Mekong Watch

Home > Policy Reform >

What is ODA?

What is ODA?

ODA stands for Official Development Assistance. Simply stated, it is official financing or other forms of assistance, given by governments to developing countries to promote and implement development. In Japan, ODA can be divided into two major categories: Multilateral and Bilateral Assistance. Multilateral assistance can be channeled through multilateral development banks and UN agencies. Bilateral assistance is given directly government-to-government.

Multilateral Assistance

Multilateral Assistance is ODA which is channeled through multilateral development banks (MDBs) and UN agencies. The Japanese government provides funds for MDBs or UN agencies, and these in turn finance projects in recipient countries. Of Japan's gross ODA for the 2000 fiscal year, 28.2% was for multilateral assistance. Japan is a major contributor to both the Asian Development Bank and the World Bank, and is therefore influential in determining policies at these banks.

When there are concerns about the social and environmental impacts of projects funded by multilateral institution, in particular MDBs, it is possible for NGOs to communicate directly with personnel from MDBs on policy issues. It is also important, however, to understand the decision-making processes of these banks to effectively influence reform. The decisions of Executive Directors (EDs) of the banks are largely determined by the policies of the governments they represent. So in the case of Japan, it is also important for Japanese NGOs to communicate their concerns regarding MDBs to the Japanese Ministry of Finance (MOF).

Mekong Watch has used a combination of communicating with responsible officials at MOF and officials at MDBs to raise concerns about the environmental and social impacts of ADB-financed projects. These projects include: Lam Takhong Pump Storage Project (World Bank), Nam Theun Hinboun Dam (ADB), Nam Theun 2 Dam (WB), Pak Mun Dam (WB), and Samut Prakarn Wastewater Management Plant (ADB).

Mekong Watch has also input information and recommendations into the reform process of the ADB Inspection Function.

Bilateral Assistance

Bilateral Assistance is given directly from the Japanese government to the recipient government, without passing through a third institution. Bilateral assistance can be divided into the two main categories of (1) bilateral loans and (2) bilateral grants.

(1) Bilateral Loans

A relatively large proportion of Japanese ODA is in the form of loans. Of the net ODA budget for fiscal year 2000, 51.4% was in the form of loans. Compared to other donor countries, this is a large percentage. The reason given by the Japanese government for the emphasis on loans is that it encourages self-reliance and prevents dependency on grant aid (it is interesting to note, however, that 28 countries unable to pay back their debts are now eligible for debt relief grants from Japan). The Implementing Agency of Loans is the Japan Bank for International Cooperation (JBIC).

Bilateral loans from the Japanese government have funded many destructive projects in the Mekong Region. Among the fundamental reasons for this is the orientation of aid that prioritizes the economic interests of corporations and the Japanese economy over that of local people. The fact that local people are rarely consulted about their needs and are excluded from decision-making processes has contributed to repeated tragedy in the Mekong Region.

Recently, new environmental guidelines were adopted by JBIC, and they are to be implemented from October 2003. A complaints mechanism is now being developed, and this mechanism is also to be implemented together with the new environmental guidelines.

Projects monitored by Mekong Watch which JBIC is either financing or considering for bilateral loans: Ta Trach Reservoir Project (Vietnam), Samut Prakarn Wastewater Management Plant (Thailand), Lam Takhong Pump Storage Project (Thailand).

(2) Bilateral Grants

Bilateral grants can be divided largely into two categories of grant aid and technical assistance. Policy regarding bilateral grants is largely determined by the Ministry of Foreign Affairs (MOFA) and implemented by the Japan International Cooperation Agency (JICA).

Grant Aid, unlike loans, does not need to be returned to the Japanese government. There are various kinds of grant aid, including project and non-project aid, grant aid for increased food production, debt relief grants, and grassroots grant assistance. Grants are usually smaller in amount than loans. Recently, controversial grant aid has included grant aid for increased food production (2KR), debt relief grants, and a grant to repair the Baluchaung Hydropower Plant No2 (in Burma). These grants have illustrated the lack of transparency and monitoring in the planning and implementation of grant aid. Social and environmental impacts of grant aid have not been sufficiently addressed. MOFA has acknowledged the need for reform, and is planning to establish new social-environmental guidelines for grant aid (similar to the new environmental guidelines adopted by JBIC).

Technical assistance involves providing equipment or services for a project, rather than funds. This could include sending Japanese experts to the recipient country, or bringing people from the recipient country to Japan for training programs. Development surveys are also included in technical assistance.

Copyright © Mekong Watch Japan. All rights reserved.