Sparking Social Change: Public and Private Partnerships in Japanese ODAPolitics Economy
This year marks the sixtieth anniversary of the launch of Japan’s program of official development assistance in 1954. In recent years, an increasingly diverse stream of financing and investment has been directed at developing countries to address the increasingly complex and difficult economic challenges confronting those nations. Alongside ODA from the developed world, we see rising amounts of funding from emerging countries, private flows, such as foreign direct investment, and grants from nongovernmental organizations and foundations. Rather than limiting itself to the provision of funding and technology to developing countries in line with past experience, Japan now needs to pool its ODA efforts with the powers of the private sector and civil society so that ODA can play an increasingly important role as a catalyst for social change in the developing world.
In this article I will look at different examples of ODA programs to give an overview of the accomplishments and current direction of Japan’s development assistance. These will emphasize the role Japanese ODA plays in being a catalyst for efforts within various international development assistance frameworks, such as the United Nations Millennium Development Goals and the post-2015 development agenda.
Japan Fourth in the World in ODA
The following graph compares net(*1) amounts of ODA provided by leading member countries of the Organization for Economic Cooperation and Development’s Development Assistance Committee, along with a comparative estimate(*2) of Chinese foreign aid. As the graph illustrates, Japan was the leading donor through 2000, but slipped to second place below the United States from 2001 to 2005. It then fell below Britain in 2006 and Germany and France in 2007, remaining in fifth place through 2012. Last year it climbed back to fourth place, rising above France. Meanwhile, China boosted its foreign aid about tenfold in the 12 years from 2001 to 2013 and now places sixth in the global ranking of donors. This is one indication of the increasing role emerging economies are playing in providing funding to other developing countries.
Averages for 2010–12 saw net ODA figures account for only 26% of resources flowing to the developing world from DAC member countries, with 66% coming from private flows and 6% from private grants. Key issues for Japan and other developed countries at this point are how to strengthen the catalytic capabilities of their ODA and how to ensure that the effects of ODA and of private flows are compatible and sustainable in promoting development.
ODA in Asia and Beyond
Japan has provided ODA loans for nearly a half century, and this lending has been a major portion of the assistance it has contributed. Averages for 2010–2012 show loans accounted for 51% of all bilateral ODA, surpassing grant aid, including technical cooperation. Over this same three-year period, 65% of Japan’s aid went to recipients in Asia, 20% to Africa, 6% to Central and South America, and 4% to the Middle East. Middle-income countries received 73%, with the remaining 27% going to low-income and least developed countries. A relatively large portion of the lending, 45%, was allocated to bolster economic infrastructure, such as transportation and energy programs, with 26% going toward social infrastructure, such as construction of schools, hospitals, and water and sewage systems.(*3) ODA loans for economic infrastructure are mainly offered to middle-income Asian countries, while social infrastructure in LDCs in Asia and Africa is also supported through Japanese ODA.
In terms of specific projects, Japanese ODA in Asia has funded ports and other infrastructure projects on the Thailand’s eastern seaboard and in northern Vietnam. These projects served as a catalyst for development in these regions by attracting foreign direct investment, helping in the formation of industrial clusters, promoting trade, and creating jobs. Japanese ODA has also helped construct airports in the capitals of Mongolia, Kazakhstan, Vietnam, Thailand, Malaysia, and Sri Lanka. Technical cooperation drawing on Japan’s experience has also helped Vietnam improve its legal systems and reform its state-owned enterprises and banking sector and aided Myanmar’s central bank in establishing a modern payment and settlement system.
In Africa, a Japanese technical cooperation project to improve mathematics and science education in Kenya has been adopted as a model for similar projects in 14 other countries on the continent. Programs are also underway in Ethiopia: One is working to bring about high-level talks between the Ethiopian government and Japan with the goal of establishing industrial policies, while another is aiming to increase quality and productivity in manufacturing through the introduction of kaizen, a Japanese management technique of promoting continuous incremental improvements.
Shaping the Post-2015 Development Agenda
The MDGs have stood as a symbol of efforts by the international community to promote global development, resulting in a wide range of programs addressing such developmental goals as reducing extreme poverty rates by half by 2015 and decreasing maternal and infant mortality. Japan has remained closely involved in global cooperation. For example, it pledged at the United Nations MDG Summit in 2010 to contribute $5 billion toward projects for global health and $3.5 billion for education over the five-year period from 2011. Japanese development assistance measured as a share of gross national income rose in 2013 to 0.23% from 0.17% the previous year. However, this figure still falls short of the common DAC target of 0.7%, and Japan ranks eighteenth among the 28 DAC member countries by this measure.
As the deadline for achieving the MDGs approaches, the discussion in the UN as well as among the broader international community has moved toward establishing new targets for the post-2015 development agenda. Japan, as part of the debate toward establishing a framework for this agenda, has adopted the perspective of ensuring human security,(*4)) emphasizing, among other concepts, the realization of universal health coverage, mainstreaming disaster risk reduction, and creation of sustainable cities.(*5)
Below I will offer some examples of how Japanese ODA has combined with efforts by the private sector and civil society to work as a catalyst on issues related to the MDGs and the post-2015 development agenda.
Enlisting Private Funds for the Campaign Against Polio
An example of efforts that are part of the goal of reducing child mortality is the eradication of polio, a disease that can strike at any age but mainly affects children under five years old. Since the Global Polio Eradication Initiative was launched by the World Health Organization in 1988, Japanese efforts have helped eliminate the disease in China—the illness was completely stamped out there in 2000(*6)—and played an important role in the campaign to banish the illness from the Western Pacific region. Today, polio remains endemic in only three countries: Pakistan, Afghanistan, and Nigeria. As part of the GPEI, in 2011 JICA, an ODA implementation organ of the Japanese government, provided ODA loans for a project aimed at eliminating the disease in Pakistan.
This program was innovative in enlisting private donors to enhance the effectiveness of JICA’s ODA loan. Using what is referred to as a “loan conversion” mechanism, the Bill & Melinda Gates Foundation agreed to repay JICA on behalf of the Pakistani government if the project was successfully implemented. In addition to the loan, Japan provided grant aid, and technical assistance from JICA experts, working together with the World Bank, WHO, and the United Nations Children’s Fund in implementing a nationwide vaccination campaign over two years from 2011. The campaign was successful in increasing vaccination rates in the country and meeting other goals, and in April 2014 the Gates Foundation, recognizing the achievements of the program, officially announced plans to repay the loan. Using the success of the Pakistan program as a model, in May 2014 JICA announced the signing of a similar loan agreement with the government of Nigeria.
Promoting Private Projects at the Local Level
As part of the discussion by the international community about the post-2015 development agenda, emphasis is being placed on orchestrating development efforts with civil society and the private sector. An example of private enterprise working with ODA to enact local-level social change in developing countries is the JICA-funded “One Village, One Product” project in Kyrgyzstan. The OVOP movement, which originated in Japan’s Ōita Prefecture, aims to enliven local communities by assisting residents in creating products for domestic and international markets using locally available materials. The approach has already spread to China, Southeast Asia, and Africa.
JICA helped initiate the OVOP movement in the Kyrgyz province of Issyk Kul in 2007, and in 2010 local producers formed a cooperative under the program. A collaborative project between JICA and Ryōhin Keikaku, the Japanese company that operates the well-known chain of Muji stores, selected the program in Kyrgyzstan and one in Kenya to provide products for Muji’s 2011 Christmas gift campaign. Since then, Ryōhin Keikaku has each year worked with the cooperative in Kyrgyzstan to produce original mobile phone cases and other felt products for sale in Japan and elsewhere. Women make up a significant number of those working at the cooperative, with the skills and income gained through the initiative serving to raise their status within their households and broader society.
Encouraged by the results of its partnership with JICA, Ryōhin Keikaku has worked to expand its product development and job creation efforts to other countries, such as Cambodia. In 2013, the company became the first Asian retailer to join the United Nation Development Program’s Business Call to Action, which strives to promote business success and sustainable development, and it was also presented by the International Finance Corporation, a member of the World Bank Group, with the Inclusive Business Leader Award the same year.
Local Cooperation to Create Barrier-Free Infrastructure
The third and final set of examples I would like to introduce are in the area of infrastructure. Creating sustainable cities is one concept being considered for the post-2015 development agenda. An important aspect of this idea is the creation of public transportation systems that take into account the diversity of needs in society, including those of people with disabilities, with the concepts of barrier-free and universal design serving to help make such systems a reality. ODA often functions as a catalyst toward realizing programs aimed at helping disadvantaged members of society.
An example of this is the loan that was extended to Thailand for constructing Bangkok’s first subway line, called the Blue Line. The Mass Rapid Transit Authority of Thailand consulted and shared ideas with groups representing disabled persons at each stage of the project, from planning through construction. The MRTA also had technicians attend training courses on barrier-free design presented by the Bangkok-based Asia-Pacific Development Center on Disability(*7)—the two organizations crafted a close relationship with the MRTA allowing the APCD, among other things, to include tours of construction sites on the Blue Line as part of their training sessions. These and other efforts enabled the MRTA to establish an original barrier-free guideline containing points not addressed under Thai law, leading to the installation of equipment like escalators and door shields on platforms.
A similar approach has been utilized in recent years in constructing Bangkok’s Purple Line and Red Line and also on railway projects aimed at meeting the urgent demand for public transportation in cities in Vietnam, Indonesia, India, Bangladesh, and other countries. Projects have drawn on Japan’s experience, along with careful attention to compliance with the laws and regulations of each country, and have involved consultations with organizations representing people with disabilities when integrating aspects of barrier-free and universal design.
These three examples illustrate how Japanese ODA functions as a catalyst for change within society and local communities by assembling of private grants and facilitating private-sector and civil-society to participate in projects. It should be noted that the experiences forged in Japan’s ODA projects do not stay within the confines of individual countries but are being shared across borders.
Toward the Future of ODA
In conclusion, I would like to touch on future issues for Japanese ODA. First, as financial flows to developing countries continues to diversify, it will be necessary to further strengthen the role of ODA as a catalyst. Second, Japan should become strategically involved in bilateral ODA and multinational aid efforts with international organizations, focusing on leading development efforts in fields where it holds a comparative advantage, such as universal health coverage and mainstreaming disaster risk reduction. Finally, it is necessary to precisely gauge the effects of ODA programs through the utilization of advanced methodologies in fields such as statistics, economics, and political science, and to disseminate these results in an easily understood format. Fully grasping the impact of ODA will help strengthen globally mandated monitoring efforts for the post-2015 development agenda, and will build up Japan’s ability to serve as a leader in global development efforts.
(Originally published in Japanese on August 26, 2014. Title photos: Members of the “One Village, One Product” cooperative in Kyrgyzstan making felt goods for Muji stores [left]; felt mobile phone cases and other products sold globally through Muji in 2013. Photos courtesy of Ryōhin Keikaku.)
(*1) ^ ODA is measured in either net or gross amounts; the DAC generally uses net figures (calculated by deducting loan repayments by recipient countries from the total amount of aid provided). When comparing net amounts across countries, Japan’s ranking is lower because of the large amounts of loan repayments it receives. As measured by gross figures, however, Japan ranked first through 2001 and has been in second place most years since then.
(*2) ^ Kitano Naohiro and Harada Yukinori, “Estimating China’s Foreign Aid 2001–2013” (JICA Research Institute Working Paper No. 78, 2014), http://jica-ri.jica.go.jp/ja/publication/workingpaper/estimating_chinas_foreign_aid_2001-2013.html.
(*3) ^ Author’s calculations based on Annex B in OECD Development Cooperation Peer Reviews: Japan 2014 (Paris: OECD Publishing, 2014), http://www.oecd.org/dac/peer-reviews/japan.htm, http://www.oecd.org/dac/peer-reviews/Japan-peer-review-2014.pdf, http://dx.doi.org/10.1787/9789264218161-en.
(*4) ^ “Human security” means focusing on individual people and building societies in which everyone can live with dignity by protecting and empowering individuals and communities that are exposed to actual or potential threats. (Government of Japan, “Japan’s Medium-Term Policy on Official Development Assistance,” 2005, http://www.mofa.go.jp/policy/oda/mid-term/index.html.
(*5) ^ The goal of universal health coverage is to ensure all members of society have affordable access to a wide range of health services. “Mainstreaming” disaster risk reduction means having governments prioritize it, including it as an element in development policy and planning and increasing investment in it.
(*6) ^ See Okada Minoru, Bokura no mura kara porio ga kieta: Chūgoku Santōshōhatsu kagakuteki genbashugi no kokusai kyōryoku (Ridding Our Village of Polio: International Cooperation and Scientific Work On the Ground in China’s Shandong Province) (Ōita and Tokyo: Saiki Printing, 2014).
(*7) ^ The APCD was established with aid from JICA as a Thai government-affiliated center in 2002. Focusing on the Asia-Pacific region, it has the aim of advancing the empowerment of disabled persons and creation of a barrier-free society. See Ninomiya Akiie, Kurumaisu ga Ajia no machi o yuku: Ajia-Taiheiyō Shōgaisha sentā no chōsen (Wheelchairs Move Around Asia’s Cities: The Challenge by the Asia-Pacific Development Center on Disability) (Tokyo: Diamond Inc., 2010).