2023.05.24
Correction: June 20, 2023
In an earlier version of this release, there was a mistake with regard to the figure of the maximum amount in the first paragraph as below:
(Incorrect) up to US$1 billion
(Correct) up to US$1.5 billion
On May 22, the Japan International Cooperation Agency (JICA) established the Facility for Accelerating Financial Inclusion (FAFI), a debt facility of up to US$1.5 billion, as part of its private sector investment finance operations.
This facility was established as part of Japan's contribution in light of Prime Minister Kishida's statement on May 20, 2023 at the G7 (Group of Seven) Hiroshima Summit—at the side event on the Partnership for Global Infrastructure and Investment (PGII)—that the G7 would contribute to the sustainable development of partner countries through public and private infrastructure investment.
In March 2020, JICA established the Facility for Accelerating Financial Inclusion in Asia (FAIA) to improve access to finance and empower women, low-income people, and micro, small and medium enterprises (MSMEs) in the ASEAN region and elsewhere. Since the FAIA has fully utilized its total credit line of US$500 million, JICA has expanded the facility to include developing countries outside of Asia and has established a new facility (FAFI).
The funding gap between demand and supply for MSMEs in developing regions is estimated at US$4.5 trillion, and the need for long-term financing remains enormous. In addition, recent compounded crises have increased the need for assistance for vulnerable MSMEs, while support for women's economic empowerment remains a focus of the development agenda, as evidenced by the agreement to further expand the "2X Challenge: Financing for Women" in 2021.
Loans will be made to local financial institutions in developing countries that are engaged in projects that contribute to improving access to finance for (1) MSMEs, (2) low-income groups, or (3) women, provided that they show a certain level of credit-worthiness and have a certain number of years’ experience in the applicable field.
Total amount of facility: up to US$1.5 billion
Terms and conditions: normal financing terms and conditions for private sector investment finance are applied.
Co-financing: co-financing with international development finance institutions (MDBs), bilateral development finance institutions (DFIs), or commercial banks of G7 countries with strong track records is required.
Implementation period: 2022-2024
This facility, which will contribute to SDGs (Sustainable Development Goals) Goals 1 (No poverty), 5 (Gender equality), and 8 (Decent work and economic growth), is an initiative based on JICA’s Global Agenda No. 4, “Private Sector,” and No. 14, “Gender Equality and Women's Empowerment Development.” JICA will work with development finance institutions and the private sector through the facility to improve access to finance for women, low-income people, and MSMEs in developing regions, thereby contributing to the agency's mission of human security and quality growth.
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