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PSIF refers to the private sector wing of JICA’s ODA financing scheme, and is provided to private companies implementing projects in developing countries for the promotion of economic development and welfare of developing countries. While such projects create jobs and stimulate the host country’s economy, they involve various risks and do not necessarily promise high returns. Thus, existing financial institutions are often reluctant to finance these companies.
Under these circumstances, Private-Sector Investment Finance (PSIF) supports development projects by private enterprises —through loans, credit guarantees, bond subscriptions and equity finance— that have high potential of achieving development impact when ordinary financial institutions are unable to provide adequate funding.
The outline of JICA’s Private Sector Investment Finance (PSIF) is as follows.
1.Target Area
PSIF provides financing in the following fields:
- 1 . Infrastructure development and accelerating economic growth
- 2 . SDGs (including poverty reduction, climate change (mitigation and adaptation))
Typical projects includes, but are not limited to:
- Infrastructure projects in power, transportation, water and sewage, waste management, agriculture, healthcare, education sector, etc. including one under PPP scheme,
- Human resource development necessary for industrial development,
- Start-up businesses that provide innovative solutions to improve the lives of underserved people
- Microfinance targeting the poor and/or small enterprises
- Support for small and medium-sized enterprises (SMEs) which contribute to employment expansion, and
- Projects addressing climate change, such as reforestation, disaster prevention, energy efficiency, and pollution control.
- Projects addressing gender equality and women’s empowerment
2.Conditions of Private Sector Investment Finance (PSIF)
- Project plan must be in line with the development policy of the developing country and have a high development impact.
- Project plan must be appropriate, and there is a prospect of their accomplishment.
- JICA’s PSIF is deemed essential for project delivery.
- Finance by commercial financial institutions on ordinary commercial terms is deemed inadequate for the project.
- JICA’s PSIF is deemed indispensable for implementation of the project plan in terms of country risk mitigation, attracting further investment by private sector, and other additionalities.
3.Major Terms of PSIF
4.Procedures of Private Sector Investment Finance (PSIF)
5.Note
- The JICA Guidelines for Environmental and Social Considerations will be applied to project plan and implementation.
- Ex-ante evaluation and ex-post evaluation will be carried out for each project.
*The above two points will be disclosed while taking into consideration the confidentiality of corporate information.