JAPAN yesterday explained its ODA (Overseas Development Assistance) loan scheme to key government representatives in Honiara.
This was during a half-day seminar Japan International Cooperation Agency (JICA) conducted for local government reps.
While Japan is one of the main donors here, it also lends out money to developing countries on very low interest rates, long-term repayment period, as well as grace period.
JICA’s technical adviser Yasushi Hayashi, who is based at the ministry of development planning and aid coordination, said they give out different types of loans.
These include project loans, engineering loans, financial intermediary loans, sector loans, program loans, commodity loans, sector program loan, and post disaster standby loan.
Mr Hayashi told officials during its early days, Japan received 13 loans totalling USD$862.9 million from the World Bank from 1953 to 1966.
He said these loans were used to build roads, railway, iron manufacturing, agriculture, and power plants.
Through those loans, Japan rebuilt its infrastructures, grew its economy, and reduced poverty.
Mr Hayashi said Japan completed repaying the loans in 1990.
As one of the world’s leading economies, Japan now wanted to assist developing countries improve and build key infrastructures through its soft loan scheme.
Mr Hayashi said interest rates for their loans are as low as 0.01% while the highest rate would be 1.4%.
Repayment period could go as far as 40 years, while grace periods range from five to 10 years.
Yesterday’s seminar heard while Solomon Islands is a major recipient of Japanese aid grant, it has yet to tap into this loan scheme.
In the Pacific, Papua New Guinea has been a major borrower of Japan’s ODA loans since 1979 until last year.
Mr Hayashi said PNG has borrowed 16 loans from Japan since 1979 that were equivalent to SBD$5.6 billion.
These loans were used to fund highways, international airport terminal, power and gas projects, water and sanitation, as well as agriculture and fisheries projects.
Vanuatu is the latest Pacific island state to borrow funds from Japan, which it used to build its new state of the art port facility in Port Vila.
JICA also used the seminar to inform and explain its objectives, operation scale, and cooperation scheme.
Head of the JICA office in Honiara Taiji Usui said this is the first time such seminar was conducted here.
“We’ve conducted similar seminars in other countries but this is the first for Solomon Islands,” Mr Usui said.
Permanent secretary of the ministry of national planning and aid coordination Jeremy Manele thanked JICA for the informative session.
He said the seminar held key government ministry representatives to understand well Japan’s aid and how to go about applying for it, as well the ODA loan scheme.
“There’s a window of opportunity that Japan has out there for us to explore,” Mr Manele said at the close of the seminar.
“The onus is on us government representatives to explore the opportunity and tap into the funds.”
Mr Manele said PNG and Vanuatu are moving into that direction.
He said it’s not a bad idea to borrow money to fund key economic projects because in the long run, these projects will contribute significantly economic growth and towards the repayment of the loans.
By OFANI EREMAE