Japan’s state-owned Nippon Export and Investment Insurance (NEXI) will team up with the African Export-Import Bank (Afreximbank) to support the decarbonization projects in Africa through new financing and insurance framework, as reported by Nikkei Asia on August 23. At the eighth Tokyo International Conference on African Development (TICAD) due on August 27 and 28, the two banks are set to ink an agreement where NEXI will insure loans provided by Afreximbank and major Japanese banks to the decarbonization-related businesses in Africa. Under the framework, the NEXI would guarantee over 90% of certain loans.

The new framework is intended to address Japanese private financial institutions’ concern over the political instability in parts of Africa, as NEXI’s loan insurance would reduce the risk that cannot be covered by private insurers. The framework will cover the deployment of renewable energies in Africa and other transition projects aimed at reducing emissions in stages, such as transforming coal-fired infrastructure into gas-powered operations in coal-reliant countries like South Africa. According to Japanese Foreign Minister Yoshimasa Hayashi, Japan is committed to supporting Africa to realize the sustainable development goals (SDGs) set out by the United Nations (UN). In March 2022, the NEXI also insured a USD207m loan provided to Afreximbank by Japanese banks including MUFG Bank [8306:JP], a debt used for ensuring a stable procurement of the vaccines in Africa.

Sources:

https://asia.nikkei.com/Spotlight/Environment/Climate-Change/Japan-readies-credit-insurance-for-Africa-s-decarbonization

https://asia.nikkei.com/Politics/International-relations/Japan-vows-to-boost-post-COVID-development-cooperation-with-Africa

https://www.nexi.go.jp/en/topics/newsrelease/2022031401.html