Countries and Regions

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Country Strategy and Program Update 2002-2004: Kiribati

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II. Implementation of the Country Strategy and Program

A. Poverty Reduction

7. Kiribati’s human poverty index of 12.7 is one of the lower poverty levels among ADB’s PDMCs, despite its very low ranking in terms of GDP per capita. Possible strategies to address key issues affecting poverty in Kiribati include (i) identifying new employment opportunities in Kiribati and overseas, (ii) focusing education and training on provision of internationally marketable skills, (iii) containing population growth, (iv) raising the awareness of the leadership of social and economic systems that sustain pro-poor growth, and (v) improving quality and coverage of education and health services.

8. The main poverty reduction outcomes to be achieved with ADB assistance are (i) increased local capacity for sustained poverty reduction through sound economic management and planning; (ii) reduced inequalities in the access to basic services, especially for people living on the outer islands; and (iii) improved environment, living standards, and employment opportunities.

9. In South Tarawa, the ongoing loan, Sanitation, Public Health, and Environment Improvement Project (SAPHE)³, the attached technical assistance (TA) Community Development and Participation Initiatives (CDP1)⁴, and the second phase of that TA (CDP2)⁵ that is proposed for 2001 will significantly help improve the quality of life for the population by providing safe drinking water, improving public health, and enhancing the environment. On the outer islands, the TA for preparing the outer island development program (OIDP) focuses on poverty alleviation and on enhancing social and economic opportunities for the people through employment generation activities and improved physical and social infrastructure, such as for basic health and education. Finally, the proposed 2001 TA to support poverty reduction will assist the Government to (i) identify a country-specific poverty line, (ii) prepare a poverty reduction strategy to be reflected in the NDS, (iii) facilitate completion of the poverty partnership agreement between Kiribati and ADB, and (iv) strengthen government economic management.

B. Thematic Priorities

1. Economic Growth

10. Appendix 2 provides the economic indicators for Kiribati.

11. The ongoing SAPHE loan was established to improve the environment, the supply of potable water, and living standards in South Tarawa. Two associated advisory TAs (Management and Advisory Services to PUB [PUB1]⁶ and CDP1) were approved to help the Government implement the project. Two further advisory TAs are in the 2001 and 2002 assistance pipeline: CDP2 for community development and participation and PUB2 for strengthening the capacity of the Public Utility Board (PUB). The TA for community development and participation, phase II will help in training community members to observe safer water and waste management practices. A request has been made to the Japan Fund for Poverty Reduction for financing of this TA. The most challenging issue facing Kiribati is the rapid growth in population and hence the need to find productive employment for workforce. In 2001, the TA to support poverty reduction will also help identify employment opportunities within the country as well as overseas. ADB’s Pacific strategy recognizes exploring potential for labor market exports as key for the development of the remote resource-poor islands.

12. The OIDP will focus on poverty alleviation and on enhancing social and economic opportunities for the people through employment generation activities. It will include a component to improve physical and social infrastructure, such as for basic health and education, resulting in higher productivity. Further, the OIDP will help enhance the capacity of local government by determining the most effective ways of improving the revenue earning capacity of the outer island communities.

2. Human Development

13. Despite the physical and fiscal constraints in Kiribati, the education system has produced substantial results. The adult literacy rate is high and primary education is virtually universal. Notwithstanding these accomplishments, a number of areas require further development, notably (i) the implementation of government policies and strategies regarding quality of, access to, and equity of education; and (ii) relevance of education to the labor market. Social problems encountered in Tarawa are partly a result of rapid urbanization and high levels of population growth which, in turn, is partly a result of in-migration from the outer islands. OIDP will focus on social development on the outer islands through improved social infrastructure, such as for basic health and education, and other activities. Appendix 3 provides the social indicators for Kiribati.

14. The Government recognizes the need to have (i) an equitable balance of service delivery to outer islands, and (ii) strengthened urban and rural councils. It is one of the objectives of OIDP to alleviate poverty by enhancing the capacity of local government. The assistance will also determine the most effective way of improving the revenue-earning capacity of the outer island communities. It will further strengthen the capacity of the local authorities and ensure that the island communities take ownership of the process by encouraging them to invest in their own development.

15. The increasing pressure on the water and sanitation services in South Tarawa has stretched the capacity of the system to the limit. Currently, the average per capita supply of potable water is less than 30 liters per day. This is well below the supply of 100 liters per day that is generally considered adequate. The ADB-assisted SAPHE project will improve the water supply and sanitation system. PUB1 and PUB2 will strengthen PUB’s management and financial capacity. The OIDP on the outer islands will provide the financial and technical resources necessary to improve basic physical infrastructure and social services delivery.

3. Gender and Development

16. The social, legal, and economic status of women in Kiribati is generally low. Outside of South Tarawa, the role of women is confined largely to domestic duties, while land tenure and community politics are reserved largely to men. Women traditionally do not have a direct role in community decision making. Instead, they exercise their influence in the family context and through churches and community groups. The poor status of women is often compounded by broader structure of economic dependency and poverty. As more men are forced to leave their homes to find work in the urban centers, overseas, or as seamen, the burden of the traditional role of women as caretakers, nurturers, and providers increases and factors like poor living standards and poor family health directly impinge on their quality of life and health.

17. Therefore, special emphasis on gender and development issues has been placed under SAPHE, CDP1, and CDP2 to enhance the role of women, their influence on the development process, and individual opportunities. During project preparation and implementation of the OIDP, women’s needs will be adequately addressed, empowerment of women promoted, and better opportunities for women’s personal growth provided within the communities.

4. Good Governance

18. The public sector provides more than 75 percent of the formal employment in Kiribati. More than 15 percent of the workforce are employed in the public service or in government- owned enterprises. State-owned enterprises pervade all aspects of the economy. Some of them provide poor service and are a drain on public resources because of their need for government subsidies and bailouts. Corruption is not a serious problem and accountability is generally sound but delivery of public services is not always good. Decision-making takes time and the Government’s stated objectives are not always carried through to implementation. Public sector reform is identified in the NDS as a key policy issue and the Government intends to formulate a comprehensive public sector reform program.

19. The TA, Public Service Reform (PSR)⁷, assisted the Ministry of Finance and Economic Planning (MFEP) and the Public Service Office (PSO) to design a method for reviewing the public service. The review is intended to lay the foundation for improving the Government’s efficiency and effectiveness. In particular, it should assist the Government to achieve objectives specified in the NDS and the budget. A Cabinet paper describing the process is expected to be submitted to Cabinet for consideration by end of 2001. In parallel, the TA, Strengthening Institutional Capacity for Financial and Economic Management, Phase II (FEM2)⁸, is strengthening the economic and financial capacity of MFEP and the Government as a whole and is helping the Government to improve its resource allocation processes and procedures. Assistance is also being provided to improve PUB’s services through the TA, PUB1 (footnote 6). Finally, the ongoing CDP1 TA (footnote 4) and the proposed CDP2 TA will foster the development of a community participatory approach to water, sanitation, and waste management in South Tarawa.

5. Private Sector Development

20. The private sector is a very small component of the Kiribati economy. Its growth is somewhat stifled by the Government’s continuing support for government-owned commercial enterprises. While some of these enterprises have been successful, notably the joint ventures in the natural monopolies of banking and telecommunications, most continue to require financial support from the Government. The imminent withdrawal of the joint venture partners in banking and telecommunications could cause significant problems for Kiribati. While the banking partner is likely to be replaced by a large regional bank, finding a suitable replacement for the telecom partner may be difficult. The Government is aware that the public sector cannot provide employment opportunities for all the young people entering the labor force and that efforts must be directed to increasing private sector employment both in enterprises and non-profit organizations. Creating an enabling environment for private sector development has been identified in the NDS as a key policy issue.

21. The SAPHE loan; the TAs PUB1, FEM2, and PSR; and the proposed TA PUB2 will all facilitate the growth of the private sector on South Tarawa. In parallel, the OIDP will help create opportunities for private sector development in the outer islands.

6. Environmental Protection

22. Environmental indicators are not available for Kiribati. Rapid urban growth coupled with inadequate infrastructure and insufficient capacity to operate and maintain the water supply and sanitation systems has resulted in severe degradation of South Tarawa’s environment. The potability of water supply of South Tarawa is a major concern. The Government has taken steps to address the issues, most notably by passing the Environment Act in March 1999. The act provides for the promotion of community participation in environment management, the appointment of environment inspectors, and the penalizing of polluters. Regulations are being prepared and two inspection officers are being appointed. However, implementation of the act is likely to remain problematic since many households do not have toilets and people are used to defecating and dumping on the beaches. The continued use of the water lens catchment area for housing and gardening is also a serious concern. The Government has recently increased the rent payable to landowners who control the water lens area, if they evict the families who are illegally occupying the land over the water lens. The effectiveness of this strategy remains to be seen.

23. The SAPHE project is expected to address the issues of institutional capacity in the sector and to help restore essential water, sanitation, and solid waste management services. Improvements in the sector will markedly reduce pollution and the risk of disease. The SAPHE project including its piggy-backed TAs will enhance the capacity in (i) solid waste management, (ii) urban development planning and municipal affairs, and (iii) municipal finance and accounting. The project will also assist in defining the role of the different agencies in the urban development process, particularly regarding monitoring and enforcement of environmental regulations, resettlement issues, land use planning, and public health. Finally, the proposed PUB2 will supplement the ongoing PUB1 to enhance the PUB’s capacity to prepare a detailed maintenance schedule and asset management program to be carried out by the Water and Sewage Division.

7. Regional Cooperation

24. Kiribati is party to five regional assistance programs, for (i) upper airspace management, (ii) information and communication technology assessment, (iii) public sector development, (iv) statistics, and (v) fisheries.

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