Partnerships to Enhance Development Effectiveness

Cooperation with the Private Sector

Supporting Economic and Social Development through Private-Sector Business Activities

Making use of the networks and trusting relationships with the governments of developing countries, and the know-how in project implementation in the developing world gained through ODA over many years, JICA provides wide-ranging support schemes, as shown in the figure below, to produce better developmental results efficiently and effectively through further collaboration with the private sector.

Private-Sector Investment Finance

Economic and social development support in developing
countries by the private sector

Of the Finance and Investment Cooperation provided by JICA, Private-Sector Investment Finance (PSIF) is a scheme to support—through the provision of loans and equity—private enterprises around the world, including Japanese companies that conduct business with high development outcomes in such sectors as infrastructure development, poverty reduction, and measures against climate change. Through collaboration with private and international financial institutions and combined operations with JICA's other ODA programs and projects, JICA makes efforts to reduce various risks associated with projects and to further increase development outcomes. JICA is particularly strengthening cooperation with international organizations in order to promote co-financing. In fiscal 2019, JICA signed memoranda of cooperation (MOC) with the Agence Française de Développement, the African Development Bank, and the European Investment Bank. These came after JICA concluded an MOC with the U.S. International Development Finance Corporation in fiscal 2018.

In fiscal 2020, JICA approved 10 projects under PSIF. These included the Local Government Infrastructure Support Project in Morocco, the Climate Change Management Project in India, and the COVID-19 Emerging & Frontier Markets MSME Support Fund (Private-Sector Investment Finance) among other projects aimed at supporting the vulnerable—including women, low-income people, and micro, small, and medium enterprises (MSMEs)—through local financial institutions. JICA also approved eight projects through the Leading Asia's Private Infrastructure Fund, a JICA-funded facility in the Asian Development Bank.

Preparatory Survey for Private-Sector Investment Finance

Supporting the formation of promising PSIF projects

This scheme is designed to identify and formulate projects that capitalize on the expertise of Japan's private sector. Under the scheme, JICA entrusts the necessary surveys to private Japanese companies that have submitted promising proposals so as to develop project plans to be implemented that utilize PSIF.

Until April 2020, this scheme was known as Preparatory Survey for PPP Infrastructure Projects. By renaming the scheme, JICA made it clear that the scheme covers a wide range of projects, including non-infrastructure projects as well as pure private-sector business activities with no involvement by a developing country government. It also improved the scheme so that it is more readily usable for applicant companies. In fiscal 2020, JICA adopted four proposals under the scheme.

There are many challenges related to this kind of project in developing countries. These challenges include an inadequate investment environment in both physical and nonphysical aspects, difficulties in securing financial viability, and insufficient recognition of proper public private role sharing and risk allocation (insufficient support from developing country governments). Therefore, in addition to supporting individual projects by the private sector, JICA is promoting comprehensive efforts for the establishment of projects by cooperating in the establishment of associated policies and institutions and strength ening implementation capacities.

SDGs Business Supporting Surveys

Supporting the creation and deployment of businesses that help developing countries achieve the SDGs

SDGs Business Supporting Surveys is a program based on proposals from private companies. It is aimed at building win-win relationships between developing countries that want to use Japanese technologies, products, and know-how for addressing their challenges and Japanese companies that seek to venture into developing-country markets. This program is made up of two types: (1) the “SME support type,” for which small and medium enterprises and leading medium companies are eligible in principle; and (2) the “SDGs Business support type,” for which large corporations are eligible in principle. The program offers three support schemes for different purposes for different business phases: SME Partnership Promotion Survey, SDGs Business Model Formulation Survey with the Private Sector, and SDGs Business Verification Survey with the Private Sector.

Of the proposals submitted in response to open calls made from fiscal 2010 2010—when JICA launched priv ate sector partnership programs programs—through fiscal 2020, JICA adopted an aggregated total of 1,333 proposals under this program, including 116 in fiscal 2020. In the second open call in fiscal 2020, JICA introduced the category of “remote implementation” whereby the survey is carried out by local human resources without Japanese personnel traveling to the partner country. JICA adopted 26 proposals under this new category, which was introduced in response to the COVID-19 pandemic. JICA also created the category of “cooperation with Japanese regional financial institutions,” which gives preferential treatment to proposals that involve the participation of employees at regional financial institutions in the survey. Under this category, JICA adopted seven proposals.

JICA conducted a follow-up survey of companies that implemented projects that took advantage of this JICA program. The survey, which covered 438 projects in total, showed that “business expansion was ongoing” for some 70% of the projects even after their term of the program expired. Of these projects, as many as 74% were “accomplished” in any of the following three categories: “securing new overseas business partners and customers,” “setting up overseas subsidiaries, offices, or representative offices,” and “starting local production or service delivery.” One such company was OSUMI Co., Ltd., based in Yokohama, Kanagawa Prefecture, as shown in the picture below. In October 2020, the company set up a local subsidiary in the Vietnamese city of Da Nang, with which the city of Yokohama had signed a memorandum of understanding (MOU) on technical cooperation.

In addition to these existing proposal-based programs, JICA introduced the Data Collection Survey on Potential Utilization of Japanese Private-Sector Technologies in Developing Countries Affected by COVID-19. Under this new program, JICA sought applications from Japanese companies for the use of their products and technologies in four sectors, including the global environment and health care. In fiscal 2020, JICA adopted 40 applications in total.

Contribution to regional revitalization augmented by cooperation with other organizations

Support for SMEs in their business expansion overseas through SDGs Business Supporting Surveys is contributing to regional revitalization and giving a much needed boost to some local economies in Japan. This is made possible by the appropriate application of local traditional technologies and technologies jointly developed with local universities. A case in point is Kawasaki Kiko Co., Ltd., based in Shimada, Shizuoka Prefecture. This company is engaged in the business that utilizes its black tea ingredient analyzer in Sri Lanka. In cooperation with the University of Shizuoka and tea-related businesses, the company aims to revitalize the tea industry in both Sri Lanka and Japan.

JICA has been stepping up partnership with external organizations as well. Partnerships with organizations with which JICA had signed an MOU for cooperation have been making progress by taking advantage of respective strengths. For example, the Organization for Small & Medium Enterprises and Regional Innovation is now providing hands-on support (in the form of expert assignment) to 27 private companies that capitalize on JICA's private-sector partnership programs. In fiscal 2020, JICA also offered more online seminars than in previous years. In addition to seminars for sharing some of the issues facing developing countries, JICA held more than 60 seminars on SDGs business for SMEs, attended by a total of over 3,000 participants.

Partnerships

Cooperation with the Private Sector

Collaboration with Civil Society

Partnerships with Universities

JICA Bonds as Social Bonds