Official Development Assistance (ODA)
1. Official Development Assistance (ODA): Its Significance and Recent Trends

1. The Significance of ODA

Various trends relevant to ODA have been undergoing significant change, both in Japan and abroad. Internationally, the end of the cold war has been followed by reorientations of aid policies, a heightened focus on global issues, and manifestations of "aid fatigue." In Japan, a protracted economic slump and an intensifying atmosphere of fiscal crisis have raised questions about ODA despite opinion surveys that underscore a still-strong level of public support for the nation's ODA policies and programs. 1 Taken together, these developments point to a need for serious efforts in reform that will translate into more effective ODA programs. At the same time, though, it is most important, "given Japan's position as a country highly dependent on the rest of the international community, and in view of the record Japan has set with ODA in terms of building international trust, .... [to work] to ensure that adequate ODA is available in terms of quantity as well as quality." 2

Many countries across Asia today are reeling from the effects of an economic crisis. Extending a helping hand to those countries will be beneficial to Japan itself, given the strong ties of economic interdependence it has cultivated with the rest of Asia at large. 3 Additionally, such help can be expected to earn Japan recognition as a "true friend in a time of need."

However, making substantial contributions not only to Asia, but also to Africa and other regions of the world, particularly with emergency humanitarian aid and assistance programs in such areas as poverty alleviation, education, human resources development, environmental conservation, health care, industrialization, and postwar reconstruction, can all be expected to help Japan itself enjoy sustained peace and prosperity over the long term. More importantly, though, as the world's second-largest economic power, it is imperative that Japan accept these efforts in aid as its obligation to the international community on which it has become so heavily dependent.

In the eyes of the international community, ODA serves as a mirror of Japan and its people. The actions and spirit of commitment that Japan demonstrates in the field of development assistance are manifestations of its awareness, ability, and dignity as a member of the international community of nations. 4 On that understanding, we must emphasize the obligation that Japan accept the responsibilities and costs commensurate with its stature as a major power.

Japan's ODA has demonstrated a substantial measure of success, and many recipient countries and their citizens have expressed sincere gratitude for that assistance. Such sentiments have earned Japan broad support from countries in Latin America, Africa, the Asia-Pacific, and other regions, notably within the context of UN elections and other international forums.

ODA projects often involve collaborative undertakings with countries whose historical backgrounds, traditions, cultures, and legal systems differ significantly from Japan's. As such, it is only to be expected that they will face certain difficulties along the way. Though Japanese ODA has on occasion been marked by failures or shortcomings, on the whole it has clearly helped to bolster Japan's credibility and prestige on the international stage. It is essential that Japan treasure and continue to nurture the assets it has accumulated through its ceaseless efforts in the ODA arena.

2. Fiscal Structural Reform and ODA

Reflecting serious fiscal strains, in FY 1998 Japan reduced the ODA budget allocation in its general account 10.4 percent from the previous fiscal year.

During the budget formulation process, then-Prime Minister Hashimoto instructed that the government make comprehensive adjustments beyond official quotas and place allocation priority on maximizing the effectiveness of ODA. As a result, the following changes were made. First, higher priority was placed on the environment, social development, and technical cooperation, and on UN agency programs in humanitarian fields. Second, in the interest of improved efficiency, a fraction of related ministry or agency budget outlays for technical cooperation was consolidated into or transferred entirely to the JICA budget. Third, the government enacted significant cutbacks in its fund donations to the OECF and to multilateral development banks.

Taken together with the recent weakening trend in the yen and compulsory increases in outlays to multilateral institutions, these developments on the ODA front have clearly confronted Japan with the necessity of making some rather painful choices regarding the priorities and nature of its aid programs. Granted that ODA is one of Japan's most important contributions to the international community, it seems essential that the country strive to maximize the effectiveness and efficiency of its ODA allocations and programs if it is to minimize the negative impact posed by its budget cuts.

3. Administrative Reform and ODA

Currently, efforts in administrative reform addressed to the whole government system are under way. In June 1998, the country enacted a Central Government Reform Law that calls for the reform of the current multi- polarized administrative system of Japanese ODA. In particular, it assigns the Ministry of Foreign Affairs (MoFA) to assume the core function of coordination throughout the whole government in the field of comprehensive policy-making of governmental development assistance including systematic aid policies for individual recipient countries and policy-making and planning of loan assistance. MoFA is also assigned to assume the core function of consistent coordination throughout the whole government for policy making and planning of technical cooperation projects. Further, the Japan International Cooperation Agency (JICA) is authorized to assume a central role in the implementation of technical cooperation, and the cabinet office and related ministries are directed to maintain close relations with JICA. Underlining the importance of consistency of ODA undertakings by government agencies with jurisdiction over different areas of the country's ODA apparatus, the Council on ODA Reforms for the 21st Century (discussed in 4 below) recommended the formulation of country assistance programs in which MoFA is obliged to play a pivotal role.

4. Measures in ODA Reform

Various domestic forums, including the Council on External Economic Cooperation and a House of Councillors investigative committee on international issues, have been actively involved in discussions concerning the issue of ODA reform and have issued substantive recommendations and proposals. Another forum, the Council on ODA Reforms for the 21st Century, was drawn up under MoFA's aegis as a consultative body to the Minister for Foreign Affairs, and chairing members from academia, the press, nongovernmental organizations (NGOs), and the business community.

Released in January 1998, the Council on ODA Reform's final report puts stress on heightened public understanding of and participation in the ODA process, as well as the need for more effective and efficient strategies of implementing aid. In particular, it recommends (i) formulation of country assistance programs; (ii) an emphasis on efforts in poverty alleviation and social development with a focus in people-oriented development; (iii) active efforts to address environmental issues; (iv) enlarged programs of assistance for the empowerment of women; (v) stronger levels of assistance for undertakings in human resources development; (vi) broader expertise support; (vii) the formation of global partnerships for collaboration by industrialized countries, middle-income countries, and developing countries; (viii) active efforts to prevent conflicts and assist in postwar reconstruction and development; and (ix) a strengthened private-sector role.

MoFA, for its part, is determined to utilize the many recommendations and proposals outlined above as valuable guidelines for the task of ODA reform, and will strive to take action on those it considers feasible.

Finally, in his first Cabinet meeting in July 1998, Prime Minister Obuchi indicated that steps should be taken to improve the transparency and efficiency of ODA. Work has since been initiated on efforts in reform that will help the country achieve those goals at an early date.

  1. According to an October 1997 opinion poll conducted by the Prime Minister's Office, 44.5 percent of the respondents felt that the country should maintain its efforts in economic assistance "at current levels." Furthermore, 31.2 percent were of the view that it should be stepped up, 13.6 percent, that it should be reduced as much as possible, and 2.3 percent, that it should be curtailed entirely. In other words, those who expressed support for the status quo or for expanded aid together accounted for 75.5 percent of the respondent total.
  2. Final report of the Council on ODA Reforms for the 21st Century.
  3. See section 3 on ODA and the Asian Currency and Financial Crisis.
  4. Final report of the Council on ODA Reforms for the 21st Century