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Japan’s development aid - Goliath goes on a diet

by Laurent Duvillier

Japan is tightening its belt when it comes to development cooperation. Yet the world's biggest provider of aid says that it is not forgetting Africa

The bright red circle clasping the globe in its warm embrace is an arresting image. Emblazoned on a vehicle, a T-shirt or a building. In Latin America, in Africa, in Asia. Is there anyone who hasn't at some point encountered this emblem of Japanese development aid? Its symbol calls to mind the flag of the Land of the Rising Sun. It had to be conspicuous: Japan has remained at the top of the list of bilateral donor countries since 1989, with a PDA (Public Development Aid) quota of close to $10.6 billion in 1998. Certainly a respectable sum, exceeding the performances of North America, France, Germany and even all Europe, since the European Community's PDA amounted to $5.2 billion in 1997. However, if we measure the contribution of each country based on the percentage of GNP donated to developing countries as PDA, then Japan only managed 0.28% in 1998. This means that it barely scrapes twelfth place in the table of the 21 member countries of the OECD (Organisation for Economic Cooperation and Development), a long way behind the United States, despite the fact that the Far Eastern giant alone accounts for between 15 and 20% of the world's GNP.

Faced with the financial crisis in the Far East as well as a downturn in its own economic growth, Japan has been forced to cut drastically its budget for development aid. After nose-diving from $14.5 billion in 1995 to $9.4 billion the following year, a plunge of almost 35% in just 12 months, Japanese PDA has picked up slightly since 1998, though never reaching its former level over the last 10 years. There is nothing to suggest that the Goliath of development (in terms of net volume) will do more to reverse this reduction in the years to come. The structural tax reform law, introduced in December 1997, heralded a decrease in PDA of approximately 10%, spread over three years from 1998. In August 1998, the implementation of this austerity measure was frozen for 1999 in order to stimulate reflation of the economy. Guided by these budgetary constraints, Japan also had to reorientate itself towards less ambitious and less costly activities by more frequently subcontracting to the country's 250 or so NGOs. After years of concentrating on Pharaonic projects relating to infrastructure - today deemed too far removed from the immediate needs of the population - Japan has redrawn its plans. Farewell to colossal bridges, roads, viaducts and dams - the time is now ripe for social development, centred more than ever on the allied Asiatic countries.

Asia before Africa

It is Asia, right next door to Japan, which gets the lion's share of bilateral aid. In 1997, the top 10 beneficiaries were all Asian countries. Indonesia, China, Thailand, India, the Philippines, Malaysia, Pakistan, Bangladesh, Sri Lanka and Vietnam have formed a close, antediluvian partnership with Japan.

“It is certainly true that our aid is focused on the Asian countries,” admits Yoshie Kobayashi, First Secretary for trade and development at the Japanese Mission to the EU. “While they remain the primary beneficiaries, however, we should remember that Japan is still the biggest donor in many ACP countries. In particular, we do not forget or ignore the countries of Africa, which are distant from us but at the same time close. Most Europeans are not aware of the extent of our presence in Africa. Of course, Europe remains the major aid provider on the African continent, but in certain African countries, it is actually Japan which gives the most.”

As if to prove her point, the First Secretary brandishes the impressive list of 55 developing countries where Japan ranks as principal donor of bilateral aid. Among them are ACP countries such as Botswana, Ghana, Kenya, Zimbabwe, Trinidad and Tobago, Tuvalu, the Maldives, the Dominican Republic and Grenada. The geographical focus on Asia, however, is a trend which is unlikely to be reversed, in spite of the possibility of more funds being transferred to Africa in the future.

“It might increase,” says Yoshie Kobayashi, “but I cannot predict to what extent. It depends very much on whether or not the situation in Africa is conducive to cooperation, on civil wars, on the progress of democracy....”

The first two meetings of TICAD (Tokyo International Conference on African Development) are further proof of Japan's involvement in the realities of Africa. These conferences, entirely devoted to establishing a coherent plan of action for the continent, were yet another opportunity to hammer home the point that yes, many African countries have recently recorded rates of growth in excess of five per cent per annum, but it is still the case that 40% of Africa's population is trying to survive on a net income of less than 1 dollar a day per person. How can we stamp out this poverty and integrate Africa into the global economy? The third TICAD conference, currently in preparation, will respond to this diagnosis of isolation, nurtured by war and instability, by harnessing the potential of the African people and encouraging greater involvement in the partnership of other players from the international community.

A clear appeal to the other international organisations and multilateral agencies to join the initiative, so as to prevent efforts being dissipated in Sub-Saharan Africa. Who will take up the gauntlet?

Trade comes first

The Land of the Rising Sun first achieved its international stature as assistance-provider in 1954, when it launched a huge public relations campaign regarding its Asian neighbours which had been occupied in the Second World War. First came financial reparation, followed by incentives to promote exports, both of which made the whole of Asia ripe for Japanese investment. The volume of aid swelled to such an extent that it was becoming imperative to redefine the policy on bilateral cooperation. Today, Japanese aid is based on a charter drawn up in 1992 which has remained unchanged since then. Its main directives cover environmental sustainability, a ban on the diversion of aid to military ends, special attention to trends in military spending, the process of democratisation and support for market economies. Nothing terribly innovative, since the general principles are inspired by Western models along the same lines but with a specifically Asian slant. The thinly-veiled demands of business are implicit in many of the proposed aid programmes. Nor is development at the top of Yoshie Kobayashi's list of priorities - and she makes no secret of the fact. To take another example, Japan is willing to grant loans on favourable terms to the governments and private enterprises of poor countries, but it baulks at the idea of making donations.

Whilst development cooperation does not necessarily have to serve the interests of Japanese commerce, it certainly does not do them any harm, given Japan's acknowledged intent to maintain the world's monetary order - and therefore its own economic well-being. Straddling three different departments (Foreign Affairs, International Trade and Agriculture), the Japanese agency JICA (Japan International Cooperation Agency) has very little room for manoeuvre. The principle of free aid is the subject of fierce internal debate, and it is far from being unanimously approved in Tokyo. On the contrary, some - like the Keidaren employers' group - have always championed the idea of much greater overlap of Japanese business with the development projects under way in the South. Indeed, The Medium-Term Policy on Official Development Assistance, a reference document setting out the priorities for Japanese cooperation until 2004, informs us that “PDA plays a significant part in safeguarding the prosperity and the very stability of Japan” by promoting “Japan's best interests, including the maintenance of peace.” To arouse public interest, it also talks of boosting “future efforts making use of Japan's experience, its technology, its know-how, taking account of growing opportunities for Japanese markets to take part in PDA projects and to encourage the participation of a wider public in development cooperation through the universities, the 'think tanks', local governments and NGOs.”

Japanese development aid focuses on Asian countries, but Japan is still an important donor in many ACP countries

Raising the spectre of world monetary imbalance at the last G8 summit in Kyushu-Okinawa, Japan reiterated its firm intention to support the countries most severely in debt. Last July, the government sketched out three new areas of priority. First, measures to curb diseases such as HIV and AIDS. Second, steps to reduce the digital divide between countries which have access to information technology and those which do not. Finally, the environment is confirmed as an essential concern of Japanese cooperation, in particular through support for those developing countries countering the effects of global warming. What, do the Japanese people - the taxpayers putting money into the public purse - make of all this?

For the Japanese government, there is now a very pressing need to regain public confidence and to unite its people around the aid programmes by convincing them of its effectiveness and their efficiency on the ground. These programmes must be made tangible, transparent, concrete and visible. According to a Japanese opinion poll taken in December 1998, only 3.5% of those asked advocated completely scrapping any form of development cooperation. Yet the proportion of those in favour of maintaining it, let alone increasing it, is being whittled away. It is now barely 70%, as opposed to 77% or 75% just a few years ago. At the same time, the citizens of Japan are recommending greater caution at a time when the donor country itself is not immune from bankruptcies and the resultant unemployment. In the image of the emblem symbolising Japanese cooperation, Japan's policy for communication of that cooperation must remind its compatriots that it was foreign aid which, half a century ago, made it possible for them to rebuild their country out of the ruins remaining at the end of the Second World War, thereby laying the foundations for the prosperity it enjoys today.

More information:

Internet: http://www.jica.go.jp

Documents: Japan's Official Development Assistance Annual Report 1999, Ministry of Foreign Affairs.

Efforts and Policies of the Members of the Development Assistance Committee: 1998 Report, DAC, OECD, 1999 Edition.