Japan s ODA at theCrossroads: Reforms,

Japan s ODA at the Crossroads
z 2008: Theopportunities and challenges

Year of Destiny of Japan s aid?

z TICAD IV (Tokyo International Conference forAfrican Development): springz Hosting G8 Summit: Julyz New JICA: October

February 14, 2007 (at DFID, London)
Izumi Ohno
GRIPS Development ForumÎExcellent opportunities to demonstrate Japan s renewed
commitment to aid and share its development visions

National Graduate Institute for Policy Studies (GRIPS)-- under a new institutional framework-- domestically and internationally

1. Overview of Japan s ODA:
Main Characteristics

Topics of Presentation
1.

Overview of Japan s Official Development
Assistance (ODA)zODA policy formulation and implementation:
assumed by various ministries and agenciesz-- Characteristics, institutional framework, and trends
2.

Future perspectives-- Japan s core competence, and potential for
UK-Japan partnershipzzOverview of Japan s ODA:
Comparison with UK and US (1)
Japan

UK

Limited involvement by the Legislature on strategy
and basic direction of ODA
z Regional concentration in Asiaz Multiple menu of assistance: grants, loans, and TA
zCurrent ODA reforms in Japan-- The nature of reforms, opportunities, and challenges

3.

Primarily MOFA (overall coordination), MOF, METI and two
executing agencies, i.e., JICA and JBIC

Loan aid, mainly focusing on economic infrastructure

Diverse aid modalities: projects (main) and nonprojects (incl. budget support, debt relief, food aid)

Overview of Japan s ODA:
Comparison with UK and US (2)
Japan

UK

US

(2005: net disbursement)$ 13,147 mn(0.28%)$10,767 mn(0.47%)$27,622 mn(0.22%)

Bilateral vs.

79% vs. 21%

76% vs. 24%

92% vs. 8%

USLegal and policy - No lawframework- ODA Charter (Cabinetdecision), MediumTerm Policy- Int l Development
Act (2002)- DFID White Papers- Foreign Assistance
Act (1961, amended)- WH National Security
Strategy (2002- );USAID Policy
Framework (2006)

Volume (ODA/GNI)

Legislative
committees- Comprehensive review - No specialized
by Int l Development
committee for ODA;
Committee (House ofbut vigorous budget
Commons, establishedscrutiny by Congressin 1997)(2004-05: % of total grossdisbursement)

Institutionalframework- Recently, special
committee for ODA
established (House ofCouncilors in 2006)- Policy: MOFA incoordination with MOF,
METI, etc.
- Implementation: MOFA(grants), JBIC (loans) &JICA (TA), etc.
- Other ministries &agencies- DFID- Independent，
cabinet-level dept. for
ODA policy &implementation- USAID: semiindependent，subcabinet-level aid
agency- MCA (2004-): govtowned corporation- Other depts. &agencies

multilateral (2005: % oftotal net disbursement)
Regional distribution

1.East Asia & Oceania(40.7%)
2.Middle East & North

Africa (19.3%)

1.Sub-Saharan Africa(53.6%)
2.South & Central

Asia (21%)

1.Middle East & NorthAfrica (47.4%)
2.Sub-Saharan Africa(22.1%)

Major aid use (2004-1.Economic

1.Social & admin.

1.Social & admin.

05: % of total bilateralcommitments)

infrastructure (26.8%)
2.Social & admin.
infrastructure (21.4%)

infrastructure (30.0%)
2.Humanitarian aid(8.1%)

2.Humanitarian aid

Grant share (2005: %of total ODA commitments)

48.8%

96.5%

100%

ODA through NGOs

1.7%

9.2%

Not reported

infrastructure (43.6%)(14.3%)(2004-05: %of total bilateralcommitments)

Source: OECD/DAC (Development Cooperation Report 2006, CRS online database)1

New Institutional Framework for Japan s ODA
1. Overseas Economic Cooperation Council (OECC)
TooyamaPrime Minister

2. Current ODA Reforms<Key Points>z Accelerated from 2002: initially reforms within theexisting framework; more comprehensive
institutional reforms started from 2006z Largely driven by domestic motives (MOFA
scandals, budget cut, public sector reform, etc.)z Political commitment yet to be demonstrated; searchfor strategic visions for aid and development
continues
z Elements of hope: the emergence of “champions” ofcountry-based approach (in selected countries) andinnovative CSO activity

Chief Secretary

MOFA Minister

MOF Minister<April 2006>

METI Minister

2. Strengthening of MOFA s policy planning and coordination capacity
Int l Cooperation
Planning HQ

UN Admin.

Foreign Policy
BureauICB

ECB

3. New JICA with multiple aid menu

JBIC

OOF

ODA
loans

<Aug. 2006>

MOFA Minister

Global Issues Dept.
MultilateralDevelopment

JICA

MOFA

New PFITA

GrantsPublic Financial
OOF
Institutions

Regional
Bureaus<From Oct. 2008>

New JICA

ODA
loans

TA Grants

Source: Ministry of Foreign Affairs

Opportunities (1)Unprecedented reform, in terms of the scope andstructural changes in ODA policy formulation andimplementation
Strategy(OECC atCabinet Secretariat)

Policy(MOFA in coordination
with related ministries and agencies)

Implementation(new JICA: Oct. 2008 -)Index

Fiscal austerity likely to continue (esp. ODA General
Account budget)z Risks of failure to comply with international
promisesz111

102 107
100
100

110
100

109

100

100

90

80

90

90

109

100
98

100
94

78

70

73

60

General Expenditures
Public Works

109

108

99

91

87

2001

budget (MOF vs. MOFA debates)

90

110
109

2000

z Bleak prospect for significant increase in ODA

1001091999ODA does not give additional votes in Japanz Many competing priorities (e.g., North Korea,education, economic reactivation)
z104

1998

Minister s vision?)

110

1997

z Lack of political interest in ODA (Prime106

98

87

7067

978365
2006

120

2005

Challenges (1)Trends of ODA Budget and the Other Major
Expenditures (Index)

2004-- Holistic approach; maximizing
synergy of multiple aid menu

new JICA

Largest bilateral donor agency, in terms of aid
volume (gross disbursements)
z Broad menu of assistance: loans, TA, grants (about60% of grant aid to be transferred from MOFA);
greater synergy effects expectedz Potential for further strengthening country-based
approach, with enhanced functions of field officesz Potential for stronger research and dissemination
capacity, by possessing a holistic viewz2003<Three-tier structure>z Strategizing ODA
z Better policy coordination(within MOFA)z Effective & efficient aiddeliveryz About2002z

Opportunities (2)FiscalYear

DefenseODA (General Account)Source: Ministry of Finance, Japan (http://www.mof.go.jp/)

2Challenges (2)Elements of Hope

Strategic planning capability of OECC and its relation
to the new MOFA structure yet to be knownz Frequent staff rotation at the government levelz Absence of serious debates on the substance of ODAvisions and policyzzzz

Decision on new JICA is by-product of the reform of publicfinancial institutions, of which JBIC is a partzz

Why and for what aid? -- domestically, views aredividedzz

Widening income disparity within Japan
Search for Japan s role in international development and its
strategic vision continues

Hottokenai Sekai no Mazushisa (Don't let it be - World Poverty;
Japan 's national campaign for G-CAP); selling 4.5 million WhiteBand in 2005

Increasing business interest in CSR

I believe that:<Public Opinions>[Q] Japan s engagement in economic cooperation

Should decrease or stop

Innovative CSO activity emerging: effectively
outreaching various stakeholders and raising publicawareness of world povertyzzStrategizing Japan’s aid; invigorating growth support; and greater
engagement in development partnerships

3. Future Perspectives

Elements of Hope…?

Should maintain thecurrent level or increase(o/w: those repliedshould increase )At the field level, champions of country-based
approach emerging in selected countries (e.g.,Vietnam, Bangladesh, Tanzania, Ghana)

Until the early 90s

1999

2006

Around 80%

71.6%

68.3%

(Around 40%)

(29.2%)(23.1%)

Less than 10%

21.7%

25.3%

1.

Japan can make valuable contributions tointernational development, by focusing on its corecompetence and working with a broad range ofdevelopment partners.

2.

Further efforts are needed to sharpen its visions
and strengthen political commitment and publicawareness, while making sure that the current
reforms be properly institutionalized.

3.

Japan should clarify selectivity and strengthen its
support to country-specific growth promotion -- notonly in Asia, but also in eligible African countries.

[Q] Perception of specific regions and countries
19992006

Feel familiarity and friendliness with Africa

18.3%

25.0%

Feel familiarity and friendliness with East Asia

39.2%

45.6%

Feel familiarity and friendliness with China

49.6%

34.4%

Source: Opinion polls on foreign policy, carried out by the Cabinet Secretariat

Focusing on Japan s Core
Competence (1)Focusing on Japan s Core
Competence (2)Catch-up, latecomer perspectives
Utilizing its aid and development experiences in
East Asiaz Collaborating with emerging donors (e.g., South
Korea, Thailand, Malaysia, China?), based onshared development visionszzzzz

Growth-driven, poverty reduction
Potential for playing a catalytic role in Asia-Africa
cooperation

Uniquely positioned as a bilateral donor providing
ODA loans (contributing to growth promotion andscale-up of pilot efforts)

Growth strategy with “real-sector concern”
zzzzLong-term perspectivezzz

Trade, investment, industries, technology, humanresources, etc.
To complement Western “framework” approach
Development is a long-term undertaking and pathdependent in nature
Respect for each country’s uniquenessRealistic and pragmatic approach in aid deliveryzBest mix approach to aid modality and harmonization

Î“Aid for graduation”, diverse paths to development

3

UK-Japan PartnershipGood potential exists for UK-Japan partnership,based on complementarities
z UK s strengths:

Thank You Very Much !

zzz

Policy framework; designing international architecture;communication strategy and stakeholder engagement;
knowledge and experiences in Africa, etc.

Japan s strengths:
zConcrete, process-oriented support; field-based expertise;
infrastructure development; knowledge and experiences inAsia (incl. a possibility of engaging emerging donors), etc.

Please visit the website of GRIPSDevelopment Forumz For our general activities

http://www.grips.ac.jp/forum-e/z For publications

http://www.grips.ac.jp/forum-e/publications.htm

The END4