Unlike technical cooperation, participants for Japan’s financial cooperation(loans and grants) are principally from the private sector, particularly tradinghouses, construction companies, and manufacturing firms. This was becausefinancial cooperation has been centrally used for the provision of equipment andconstruction of facilities. As previously stated, when Japan’s ODA started, it wasstrongly motived by the need for export promotion, with the private sector workingas major implementers of the loans and grants part of ODA.
This, however,gradually started to change during the 1980–1990s, when the private sector beganto take less interest in pursuing ODA-related business. One reason was the systems’change toward untying yen loans in the late 1970s and a resulting decline inthe number of contracts won by Japanese firms, which eventually fell to approximately20 percent in the 2000s.21 Another was the attitudinal change of the privatesector toward ODA: during the 2000s, many major trading companies started towithdraw from the ODA business, and particularly from grant projects, which theyno longer saw as lucrative due to the alleged risks associated with corruption ofrecipient governments as well as other political risks.Since the beginning of the 2010s, however, a new, more broadly based, kindof private–public partnership has come to be mainstreamed.
Up until then, theprivate sector roles in ODA were rather limited to that of the implementers ofODA (and particularly infrastructure) projects. By contrast, the emerging form ofODA is aimed at supporting the mainstream business activities of the private sectorin developing countries. As such, this is a clear break with the traditional ODA–private sector relationship. Practically, this new private–public partnership is beingpromoted by ODA-implementing agencies like JICA through a process of solicitingbusiness proposals from the private sector, including from firms that havehitherto had little engagement in ODA-related activities, particularly small- andmedium-sized enterprises.
Once such proposals are judged as beneficial to developingcountries, they can be selected as subjects of financial and technical supportfrom ODA for their implementation.