Solomon Islands Broadcasting Corporation

Can Solomon Islands Claim 21st Century?

By Geoffrey Kaka

Solomon Islands enters the 21st century with many of the world's poorest countries. Incomes, assets, and access to essential services are unequally distributed and the rural areas of the Solomons contains a growing share of the world's absolute poor, who have little power to influence the allocation of resources.

Moreover, many development problems have become largely confined to Solomon Islands. They include lagging primary and high school education in rural areas, health services and other institutions.
Many countries have made important economic reforms, improving macroeconomic management, liberalising markets and trade, and widening the space for private sector activity. Where these reforms have been sustained - and underpinned by civil peace - they have raised growth and incomes and reduced poverty. Even as parts of the pacific region are making headlines with ethnic tension and natural disasters, other parts are making headway with rising interest from domestic and foreign businesses and higher investment.

But the response has not been sufficient to overcome years of falling income or to reverse other adverse legacies from the long period of economic decline - including deteriorated Solomon Islands capacity, weakened institutions, and inadequate infrastructure. Major changes are needed if Solomon Islanders - and their children - are to claim the 21st century. With Solomon Islands rapidly growing population, 5 percent annual growth is needed simply to keep the number of poor from rising.

Moreover, Solomon Islands will not be able to sustain rapid growth without investing in its people and in particular tertiary students both at home and abroad. Many of our rural areas lack the health, education, and access to inputs needed to contribute to - and benefit from - high growth. Women are one of Solomon's hidden growth reserves, providing some of the region's labour, but their productivity is hampered by widespread inequality in education and access. Thus gender equality can be a potent force for accelerated poverty reduction.
Solomon Islands thus faces an immense, multifaceted development challenge. But the new century offers a window of opportunity to reverse the marginalisation of Solomon Island's people - and of Solomon Island's governments, relative to donors, in the development agenda. The time has come for political participation to sharply increase, paving the way for more accountable government, and there is greater consensus on the need to move away from the failed models of the past. In my recent contribution on "Good Governance for Solomon Islands" I have tried to emphasise how important it is for Solomon Islands politician to play their part in the development process.
All in all, making these benefits materialise will require a ``business plan'' conceived and owned by Solomon Islanders, and supported by donors through coordinated, longterm partnerships. Solomon Islands culture differs widely, so there is no universal formula for success. But many countries face similar issues, and can draw on positive examples of how to address them.

Improving governance and resolving conflict is perhaps the most basic requirement for faster development. Widespread civil conflicts impose enormous costs, including on neighbouring countries. Contrary to popular belief, Solomon Island's conflicts donot stem from ethnic diversity alone but rather, in a pattern found around the world, conflicts are driven by poverty, underdevelopment, and lack of economic diversification, as well as by political systems that marginalise large parts of the population. But conflicts perpetuate poverty, creating a vicious circle that can be reversed only through special development efforts - including longrun peacebuilding and political reforms. With success in these areas, countries can grow rapidly, and flight capital can return.

Countries that have made the greatest gains in political participation are also those with better economic management. Again, this conforms to a global pattern that suggests multiethnic states can grow as fast as homogeneous ones - if they sustain participatory political systems. Solomon Islands therefore, need to develop political models that facilitate consensus building and include marginalised groups.

Development programs need to be winwin, improving the management and distribution of economic resources and contributing to more effective states. Programs should empower citizens to hold governments accountable, enable governments to respond to new demands, and enforce compliance with the economic and political rules of the game. Development efforts may start to move in this direction, with greater beneficiary involvement in the delivery of services and more emphasis on results. But far more needs to be done to strengthen Solomon Island's institutions - including ensuring that representative institution, such as parliaments, play their proper role in economic and budgetary oversight.

Investing in people is also essential for accelerated poverty reduction in Solomon Islands. Solomon Islanders are caught in a trap of high fertility and mortality, low education (especially of women - less than onequarter of poor rural girls attend primary school), high dependency ratios, and low savings.

While the resources available for education and health are inadequate in Solomon Islands, many need to translate their existing commitment to human development into effective programs for delivering essential services and increasing gender equality. Solomon inherits some of strongest communities in the Pacific, yet services are usually provided through weak, centralised institutions that are seen as remote and ineffective by those they are supposed to serve. Deconcentrated service delivery through local communities, supported by capacity building at local levels and effective governance to ensure transparency and empower recipients, could have a major impact. These could be done with effective regional cooperation and donor support through coordinated long-term partnerships.

Increasing competitiveness and diversifying economies must be a third area of focus if Solomon Islands is to claim this new century. Job creation is slow not because of labor market rigidities (though there are exceptions) but because of the high perceived risks and costs of doing business in Solomon Islands. These need to be lowered by locking in reforms and delivering business services more efficiently - with less corruption, better infrastructure and financial services, and increased access to the information economy. Solomon Islands trails the world on every dimension of these essentials. Lowering these barriers requires new approaches, including more participation by the private sector and by local communities, a more regional approach to overcome the problems posed by their rural communities, and a central government shift to regulating and facilitating services rather than providing them.

Reducing aid dependence and strengthening partnerships will have to be a fourth component of Solomon's development strategy. Concessional assistance is essential if Solomon Islands is to grow rapidly while also increasing consumption to reduce poverty. Excluding private inflows, the savings gap for a typical country is about 17 percent of GDP, and other regions show that private flows cannot be sustained at more than 5 percent of GDP without risk of crisis. But aid, particularly when delivered in a weak institutional environment by large numbers of donors with fragmented projects and requirements, can weaken institutional capacity and undermine accountability.

High debt and debt service add to the problem, deterring private investment and absorbing core budget resources, making governments ever more ``cash poor'' but ``project rich,'' with a development agenda increasingly perceived as being shaped by donors. Lack of selectivity compounds the problem, channelling a lot of aid to countries with poor development policies. And with few exceptions, aid has largely been confined to national boundaries rather than used to stimulate regional and international public goods.

These problems should be widely recognised, and a consensus has emerged that the primary goal of aid should be to reduce poverty. But paradoxically, aid transfers are declining just when many of the problems are being addressed. Solomon Islands enters the new century in the midst of intense debate on aid. New aid relationships are being implemented - relationships that emphasize a holistic, country-driven approach supported by donors on the basis of long-term partnerships, and with greater beneficiary participation and empowerment over the use of resources.

If there is going to be any change in the right direction for the Solomon Islands, I believe there is a long way to go. In a typical poor country like our Solomon Island, aid transfers might equal 10 percent of GDP, yet the poorest fifth of the population disposes of only about 4 percent of GDP. It remains to be seen how well partnerships can resolve the tensions between the objectives of recipients and individual donors, and how far the behaviour of donors will change to facilitate Solomon Islands ownership of its development agenda. It also remains to be seen how far partnerships can extend beyond assistance, to include enhanced opening of world markets to Solomon Islands products and services.