OECD Development Co-operation Peer Reviews: Japan 2020

5. Japan’s delivery modalities and partnerships

Abstract

This chapter looks at the principles that guide Japan’s partnership approach across its development portfolio, and how Japan uses its financial, diplomatic and technical resources in its global engagement and in partner countries. It assesses whether the approach and principles are consistent with Japan’s development co-operation policy and international commitments on development effectiveness: ownership of development priorities by developing countries; a focus on results; inclusive development partnerships; and transparency and mutual accountability.

The chapter first considers Japan’s approach to partnerships for development co-operation with a range of actors, assessing whether they embody the development effectiveness principles. It then explores whether Japan’s work in partner countries is in keeping with its domestic and international commitments to, and principles of, effective development co-operation.

In brief

The great majority of Japan’s development co-operation is delivered through projects with developing country governments. Other channels are used to a very limited extent, and grants available to civil society organisations (CSOs) are relatively small in volume. Greater dividends could be achieved by ensuring synergies across Japan’s loans, grants, technical co-operation, volunteers and support provided to other development actors. Country development cooperation policies could better describe these synergies and Japan’s overall contribution to sustainable development.

Budgeting and approval processes are centred on individual projects rather than country portfolios, limiting Japan’s ability to provide multi-year predictable funding to multilateral, regional and civil society organisations, and private sector entities. Regular reporting and strict financial accountability are required.

Despite active participation in government-development partner co-ordination mechanisms, it is rare for Japan to jointly finance projects with other donors in partner countries. It does play a positive role in leading sectoral working groups, encouraging co-ordination and mapping of donor support.

Japan has a proud record of support for south-south and triangular co-operation, valuing the political and developmental benefits of these approaches.

Japan is a responsive development partner, regularly updating aid management databases. Data and information about Japan’s development co-operation activities are shared transparently using a range of mechanisms.

Japan is committed to country ownership, seeking to achieve mutually beneficial partnerships and taking a recipient-driven approach. Its use of partner country financial management systems for loans is significantly higher than the Development Assistance Committee (DAC) average. Annually scheduled payments are made on time, but Japan’s medium-term predictability could be improved. The Japan International Cooperation Agency’s country analysis papers could also draw on a broader range of data.

Effective partnerships

ODA is mostly delivered through projects with developing country governments

Japan rarely partners with non-government actors in delivering its development co-operation (Table B.2). In 2017-18, 84.7% of bilateral projects (78.7% of bilateral gross disbursements) were funded with developing country governments, 6.9% with non-government organisations (NGO) and CSOs (1.7% of bilateral gross disbursements), and 2.96% with multilateral organisations (10.2% of bilateral gross disbursements). The great majority of projects to and through civil society partners were project-type interventions (77.7%), with core support making up just 19.4%.

Japan’s focus on individual projects rather than overall multi-year country portfolios reduces predictability. Japan primarily invites proposals for project-type interventions (78.2% of bilateral activities in 2017-18), making limited use of core support mechanisms and flexible funding instruments (3.7%). Its preference for working with partner governments, together with a lack of clarity regarding country allocations, constrains Japan’s ability to provide multi-year predictability to its partners, including multilateral, regional and civil society organisations, and private sector entities.

The process of seeking funding from Japan’s supplementary budget is administratively burdensome for all parties. In the middle of the calendar year, embassies invite multilateral partners based in-country to submit proposals for emergency responses. Embassies review them and send their recommendations to Tokyo. Decisions are usually communicated at the end of the year, and funds, which must be disbursed within the current Japanese fiscal year and executed as soon as possible, are transferred early in the following year. This approach is not strategic, does not facilitate timely response to emergencies, and imposes administrative burdens on all parties – for one United Nations organisation a dedicated unit of three people in New York together with staff from its six-person liaison office in Tokyo manage the administrative and reporting requirements (Chapters 2 and 7).

Japan requires regular reporting and strict financial accountability. Recipients of Japanese loans and large grants are required to report on a quarterly basis, and particular attention is paid to financial accountability. Each grant-funded institution identifies the results it expects to achieve and reports against these using progress and completion reports (Chapter 6).

Engagement with civil society is limited

Grants available to CSOs are relatively small. The Ministry of Foreign Affairs (MOFA) and Japan International Cooperation Agency (JICA) offer funding windows for CSOs but funds are not large. JICA’s Partnership Program provides a maximum of JPY 100 million (approximately USD 900 000) to projects proposed by Japanese organisations with extensive experience in international co-operation; these are to be completed within five years. Less experienced Japanese organisations and Japanese local government bodies can apply for a maximum of JPY 10 million (approximately USD 90 000) and JPY 60 million (around USD 540 000) respectively for projects to be completed within three years (JICA, 2015[1]). MOFA’s grant assistance for projects run by Japanese NGOs is also small. In the 2019 financial year, MOFA reports supporting 219 projects totalling JPY 11.14 billion (around USD 100 million) at an average of USD 457 500 each. This amounts to double its grant assistance in 2017 – 113 projects totalling JPY 5.07 billion (around USD 46 million), averaging some USD 407 000 each (MFA, 2019[2]). Japan could draw on good practices of other DAC members to support NGOs to respond more flexibly to the changing contexts within which they operate.1

Co-ordination with other development partners works, though co-financing is limited

Japan participates actively in government-development partner co-ordination mechanisms but rarely funds projects jointly with other donors. Contributions to pooled programmes and funds comprised just 6% of country programmable aid in 2018. In addition, Japan makes very limited use of budget support – just 3% in 2018 – or programme-based approaches (Table B.2). It is rare for Japan to co-finance with other development partners, partly because of differences in project management procedures between donors, which often create difficulties with co-ordinating co-financing. Multilateral funding is almost always clearly earmarked, or provided through bridge or parallel financing (Chapter 3). As seen in the water sector in Cambodia, and the transport sector in Ghana, Japan prefers to directly manage its own contributions in full, leaving others to contribute theirs, with a view to a co-ordinated whole (Annex C).

South-south and triangular co-operation are actively supported

Japan has a proud record of support for south-south and triangular co-operation. Japan’s development co-operation began by joining the Colombo Plan in 1954. At the time, Japan was still undergoing post-war reconstruction using external aid.2 Drawing on its own experience of receiving technical and financial co-operation during the post-war reconstruction period, while at the same time providing development co-operation, Japan subsequently commenced work with developing and emerging countries in triangular co-operation arrangements, commencing with Thailand in 1975. Today, Japan is one of the largest partners in triangular co-operation globally. It uses this long-standing experience to promote triangular co-operation within the United Nations system, the DAC, the Global Partnership for Effective Development Co-operation (GPEDC), the G20 and other global fora (Box 5.1).

Box 5.1. Japan’s promotion of south-south and triangular co-operation

Japan is a pioneer in the field of south-south and triangular co-operation. It values the political and developmental benefits of these approaches, including deepening relationships among countries, building trust and co-creating solutions which are well-adapted to the context of developing countries.

Japan values south-south and triangular co-operation as effective co-operation methods which also strengthen partnership with developing countries since they promotes sharing knowledge and expertise of developing countries and encourage mutual learning among all stakeholders.

South-south and triangular co-operation are effective in:

• disseminating successful efforts, including Japan’s development experience

• contributing to the promotion of regional and global co-operation

• complementing and supplementing bilateral and multilateral co-operation with the knowledge and experience of developing countries to achieve development results

• building on its experience and knowledge of south-south and triangular co-operation; in this regard, Japan is engaging with global advocacy efforts such as the Global Partnership Initiative on Effective Triangular Co-operation.

The Asia-Africa Knowledge Co-Creation Program enabled Asian and African countries to share experience and knowledge to create approaches best suited to African countries’ needs. Fifteen African countries participate in the Total Quality Management for Better Hospital Services project. This targeted the shortage of financial, logistical and human resources health systems by introducing Sri Lankan and Japanese experience in hospital management, promoting 5S (sort, set, shine, standardise and sustain) and Kaizen (continuous quality improvement) processes. Through this programme, Tanzania learnt from the successful efforts of Sri Lanka and has scaled up the initiative across the country.

In 2015 Japan and Chile started the KIZUNA project. It disseminates Chilean experience throughout Latin America and the Caribbean region. The project shares the expertise Chile gained through its 30 years of co-operation with Japan and enables countries in the region to access high quality disaster risk reduction training programmes. It fosters knowledge exchange and creation of a network of specialists at national and regional levels. In addition, Chile’s experience was shared in international conferences such as the Second high-level United Nations Conference on South-South Co-operation and the G20 Development Working Group.

Source: JICA (2018[3]), JICA’s Support for South-South and Triangular Cooperation. For inclusive and dynamic development, www.jica.go.jp/activities/issues/ssc/ku57pq00001wlrnp-att/pamphlet_en_01.pdf; JICA (2020[4]), Africa. Asia-Africa Knowledge Co-Creation Program (AAKCP), www.jica.go.jp/english/our_work/thematic_issues/south/project06.html; JICA (2015[5]), News. KIZUNA Project Launched – Impressive Results From Early Evacuations, Improved Seismic Resistance in Buildings, www.jica.go.jp/english/news/field/2015/151102_01.html.

Japan is an accountable and transparent donor

Japan uses a range of mechanisms to share data and information about its development co-operation. MOFA publishes an annual White Paper on Development Cooperation (MFA, 2019[2]) and JICA publishes an annual report and data book (JICA, 2019[6]). The ODA Mieru-ka site provides information in Japanese language on projects by country, thematic issue and type of co-operation.3 In addition, MOFA and JICA report in English to the International Aid Transparency Initiative (IATI), although given the high number of projects involved it is proving difficult to meet IATI’s requirements (Table 5.1). Japan tracks results at project level but, as noted in the 2014 Peer Review, has limited ability to capture its overall development results (Chapter 6).

Country-level engagement

Japan has a strong commitment to country ownership and mutual benefit

Japan is committed to country ownership, seeking to achieve mutually beneficial partnerships and taking a recipient-driven approach. Based on its own experience, Japan values self-reliant development and the mutual benefit gained from development co-operation. Like many DAC members, Japan is clear that both parties will gain by co-operating. It sees its partners’ willingness to borrow as evidence of ownership (Chapters 2 and 3).

Country development cooperation policies outline Japan’s priorities but could better describe Japan’s overall contribution to sustainable development. These concise documents identify how Japan’s priorities are in line with those of the partner country, but they do not describe the results Japan expects to achieve (MFA, 2020[7]). In addition, as found in the 2018 GPEDC monitoring survey (OECD/UNDP, 2019[8]) Japan is encouraged to enhance the inclusive manner in which it consults partner country governments and other stakeholders as it elaborates country development cooperation policies. While better than the DAC average, alignment with country priorities and use of country-owned results have decreased significantly since 2016 (Table 5.1). A more strategic approach that links Japan’s co-operation to the Sustainable Development Goals (SDGs) and includes the overall picture of its investments at the country level would give Japan visibility, allow it to be more effective in establishing priorities aligned with the partner government, and show how it is responding to country needs.

JICA’s country analysis papers could draw on a broader range of data. JICA uses country analysis papers to guide its programming, presenting and testing these with partner governments. Recognising the challenges of accessing reliable, up-to-date official statistics, JICA could consider making greater use of a range of analyses – e.g. by going beyond headline poverty data to use poverty mapping instruments, such as IDPoor in Cambodia (Annex C). Drawing on its extensive alumni network and other stakeholders (academics, think tanks, local CSOs, innovators and other private sector actors) could also add value to Japan’s context analysis.

Japan responds to requests from partner governments. Government partners complete and submit annual needs surveys by funding instrument – technical co-operation, grants and loans. The ODA Task Force considers these and forwards its recommendations to Tokyo for approval (Chapter 4). The overall resource envelope for each country and region is determined by adding the budget lines allocated for each instrument which – except for humanitarian and emergency relief funding – typically follow past trends. A detailed, public, rolling three-year country plan includes all ODA investments and provides an overview of Japan’s interventions.

Japan’s use of partner country financial management systems is significantly higher than the DAC average. Japan makes good use of public financial management systems for budget execution, financial reporting, auditing and procurement (74% in 2018 compared with the DAC average of 55%). However, when this is broken down by modality, use is seen to be high for loans (96%) but very low for grants (8%). In Cambodia, where there is a higher risk of corruption, JICA supports all public finance for grants and technical co-operation, disbursing funds directly to the recipient’s account dedicated solely to the project in a bank in Japan. ODA loans can be on- or off-budget, and there are five possible disbursement procedures. In Cambodia, JICA uses the transfer procedure for ODA project loans, making payments directly to contractors upon the request of the government. At 64%, Japan’s use of partner countries’ results frameworks, results indicators, data and statistics, while better than the DAC average (56%), has reduced since 2016 (Table 5.1) (OECD/UNDP, 2019[8]).

Japan applies the "Build Back Better" principle in responding to disasters by accompanying a country from the emergency phase to its reconstruction. In order to realise this principle, Japan often assists the partner government in designing a reconstruction master plan that enhance the country's resilience. In doing so, Japan shares a wide array of technical expertise and their past experiences and offer financial assistance (both grant and loan) for resilient infrastructures. Predictable and transparent partnerships are common.

Japan’s annually scheduled payments are made on time, but its medium-term predictions could be improved. Almost all scheduled payments (98%) are disbursed during the fiscal year, less so those in the medium-term (Table 5.1). Sharing rolling plans with partner governments, as seen in Cambodia and Ghana (Annex C), has enabled Japan to improve its medium-term predictability (increasing from 63% to 83%). Nevertheless, publishing these more regularly on MOFA’s website would also increase transparency and accountability to the public.

Japan is a responsive development partner, regularly updating aid management databases. It responds to requests from partner governments to provide or input details of its projects into partner government aid management databases, thus ensuring information can be accessed by partner governments and other actors, including civil society and parliaments. Japan is also an active participant in mutual accountability assessment processes (OECD/UNDP, 2019[8]).

Japan plays a positive role as lead donor, encouraging co-ordination and mapping of donor support. Where it leads government-development partner technical working groups, Japan has played an important role in mapping donor support in sectors, as seen in Cambodia and Ghana (Annex C).

Table 5.1. Japan’s performance on effective development co-operation, 2018

	Alignment and ownership by partner country (%)				Predictability (%)		Transparency
	SDG17.15 Use of country-led results frameworks	Funding recorded in countries’ national budgets	Funding through countries’ systems	Untied ODA	Annual predictability	Medium-term predictability	Retrospective statistics (OECD CRS)	Information for forecasting (OECD FSS)	Publishing to IATI
2016 round	75.9%	83%	67.9%	74.6%	98.4%	63%	Excellent	Needs improvement	Needs improvement
2018 round	64.2%	70.7%	74.4%	67.2%	97.6%	88.5%	Excellent	Needs improvement	Needs improvement
2018 DAC average	56%	53%	55%	82%	88%	65%
Trend	▼	▼	▲	▼	▬	▲	▬	▬	▬

Note: Data drawn from 252 projects totalling USD 5.9 billion in 63 countries and territories. CRS: Creditor Reporting System; FSS: Forward-spending survey; IATI: International Aid Transparency Initiative. Green triangle = positive trend; green bar = positive performance, no change; red triangle = negative trend; red bar = improvement needed; no change. Untied ODA figures refer to all bilateral ODA excluding donors’ administrative costs and in-donor refugee costs. The 2018 Round’s figure of untied ODA has been updated with the most recent data available (2018).

Source: OECD/UNDP (2019[8]), Making Development Co-operation More Effective: How development partners are promoting effective, country-led partnerships, www.oecd.org/dac/effectiveness/Part-II-of-the-Global-Partnership-Progress-Report.pdf.

Greater synergies among instruments would add value to Japan’s efforts

Japan’s development co-operation spans a range of instruments which are all appreciated in their own right (Chapter 2). Japan strives to achieve synergies among its development co-operation instruments, for example as seen in Cambodia, Japan is complementing investments in water infrastructure with technical co-operation supporting government capacity to manage water supply. Nevertheless, a more co-ordinated and strategic approach could be taken to country portfolios, creating greater synergies across Japan’s loans, grants, technical co-operation, volunteers and support provided to other development actors. The potential for more synergies was observed in Cambodia and Ghana (Annex C). This could help Japan to achieve development co-operation outcomes which are greater than the sum of its individual project parts.

Japan places no policy conditions on its aid

Japan’s terms and conditions of aid are clear and transparent. It does not place policy conditions on development co-operation.

References

[4] JICA (ed.) (2020), Africa. Asia-Africa Knowledge Co-creation Program (AAKCP), https://www.jica.go.jp/english/our_work/thematic_issues/south/project06.html (accessed on 6 February 2020).

[6] 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).

[3] JICA (2018), JICA’s Support for South-South and Triangular Cooperation, Japan International Cooperation Agency, https://www.jica.go.jp/activities/issues/ssc/ku57pq00001wlrnp-att/pamphlet_en_01.pdf (accessed on 24 February 2020).

[1] JICA (2015), JICA Partnership Program. Toward active citizen participation in international cooperation, Japan International Cooperation Agency, https://www.jica.go.jp/english/our_work/types_of_assistance/citizen/c8h0vm0000anzm5q-att/partner_01.pdf (accessed on 24 February 2020).

[5] JICA (2015), News. KIZUNA Project Launched - Impressive Results From Early Evacuations, Improved Seismic Resistance in Buildings, https://www.jica.go.jp/english/news/field/2015/151102_01.html (accessed on 6 February 2020).

[7] MFA (2020), Country Assistance Policy for Respective Countries, Ministry of Foreign Affairs of Japan, https://www.mofa.go.jp/policy/oda/assistance/country2.html (accessed on 6 February 2020).

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

[8] OECD/UNDP (2019), Making development co-operation more effective: How development partners are promoting effective, country-led partnerships, OECD, http://www.oecd.org/dac/effectiveness/Part-II-of-the-Global-Partnership-Progress-Report.pdf (accessed on 5 August 2019).

Notes

← 1.  As part of its work stream on civil society engagement in development co-operation, the OECD’s Development Co-operation Directorate recently prepared a report on how DAC members work with civil society. See www.oecd.org/dac/civil-society-engagement-in-development-co-operation.htm.

← 2.  The Colombo Plan was established in 1950 as a regional inter-governmental organisation to improve the economic and social development of the Asia-Pacific region. Its focus is on human resource development and south-south co-operation. See www.colombo-plan.org/overview.

← 3.  See www.jica.go.jp/oda (in Japanese).