Section 3. Capital Grant Assistance (Grant in Aid)



1.  General View


Grant in aid refers to a type of assistance in which funds are provided without obligating recipient countries to pay back. Japan started its grant in aid program in fiscal 1968 and its fund volume has increased sharply to make itself a major pillar in the expansion of Japan's ODA, in particular in the improvement of the quality of ODA.

Japan's grant in aid program comprises (1) general grant assistance, (2) fishery-related assistance, (3) disaster relief-related assistance, (4) culture-related assistance, (5) food assistance, and (6) food production increase assistance. In the fiscal 1986 budget (after the revision made during the course of the year) appropriations for grant in aid surpassed \180,000 million, or an 8.7-fold increase from 10 years ago.



2.  Cooperation through the Use of Economic Development and Other Assistance Expenses


(1)  General Grant Assistance

Under general grant scheme, which forms a major portion of economic development and other assistance expenses, Japan extends funds necessary for procurement of facilities, materials and equipment, and services for the implementation of projects geared to the socioeconomic development of developing countries. An emphasis is placed on the areas related to basic human needs which are vital to people's daily life and human resources development in developing countries.


Trends in Budget Items for Grant in Aid


General grant in fiscal 1986, on a budget authorization basis, amounted to about \104,100 million to cover projects in 54 developing countries.

The following are its area-by-area breakdown.

(a)  Medical Treatment and Health Improvement

Japan gave a total of \13,019 million in grant in aid to 18 projects, including those involving the establishment of Rehabilitation Research Center for the Physically Disabled in China, the improvement of medical equipment for the Sanjay Gandhi Post Graduate Institute in India and the Kinshasa University Hospital in Zaire.

(b)  Education and Research

Japan provided a total of \27,020 million in grant in aid to 21 projects, including the project for the establishment of the National Youth Center in Sri Lanka, the construction project of a Junior Secondary School at Meheba Refugee Settlement in Zambia and the construction project of Paraguayan-Japanese Center for Human Resources Development in Paraguay.

(c)  Public Welfare and Environment Improvement

Japan gave \20,276 million in grant in aid to a total of 32 projects, including the project for the environmental and hygienic improvement in Metropolitan Manila in the Philippines, the Rural Water Supply Project in the Yemen Arab Republic and the Improvement Project of Water Supply System of Majuro Atoll in the Marshall Islands.

(d)  Agriculture

Japan gave a total of \15,214 million in grant-in-aid to 18 projects, including the Construction Project of the Pest and Disease Forecasting Control in Indonesia, the Construction Project of Food Grain Warehouse in the Sudan, the Agricultural Land Development Project in Zambia and the comprehensive development project of model agricultural community in Honduras.

(e)  Transport and Communications

Japan gave \26,603 million in grant-in-aid to 36 projects, including the Rural Telecommunications Network Improvement Project in Nepal, the broadcasting facility construction project in Senegal and the Project for the Improvement of Radio Broadcasting Stations in Papua New Guinea.

(f)  Others

Japan provided \1,911 million in grant-in-aid to the project for the establishment of the Metal-Working and Machinery Industries Development Institute in Thailand.


General Grant Assistance by Region and Area (Note)


In addition, based upon the resolution adopted at a ministerial meeting of the Trade and Development Board (TDB) of the United Nations Conference on Trade and Development (UNCTAD) in March 1978, Japan has provided cash grants, to ease debt repayment burdens, to as many as 18 countries (least developed countries and others) to which Japan extended public loans in or before fiscal 1977. In fiscal 1986 Japan supplied about \7,122.13 million under this scheme to 13 countries.


(2)  Fishery-Related Assistance

Fishery-related assistance refers to supply of funds necessary for fishery training, for constructing fishery research facilities and fishery ports and for purchasing other fishery facilities, materials and equipment. In fiscal 1986, Japan granted \9,450 million to a total of 12 projects, including the Lautoka Fishery Port Improvement Project in Fiji and Construction Project of the Paita Fishery Training Center in Peru.


(3)  Disaster Relief-Related Assistance

Disaster relief-related assistance comprises emergency assistance to countries suffering from natural disasters, such as storms, floods, earthquakes and droughts and humanitarian assistance to refugees and victims of disputes. In fiscal 1986, Japan extended \1,357.15 million in assistance to 21 cases, such as the toxic gas leak incident in Cameroon, earthquakes in El Salvador and Ecuador, and difficulties of Cambodian refugees.


(4)  Culture-Related Assistance

Culture-related assistance is designed to provide funds necessary for purchasing materials and equipment for promotion of education and research, preservation and utilization of cultural assets and relics, and cultural performances and displays in developing countries. Japan has implemented such assistance since fiscal 1975 as part of cooperation concerning cultural exchanges. In fiscal 1986, Japan extended a total of \2,000 million in culture-related assistance to 52 cases.



3.  Cooperation through the Use of Food Production Increase and Other Assistance Expenses


(1)  Food Assistance

Food assistance, also called Kennedy Round (KR) assistance, has been extended on the provisions of Food Assistance Convention of 1986, which is part of International Wheat Agreement of 1986, a successor to International Grain Agreement of 1967 (The above Convention was established in March 1986, and the government of Japan deposited the instrument for acceptance in December after obtaining parliamentary approval in November.)

According to the Convention, Japan is under obligation to contribute at least 300,000 metric tons in wheat equivalent terms every year, and has granted funds necessary for importing grains, such as rice and wheat (in fiscal 1985 and 1986, Zimbabwe-produced maize was used as well), and their transportation to developing countries suffering from food shortages. On the budget authorization basis in fiscal 1986, food assistance was extended to 34 countries and two international organizations and totaled \18,496 million. A regional breakdown of the recipients shows that Africa accounted for 69.6% of the total, followed by Asia with 20.0%, Latin America 7.6%, Middle East 2.5% and Oceania 0.3%.


(2)  Assistance for Food Production Increase

Being cognizant that food problems in developing countries should be ultimately solved through their own efforts to increase food production, Japan has appropriated budget for food production increase assistance since fiscal 1977, providing developing countries with funds for purchasing fertilizers, agricultural chemicals, and agricultural implements. On the budget authorization basis in fiscal 1986, Japan extended assistance for food production increase to 51 countries in total amount of \38,600 million. A regional breakdown of the recipient countries shows that Asia accounted for 55.7%, Africa 32.1%, Middle East 3.4%, Latin America 8.3% and Oceania 0.5%.



4.  Recent Trends in Japan's Grant Assistance


(1)  Effective Implementation and Appropriate Assistance

Japan has established carefully thought-out measures at every stage of the implementation of capital grant assistance in order to make it for more effective and appropriate.

In order to ensure more effective and appropriate assistance even amid the expansion of the scale of grant assistance, Japan has taken measures as follows: supporting the governments of developing countries in their project-formulation process itself, conducting various preliminary surveys prior to decisions, trying to improve accuracy of the calculation of financial requirements for each project, extending cooperation to promote the implementation of projects by aid recipient governments, checking how projects were actually implemented, and helping the recipient governments perform necessary follow-ups as well. Moreover, Japan has provided general orientations to the governments of developing countries on the system of Japanese grant assistance and at the same time conducted various basic surveys for improving arrangements involved. Japan International Cooperation Agency (JICA) has primarily conducted these.

In view of the growing usefulness of opinions and advices from experts on policy planning and project implementation concerning grant assistance, advisory group meetings on grant assistance have been held semiannually under the Director-General of the Economic Cooperation Bureau of the Foreign Ministry since fiscal 1977 with the participation of knowledgeable people of various quarters. Eighteen meetings were held by March 1987. Current measures mentioned above owes discussions and recommendations of these meetings to a large extent.


(2)  Other Features in Recent Trends

Japan has sharply expanded its assistance to Africa after the recent food shortage in the region. Among other programs Japan reinforced its assistance to the region to improve long-term productivity and the people's livelihood with the total value exceeding \54,000 million in fiscal 1986. The ratio of grant assistance toward sub-Saharan African in the total Japanese grant assistance topped 30% in this fiscal year 1986 for the first time. Japan has also made efforts to extend its assistance in a careful manner to Oceania, where many small-scale countries are located, and appropriated 3.6% of the total budget for the region (2.9% in fiscal 1985).

Japan has made various efforts to maximize the effect of the capital grant assistance. In implementing it, Japan considers it necessary to harmonize it with technical cooperation and other forms of assistance, to check up projects already executed, to cooperate with other donors and international organizations and to increase the countries to which Japan organizations extend assistance.



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