Japan International Cooperation Agency (JICA), an agency that coordinates economic and social development assistance for the Government of Japan, inked a deal with the IDB that will see JICA invest a total of US$3bn in Latin America and the Caribbean to support renewable energy and energy efficiency projects.
As part of the agreement, JICA will help set up a US$5mn fund within the IDB that will go towards researching the potential for new projects in the region.
The deal builds on an existing Co-financing for Renewable Energy and Energy Efficiency (CORE) programme created in 2012 to support energy investments to help combat climate change, tripling the current investment target from US1bn to US$3bn and extending the programme until April 2021.
“Japan has been a valuable partner as we have worked hard to put sustainability at the front and center of our operations,” said IDB President Luis Alberto Moreno in a statement.
“Latin America and the Caribbean have enormous energy and infrastructure needs and we believe the program will help ensure that these investments have an even greater positive impact,” Moreno said.
“We believe the expanded program can serve as a vehicle for accelerating the establishment of quality infrastructure in Latin America and the Caribbean, generating positive long-term impacts of economic, environmental, and social importance,” said Manabu Sakai, the State Minister of Finance of Japan.
“Its expansion will not only broaden its geographical reach but bolster the region´s infrastructure efforts by reinforcing the importance of the sector. Japan is very much looking forward to continuing the transfer of its technology and experience to the region as a means of advancing sustainable development,” Sakai said.
The move is part of a broader effort to boost participation of Japanese entities in infrastructure projects across Latin America and strengthen its economic ties to the region. The region has roughly US$300bn in new infrastructure funding needs, according to the IDB.
Trade between Latin America and East Asia has more than doubled over the past decade, reaching a high of over US$500bn in 2014. This figure is expected to grow to at least US$750bn by 2020. But Japan’s share of that is trade is still dwarfed by China’s. The latter’s share of total trade with the region reached US$254bn in 2014, compared with Japan’s US$64bn.