Sixty Years on Japan Changes Aid Gear to Poor Nations

Visitors to the small Tully’s Coffee in Hiroshima Airport are greeted with a menu displaying coffee imported from Brazil, Mexico and Ethiopia. One cup is seven dollars. It is a premium price which customers are willing to pay because of where it originates from and how it has been harvested.

The variety from Ethiopia is called “Belete Gera Select,” bearing the name of a mountainous forest near the town of Bonga, in the Southern Nations, Nationality & People Regional State. Found nearly 420Km south of Addis Abeba, the forest is, strangely, named after a 1950s outlaw, whose fate none could foresee. It is home to close to 4,000 farmers who also make their livelihoods there.

In 2010 these farmers began exporting between 20 and 60 tonnes of coffee,. Mainly it was to Japan, but they also exported to the United States and Italy. Consumers in these countries are willing to pay higher prices, for they are told, and believe, that the beans collected in these weredas are not like any of the big commercial farms that grow coffee.

Coffee beans from Belete-Gera are exported after they are certified under one of the three brands highly promoted in the developed world. Japan is one such nation, with close to five trillion dollars in gross domestic products (GDP). Consumers in the western world are told that Forest Coffee,Organic and Fairtrade coffee beans are processed in such a way as to ensure that the small scale farmers in poor countries are the direct beneficiaries, and that they are obliged to protect and conserve the forest they live in.

The forest coffee certification program in Belete Gera area was launched in 2007 with the aim to “maintain the forest in a sustainable manner,” while the population inside it keeps on earning money. Farmers are limited to collecting a yield in return for premium prices offered after the certification is issued by the Rainforest Alliance, an international organisation based in the United States.

The WaBuB Coffee Certification Programme is, however, supported by the government of Japan, as one of the eight initiatives supported in the agricultural sector in Ethiopia. The Oromia Forest & Wildlife Enterprise, supported by the Japan International Cooperation Agency (JICA), organised farmers in seven cooperatives. They are told not to expand their farm size and homestead inside the forest and agree to the certifications process in exchange for earning more money for their coffee than other farmers across the country. And certification has an extensive and elaborate internal control system, developed by experts brought in from Japan through JICA.

As the sole implementing agency of Japanese aid to poor countries, JICA is involved in a number of projects in Ethiopia, supporting projects far bigger and larger than just impacting the lives of a few thousand farmers and their families in the Belete-Gera Forest. Ever since 1972, when the government of Japan sent 25 volunteers and provided loans to finance two projects, JICA has supported Ethiopian agriculture, education, health, water resources, through private sector development and infrastructure.

Japanese funding has enabled landmark projects, such as the nation’s lone suspension bridge over the River Abay. This bridge replaced one built by the Italians and is a vital link to the capital for the north-west, as well as the road from Addis Abeba to Ghoa Tsion, connecting to the bridge.

Currently two projects standout as most crucial to the country, the first is a replacement bridge over the Awash River, 230Km east of Addis Abeba, connecting the city with the eastern part of the country, and the second involves developing a geothermal energy plant near Lake Langano to enhance the power generation capacity from six to 50Mw.

These Ethiopian projects convey Japan’s role as the third largest aid provider to Ethiopia, and the 10th largest aid provider to poor countries globally. In the year that farmers from Belete-Gera Forest started to export coffee to Japan, the government of Japan funneled 36.06 million dollars of aid in total into Ethiopia, an amount that had increased by more than three-fold in 2011.

Japan has a history spotted with its wrong doings towards other countries in its neighbourhood, yet it has also suffered horribly when the Atomic Bomb was used for the first time in 1945. Japan recreated itself in the aftermath of World War II to have a constitution which declared its desire, “to occupy an honoured place in an international society striving for the preservation of peace, and the banishment of tyranny and slavery, oppression and intolerance for all time from the earth.”

Japan began paying reparations to countries such as Myanmar, Indonesia, Vietnam and Thailand, a precursor for it to join the club of donors under the 1954 Colombo Pact.

Advancing these lofty goals, for six decades, successive Japanese governments have channelled over 250 billion dollars of official development assistance (ODA), of which, 1.23 billion dollars was sent to Ethiopia. In doing so Japan hopes to see, “peoples of the world . . . live in peace, free from fear and want.”

JICA President, Akihiko Tanaka (PhD), says when it comes to Japan’s role in lifting the world’s poor out of poverty, it makes little difference whether Japanese political parties come from the right or left.

“There is a general consensus amongst Japanese political parties about the necessity and modalities of ODA,” Tanaka told a group of journalists from aid recipient countries from Asia, Caribbean and Africa, during a press briefing held at his Tokyo headquarters.

Japan has passed through three phases in the interim, Tanaka said, before a symposium called to reflect on three generations of Japan’s largess to poor countries, held on November 19, 2014.

It was a time to reflect back on the impact and relevance of Japanese aid to the world. It was also a moment of symbolic gesture, where a Kenyan minister was invited alongside the Foreign Minister of the Philippines, demonstrating Japan’s desire to move away from its traditional operating zones to the new frontier.

This new frontier, no doubt, is Africa, where Japanese bilateral aid since 1993 is only exceeded by France and the United States. Indeed, the 1990s were towering years for Japan in foreign aid, for in 1999 it had injected over two billion dollars into African economies, mostly to finance infrastructure. In the form of official aid, it is the highest amount ever given, representing eight percent of total aid received by Africa.

These were the Japanese development circle heyday, said Helen Clark, UNDP administrator, who spoke at the symposium, and attached “quality, reach and focus” to aid from Japan.

Yet, these are the very traits of Japanese aid which are put to the test, due to a recurrent stagnation of its economy, a shrinking budget and growing skepticism among the Japanese people, said Ippeita Nishida, research fellow at the Tokyo Foundation. The Japanese overall budget to foreign aid has been slashed to a little over half a billion dollars in 2014. The amount to come to Africa has been accordingly adjusted.

Japan gave 1.7 billion dollars to countries in sub-Saharan Africa in 2012, down from nearly two billion dollars two years earlier.

The growing scepticism, albeit from a narrow constituency in Tokyo involved in development affairs, comes as a result of an economy which has been suffering deflation for over a decade now. Japan’s per capita income has declined to 37,539 dollars, from an all time high of 46,531 dollars two years ago.

“Domestic consumption isn’t strong due to population growth,” said Sato Kan Hiroshi, a senior researcher with the Institute of Developing Economics, who blames Japan’s current woes on deflation, stagnation and depopulation.

Japan indeed has an aging demography and its depopulation is evident from casual observation.

A student population in Hoyo No Mori (Rich Forest), an elementary and junior high school in the suburb of Tokyo, has only 909 students, after merging two elementary and two junior high schools, due to a lack of students. Kazuhiro Koizumi, one of two principals at a middle class school in Shinagawa Municipality, recalled that four separate schools had enrolled double the number of students in the 1960s.

Economists, such as Hiroshi, sees these trends affecting an economy unable to come out of the woods, despite reform measures known as “Abenomics.” It is a program launched by the current Prime Minister, Shinzo Abe, nicknamed “Three Arrows”. Abenomics aspires to change Japan’s economy with doses of fiscal stimulus, monetary easing and structural reforms. The jury is still out to see whether these initiatives work, but their impact on the behaviour of Japanese companies and the government’s approach to official aid is already evident.

“Under the fiscal constraints, we cannot do everything that our partner countries want,” Tanaka told journalists. “We have to be rather selective.”

Yet, Japan has no national consensus over ODA now, according to Hiroshi.

“It is in search of a new model.”

Many in the development affairs circle in Tokyo see the new approach heading in favour of what is now considered as “Abe Initiative,” a move designed to stimulate the growth of the private sector by introducing Kaizen, a bottom-up and continuous improvement in quality and productivity of companies in Africa. A part of this is to train Africa’s youth as future leaders of the continent in the economy.

In January 2014, Prime Minister Abe visited three African countries, including Ethiopia. During the trip foreign policy officials were conscious of the might of China, a neighbouring Japanese rival, in the future of Africa. Subsequently, Japan resolved to train 1,000 young professionals from the continent over five years in a variety of courses, including a two-year masters program to a short term but focused training.

In mid-November, at the JICA training centre in Tokyo, one of the short term training courses, with 20 students from 17 countries, was almost completed. Worqneh Bulti, 29, was among these students, learning traffic demand analysis using “Strada System” developed by JICA engineers.

A father of one and graduate of engineering from Jimma University, and employed by the Addis Abeba Roads Authority (AARA), he was in Group Seven of eight, alongside Tay Zar, from Myanmar. The duo sat three rows from their Professor, Atsushi Fukuda, who said he used the model for the first time in a class. They discussed their presentation on traffic modeling of an imaginary city, St. Rada, whose map oddly resembled that of Addis Abeba. It was a presentation made after a four-day crash course, which Worqneh feels is not enough to master the system. If he finds his course too short, there are other Ethiopians few blocs away taking a more formal and postgraduate studies.

Close to 23 these students are scattered across 100 universities in Japan, from a total of 782, to participate in the youth leadership program. These students are part of 150 scholarships to Japan this year, awarded to students from Ethiopia, Kenya, Tanzania, Mozambique, Rwanda and South Africa.

They are a small piece of a grand strategy of creating a market in Africa for Japanese companies who would like to enter the continent. And there are a growing number of companies with the appetite for overseas markets, especially Africa’s.

“Traditional markets for Japanese companies were in East Asia,” noted Hiroki Nagamine, head of the Planning Division for Middle East & Africa of Japan External Trade Organization (JETRO). “But they are now eager to explore new frontier markets in a new continent.”

His organisation carries out occasional surveys among Japanese companies on their interest in expanding overseas. While the Japanese government encourages close to 1,500 small and medium sized companies to invest in overseas markets, mainly in East Asia, the ones already operational in Africa say they have experience which encourages others to join them.

Of 112 Japanese companies surveyed by JETRO in Africa, close to 60pc of them say they would like to expand their businesses in Africa over the next two years, a figure notable compared to only three percent who said they will downsize their businesses. This is pleasant news to African governments. Of the companies that want to expand in Africa, close to 74.4pc of them operate in the manufacturing sector, according to JETRO.

Although an overwhelming 98.2pc of the companies are concerned with “political and social instability” in the continent, another 79pc see sales increases over the years too irresistible to abandon Africa. And 65.7pc of them consider growth potential as their reasons for remaining in the continent, while another 27pc claim the reason is their relationship with their domestic partners.

Such is the growing interest in African markets that JETRO officials are persuaded to open more African offices over the next few years, in addition to those it has in Nairobi, Johannesburg, Lagos, Abidjan and Rabat. Addis Abeba and Dar es Saalam will have JETRO offices, disclosed Nagamine.

“Unlike many countries, Japan is supporting outward investments at the request of its big companies,” said Ryoichi Ito, director of Overseas Business Support Division of JETRO.

Compelled by sever fiscal constraints, which leaves little room to increase its funding for ODA, Japan is changing its policy in providing foreign assistance to targeted ODA, according to many in the development circle in Tokyo. And it sees many of the recipient countries have improved from their former destitute conditions.

“You [recipient countries] have enjoyed economic growth,” said Invi Eiji, Africa Director of JICA.

It is a voice echoed by Hiroshi, and one shared by many in Tokyo.

“Development assistance and business should combine to advance foreign policy objectives and economic diplomacy,” said Hiroshi.

The newly favoured approach is thus providing loans in Yen, Japanese currency, promoting private sector development and the expansion of Japanese companies to Africa. The government, through the Tokyo International Conference on African Development (TICAD), a two decade program, furnishes a loan of four billion dollars over five years. Disbursements began in 2010.

The Japanese government is therefore pushing JICA to refocus its traditional role in development assistance to design programs which will inject managerial know-how to medium size companies. Kaizen – literally mean improvement in Japanese – is a catchword that will be much heard of across the continent in years to come. Already, Ethiopia is seen in Tokyo as “a star performer,” with a TV commercial broadcast in Japanese showcasing improvements reportedly made inside a Peacock Shoe Factory, located inside an industrial park near Nefasilk area.

In 2008, the late Ethiopian Prime Minister, Meles Zenawi, visited Japan for the fourth time. At his request JICA launched technical assistance the following year, by introducing the workflow philosophy among Ethiopian state and privately owned companies. Atypical for Africa, Ethiopia went to the extent of setting up a national Ethiopian Keizen Institute, with the intention of “building a more vigorous private sector.”

Its promoters claim that during the second phase of the program, due to end in 2014, companies that embraced it have saved as much as 30,000 dollars, 70 dollars per worker, by managing production using the Kiezen system. They followed simple procedures such as “sorting, setting in order, shining, standardising, and sustaining,” while maintaining factory premises.

Away from the factory compounds and forest coffee farms that JICA supports, these are towering ideals visitors would be greeted with when exiting elevators on the sixth and seventh floors at JICA’s country office, in Addis Abeba, located in MINA Building, off China-Ethiopia Friendship Road.






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