Japan International Cooperation Agency (JICA) has announced an investment of US$40 million in Aavishkaar Capital’s Global Supply Chain Support Fund to support enterprises in Asia and Africa.

Aavishkaar Capital, based in Mumbai, manages the fund and provides credit to private companies involved in supply chains across sectors such as agriculture, food processing, and manufacturing.

The fund, set up in partnership with Germany’s KfW development bank, targets small and medium-sized enterprises that have social and environmental impact.

According to JICA, the investment aims to help expand the fund’s activities beyond India into emerging markets in Africa and Asia, contributing to the wider Indian Ocean region.

🔗 Source: JICA

🧠 Food for thought

1️⃣ Japan shifts from traditional aid to private sector partnerships in development finance

JICA’s $40 million commitment to Aavishkaar represents Japan’s broader strategic pivot away from declining official development assistance toward private sector-led development finance.

Japan’s ODA to Africa has fallen behind contributions from the US and Germany, limiting its ability to compete with China’s growing influence on the continent2.

This decline has prompted Japan to redesign its African diplomacy to focus on strategic partnerships rather than traditional aid, with private sector investment becoming the preferred vehicle2.

The Aavishkaar deal demonstrates this shift in practice. Rather than providing direct government aid, JICA is channeling funds through an established private impact investor that can leverage additional capital and market mechanisms.

This approach allows Japan to maintain development influence while potentially achieving greater financial sustainability and market-driven outcomes compared to traditional aid models.

2️⃣ Established impact investors offer proven scale for development finance partnerships

Aavishkaar’s track record illustrates why development agencies increasingly partner with seasoned impact investors rather than creating new funding mechanisms from scratch.

The Mumbai-based firm manages approximately $555 million across eight impact funds and has invested in over 60 enterprises, reaching 136 million beneficiaries with 52% being women3.

This existing infrastructure and proven impact measurement capability allows JICA to immediately access established deal flow and operational expertise across Asia and Africa.