Abundant natural resources are essential to corporate supply chains
--How is the IDB contributing to the various challenges facing the global economy, such as climate change and food security?
For many years, Latin America and the Caribbean have been in the position of receiving support from the world. But today, the world needs this region. For example, its abundant natural resources, including critical minerals and agriculture, are essential for companies to build their supply chains.
The region holds two-thirds of the world's lithium and 38% of its copper, making it essential for the global energy transition. The IDB supports countries to ensure sustainable and transparent mining and helping them strengthen their supply chains with trusted partners like Japan.
The Amazon rainforest is also important. It absorbs 25% of the carbon dioxide (CO2) captured by all land on Earth. To protect this important resource, the IDB supports investments in nature-based solutions, sustainable land use, and climate resilience.
Additionally, Latin America and the Caribbean region produce enough food for 1.3 billion people, and the IDB is strengthening global food security by promoting innovation in agriculture, improving logistics, and supporting resilient agriculture. As global supply chains shift, the region can play a larger role in ensuring food security.
In 2023, the IDB together with IDB Invest (Inter-American Investment Corporation) and IDB Lab (Multilateral Investment Fund), provided a total amount of $24.295 billion in financing to the region. The IDB is expanding the capacity of financing while promoting private sector-led growth.
IDB Invest is increasing its capitalization by $3.5 billion, expanding its investments in infrastructure, renewable energy, and supply chains. Similarly, IDB Lab is also expanding its fund size by $400 million of replenishment, strengthening its support for entrepreneurship and digital transformation.
Latin America and the Caribbean is a democratic, conflict-free region that offers a stable environment for businesses to invest and deepen regional integration. This stability, combined with its economic potential, has led to deepen the region's role in the global economy.
--Is the Japanese government showing a proactive stance toward investment in Latin America and the Caribbean?
Japan is a major development partner in Latin America and the Caribbean through JICA (Japan International Cooperation Agency) co-financing, Japanese trust funds, and technology transfers, and is the first non-borrowing country shareholder of the IDB. Among non-borrowing shareholders, the United States holds the largest share at 30%, Japan holds 5%.
The total contributions from the Japanese government to the Japan Trust Fund have reached $473 million, and the total number of projects supported by the Japan Trust Fund has exceeded 650. For example, Japan has supported projects to promote the digitization of hospitals in the region and has a track record of giving priority to low-income and vulnerable countries.
In February this year, JICA also decided to invest up to $1.5 billion in the trust fund managed by IDB Invest, the IDB Group's private-sector investment arm. Under this investment agreement, JICA will co-finance loans provided by IDB Invest to private companies for their efforts to achieve the Sustainable Development Goals (SDGs).
--However, investment by Japanese private companies in Latin America and the Caribbean remains at a relatively low level.
Unfortunately, Japanese companies do not fully understand the potential of the Latin America and the Caribbean region. The bidding rates for projects undertaken by the IDB is also low. Honda Motor Corporation, Toyota Motor Corporation, and Nissan Motor Corporation announced that they would invest more than $1 billion in the region in 2024, creating more than 2,500 jobs in Mexico alone, but this is only a partial move. We would like to actively attract more private companies to generate such success cases.
To attract corporate investment, we launched an initiative called BID for the Americas in September 2023. This provides early access to infrastructure projects and business matchmaking. It promotes investment in the hospital, water, energy, transportation infrastructure, and agriculture sectors through joint implementation of loan and guarantee programs offered by the IDB Group.
--In addition to investing in infrastructure and other areas, what are your expectations for Japanese private companies?
We are looking forward to investment not only from large companies, but also from startups from Japan. IDB Lab (IDB group) and JICA have partnered on the open innovation program TSUBASA (Transformational Start Ups' Business Acceleration for the SDGs Agenda), which was launched in 2021 to support Japanese startups working on development issues in the region.
Japan is the largest contributor to IDB Lab, with approximately 30% of its shares. One notable success story is OUI Inc., a start-up company from the Keio University School of Medicine. The company provides technology that uses AI and a medical device called a "Smart Eye Camera" that can be attached to a smartphone. From 2021, it has been conducting demonstrations of the construction of a remote ophthalmic diagnosis model for indigenous people in Brazil, with the aim of providing early detection of visual impairments such as cataracts and providing ophthalmic care.
We hope that beyond large corporation investment, Japan's advanced solutions will continue to expand in the market through startups.
We are used to political transitions in each country
--How do you see the impact of the Trump administration coming into power? Are there more threats to Latin America and the Caribbean, such as higher tariffs on Mexico and the recapture of the Panama Canal?
We are used to regime changes. We have experienced many political cycles since our establishment, with regime changes occurring quite often among the 26 borrowing and 22 non-borrowing member countries, and we have consistently worked with all countries and all regimes throughout our history. We have served as a bridge between administrations, between the public and private sectors, and between regional and non-regional member countries, and we believe that we should focus on a common regional and global agenda.
The IDB, the largest development bank in the region, believes that greater prosperity in Latin America and the Caribbean would benefit the entire hemisphere.
--The Trump administration appointed Mauricio Claver-Carone, the former president of the IDB, as a special envoy in charge of controlling illegal immigration for Latin America. This has an aspect of the politicization of the IDB president's position, doeisn’t it?
The IDB is an institution with a long-term perspective. Our role in ensuring continuity and bridging political transitions remains unchanged.
