On June 6, the Japan International Cooperation Agency (JICA) attended a ceremony regarding the “Private Sector Promotion Fund” at the venue of the European Bank for Reconstruction and Development (EBRD) Annual Meeting, currently being held in Riga, the capital of the Republic of Latvia, and signed a Letter of Intent with the EBRD concerning the fund.
Developing countries in the Middle East, Europe, and East and Central Asia face a range of development challenges, including economic diversification, energy security, infrastructure development, providing financing to small and medium-sized enterprises and women entrepreneurs, and improving agricultural productivity. In particular, since the start of the 2020s, progress in addressing these challenges has been delayed due to the contraction of economic activity caused by the COVID-19 pandemic, soaring energy prices, and the impact of conflicts that have erupted and are becoming protracted in Ukraine and the Middle East.
Furthermore, while many of the developing countries in these regions were formerly part of the socialist bloc and are still in the process of transitioning to a free-market economy, there is a growing need for development funding denominated in local currencies, driven by lessons learned from their past reliance on foreign-currency-denominated external borrowing as a source of economic growth.
This project involves investing in the Japan-EBRD Initiative for Development Acceleration and Inclusion (JIDAI Fund), a fund established and managed by the EBRD—which has many years of experience in providing loans and investments to the private sector in the Middle East, Europe, and East and Central Asia, and of which Japan is the second-largest shareholder. The JIDAI Fund will provide financing in coordination with the EBRD’s own account, complementing the EBRD’s financing, bond purchases, and guarantee operations (hereinafter referred to as “financing, etc.”)—primarily denominated in local currency—in support of private sector initiatives aimed at achieving the SDGs. JICA’s financing and other operations through the JIDAI Fund are projected to total up to 1 billion U.S. dollars at the time of the fund’s establishment.
JICA will invest in the JIDAI Fund using overseas investment and financing to help bridge the funding gap required to achieve the SDGs in the Middle East, Europe, and East and Central Asia, thereby contributing to sustainable socio-economic development in these regions. It is also expected to serve as a source of funding to meet the local currency financing needs of Japanese companies and their affiliates operating in these regions to achieve the SDGs.
The ceremony was attended by EBRD CFO Buchhart-Kubler-Zolger, Mr. Mimura, Vice Minister of Finance of Japan, and former JICA Director Hara.
Moving forward, JICA will continue to collaborate with various countries and international organizations to contribute to the socioeconomic development of developing countries and regions in line with the Sustainable Development Goals (SDGs).
Scene from the signing ceremony (from left: JICA Director Hara, Mr. Mimura, Financial Vice Minister of Japan, and Mr. Coubert-Zolger, CFO of the EBRD)
1. Portfolio Companies
Japan-EBRD Initiative for Development Acceleration and Inclusion
2. Country (Target Region)
The Middle East and Europe, as well as East and Central Asia
3. Amount of Investment
Initially up to $1 billion
4. Project Name
Private Sector Promotion Fund
5. Business Objectives
This initiative aims to contribute to sustainable development in the Middle East, Europe, and East and Central Asia by promoting private-sector projects through a combination of a fund established within the EBRD and financing from the EBRD’s own account, primarily in local currency, bond purchases, or guarantees, to private sector projects that contribute to sustainable development in the Middle East, Europe, and East and Central Asia. By doing so, the project aims to narrow the funding gap necessary for achieving the SDGs in these regions and thereby contribute to their sustainable socio-economic development.
6. Business Overview
Through contributions to a fund established at the EBRD, we will provide the necessary financing for the EBRD’s loans to private companies in the Middle East, Europe, and Eastern and Central Asia.
7. Contributing to the SDGs
Goal 17 (Let’s Achieve Our Goals Through Partnership)
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