A qualitative analysis of chronic poverty and poverty reduction strategies in Solomon Islands

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What is Chronic Poverty?

The distinguishing feature of chronic poverty is extended duration in absolute poverty.

Therefore, chronically poor people always, or usually, live below a poverty line, which is normally defined in terms of a money indicator (e.g. consumption, income, etc.), but could also be defined in terms of wider or subjective aspects of deprivation.

This is different from the transitorily poor, who move in and out of poverty, or only occasionally fall below the poverty line.

Background Paper for the Chronic Poverty Report 2008-09

A qualitative analysis of chronic poverty and poverty

reduction strategies in Solomon Islands

Matthew Clarke CPRC and ODI

2007

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Index of Tables

Table 1: Estimates of Formal Employment 2000-2004 ... 5

Table 2: Solomon Islands Government Revenue, 2000 -2004 (in SI$ millions)... 8

Table 3: Solomon Island Merchandise Exports, 2000-2005 (in US$ millions) ... 9

Table 4: Composition of Exports, 2000-2004 (value in US$ ,000, volume in metric tons except for timber) ... 10

Table 5: 1999 Human Development Index for Pacific Island Countries... 12

Table 6: Basic Characteristic of the Pacific Island Countries, 2004 ... 13

Table 7: Estimated Population and Population growth by Province, 1999-2005 ... 16

Table 8: Simple Borda Ranking of Selected Indicators at Provincial Level... 17

Table 9: Human Development Index for Solomon Islands provinces – 1999 ... 20

Table H1: Reduction in Aid Receipts of Pacific Countries ... 54

Table H2: Estimates of Formal Employment 2000-2004 ... 56

Index of Figures

Figure 1: Actual and projected real GDP growth, 2000 – 2010 (percent) ... 5

Figure H1: ODA/GDP ratio for Solomon Islands, 1973-2004 ... 54

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Summary

Both poverty and chronic poverty are difficult to measure in Solomon Islands. Apart from general data constraints, there is a distinct lack of data that can be utilised to assess the extent and severity of either poverty or chronic poverty both spatially or inter-temporally with any accuracy. Eighty-four percent of Solomon Islanders live in rural areas, with very limited access to education, health or other social services. In addition, they are serviced by poor or non-existent transport, electricity or telecommunications infrastructure, and rely on subsistence farming for their livelihoods. To address this reality pro-poor economic growth must originate from growth in the rural agricultural sector. To date, the poverty reduction strategies designed by the Solomon Island Government and other international financial institutions, such as the Asia Development Bank and International Monetary Fund, have failed to explicitly focus on this sector. Instead they emphasise private sector productivity, public sector capacity and improved infrastructure. Whilst important, such reforms are insufficient to fully address the circumstances of the poor within Solomon Islands. Alternative approaches to development that prioritise the poor and rural agricultural development are now required.

Acknowledgements

The research for this Background Paper was made possible by funding from the Australian Government's AusAID.

Author

Dr Matthew Clarke, Program Leader - International Development School of Global Studies, Social Science and Planning, RMIT, Melbourne, Australia

Email: matthew.clarke@ems.rmit.edu.au

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Introduction

Solomon Islands¹ is the third largest archipelago in the South Pacific, comprising nearly 1000 islands of which only around one-third are populated. While many of the country’s islands are coral atolls, the larger islands, including Guadalcanal, Choiseul, Santa Isabel, Malaita, San Cristobal and New Georgia (which account for eighty percent of land mass and home to eighty percent of the population) are mountainous and thickly forested, occasionally skirted by thin coastal plains that provide fertile but limited agricultural land. The total land area is 28,370 km2, but less than one percent of land is presently under cultivation, whilst the total sea area of Solomon Islands is 1.35 million km2. The vast majority of the population are Melanesian (settling the islands over 3,000 years ago), however over 150 languages are spoken throughout the country. English is the official language, yet most people use Pidgin to communicate with those from other language groups.

Poverty and chronic poverty² in Solomon Islands are difficult to measure as doing so requires accurate and comparable data both across time (inter-temporal) and across space (interspatial). Apart from general data constraints, there is a distinct lack of data that can be utilised to assess the extent and severity of either poverty or chronic poverty both interspatially or inter-temporally with any accuracy³. A household expenditure and income survey was undertaken in 1991 but it was ‘limited in scope and coverage’ (SISO 2006a, p. ii) and cannot be meaningfully compared to the household expenditure and income survey undertaken in 2006. Other data on education, health, water and sanitation and other indicators of chronic poverty are by and large outdated, incomplete or insufficiently disaggregated for any proper analysis. For example, there are no official data on the proportion of the population below US$1 per day, poverty-gap ratio, or the share of the poorest quintile in national consumption. What is known though is that eighty-four percent of Solomon Islanders live in rural areas, with very limited access to education, health or other social services. In addition, they are serviced by poor or non-existent transport, electricity or telecommunications infrastructure, and rely on subsistence farming for their livelihoods. Despite its tropical setting, the reality of subsistence living in Solomon Islands is neither romantic nor idyllic. Village life is harsh. ‘Food preparation remains laborious, house construction and repair is hard and time consuming, and social obligations to church, school and community grow daily’ (Roughan 2002, p. 85).

1 See Appendix A for general descriptive data for Solomon Islands.

2 Chronic poverty is poverty that persists over time, and often is inter-generational. Those who experience chronic poverty are excluded from the normal benefits associated with economic growth or poverty reduction strategies that do have some positive impact on the circumstances of the poor.

Chronic poverty is not only characterized by low income, but is also a function of illiteracy, illness, barred access to education, health services, and safe drinking water, social exclusion and exploitation. Many who experience chronic poverty live in rural areas or urban slums (ODI 2005).

3 This data constraint is recognised within official documents – see SIG 2005b; ADB 2005b; IMF 2005b.

For example, no national accounts have been produced since 1994, the last census was held in 1999 and only preliminary findings of the 2005/6 Household Income and Expenditure Survey have been

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Poverty in Solomon Islands is not simply being defined by going without food or shelter, but rather it is lacking the basic services of education, health, and transportation. Given this definition, it is reasonable to suggest that the majority of the Solomon Islanders living in rural areas are poor. Recent civil strife within Solomon Islands has only worsened their circumstances (UN 2006). However, determining precisely how many Solomon Islanders are chronically poor though is not possible with any accuracy.

National and international initiatives to increase economic growth have recently been developed for Solomon Islands. This paper will review how these policies incorporate chronic poverty into their analysis and whether it is likely these policies (if implemented) will positively impact on chronic poverty throughout the provinces. In this regard, economic growth in Solomon Islands is desirable if it positively improves the circumstances of the poor. Presently, the major drivers of economic growth come from a very narrow band of economic activities that rely heavily on private investment and are located near urban centres. The juxtaposition between this narrow formal economy and a broad based subsistence economy means it is unlikely that such economic growth will have any significant or widespread impact on chronic poverty.

Within Solomon Islands pro-poor economic growth must originate from growth in the rural agricultural sector (Feeny 2004). To date, the poverty reduction strategies designed by the Solomon Island Government (SIG) and other international financial institutions, such as the Asia Development Bank (ADB) and International Monetary Fund (IMF), have failed to explicitly focus on this sector. Instead they emphasise private sector productivity, public sector capacity and improved infrastructure. Whilst important, such reforms are insufficient to fully address chronic poverty within Solomon Islands. Alternative approaches to development, such as land reform, greater focus on natural resource use (that is sustainable) and family-based economic development are now required (Wallace 2002; Oxfam 2006b).

This paper is set out as follows: this first section has introduced the research. Section two briefly describes the current political situation in Solomon Islands with an emphasis on the recent period of civil strife and the response to that civil strife.

Government revenue and natural resources are discussed in Section 3. Section 4 focuses specifically on describing the state of chronic poverty, which is made difficult because of significant data constraints. A description of poverty reduction strategies and the incorporation of chronic poverty into them is undertaken in Section 5. Section 6 suggests various policies that may assist in aligning current poverty reduction strategies with the reality of chronic poverty in Solomon Islands, before the paper is concluded in Section 7.

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1 Current Situation

Solomon Islands gained independence from Great Britain in 1978 following two years of self-governance. Since that time, its political environment has been characterised by instability with fifteen different governments over 28 years⁴. More recently this instability escalated into four years of civil strife between 1999 and 2003. Much of the instability (and ensuring civil strife) is a function of perceptions of corruption and repatriation of resources and wealth from outlying provinces to the central seat of Government in Honiara, Guadalcanal Province (UN 2002; ADB 2004; Allen 2005).

This political instability has been further exacerbated by an undeveloped sense of nationalism within Solomon Islands as ‘most people carry with them competing clan, island, provinces and nation identities – in that order’ (UN 2002, p. x). Indeed, basic allegiances remain to the family and clan, not to the nation (Mamaloni 1985; Jourdan 1995; Moore 2005; Kabutaulaka 2005). It is possible that those in outlying rural areas have no sense of nationhood at all. This in part helps explain the civil strife of 1999 to 2003 that led to the disintegration of government services and law and order.

The impact of the period of civil strife should not be understated when discussing the current social and economic circumstances of Solomon Islands and its future development plans. While the immediate events igniting the period of civil strife are clear, the underlying causes have a longer history (see Bennett 2002, Moore 2004, Kabutaulaka 2001, 2002 and Dinnen 2003 for further analysis of the civil strife).

Resource ownership, resource use and poverty are central to both the longer smouldering of tension and more recent incendiary of violence (Roughan 2005).

The underlying causes derive from a linkage between poverty, resources, and governance. A poverty of resources caused some to seek opportunities elsewhere. The host landowners became resentful at the numbers of settler relatives who followed and were also upset at the failure of Government to channel to them a fair share of the benefits accruing from large-scale developments on their islands (UN 2002, p. xii).

The civil strife had serious consequences for the country as a whole. Over 20,000 people fled the violence in Honiara to their home provinces, including many educated and senior bureaucrats (again adding to the disintegration of government services⁵).

‘It was a situation in which state structures never completely collapsed but were subverted and utilized to serve the interest of a self-defined and privileged few. Some people in the government, the police and the public service in general increasingly cultivated cliental relationships, used state institutions to serve their interest, and extorted money from the state coffers’ (Kabutaulaka 2005, p. 292). While the civil strife and violence was centred in Honiara, a general breakdown of law and order occurred in other provinces and rural areas as well. This state of decay and collapse

4 See Appendix B for a full list of the Governments since Independences.

5 A benefit of this return to home provinces was that many that returned had skills and expertise that did

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continued until the Australian-led Regional Assistance Mission to Solomon Islands (RAMSI) was implemented in July 2003.

Fearful that Solomon Islands may become a failed state⁶, the initial purpose of the RAMSI intervention was to restore and strengthen (but not replace) existing government institutions (Moore 2005; Kabutaulaka 2005, SIG 2005b). Initially, over 2,000 public servants and armed police and defence force personnel from Australia, New Zealand and other Pacific countries were deployed. Restoring law and order was the first task and almost immediately 2,500 weapons and 300,000 rounds of ammunition were either voluntarily handed-in or confiscated within the initial months of RAMSI.

Whilst ethnic tension and political instability remain⁷, this semblance of law and order following the RAMSI interventions has provided much needed space to re-establish economic and social development within Solomon Islands.

1.1 The Economy

Solomon Islands’ economy faces several constraints, including: 1) remoteness; 2) susceptibility to natural disasters; 3) low institutional capacity; 4) limited diversification of economic activity; and 5) poor access to capital and investment (ADB 2005b). In 2004 the per capita GDP per capita for Solomon Islands was US$470. Solomon Islands’ economy is recovering from the contraction experienced during the years of civil strife between 1999 and 2003. In 2000, real GDP per capita contracted by 14.0 percent and then fell another 10.0 percent in 2001 and 2.4 percent in 2002. Recovery occurred in 2003 when real GDP per capita grew around 5.3 percent and continued to expand 4.6 percent in 2004 and an estimated 4.4 per cent in 2005. The IMF has projected continued growth into the future, but only at low levels, around 1.5 percent (see Figure 1). Natural resources (agriculture, fishing and forestry) accounted for about two-thirds of this recent economic growth, but much of this was as a result of unsustainable logging of natural forests. The services sector contributed about one-quarter of this growth (IMF 2005c). Long-term sustainable drivers of economic growth must still be found⁸.

6 Kabutaulaka (2005) provides analysis of how the term ‘failed state’ was applied to Solomon Islands and the consequences of this for Australia’s foreign policy in the Pacific generally and Solomon Island specifically.

7 In April 2006, much of Chinatown in central Honiara was razed to the ground following the election of a (short-lived) Government led by Mr Synder Rini. This violence was apportioned to perceptions of political interference by ethnic-Chinese business leaders.

8 ‘The recently initiated rehabilitation of palm oil production on Guadalcanal and the planned reopening of the Gold Ridge mine are encouraging developments. However, the projects cannot be expected to provide major boosts to GDP until late 2006 and 2007’ (ADB 2006, p. 3). Yet, even then this economic growth will be from a narrow base and have limited poverty reduction impact on the wider population.

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Figure 1: Actual and projected real GDP growth, 2000 – 2010 (percent)

-15 -10 -5 0 5 10

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

actual (2000 - 2004) and projected (2005 - 2010) real GDP pc

Source: IMF 2005c

Employment in the formal economy has always been quite low (no more than a quarter of the working-age population⁹ – SIG 2005b) with most of this found in the public sector within the urban centres (primarily in Honiara). The large majority of the population (and nearly all those in rural areas) are subsistence farmers reliant upon their own production for their livelihoods (SIG 2005b). Inflation between 2000 and 2004 averaged 8.2 percent (peaking at 10.1 percent in 2003) but fell in 2004 to 6.5 percent largely as a result of increased supplies of fresh fruit and vegetables at major markets and the relative strength of the Solomon Islands exchange rate.

A strong argument can be made that the recent economic recovery was made possible by the restoration of law and order and increased aid flows brought about by RAMSI (see Bately 2005). Yet, many effects of the civil-strife remain: ‘public service delivery is generally poor; property rights and the legal system are weak; the financial sector is not functioning effectively; physical infrastructure is underdeveloped; the quality and reliability of water, electricity and communications services are poor; and the costs of establishing, running and closing a business are high by regional standards’ (ADB 2005a, p. 220). Clearly much is still to be achieved.

Table 1: Estimates of Formal Employment 2000-2004

2000 2001 2002 2003 est 2004 proj

Total 43,910 42,631 41,067 41,723 42,297

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Classification by industry

Agriculture 7,381 7,102 6,691 6,510 6,342

Forestry 3,226 3,192 3,132 3,285 3,482

Fishing 5,315 5,179 5,030 5,015 5,114

Manufacturing 1,480 1,452 1,424 1,444 1,476 Electricity and Water 524 507 482 470 469 Construction 1,569 1,498 1,427 1,400 1,397

Trading 3,309 3,213 3,111 3,124 3,274

Transport and Communications 1,385 1,348 1287 1,254 1,246

Finance 826 823 805 798 806

Administration 6,659 6,435 6,138 6,800 6,758 Other Services 12,236 11,882 11,540 11,623 11,933

Source: IMF 2005c

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2 Government Revenue and Natural Resources

The SIG relies on revenues through taxation on natural resources for a portion of its general revenue. Solomon Islands’ economy primarily consists of three productive natural resource sectors: forestry, fishing and agriculture. The bulk of Solomon Islands’ natural resources are its timber reserves and its marine resources. However, as ‘the commercial timbers of the nation’s natural forest resources are almost spent’

(UN 2002, p. vi) Solomon Islands will now rely on its marine resources for future export and domestic revenue. Some small commercial oil palm and copra plantations have also been developed but these were negatively affected by the civil unrest. The forestry sector accounts for roughly 7 percent of GDP but as stated, present harvesting levels are unsustainable¹⁰. More recently this harvesting has accelerated in expectation that new (legislated) logging limits will be enforced and this has further exacerbated the situation (ADB 2005a). Timber production has also been long recognised as being unsustainable because of over-harvesting.

A major element in the medium-term development of Solomon Islands is the assurance of increased returns from natural resource management. Logging, in particular, has become a major source of foreign exchange. There are concerns, however, that without sustained yield management, the output of logs will soon begin to decline. A comprehensive land use plan and assessment of land capability are urgently needed in order to ensure that the timber industry is managed within an overall framework of resource renewal and environmental protection. (PDP 1991, p. x)

Government revenue from logging during the period 2000-2005 was minimal, earning the government the equivalent of around three percent of GDP. This is projected to fall to just 1.3 percent in 2010 as logging restrictions are enforced (IMF 2005b, c). In terms of SIG revenue, the tax revenue from logging accounts for between ten to fifteen percent of total revenue. However, logging output and taxation rates on logging suggests that this revenue stream should be higher. Logs valued up to SI$550 m³ are taxed at 25 percent of the determined value. Timber logs valued at between SI$550-850 m³ are taxed at SI$1357.50 plus 40 percent of the difference and more valuable logs (those valued above SI$850 m³) are taxed at SI$257.50 plus 60 percent of the difference. It is also officially recognised that actual logging is far greater than reported logging due to weakness in the monitoring and inspection process (SIG 2005b). That revenue is not greater is largely because of the misuse of tax exceptions for logging firms. It is estimated that half of all logging exports have been exempted from government duties (AusAID 2006). This suggests the view that

‘corruption is widely acknowledged to be pervasive and ingrained’ (ADB 2004, p. 3) is valid.

10 Current harvesting is five times the sustainable yield of about 200,000 m³ (SIG 2005b) and it is

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Much of the natural resources underlying these exports have now been destroyed and future tax revenue from this sector is unlikely to grow into the future (Martin 1985, PDP 1991). The SIG have recognised that ‘care must be exercised to ensure that the future generation will still have the opportunity to use this resource to enjoy and enrich their livelihood through the use of the forestry resources. Since most of these resources are tribally owned, efforts must be made to ensure that resource owners benefit maximally from the use of these resources’ (SIG 2005, p. 7). This may include re-planting programs and other land care projects.

Table 2: Solomon Islands Government Revenue, 2000 -2004 (in SI$ millions)

2000 2001 2002 2003 2004 est

Total Revenue 279.3 220.9 247.2 364.0 516.9

Tax Revenue 256.7 202.6 237.1 332.7 463.4

Income and profits Individuals

Corporations

96.3 54.1 42.2

73.6 42.7 30.9

73.2 37.6 35.6

96.1 50.5 45.6

149.4 61.7 87.7

Goods and Services Sales tax

Excises

66.9 59.4 7.6

63.3 56.8 6.5

70.1 63.0 7.1

112.0 96.7 15.3

164.0 143.3 20.7

International Trade Customs and import duties

Export taxes

Logging taxes

93.5 52.7 40.8 n/a

65.7 42.7 23.0 n/a

93.8 54.5 39.3 n/a

124.6 67.8 56.8 54.7

150.0 82.4 67.6 63.8

Other Revenue 22.6 18.3 10.1 31.3 53.5 Stamp duty 1.7 1.9 3.0 3.7 3.9 Licenses and fees 1.6 2.0 2.9 2.5 5.6

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Miscellaneous revenue 19.3 14.4 4.2 25.1 44.0

Source: adapted from IMF 2005c

The fisheries sector presently accounts for nearly ten percent of GDP and nearly twenty percent of total exports. However it does not provide any significant revenue to the SIG. Further, non-Solomon Island commercial fishing entities catch the vast majority of fish caught within Solomon Islands, catching around 90% of the fish landed. Thus during the 1990s, Solomon Islands were responsible for landing only 11% of the annual US$2 million worth of fish caught each year (UN 2002). It is possible that the commercial fisheries industry could be developed and as the fishery resources are naturally spread throughout the nation, such an industry could be decentralized and thus facilitate more equal distribution of its benefits through all provinces. However, Solomon Islanders consume over 22 kg of fish and 12 kg of shellfish per annum, and so fishery resources are not simply an important export activity but are central to the basic subsistence lifestyles of the majority of the population.

Merchandise exports fell during the height of the period strife, falling from US$65.1 million in 2000 to US$47.1 million in 2001. Japan and Australia are Solomon Islands largest trade partners. Japan accounts for over half of total exports while Australia is responsible for nearly 60 percent all imports. Since then, merchandise exports have increased each year reaching a projected US$100 million in 2005. Timber and Fish have been the largest components of these exports making up over 80% of all merchandise exports during this period, with timber exports accounting for around two-thirds and fish exports accounting for over 15 percent.

Table 3: Solomon Island Merchandise Exports, 2000-2005 (in US$ millions) 2000 2001 2202 2003 2004 est 2005 proj

Merchandise exports

65.1 47.1 57.8 74.2 96.7 100.2

Of which:

Timber

44.1 36.1 37.7 49.5 62.6 62.7

Fish 8.1 7.1 10.5 12.4 17.6 16.6

Minerals 0.3 0.1 0.0 0.1 0.4 n/a

Palm Oil 1.3 0.0 0.0 0.0 0.0 n/a

Copra 6.8 0.1 0.3 1.0 3.4 n/a

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Cocoa 1.8 0.9 4.1 7.1 5.4 n/a

Other 2.7 2.9 5.2 4.2 7.4 n/a

Source: compiled from IMF 2005b, c

Table 4: Composition of Exports, 2000-2004 (value in US$ ,000, volume in metric tons except for timber)

2000 2001 2002 2003 2004 est

Timber logs (cubic metres)

Value 44,100 36,085 37,659 49,480 62,551

Volume 536,000 5354,000 550,000 714,100 1,043,150

Fish

Value 8,091 7,074 10,484 12,373 17,643

Volume 21,163 17,699 18,520 28,955 27,249

Copra

Value 6,827 82 329 1,042 3,413

Volume 19,004 1,701 1,731 14,848 21,831

Cocoa

Value 1,823 859 4,109 7,086 5,400

Volume 2,316 2,038 2,907 4,587 4,181

Palm Oil

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Value 1,290 … … … …

Volume 1,263 … … … …

Other (value)

2,972 3,017 5,210 4,229 7,740

Total 65102 47,118 57,970 74,210 96,747

Source: IMF2005c

It is projected that by 2010, that merchandise exports will grow by another 43%.

However, timber exports will fall in real terms and account for less than one-quarter of these exports. Fish exports will also stagnate in relative terms and continue to account for around 15 percent of total merchandise exports. It is projected that the shortfall will be met by significant increases in minerals (including gold), palm oil, copra, cocoa and other (IMF 2005b). Negotiations have also commenced between international investors and the SIG to recommence palm-oil operations, but little other evidence of improved foreign investor confidence exists. While a growing economy in Solomon Islands has indirect benefits for the larger community, direct benefits from these exports will largely bypass those outside the urban population and formal economy. Therefore benefits of this export growth for the chronically poor can be expected to be minimal.

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3 Chronic Poverty and Progress: Limited Indicators (tell a limited story)

It is not possible to precisely identify the chronically poor in Solomon Islands as, like in many Pacific nations, data constraints hinder accurate assessment of any reasonable measure of well-being and progress (Feeny and Clarke 2006; Moore 2005, ADB 2005b). Solomon Islands though are undeniably poor, ranking near the lowest in the Human Development Index (HDI) amongst all Pacific nations. Indeed, its HDI ranking has fallen in recent years and it is now ranked 124^th (out of 177 nations) (UNDP 2006). Whilst low by regional and international standards (only PNG, Vanuatu and Kiribati recorded lower scores – see Table 5), the HDI did increase from 0.420 in 1986.

Table 5: 1999 Human Development Index for Pacific Island Countries

Country GDP per capita

(US$ - 1999)

HDI (1999)

Palau 8027 0.861

Cook Islands 4947 0.822

Niue 3714 0.774

Fiji 2684 0.667

Nauru 3450 0.663

Tonga 1868 0.647

Samoa 1060 0.590

Tuvalu 1157 0.583

Federated States of Micronesia

2070 0.569

Marshall Islands 1882 0.563

Solomon Islands 863 0.553

Kiribati 702 0.515

Vanuatu 1231 0.425

Papua New Guinea 1196 0.314

Tokelau n/a n/a

Source: SIG and UNDP (2002)

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It should also be noted that many Pacific countries prefer the term ‘hardship’ to poverty. Social networks often prevent hunger and outright destitution that are often associated with the term ‘poverty’ (World Bank 1991, IMF 2005b). ‘There is a social understanding in this community: nobody goes short of food; there’s always somewhere to stay; the old and young are looked after; and the mentally ill, the disabled and the chronically sick are looked after’ (Webber 1985, p. 45). Thus, the nature of poverty in the Pacific often relates to a lack of access to basic services and a lack of income earning opportunities rather than outright destitution (AusAID 2006).

The ADB has recently sponsored Participatory Assessments of Hardship (PAH) among communities in a number of Pacific countries. Results from these assessments indicate that poverty and hardship in Pacific countries are defined as

“inadequate levels of sustainable human development through access to essential public goods and services and access to income opportunities” (Abbot and Pollard 2004, pp.xi).

Across a number of indicators, Solomon Islands performs poorly when compared to neighbouring Pacific nations. It has the lowest GDP per capita, lowest adult literacy rate and falling real GDP over the last fifteen years. Solomon Islands also has the largest proportion of its population below 14 years of age.

Table 6: Basic Characteristic of the Pacific Island Countries, 2004 Population Population

density

Urban Population

Literacy rate

GDP per capita

Average annual GDP growth

Youth aged below 14 years

‘000 people/km² % total % of adult population

US$ % % of total population Cook

Islands

20 86 70 94 7549 1.8 30

Fiji 840 46 52 93 3098 1.6 31

Kiribati 90 123 49 93 633 2.0 39 Marshall

Islands

61 337 67 92 1803 -2.3 37

Micronesia 108 154 30 95 1786 -0.7 39 Nauru 10 479 … 95 3500 -5.0 37

Niue 1.8 6.9 33 95 4364 … 30

Palau 21 46 68 91 6350 0.8 27

Papua New Guinea

5800 13 13 57 695 1.0 39

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Samoa 181 65 22 99 2030 1.6 33 Solomon

Islands

521 18 17 30 513 -1.9 42

Tonga 102 127 34 99 2087 2.2 36 Tuvalu 11 373 … 95 1346 2.7 30

Vanuatu 213 17 23 34 1472 0.0 34

Low Income Country Average

80 31 61 536 2.6 19

Source: AusAID 2006

Notwithstanding the data constraints discussed, a demarcation exists between the livelihoods experienced in the urban areas compared to those in rural areas (SIG 2005b, 2006b; ADB 2005b; SISO 2006a, 2006b). Urban households earn 56 percent of income¹¹ through wages and salaries and just 13 percent through home production, which contrasts to rural households who earn only 5 percent of income through wages and salaries and 49 percent through home production (indicating a subsistence existence). Expenditure¹² in urban areas per capita was more than 2.5 times higher than in rural areas (SID7,701 compared to SID2,927). Food was the largest item of expenditure representing 54 percent on average across the country (though it represents just 35 percent in urban areas compared to 63 percent in rural areas). Housing expenditure was the second largest expenditure item, being greater both in absolute and relative terms in urban areas compared to rural areas (SID17,849 and 25 percent to SID2,561 and 11 percent).

An estimate of inequality based on expenditure indicates that rural areas have less inequality than urban areas as measured by a Gini co-efficient (0.316 compared to 0.286).

Other indicators (apart from income and expenditure) can also be useful in providing some measure of chronic poverty. For example, 62 percent of housing materials in rural areas are traditional (thatch) compared to just 18 percent in urban areas.

Likewise, the 92 percent of energy used for cooking in rural areas comes from an open fire compared just 49 percent in urban areas. Notably, only 3 percent of the urban population use electricity as their main energy source for cooking whilst 0.2 percent in rural areas have access to electricity for cooking purposes. This lack of

11 Includes income from wage/salary, self-employment, services, benefits, home production, cash gifts, goods received, gambling, rent, loan income and other sources.

12 Reported expenditure is considered more accurate than reported income as more than half of the surveyed households in the 2006 HIES reported their household expenditure to be between 26 percent more to more than double their income.

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access to electricity, especially in rural areas, is also clear in that just six percent of those in rural areas use electricity for lighting, compared to 61 percent in urban areas (kerosene is the major lighting energy source in rural areas accounting for 88 percent – compared to 36 percent in urban areas). Urban residents also have better access to clean water with 64 percent of urban residents having piped water as their main water source compared to just 15 percent of the rural population. One quarter of the rural population access water outside of their own neighbourhood (compared to just 6 percent of the urban population). Finally, 57 percent of the urban population have access to their own flush septic tank toilet compared to just 6 percent of the rural population. Whereas the 47 percent rural residents rely on a water closet over water (or sea) for their sanitation needs, whilst only 3 percent of urban residents do likewise.

Across all these income and non-income indicators, the minority urban population have a higher standard of living than their rural population.

Solomon Islands Development Trust (Roughan 2004) has more recently reported that despite improvements in law and order, the living standards of the rural poor have not improved since the arrival of RAMSI¹³. ‘For the 85 percent of the population living in villages, hardship appears to have increased as cash income generation has been outpaced by rising costs of basic goods and services such as salt, rice, soap, kerosene, school fees, and ship transport’ (ADB 2005a, p. 218). Thus, it is arguable that the economic benefits emanating from the recent economic growth have yet to benefit the majority of Solomon Islanders and the majority of the non-urban population suffering chronic poverty.

3.1 Provincial Comparisons

While the 2006 HIES provides some data for interspatial analysis, it is still extremely limited. ‘The survey design and costing meant that the data collected would only provide estimates at the national and provincial geographic levels’ (SISO2006b).

Thus it is not possible to consider distinct income groups or communities using this data.

The Solomon Islands’ population is estimated to be above 533,000 (see Table 7).

Malaita, Guadalcanal and Western provinces have the largest populations – 26, 15 and 15 percent respectively whilst Rennell-Bellona is the smallest with less than one percent of the total population. The township of Honiara is itself considered a province (it is located on Guadalcanal Islands) and has 13 percent of the total population. Perhaps more notably, over 80 percent of Solomon’s Islands urban

13 By what criteria the effectiveness of RAMSI should be judged are contentious – while law and order have been achieved (in the Provincial capitals) there is concern about the lack of capacity-building and the limited involvement of local counter-parts in the decision making process (see ADB 2005b and

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population reside in Honiara. Thus, there are only very small urban populations spread throughout the remaining nine provinces.

Table 7: Estimated Population and Population growth by Province, 1999-2005 Population in

2005

Percent of total Population in 1999

Annual growth

% (1999-2005)

Choiseul 31,329 5.86 20,008 7.4

Western 81,852 15.34 62,739 4.4

Isabel 23,638 4.43 20,421 2.4

Central 24,491 4.59 21,577 2.1

Rennell- Bellona

4,409 0.83 2,377 10.3

Guadalcanal 84,438 15.82 60,275 5.6

Malatia 140,569 26.34 122,620 2.3

Makira 50,026 9.37 31,006 8.0

Temoto 23,800 4.46 18,912 3.8

Honiara 69,189 12.96 49,107 5.7

Total 533,672 100.00 409,042 4.4

Source: SISO 2006a, 2006b

Given its urban status, it is expected that Honiara has the highest average per capita expenditure amongst all provinces of SID8,426 which is more than 3.5 times the lowest average per capita expenditure of SID2,240 in Temotu. Excluding Honiara (37 percent), households across Solomon Islands spend between 59 percent (Temotu) to 65 percent (Central) of total expenditure on food. The range of expenditure on housing is between 5 percent (Rennell-Bellona) to 14 percent (Makira), with Honiara households expending 26 percent on housing. Isabel has the lowest estimated inequality based on household expenditure with a Gini-c-efficent of 0.260 compared to the most unequal province of Rennell-Bellona with a Gini co-efficent of 0.463.

Again, income estimates are unreliable as over 55 percent of households surveyed reported expenditure between 26 percent to double that of income. Acknowledge that, all provinces (other than Honiara) received the majority of their income from home production – ranging from 46 percent in Temotu to 65 percent in Isabel. Wages and salaries in comparison only contributed 8 percent in Central up to 25 percent in Western (and 49 percent in Honiara).

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Considering non-income indicators of chronic poverty, 90 percent of homes in Temotu have use traditional (thatched) materials for housing construction compared to just 11 percent in Rennell-Bellona. While 43 percent of households in Honiara use open fires as their main source of energy for cooking, the range for the rest of the Solomon Islands is between 98 percent in Temotu and Choiseul to 83% in Western.

While 63 percent of households in Honiara use mains electricity as their main energy source for lighting, Western is the only other province that has reasonable access (21 percent) to this energy source. The main alternative energy source for lighting is kerosene which 92 percent of households in Central use. Seventy percent of households in Honiara can access private piped water for cooking and drinking, but this compares to Rennell-Bellona which has no piped water at all and in which 81 percent of households rely on rain water tanks. In terms of sanitation, 58 percent and 22 percent of households in Honiara and Western respectively have access to private flush septic tank toilets, whereas less than one percent of the population in Choiseul have such access with nearly 90 percent using the sea or other water bodies for their sanitation.

While limited, it is possible to estimate an order of interspatial poverty within Solomon Islands at the province level only provinces by averaging the Borda rankings across the following indicators¹⁴:

• Average expenditure (higher expenditure considered better)

• Gini co-efficient (lower Gini co-efficient considered better)

• Housing materials (lower use of traditional materials considered better)

• Cooking energy source (less reliance on open fire considered better)

• Lighting energy source (less reliance on kerosene considered better)

• Water source (higher reliance on piped water considered better)

• Sanitation (higher access to own flush septic toilet considered better) Table 8: Simple Borda Ranking of Selected Indicators at Provincial Level

Expenditure^a Gini^b Housing materials^c

Cooking energy source^d

Lighting energy source^e

Water access^f

Sanitation access^g

Average Ranking

Choiseul 9 9 7 10 4 9 10 10

Western 5 2 3 2 2 5 2 2

Isabel 6 1 9 6 8 3 4 4

14 It is acknowledged that alternative arguments could be made regarding some interpretations of what

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Central 4 7 5 4 10 8 3 6 Rennell-

Bellona

2 10 1 8 5 10 8 8

Guadalcanal 3 6 4 5 6 6 5 3

Malatia 7 5 6 7 7 4 6 7

Makira 8 2 8 3 9 2 7 5

Temoto 10 8 10 10 3 7 9 9

Honiara 1 4 2 1 1 1 1 1

Source: authors own estimates based on SISO2006a, 2006b

a Average per capita expenditure in 2005 Solomon Islands Dollars

b Gini co-efficient for total annual expenditure

c Number of houses in province using traditional (thatched) materials for outer walls

d Number of houses in province using open fire as primary source of energy for cooking

e Number of houses in provinces using kerosene as main source of energy for lighting

f Number of houses in province with water piped into household / yard

g Number of houses in province using own flush septic tank toilet

Within this simple approach¹⁵, Honiara, followed by Western and Guadalcanal, are considered the better performing provinces, whereas Choiseul and Temotu are the least performing provinces. Appendix D contains the full data for these indicators.

Using SIG and UNDP (2002), some further limited intraspatial analysis using the HDI approach is possible¹⁶ (see Table 9). Malaita, Guadalcanal, Temotu and Central provinces each had lower scores than the national average, whereas, Honiara Central and Western, Choiseul, Makira, Rennell-Bellona, and Isabel provinces each had scores higher than the national average (cf. with rankings discussed above).

However, even the highest ranked area of Solomon Islands, Honiara Central, was still ranked lower than six regional neighbours (see Table 5). The SIG and UNDP (2002) report also calculates a number of variations of the HDI, including the Human Poverty Index, and Gender-related Development Index all of which roughly rank Malaita and Guadalcanal as the least performing provinces and Honiara Central and

15 Again, these figures cannot be considered inter-temporally due to data constraints and thus they provide a static (rather than dynamic) view of (chronic) poverty life within Solomon Islands. The actual usefulness of this approach must also be considered against the knowledge that these measures are province-wide averages which therefore mask internal inequalities and thus may hide pockets of chronic poverty.

16 It should be noted that the data constraints have resulted in GDP per capita being held constant across all provinces. This means that the scores for the poor provinces are higher than they should be and the scores for richer provinces are lower than they should, minimising the differences between provinces.

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Western and Choiseul provinces as the better performing areas. Interestingly though, the Gender Empowerment Measure, which includes the percentage share of women in parliament, administrative and managerial employment, professional and technical employment and those women who are economically active, ranks Guadalcanal and Malaita provinces higher than in the other indices and Choiseul Province lower.

Honiara Central is the best performing location for this measure.

It is certainly note possible to assess chronic poverty either spatially or inter- temporally with any certainty using this approach. Any estimates are likely to provide a semblance of authority that they are not due. Additional resources must be made available to collect data that can be used to properly assess both poverty and chronic poverty within Solomon Islands across time and regions. Without this proper analysis, policies designed to improve the circumstances of these poor are in grave danger of failing.

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Table 9: Human Development Index for Solomon Islands provinces – 1999 Life Adult Enrolment

GDP

pc GDP HDI

Expect. Literacy

aged 5 -

19 1999 Index

at birth prices

National,

1999 61.1 76.6 56.3 863 0.360 0.553 National,

1986 54.6 48.8 34.8 701 0.325 0.420

Honiara 62.8 90.5 67.6 863 0.360 0.606

Western 61.6 94.0 65.4 863 0.360 0.605 Choiseul 61.6 92.2 63.4 863 0.360 0.599 Makira 61.9 81.0 65.2 863 0.360 0.577

Rennell

Bellona 62.1 73.9 72.4 863 0.360 0.571 Isabel 60.4 75.2 66.2 863 0.360 0.557

Central 62.1 72.0 56.6 863 0.360 0.549 Temotu 62.6 60.6 61.5 863 0.360 0.532 Guadalcanal 60.7 73.1 41.1 863 0.360 0.526

Malaita 61.1 61.4 49.1 863 0.360 0.511

Source: SIG and UNDP (2002)

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4 Incorporation of Chronic Poverty into Solomon Islands’ Poverty Reduction Strategy Paper

The International Monetary Fund (IMF) and the World Bank initiated the poverty reduction strategy papers (PRSP) approach in 1999 to enhance the relationships between national governments, donors and civil society. Around 60¹⁷ countries have either prepared or are preparing PRSPs. The Solomon Islands is not one of these countries.

Poverty reduction in Solomon Islands can only be understood in light of the civil unrest, ongoing political instability and the RAMSI intervention. Given this trinity of circumstances, it is not surprising that Solomon Islands have not yet prepared a formal PRSP. However, they have established a poverty partnership with the Asia Development Bank (ADB), which can be considered a proxy PRSP¹⁸. The ADB itself is guided in its own poverty reduction activities by its poverty reduction strategies (ADB 1999, 2000). The ADB argues that poverty is increasing in the Pacific due to poor economic growth, weak governance (in some countries), declining public service performance, low levels of private sector development, environmental degradation, gender inequity, and high levels of vulnerability to external economic shocks and natural disasters. The recent conflict, ethnic tension, internal displacement, unstable government, financial crisis, high population growth and economic contraction within Solomon Islands have only served to increased the experience of poverty.

The current Solomon Islands development plan is the National Economic Recovery, Reform and Development Plan (NERRDP). The Solomon Island Parliament formally adopted this plan in November 2003. In line with PRSP best-practice (see IMF and World Bank 2004, 2005), the ‘preparation of NERRDP involved extensive consultations within the government, with provincial governments, development partners, non-government organisations, the private sector and National Parliamentarians and Ministers and Premiers of the provinces’ (SIG 2005b, p. 44). To ensure complementarity, the NERRDP was also incorporated into the ADB’s Country Strategy and Program (CSP) thus guiding all present and future ADB assistance to Solomon Islands. All interventions now seek to ‘improve living standards and quality of life (SIG 2005b, p. 4). The five specific goals of the NERRDP¹⁹ include: 1) normalising law and order; 2) strengthening democracy and good governance; 3) restoring fiscal and financial stability and reforming public service; 4) revitalising

17 See Appendix E for a full list of countries.

18 See Appendix F for the whole Poverty Partnership agreement.

19 RAMSI’s commitment to NERRDP as the lead document for development interventions is contested – cf. Bately 2005 with Oxfam 2006b. The enlarged brief given to RAMSI after it had secured improved law and order and normalization of government functions are in line with these goals. RAMSI’s role now includes focussing on: 1) ending corruption within the public sector, including the police force; 2) restoring collapsed infrastructure in both urban and rural areas; 3) capacity building within the public sector; 4) privatisation of SOEs; 5) land tenure reforms; 6) increasing private investment; and 7)

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productive sector and rebuilding infrastructure; and 5) restoring basic social services and fostering social development (SIG 2005b)²⁰. To achieve these goals, successive Solomon Islands governments SIG have also ‘subscribed to the tenets of prudent fiscal and monetary policy and the principles of sound macroeconomic management, prioritisation of public expenditures in support of essential public services, a fair and equitable tax system, strengthening the framework for the development of the private sector, liberalization of trade and foreign investment, and ensuring secure property rights and transaction’ (SIG and ADB 2003, p. 2).

However since then, the Government of Solomon Islands has changed a number of times resulting in successive governments releasing supplementary statements and frameworks for development, including Vision 2020: A Brighter Future for Solomon Islands Statement, and most recently the Grand Coalition for Change Policy Document Framework. Within this fragile post-civil strife environment, it appears easier for governments to announce policies rather than implement them. However, these various plans are not widely dissimilar and can be analysed as a suite of common poverty reduction strategies planned (if not implemented) by successive Solomon Island governments. It should be noted that hese documents do not explicitly consider chronic poverty in their analysis.

4.1 Centre and Periphery

The lack of consideration of chronic poverty within the poverty reduction strategy may reflect blindness by national leaders to the circumstances of the periphery. While the majority of Solomon Islands’ population live in rural areas, the Government is located in Honiara, Guadalcanal Province. The power and influence of the Government has expanded since independence, to the resentment of other provinces (see Mamaloni 1985; Roughan 2002). Much of this resentment is due to the income being taken away from these resource rich provinces ostensively to be redistributed amongst the poor provinces. However, the combination of inefficiency and corruption has resulted in perceptions that few improvements in the circumstances of the poor provinces have been achieved, despite a distinct reduction in the wealth of the rich provinces.

This resentment is further exacerbated by the view that what ‘national revenue has not been wasted has been invested in Honiara infrastructure and facilities’ (UN 2002, p. x). A further significant failure of the Government has been: 1) the inefficient monitoring of log exports resulting in the failure to capture potential revenue via duties and other taxes; and 2) provision of tax exemptions and duty remissions to various individuals and firms.

In response, calls have been made for the establishment of a new federal system of government within Solomon Islands²¹. ‘The desire for decentralization appears to be a response to the perceptions that the national Government has failed in effectively fulfilling its core functions, and that resources have not been equitably shared by the

20 see Appendix G for a fuller overview of the key strategic areas of NERRDP.

21 Discussions of a federal system of government also took place prior to Independence (see Mamaloni 1985)

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capital and the rest of the country’ (ADB 2004, p. 3). National leaders within Solomon Islands are leading this debate (SIG 2005). There is now recognition that non-corrupt leadership by Solomon Islanders themselves is a pre-condition for any lasting development (Kakutaulaka 2005; Sanga 2003; Aqorou 2003).

In addition to the very political question of how national resources would be distributed amongst the provinces, the (lack of) capacity of the provincial governments would perhaps be the largest impediment to such a federal system being fully implemented. Whether it is possible to improve the functioning of the provincial public sector (ensuring it administers revenue, manages public expenditure, regulates state-owned enterprises, etc.) must be addressed. Further, a federal system may undermine the limited sense of nationalism that still needs to be developed. Basic allegiances remain to the family and clan, not to the nation (Mamaloni 1985; Jourdan 1995; Moore 2005; Kabutaulaka 2005). Successive Solomon Islands governments have recognized this and noted that constitutional boundaries should be redrawn to better align with historical, natural and social divisions (SIG 2005, 2006a).

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5 Policies to Address Chronic Poverty

Current government and donor strategies for the Solomon Island explicitly identify achieving economic growth as their main priority. Economic growth benefits the poor by increasing productivity, labour demand, incomes, investment, and government revenue (see Bell and Rich 1994; Ravallion and Chen 1997; Dollar and Kraay 2000).

However,

…economic growth does not guarantee access to health, education and a clean water supply or a better standard of living for those living in some, usually remote areas. Moreover, if economic growth is largely driven by urban areas, the extent to which it will impact on the rural sector will depend on rural-urban linkages… poor transportation networks and law and order problems can prevent the rural sector from benefiting from urban-based growth. (Feeny 2004, p. 8-9)

For societies with large rural populations, such as Solomon Islands, economic growth that most effectively reduces poverty is therefore growth of the rural agricultural sector (see Fenny 2004; Ravallion and Datt 1996; Bourguignon and Morrison 1988;

AusAID 2006). The subsistence lifestyle of most Islanders means that while they have sufficient access to local produce, they do not have access to money to pay for certain food items, such as rice and salt, nor services such as school fees, health care or intra-island transport (ADB 2005a). Economic progress that has occurred is primarily located in the few urban areas (but predominately Honiara) and thus disconnected from the majority of the population. However, ‘if growth can be widespread, geographically, its benefits will contribute to poverty reduction over a wider area’ (ADB 2005b, p. 44). An alternative approach to development is therefore required within Solomon Islands in order to address the poverty faced by the majority of its rural-based population (Oxfam 2006a). Calls for such an alternative model that places people at the centre of the development (rather than economic outcomes) are not new (see Korten 1990, Clark 1991; Friedman 1992).

The alternative approach does not deny the need for economic growth, but rather: emphasises appropriate economic growth premised in the understanding that the Earth’s resources are finite… This approach draws on, and is present in, cultural views and lifestyles and in people’s traditional relationships with the environment. It is development that is appropriate and informed. (Wallace 2002, p. 57)

Alternative development directly addresses the needs of the poor. To this end, certain recommendations are now made that, if implemented, will assist in the reduction of chronic poverty by: 1) reducing constraints that have hampered growth of the rural agricultural sector; and 2) placing the poor at the centre of the development process.

Addressing chronic poverty within Solomon Islands by increasing rural agricultural growth and prioritising the poor requires improving: 1) law and order; 2)

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infrastructure; 3) productivity; and 4) human capital. Whilst these broad approaches align closely with those contained within various SIG and ADB development plans, they so differ in that they are presented within the alternative development approach paradigm. Thus, the focus on these recommendations is not achieving economic growth per se, but rather addressing constraints to rural agricultural development and distribution of these benefits directly to the poor. In this regard, it may be that future measures of economic growth will not fully capture all the increased activities that are improving the circumstances of the poor (Roughan 2005, 2006).

5.1 Improve Law and Order

There are various areas requiring reform to improve the delivery of services to all Solomon Islands communities. Following the period of civil-strife, reform of the law and order sector is vital. This includes improving policing and national security to restore the ‘integrity, capability, confidence, efficiency and effectiveness of the Royal Solomon Islands Police, community participation in policy and presence of policing service in every community throughout the country’ (SIG 2005, p. 10). A continuing focus on achieving long-term peace and political stability is required and coverage must cover all rural areas of Solomon Islands.

5.1.1 Judiciary

In addition to improving general levels of legal services across the country, the SIG have resolved to maintain the independence of the judiciary. Embedded in these legal reforms is the acknowledgement of the importance of a prevailing peace throughout the country and recognition that these reforms will also bolster and support reconciliation and other peace-building processes. The SIG have recognized the importance of ensuring that all Solomon Islanders have equal representation in both provincial and national governments and that representation be based on historical and social groupings to improve national cohesion (also see UN 2002).

5.1.2 Reconciliation

Whilst there has been a normalisation of law and order since RAMSI, ethnic tension has not entirely dissipated. Solomon Islands Christian Association continues to call for a process similar to the Truth and Reconciliation Commission established in South Africa so that all who are aggrieved can experience traditional reconciliation.

Such a model may be the Community Peace Restoration Fund model of community- based peace dividend approaches, which is a model that could be successful in both dealing with ongoing and underlying tension. It could also be a model that leads to the establishment of community-based projects as well as new schools and kindergartens, etc. While the violence surrounding the period of civil strife (and ensuing political violence) has centred on Guadalcanal and Malaita provinces, reconciliation is required throughout Solomon Islands.

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5.2 Improve Infrastructure

Infrastructure throughout Solomon Islands is poor and constrains development opportunities throughout the country (AusAID 2006). Investment is required throughout the country. For example, only 40 kilometres (of the country’s total of 1,500 kilometres) of roads are paved and most of these roads service the country’s capital, Honiara. It is not just transport infrastructure that is limited. Only 16 percent of the population have access to electricity. And whilst telecommunications infrastructure is more advanced, its cost is prohibitive to most Solomon Islanders (ADB 2005b; AusAID 2006).

5.2.1 Market Access

Transport infrastructure and services is important as ‘reliable access to domestic and international markets for rural produce will be a key strategy to restart rural economies, reduce the demand for migration to the capital in search of employment, reduce conflict between groups competing for limited opportunities, and address the challenges of restoring basic social services in rural areas’ (ADB 2004, p. 1-2). As noted, outside of the capital city, all-weather roads are either non-existent or in disrepair, and shipping and air services are unreliable and expensive. These constraints ‘pose considerable barriers to market access and impede the growth of rural production’ (ADB 2004, p. 5).

5.2.2 Shipping

Intra-island transport is very important within Solomon Islands. It is however expensive and currently very limited. Intra-island transport is most feasible by relying on small- to medium ships. Such transport is presently commercially unviable and requires on-going government subsidies (ADB 2005b). However, by increasing the frequency of shipping, those in the Provinces will be able to access larger markets (including tourism), education and health services. Social networks will also improve through the increase in passages.

5.2.3 Tourism

Given the recent civil strife, it is not unexpected that tourism to Solomon Islands has contracted by 17 percent since 1995. To reverse this trend, in addition to maintaining law and order, towns such Gizo and Auki within the Western Province require functioning ports and airfields if they are to develop their infant tourism markets. Both Gizo and Auki for example have small-scale indigenous tourism in place, but the lack of adequate transport infrastructure, reliable electricity and affordable telecommunications have constrained any growth or expansion. Not only are there direct benefits to the providers of accommodation, but also there are ancillary benefits to those involved in transport, food industries and other hospitality services.

The SIG have determined that tourism would be best developed at the community level and should promote Solomon Islands diverse cultures and environments.

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5.3 Improve Productivity

Poor governance, combined with the civil strife, has resulted in a very constrained business environment and a withdrawal of private investment from the most productive sectors. This has negatively affected the key productive sectors of Solomon Islands’ economy: forestry, fishing and agriculture. However, the ‘key strategies for overcoming the constraints on the business environment include regulatory reforms, development of transport infrastructure and utilities, SOE reform, financial sector reforms, provision of policy and governance advice to provincial governments, development of statistics to inform policy formulation, monitoring and evaluation, and formulation of sectoral policies to promote investment and growth’

(ADB 2004, p. 7) are primarily focussed on private investment in this sector. Thus they exclude the 80 percent of Solomon Islanders who live in rural areas and rely on subsistence farming for their livelihood. If the focus on these productive sectors is to alleviate chronic poverty, reform must also be directed at the local, non-commercial levels (ADB 2005b).

Solomon Islanders own a wealth of natural resources. However, they require assistance to transform these natural resources into cash wealth that can be used to improve their material circumstances. Many opportunities exist in this regard. For example, on Simbo Island, local communities are harvesting eggs of the local megapode bird. The local communities manage this harvesting in a sustainable way so that the megapode population is not threatened. In other communities, butterflies are also now being raised and sold. Again, this community-based enterprise is being undertaken without affecting the balance of nature. Other income generating schemes based on sustainable use of natural resources include ‘harvesting tree wealth, making fibre paper, pressing ngali oil, planting coral and seaweed…

(allowing) cash starved villagers to increase their earning capacity without destroying the very basis of these new industries’ (Roughan 2002, p. 86).

Within Solomon Islands, it is more likely that communities as a whole, rather than individual families or households, will suffer poverty. Thus, interventions to alleviate poverty must also work with whole communities. For example, Solomon Islands Development Trust worked with 18 village groups in central Makira to process ngali nut oil and establish international markets. These communities are now earning SI$30,000 per annum. Similarly, the community of Marovo Lagoon worked in partnership with the World-Wide Fund for Nature to establish a community based eco-tourism earning the community SI$60,000 per annum.

5.3.1 Land Reform

Ninety-five percent of land within Solomon Islands is held under customary and tribal ownership, yet just over ten percent is formally registered (AusAID 2006). Given the heavy reliance on subsistence farming by the bulk of the population, land ownership is also very important in increasing productivity as secure land ownership, the rule of law and property rights are all necessary if land is to be used in increasingly productive ways. Experiences in both Solomon Islands and other Pacific countries