa
in 1967 were only 6 percent of its total imports
but were more than five times the 1959 level (see
Figure 1). The rapid rise in imports reflects
increasingly large purchases of African metals
and minerals (see Figure 2). Zambia, for example,
is a major supplier of copper, while South Africa,
Swaziland, and Angola are sources of iron and
iron ore.
2. Although Japanese private investment* in
Africa in recent years has averaged only about $3
million annually, or about 4 percent of Japan's
total overseas investment, it will grow impressively
in the next few years. Investment has been con-
centrated in Kenya, Nigeria, Ethiopia, and Zambia --
principally in light industry plants producing
textiles and processed foods. Now, however, the
emphasis has shifted to minerals, and Japanese
industrialists plan to spend more than $100 mil-
lion in African mining ventures during the next
few years.
3. Japanese official aid expenditures in
Africa averaged about $1 million annually until
* Japanese private investment overseas may in-
volve taking a minority position in a joint
venture with local or other foreign firms. In
countries which restrict the participation of
foreign capital, the Japanese often seek to gain
influence by extending loans to non-Japanese par-
ticipants in the joint ventures on a production-
sharing basis. The loans are often repaid in raw
materials.
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1968 and were used exclusively for technical
assistance. In 1966, Japan pledged a total of $42
million in development loans, all of which were
to Nigeria, Kenya, Tanzania, and Uganda. Very
little had been disbursed by late 1968.
4.- Despite increased Japanese economic activi-
ties on the continent, Africa is still less impor-
tant economically to Japan than most other areas
of the world. Japan's major trading partners have
always been and probably will remain the United
States and, collectively, the countries of Asia.
The United States is a main source of foodstuffs,
raw materials, and machinery us well as a large
market for Japanese consumer goods, while Asia is
a principal source of raw materials and a major
market for heavy industrial machinery. Africa,
on the other hand, seldom has accounted for more
than 5 percent of Japan's trade.*
The Importance of White-Ruled Africa
5. White-ruled Africa -- South Africa,
Rhodesia, Angola, and Mozambique -- accounts for
almost half of Japan's total trade with the con-
tinent. Japan's imports include foodstuffs,
agricultural raw materials, and minerals, while
exports are largely textiles, iron and steel, and
machinery (see Table 1).
6. South Africa last year bought about 35
percent of all Japanese exports to Africa, despite
Pretoria's stiff tariffs and quota restrictions
against those types of consumer goods which Japan
exports. This country, with the only developed
economy in Africa, offers a ready market for
Japanese exports. South Africa also supplied over
40 percent of Japan's imports from the continent.
Japan is now a major trading partner for South
Africa, last year taking about 15 percent of South
Africa's exports. As a result of a persistent trade
deficit -- amounting to $120 million in 1967 --
Tokyo is increasing its pressure on Pretoria to
adopt a more liberal import policy for Japanese
goods, but with little success to date.
* Excluding exports and imports of ships under
Liberian "flag of convenience" registry.
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JAPAN: IMPORTS AND EXPORTS
BY MAJOR WORLD REGIONS
Exports
Imports
ANGLO
AMERICA*
EUROPE** OCEANIA
MILLION US $
EXPORT TOTAL: 3.248
IMPORT TOTAL- 3,599
238 329 204
7y'n :'M
LATIN AFRICA***
AMERICA
EXPORT TOTAL: 10,057
IMPORT TOTAL: 11,651
ANGLO
AMERICA*
EUROPE** OCEANIA
LATIN AFRICA"*
AMERICA
*Including the United States, Canada, Greenland, Puerto Rico, the ~ ,rgin Islands, and the Canal Zone
**Including the USSR
***Excluding exports and imports of ships under Liberian "flag of convenience" registry
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JAPAN: TRADE WITH AFRICA, BY COMMODITY
MILLION US $
75045 11-68 CIA *Excluding exports and imports of ships under Liberian "flag of convenience" registry
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7. Japan's trade with the rest of white-ruled
Africa is relatively small and has been reduced
further because of Tokyo's official compliance
with the UN program of economic sanctions against
Zambia, Congo ;Kinshasa), and Swaziland
8. Nearly half of Japan's African trade is
with black Africa, mostly with countries rich in
mineral resources (see Figure 3). Zambia alone pro-
vided about 20 percent of Japanese imports from
Africa last year and ranks second only to South
Africa among Tokyo's leading African suppliers (see
Table 2). Copper makes up almost all imports from
Zambia: last year that country accounted for nearly
half of Japan's total refined copper imports. Over
20 percent of Zambian exports go to Japan, now
Zambia's leading customer. Two large Japanese
trading firms have agreed to lend the Zambian
copper mining industry $70 million, part of which
will be financed on the Eurobond market to avoid
an outflow of capital from Japan. This venture,
Japan's largest in Africa to date, will assure
Tokyo of 7.00,000 tons of copper over the next
10 years.
9. Copper resources,in the Congo (Kinshasa)
have also attracted Japan's attention. In 1967,
Kinshasa granted Japan concessions to develop two
ore bodies
Japan's major Congolese
imports at present are cobalt and industrial
diamonds, but Tokyo is also interested in the
Congo's iron and tin
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JP410-/f 1 Arta 41~ `
A Genena.e AenLa.2 View os the
Nehanga Open Pit Coppers Mine
in Zambia
The Nehanga Open Pit L6 Neah.Cy
a Mite Long and Oven 300 Feet
Deep
F.Cotation Cetta where Both Oxide
and Sutph.ide Coneen.tnate.b arse
Pnodueed at the Nehanga Mine
The Inten.ion o6 the Tank Houze
Which Pnoduceb Neanty 9,000
Tonb ob Coppers Ca.thodea Month.Qy
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1000 Miles
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10. Swaziland's iron ore reserves are responsible
for its sharply increased trade with Japan. A large
investment was made by the Yawata Iron and Steel
Company and the Fuji Iron and Steel Company during
the 1960 s to develop Swaziland's iron ore resources.
Exports of iron ore to Japan have increased even
faster than plannad, making Swaziland its third
largest African source of imports. Japan has be-
come Swaziland's leading export market, accounting
for at least 25 percent of exports in 1967.
The Rest of Africa
11. The remaining 40-odd countries of Africa
are relatively unimportant to Japan. They accounted
for about 70 percent of Japan's imports from Africa
in 1959 but only 30 percent in 1967. Trade is small
because of the limited market for Japanese goods
and because of the low level of Japanese demand for
tropical products such as bananas, coffee, and cocoa,
which generally are these countries' chief exports.
Afew of these countries have mineral resources that
Japan is seeking, but these resources are not yet
developed.
Prospects
12. The increase in Japan's trade with South
Africa, Zambia, the Congo (Kinshasa), and Swaziland
over the next few years will be substantial, re-
flecting Japan's accelerating 'demand for the kinds
of minerals these countries have. Tokyo may seek to
purchase larger amounts of South African uranium.
Japanese trade and investment activities are also
likely to increase substantially in several other
countries which have the potential for becoming
important sources of metals and minerals. The
Japanese have shown interest in exploiting deposits
in Sudan, Mozambique, Libya, Guinea, Angola, and
Sierra Leone. In Mozambique, for example, they
may invest $50 million in iron ore development for
eventual export to Japan if reserves prove large
enough. Libya has indicated an interest in granting
the Japanese an oil concession which would make
the Libyans the first African suppliers of oil to
Japan.
Angola and Sierra
Leone have recently signed long-term contracts
for sizable amounts of iron ore.
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13. Japan's minuscule aid program in Africa
is not likely to increase appreciably in the next
few years, as Tokyo will continue to focus almost
all of its aid on countries in Asia. Whatever
additional aid Japan may offer to the continent
will probably consist of small technical assistance
grants.
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Table 1
Japan: Trade with South Africa
by Selected Commodities
1963 and 1967
Million US $
1963 1967
Imports
Corn
38.5
47
8
Sugar
25.1
.
21
2
Wool
16.7
.
25.2
Iron ore
9.6
37.7
Copper concentrates
1.0
5.7
Nonmetallic minerals
6.0
18.0
Pig iron
3.8
39.3
.Coal
1.8
6.1
Other
28.0
78.0
130.5
279.0
E'cport:
Textiles
41.2
51.9
General machinery,
4.5
13.8
Electric machinery
5.8
15.8
Transport equipment
12.0
29.5
Iron and steel
2.9
9.2
Chemicals and pharmaceuticals
2.2
5.8
Precision instruments
2.0
4.5
Other
9.2
26,4
79.8
156.9
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Table 2
Japan: Trade with Selected African Countries
Selected Years, 1959-67
Million US $
1959
1961
1963
1965 1967
Ex-
ports
Im-
ports
Ex-
ports
Im-
ports
Ex-
ports
Im-
ports
Ex-
ports
Im-
ports
Ex-
ports
Im-
ports
South Africa
51.9
37.2
49.1
82.3
79.8
130.5
137.7
133.9
156.9
279.0
Zambia
8.1
60.9
29.4
.138.1
Swaziland
Negl.
25.5
Nigeria
47.5
6.9
73.1
9.5
74.1
6.8
59.0
9.4
38.3
16.2
Ghana
22.5
2.2
26.7
4.4
23.7
11.0
23.6
7.9
15.5
19.3
Mozambique
0.7
3.4
4.3
5.2
6.9
7.8
8.9
10.9
15.5
16.5
Sudan
0.7
6.1
15.2
7.2
16.5
14.3
19.5
9.0
12.8
17.3
Egypt
12.3
16.6
22.1
17.5
24.4
16.8
17.3
27.9
10.7
19.1
Ethiopia
7.8
2.2
13.9
3.8
14.1
5.5
21.5
4.4
17.9
5.9
Kenya
11.5
6.0
22.9
6.5
29.3
4.4
25.7
5.5
17.1
5.6
Uganda
6.5
12.9
5.6
2.0
7.4
4.2
6.4
5.5
5.8
15.0
Tanzania
11.0
8.2
9.3
8.1
10.1
5.8
9.2
4.6
9.1
11.3
Other
31.4
25.0
43.6
42.6
60.3
53.2
116.7
59.2
138.4
81.8
Total
203.8
126.7
285.8
189.1
346.6
260.3
453.6
339.1
467.4
650.6
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