Island Development Program in Tuvalu (Loan 1693-TUV[SF]) | Asian Development Bank

Island Development Program in Tuvalu (Loan 1693-TUV[SF])

Evaluation Document | 30 April 2006

This report evaluates the performance of the Island Development Program aimed to support the process of decentralization, foster sustainable development finance, and promote an improved enabling environment for the private sector in Tuvalu.

The main aim of the Island Development Program (IDP) was development through decentralization. It was designed to reduce poverty and improve the quality of life of Tuvalu's disadvantaged population.

It aimed to provide support for the Government's comprehensive agenda of reforms focusing on the development of the outer islands. The concept underlying the trust fund, known as the Falekaupule Trust Fund (FTF), was to invest the proceeds of the ADB loan and contributions from the Government and from island councils in international capital markets, have the funds professionally managed, and use the revenue generated by the fund to finance development in the outer islands on a sustainable basis.

The project was rated as successful, bordering on highly successful. It was rated as highly relevant, effective, efficient, and sustainability is most likely.

Summary of findings

  • Implementation of the IDP was done as planned, its main objectives had been achieved, and all tranche conditions had been fulfilled on time. The evaluation validates project completion report findings that the establishment of the FTF and its initial distributions provided development capital for island communities in line with the FTF's goals and that this allowed islands to implement their own projects.
  • Tuvalu's own efforts and achievements were critical factors underlying the program's design. The country had developed a reputation for strong fiscal management, and the Tuvalu Trust Fund (TTF) is often cited as a good and replicable model for similar small economies with physical and resource constraints.
  • The creation of the FTF was both timely and relevant given the introduction of the Falekaupule Act to decentralize power. The FTF was based on the successful TTF model and has a high level of community ownership. The FTF has low transaction costs, is flexible, and is demand-driven. It channels resources to the islands for projects identified by the communities themselves according to established criteria for project eligibility.
  • The project is assessed as highly relevant. The FTF establishment was consistent with the Government's IDP, which covered two key policy areas that were deemed essential:
  • decentralizing, and thereby enhancing, regional autonomy; and
  • fostering an enabling environment for regional development.
  • The project is assessed as effective. The FTF has been set up and is owned by island communities, with the objective of providing funding for island development. However, the training component of the IDP was rated as less effective as the training and communications component for island council staff and for communities in general was ineffective due to
  • failure to translate the Falekaupule Act and supporting documents into local language; and
  • ineffectiveness of the trainers' training approach for members of the councils of elders and the staff of island councils.
  • The project is assessed as efficient as the FTF follows sound investment and distribution principles similar to the TTF.
  • The project is assessed as most likely to be sustainable as key features of the TTF were adopted and because the fund is managed by three separate professional fund managers, and adequate governance and oversight arrangements are in place.

Lessons identified

  • When dealing with a trust deed, getting it right the first time is important. The distribution formula issue gave rise to major problems between island communities because of last-minute changes to the deed formula.
  • Translation of crucial documents is essential when dealing with the island communities.
  • Training should take place on the islands when island communities are the major stakeholders.
  • TA and advice from external parties are essential for long-term success of the FTF.
  • Tranche conditions should have been more tightly focused to address the program's objectives.


  • Executive Summary
  • Map
  • Introduction
  • Design and Implementation
  • Performance Assessment
  • Other Assessments
  • Issues, Lessons, and Follow-up Actions
  • Appendixes