OECD Development Co-operation Peer Reviews: Japan 2020

3. Japan’s financing for development

Abstract

This chapter looks at Japan’s official development assistance (ODA) figures, including the overall level and components of aid, the level of bilateral and multilateral aid, and geographic and sector allocations of bilateral aid. In line with commitments in the Addis Ababa Action Agenda and the emerging concept of total official support for sustainable development, it also examines Japan’s efforts to mobilise finance for sustainable development other than ODA.

The chapter begins with a review of Japan’s ODA volumes and its efforts to meet domestic and international ODA targets. It then discusses the extent to which Japan allocates bilateral aid according to its statement of intent and international commitments, and, examines the effectiveness of Japan’s use of multilateral aid channels. The chapter concludes with a review of financing for sustainable development and how Japan promotes and catalyses development finance other than ODA.

In brief

Japan takes note of international commitments to increase ODA, but does not currently plan to scale up ODA much beyond 0.28% of its gross national income (GNI). In 2018, under the new grant-equivalent value methodology, Japan’s ODA increased by 40.7% (compared to net flows in 2017) to USD 14.2 billion, maintaining its ranking as the fourth largest bilateral donor. In 2018, Japan continued to notify ex ante that 100% of its aid to least developed countries (LDCs) was untied, in line with the Development Assistance Committee (DAC) recommendation. However, the share of untied aid contracts ultimately awarded to Japanese companies in LDCs has increased substantially.

Japan’s ODA is concentrated mainly on lower-middle-income countries and the Asia region, although it has also maintained its focus on Africa and the Middle East. Japan’s share of technical co-operation in its overall ODA is greater in higher-income partner countries, which is good practice. A growing share of ODA is provided in the form of highly concessional loans for economic infrastructure sectors. Japan has taken steps to mainstream gender and women’s empowerment, as well as environment and climate change, across its portfolio. However, the degree of mainstreaming is uneven across sectors.

Japan provides 20% of its ODA multilaterally, and is consistently among the top five donors to eight of the largest multilateral organisations and funds. Japan utilises its multilateral ODA as complementary to its bilateral programming, allowing it to enlarge its bilateral footprint in achieving human security, humanitarian support and in fragile and conflict-affected settings. However, the reliance on a supplementary budget for earmarked funding does not allow for predictable or multi-year commitments, and discourages Japan from pooling earmarked funds with other donors.

Japan has supported the Addis Tax Initiative to increase support to domestic resource mobilisation, although it is not a member. Japan presided over the Leading Group on Innovative Financing for Development in 2019 and is taking steps to include blended finance instruments in its overall palette of instruments.

Overall ODA volume

Japan has no specific plans to scale-up ODA in line with international commitments

Japan lacks a clear statement or timeline for achieving the 0.7% target of GNI provided as ODA. Japan’s 2015 Development Cooperation Charter underscores the need to strengthen its financial and human resources for development co-operation. It “is mindful of” the need to achieve the 0.7% ODA-GNI target , but it lacks a clear statement of the ODA levels it aims to achieve, and a timeline for achieving this target (Government of Japan, 2015[1]). In 2018, under the new grant-equivalent value methodology, Japan’s ODA increased by 40.7% to USD 14.2 billion, maintaining its rank as the fourth largest bilateral donor. This was equal to a 0.28% ODA-to-GNI ratio (Figure 3.1). Preliminary figures for 2019 show that ODA increased to USD 15.2 billion (in 2018 prices) for an ODA-to-GNI ratio of 0.29%. Measured using the previous metric of ODA flows, Japan’s net ODA (cash basis) fell 13.4% in 2018 to USD 10.1 billion, but increased to USD 11.4 billion in 2019.

Japan could afford to strengthen its leadership and commitment to the Sustainable Development Goals (SDGs) by increasing ODA. While growth in the region and globally has stalled in the first quarter of 2020, Japan is still the world’s third largest economy. Given its historic lending and the relatively high share of loans in its ODA portfolio today, Japan will continue to receive important loan repayments, which in 2018 accounted for just over USD 7 billion.1 In the past seven years, Japan’s economic growth has been positive: the estimated annualised growth rate in 2019 was higher than expected, at 1.8%2 (Harding, 2019[2]).

Japan increased its share of bilateral ODA to LDCs from 23% in 2014 to 31% in 2018. This is commendable; however, Japan’s overall support to LDCs amounted to 0.10% of its GNI, which is below the 0.15% commitment made by United Nations (UN) members in the Istanbul Programme of Action for LDCs.3

Japan’s supplementary budget, which is typically set aside for humanitarian or emergency spending and inherently unpredictable, accounted for just 6% of the total ODA budget in fiscal years 2018 and 2019, which is lower than 11% in fiscal year 2013 (Chapters 5 and 7).

Figure 3.1. Japan's ODA, 2009-18

Notes: Net ODA is equal to gross ODA minus loan repayments. The grant-equivalent value of ODA is not available before 2015. The percent of ODA-to-GNI is officially measured using the grant-equivalent value measure starting in 2018.

* 2019 data is preliminary, and gross ODA and loan repayments are not yet available for 2019.

Source: OECD (2020[3]), Table 1 DAC database, https://stats.oecd.org/Index.aspx?DataSetCode=TABLE1.

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Japan mostly adheres to the DAC recommendations on aid, but the share of untied aid contracts awarded to Japanese companies in LDCs has increased substantially

In 2018, Japan continued to report as untied 100% of its aid covered by the DAC Recommendation to Untie Official Development Assistance to Least Developed Countries – i.e. to LDCs and highly indebted poor countries (HIPCs), but excluding technical co-operation and food aid.4

Since 2012, the share of untied aid contracts ultimately awarded to Japanese companies in LDC partner countries has progressively increased. By 2017 88% of untied aid contracts in LDCs were awarded to Japanese companies, compared to 12% in 2012 (Figure 3.2).5 The transparency of Japan’s reporting on de jure untied aid contracts is limited by the fact that in the case of contracts awarded to joint ventures, Japan is neither able to identify the main contractor, nor can it provide the breakdown of the contract amount by individual contractors.6 The partner country government manages the procurement process, setting what can be very narrowly defined technical specifications, terms of reference and requests for proposals, all of which is usually reviewed by Japan. In line with narrowly defined specifications, joint programming and co-financing with other development partners is not Japan’s first choice of modality.7

Figure 3.2. Untied aid contracts awarded to Japanese companies, 2009-18

As % of total untied aid commitments

Note: According to JICA’s Procurement Guidelines, joint ventures are “jointly and severally” responsible for execution of the whole contract. For this reason, Japan notifies only one contract value for the entire joint venture, unlike other DAC members who either indicate which company is the main contractor or report separate amounts by contractor, Since only one contract value is provided, the DAC Secretariat divides the amount evenly among the contractors Japan reports so as to be able to compare across DAC members. As a result, these figures may not fully reflect the reality on the ground.

Source: OECD (2020[4]), Contract Awards Database.

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In 2018 almost 33% of Japan’s aid was tied. Other than aid which falls within the scope of the DAC recommendation (discussed above), 67.2% of Japan’s bilateral ODA was reported as untied in 2018. This is worse than the 78.2% in 2014 and a move away from Japan’s commitment at the Busan Fourth High Level Forum on Aid Effectiveness to accelerate efforts to untie aid to the maximum extent. Indeed, the share of Special Terms for Economic Partnership (STEP) (i.e. tied) loans has increased in the past five years, which also affects how and where Japan positions its support. In all, these findings show that Japan is realising its Revitalisation Strategy to use ODA as one instrument to revitalise Japan’s growth (Chapter 2) (Prime Minister’s Office, 2013[5]). This points to the challenge of pursuing development and commercial interests together, as it may undermine regional and partner countries’ own private sector development efforts that Japan sees as the key to sustainable development. That said, tied aid projects are based on requests by partner countries seeking highly concessional loans for the application of Japanese technologies and quality infrastructure, such as high speed rail and mass rapid transit.

In contrast to findings in the 2014 Peer Review, Japan did not comply with the recommended grant element of 86% on a three year average of bilateral ODA loans committed to LDCs in 2017 or 2018, primarily because it counts loans extended for private sector investment finance on less concessional terms as ODA.8 This also points to the need for a whole-of-government approach to the provision of ODA.

Japan’s ODA reporting to the DAC Secretariat continues to be timely and of excellent quality. However, Japan is invited to provide activity level data in the Creditor Reporting System on Other Official Flows transactions (only aggregate data are provided). The Japan International Cooperation Agency (JICA) has a public, transparent, and detailed database that includes all its ODA loan projects, the terms and conditions of loans, and often an ex ante evaluation.9

Bilateral ODA allocations

Japan has a high share of country programmable aid

Japan’s share of country programmable aid, at 80% in 2018, is well above the DAC average (49%). This is largely due to the fact that it has little bilateral aid not considered “programmable”, considering the fact that it has a low humanitarian aid share; only 1-2% goes towards core funding of non-governmental organisations (NGO); close to zero is allocated to in-donor refugee costs; and there was no debt relief in recent years.

Japan has a low share of humanitarian aid at just 4% of bilateral aid. Japan’s humanitarian aid has an important focus on disaster prevention and preparedness, in line with its national priority (Chapter 7).

The emphasis on partnerships with civil society in the charter has to be implemented through project-based funding, and in this regard, the recently announced increase in funding available to civil society organisations (CSO) through the grant assistance scheme is a welcome boost to Japan’s low levels of funding to CSOs.

Japan’s ODA is relatively concentrated in Asia and lower middle-income countries

In 2017-18, 64% of Japan’s bilateral ODA went to its top 20 recipients (OECD, 2014[6]). Another 5% was provided as regional ODA and 14% was unallocated by region or country, leaving about 17% of Japan’s ODA for the remaining 122 countries for project-type interventions, technical co-operation and scholarships (see Table B.3, Annex B). Japan has a bilateral programme in 142 countries, but no priority partner countries.

The majority of Japan’s country allocable bilateral ODA goes to lower middle-income countries (57% in 2017-18). In line with its charter, Japan provided the largest proportion of its ODA to Asia, a region it considers especially exposed to the “middle-income trap” in which relatively favourable income status conceals poor governance, internal disparities and high vulnerability. South and Central Asia account for a growing volume and share of Japan’s ODA, up from 30% in 2014 to 43% of gross disbursements in 2018, while Far East Asia’s volume and share has shrunk from 35% to 22%.

Japan has maintained its focus on Africa. While Japan’s ODA is not as concentrated in LDCs and other low-income countries as other DAC members, it is maintaining its focus on Africa in line with its commitments to the Tokyo International Conference on African Development (TICAD). It emphasises mutual benefit to capitalise on Africa’s impressive growth driven by expanding trade and investment. Its share of bilateral allocable ODA to North Africa increased to 5% in 2018. ODA to sub-Saharan Africa has stayed at around 11% in the past five years, with Kenya and Mozambique in the top 20 (see Table B.4, Annex B).

Seen as key to peace, stability and a stable energy supply, the Middle East receives 7% of Japan’s bilateral ODA. Peacebuilding and fragility are key aspects of Japan’s human security approach: 35% of Japan’s bilateral ODA supports fragile states (Chapter 7).

Economic infrastructure is a growing share of Japan’s bilateral ODA

Japan has concentrated on economic infrastructure, and as a consequence support to social infrastructure and services has shrunk. Japan’s sectoral focus is increasingly on economic infrastructure and services, which accounted for 55% of Japan’s ODA commitments from 2017-18 compared to 41% in 2011-12. Of this, the bulk (45%) was for transport (road, rail, water) and communications, followed by 9% for energy (see Table B.5, Annex B). The share of Japan’s ODA for social infrastructure and services has fallen significantly, accounting for 16% in 2017-18 (compared to 25% in 2011-12), and including 4% for education, 2% for health, and 7% for water supply and sanitation. However, this reflects the increase in loans extended for economic infrastructure and not a real decrease in aid in social sectors. Productive sectors accounted for 11% of bilateral ODA, including 8% to agriculture, forestry and fishery. Humanitarian ODA accounted for only 4% (Chapter 7).

Gender and environment mainstreaming are evident, but uneven across sectors

JICA screens all its activities against the gender, environment and Rio markers. Overall 94% of Japan’s bilateral allocable aid is screened, and JICA recently set the target that 40% of projects (in volume terms) should be gender responsive; in 2016-17 it achieved 34% of bilateral allocable aid (OECD, 2018[7]). The gender mainstreaming guidelines describe very concrete steps for each stage of the project cycle (Chapter 2). Surprisingly, economic infrastructure, education, and water and sanitation received well under 50% of commitments with gender equality and women’s empowerment as either a principal or significant objective in 2016-17, although this seemed to increase in 2018.

For infrastructure, water and sanitation, and fisheries projects, Japan reports over half of its commitments in support of the environment and two-thirds to disaster risk reduction. In 2018, Japan reported USD 10.1 billion of ODA in support of the environment (OECD, 2019[8]). However, its multi-sector investments, education, health, and government and civil society investments hardly take into account the environment or climate change, suggesting the need for more deliberate and proactive integration of environmental concerns, including climate, into development policies, plans, budgets and actions. Looking across its bilateral portfolio for 2018, 15% of Japan’s bilateral ODA was for the environment, 45% for climate change mitigation, and 9% for climate change adaptation (OECD, 2019[9]).10

Over 2013-17, Japan was the top provider of bilateral ODA for the ocean economy (ocean-based industries and marine ecosystems) and it committed over USD 1 billion for the conservation and sustainable use of the ocean over the same period. Japan provided an additional USD 1.6 billion to reduce negative effects of land-based activities on the ocean, primarily through sanitation and waste management projects.

Japan has a growing share of bilateral ODA loans, including to LDCs

Japan is the largest provider of ODA loans among DAC countries. Its share of highly concessional loans is growing. On average over the past 10 years, 56% of Japan’s bilateral ODA has been extended as loans (OECD, 2020[3]). The share of loans reached 61% of bilateral ODA in 2017. Given the time lag between preparatory surveys, ex-ante evaluations, and actual disbursement, commitments may paint a more realistic picture than disbursements. Loans committed in 2017 and 2018 amounted to USD 14.3 billion and USD 13.7 billion respectively, or 71% of total bilateral commitments in both years. In 2017-18, loans were mostly extended to lower middle-income countries (64%) and LDCs (23%), with 13% going to upper-middle income countries. For Japan, loans symbolise a longer-term relationship that goes beyond financial support (Box 3.1).

Figure 3.3. Japan's bilateral ODA: loans, grants, technical co-operation, 2009-18

USD 2017 billion, gross disbursements and % bilateral ODA

Source: OECD (2020[3]), Table 1 DAC database, https://stats.oecd.org/Index.aspx?DataSetCode=TABLE1.

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Japan offers extremely generous terms and conditions for its loans. But as the field becomes more crowded and more competitive with the growth in bilateral development finance, Japan will have to reposition itself to compete in other ways. This will include simplifying procedures, re-examining procurement procedures, shortening implementation time and encouraging more private sector investment finance to provide foreign direct investment. To improve its partnerships for quality infrastructure, Japan is working to accelerate ODA loan procedures, shortening the time between the start of the feasibility study and construction to 1.5 years.

Japan’s technical co-operation takes on a more important role as incomes rise

Technical co-operation makes up 15% of Japan’s bilateral ODA. Given Japan’s geographical priorities, its ODA portfolio is more evenly spread across income levels than other DAC members, and it does not phase out of lower and upper-middle income countries abruptly. Instead, the share of ODA grants decreases while shares of ODA loans at reasonable terms and conditions increase, as does knowledge exchange through an increase in technical co-operation.11 This is good practice in transition financing, and other members could learn from it.

In fiscal year 2018, Japan was supporting 518 technical co-operation projects in 91 countries. Some of these technical co-operation interventions are linked to a grant and/or loan project, as seen in Ghana (Chapter 5). In 2017-18, 69% of technical co-operation by volume was either multi-sector, or in the education, transport, agriculture, other social infrastructure (social protection), and water and sanitation sectors. Technical co-operation is provided in-kind from Japan (Annex C).

Box 3.1. The value of loans in development co-operation

For Japan, the philosophy of equal partnership and self-reliance underpins its provision of loans. Japan takes great care to assess debt sustainability and is very cautious in extending new loans. This can be seen in Ghana, a lower middle-income country where Japan has decided to no longer extend its highly concessional loans because of high levels of debt distress. It signed its last loan agreement in December 2016 (Annex C).

Loans symbolise a longer-term relationship beyond financial resources, as seen in Cambodia where authorities relied as much on Japan’s skills development and technical expertise on fiscal management, revenue mobilisation, statistical capacity, procurement, and debt management as it did on financial support.

In recent years, the Indian Government has been the largest recipient of ODA loans from Japan, provided for the development of economic infrastructure. Although the bulk of loans go to economic infrastructure, Japan has also promoted universal health coverage in Kenya and Senegal through policy-based Yen loans. The share of loans committed has increased since the 2014 Peer Review, in line with Japan’s philosophy of self-reliance.

Although JICA also provides private sector investment finance loans on harder concessional terms, loans extended to partner countries are highly concessional compared to other creditors, including multilateral development banks. For example, loans to low-income countries and least developed countries carry an interest rate of 0.01%, a grace period of 10 years, and a repayment period of 40 years. Japan also continues to offer preferential terms for four priority sectors (global environment and climate change; health and medical care services; disaster prevention and reduction; and human resource development). Its generous terms and conditions have certainly been Japan’s competitive advantage.

Source: JICA (2017[10]), Terms and Conditions of Japanese ODA Loans, www.jica.go.jp/english/our_work/types_of_assistance/oda_loans/standard/c8h0vm0000bovikq-att/2017_01_01.pdf; MFA (2019[11]), White Paper on Japan's Development Cooperation 2018, www.mofa.go.jp/files/000554934.pdf.

Multilateral ODA allocations

Japan is an important and concentrated multilateral partner

Japan provided the fourth largest volume of multilateral ODA among DAC members (USD 3.5 billion in 2018). It has regularly provided 20% of its ODA portfolio to a select number of multilateral organisations (OECD, 2020[3]). It is consistently among the top five donors to the World Bank’s International Development Association, the Asian Development Bank, the African Development Bank, the United Nations Development Programme (UNDP), United Nations Children's Fund (UNICEF), World Food Programme (WFP), and the Global Fund. It is currently the top donor to the Global Environment Facility (GEF).

A large share of Japan’s multilateral earmarked funding is humanitarian and for specific programmes and funds. In addition to its core support, Japan provides an additional USD 1.4 billion (10% of gross ODA) in earmarked (non-core) contributions through multilateral organisations (OECD, 2020[4])). Of the total earmarked funding Japan provided in 2017-18, more than one-quarter was for humanitarian purposes. Afghanistan was the largest overall recipient of all earmarked funding, accounting for 12% in 2017-18 (of which 8% was humanitarian). Countries in the Middle East and South and Central Asia regional groupings each accounted for 15% of earmarked funding. In terms of the structure of earmarked funding in 2017 and 2018, 27% was for specific projects, and 72% was for specific programmes and funds. Japan’s earmarked contributions to UN Funds and Programmes12 and the African Development Bank had a higher share (38% and 40%) of project-specific funding. In contrast, only 4% of earmarked contributions to the World Bank was project-specific and none of the earmarked funding to the Asian Development Bank went towards specific projects.

Figure 3.4. Japan's main multilateral partners: 2017-18 average

2017 USD millions (gross disbursements)

Source: OECD (2020[4]), Creditor Reporting System (database), https://stats.oecd.org/index.aspx?DataSetCode=CRS1.

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Multilateral support complements Japan’s bilateral programming, but is rarely pooled with other donors

Japan uses its multilateral funding to support human security, resilience, humanitarian support and poverty reduction. Japan’s multilateral contributions (including earmarked programme funding) are used to complement bilateral programming. The UN Human Security Trust Fund13 and the Japan Social Development Fund hosted by the World Bank are examples of programmes used to pilot new ideas to drive social inclusion and reduce poverty.

Japan’s specific conditions mean it rarely pools its earmarked multilateral support with other development partners in partner countries. Japan has contributed USD 7.4 million to the Special Purpose Trust Fund in 2018 by utilising the supplementary budget to support the new Resident Coordinator system and UN development system reform. However, it has not made any multi-year commitments. Japan does not typically pool its earmarked support to specific programmes with other donors.14 Japan reported its earmarked funding in 2017 and 2018 as project-type interventions and did not report any of its earmarked funding as basket or pooled funding. While this can in part be explained by the conditions linked to the supplementary budget often used for earmarked funding and which must be disbursed within 12 months, offering little predictability (Chapter 7), it also reflects Japan’s very specific financial reporting and procurement practices.

Financing for sustainable development

Japan helps build countries’ capacity to mobilise domestic resources

In 2018 Japan sextupled its 2015 ODA for domestic resource mobilisation, allocating USD 20 million. One-third of this was technical co-operation. Japan continues to seek tax exemptions on its ODA-funded goods and services in partner countries.

Japan has started new development finance and private sector support

Japan is starting to move beyond traditional instruments of grants, technical co-operation and Yen loans to catalyse private investment in partner countries (Annex C). Japan presided over the Leading Group on Innovative Financing for Development in 2019, and has started to find ways to top-up public development finance via new blended finance initiatives. Japan’s development finance currently includes some private sector investment finance, and it is increasingly looking to expand the use of guarantees to enrich its own palette of blended finance instruments through partnerships with development finance institutions, such as the African and Asian Development Banks, the Multilateral Investment Guarantee Agency (MIGA), and the International Finance Corporation (IFC). Its goal is primarily to de-risk investment and encourage its own private sector to invest.

Japan works to improve the enabling environment for business in partner countries. In Cambodia, the Japanese business association worked on behalf of the wider business community and was effective in drawing the attention of local authorities to resolving challenges to doing business (Annex C). Improving the business environment with innovation and private sector investment also remains a priority for Japan in sub-Saharan Africa, as reflected in pillar 1 of the Yokohama Declaration 2019 of TICAD7 (MFA, 2019[12]). However, Japanese foreign direct investment (FDI) has been slow to follow when business environments improve, especially – but not only – in sub-Saharan Africa. Similarly, Japanese sovereign wealth funds and its Government Pension Investment Fund – the largest in the world – are not yet investing in developing countries despite the untapped potential for large returns on investments. This reflects their need to balance risk and return in investing in developing countries.

JICA partners with other bilateral and multilateral development financial institutions to offer project finance, corporate finance, equity, bank (non-sovereign) loans, and/or technical co-operation to private companies. For example, JICA, together with the International Finance Corporation (IFC), the OPEC Fund for International Development (OFID) and the German development bank (DEG), has invested in the largest photovoltaic power plant in Jordan to increase renewable electricity supply (IFC, 2018[13]).15 JICA also issues government-guaranteed offshore bonds16 to the tune of USD 500 million per fiscal year. Proceeds from the bonds are allocated to JICA’s Finance and Investment Account, and used to establish basic infrastructure, social services and other activities in developing countries through loans, including to the private sector.

Japan also uses ODA to finance feasibility surveys for Japanese businesses looking to invest in partner countries, and for some public-private partnerships (PPPs). For example, JICA funded the Japanese enterprise Terumo to invest its unique health care technology in major government blood centres and hospitals first before expanding to local blood centres and clinics. This is a good example of how Japan gave consideration to inclusiveness and sustainability while supporting private sector investment.

Japan could draw more on its own experience to drive innovation, transfer leading technology and skills, and partner with the local private sector, as highlighted in the field visits (Annex C). Japan has established viable PPPs in Ghana and is embarking on a new one in Cambodia (Annex C). Though JICA’s use of PPPs has been somewhat limited, it now seems to be looking beyond business as usual with 150 new projects adopted under proposal-based programmes in FY2019 (JICA, 2019[14]).

The Japan Bank for International Cooperation (JBIC) provides non-ODA loans, equity and guarantees to secure energy and mineral resources that are strategically important for Japan, maintain and improve the international competitiveness of Japanese industries, and promote Japanese business operations in developing countries. For example, in Mozambique and Malawi in 2017, JBIC financed the construction of the Nacala railway and port infrastructure in order to secure a stable supply of mineral resources for Japan, and in 2019 it financed a wind power generation project in Morocco, supporting a Japanese company’s participation in renewable energy.

Where it is present, the Japan External Trade Organisation (JETRO) helps the Japanese private sector understand the business and regulatory environment in a partner country so that they can resolve challenges, follow national laws, and uphold labour and safety standards.

Japan’s reporting now includes ODA equity, support to the private sector and total official support for sustainable development

ODA equity to private sector entities in developing countries makes up a very small share (1%) of Japan’s gross ODA. Top ODA equity investments in 2017-18, as reported to the OECD by Japan, include the Japan Association of Southeast Asian Nations (ASEAN) Women Empowerment Fund; Leading Asia’s Private Sector Infrastructure Fund; and the Port Authority of Sihanoukville in Cambodia. Japan has recently reported ODA loans to private sector entities, including USD 72.3 million in commitments in LDCs in 2017. Japan reports aggregate other official flows, and has recently started reporting JBIC investments to total official support for sustainable development (TOSSD), including confidential reports per activity, which is a welcome development.

References

[1] Government of Japan (2015), Cabinet Decision on the Development Cooperation Charter, February 10, 2015, Government of Japan, https://www.mofa.go.jp/files/000067701.pdf.

[2] Harding, R. (2019), “Japan economy grows faster but fears of a slowdown intensify”, Financial Times. 9 December 2019, https://www.ft.com/content/bfd09efe-1a30-11ea-97df-cc63de1d73f4 (accessed on 10 February 2020).

[13] IFC (2018), IFC Supports Jordan’s Largest Renewable Energy Project with Landmark Financing Package, International Finance Corporation, Washington DC, https://ifcext.ifc.org/ifcext/Pressroom/IFCPressRoom.nsf/0/90451139BD250F778525821700303E6B?OpenDocument (accessed on 24 February 2020).

[14] JICA (2019), JICA 2019 Japan International Cooperation Agency Annual Report, Japan International Cooperation Agency, Tokyo, https://www.jica.go.jp/english/publications/reports/annual/2019/c8h0vm0000f7nzvn-att/2019_all.pdf (accessed on 22 February 2020).

[10] JICA (2017), Terms and Conditions of Japanese ODA Loans, Japan International Cooperation Agency, https://www.jica.go.jp/english/our_work/types_of_assistance/oda_loans/standard/c8h0vm0000bovikq-att/2017_01_01.pdf.

[11] MFA (2019), White Paper on Japan’s Development Cooperation 2018, Ministry of Foreign Affais, https://www.mofa.go.jp/files/000554934.pdf.

[12] MFA (2019), Yokohama Declaration 2019. Advancing Africa’s Development through People, Technology and Innovation, Ministry of Foreign Affairs of Japan, https://www.mofa.go.jp/region/africa/ticad/ticad7/pdf/yokohama_declaration_en.pdf.

[4] OECD (2020), Creditor Reporting System (database), https://stats.oecd.org/index.aspx?DataSetCode=CRS1.

[3] OECD (2020), Table 1 DAC database, https://stats.oecd.org/Index.aspx?DataSetCode=TABLE1.

[9] OECD (2019), Aid in Support of Environment, OECD, Paris, https://www.oecd.org/environment/environment-development/Aid-in-Support-of-Environment.pdf (accessed on 17 February 2020).

[8] OECD (2019), Development Co-operation Profiles, OECD Publishing, Paris, https://dx.doi.org/10.1787/2dcf1367-en.

[7] OECD (2018), Aid in Support of Gender Equality and Women’s Empowerment, OECD Publishing, https://www.oecd.org/dac/gender-development/Aid-to-gender-overview-2018.pdf (accessed on 17 February 2020).

[6] OECD (2014), OECD Development Co-operation Peer Reviews: Japan 2014, OECD Development Co-operation Peer Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264218161-en.

[5] Prime Minister’s Office (2013), Japan Revitalization Strategy - Japan is Back, https://www.kantei.go.jp/jp/singi/keizaisaisei/pdf/en_saikou_jpn_hon.pdf (accessed on 20 February 2020).

Notes

← 1.  ODA grant-equivalent values are not discounted for loan repayments to Japan for previously extended loans.

← 2.  Prime Minister Abe announced a stimulus package in December 2019 to counter sluggish demand accentuated by a recent consumption tax.

← 3.  This can also be explained by the fact that Japan’s multilateral ODA – generally characterised by a high LDC spend – has stagnated since 2014 in part due to the weak Yen.

← 4.  Japan did not agree to the broadening of the scope of the DAC recommendation to include HIPCs in 2008 and other low-income countries and International Development Association-only countries in 2018. Yet, Japan did not tie its ODA in any of the groups of countries currently covered by the DAC Recommendation in 2018.

← 5.  Since only one contract value is provided, the DAC Secretariat divides the amount evenly among the contractors so as to be able to compare across DAC members. Therefore, these figures may not fully reflect the reality on the ground. As with other donors, this self-reported information on contract awards does not take into consideration subsequent subcontracting.

← 6.  According to JICA’s Procurement Guidelines, joint ventures are “jointly and severally” responsible for execution of the whole contract. For this reason, Japan notifies only one contract value for the entire joint venture, unlike other DAC members who either indicate which company is the main contractor or report separate amounts by contractor.

← 7.  Based on conversations with development partners investing in the same sector and geographic area in Cambodia.

← 8.  In 2017, the grant element was 87.8% and in 2018 it was 78.5% (below the 90% threshold), but Japan also did not comply when using the alternative measure, a three-year average for each LDC. There were three projects in particular in 2017 that preclude Japan from meeting the terms and conditions of aid. They include loans extended to private sector entities: (1) in Myanmar for the Thilawa Special Economic Zone – see note 34 above; (2) co-financing with IFC in Bangladesh for a combined-cycle power plant that uses both gas and a steam turbine to produce more electricity from the same fuel; and (3) a floating storage and regasification unit in Bangladesh. In reporting these as ODA investments, Japan indicated that official support was required to attract private finance and deliver better development outcomes.

← 9.  The database is publicly accessible here: https://www2.jica.go.jp/en/yen_loan/index.php.

← 10.  In 2018, DAC members provided 11% of bilateral allocable aid for environment and 26% focusing on climate (mitigation and adaptation).

← 11.  In upper middle-income countries where Japan is present, technical co-operation commitments amounted to 42% of gross bilateral ODA from 2017-18, whereas it represented 22% in low income countries and 28% in lower middle-income countries. Note that this excludes bilateral ODA not allocated by country or by region.

← 12.  UN Funds and Programmes include UNDP, UNICEF, the UN Environment Programme, the United Nations Human Settlements Programme, the UN Population Fund, and WFP.

← 13.  Contributions to the United Nations Trust Fund for Human Security come primarily from Japan, but contributions have also been received from Greece, Malta, Mexico, Slovenia and Thailand.

← 14.  There are a few funds to which Japan does provide pooled funding: Global Partnership for Education for Bangladesh and South Sudan; Law and Order Trust Fund for Afghanistan; and the Enhanced Private Sector Assistance Initiative [with Australia] at the African Development Bank.

← 15.  The project aims to increase and diversify the electricity supply through construction and operation by Baynouna Solar Energy PSC of a 200MW Baynouna photovoltaic solar power plant to be located at Al‑Muwaqqar in Jordan.

← 16.  In fiscal year 2019, JICA bonds were issued at a coupon rate of 3.375% and a maturity period of 10 years.