ADB's Work in Solomon Islands

Solomon Islands covers about 28,000 square kilometers of Melanesia in the South Pacific, with around 85% of the population living in villages of just a few hundred people each.

ADB has been supporting Solomon Islands since 1973. While economic growth in the country has been broadly steady, it has been reliant on temporary drivers, including unsustainable logging. Solomon Islands faces the challenge of developing new sources of growth to address employment and income challenges. Prospects rest on the private sector and developments in mining, agriculture, fishing, and tourism.

Children playing in a beach on the outskirts of Honiara.

Since 1973, ADB has committed loans totaling $174.4 million, grants of $219.0 million, and technical assistance worth $32.3 million for Solomon Islands. Cumulative loan and grant disbursements to Solomon Islands from concessional ordinary capital resources, the Asian Development Fund, and other special funds amount to $169.1 million.

Transport Sector Project Development Facility aims to improve the design and implementation of priority road, maritime, and aviation projects

In the medium and longer term, the Sustainable Transport Infrastructure Improvement Program is strengthening country systems to deliver the National Transport Plan and aligning government funding with development partner assistance through the National Transport Fund.

ADB is working with development partners to support the Tina River Hydropower Project, which will generate electricity from renewable sources and provide more affordable and reliable energy to Honiara. The $15.2 million Solar Power Development Project is supporting a grid-connected solar power plant put into operation by the Solomon Islands Electricity Authority. The project will reduce the need for costly shipments of diesel to provincial centers.

Tina River Hydropower Project will help reduce Solomon Islands’ reliance on imported fossil fuels for energy through hydropower generated from Tina River.

In September 2019, ADB committed the Urban Water Supply and Sanitation Sector Project, which aims to improve the efficiency, accessibility, and sustainability of safe water and sanitation for around 141,000 people living in urban and peri-urban areas, as well as investing in hygiene awareness and education. Project readiness financing was used to help minimize contracting delays and speed up the initial disbursements for the project.

In 2019, ADB signed a $6 million grant agreement with Solomon Islands as part of the second phase of its regional program on disaster resilience in the Pacific. The grant will help improve the country’s resilience to disasters triggered by natural hazards. It will support policy actions in disaster risk management and provide a source of contingent financing for timely disaster response, early recovery, and reconstruction activities.

ADB committed a $5 million policybased grant in 2018 to support government efforts to implement policy and institutional reforms that will progressively improve fiscal sustainability, public financial management, and service delivery, as well as enhance the country’s business environment.

ADB’s Pacific Private Sector Development Initiative has been active in Solomon Islands since 2008. This regional technical assistance covers financing growth, the economic empowerment of women, state-owned enterprise reform, business law reform, and development of competition policy and competition law. It supported the establishment of a competition policy and a state-owned enterprise policy, both of which were endorsed by the country’s cabinet in 2018.

Sewing course initiative in the outskirts of Honiara part of the Pacific Private Sector Development Initiative

ADB also supports Solomon Islands through the Pacific Region Infrastructure Facility, which provides technical assistance, research, and knowledge products on key infrastructure issues to Pacific island countries and acts as a coordination facility for development partners in the region. In 2019, the facility supported Solomon Islands in the development of a draft national infrastructure pipeline.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments from ADB’s own funds (in equity and direct loans) in 2019 amounted to $3.00 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2019, ADB mobilized $3.28 billion of long-term cofinancing and $3.69 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.

Financing Partnerships

Financing partnerships enable ADB’s development partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade Finance Program and Supply Chain Finance Program.

ADB began cofinancing operations in Solomon Islands in 1983. Since then, sovereign cofinancing commitments for Solomon Islands have amounted to $194.77 million for 12 investment projects and $9.20 million for 13 technical assistance projects.

In 2019, Solomon Islands received $20.35 million in grant cofinancing from the European Union for the Urban Water Supply and Sanitation Sector Project.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

Solomon Islands continues to exhibit characteristics of a fragile state, and its structures lack the capacity to provide many of the basic drivers to reduce poverty. The country is remote from major markets and has low levels of human development, a small domestic market, and a narrow economic base. It has also been affected by major natural disasters. Key development challenges for the government are to generate sustainable economic growth and build fiscal buffers to respond to shocks. Despite the progress made under the Regional Assistance Mission to Solomon Islands, ADB and other development partners continue to face the challenges of working in a postconflict environment while trying to implement projects.

50 years of ADB’s partnership in the Pacific

Future Directions

ADB’s country operations business plan, 2020–2022 for Solomon Islands will continue to support three priority sectors: transport, public sector management, and urban planning. A land and maritime project is proposed for the transport sector. Health and education have also been identified as additional areas for ADB involvement.