～Leading the world with trust" through co-creation with development partners～

“Why support private sector?" was the question posed to the participants at the Donor Committee for Enterprise Development (DCED)Annual Meeting (held from 6/3 to 6/6/2024), a gathering of development partners engaged in private sector development.

Many exemplary comments were made, such as "to reduce inequality and improve incomes to achieve a sustainable society by promoting activities of private sector, including small and micro enterprises." but one USAID official said, "to lose our jobs." I learned that the vision "Journey to Self-Reliance " (purpose of aid should be to eliminate the need for aid) launched in 2017 by former USAID Administrator Mark Green was widely spread and settled among the staff.
Although I wondered "how many people are working to lose their own jobs," I felt no discomfort since the most important philosophy of Japan's Official Development Assistance is to support "self-help efforts" and "self-reliant development" of the partner countries.

In the Development Cooperation Charter approved by the Cabinet in 2023, "mobilization of private-sector funds," "collaboration with private sector," and "co-creation with other development partners" are necessary in order to solve development issues and to achieve sustainable growth in developing countries. DCED Annual Meeting was indeed a place of "co-creation" (private sector development x donor collaboration) spending four days (and nights) with development partners including private companies. I would like to briefly share some of the fruitful discussions we had relating to "co-creation," "innovation," and "green".

In recent years, as development issues in developing countries have become more complex and uncertain in this era of rapid change, it has become increasingly difficult for one country or one organization to create new value on its own. Therefore, each development partner has become increasingly aware of the need to collaborate with a variety of stakeholders. In particular, European development partners, who operate in a smaller scale compared to the World Bank Group, USAID, and JICA, sometimes find it difficult to formulate, implement, monitor, and evaluate projects on their own, and are willing to look for partners with the same mission and vision. Hence, DCED proved to be a valuable opportunity to exchange views on cooperation policies, priority areas, etc., and try to find a specific collaborative project with partners whose visions are in line. In addition, this time, not only donors but also officials from developing countries participated, and I felt the change in trend of co-creation as developing countries increasingly becoming an important partner.
On the other hand, as for co-creation with the private sector, it is a difficult issue for public institution to promote collaboration while keeping in mind the fairness, transparency, market distortion, crowding out, etc. In addition, very often ODA procedures cannot keep up with the speed of the private sector, and end up giving up the partnering a good project.
In this context, USAID introduced its latest efforts in private sector engagement (PSE) (Private Sector Engagement Modernize). First, a survey was conducted to staff members to identify necessary training and tools. Secondly, a community of nearly 1,000 staff members (PSE Hub) was established to quickly respond to questions from the members. Thirdly, Global Industry Coordination Network was established to strengthen networking and coordination with the private sector from selected representatives from high priority industries (focusing on national interest).
Other new initiatives include the establishment of the Edge Fund ($50 million), a fast-track scheme to scale up projects implemented by SMEs. This scheme allows overseas offices to make budgetary allocations (require companies to invest the same amount) in a surprisingly short period of time (5 months minimum) from request to approval and funding. Private Sector Collaboration Pathway also allows firms to submit proposals which they can receive small amounts of funding in as little as five weeks, with no particular selection process to ensure fairness, transparency, or additionality.
USAID is piloting these initiatives to break down the barriers that each agency faces, by putting emphasis on speed and national interest.

In October 2023, the G7 released the Leaders' Statement , International Guiding Principles , and International Code of Conduct on the "Hiroshima AI Process" to shape inclusive governance over AI, and currently Japanese government began to consider measures to support developing countries.
At DCED, we discussed the impact of AI on labor markets in developing countries . Survey shows that while AI improves the quality of work and the performance of lower skilled workers, it also can lead to income and gender inequality, such that low-income workers are more likely to be forced to change jobs, as well as facing the risk of surveillance in the workplace. Therefore, in addition to rights and protection measures for low-income workers, the participants agreed to prioritize reeducation and training, among other issues.
Moreover, since some developing countries, especially in Africa, are unable to benefit from digitalization, IFC mentioned the need for cooperation in investing in digital infrastructure, providing systematic support for startups, and financing companies to adopt digital technologies.

This year DCED showed a strong interest in green growth, as the majority of donors were European based. Members emphasized that developed countries understandably need to promote decarbonization, but developing countries also need to establish a low emission growth trajectory, especially in key emission sectors such as power generation, industry, agriculture, and land use. Since this will require significant financial resources, donors are expected to mobilize private capital and support industrial policies that promote green transition.
GIZ (Germany) introduced the benefits of the Green Industrial Policy (GIP) , including its contribution to the Paris Agreement, job creation, resource efficiency through renewable energy and circular economy, and the potential of leapfrogging, by introducing examples of cooperation in Eswatini and Jordan.

JICA President Tanaka emphasized the necessity to work with diverse partners in co-creation because "the world is in a complex, once-in-a-century crisis that threatens human security. " The DCED is a valuable opportunity for development partners and private companies with the same objectives to come together to "co-create" and discuss new initiatives such as "innovation" and "green". Although JICA was the only Asian organization participating in the DCED among the Western organizations, it was gratifying to see that Western countries and developing countries expressed their desire to actively co-create with us as a trusted partner. I would like to thank our senior staff of JICA who have faithfully followed JICA’s Vision "Leading the world with trust." I strongly felt that JICA should continue to cherish such opportunities and actively disseminate JICA's activities, and co-create with diverse partners to overcome the "polycrisis".