Japan

At a glance

Funding trends

  • Japan’s official development assistance (ODA) stood at US$14.2 billion in 2018, making Japan the fourth-largest donor country in absolute terms and the largest in Asia. This represents 0.28% of Japan’s gross national income (GNI).
  • Japan’s total ODA in fiscal year (FY) 2020 (April 2020 to March 2021) is estimated to increase by 3% compared to FY2019. This includes a marginal increase in the foreign ministry’s ODA budget of 1.2%.
  • Japan historically focuses its support through bilateral ODA (77% of total ODA), with Japan’s contributions to multilaterals as a share of total ODA (23%) still well below the OECD DAC average (41%). Nonetheless, Japan’s contributions to multilaterals increased in 2018 and are set to grow further according to recent budget documents.

3 - Total ODA Japan

This chart depicts ODA according to the grant-equivalent measurement system. Statistics using this system became official in 2018. For further details on methodology, see our Donor Tracker Codebook.

Strategic priorities

  • Japan prioritizes self-reliant development, promotion of economic growth, and public-private partnerships (primarily with Japanese companies) in its Development Cooperation Charter. As a result, a majority of Japan’s ODA is channeled through loans, typically of a concessional nature with below-market interest rates and longer repayment periods.
  • Japan’s focus on Asia is expected to continue due to the country’s strong economic, diplomatic, and geographic ties to the region. Japan is strengthening its relationship with Africa, particularly in the areas of governance and infrastructure development.
  • Japan’s priorities for its 2019 G20 presidency included health, infrastructure, climate change, ocean plastic waste, digital economies, and aging societies. Japan’s G20 Aichi-Nagoya Foreign Ministers’ Meeting had three themes: free trade and global governance, Sustainable Development Goals (SDGs), and African development.

 

4* - Japan bilateral by sector

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Outlook

  • Japan was set to host the Summer Olympics and Paralympics in 2020, but the games have been delayed by one year due to the COVID-19 crisis. The government plans to use the Olympic Games to increase awareness of the SDGs and has created the ‘Sport for Tomorrow’ program to advance international cooperation and exchange through sport.
  • Japan is also slated to host the Nutrition for Growth Summit in Tokyo in December 2020. As the event is typically tied to the Olympics, there is uncertainty whether it will proceed on schedule. Nonetheless, Japan has increased its focus on nutrition-related topics for the year leading up to the Summit.  

 

4* - Japan bilateral by sector

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Policy Priorities

Japan focuses its ODA on Asia; support is increasing for economic development in Africa

Japan’s long-term development objectives are defined in its Development Cooperation Charter, last updated in 2015. They include a strong focus on involving the Japanese private sector in development cooperation, particularly in Asia, to support sustainable and inclusive economic development in developing countries and to promote the national interests of Japan.

Prime Minister (PM) Shinzo Abe built upon these themes in his November 2019 address at the Japan-ASEAN Summit Meeting, in which he laid out Japan’s plans to expand support for ASEAN countries in three areas: quality infrastructure development, green investment, and improving financial access and support for women. Foreign Minister Toshimitsu Motegi expanded upon these priorities in a foreign policy speech in December 2019, and announced that Japan aims to mobilize US$3.0 billion in public and private funding in support of these priorities in the region, including US$1.2 billion in overseas loans and investment by the Japan International Cooperation Agency (JICA) in ASEAN countries.

Japan has also strengthened its development focus on Africa in line with its ‘Free and Open Indo-Pacific’ strategy, announced in 2016 by PM Abe. The strategy focuses on connecting Africa and Asia to promote sustainable growth in the two regions. ODA plays an important role in the strategy and involves capacity strengthening and infrastructure building in Africa and Asia.

Japan has strengthened its development focus on Africa in line with its ‘Free and Open Indo-Pacific’ strategy, announced in 2016 by Prime Minister Shinzo Abe

Japan’s short-term development priorities are set in its annual ‘Priority Policy for International Cooperation’ and are foreshadowed in the annual budget released some months earlier. The Priority Policy has contained the same broad priorities since FY2016: peace and stability within the international community, responding to global challenges, economic diplomacy, and the promotion of “high-quality growth”. The Priority Policy for FY2019 specifically discusses the realization of the ‘Free and Open Indo-Pacific’ strategy, the importance of addressing global issues, and making diplomatic efforts to support the Japanese economy.

The government emphasizes the role of ODA as a strategic diplomatic and economic instrument in the Development Cooperation Charter, and in the ‘Free and Open Indo-Pacific’ strategy. This involves, for example, making use of bilateral ODA over multilateral, as well as approval to use ODA to support foreign military forces for “non-military purposes.” These trends underscore Japan’s explicit references in its foreign policy documents to promoting Japan’s national interest through ODA.

Japan's key development priorities:

  • Free and Open Indo-Pacific: Supporting economic development in Africa and Asia and connectivity between these two regions;
  • Global health: Expanding universal health coverage and investing more in managing infectious diseases through Gavi and the Global Fund; and
  • Infrastructure: Enabling strong and sustainable growth through funding (primarily loans) for core infrastructure projects such as transportation, energy, and natural resource development.

 

ODA Breakdown

Most of Japan’s ODA is provided bilaterally, although the share decreased in 2018

Japan provides most of its ODA bilaterally (77% in 2018). This is well above the 59% average among members of the Development Assistance Committee (DAC) of the OECD in the same year. The bilateral share of Japan’s ODA dropped slightly in 2018 (down 5% from 82% in 2017), although this does not reflect any change in the stated priorities of Prime Minister Shinzo Abe, who plans on increasingly using ODA as a strategic diplomatic and economic instrument.

Japan channels much less bilateral ODA through multilateral organizations and non-governmental organizations (NGOs) compared to other members of the DAC. In 2018, Japan channeled 10% of its bilateral ODA through multilaterals (DAC average: 23%), and only 2% through NGOs and civil society (DAC average: 18%).

5 - Japan bi-multi ODA

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Japan provides most of its bilateral ODA in the form of loans with an emphasis on infrastructure

Japan channels its bilateral ODA mostly as loans: 60% in 2018, which is nearly seven times greater than the DAC average of 9%. This is largely explained by Japan’s focus on infrastructure projects that are mainly supported by loans. Japan’s loans typically feature long grace periods and low interest rates, which means a large portion of these loans qualify as ODA under the OECD DAC’s ‘grant-equivalent’ methodology (see our Codebook for more information). Japan’s use of loans in ODA is expected to increase further.

Japan allocates the largest share of its bilateral ODA to infrastructure projects. It spent more than a third (35%, US$4.6 billion) of bilateral ODA in 2018 on the sector. Bilateral ODA to infrastructure peaked at US$4.8 billion in 2017 due to several large transportation projects in India, Thailand, Vietnam, and Bangladesh. Although funding for some of these projects has decreased from this high, the heavy use of infrastructure loans is expected to continue and is likely to expand into Africa with Japan’s increasing focus on the region.

Japan allocates the largest share of its bilateral ODA (35%, US$4.6 billion) to infrastructure projects

The second-largest share of bilateral ODA in 2018 went to the energy sector (14%, US$1.9 billion) followed by multi-sector activities (9%, US$1.2 billion), and water and sanitation projects (8%; US$1.1 billion).

4 - Japan bilateral by sector

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Japan focuses its bilateral ODA on lower-middle income countries in Asia, with an increasing focus on Africa

The largest share of Japan’s bilateral ODA goes to lower-middle income countries: 60% in 2018, compared to the OECD DAC average of 23% for these countries. This is due in large part to Japan’s focus on Asian countries.

6 - Japan bilateral ODA income group

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In 2018, Asian countries received 57% of Japan’s bilateral ODA overall. The largest recipients were India, Bangladesh, and Vietnam. According to Japan’s development policy framework, the Development Cooperation Charter, Asia will remain its geographic focus.

In 2018, 9% of ODA was allocated to low-income countries (LICs), well below the DAC average of 19%. Sub-Saharan Africa accounted for 10% of bilateral ODA in 2018, a marginal increase of 1% from the year before, albeit still below the DAC average of 21%.

Japan is nonetheless showing signs of increased focus on Africa. This was demonstrated by a US$30.0 billion pledge of private- and public-sector funds to Africa made during the sixth Tokyo International Conference on African Development (TICAD VI) in August 2016.  At the seventh Tokyo International Conference on African Development (TICAD VII) in August 2019, Prime Minister Abe stressed Japan’s commitment to support private investment in Africa and launched the Africa Health and Wellbeing Initiative, which aims to share Japan’s global health knowledge and technology with African countries. Following TICAD VII, the Japan International Cooperation Agency (JICA) has started selling TICAD bonds worth US$109 million, the proceeds of which will be used for JICA finance and investment in Africa.

7 - Japan top 10 recipients

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Japan is the fifth-largest OECD DAC donor to multilaterals

Even with its current emphasis on bilateral spending, Japan is the fifth-largest donor to multilateral organizations (US$3.4 billion in core contributions in 2018). Moreover, this share is increasing, with 23% of gross ODA channeled through core contributions to multilaterals in 2018, compared to 18% in 2017. Japan’s recent budget trends indicate that this share is likely to increase further.

The largest recipients of financing in 2018 were the World Bank (49% of overall multilateral spending), regional development banks (23%; mostly the Asian Development Bank and African Development Fund), and United Nations (UN) agencies (12%).

The growth in Japan’s contributions to multilaterals can be partly explained by its leadership role in several major events and related multiyear pledges. In the lead up to its G7 presidency in 2016, Japan announced a range of funding commitments to multilateral organizations in health, women’s empowerment, and stabilization of the Middle East, including US$800 million for the Global Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund) for the 2017-2019 replenishment period. Japan has subsequently pledged US$840 million to the Global Fund for the 2020-2022 period.

Japan has also notably increased its support to the African Development Fund (ADF). Japan provided US$781 million during ADF’s 2017-2019 replenishment period, driven largely by a US$700 million loan agreement signed by JICA and ADF in March 2018. Japan’s contributions to ADF more than tripled in 2018, making it the largest multilateral recipient of Japan’s multilateral ODA outside the World Bank.

In addition to core contributions, Japan channeled US$1.3 billion or 8% of its total ODA in 2018 as earmarked funding through multilaterals, which is reported as bilateral ODA. This is below the DAC average of 14%. Such funding is earmarked for particular regions, countries, or themes, rather than contributing to a multilateral’s core funding, which can be spent at the discretion of the multilateral itself.

Unless otherwise indicated, all data in this section is based on the grant-equivalent measurement system. For more information, see our Donor Tracker Codebook.

Main Actors

MOFA steers policy; JICA leads implementation

Japan’s Prime Minister sets overarching priorities for development policy. Prime Minister (PM) Shinzo Abe (Liberal Democratic Party, LDP) has been leading a conservative coalition government with the National Komeito Party (NKP) since December 2012. Under the leadership of PM Abe, the Cabinet Office established the Sustainable Development Goals Promotion Headquarters (SDGs HQ) in May 2016. The SDGs HQ is chaired by PM Abe and its membership includes all cabinet members. It was established to coordinate and align the government’s efforts to achieve the SDGs both domestically and internationally.

The Ministry of Foreign Affairs (MOFA), led by Foreign Minister Toshimitsu Motegi (LDP), sets development priorities in consultation with other ministries. Within MOFA, the International Cooperation Bureau (ICB) is responsible for designing development policy. ICB is currently led by Director-General Hideo Suzuki. ICB’s Global Issues Cooperation Division, led by Director-General/Assistant Minister Tamaki Tsukada, is responsible for multilateral policy and some sector policies.

The Ministry of Finance (MOF), currently headed by Taro Aso (LDP) plays a key role in development finance, funding contributions to multilateral development banks, as well as ODA loans that are implemented by Japan’s development agency, the Japan International Cooperation Agency (JICA). Under the supervision of MOFA and MOF, JICA is responsible for implementing bilateral development assistance through loans, grants, and technical cooperation. It is headed by Shinichi Kitaoka and employs more than 1,900 people in 2020, including staff located across nearly 100 country offices.

Guided by the Development Cooperation Charter, MOFA country assistance planning divisions draft five-year country assistance policies (CAPs) for selected partner countries. CAPs outline priority areas for Japan’s bilateral development funding. CAP divisions consult recipient governments and seek input from Japan’s ODA task forces when developing CAPs. ODA task forces are in-country teams that coordinate bilateral ODA, usually made up of staff from embassies and JICA country offices.

Relevant stakeholders in country program planning are MOFA’s country assistance planning divisions (for grant assistance and technical cooperation), MOF’s International Bureau (for loans), and JICA’s human development, rural development, and regional departments.

Japan Organisation Chart

Parliament: Japan’s Parliament, referred to as the ‘National Diet’, is composed of two chambers: the House of Representatives and the House of Councillors. Members of the Diet, debate and vote on the national budget, including the budget allocations for ODA. In the House of Councillors, the ‘Special Committee on Official Development Assistance and Related Matters’ reviews the budget before it goes to the Cabinet for approval. The committee is powerful in influencing the strategic direction of development policy.

Civil Society: Since 2000, MOFA has increasingly promoted partnerships between the government and Japanese civil society organizations (CSOs). In 2015, MOFA and CSOs jointly released a five-year plan for their collaboration on development activities. That said, CSOs were responsible for only 2% of ODA spending in 2018, a share that has remained static over the past five years and is well below the DAC average of 18%. This can be partly explained by the type of ODA Japan focuses on — i.e., infrastructure projects — that are more often implemented by private corporations. MOFA also organizes dialogues with non-governmental organizations (NGOs) seven times a year. Important players are the Japan NGO Center for International Cooperation (JANIC) and the Japan Platform (a humanitarian assistance organization), as well as three NGO networks: Ugoku, Japan Civil Society Network on Sustainable Development Goals, and the Global Compact Network Japan.

Budget Structure

The Ministry of Finance manages the majority of ODA, largely consisting of loans

Japan’s ODA comes from a number of budgetary sources. More than one third (36%) of ODA in FY2020 comes from the General Account, which comprises the regular budget of ministries. For FY2020, ODA from the General Account is budgeted at US$5.1 billion (¥561 billion; see table below). Additional ODA comes from various other budget sources, including the Special Account, the Ministry of Finance’s Fiscal Investment and Loan Program (FILP), and capital from Japan’s development agency (JICA; Japan International Cooperation Agency).

Japan’s ministries and agencies use, to varying degrees, resources from both the General Account and from other budgetary sources. The three primary players involved are:

  • The Ministry of Finance (MOF) manages the largest share of the overall ODA budget (76%, or US$15.7 billion in FY2020). The reason that MOF controls such a large share is that most of MOF’s ODA funding is for loans through FILP (US$13 billion in FY2020, or 63% of total gross ODA). This includes funds channeled through JICA, as well as government bonds which are used to make most of MOF’s assessed contributions to multilateral development banks. A smaller share (US$702 million in FY2020) of ODA spending by MOF comes from the General Account.
  • The Ministry of Foreign Affairs (MOFA) manages approximately one fifth (21%, or US$4.4 billion in FY2020) of Japanese ODA, almost all of which is sourced from the General Account. The budget includes lines for bilateral funding (grant assistance and technical cooperation, mostly channeled through JICA) and multilateral funding.
  • The Japan International Cooperation Agency (JICA) directs a large share of MOF’s ODA funding, with JICA’s share alone making up 39% of the total ODA budget (US$7.7 billion in FY2020). This mainly comes from its own capital and is used for loans. In addition, JICA administers large shares of funding for grant assistance and technical cooperation that come from MOFA’s General Account budget.

The budget table below displays ODA funding lines for FY2020.

Japan's ODA budget, FY2020

millions
US$

millions
¥

General Account Budget 5,080 561,015
Ministry of Foreign Affairs 4,010 442,901
Grants 1,478 163,200
Technical cooperation through JICA 1,373 151,600
Multilateral contributions, of which: 859 94,900
   Mandatory contributions 583 64,400
   Voluntary contributions 276 30,500
Other assistance (incl. admin costs, CSO funding, support for JICA loans) 300 33,000
Ministry of Finance 702 77,514
Other ministries and agencies 368 40,601
Special Account 9    1,000
MOF and others (Multilateral contributions) 5    600
MOF and others (Technical cooperation) 4    400
Investment and contribution bonds 2,498 275,900
Multilateral development banks 2,124 234,600
UN and related agencies 37 4,100
Fiscal Investment and Loan Program 12,967 1,432,100
JICA loans, JICA investment bonds, JICA loan collection by MOF and others 12,342 1,363,000
Technical cooperation by MOF and others 626 69,100
Total gross ODA 20,555 2,270,000
Loan repayments (6,350) (701,300)
Total net ODA 14,205 1,568,720

Note: numbers may not add precisely due to rounding. Budget presented according to the cash flow basis, as released by the Government of Japan.

Source: Government of Japan, MOFA FY2020 ODA Budget summary and FY2020 ODA Budget, breakdown by Ministry

 

Budget Process

Initial ODA budget allocations are determined from April to August; Cabinet makes final decisions in December and January

Japan’s fiscal year runs from 1 April to 30 March. However, certain budget allocations are decided throughout the year (see ‘supplementary budgets’ below).

 

Japan Budget Circle

 

  • Ministries prepare their budget requests: From April to August, all ministries draft their funding requests for the upcoming fiscal year. This includes the Ministry of Foreign Affairs’ (MOFA) grant assistance budget as well as technical cooperation channeled through the Japan International Cooperation Agency (JICA). Key stakeholders during this phase are senior officials at MOFA’s International Cooperation Bureau.
  • Ministry of Finance assesses ministerial budget request: Between September and December, once the ministries have submitted their budget requests, the Ministry of Finance (MOF) assesses them and forwards them to the Cabinet. This process is complete by December.
  • Cabinet makes final decision on draft budget bill: Around December, the Cabinet makes its final decision on ministries’ budget requests and presents the draft budget bill to Parliament (the ‘Diet’), usually by mid-January.
  • The Diet debates the draft budget: From January to March, ministerial budgets are discussed by the House of Representatives’ Budget Committee. Once approved by the Diet, the budget bill is adopted.
  • Supplementary budgets: In addition to this annual budget cycle, ministries can submit supplementary budget requests for the ongoing fiscal year between August and November. These are assessed by the MOF, negotiated in the Diet, and approved by the Cabinet and the Diet between December and January.

Apart from year-to-year allocations, the Prime Minister has ample discretion to commit new funding to multi-year initiatives. For example, Prime Minister Shinzo Abe announced a commitment of US$2.9 billion in funding for global health in December 2017 at the universal health coverage (UHC) Conference.