Solomons Islands: Resurrected, not reformed

The Solomon Islands are today one of the poorest and least developed countries in the South Pacific. The islands are richly endowed with volcanic soils, marine resources, timber and minerals and well located for trade and tourism near burgeoning Asian markets. Yet the living standards for most of its people are scarcely higher than they were at the time of their first contact with the rest of the world.

As a consequence of economic stagnation, the Solomon Islands has a turbulent past. Migrants from the island of Malatia, who moved in large numbers to Guadacanal in search of better economic opportunities, came to be resented by locals from Guadacanal who claimed the migrants were taking their land and jobs. This has always been a source of tension, but civil unrest increased from the mid 1990s, with open fighting triggering economic collapse. In April 2003, the then Prime Minister Allan Kemakeza requested Australian assistance. After discussions with New Zealand and endorsement by the Pacific Islands Forum, an Australian led assistance package became the Regional Assistance Mission to the Solomon Islands (RAMSI) which landed military, police and civilian personnel in the Solomons Islands in 2003. Their immediate objective was to restore law and order by confiscating firearms, establishing a presence in the nine Provinces and to charge those responsible for the worst of the violence.

The RAMSI intervention marked a turning point for Australia’s relationship with the Pacific islands. From a policy of benign neglect, Australia became more heavily involved with the political and economic development of the Pacific.

It has now been four years since RAMSI first landed, and their success has been mixed.

The most important impact of the intervention has been on the security front. Peace and stability have returned to the Solomons under RAMSI’s watch. Over 6,000 people have been arrested, over 9,000 people have been charged and more than 3,000 guns have been removed from the country. While there have been outbreaks of violence, notably the riots in Honiara in 2006 which targeted the city’s Chinese community, RAMSI has done well to keep the peace.

Yet the security gains will prove temporary, however, if the underlying economic stagnation that led to the civil unrest is not addressed. To date, RAMSI’s economic successes have been less emphatic.

RAMSI is doing well to reduce the level of government regulation and to encourage private sector growth in the capital. It has made important and sensible reforms to banking regulation, foreign investment legislation, and reduced red tape. It has made great strides forward in improving probity in government, reforming the tax system and overseen a restoration of macroeconomic stability.

While these are all worthwhile efforts, they address secondary concerns that do not reflect the true constraints on development. The Solomons economy is characterized by a very small formal sector, a non existent informal sector and a large subsistence sector. About 85% of the Solomons population live subsistence lives in rural areas and few are engaged in private enterprise. If cumbersome regulation and legislation were the only obstacles to growth, one would expect to see a burgeoning informal sector existing beside the formal and subsistence sectors to get around the restrictions. This is the pattern of development everywhere else in the world. Yet the sight of thousands of young men idle in the capital and the complete lack of an informal sector points to more fundamental constraints to development in the Solomons that continue to be overlooked.

Chief amongst these is land ownership. Currently, about 95% of all land is communally held by villages and clans and has been so for generations without any formal recognition of ownership or title. Customary laws are the default institution used to interpret land issues because no other system that works currently exists. Customary land tenure is the key impediment to growth in the Solomons. Without reform here, changes to the tiny formal economy will have only marginal impact. Land needs to be surveyed, registered and then made available for long term lease.

This is a huge task, but it is vital. RAMSI has not dealt with the issue at all although many of the Solomons social and economic problems are tied to the unavailability of land. International agencies, such as the World Bank and Asian Development Bank have been similarly inactive on the land front.

Infrastructure, in particular, roads and inter island transport links, urgently need to be developed to link producers with consumers and thus encourage smallholder agricultural production. Although RAMSI has pledged millions towards infrastructure development, more results need to be shown for its efforts.

The creation of employment needs to be a key objective. The Solomon Islands has the fastest population growth in the region with at least 16,000 fresh entrants into the labour market each year. Even with the newly hastened growth rate the economy is not generating anywhere near enough jobs for the additions to the labour market let alone making inroads in the massive pool of unemployment that already exists.

RAMSI, rather than making these necessary changes needed to trail blaze a new growth path, has reinstated the same institutions, the same central bank and the same unnecessary proliferation of ministries that contributed to stagnation for thirty years. To this over-administration it has added its own layer of oversight and the reforms made thus far have done nothing to address to the key constraints to development. Under RAMSI’s watch, the Solomons government has been resurrected rather than reformed.

Gaurav Sodhi is a researcher at the Centre for Independent Studies, his issue analysis paper ‘RAMSI Five out of Ten’ will be released in January.