Reports published by ECCEA

Socio Economic Aspects of Japanese Aid

Executive Summary

Since 1987 in some cases, and 2000 in others, six small, independent states in the Eastern Caribbean, all members of the United Nations, namely Grenada, St Vincent & the Grenadines, St Lucia, Dominica, Antigua & Barbuda and St Kitts & Nevis, have benefited from bilateral
aid, which is essentially concentrated on the fishing sector. According to the statistics of the Ministry of Foreign Affairs of Japan, the amount of this aid totals 18,490 million JPY, which is equivalent to around 160.1 million USD. However, we should remind ourselves that this figure does not even represent a half of the EU aid to these same countries during the same period, namely 367.1 million European units of account, or approximately 330 million USD.

What makes the Japanese aid exceptional is the fact that it has been concentrated on one single sector, with twenty-two (22) fisheries’ infrastructure projects being financed in these islands using these funds. The fishing industry in these islands, which are located in the tropical zone that lies between 12° and 17°30 Northern latitude, is one of the most traditional industries of these island societies. It is often more of a safe sector for additional employment rather than a sector for full-time work. According to the islands, this sector represents between 1% and 2% of the GDP. The effects of this massive aid should, therefore, be spectacular in terms of the development achieved.

But is this really “sustainable development”, as defined by the World Commission on Environment and Development? In other words, is it development that meets the needs of the present but without compromising the capacity of future generations to attain their own needs? What effects have been observed on the fishing industry of these islands? What have been the effects on the economy of these countries in terms of development, in terms of their balance of payments, and in terms of the public budget? What is it that drives the Japanese co-operation programme to concentrate its efforts solely on this type of investment? To find answers to these questions, an economist who is well acquainted with the situation in the Caribbean was entrusted with the task of conducting an evaluation visit. This visit took place in July and August 2002 and confirmed what the statistics were already indicating, namely that the results of this aid package on the fishing industry of these islands are far from convincing.

If we first take a look at the effect on the fishing industry, we can see that, as far as the evolution of the tonnages caught is concerned, the rare statistics show contradictory results. In some islands, the size of the catches has regularly decreased, while in others it has increased. Consequently, there is no correlation between the setting up of fishing infrastructures using Japanese aid and the size of the catches. A more detailed analysis showed that, in reality, Summarythere is an indirect link. The creation of fisheries’ infrastructures has enabled an improvement in the size of the catches in those areas where investments were also made in modern fishing vessels, but this has also had the effect of marginalising the populations of fishermen from the traditional sector. There has, however, been a slight value-added improvement,
as a result of the presence of preservation facilities, together with an improvement in terms of sanitation regarding the presentation of the fish for sale on a bed of ice. Furthermore, the analysis showed that it is not possible for these investments to pay for themselves solely on the basis of services from the fishing industry. In other words, they cannot exceed the break-even point unless the total value of production of the fishing sector is multiplied by a coefficient of around 3.7 in the case of Antigua, by around 1.9 in Dominica, or around 1.6 in Grenada – not to mention the other islands. There is, however, no reserve for increasing production capacity by this amount in a sector that is geared to tradition. Additional investment is needed in modern fishing vessels and in the training of manpower. This aspect is not given any support anywhere within the Japanese aid programme.

In addition, this supplementary investment increases the multiplying coefficient still further. In any event, such transformations can only come about as a consequence of the effects of the investments that have been financed and realised through this aid package. The body responsible for providing the Japanese aid, JICA, must have come to the same realisation. Despite this, the action has been repeated year after year, including in zones that are badly exposed to hurricanes, where the infrastructure has been destroyed on several occasions. This means that even more aid has to be requested to enable repairs to be made. It is clear then that the logic which dictates that such investments are constantly increased does in fact have nothing to do with a wish to effect a real transformation in the fishing industry on these different islands. Moreover, the risk of seeing these fisheries complexes destroyed or damaged has thus merely been included as part of the decision-making process regarding the allocation of the aid.

So what is the effect of these aid packages on the economy of these islands and on their public budgets? We should remember first of all that these are very small, island economies, and that the amount devoted to aid for the fishing industry each year represents between 1% and 2% of the islands’ annual GDP, i.e. as much as or more than the total added value of the fishing industry. Furthermore, these island economies have enormous problems maintaining equilibrium in their balance of payments, they have great difficult in balancing their public operating budget, and it is virtually impossible for them to finance their public investment on their own. And they depend on international aid for this purpose. Nevertheless, these countries are, in the main, more successful than the vast majority of developing countries if we consider their Human Development Index, probably because the influxes of migrants that were triggered off have been easily absorbed in Great Britain, in the USA and in Canada, and also because the demographic growth has not brought about any disastrous situations.

The enquiry has shown that, even though a specialised company, OAFIC, was entrusted with the task of conducting a global strategic study, no sociological
study was ever carried out on the populations concerned from the fishing industry, on their needs, their behaviour and their capacity to adapt to the change. As a result, the failure of this policy was easily predictable. So we are then left with the effects of these large investments on the economies of these islands. Given the manner in which these aid packages have been managed, it is unlikely that the “local added value” financed by the aid exceeds 38 - 40% of the declared amount of that aid. Indeed, this figure is probably less, as there is, unfortunately, every reason to believe that part of the aid includes a special budget intended to “reward the laudable efforts of those who give their support to the project” and to silence those whose consciences are opposed to such practices. What is it then that drives the Japanese co-operation to concentrate its efforts solely on this type of investment? A strategy has been put in place by Japan, the prime instrument of which is the use of aid for the fishing industry. And what does Japan receive in return for this aid?

It could be access to the exclusive eco-nomic zone. But why should Japan invest so much for access to such small zones of between 6,800 and 70,000 km2 when negotiations with countries that are almost as small in the Pacific concern zones totalling millions of km2? And, then again, why create infrastructures on land that will be of no use to Japanese deep-sea fishing vessels for transhipment? So Japan is not gaining access to the EEZ in return, which means that the reason can only be a strategic one.

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