Japan

At a glance

ODA funding trends

  • Japan's official development assistance (ODA) stood at US$16.3 billion in 2020 (current prices), making Japan the fourth-largest Organisation for Economic Co-operation and Development (OECD) Donor Assistance Committee (DAC) donor country in absolute terms and the largest in Asia. ODA represents 0.31% of Japan's gross national income (GNI).
  • Japan's total ODA in fiscal year (FY) 2021 (April 2021 to March 2022) is estimated to increase by 7% compared to FY2020. This includes a marginal increase of 1.6% in the foreign ministry's ODA budget.
  • Japan historically focuses its support through bilateral ODA (78% of total ODA in 2019), with contributions to multilaterals as a share of total ODA (22%) still well below the OECD DAC average (41%).

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 long repayment periods.
  • Japan's 'Free and Open Indo-Pacific' strategy focuses on connecting Africa and Asia to promote sustainable growth in the two regions. Japan's focus on Asia was already strong and is expected to remain strong 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 has structured its international response to COVID-19 under two main themes: 1) promoting health and 'human security' through multilateral health initiatives and health systems strengthening with a focus on Africa and Asia and 2) addressing the economic impacts of the pandemic through financial assistance to partner countries and support for sustainable and long-term economic growth initiatives.
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Outlook

  • Prime Minister Yoshihide Suga assumed office in September of 2020, following the resignation of former Prime Minister Shinzo Abe. Suga and his Liberal Democratic Party's coalition rule of nearly a decade will be tested in Japan's next general election, which is scheduled to take place by October 22, 2021.
  • Japan is slated to host the Nutrition for Growth Summit in Tokyo in December of 2021. Although originally planned for 2020, the event was delayed along with the Tokyo 2020 Olympic and Paralympic Games due to the COVID-19 crisis. Japan typically uses milestone events to direct large-scale pledges, and the government views the summit as an opportunity for Japan to make commitments -- both financial and political -- to improve global nutrition outcomes.

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, which was last updated in 2015. Priorities include a strong focus on involving the Japanese private sector in development cooperation, particularly in Asia, to support sustainable and inclusive economic development in low- and middle-income countries and to promote the national interests of Japan. 

Former Prime Minister 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 of 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 by 2022, including US$1.2 billion in overseas loans and investment by the Japan International Cooperation Agency (JICA) in ASEAN countries. Prime Minister Yoshihide Suga also underscored the importance of cooperation with ASEAN as a strategic partner in his policy address to the Japanese Parliament (known as the 'National Diet') in January of 2021.

Japan has also strengthened its development focus on Africa in line with the 'Free and Open Indo-Pacific' strategy introduced by Abe in 2016 and endorsed by Suga. The strategy focuses on connecting Africa and Asia to promote sustainable growth in the two regions. Official development assistance (ODA) plays an important role in the strategy and involves capacity strengthening and infrastructure building in Africa and Asia. In response to the COVID-19 crisis, the Japanese government has focused its support for Africa under three primary themes: 1) strengthening Africa's capacity to respond to COVID-19, 2) building resilient and inclusive health and medical systems, and 3) responding to the socio-economic impacts of COVID-19.
Japan's short-term development priorities are set in its annual 'Priority Policy for International Cooperation' document and are foreshadowed in the annual budget released some months earlier. The Priority Policy has contained the same broad priorities since FY2016:

1)    Peace and stability within the international community;
2)    Responding to global challenges;
3)    Economic diplomacy; and
4)    Promotion of "high-quality growth".

The government emphasizes the role of ODA as a strategic diplomatic and economic instrument in the Development Cooperation Charter and 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 national interests through ODA.  

Japan has structured its international response to the COVID-19 crisis under the themes of health or 'human security' and economic recovery. Within these themes, Japan is prioritizing three pillars through its development assistance: 

1)   Supporting immediate COVID-19 response through the strengthened capacity for health services, vaccines, diagnostics, and therapeutics;  
2)    Advancing long-term health systems strengthening in partner countries; and 
3)    Promoting broader health security through support for sectors including water and sanitation, nutrition, education, and gender equality.  


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 including COVID-19 through Gavi, the Vaccine Alliance and the Global Fund to Fight AIDS, Tuberculosis, and Malaria; 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

More than three quarters Japan’s ODA is provided bilaterally

Japan provides most of its official development assistance (ODA) bilaterally (78% in 2019, the last year for which complete data is available). This is well above the 59% average among members of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) in the same year. 

Japan prefers to channel the majority (86%) of its bilateral ODA through the public sector compared to other members of the DAC (DAC average: 47%). Much less bilateral ODA is channeled through multilateral organizations and non-governmental organizations (NGOs). In 2019, it amounted to 8% (DAC average: 22%), while only 2% of Japan's bilateral ODA was channeled through NGOs and civil society organizations (DAC average: 20%).

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: 64% in 2019, which is eight times greater than the DAC average of 8%. This is largely explained by Japan's focus on infrastructure projects, most of which are 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. In 2019, funding to this sector reached a 10-year peak at US$5.7 billion, which accounted for more than a third (39%) of Japan's bilateral ODA. Bilateral ODA to infrastructure peaked in 2019 due to several large "transportation and storage" projects in India, the Philippines, Bangladesh, and Indonesia. The second-largest share of bilateral ODA in 2019 went to the energy sector (14% or US$2.1 billion) followed by multi-sector activities (9% or US$1.3 billion), and water and sanitation projects (6% or US$916 million). 

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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: 63% in 2019, compared to the OECD DAC average of 24% for these countries. This is due in large part to Japan's focus on Asian countries. 

In 2019, Asian countries received 61% of Japan's bilateral ODA overall. The largest recipients were India (US$2.7 billion or 18% of bilateral ODA), Bangladesh (US$1.3 billion or 9%), and the Philippines (US$1.0 billion or 7%). Most of this funding was disbursed as loans. According to Japan's development policy framework, the Development Cooperation Charter, Asia will remain Japan's geographic focus. 

Japan is nevertheless showing signs of increased focus on Africa. At the Seventh Tokyo International Conference on African Development (TICAD VII) in August of 2019, former Prime Minister Abe stressed Japan's commitment to supporting 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. Japan has announced that TICAD VIII will be held in August of 2022 in Tunisia, the second time the conference is held in Africa.  Despite these initiatives, the African Union region designations of Eastern, Western, Central, and Southern Africa (referred to as 'sub-Saharan Africa') only accounted for 10% of Japan's bilateral ODA in 2019, well below the DAC average of 22%. It is expected that this share will increase due in part to Japan's commitments at TICAD VII and its growing partnership with the African Development Fund.

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Japan is the fifth-largest OECD DAC donor to multilaterals

Even with its current emphasis on bilateral spending, Japan was the fifth-largest donor to multilateral organizations with US$3.8 billion in core contributions in 2019 (according to the OECD's grant-equivalent measurement system). Japan channeled 22% of its total ODA to multilaterals in 2019, and this share has remained relatively stable over the last 10 years. 

The largest multilateral recipients of financing in 2019 were the World Bank (55% of overall multilateral spending), regional development banks (18%; mostly the Asian Development Bank and the African Development Bank), and UN agencies (14%).

Japan's stable support to multilaterals can be partly explained by its leadership role in several major events and related multi-year 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 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). It 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 of 2018. Japan contributed US$344 million in 2019 to ADF, making it the largest multilateral recipient of Japan's multilateral ODA outside the World Bank and the Global Fund.

In addition to core contributions, Japan also channeled US$1.2 billion or 6% of its total ODA in 2019 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 multilateral's discretion. 

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

For more granular and up-to-date development finance data on Japan, including information on where and in which sectors it is spending both ODA and non-ODA funds, please consult the IATI d-portal. IATI is a reporting standard and platform on which organizations and governments voluntarily publish data on their development cooperation.

Main Actors

MOFA steers policy; JICA leads implementation

Japan's Prime Minister sets overarching priorities for development policy. In September of 2020, Prime Minister Yoshihide Suga (Liberal Democratic Party, LDP) took leadership of a conservative coalition government with the National Komeito Party (NKP). Suga chairs the Cabinet Office's Sustainable Development Goals Promotion Headquarters (SDGs HQ), which coordinates and aligns the government's efforts to achieve the SDGs both domestically and internationally. The SDGs HQ was established in May of 2016 by the Cabinet Office 2016, under the leadership of former Prime Minister Abe.

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 Atsushi Ueno. ICB's Global Issues Cooperation Division, led by Director-General/Assistant Minister Keiichi Ono, 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 official development assistance (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 (as of 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, which 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 has significant influence over 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. No plans have been announced for a follow-up strategy. CSOs were responsible for only 2% of ODA spending in 2019, a share that has remained static over the past five years and is well below the DAC average of 20%. 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 official development assistance (ODA) comes from several budgetary sources. More than one-third (33%) of ODA in FY2021 comes from the General Account, which comprises the regular budget of ministries. For FY2021, ODA from the General Account is budgeted at US$5.2 billion (¥568 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 (Japan International Cooperation Agency; JICA).
 
Japan's ministries and agencies use, to varying degrees, resources from both the General Account and other budgetary sources. There are three primary players:

  • The Ministry of Finance (MOF) manages the largest share of the overall ODA budget (78%, or US$17.1 billion in FY2021), as most of MOF's ODA funding is for loans through FILP (US$14.0 billion in FY2021, 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$711 million in FY2021) of ODA spending by MOF comes from the General Account.
  • The Ministry of Foreign Affairs (MOFA) manages one-fifth (20%, or US$4.5 billion in FY2021) 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 35% of the total ODA budget (US$7.7 billion in FY2021). 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 displays ODA funding lines for FY2021.

Japan's ODA budget, FY2020

millions
US$

millions
¥

General Account Budget 5,208 567,955
Ministry of Foreign Affairs 4,125 449,798
Grants 1,497 163,200
Technical cooperation through JICA 1,391 151,700
Multilateral contributions, of which: 933 101,700
   Mandatory contributions 652 71,100
   Voluntary contributions 281 30,600
Other assistance (incl. admin costs, CSO funding, support for JICA loans) 304 33,197
Ministry of Finance 711 77,514
Other ministries and agencies 373 40,643
Special Account 9    1,000
MOF and others (Multilateral contributions) 6    600
MOF and others (Technical cooperation) 4    400
Investment and contribution bonds 2,906 316,900
Multilateral development banks 2,500 272,600
UN and related agencies 406 44,300
Fiscal Investment and Loan Program 13,999 1,526,500
JICA loans, JICA investment bonds, JICA loan collection by MOF and others, of which: 13,390 1,460,100
    JICA JPY Loan 5,634 614,400
    JICA Loan Collection 5,361 584,580
    JICA Investment Bonds 2,329 254,000
    Others 65 7,120,000
Technical cooperation by MOF and others 609 66,4000
Total gross ODA 22,123 2,412,400
Loan repayments (6,206) (676,700)
Total net ODA 15,916 1,735,600

table footnote

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, former 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.