DAC AID REVIEW OF JAPAN

The Development Assistance Committee (DAC) of the OECD reviewed the development co-operation policies and programme of Japan on 14 November 1995. Japanese development co-operation is now a pillar of the total international effort, and brings to bear Japan's distinctive regional experience and insights, as well as leading, and still-growing, resource commitments. This DAC review examined some of the contributions of Japanese and other aid to development "success stories" in Asia.

The Delegation of Japan was headed by Mr. Norio Hattori, Deputy-Director General, Economic Cooperation Bureau, Ministry of Foreign Affairs. The examining Members were the European Community and Italy.

The Chair of the DAC, Mr James H. Michel, summarised key points discussed in the review:

A. Japan's ODA Charter and current priorities

Development has become a central priority of the foreign policy of Japan. Internationally Japan's leadership in volume of official development assistance ODA and advocacy of development co-operation has contributed to maintaining the overall commitment and momentum among DAC Members.

In 1992 Japan adopted an ODA Charter which aims to match a set of standards of self-help and good governance on the recipient side by a predictable flow of resources on the Japanese side. The Government has set, and met, successive ODA spending targets and is pursing ambitious new policy goals in line with its Charter:

The discouragement of production of mass destruction weapons and the encouragement of democratisation;
Major new aid commitments on women in development and on global issues such as environment, population and Acquired Immune Deficiency Syndrome (AIDS);
Expanding "software" aid in social sectors, human resource development and institution-building, and expanded use of "grass-roots" grants and NGO channels. These new directions are undertaken without abandoning Japan's long-standing emphasis on infrastructure in its programme; and
Work to exercise a leadership role in a number of areas of international co-ordination and in promoting new initiatives, such as South-South co-operation and engaging new donors.

The Committee was encouraged to hear of the openness by Japan to further expanding its assistance to other regions and notably to Sub-Saharan Africa, where its contributions as a leading donor are much needed.

B. Issues in management and effectiveness

In past reviews, the DAC has expressed concern about the capacity of the Japanese aid management system. A number of major points emerged in the 1995 Review on this front:

Since 1993 "ODA country policies" relating to major recipient countries have been prepared and made public. This is a major step forward. The DAC found that these strategies can still be refined to take better account of the diversity of programmes involved, including the full range of Japan's technical co-operation programmes.
The skills and specialisation of aid management staff require strengthening in parallel with staff numbers, in order to match Japan's aid volume with quality. This particularly applies to cross-cutting issues such as Women in Development, population, participatory development and the social sectors.
Evaluation is increasingly important in the Japanese ODA system, and few DAC Members have as strong an institutional capacity as Japan to follow-up on evaluations and actually to remedy the problems identified.
The Government has approved a merger of the Overseas Economic Cooperation Fund (OECF) with the Export-Import Bank of Japan over the next four years, specifying that distinctions between the ODA and non-ODA accounts in the new institution will be maintained.

C. ODA volume and quality, public awareness

Reflecting sustained political priority and successful medium-term targeting for ODA budgets, Japan now accounts for nearly 23 per cent of total disbursements by DAC Members. On the scale of relative effort, Japan's ODA/GNP ratio rose in 1994 to 0.29 per cent, compared with a DAC average of 0.30 per cent for the year.

Japan's Fifth Medium-Term Target for ODA calls for disbursements of between $70 to $75 billion during the period (1993-97). In 1993 and 1994 some 35 per cent of the target figure was disbursed.
The Committee noted that Japan's loans are now almost completely untied and that the authorities have taken substantial steps to ensure that its procurement systems, both for loans and grants, are more open and transparent.
Japanese policy-makers do not take Japan's achievements in ODA for granted and they stress that other donors' performance has a bearing on their ability to maintain support at home. Polls show a solid current of opinion in Japan (about 79 per cent ) supporting present or increased levels of ODA. At the same time, demands at home (e.g. the Kobe earthquake in January 1995 and the needs of an ageing population) have begun to call into question for some the long-standing priority accorded to ODA. The Japanese government is making redoubled, and creative, efforts to strengthen knowledge and support among parliamentarians and the public.

The Summary and Conclusions of this DAC review will be published in the Development Co-operation Review Series together with the report prepared by the OECD Secretariat.

Back to Index