Proposal for a New
African Growth Support Initiative

Nov. 27, 2008
Izumi Ohno & Kenichi Ohno
GRIPS Development Forum:
Secretariat for Multi-stakeholder Discussion Group

TICAD IV and the Current GlobalEnvironmentz

TICAD IV (May 2008)-- regarded as “departure” from previous conferences,
communicating Japan s serious engagement in Africa andwillingness to share East Asian experiences

Yokohama Action Plan (May 2008) – Boosting Economic Growth –Trade, Investment and Tourism – 3. Assist Private Sector Development:“Support African countries to plan and implement industrial
development strategies and policies, drawing on Asianexperiences as appropriate.”z

Global financial crisis-- reminding the importance of strengthening the real economy andindustrial competitiveness-- Japan s commitment to African development to be tested

Concretizing the TICAD IVGrowth AgendazJapan must immediately formulate overall andcountry-specific assistance visions for African
developmentÎMulti-stakeholder discussion group (April-June, 2008)ÎWorkshop to gather African perspectives (July, 2008)ÎProposal for a New African Growth Support
Initiative (Aug. 2008)
99999

Basic principles
Incorporating East Asian perspectives
Target countries and selection criteriaEntry points for Japan
Requests for the Japanese government and the new JICA

Basic Principles(1) Making a firm commitment to long-term
partnerships with African countries, with sustained
policy dialogue as a key ingredient(2) Selecting a few target countries and producing
success stories(3) Putting Japan’s growth support into thepartnership context—mobilizing cooperation byother donor agencies, emerging donor countries,
and private sector

Incorporating East Asian
Perspectives
No standard “East Asian model” exists
z It should be the methodology (in a broad sense) todesign and implement policies unique to eachcountryz Japan should complement the current international
growth support, with East Asian perspectives suchas:zzzContinuous policy dialogue for joint strategy formulation
Goal orientation with concrete thinking, building on yourstrengthsÎDynamic capacity development:
Improve ability through selective hands-on experienceーclear
goals, focused efforts, trials and errors, cumulative sense ofachievement

Select Target Countries for
Success Stories<Selection Criteria>

Partner countries
zzz

Leadership
TargetGovt. administration forpolicy implementation countries
Economic potentialJapanzzz

Possibility of financialsupport
Business interest
Capacity of countrybased team-- Prerequisite: macroeconomic and political stability-- Respective TICAD IV pillars could have their target countries.
-- Target countries do not need to correspond to largest ODA recipients(e.g., no need to be annual Yen loan recipients); but long-term policy
engagement is vitally important.

Four Entry Points for Japan’sEngagement in Africa(1) If the country already has valid national development
vision, strategies and action plans, mobilize aid torealize the existing vision(2) If not, engage in continuous policy dialogue for selfdiscovery and strategy formulation (preferably followedby specific ODA and other assistance)(3) Build core infrastructure and align aid & investments
around it through donor coordination & public-private
partnership (e.g., development corridors, OSBP, OVOP)(4) If the country has attracted (or likely to attract) large FDI
projects by the Japanese private sector, mobilize aid tocreate an enabling business environment

(1) Mobilize Aid to Realize theExisting National Vision
The case of Ethiopiaz Ethiopia’s industrial vision (ADLI, Ind. Dev. Strategy)
and strategies (Leather M/P, etc) are largely validand clear.
z Donors should support Ethiopia’s vision rather thancreating a new one.
z Japan has many aid tools for industrial support:- Production and technology management- Industrial human resource training- Efficient logistics and marketing- Infrastructure (esp. transport and power)- Regional development planning- Creating necessary laws, standards, institutions- Removing negative impacts of industrialization

(2) Japan’s Policy Dialogue withDeveloping Countries
Argentina – Okita Mission 1985-87; 1994-96 (follow up)z Vietnam – Ishikawa Project 1995-2001
z Thailand – Mizutani Report for upgrading SMEs andsupporting industries, 1999
z Indonesia – Continuous Government-Business Policy
Dialogue; Urata Report for SMEs, 2000; Prof. Shiraishi& Asanuma, 2002-04 (post-Asian crisis)z Laos – Prof. Hara for overall development strategy,
2000-05z Myanmar – Prof. Odaka,1999-2002 (but failed)zIshikawa Project in Vietnam
1995-2001
zzzzz

Communist Party General Secretary Do Muoi requested Prof.
Shigeru Ishikawa to study the Vietnamese economy. The
bilateral project was agreed between two prime ministers.
JICA mobilized a large number of scholars and consultants.
Prof. Ishikawa emphasized the spirit of mutual respect andjoint work (and a lot of patience).
Topics covered: macro, budget & finance, industry, agriculture,trade, SOE reform, Asian financial crisis.
Continued dialogue—New Miyazawa Plan (1999), VietnamJapan Joint Initiative for improving investment climate (2003-).
Now under preparation—Vietnam-Japan Partnership for
Supporting Industry Development.

Ishikawa Project in Vietnam
Vietnam = Transition economy+ Underdevelopment

Advise on the drafting
process of the 6th FiveYear Plan

Phase 1 (95.8-96.6)¾Macro-economy¾Fiscal and monetary
policy¾Industrial policy¾Agricultural and ruraldevelopment

Tasks:•Macroeconomic stabilization•Structural adjustment (systemic transitionto market economy)•Long-term development strategy

Advice on theimplementation issues of
the 6th Five-Year Plan,
including participation inAFTA/APEC/WTO andindustrial policy
Phase 2 (96.7-98.3)¾Fiscal and monetary
policy¾Participation in AFTA/
APEC/ WTO andindustrial policy¾Agricultural and ruraldevelopment¾SOE reform

Advice on the emerging
issues arising from theEast Asian crises and theeconomic integration
process

Advice on theformulation of the 7thFive-Year Plan

Follow-up Phase(98.7-99.7)¾General commentary¾Fiscal and monetary
matters¾Industry and trade¾Agricultural and ruraldevelopment

Phase 3 (99.9-01.3)¾General commentary¾Fiscal and financial
Follow
reformup¾Trade and industry¾Agricultural and ruraldevelopment¾SOE reform and private
sector development

Joint research (2001- )¾Agriculture and rural development (livestock, vegetable,fruits and industrial crops, etc.)
Source: MPI and JICA, Study on the Economic Development Policy in
the Transition toward a Market-Oriented Economy In the Socialist Republicof Viet Nam (Phase 3) Final Report Vol. General Commentary, 2001, pp.iii-vi.

¾Monetary policy under partial dollarization

JICA Vietnam Office, Executive Summary of Ishikawa Project Phase 3,March 29, 2002.

¾Trade and industrial policies in the age of integration(NEU-JICA joint research program ÎGRIPS-VDF)¾Fiscal policy (introduction of personal income tax)

Continuous Policy Dialogue in
the Partnership Context
The case of Tanzania (development partnership)MKUKUTA (2nd PRSP) – Govt. s vision for broad-based
growthz Active development partnerships underway
z Japan: focused assistance plan (i.e., infrastructure andagriculture), participating in budget support, co-chairing
the Growth Cluster Group, dispatching policy advisers(industrial development, PRSC), etc.
z Active discussions on “growth drivers” (e.g., corridor & portdevelopment; special economic zones)
Î the next step would be to forge consensus on theirprioritization with coherencyz

Continuous Policy Dialogue in
the Partnership Context
The case of Zambia (South-South cooperation)
JICA is conducting “Triangle of Hope” Project 2006-09(improving investment climate), mobilizing a Malaysian
expert (ex-MIDA official).
z Task forces organized within GoZ, with the involvementof Presidentz Investment promotion initiatives – targeted at Malaysiaand Indiaz JICA support to the development of Multi-facility
Economic Zone (MFEZ)z As a next step, Zambia wants Japan to help formulate along-term industrial strategy.
z(3) Japanese Assistance for Core
Infrastructure
Greater Mekong Subregion – East-West andNorth-South Corridors for development of Indochinaz Thailand – Eastern Seaboard: creation of industrial
zones around a port infrastructurez Vietnam – Highway No.5 (Hanoi – Haiphong Port)
for FDI attraction (industrial clusters)z Cambodia – Sihanoukville Port, power and telecom
networks, special economic zone
z El Salvador – La Union Port + regional developmentz Mozambique (planned) – Nacala Port and Corridor
for regional developmentzEl Salvador: Growth Diagnostics
vs. Japan’s ODAzzz

Hausmann-Rodrik Growth Diagnostics 2003: The largest
constraint in El Salvador is the lack of self-discovery caused
by market failure (low appropriability). Infrastructure is not abinding constraint.
Local Report 2008 (FUSADES): Our infrastructure is best inCentral America and we are already a regional hub, but wecan do even better by handling trade more efficiently. This willraise our productivity and competitiveness. For this purpose,infrastructure, especially La Union Port, is essential.
Japanese ODA in El Salvador: Upgrade La Union Port as
key infrastructure. Additional support for social & HRD,
productive sectors, Eastern Region development, andregional integration.

The Vision: Strengthening El Salvador’s
Position as a Regional Transport Hubzzzz

Airport already aregional hub (built byJapan 28 years ago)
Central American
Highway link
Pacific-Atlantic link via
Panama Canal – ElSalvador as a regional
feederHowever, La Union Portis low capacity
Î Build a new port withsufficient capacity andservices

Components of Japan’s ODA in
El Salvador (ongoing)
KEY INFRASTRUCTURE- Construction of La Union Port- Rebuilding an old bridge (Honduras border)- Digital map technology for efficient planning- Urban development planning for La Union CitySocial & Human RD- MEGATEC La Union(training center)- Primary schools & math- Clean water- Rural electrification- Solid waste control

Support for
Productive Sectors

Eastern Region
Development- SME promotion- Aquaculture- Small-scale agriculture- Reservoirs & irrigation- Small-scale livestock- La Union Port- Plan Puebla Panama- CAFTA & other FTAs
- Cent. Amer. integration- M/P for Eastern Region

Build Core Infrastructure and Align Development
Programs
Nacala Development CorridorÎ(Source: CPI, Govt. of Mozambique)aThe Case of Mozambique (planned)
Regional development around Nacala portand corridor-- Nacala-Nampula: paved-- Namupla-Cuamba: ODA loan planned (by JICAwith AfDB)

(4) Mobilize Aid to Facilitate FDIProjectszUsing ODA to mitigate risks for private sector
investments in Africa (e.g., infrastructure, HRD, CSR)-- In East Asia, ODA played a catalytic role in promoting Japanesetrade & investment.

New initiative, based on TICAD IV commitment topromote public-private partnershipsz Public-private joint missions to promote trade &investment in Africa (Sept. 2008)
z Follow-up activities by MOFA, METI, JICA, JETRO toconduct preliminary surveys on port and transport
infrastructure development (e.g., Ghana, Tanzania,Madagascar)z New JICA -- the Office for Private Sector PartnershipzRequests for the Japanese Govt.
and the New JICAz

Build professional teams for intellectual aid -- newalliances among the public, private/NGOs & academic
circlesz

Build a theoretical basis for growth support with East
Asian perspectives and disseminate (i.e., the role of new
JICA research institute)z

Devise innovative approaches to facilitate theformulation and implementation of high-quality
infrastructure projects (e.g., faster process, link with TC,collaboration with regional development institutions)zIntroduce instruments to support local private sector
development (e.g., microfinance, equity investment &guarantees), to ensure the broader benefits from ODA or
privately-financed large-scale projects

Thank You Very Much !
z For details, please visit the websites of

GRIPS Development Forum
http://www.grips.ac.jp/forum/ (Japanese)
http://www.grips.ac.jp/forum-e/ (English)z Publication

http://www.grips.ac.jp/forum/pdf08/PN4.pdf(Japanese)
http://www.grips.ac.jp/forum-e/pdf_e08/
PN5.pdf (English)