Samoa

Country Information

Location and People

The 10 volcanic islands of Samoa lie south off the Equator and about half way between Hawaii and New Zealand. They are dominated by rugged mountain ranges and surrounded by coral reefs and lagoons. The two relatively large islands of Upolu and Savaii account for approximately 96% of the country’s total land area of 2,934 square kilometers. They are also home to the majority of the country’s 180,000 people. Samoa is at the very heart of Polynesia, and some 93% of the population are native Samoans. Almost all the remainder are of mixed Samoan and European heritage.

Historical Background

New Zealand occupied the German protectorate of Western Samoa in 1914 at the outbreak of World War I. It continued to govern the islands until 1962, when the islands became the first Polynesian nation to reestablish independence in the 20th century. The country dropped the "Western" from its name in 1997.

Socio-Economic Conditions

The economy of Samoa is dependent on agriculture, fishing, family remittances from abroad, and development aid. Mixed subsistence agriculture, forestry, and fishing employs two-thirds of the labor force and furnishes 90% of exports. The manufacturing sector processes mainly agricultural products and produces garments, but one factory employs 3,000 making automobile electrical harnesses for export to Australia. Exports are otherwise heavily based on fish, garments, and coconut- and taro-based products.

Tourism is an expanding sector, accounting for about 25% of gross domestic product. Tourist arrivals increased to an estimated 101,390 in 2005, pushing up total tourism revenues by some 4.4% from 2004. 

A reform program launched in 1993 transformed the Samoan economy into one of the better-performing economies in the Pacific. During the second half of the 1990s, the overall balance of payments moved from deficits to increasing surpluses, largely the result of increased tourism receipts and family remittances.

Macroeconomic and fiscal stability, liberalized financial markets, public service reforms, reduced government presence in commercial areas, and better infrastructure have resulted in significant improvement in the business environment. The availability of land for commercial development purposes remains low, however, due primarily to the communal ownership of land. Customary land covers roughly 80% of Samoa, and its sale is prohibited. Corruption has not been a significant problem in Samoa. The consensus is that civil servants are honest and that overall accountability and transparency in government is good and has improved.

Although poverty may not be the severe problem, Samoa is especially vulnerable to external economic shocks and devastating storms and droughts. Poverty and vulnerability are linked as the latter threatens the sustainability of livelihoods. Some 75% of the population still relies on land and coastal resources as a main or supplementary source of income. Over 50% of residents live in small coastal villages.

About 20% of households have incomes below the basic needs poverty line and are experiencing some degree of financial hardship. Hardship is generally associated with poor access to services and opportunities.

The lack of income generating opportunities is a critical issue for all communities in both urban and rural areas. The perceived poor quality of service delivery, including that for education and health,  was identified as an important cause of hardship in many communities.

Even the traditional Samoan social structure and its associated safety nets are coming under strain as external influences affect attitudes and aspirations. Many youths find it difficult to obtain the sort of jobs to which they now aspire. Conditions of financial hardship, while not widespread, are leading nevertheless to increased social and domestic tensions, rising crime rates, and deterioration in the quality of life for some.

Country Outlook

Central Bank Building in the heart of Apia

The economy recovered quickly from cyclone Heta early in 2004 and is estimated to have posted moderate growth that year. A boom in construction is expected to support the economy through 2005 and into 2006, fueled by the Samoa’s hosting of the South Pacific Games in 2007.

Samoa has achieved a relatively high level of sustainable economic growth and human development, and has emerged as a leader of economic and public sector reform in the Pacific. This has been the result of political stability, determined leadership, and solid performance—especially in the areas of macroeconomic and fiscal management, financial sector liberalization, and public sector reforms.

Facilities for the South Pacific Games 2007, the new Aquatic Centre at Tuanaimato

Nevertheless, significant challenges require continued attention. The immediate challenge is to continue the momentum of economic reforms, particularly those increasing private sector participation and competition, and improving public enterprise efficiency and effectiveness. Also critical is continuation of efforts to mobilize customary land for productive and economic uses. Other important challenges include addressing outstanding infrastructure requirements—particularly in water and sanitation, and improving the quality of primary education, the scope and effectiveness of preventive health care, and the prospects of poorer people in society.