Official Development Assistance (ODA)
Part I. Official Development Assistance (ODA): Its Track Record and Goals
Chapter 3 Formulation of the Medium-Term Policy on ODA: a Set of Aid Guidelines for the Next Five Years
The medium-term policy provides a systematic and concrete ODA approach for the next five years, and lays the groundwork for the country assistance programs for each main recipient country which will be created and announced this year. Such systematic implementation in line with the ODA Charter20 (approved by the cabinet in June 1992) should boost aid effectiveness and efficiency, as well as clarifying at home and abroad the basic approach and specific mechanisms of Japan's ODA.
Japan's straitened economic circumstances have increased the urgency of improving ODA quality; accordingly, no numerical targets have been given in the medium-term policy.21
In the process of formulating the medium-term policy, full attention was given to the views expressed by the Council on External Economic Cooperation, a consultative body to the prime minister, as well as views and recommendations on ODA reform put forward by the various sectors of society and Diet debate. The government also worked to incorporate public opinion to the greatest possible extent, engaging, for example, in exchanges of views with NGO representatives.
Section 1 Basic Approach
The medium-term ODA policy comprises an introduction and five key sections (see the outline in Chart 6, or the full text in Reference, Chapter 5).
The introduction overviews the current situation in those developing countries needing support from the international community, and also looks at global issues. In terms of the significance of Japan's aid program, it articulates the fundamental position that the provision of ODA (i) is an obligation that Japan must satisfy as the world's second-largest economy and the world's largest ODA donor, (ii) bolsters Japan's standing and credibility in the eyes of the international community, and (iii) contributes to promoting the national interest of Japan, which depends on world peace and stability, particularly given Japan's dependence on imports of resources, energy, food, and other basic materials.
The introduction is followed by an explanation of the necessity of gaining the understanding and support of the Japanese public if Japan is to continue providing effective ODA despite its current fiscal strains. To obtain improved public understanding and support, the medium-term policy declares it necessary that the government (i) pursue and implement aid projects in more appropriate, efficient, and effective manner, (ii) honor its obligations of accountability to the National Diet and the public at large, and (iii) coordinate ODA more closely with Japanese foreign policies and other policies pertaining to the national interest.
In Section I, "Basic Approaches," the following six key points are presented.
First, attention is devoted to the ideas and viewpoints contained in the Development Partnership Strategy that was put forward in 1996 by the Development Assistance Committee (DAC), a group set up among the industrialized countries forming the Organization for Economic Cooperation and Development (OECD). The new strategy states that the ultimate goal of development is to improve the well-being of people and formulates specific goals for social development,22 placing even greater emphasis on poverty alleviation and social development.
Second, emphasis is placed on the importance of promoting "ownership" in developing countries and "partnerships" with aid donors. Specifically, a commitment is made to the formation of aid frameworks and measures to strengthen coordination between donor countries and international organizations, conditioned on the self-help efforts and initiatives of the recipient countries.
Third, the policy calls for aid tailored to the needs and circumstances of each country, as determined through policy dialogues and preliminary development surveys. This will naturally demand that Japan actively pursue dialogues with each recipient. If Japan simply continues down familiar roads and fails to respond to changes in the circumstances of recipient countries, precious aid resources could be wasted. Attention must be paid to ensure that vested interests do not emerge in aid-receiving sectors and recipient countries. Aid schemes, such as ODA loans, should be reviewed, where appropriate, in light of changing conditions.
Fourth, it is noted that the advancement of developing countries will require-in addition to recipient efforts in self-help-shared roles and available resource coordination by all active agents in the development process, including the donor countries, international organizations, the private sector, and NGOs. In particular, given the growing role of the private sector through, for example, trade and investment, the tasks envisaged for ODA are improvement of the environment for private-sector activities and the inflow of private funds, and the provision of assistance to sectors not benefiting from private flows.
Fifth, emphasis is placed on "human-centered development" which is indispensable to the realization of sustainable development, and attention is given to "Human Security"23; namely, the protection of individuals from environmental deterioration, drug abuse, organized crime, infectious diseases, human rights infringements, regional conflict, antipersonnel mines, and various other threats.
Sixth, to foster heightened public understanding and support, efforts will be made to actively pursue national involvement in Japanese aid and greater visibility24 as well as a better awareness and understanding of Japan's assistance programs in recipient countries.
Although some recipient countries seem to have come to regard Japan's aid as a matter of course, in the great majority of cases, Japanese assistance is frequently reported by the local media and is much appreciated. In particular, during the Asian economic crisis, Japan provided an unparalleled level of assistance to the East Asian countries with which it has such close ties, and this sparked renewed awareness of the significance of Japanese aid. Naturally, Japan will also seek to increase awareness and understanding in recipient countries by developing dialogue with their governments and enhancing public relations activities.
To promote national involvement in and visibility of Japanese aid, it will be essential to involve Japanese companies and their outstanding technology in ODA programs. With the untying of yen loans,25 orders received by Japanese companies as a ratio of total yen loans-local and foreign currency included-have hovered at around 30 percent for the last five years. However, as developing countries are also keen to utilize limited assistance funds as effectively as possible, Japan should maintain its basic policy on general untied loans but also develop tied aid26 within the limits of international rules to make use of the special technology and management know-how of Japanese companies. Areas to which this strategy should be applied include human resources development and those environment-related projects where preferential conditions have been granted on special yen loans facilities27 toward economic structural reform. It will also be imperative to actively enlist the experience of experts from universities, think tanks, local governments, and the private corporate sector. Japan has already hammered out policies for even stronger dialogue and collaboration with the many NGOs deeply involved in the development arena.
In Section II, "Priority Issues and Sectors," and Section III, "Priority Issues and Sectors by Region," tangible perspectives, viewpoints, and strategies for aid are discussed with respect to seven issues and sectors and eight regions.28 It is noted that Japan will place greater emphasis on poverty alleviation programs, certain aspects of social development, human resources development, policy-related assistance, and other "software" aspects of cooperation while striving for balance with assistance in the arenas of economic and social infrastructure development. In the meantime, Japan will also continue to actively tackle various global issues. On the regional orientation of aid, The medium-term policy points out that Japan will maintain its priority on Asia as a region with which it has developed deep ties geographically, historically, and in various other dimensions.
Section IV, "Methods of Aid," underlines the necessity of action on four fronts if Japan is to implement ODA on efficiently and effectively : (i) a MoFA-led drive to strengthen coordination between government offices and agencies for the implementation of aid, (ii) active enlisting of the knowledge and experience of the private sector, NGOs, and local governments, (iii) heightened coordination and collaboration with other donor countries and international organizations, and (iv) greater assistance toward the expansion of the South-South cooperation provided by those developing countries (particularly emerging donors) which have launched assistance to other developing countries.
Section V, "Points to Be Followed in the Implementation and Management of ODA," identifies the following points as requiring due attention in implementing ODA: (i) greater understanding of the conditions in individual developing countries and the formulation of country assistance programs that give concrete form to current policies on country assistance29, and (ii) reinforcement of preliminary studies, environmental considerations, monitoring of implementation, and ex-post evaluation. The medium-term policy concludes with discussion of (iii) human resources for development cooperation; (iv) promotion of public understanding and participation; and (v) promotion of information disclosure. Steps are also called for to boost the participation of volunteers from different age groups-ranging from youth to senior people-in ODA implementation, as well as to provide more information pertaining to project tender processes and individual projects.
Section 2 Implementation of the Medium-Term Policy
It will be important to press steadily ahead with the implementation of medium-term ODA policy measures. As noted above, country assistance programs will be developed and announced for around 10 countries.
Mechanisms are already in place for some of the measures identified in the medium-term policy, and these should be further reinforced. To take the example of the active promotion of student intakes, which falls within the priority issue of human resources development, grant cooperation and JICA assistance for foreign students30 have been added to loans for East Asian foreign students, government exchange programs and other such existing assistance. There are also many other issues waiting in the wings. To use Japanese human resources to promote aid with greater visibility, for example, Senior Volunteer dispatches should be substantially expanded and support for NGO disaster relief activities beefed up. More effort must also be put into developing skilled human resources of an international standard in the area of development assistance through links with institutes such as policy research graduate schools and the Foundation for Advanced Studies on International Development (FASID).31 With the understanding and support of the Japanese people, the government will now shift into practice the approaches contained in the medium-term policy, starting with the most feasible.
Chart 6 Outline of Medium-Term Policy on Official Development Assistance (ODA)
Introduction
- Development issues for the 21st century (alleviation of poverty and under-development, democratization, and the transition to market-oriented economic systems)
- Globalization and assistance for reforms in economic structure
(economic rehabilitation and social stabilization in Asia) - Efforts to address global issues (the environment, population, AIDS, food, energy, and drug abuse)
- Fulfillment of Japan's role as the world's second-largest economy and its responsibilities as a member of the international community, resulting in improved international stature and credibility and benefiting tothe interests of Japan
- Accountability to the Diet and to the general public and the taking of steps to improve publicunderstanding and support will be essential, given the current fiscal and economic difficulties and themajor changes in the domestic and international environment for aid
- Implementation of aid programs and the coordination of appropriate, effective and efficient ODA with Japan's foreign policies and with other important policies pertaining to the national interest
I. Basic Approaches
- Aid with an eye to the guidelines of DAC's Development Partnership Strategy (specific development goals, self-help efforts, and partnerships)
- Exclusion of vested interests in aid-receiving sectors and recipient countries, and timely and appropriate revision of aid schemes (such as ODA loans) in light of changing conditions
- Emphasis on the concepts of "human-centered development" and "human security"
- National involvement in and visibility of Japanese aid; utilization of Japanese developmentexperience, technology and know-how, including private sector resources; promotion of betterawareness of Japanese aid in recipient countries
II. Priority Issues and Sectors
Statements of fundamental policy on the implementation of aid, with attention to key development issues (heightened priority on poverty alleviation programs, social development, human resources development, the "software" aspects of assistance, and the continued drive to address global issues)
- Support for poverty alleviation programs and social development (specific DAC partnership strategytargets, the 20/20 Initiative, alleviation of regional disparities, and "water" issues)
- Basic education
- Health and medical care
- Women in development (WID)/Gender in developing countries
- Support for economic and social infrastructure (benefits for the poor, and coordination and division of roles with the private sector)
- Human resources development and intellectual support
- Human resources development (expanded support for the acceptance of foreign students and the provision of Japanese-language programs in addition to current programs for human resources development)
- Intellectual support (including the dispatch of Japanese experts as policy advisers, etc.)
- Support for democratization
- Responding to global issues
- Environmental conservation
- Population and AIDS
- Food
- Energy
- Drug abuse
- Support for overcoming the Asian currency and economic crisis and promotion of economic structural reform
- Conflicts, natural disasters, and development
- Conflict and development (poverty alleviation programs and "good governance" for theprevention of conflicts, humanitarian aid [with attention to NGO roles], rehabilitation and reconstruction aid, and antipersonnel mine issues)
- Disaster prevention and post-disaster reconstruction (Japan Disaster Relief Teams, etc.)
- Responding to issues of debt relief (with emphasis on self-help efforts by debtor countries to repay their debts; allocation of funds freed from through debt relief to poverty alleviation and social development; and exercise of greater caution in the provision of ODA loans)
III. Priority Issues and Sectors by Region
Statements of basic Japanese position and policies on aid to eight developing regions (including Asia - priority region for Japanese ODA)
- East Asia, Southwest Asia, Central Asia and the Caucasus, the Middle East, Africa, Latin America and the Caribbean, Oceania, and Europe
IV. Methods of Aid
Statements on need for coordination with and utilization of other development means and resources, in addition to Japanese ODA, for the effective and efficient implementation of aid programs
- Coordination of ODA programs within the Japanese government, among implementing agencies and with various aid schemes
- Coordination with Other Official Flows (OOF) and the private sector (attention devoted to utilizationof private sector expertise and know-how, and the provision of opportunities for Japanese businessesto participate in ODA projects, etc.)
- Support for and collaboration with NGOs (dialogues with NGOs, support for NGO aid activities, utilization of NGO personnel resources and expertise, reinforcement of Japanese NGOs base for aidactivities, and coordination and collaboration with local governments)
- Coordination with other donor countries and international organizations
- Support for South-South cooperation
V. Points to Be Followed in the Implementation and Management of ODA
Statements on project implementation- and management-related issues that should be given attention in the interest of improving the effectiveness and efficiency of Japanese ODA and earning heightened public understanding and support both at home and abroad
- Understanding of the conditions in individual developing countries and the formulation of country assistance programs (policy dialogues and far-reaching studies, transparency and coherence backed by country assistance programs, utilization of local embassy resources, etc.)
- Preliminary studies and environmental considerations, monitoring of project implementation, ex-post evaluation
- Human resources for development cooperation (including strengthening and utilization of private-sector consultants)
- Promoting public understanding and participation (domestic and international activities in public relations and disclosure, promotion of participation in ODA activities by all sectors of the public [including private companies, local governments, NGOs, labor and management organizations])
- Promoting information disclosure (broad-based disclosure to the Diet and the general public; efforts to expand the scope of disclosure and improve the usefulness of related information; provision of information to the local media and local community; increased opportunities for the Japanesepublic to come into contact with ODA projects)
- See Part II, Chapter 5.
- The cabinet decided on June 3, 1997 that no new numerical medium-term target would be set.
- For example, halving the proportion of impoverished populations by the year 2015. See Part IV, Chapter 4, Section 2 Aid Coordination.
- See Part II, Chapter 1, Section 2 Human Security and ODA.
- See Part II, Chapter 1, Section 1 Efforts to Heighten Public Understanding, Support and Participation, and Part IV, Chapter 4, Section 5 the Utilization of Japanese Technology and Expertise.
- In other words, placing no restrictions on procurement origins for materials and services provided as part of assistance.
- Restriction of procurement origins to Japanese companies.
- See Part II, Chapter 2, Section 1 Towards Economic Recovery in Asia.
- The section on "priority issues and sectors" covers (i) support for poverty alleviation programs and social development; (ii) support for economic and social infrastructure; (iii) human resources development and intellectual support; (iv) responding to global issues; (v) support for overcoming the Asian currency and economic crisis; (vi) conflict, disaster and development; and (vii) responding to issues of debt relief. The following section on "priority issues and sectors by region" examines aid to (i) East Asia; (ii) Southwest Asia; (iii) Central Asia and the Caucasus; (iv) the Middle East; (v) Africa; (vi) Latin America and the Caribbean; (vii) Oceania; and (viii) Europe.
- See Reference, Chapter 5.
- A grant-based funding system for exchange students and a system for long-term trainee intakes, both established in FY1999.
- See Part II, Chapter 1, Section 1, 6. Cultivation of Human Resources for Development Assistance.