The Silent Developer of Help? An update on Japan’s development assistance

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In the wake of the recent meeting of Quad leaders (Australia, India, Japan and the United States) in Tokyo and its focus on development issues, it is worth considering Japan’s aid program. This follows our recent two-part blog on the US aid program under the Biden administration.

Under the 2015 Development Cooperation Charter – a revision of the 1992 Official Development Assistance (ODA) Charter by the government of former Prime Minister Shinzo Abe – Japan’s development cooperation goals are “[to] more proactively contributing to the peace, stability and prosperity of the international community” and “guaranteeing Japan’s national interests such as maintaining its peace and security, pursuing its prosperity, achieving an international environment that provides stability, transparency and predictability, and the maintenance and protection of an international order based on universal values.

The charter requires the Japanese government to regularly publish a white paper on development cooperation, outlining its aid priorities and achievements. The 2020 White Paper stresses the importance of Japan’s aid as a tool to support its foreign policy goal of a “free and open Indo-Pacific”. Japan recently flagged a review of the charter and future aid increases, citing the impacts of COVID-19, China’s increased development engagement and Russia’s invasion of Ukraine.

Japan’s development assistance includes both concessional grant and non-grant financing (sovereign loans, multilateral loans, private sector financing), with the latter accounting for about half of its total grant-equivalent assistance in 2019 .

In 2021, Japan’s aid increased in real terms by 12% (to $17.6 billion), making it the OECD’s third largest aid donor by volume, after the United States. and Germany.

Japan has also moved up the ranks of aid generosity. As a proportion of gross national income (GNI), its aid has increased year on year since 2016, reflecting Tokyo’s growing concerns about China’s regional assertiveness and a more confident foreign policy under Abe and his successors. In 2021, Japan exceeded the OECD donor average (0.33%) for the first time in two decades. This contrasts with Australia’s successive budget cuts and declining aid generosity between 2013 and 2020. This gap will widen if Australia’s impending real aid cuts continue and aid of Japan continues to grow.

Compared to its peers, Japan devotes a very large share of its aid (46% in 2020) to economic infrastructure (transport, communications, energy). This is much more than other OECD donors (17% on average; 10% for Australia) and contrasts with most Western bilateral donors for whom social infrastructure (health, education, water and sanitation), governance and humanitarian aid are more important.

Climate change is also increasingly important, with Japan committing an additional $10 billion in climate finance over five years at the Glasgow Climate Summit in 2021. This is on top of the $11.8 billion annual public and private climate funding that Tokyo has pledged to maintain until 2025. Japan has also joined other G7 donors in a new agreement to end public funding for overseas fossil fuel projects in Japan. by the end of 2022.

In addition to its policy objective of “quality growth”, Japan’s emphasis on economic infrastructure reflects the prominent role that state support for domestic enterprises, exports and technology has played in the evolution of its post-war aid program. While the majority of its country aid goes to middle-income countries, Japan has only committed to untying its aid to least developed countries (LDCs). In 2018, 32% of Japan’s aid to non-LDCs remained tied to domestic companies. Since 2015, this has included using ODA to provide maritime surveillance capabilities and Japanese-built coast guard vessels to countries such as the Philippines, Vietnam and Indonesia.

Like Australia, Japan’s aid is heavily concentrated in its region. It is the largest bilateral donor in Asia, the third largest bilateral donor (after Australia and New Zealand) in the Pacific and, together with the United States, the largest shareholder of the Asian Development Bank. Japan is an active donor in all of the countries that make up Australia’s top ten aid recipients.

Japan’s development footprint is largest in middle-income South and Southeast Asia – in 2020 Bangladesh ($2.1 billion) and India ($1.8 billion) were its two largest recipients of bilateral aid, followed by Indonesia ($1.4 billion), the Philippines ($1.2 billion) and Myanmar ($1.1 billion). In early 2022, Japan officially ended its 40-year bilateral aid program with China.

Japan is also a major Pacific donor. Japan provided $329 million in aid to the Pacific in 2020, with Papua New Guinea ($127 million) and Fiji ($42 million) being its top two bilateral recipients. Japan has also actively supported Pacific regionalism through the Triennial Meeting of Pacific Island Leaders and through its support in areas such as ocean and fisheries management, climate change and disaster relief. , economic connectivity and human resource development.

Pacific leaders hailed Japan’s commitment to reach net zero by 2050 and cut greenhouse gas emissions by 46% (compared to 2013 levels) by 2030. The controversial projects of Tokyo to reject in the Pacific a million tons of waste water treated of its nuclear power station of Fukushima The ocean remains however an important point of contention with the area.

On aid effectiveness, a 2020 OECD peer review of Japan’s aid recommends greater development policy coherence, greater support to multilateral and societal partners civil society, increased investment in the capacity of locally recruited staff and greater use of strategic assessments. Specifically, it also recommends that Japan “continue to fully untie its aid covered by the DAC recommendation, while monitoring the impact of its declining share of untied aid overall and striving to reverse”.

In terms of donor cooperation, together with the Quad, Japan and Australia are founding members (along with the United States) of the trilateral Blue Dot network. As a counterpoint to China’s Belt and Road Initiative, the network, which is supported by the OECD, aims to promote “investment in quality infrastructure that is open and inclusive, transparent, economically viable, aligned with the Paris Agreement, financially, environmentally and socially sustainable and compliant”. international standards, laws and regulations. It is not clear if any projects have been certified by the network to date.

Bilaterally, a 2011 memorandum of understanding between the Japan International Cooperation Agency and the former AusAID remains on DFAT’s website but does not appear to have been updated in the decade since its signing. Given our converging foreign policy and development interests, particularly with regard to Southeast Asia, the Pacific and climate change, renewing this agreement would be a good starting point for a new government seeking to strengthen its cooperation with Japan.

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This research was undertaken with support from the Bill & Melinda Gates Foundation. Views represent those of the author only.

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