Infrastructure remains top area of support for JICA

A list of Indonesia-Japan joint infrastructure projects. Indonesia is among the countries with the highest value of approved loan projects from the Japan International Cooperation Agency for 1H 2014. Photo by: Seika / CC BY

In the first half of 2014, the Japan International Cooperation Agency signed off on 578.74 billion yen ($5.65 billion) worth of projects, mostly in the infrastructure sector.

Economic infrastructure support remains the mainstay of Japanese development cooperation. The heavy focus on infrastructure is based on Japan’s postwar experience, which spurred industrialization by building the necessary economic foundations, such as roads and ports. JICA’s largest infrastructure initiative for the period is the $1.37 billion Delhi Mass Rapid Transport Project. Already on its third phase, the project aims to meet increasing transportation demand and address traffic congestion by extending the operational network of the Delhi Metro — India’s urban transportation system.

Drawing from its extensive expertise and long history with disasters, Japan aims to drive the global agenda on disaster risk reduction. Apart from mainstreaming disaster risk reduction in its aid programming, JICA is setting aside reserve loans for disaster-prone developing countries through its Standby Emergency Credit for Urgent Recovery scheme. SECURE aims to promptly provide funds urgently needed for post-disaster recovery activities. Disaster-prone Philippines and Peru are the pilot countries under the scheme.

Innovation in terms of technologies and financial mechanisms is a key part of Japan’s development programming as well. The Port Sector Rehabilitation Project (Phase II) in Iraq, for instance, is financed under JICA’s Special Terms for Economic Partnership scheme, which leverages the advanced technologies and know-how of Japanese firms in project implementation.

Together with the Bill & Melinda Gates Foundation, meanwhile, JICA established a “loan conversion” mechanism to help eradicate polio in developing countries. Under this funding model, the Gates Foundation will repay the credit to JICA on behalf of the recipient country. JICA’s Polio Eradication Project in Nigeria incorporates this innovative financing mechanism.

For the first half of 2014, JICA approved the highest value of loan projects in India, Vietnam and Indonesia. View larger version.

Although Japan provides development assistance to more than 140 countries, much of its aid goes to middle-income countries. India, Indonesia and Vietnam are some of Tokyo’s largest aid recipients. Japan uses ODA as a tool to expand its diplomatic presence worldwide, but it has chosen to focus its aid on areas where it can make the biggest difference.

Despite a tight fiscal environment, Tokyo’s ODA budget rose slightly to $16.5 billion in 2014, up 5 percent from the previous year.

Condensed and republished with permission from The International Development Journal, a leading monthly journal in Japanese focusing on international development.

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  • Christine Dugay

    Christine is a former senior analyst under the Surveys and Advisory Services team of Devex. A skilled researcher, she contributes to and/or leads custom research projects and surveys commissioned by leading companies and development institutions. Christine has a professional certificate in political economy and a master’s degree in Japanese studies, and is a fellow of the Japan Foundation.