Official Development Assistance (ODA)
Japan's ODA White Paper 2002
Part I. Trends in Japan's ODA in a Rapidly Changing World
Chapter 3
Increasing Public Support and Participation: Further Promoting ODA Reform
Section 1. Severe Domestic Situation regarding ODA and the Acceleration of ODA Reform
- In the face of severe economic and fiscal conditions and domestic criticism of ODA, Japan's ODA budget has been decreasing since fiscal year 1998.
- In 2002 the Ministry of Foreign Affairs announced and began implementing various specific ODA reform measures anchored in the key concepts of transparency, efficiency, and public participation.
In the face of a prolonged economic slump, a deteriorating fiscal situation, and increasingly critical public views of ODA, Japan's ODA budget has been falling since fiscal year 1998. The fiscal year 2002 ODA budget registered a particularly large decline of 10.3% from the previous year. The draft budget for fiscal year 2003 similarly shows a drop of 5.8% from the previous year. If this budget is passed as is, the ODA budget will have declined by 26.6% over the past six years. Many European countries and the United States, meanwhile, which had been showing signs of "aid fatigue" in the 1990s, announced increases in their ODA outlays in 2002, as mentioned in Chapter 1.
ODA is financed by the taxes paid by the public, so gaining popular support for and understanding of ODA is an essential precondition for its implementation. As such the Ministry of Foreign Affairs (MOFA) has used the Internet and such forums as town meetings to try to convey in ways that are easy to understand the significance of and international trends in ODA. It has also tried to address the public's concerns about ODA by advancing reforms. In 2002 MOFA announced and implemented various specific ODA reform measures anchored in the key concepts of transparency, efficiency, and public participation, starting with the "Ten Reform Principles to Ensure an Open Foreign Ministry" announced upon Foreign Minister Yoriko Kawaguchi's appointment. It also commenced efforts to lend its ODA policy greater strategic direction. The proposals and other documents concerning ODA reform announced in 2002 are summarized below. Concrete measures contained in these proposals are explained in detail in the following sections.
(1) "Ten Reform Principles to Ensure an Open Foreign Ministry" and the Second Consultative Committee on ODA Reform
In mid-February, immediately following her appointment, Foreign Minister Kawaguchi announced the "Ten Reform Principles to Ensure an Open Foreign Ministry," one pillar of which was identified as increased efficiency and transparency of ODA. Measures aimed mainly at enhancing transparency were (1) conducting hearings of the views of NGOs at overseas diplomatic missions; (2) including third-party participants in committees to identify priority fields and projects; (3) appointing nonministry personnel to senior posts (with responsibility for evaluation) in MOFA's Economic Cooperation Bureau; and (4) introducing proper auditing methods. As demonstrated by its inclusion in the "Ten Reform Principles," ODA reform is one of the key items of discussions by the Reform Advisory Board and a pillar of the resulting Action Program for Foreign Ministry Reform.
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Recommendations by Advisory Groups and Political Parties March 29 July 2 July 22 July 25 December 18 December 21 |
Series of Reforms Undertaken by MOFA February June 27 July 9 August 21 December 10 December 20 |
1. ODA totally utilizing the mind, intellect, and vitality of the Japanese people
Finding and Fostering of Development Personnel
- Strive to improve development education in compulsory school education
- Create human resources development programs for undergraduate and graduate students
Effective Utilization of Existing Human Resources and Technology
- Establish a "Human Resources Development Center for International Cooperation" (provisional name)
- Expand the quota for public recruitment and entrustment contracts of specialists dispatched by the Japan International Cooperation Agency (JICA)
- Proceed with personnel exchanges with NGOs and enterprises
- Assign those people experienced in specific sectors, countries and regions to related sections of the Ministry of Foreign Affairs and ODA implementing agencies
Collaboration with NGOs
- Enforce support for NGOs and have NGOs make further efforts to secure their eligibility and augment transparency
- Build a mechanism for collaborating with NGOs familiar with local situations in formulating ODA policies
Securing Transparency
- Further promote disclosure of information at each stage, from selection to implementation, ex-post evaluation and follow-up on projects
- Reinforce evaluation by a third party at each stage (Emphasize the judgment of the "Board on Comprehensive ODA Strategy" regarding the priority of ODA projects; introduce a thorough third-party audit system, including audit with no prior notice, regarding bidding procedures; and further utilize external knowledgeable people in ex-post evaluation)
- Hold ODA Town Meetings on a regular basis in various parts of the country
2. Prioritized and Effective ODA with a Strategy
Establishment of a "Board on Comprehensive ODA Strategy"
- Establish a permanent "Board on Comprehensive ODA Strategy" which is composed of representatives with various backgrounds
- The Board as the commanding authority of Japan's ODA, consulted by the Minister for Foreign Affairs, will discuss basic ODA policies such as Country Assistance Programs and the significance and the degree of priority of major ODA projects and will make proposals to the Minister
Prioritizing Country Assistance Programs
- The "Board on Comprehensive ODA Strategy" will narrow down the priority areas of aid
Promotion of International Collaboration
- Formulate "sector/issues-specific aid principles" by holding policy dialogues with international organizations and donor countries and assessing the needs of ODA recipient countries
3. Drastic Improvement of the ODA Implementation System
Securing Consistency
- Reinforce links between grant aid, technical cooperation, and loans
Speedy and Flexible Response
- Respond to urgent needs such as conflict prevention and peace building
- Seek closer collaboration with NGOs in order to implement minute assistance that meets a variety of needs on the ground
- Promote transfer of authority and business to local field offices
Ceaseless Review
- Seek further improvement of ODA evaluation (in particular, promote evaluation of technical cooperation that includes JICA experts and reinforce functions to feed back results of evaluation to policy planning and improvement of aid methods)
- Make an overall review of long established schemes, including a review of the debt-relief scheme
In March 2002 the Second Consultative Committee on ODA Reform (a private advisory body to the foreign minister chaired by professor Toshio Watanabe, dean of Takushoku University's Faculty of International Development) submitted its final report to Foreign Minister Kawaguchi. It contains concrete proposals centered on the concepts of "transparency," "efficiency," and "public participation" and is built around the three pillars of "ODA making full use of the spirit, intellect, and vitality of the Japanese people," "prioritized and effective ODA with a strategy," and "drastic improvement of the ODA implementation system."
(2) Launching of the Board on Comprehensive ODA Strategy and Announcement of the "Fifteen Specific Measures for ODA Reform"
Based on the recommendations of the Second Consultative Committee on ODA Reform's final report, MOFA in June 2002 launched the Board on Comprehensive ODA Strategy, with Foreign Minister Kawaguchi serving as the chair and Professor Watanabe (who chaired the Second Consultative Committee on ODA Reform) as the acting chair. Other members on the board are the senior vice-minister for foreign affairs in charge of ODA, the parliamentary secretary for foreign affairs, development specialists, former members of international organizations, NGO representatives, business leaders, and journalists. As a rule, the board meets once a month to discuss basic ODA policies, such as the revision of the ODA Charter and the formulation and revision of Country Assistance Programs, as well as other important issues. Working closely with other concerned ministries, MOFA intends to thoroughly apply the results of these meetings in the planning and formulating of ODA policy. (For details, see Section 2 [3].)
In July 2002, under the policy of "immediately implementing whatever possible," MOFA announced "Fifteen Specific Measures for ODA Reform" in the five fields of "auditing," "evaluation," "partnership with NGOs," "exploring, fostering, and utilizing human resources," and "information disclosure and publicity," centered on the concepts of "public participation," "transparency," and "efficiency," which are also the keywords of the final report of the Second Consultative Committee on ODA Reform.
With the exception of items that require new budgetary appropriations, these specific measures were steadily implemented during fiscal year 2002. Also, the government's fiscal year 2003 draft budget includes necessary expenses for the expansion of external auditing and the establishment of the Human Resources Development Center for International Cooperation (provisional name). As for the state of implementation of the "Fifteen Specific Measures for ODA Reform," see Section 3 (1) on partnership with NGOs, Section 3 (2) on exploring, fostering, and utilizing human resources, Section 3 (4) on information disclosure and public relations, Section 4 (2) on auditing, and Section 4 (3) on evaluation.
- 1. Auditing
- (1) External auditing will be expanded to all schemes of economic cooperation (ODA loans, grant aid, and technical cooperation).
- (2) Auditing will be conducted without prior notice in each scheme.
- (3) Mechanisms for follow-up of auditing results and improvement based on the results will be worked out, through external participation, such as auditing companies.
- 2. Evaluation
- (4) In fiscal year 2002 and thereafter ex-post evaluation should include, without exception, the viewpoint of a third party.
- (5) Evaluation Committees, composed of external intellectuals, have already been established in the Ministry of Foreign Affairs and implementing agencies (The Ministry in December 2001, JICA in June 2002, and JBIC in June 2002), through which verification of and recommendations based upon the feedback of individual evaluations will be further enhanced.
- (6) From the viewpoint of reinforcing tie-ups with the recipient governments and their agencies for improving evaluation, the Ministry will expand evaluation by related agencies of recipient countries in fiscal year 2002. In addition, the Ministry will hold the Second Tokyo Workshop on ODA Evaluation, in order to have the governments of recipient countries deepen their knowledge and understanding of ODA evaluation.
- (7) As part of efforts to disclose the results of evaluation, and also to reinforce tie-ups among the Ministry, implementing agencies, and evaluation-related academic circles, the Ministry will co-host a seminar on ODA evaluation in autumn 2002, targeted at NGOs and the public.
- 3. Partnership with NGOs
- (8) To strengthen the functions of Regular Consultations between NGOs and the Ministry of Foreign Affairs, the Ministry will establish two subcommittees on ODA policy consultation and on promotion of collaboration between NGOs and the Ministry, in addition to the current plenary committee. The first meetings of the two subcommittees will be held promptly.
- (9) In those developing countries where many Japanese NGOs are engaged in assistance activities, regular consultation meetings ("ODA-Embassy") among Japanese embassies, field offices of JICA and JBIC, and NGOs will be immediately started.
- (10) To support capacity building and NGO activities, the Ministry introduced a new scheme, "grant assistance for Japanese NGO projects," in June 2002. The Ministry will also introduce "grassroots technical cooperation" as soon as possible.
- 4. Exploring, Fostering, and Utilizing Human Resources
- (11) The Ministry will shortly begin to study new frameworks ("Human Resources Development Center for International Cooperation [provisional name]") for efficiently promoting an information network on human resources related to international cooperation and matching of human resources.
- (12) As part of efforts to strengthen collaboration between development education and compulsory education, programs for development education will be regularly implemented in all domestic organizations of JICA, so that elementary, junior high, and senior high school students understand the importance of international cooperation.
- 5. Information Disclosure and Publicity
- (13) The Ministry will regularly hold ODA Town Meetings (in Kanazawa in late August 2002, in Tokyo in October, and monthly thereafter in principle). At these meetings, discussions of the Board on Comprehensive ODA Strategy will be explained, and opinions of the public will be widely heard.
- (14) ODA Mail Magazine will be started on July 11 2002.
- (15) "ODA One-Stop Shop" (List of ODA project sites), showing an outline of ODA project sites vividly with photographs, will be started up on the ODA website in autumn 2002.
(3) Final Report of the Reform Advisory Board and the Action Program for Foreign Ministry Reform
The issue of ODA reform was also discussed by the Reform Advisory Board, launched in February, as one of the measures in Foreign Ministry reform, based on the "Ten Reform Principles" announced by Foreign Minister Kawaguchi immediately following her appointment. The Reform Advisory Board submitted its final report in July 2002, which made four specific proposals regarding ODA reform: (1) ensuring transparency in implementing grant aid; (2) reinforcing ODA evaluation; (3) ensuring public accountability for debt cancellation; and (4) ensuring efficiency in the selection and implementation of ODA projects. The final report also proposed specific measures to strengthen cooperation with NGOs and bolster the system of support for NGO activities.
Following the proposals submitted by the Reform Advisory Board, MOFA announced the Action Program for Foreign Ministry Reform in August. The ODA-related measures contained in the action program aimed to (1) ensure transparency during the process of selecting and implementing grant aid projects; (2) reinforce ODA evaluation and examine its effectiveness; (3) ensure accountability for debt cancellation; and (4) ensure efficiency in the selection and implementation of ODA projects. MOFA is now proceeding with the steady implementation of these measures.
1. Measures to ensure transparency during the process of selecting and implementing grant aid (for implementation during fiscal year 2002)
- The Committee for Grant Aid, comprising private citizens, shall be established under the Director-General of the Economic Cooperation Bureau in accordance with the following points:
- Members shall consist of about five experts from such fields as finance, development economies, law, and accounting.
- The term of office shall be two years.
- The committee shall meet about once a month for closed meetings (strict confidentiality shall be observed).
- The committee shall be briefed on ODA projects regarding requests, selection screening, approval, bidding (comparison of anticipated prices and those of actual winning bids), and the state of implementation.
- The committee shall release a brief evaluation report once a year.
- The method of selecting grant-aid-implementing organizations shall be changed from designated bidding to preliminary screening plus general competitive bidding.
- There shall be external auditing by third parties relating to the suitability of procured items and the appropriateness of prices.
- The carry-over of the grant-aid budget to subsequent years shall be made more flexible.
- Guidelines on environmental and social considerations relating to grant aid shall be formulated, taking into account the "JBIC Guidelines for Confirmation of Environmental and Social Considerations," which was formulated by the Japan Bank for International Cooperation (JBIC) on April 1, 2002.
2. Measures to reinforce ODA evaluation and examine effectiveness (for implementation during fiscal year 2002)
- The Evaluation Division shall be moved from the Economic Cooperation Bureau to the Minister's Secretariat.
- Efforts shall be made to expand third-party evaluation and promote joint evaluation with NGOs, international organizations, and others.
- Countries receiving large amounts of aid shall be obliged to submit and disclose evaluation letters.
- NGOs and other private groups as well as international organizations shall make evaluations of how the grant aid for increase of food production is being implemented in recipient countries and the information shall be made public. The aid program will be reviewed premised on abolition.
3. Measures to ensure public accountability for debt cancellation (for implementation during fiscal year 2002)
- A yen loan repayment examination committee shall be established in accordance with the following points:
- Members shall be selected from among experts in such fields as finance, development economies, law, and accounting and also from aid-implementing organizations (strict confidentiality shall be observed).
- The committee shall make country-specific analyses of yen loans covering such items as the total amount, the state of repayment, the state of debt management, the impact of inflation and exchange-rate fluctuations in each recipient country, the total amount of Grant Aid for Debt Relief, the state of forbearance lending, and the estimated losses. It shall also calculate the burden of the Japanese people in future.
- The committee shall release an annual report.
- The committee shall make proposals regarding such issues as a debt relief strategy and quantitative reductions of yen loans starting in fiscal year 2003 premised on the abolition of Grant Aid for Debt Relief, which is a part of the Foreign Ministry budget.
- The committee shall release a brief evaluation report once a year.
4. Measures to ensure increased efficiency in the selection and implementation of ODA (for immediate implementation)
- In order to implement ODA efficiently and in a unified manner, the various functions and roles that are currently dispersed among related ministries and agencies shall be thoroughly reviewed. In order to streamline the overlapping of human resources and uncoordinated implementation system, consultations with related ministries and agencies should begin on the formation of a more desirable organizational structure, bearing in mind one that is more unified. In doing so, the following points should be noted:
- Where possible, work should be entrusted to the private sector.
- A bold streamlining of personnel and organizations should be carried out.
- Jurisdiction over aid-implementing agencies should be streamlined from the point of view of achieving unified policy implementation.
- Appropriate policy instructions should be given to the cabinet regarding the formation of an ODA strategy, the drafting of Country Assistance Programs, the distribution of the budget among loans, grant aid, and technical cooperation, and other policy matters.
- Financial statements, including consolidated statements incorporating implementing agencies under government jurisdiction, should be formulated and be subject to external auditing.
- An appropriate ODA evaluation manual should be compiled, enabling regular and coordinated execution of external evaluations.
- A large number of private citizens, including development assistance experts and those with NGO experience, should be appointed to important policymaking positions and as staff members.
- A function should be included to cultivate human resources proficient enough to be called true experts in the field of development assistance.
1. Measures to ensure transparency during the process of selecting and implementing grant aid
- A committee shall be established under the Director-General of the Economic Cooperation Bureau to promote more effective and appropriate implementation of grant aid (final decision and establishment by the end of December 2002).
- The selection of companies receiving contracts for grant aid shall in principle be through open, competitive bidding (already being implemented).
- In line with the 15 Specific Measures for ODA Reform announced on July 9, 2002, external auditing shall be expanded (for immediate implementation; to be reflected in the budget requests for fiscal year 2003).
- In order to ensure the efficient execution of the grant-aid budget, requests for carry-overs into the following year's budget shall continue to be made (already being implemented).
- JICA's "Environmental Guidelines" shall be revised, and assistance shall be provided according to the revised guidelines (immediate start of study, to be concluded by the end of December 2002).
2. Measures to reinforce ODA evaluation and examine effectiveness
- The transfer of the Evaluation Division from the Economic Cooperation Bureau shall be studied as part of organizational reform (final decision by the end of December 2002).
- In line with the 15 Specific Measures for ODA Reform announced on July 9, evaluation shall be implemented from the viewpoint of a third party (for immediate implementation; to be reflected in the budget requests for fiscal year 2003).
- Joint evaluation with NGOs and international organizations shall be further expanded (for immediate implementation; to be reflected in the budget requests for fiscal year 2003).
- organizations in recipient countries, and consideration shall be given to the adoption of standardized evaluation forms (for immediate consideration; final decision by the end of December 2002).
- The present system of grant aid for increase of food production shall be drastically revised, including the possibility of abolishing the system (for immediate consideration; fiscal decision by the end of December 2002).
3. Measures to ensure public accountability for debt cancellation
- When considering and deciding on the provision of yen loans, examination of the economic and fiscal situations of the recipient country, including debt repayment capability, shall be conducted more strictly. The results of these examinations shall be reported to the Board on Comprehensive ODA Strategy in the fiscal year following the loan-provision decision, and efforts toward further improvement shall be made based on discussions by the board (for immediate consideration; implementation from fiscal year 2003).
- The issue of debt relief shall be studied primarily by the Ministry of Foreign Affairs, Ministry of Finance, and Ministry of Economy, Trade, and Industry, and a conclusion will be reached at an early date (for immediate consideration; conclusion by the end of December 2002).
4. Measures to ensure increased efficiency in the selection and implementation of ODA (for implementation by the end of September 2002)
- To encourage efficient implementation of ODA, views on the coordination of the functions and roles of the relevant ministries and agencies shall be exchanged through regular meetings of the Inter-Ministerial Meeting on ODA, established by oral approval of the cabinet in November 1999, and other meetings.
(4) Task Force on Foreign Relations for the Prime Minister
The Task Force on Foreign Relations, chaired by Special Advisor to the Cabinet Yukio Okamoto, submitted a report entitled "Japan's ODA Strategy" to Prime Minister Junichiro Koizumi in July proposing, among other things, improvements in the strategic nature of ODA. The report stated that reducing the amount of ODA was not desirable given current international trends, even in the light of severe fiscal conditions. Regarding ODA strategy, the report broadly divided Japan's ODA into two categories: assistance directly linked to national interest and assistance that cannot be said to be directly linked to national interest but that Japan should continue providing as a contributing member of the international community. With regard to the former, the report identified as priority regions the Association of Southeast Asian Nations (ASEAN), the less developed countries of East Asia, the Indian subcontinent, the Middle East, Central Asia, and the coastal countries of the Caspian Sea; as priority sectors, it cited the construction of infrastructure for the economic integration and growth of East Asia, assistance in the fields of the environment and energy, the reduction of poverty, peace building, and the promotion of understanding of Japan. (For details, see the Cabinet Office website
< http://www.kantei.go.jp/foreign/policy/2002/1128tf_e.html >.)
(5) ODA Reform: Implementation of Three Measures
In December 2002 Foreign Minister Kawaguchi announced an agenda for "ODA Reform: Implementation of Three Measures" consisting of a review of the ODA Charter, changes in debt relief methods, and the establishment of the Committee for Grant Aid.
In view of the changes that have occurred in the domestic and international situation in the decade since the formulation of the ODA Charter--which was approved by the cabinet on June 30, 1992, and forms the nucleus of Japan's ODA strategy--a decision was made to carry out a bold review of the charter while listening broadly to the opinions of the public. The review is currently underway, and a final conclusion should be reached in the middle of 2003.
Japan previously carried out debt relief for yen loans through the provision of grant aid for debt relief to the HIPCs and other countries eligible for relief on the basis of internationally agreed frameworks. However, it was decided that rather than provide grant aid for debt relief, Japan would forgive the debts on yen loans provided by JBIC from fiscal year 2003 in the light of the desire for an early solution to the debt problems of developing countries, the need to reduce the burden on debtor countries, and the improvements in the transparency and efficiency of ODA.
A decision was also made to establish the Committee for Grant Aid under the Director-General of MOFA's Economic Cooperation Bureau with the aims of achieving proper implementation of grant aid and enhancing transparency. The committee, to be staffed by NGO members and experts from the fields of finance, development economics, law, and accounting, would meet on a roughly bimonthly basis to examine projects at various stages--from their submission to cabinet meetings, bidding for contracts, and actual implementation--from the perspective of ensuring proper implementation.
(6) The LDP's ODA Reform Working Team
In September 2002 the Liberal Democratic Party (LDP) established the ODA Reform Working Team chaired by former Foreign Minister Masahiko Koumura under the LDP Policy Research Council's Special Committee on External Economic Cooperation. In December the working team issued a report entitled "Specific Measures for ODA Reform: Toward ODA That Is Understood by the Public," which contained such specific measures as (1) revising the ODA Charter; (2) strengthening the functions of drafting an ODA strategy; (3) increasing cooperation among ODA-related ministries and agencies; (4) strengthening the ODA implementation functions of MOFA, which plays a core coordinating role in economic aid; (5) giving local aid offices a greater role in policymaking; (6) strengthening cooperation with implementing organizations; and (7) fostering human resources with a high degree of specialized knowledge in the field of assistance.
As mechanisms for strengthening collaboration among ODA-related ministries and agencies, the report calls for the positioning and revitalization of forums under the Council of Overseas Economic Cooperation-Related Ministers, including the Inter-Ministerial Meeting on ODA at the bureau-director-general level and the Bureau Meeting for the Inter-Ministerial Meeting on ODA at the division-chief level, as well as separate experts meetings on financial cooperation, technical cooperation, and ODA evaluation. Also, in line with the Basic Law on the Administrative Reform of the Central Government, the report strongly urges MOFA to play a core coordinating role in the planning and drafting of the government's ODA strategy and policy and emphasized the need to strengthen its functions for this purpose. Furthermore, the report proposed that ODA specialists be trained in related ministries and agencies and called for active personnel exchange among related ministries and agencies as well as with implementing organizations. Another pillar of the report was strengthening the role of local offices in the policymaking process. It proposed the establishment of "local ODA task forces" comprising, among others, officers of Japan's overseas diplomatic establishments in charge of economic cooperation and staff of the local offices of implementing organizations.