Japan offers, not just spends ODAs

To prevent the mistakes of other multilateral aid agencies, Japan’s Official Development Assistance (ODA), which marks its 70th anniversary this year, is set to undergo a major change from a relationship of giving and receiving to a co-creating partnership,

ODA in the past was primarily request-based, meaning assistance was provided to countries that requested it, but Japan introduced an offer-based approach in which it proactively offers assistance that takes local circumstances into consideration.

These initiatives have already started in Southeast Asia and Africa.

The first instance of offer-based ODA kicked off in Cambodia in December 2023 when the governments of Japan and Cambodia agreed on a package supporting the Cambodian government’s efforts to build digital infrastructure, including assistance for the development of a National Data Center and assistance for enhancing the country’s telecommunications networks and human resources development.

Japan’s ODA dates back to 1954, when it joined the Colombo Plan, an organization for regional cooperation in Asia, two years before it became a member of the United Nations. It was only nine years since the end of the Second World War.

Japan was also in the middle of postwar reconstruction and was by no means a rich nation, but it assumed the role of postwar reparations to Asian countries.

For Japan, which lacked abundant natural resources and did not maintain a powerful military force after the war, ODA for supporting the economic development of other countries was also an important tool for peaceful diplomacy.

Infra facilitates investments

The development of infrastructure such as ports and highways through Japan’s ODA facilitated the expansion of Japanese companies into those countries, creating win-win relationships.

Japan’s ODA continued to grow with its economic development and in 1989, Japan surpassed the United States as the world’s largest donor nation. However, it was overtaken by the United States in 2001 due to a sluggish economy, and today it has fallen to third place.

The government’s budget for ODA peaked at 1,168.7 billion Japanese yen (P453 billion) in 1997 and has continued to fall ever since, amounting to only 565 billion Japanese yen (P219 billion) in 2024.

The United Nations sets the target for each country’s ODA provision at 0.7 percent of the gross national income, but Japan has managed to provide only half that level in recent years.

With no prospect of increasing ODA spending, Japan aims to enhance the quality of its assistance. As part of its ongoing ODA reform, Japan updated its Development Cooperation Charter, which sets out the basic policy for ODA, for the first time in eight years in June 2023 and incorporated “offer-type cooperation” as a new assistance framework.

In addition to traditional assistance for infrastructure construction, including roads, bridges, and ports, Japan will proactively offer a wide range of programs that encompass climate action, promotion of digitalization, building stronger supply chains and human resources development.

Southeast Asian countries have developed basic infrastructure and achieved economic development, and are now seeking sustainable technical guidance and advanced human resources development with the aim of achieving high-quality economic development and enriching people’s lives.

To contribute to that end, a new form of ODA — one that embodies the proverb “Don’t give a man a fish; teach him how to fish” — is being called for, and offer-type cooperation symbolizes that.

Plans for offer-based ODA are under way in Southeast Asian countries. A leaders’ meeting of the Asia Zero Emission Community (AZEC), a framework aimed at achieving decarbonization in Asia, was held on 11 October in Vientiane, Laos, in which an “Action Plan for the Next Decade” was adopted. The plan incorporates the use of offer-based ODA as projects led by Japan.

Japanese Prime Minister Shigeru Ishiba, who participated in the meeting, talked with his Laotian counterpart, Sonexay Siphandone, communicating Japan’s intent to support the economic development of Laos through offer-based ODA.

Laos relies primarily on hydroelectric power and Japan will support the enhancement of its power generation capacity, facilitating the country’s stable supply and expand exports of electricity.

Japan will also assist in technological development for the production of green hydrogen and ammonia, which do not generate carbon dioxide when burned.

In October 2023, the Japanese government held a policy dialogue on economic cooperation with the Indonesian government in Jakarta, and discussed its plans to promote economic cooperation, including offer-based ODA.

As these examples show, Japan is offering effective plans for assistance to various countries leveraging its unique strengths, including expertise in providing assistance cultivated over many years and the technological capabilities of private-sector businesses.

Offer-based ODA is under way in Africa as well. In March, Japan and Mozambique agreed on assistance for a project on counter-terrorism and socioeconomic development.

In Cabo Delgado, a northern province of Mozambique, armed attacks have halted some of the largest liquefied natural gas projects in Africa. Japan will provide automobiles and motorcycles to be used for anti-terrorism and security operations, as well as human resources development programs for police and judicial authorities to crack down on terrorism. This offer is based on the needs of local communities that seek stable security and resumption of development projects.

Changing horizon

Japan International Cooperation Agency president Akihiko Tanaka, who is responsible for ODA operations, said “The list of developing countries has changed considerably over the past 70 years. Thailand and Indonesia are now upper middle-income countries. In the future, co-creation based on mutual insights will be key in ODA, instead of just unilateral assistance. The idea is to solve social issues together in a way that also benefits Japan through the technology and knowledge developed through the effort.”

The Development Cooperation Charter updated last year also stated, “Japan will realize cooperation that does not involve... economic coercion, and that does not undermine the independence and sustainability of developing countries.”

Debt traps, in which excessive loans are extended without regard for the borrower’s financial capacity or ability to repay, leading to economic control, have become a global issue. Although ODA serves to strengthen the diplomatic and economic relationships of both parties, it must never compromise the independence of the country on the receiving end of support.

Moreover, assistance will be ineffective if the plan is one-sided and not tailored to local circumstances. Offer-based ODA is characterized by an approach in which Japan and its counterpart work together to flesh out the details of assistance. There is now a need for this type of ODA, similar to tailor-made clothing, created through close communication between the tailor and the customer.