Japan launched its first three pilot SIBs in 2015 in Yokosuka City, Amagasaki City, and Fukuoka City, followed by the nation’s first fully structured SIBs in Kobe and Hachioji in 2017. With technical support from the Ministry of Economy, Trade and Industry (METI) and the Ministry of Health, Labour and Welfare, SIBs expanded to more cities between 2017 and 2019. By 2019 nearly twenty SIB projects (referred to interchangeably as pay-for-success [PFS] in Japan) had been created, primarily by local government bodies nationwide, with total investment of approximately US$5.8 million (¥900 million). SIIF was involved in the creation of three of these twenty projects, and in the provision of funds for eight, highlighted in Figure G. As of the end of FY2023, the Cabinet Office has reported 273 PFS contracts underway, including those implemented by the national government. SIBs face criticism for their high transaction costs and the perception of privatizing public services. Nonetheless, they remain a valuable tool for advancing sustainable finance. Figure G: Japan’s First SIBs
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Ten Years in the Making
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