Japan to Dispense Billions in Foreign Aid

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Olivier Asselin / AP

A construction worker helps a colleague lift a bag of concrete at a work site in Ghana

Japan, once the world's biggest donor nation, is stepping up efforts to boost its influence in resource-rich developing countries by creating a super agency that will dispense billions of dollars a year in foreign aid, most of it bound for Africa and Asia — regions where China is rapidly increasing its clout as an aid donor and commercial partner.

The move, announced this week, will unite two government bodies that previously administered aid separately — the Foreign Ministry and the Japan Bank for International Cooperation — under the umbrella of the Japan International Cooperation Agency (JICA). The revamped agency's annual budget of more than $10 billion puts it in the same league as the Asian Development Bank and the U.S. Agency for International Development. With the sagging economy, which many — including Prime Minister Taro Aso — say is already in recession, the reorganization doesn't necessarily mean more money, just a more efficent way at dispensing it. JICA expects the change to scale up its activities and quickly turn projects into viable programs and also streamline the process of providing technical assistance, grant aid and soft loans. The JICA will also set up a research institute of about 40 staff to compare development patterns between Asia and Africa.

Japan, which has the world's second-largest economy, was the No. 1 provider of overseas aid in the 1990s. After years of sluggish economic growth, the country ranks fifth among donor nations according to the organization for Economic Cooperation and Development. (Aid has fallen by about 40% and is a hit to Japan's diplomatic clout). In an Oct. 3 speech, Sadako Ogata, JICA's president since 2003, chided Japanese society for its lack of support of foreign aid and questioned the country's ability to play a leadership role in areas such as alternative energy development in the world's poor countries. "The reality of an interdependent world is not reflected strongly enough in Japanese thinking," she says.

Japan's motives are not entirely altruistic. The economic rise of China, India and other countries means resource-poor Japan faces increasing competition for commodities such as oil and metals. Foreign aid is a way to cement relationships with potential trade partners. Development experts such as Jeffrey Sachs, Special Advisor to the United Nation's Secretary General on development goals, say that China is providing billions of dollars each year to Africa, although no one knows the official figure. Japan's trade with Africa, about $25 billion, is about one third of China's trade with the continent. Tokyo's move to expand JICA can be seen then as "partly China-driven, since Japan thinks they're competing with China for Africa and for resources," says Robert Dujarric, Director of the Institute of Contemporary Japanese Studies at Temple University. "And this is partly U.S.-driven, since the U.S. knows that Japan is limited in terms of what it can do in the military field, so they should do something in the aid field as a way to help."

Ogata acknowledges that "China will be a strong competitor," adding that there were "positive results" of the country's larger role in African development. She says she hopes JICA and China can collaborate in the manner that Japan does with other countries. In the meantime, Africa can only hope that both of its suitors follow through on their promises.

(For more photos from Japan, click here.)

(To see photos of the U.N.'s efforts to feed the people of Uganda, click here.)