PERSPECTIVES ON THE "NEW JICA", THE WORLD'S

UNCLAS SECTION 01 OF 02 TOKYO 003093 SIPDIS STATE PASS USAID - KAREN TURNER (ODP) E.O. 12958: N/A TAGS: EAID ECON PREL JA SUBJECT: PERSPECTIVES ON THE "NEW JICA", THE WORLD'S LARGEST AID AGENCY ¶1. (SBU) SUMMARY: The reorganization of the Japan International Cooperation Agency (JICA),which recently announced its largest foreign assistance project loan to date, has not slowed Japan's overseas development assistance programs. The Japanese government expects the new JICA, which consolidates the GOJ's ODA yen loans, grant aid and technical assistance which were previously divided among the Ministry of Foreign Affairs and the Japan Bank for International Cooperation (JBIC),to streamline Japan's ODA program. The new JICA is reportedly the world's largest bilateral development organization in terms of the amount of ODA it directly administers. Some analysts and senior officials hail the reorganization as a way to make Japanese aid more efficient and systematic amid declining ODA funds. Others within JICA, however, report differences in organizational culture will take time to smooth out, something which may stymie large-scale operational reform in the short-run. END SUMMARY. -------------- Toward More Efficient, Effective Aid -------------- ¶2. (U) The Government of Japan officially consolidated its aid organizations into the new JICA on October 1, an event JICA President Sedako Ogata called a "major historic turning point" for Japan's ODA. JICA, which previously administered Japan's technical assistance program, absorbed the overseas economic cooperation operations portfolio from the Japan Bank for International Cooperation and the overseas development grant-making function from Japan's Foreign Ministry. Under the new scheme, JICA is responsible for USD 10.3 billion in development funds, and, by the agency's own estimate, is now the world's largest bilateral development organization. ¶3. (U) In the month since JICA's reorganization, analysts have generally praised the merger and said it will enhance the efficiency of Japan's ODA programs, despite the size of the agency. Takushoku University President Toshio Watanabe, an expert on Japan's development program who has chaired MOFA's Advisory Council on International Cooperation, praised the reorganization as a way to make Japan's ODA more systematic. Media have noted the new JICA will now be able to implement a comprehensive, country-by-country based ODA program, as opposed to the previous framework in which MOFA, JICA and JBIC each conducted their own research and each had their own implementation strategy. Calling the reorganization a "good first step", MOFA Director General for International Cooperation Masato Kitera told emboffs the new approach will enable the GOJ to keep "one set of eyes" on a country's development aid from program formulation through implementation and execution, and he fully anticipates JICA will make Japan's ODA more effective. (NOTE: While MOFA will continue to set Japan's broader development strategy and coordinate the GOJ's participation in multilateral development initiatives, the shift of overseas grant aid to the new JICA removes MOFA from the direct administration of foreign assistance. END NOTE.) -------------- Working Level Perspectives -------------- ¶4. (SBU) The new JICA not only integrates the Japan-based offices of JBIC, JICA and MOFA, but also integrates Japan's in-the-field development programs. At the end of October, JICA had 55 offices abroad and JBIC had 19; these 74 offices reportedly will be consolidated into 56 offices. A JICA Middle East and Europe Division official told emboff the integration is already proceeding, including of interagency communications. (Note: JICA officials were already handing out business cards with the new JICA logo and contact information at a reception shortly before the official reorganization). The official said some differences in organizational culture between the finance-oriented former JBIC staff and the development-focused JICA technical personnel may take time to resolve, but he did not anticipate a negative impact on overseas development operations. ¶5. (SBU) An official in the international research office at the Japan Finance Corporation, which retained JBIC's non-ODA related finance functions, was more pessimistic about TOKYO 00003093 002 OF 002 short-term efficiency gains. She told emboff former JICA and JBIC elements have yet to "get used to working together" in a single agency. The official described the new JBIC immediately following the reorganization as full of confusion and internal communication difficulties, and pointed to other, more mundane things like separate cafeterias for JBIC and JICA staff within the agency's headquarters as examples of what needs to be addressed before the agency's parts are fully integrated. The official said some within JBIC view the spin-off of the ODA functions to JICA as an "unhappy divorce" similar to the "unhappy marriage" that arose when the then-Export-Import Bank of Japan and the Overseas Economic Cooperation Fund merged to become JBIC in 1999. She speculated morale may suffer as more senior JBIC staff who went through the first integration now see the overseas economic cooperation portfolio spun-off again and so question the point of the reorganization. ¶6. (SBU) Comment. Unification of Japan's ODA functions under a single decision-maker should result in more effective and efficient development assistance at the planning and disbursement levels. The new JBIC culture will take time to develop, as any organizational merger of this size, and requires management and staff to "buy into" the new larger entity. There are differences over how quickly and well the organizations will merge over the near term into the new JICA, but the working-level perspectives suggest little visible change in operations from an aid recipient or donor coordination standpoint. End Comment. SCHIEFFER