The “African growth support” initiative, multi-stakeholder study group
Fourth meeting minuteDate: 19th June, 2008
(18:40 – 20:30)
Place: GRIPS Room 4A
Participants: 13 people with background in government, aid implementation
agencies, research institutes, and 6 people from the GDF secretariat participated.
The 4th meeting was held following the conclusion of the TICAD IV conference (28–31May). In line with one of the pillars of TICAD IV, namely “Boosting Economic Growth”
in Africa, the 4th meeting aimed at concretely discussing the direction and approachnecessary to effectively implement the various initiatives in the Yokohama
Declaration. On this backdrop, the meeting was opened with a presentation from theMinistry of Foreign Affairs of Japan (MOFA) describing the background andpreparation leading to the TICAD IV along with explanation of the various resolutions
adopted at the conference. The secretariat followed with a summary of the salient
points discussed in the previous three meetings.
TICAD IV Summary•The TICAD IV was deemed a success, in view of the large participation fromAfrican countries (51 out of 53 countries, with – 40 heads of states andgovernments) as well as participation at the highest level by multilateral andother partner organizations including the World Bank, the UN, the EU and others.
In addition, unlike with previous TICAD meetings, the TICAD IV yielded the“Yokohama Declaration” whose commitments are described as proactive byAfrican participants, as it includes very specific, action-oriented initiatives topromote trade and investment to Africa. With this positive outcome, thegovernment of Japan planned to seek for more support for African development
issues from its G8 partners at the upcoming Toyako G8 Summit.

•

Considering in the past, several commitments to support development in Africa
have been made but not materialized, the MOFA and other stakeholders haverecognized the need for a follow-up mechanism to ensure that, this time
resolutions contained in the “Yokohama Declaration” are fully implemented. In
this respect, a secretariat is scheduled for set up in the Africa division of theMOFA with the goal to devise and oversee an action plan for implementation ofthe “Yokohama Declaration”.

•Participants were also informed (MOFA presentation) that a fact-finding mission,
to be conducted at the senior level of government, and comprising politicians aswell as business executives (including keidanren members) is scheduled to visit
selected African countries at the earliest (tentatively in August or September).

1For effective support to growth in Africa•Participants recognized that, because the trend is towards a much more focused
approach to development assistance, it is important that assistance that isprovided be effective in bring desired outcome. Therefore, participants agreed forthere being a need to devise country-specific assistance programmes includingbusiness development programmes such as to combine various components andinitiatives to make Japan’s assistance more effective. These programmes could be
implemented on the back of joint growth diagnostics studies (or policy dialogue)
to lead into – the all too important – “self-discovery” by the recipient countries.
As an example, the South African government (using its own resources) inviting a
Harvard university research team to assist a home grown initiative to identify
binding constraints to “shared growth” was cited as a model that could be
supported through ODA in countries with similar initiatives.

•With respect to the dispatch of an investment mission, here too, participantsargued that ODA being Japanese taxpayers money – contributed with the aim tostrengthen friendship with other nations through development assistancecontribution – any such dispatch should take into account Japan’s strategicinterests. Therefore, investment missions should be adequately prepared incollaboration with the recipient countries and involve participation of theJapanese public, private sector as well as academic and research circles todetermine the best policy option in selected countries.

Balancing financial assistance and intellectual contribution•While on the one hand there is commitment to provide Africa with up to fourbillion US dollars in yen loans within 5 years, on the other hand, participants
expressed concern at two levels; first, an excessive capital inflow in countries
with unstable macro-economic conditions could worsen the external debt
situation and, second considering the current commodity boom and the resulting
increase in revenues to resource rich countries, problems such as the Dutch
Disease could occur. Therefore participants emphasized the need to provide,
along with the funds, knowledge to support industrial development.

•With respect to external debt concern, participants argued for more flexibility tojudge countries on a case-by-case basis to account for limitations in the WorldBank and IMF’s analysis technique that relies on a preset index and can therefore
lead to erroneous conclusions (in the index, scenario analysis such as natural
resources development is not fully built-in in). For instance, based on the WorldBank and IMF’s Debat Sustainability analysis, Bhutan would not qualify for
financial assistance, whereas if consideration is given to potential for electric
power development, the country would qualify.

•Participants agreed on the importance of intellectual support as illustrated by thecase of Namibia. A resource rich country that has financial reserves – thanks tothe commodity boom – but whose treasury department (Ministry of Finance)
expressed incapacity to devise concrete strategies to implement the economicgrowth (economic white paper). In early June at the World Economy Forum on
Africa organized in Cape Town South Africa, the prevailing view from African
participants was that of an interest and expectation for support for accelerated

2growth and investmentMozambique)promotion (through projects such as MOZAL inNew JICA’s to emphasize "high-quality" project cooperation•Whereas revenues from natural resources as well as pension funds have
improved governments finances, there is a crying lack of commercially attractive
investment opportunities to invest in and earn a return. Despite their multitude ofneeds, many governments don’t know how to use their increased revenues more
profitably. Irrespective of the private sector, public sector, or public-private
partnerships, the scarcity of innovative ideas is felt throughout. Participants
agreed that in order to come up with concrete high-quality projects there is aneed to support human and institutional capacity development including thecapacity for undertaking feasibility studies (not only commercial viability but, also
project development).

•Participants noted that while traditionally most financing to developing countries
is justified by the determination that locally available public funds are insufficient
to meet the needs, recent increase in domestic funds availability as well as thenew trend of public-private partnerships funds call for a new approach todevelopment assistance. Therefore the need for development partners to get
involved from the feasibility stage and provide technical assistance throughproject completion, maintenance as well as management structure and systems
control. Participants hoped the New JICA would adopt such an approach.

•Another bottleneck for mobilizing private finance is the underdeveloped state of
the African financial markets. Therefore participants argued for assistance toimprove the capacity of the local and regional financial markets which will
promote more public-private partnerships. In recent years, various development
assistance organizations as well as international organizations have been focusing
on development of the African financial markets. In particular, there has beenemphasis on development of micro-finance institutions to improve financial
services to the poorest segments of society. Here too, besides the need for funds,
more should be done to provide knowledge in how to manage these funds wisely.
At this point in time, it is not clear idea whether Japan can – at both thegovernment as well as the private sector level – provide such assistance.

“Target country” selection•Though narrowing selection of "target country" is not preferable from a diplomatic
viewpoint, trends in leading countries can be picked from various development
initiatives including those that emerged from the recent TICAD IV. Considering
the Japanese system and various primary factors on the Japanese side, target
country selection may result naturally instead. In the mean time, anotherapproach could be to start with countries that appear to offer the best
environment for success.

•It is not imperative that the amount of overall assistance (in financial terms) fromJapan correspond to the support to accelerated growth in the recipient country.
Moreover, as far as support to accelerated growth is concerned, recipient
countries political situation as well as leadership will be important factors to3

consider, as it will depend on analysis of specific updated information obtained in
the target country. Therefore, participants expressed the need for Japan todispatch staffs to establish relationships of trust and networks with relevant localauthorities.
Continuous policy dialogue with two or more entry points
Types of support:
1. Policy dialogue driven by and incorporating mega-project development (e.g.:
infrastructure, resource-based FDI), and aligning various development
programmes to it; and) focused project
2. Policy dialogue and joint drafting of strategies by invitation from a country notinitiated by existence of mega-project (in the case of Africa say a “mini-Ishikawaproject”).
•The setting up of a consortium to include the private sector, the government,
researchers, development assistance agencies, learning from lessons of the pastpolicy dialogue experiences (e.g., “Ishikawa project” in Vietnam) could yield a
new way to collaborate for effective policy dialogue with recipient countries. In
the event of a firm request for policy dialogue from a recipient country, thismodel could be used for 1 to 2 years to collaborate with the recipient government
in a concrete manner to do policy dialogue.

•In the case when research is undertaken first, more time would be required toproduce tangible outcome. It may be rather more effective to focus on a concrete
project and pursue policy dialogue around it.

•While on the one hand, it is important to support industrial strategy formulation
to identify and nurture industry sectors with the best prospects (a macro-levelapproach), on the other hand, an approach where the investment facility aimed
at inducing private companies to identify viable industry sectors is also a feasible
alternative (a micro-level approach). However the drawback of the latterapproach would be to concentrate on the service sector which will not promote
the all important manufacturing sector to emerge. In any case, it is important toinclude information that derives from the micro level into the policy dialogue.

•Besides the government, other parties such as ESKOM, DBSA, and others (in thecase of the southern Africa region) could be considered for collaboration in theproject activities, and Japan could participate in such projects if they are judged
to be of high quality.

Future work
The secretariat plans to summarize the content of the previous four sessions of thebrainstorming discussions in a paper format to be distributed to participants aroundend of July or early August. After receiving participants’ comments, the secretariat
will prepare a final draft proposal to be delivered to the New JICA.
In order to include African perspectives to the discussions, a seminar led by Mr.
J.D.N. Elumba (secretariat) along with other prominent Africans in Japan is planned
to be held on the 25th of July.

4