Official Development Assistance (ODA)
Japan's ODA White Paper 2002
Part I. Trends in Japan's ODA in a Rapidly Changing World
Chapter 3
Section 4. Enhancing Transparency and Efficiency at Every Stage of ODA Projects
- Transparency is being enhanced through the publication of a list of yen loan candidate projects (the "long list") and the holding of meetings of the Committee for Grant Aid.
- JBIC has formulated and published the JBIC Guidelines for Confirmation of Environmental and Social Considerations, while JICA has begun work on revising its environmental guidelines.
- Efforts are also being strengthened through various measures relating to procurement, auditing, and evaluation.
(1) Increasing Transparency in Project Selection and Procurement
Efforts are being made to ensure transparency at every stage of individual ODA projects, from the initial project cycle (project selection) to completion (ex-post evaluation), and to make sure that these procedures are conducted in a fair manner.
Efforts at the project selection stage include the publication of a list of yen loan candidate projects (the "long list") and the holding of meetings of the Committee for Grant Aid. Yen loan candidate project lists had already been announced for four countries (China, Morocco, Tunisia, and Viet Nam) when in November 2002 a list for India was also published. Each list cites candidate projects over a period of several years. Inclusion on the list does not automatically mean a yen loan will be provided; in principle, after the compilation of the list, formal loan requests can be made each fiscal year for projects that are on the list, and loans are extended to selected projects. From a medium- to long-term perspective, the compilation and publication of such lists is expected to enable the identification and formulation of more effective and efficient yen loan projects and to promote collaboration with other donor countries and international organizations.
The environmental and social impact of ODA projects must be subject to adequate checks before the projects are carried out. After conducting public hearings and taking note of a broad range of views from experts, NGOs, and others, the Japan Bank for International Cooperation (JBIC) in April 2002 integrated its environmental guidelines for the provision of overseas economic cooperation (consisting of ODA) and international financing (consisting of other official flows [OOF]) and compiled and published new JBIC Guidelines for Confirmation of Environmental and Social Considerations. The new guidelines stipulate that JBIC should consider not only environmental factors but also social ones, such as the displacement of residents and the impact on aboriginal groups and women. These guidelines will go into full effect on October 1, 2003. The Japan International Cooperation Agency (JICA), meanwhile, is also in the process of revising its environmental guidelines, which so far have been compiled separately for each sector, in accordance with the Action Program for Foreign Ministry Reform and with reference to JBIC's new environmental guidelines and the views of a broad segment of the general public, including NGOs.
Measures have also been taken to ensure transparency during the procurement stage of ODA, including grant aid, loans, and technical cooperation, in accordance with JICA and JBIC procurement guidelines. Bidding, in principle, is conducted by developing countries, JICA and JBIC verify the results, and both the names and amounts of the winning tenders are announced. In case improprieties are discovered, a setup has been established whereby firms that commit improprieties are disqualified from bidding for or receiving contracts for ODA projects for certain periods. In one exceptional case, these rules were applied to the greatest extent possible to three Japanese companies whose employees were arrested in 2002 on charges of committing fraud in the four Northern Islands, even though the project was financed with contributions from the Ministry of Foreign Affairs (MOFA) budget, rather than being part of ODA.
(2) Strengthening ODA Auditing
Measures like these are taken to ensure transparency at each stage of ODA projects. Special emphasis and various recommendations, though, were given to auditing--the function of which is to confirm the appropriateness of fund flows in ODA projects--in the final report of the Second Consultative Committee on ODA Reform, the "Ten Reform Principles to Ensure an Open Foreign Ministry," and the final report of MOFA's Reform Advisory Board, which offered various recommendations.
In line with these proposals, MOFA has adopted the following concrete measures based on the three pillars of "more extensive audits," "spot-checks without prior notice," and "establishment of a system to adopt improvement measures."
To carry out more extensive audits of loans, MOFA plans to gradually expand the number of countries subject to a review of yen loan procurement procedures by external experts from November 2002 and to systematize the submission of audited financial statements for projects using special expenditure methods. In the case of grant aid, MOFA has introduced third-party audits for general project grants and made external auditing obligatory, in principle, from September 2002 for grant assistance for grassroots projects totaling ¥3 million or more (as opposed to the previous figure of ¥20 million or more). As for technical cooperation, JICA introduced external auditing for its accounting records in October 2002.
Regarding the implementation of spot-checks without prior notice for loans, MOFA plans to introduce a system of external auditing for yen loan procurement procedures using a sampling of projects that were agreed upon at the government level, in principle, in and after fiscal year 2002. In the case of grant aid, consideration is being given to introducing external audits for a sampling of verified contracts. As for technical cooperation, spot-checks will be implemented when the above-mentioned external auditing is introduced.
Regarding the establishment of a system of effecting improvements, existing mechanisms by which the relevant departments of implementing organizations follow up on auditing results for loan and technical cooperation will be expanded. In the case of grant aid, a mechanism will be set up by which auditing results are reported to the Committee for Grant Aid and reflected in actual operations.
(3) Enhancing ODA Evaluation
Monitoring and evaluation are playing increasingly important roles in making development assistance more results-based, effective, and efficient in the international community. In Japan as well, efforts are being made to strengthen and expand evaluation in line with the "Fifteen Specific Measures for ODA Reform" and the Action Program for the Reform of the Ministry of Foreign Affairs. ODA evaluation has three objectives: (1) to support the management of aid implementation by verifying that ODA is being implemented effectively and efficiently; (2) to contribute to raising the quality of ODA by providing feedback of the evaluation results and having these results reflected in the formulation and implementation of future ODA policy; and (3) to ensure accountability by disclosing evaluation results, thereby enhancing the transparency of assistance and promoting public understanding. Strengthening ODA evaluation is key to improving the efficiency and transparency of ODA. There are three stages to ODA evaluation: implementing evaluation, providing feedback of the evaluation results, and publicly announcing and disclosing these results. Efforts are currently being made to bolster evaluation at each of these stages.
1. Reforms in the Implementation of Evaluation
- Evaluation should include, without exception, the viewpoint of a third party
- To expand evaluation by related agencies of recipient countries
- Implementation of project-level ex-post evaluation by the Japan International Cooperation Agency (JICA) and the Japan Bank for International Cooperation (JBIC) of all projects for which evaluation methods are established
2. Reforms in the Feedback of Evaluation Results
- Strengthening of the functions of the Ministry of Foreign Affairs (MOFA)'s Wise Men Committee for Evaluation Feedback
3. Reforms in the Disclosure of Evaluation Results
- Holding of independent and joint evaluation seminars by MOFA, JICA, JBIC, and the Japan Evaluation Society.
At the implementation stage, third-party viewpoints have been included in all ex-post evaluations carried out by MOFA, JICA, and JBIC since fiscal year 2002 in order to increase the objectivity of evaluation. Also, as part of efforts to strengthen collaboration with and improve the evaluation capabilities of recipient countries, the Second Tokyo Workshop on ODA Evaluation was held in November 2002?following the first one in 2001?with the participation of government officials in ODA related ministries of Asian countries and representatives of international organizations.
The Ministry of Foreign Affairs (MOFA) hosted the Second Tokyo Workshop on ODA Evaluation at the United Nations University in Tokyo on November 13?14, 2002. Approximately 50 representatives, including government officials and evaluation experts from 17 Asian countries, international organizations, and Japan participated in this workshop. The participants exchanged views on recent trends in ODA evaluation, the progress of efforts in their respective countries, and other topics. This workshop was open to the public, and approximately 100 people sat in, including academic experts, NGOs, and consultants.
There is a growing awareness within the international community that evaluation is an essential element in the effective and efficient implementation of ODA. The participants confirmed that monitoring and evaluation are being incorporated into development assistance systems around the world. The participants agreed on the need to conduct consistent evaluations at every level, from individual project evaluation to program/policy level evaluation, and at every stage, ex-ante, mid-term, and ex-post. They also shared the view that efforts should be made to set indicators at the stage of planning and formulation in order to manage ODA properly.
The workshop participants recognized the importance of evaluation capacity building in recipient countries to facilitate cooperation between donor and recipient countries in evaluations. In this respect, a proposal made at the workshop calling for establishing national evaluation associations in recipient countries was one of the major results. In the light of the importance of accountability to citizens, the workshop, which was open to the public, was significant.
Evaluation is meaningful only if the results are incorporated into the implementation of ODA. In order to reinforce this feedback mechanism, MOFA in December 2001 established the Wise Men Committee for Evaluation Feedback, made up of outside experts. Recommendations based on evaluation results are submitted via this external feedback committee to the Internal Feedback Liaison Meeting on ODA Evaluation, chaired by the Director-General of the Economic Cooperation Bureau. Follow-up measures in response to the recommendations are discussed by the internal meeting, although the basic stance is to adopt the proposals of the external feedback committee.
A s a topic for research, ODA evaluation is an extremely interesting and appealing area. More practical applications are emerging for scholarship in this area, and scholars are getting more opportunities for first-hand observation. Even in my wildest dreams, though, I never thought I would end up being the person responsible for ODA evaluation. The great transformation embodied by the reform of the Ministry of Foreign Affairs has turned this unlikely scenario into reality, but it is so rare for a scholar to become a hands-on official that I was simply dazed at first. By now, however, I have come to realize something that should have been a matter of fact: There is a big difference between the theoretical constructs of a scholar and the realities of government administration.
In actual aid disbursement, many different and complicated background elements and conditions come into play to produce a result, but the scholar, being unfamiliar with such background elements and conditions, often accepts the result unquestioningly. For this reason, a great many misunderstandings arise. I encountered a very interesting response when I raised questions about a matter that is taken for granted at the Foreign Ministry. The person responding wondered how it was that I didn't view the issue as a matter of common sense, but in the process of explaining it to me, an amateur, it seems he unexpectedly had to reconsider (or reevaluate) his own job. What passes for common sense in one place may not seem so obvious elsewhere, and getting both sides to realize this may be one way to achieve accountability and transparency.
* Since April 1, 2003, Yamaya has held the post of Director for Policy Evaluation and Administrative Review.
Efforts have already been made to make public announcements and disclosures of evaluation results, such as through the publication of evaluation reports and postings on the MOFA website. Moreover, MOFA held joint evaluation seminars this year with JICA and JBIC, which are implementing organizations, as well as with the Japan Evaluation Society, in an effort to further promote public understanding of ODA.