Mechanism of Development Cooperation Program
(1) Development Investment and Loan Program
This program aims to extend funds under favorable conditions to facilitate projects undertaken by private Japanese companies in developing countries that contribute to social, agricultural, forest, mining and manufacturing development. Consideration is given to projects for which implementation is hindered by difficulties in obtaining loans from the Export-Import Bank of Japan or OECF, given factors such as risk, profitability, technical challenges, and the effects of economic cooperation.
(i) Scope of the Program
(a) Related Facilities Improvement Projects
These are projects designed to improve facilities that are essential to the operation of development projects undertaken by private Japanese companies in developing countries. As such, they are used to improve facilities with a significant public interest component that will lead to improved living conditions and welfare for local inhabitants.
Specific examples of related facilities improvement projects include public facilities that contribute to enhancing the living conditions and welfare of local residents, such as schools, hospitals, public halls, temples, churches, and firefighting facilities, and those that improve access to the wider region through facilities that may also be needed for corporate activity, such as roads, ports, water and sewerage, and electricity services.
A precondition for gaining funding under the related facilities improvement project program is that the prime development project should be funded by a government-related financial institution such as the Export-Import Bank of Japan, or the OECF.
(b) Experimental Projects
Experimental projects are development projects of a pioneering nature that will defy realization unless they are integrated with a program of technological improvement and development. Once the aim of the development has been identified, it is acknowledged that the benefits of cooperation will be significant, not only for the company concerned, but also for the region.
Specific examples of experimental projects include the cultivation of nontraditional crops, afforestation, processing of previously unutilized timber species, development of mineral resources (excluding oil, flammable natural gas, and metallic minerals), mining, beneficiation, and refining.
It should be noted that, oil, flammable natural gas and metallic minerals are excluded under this program, because development projects for these products are already eligible for support provided by the Japan National Oil Corporation and the Metal Mining Agency of Japan. Manufacturing development projects are also ineligible, since regional differences in siting conditions are scant, and few cases qualify as experimental projects.
(ii) Eligible Persons and Corporations
Those benefiting from the development investment and loan program are, as a rule, Japanese corporations or Japanese people who personally undertake or implement development projects in developing countries, and those with equity or intending to invest in overseas corporations that undertake such projects.
(iii) Investment and Loan Conditions
Despite the presence of substantial benefits in terms of development cooperation, the conditions attached to investment and loan programs are extremely soft, due to the fact that they tend to lack profitability or have a substantial risk profile.
(2) Survey and Technical Instruction Program
Under this program, technical support is provided for addressing various implementation-related issues in Japanese corporate-led projects with excellent development cooperation benefits that contribute to economic and social advancement and to improvement in public welfare in developing countries.
(i) Survey Cooperation
This form of cooperation is extended to projects eligible under the development investment and loan program. At the request of a Japanese company that intends to implement such a project, JICA undertakes a basic survey, development plan survey, and an implementation survey on behalf of the company, thereby facilitating the implementation of the project.
(ii) Technical Guidance
Technical guidance is delivered through the dispatch of experts and acceptance of trainees to ensure the smooth implementation of development cooperation projects. That is, in circumstances where technical problems arising in the course of project implementation cannot be addressed locally, or where the technological standards of local personnel are lacking, JICA will, at the request of a Japanese company, dispatch experts to the developing country or accept local technical staff for training in Japan. JICA bears part or all of the costs incurred for survey cooperation and technical guidance.