NOTE: Some content may not display correctly, including tables and figures. See PDF for full details.
Government of the Solomon Islands
National Development Strategy
2011 to 2020
Vision:
A United and Vibrant Solomon Islands
DRAFT FINAL
July 2011
Ministry of Development Planning and Aid Coordination
Honiara, Solomon Islands
Foreword
The formulation of the National Development Strategy (NDS) is one of the key expected outputs of the Ministry of Development Planning and Aid Coordination as we strive for endurance and nation building of our country, Solomon Islands. In 2010 the Ministry was tasked to prepare a National Development Strategy to replace the Medium Term Development Strategy 2008‐2010.
Whilst the previous Strategy focused on a Medium term time frame, the NDS is more long term in nature covering a period of 10 years. This Strategy sets out a framework for Development Programmes in Solomon Islands and the basis for dialogue with our Development Partners and stakeholders for support and implementation of the NDS priorities in the next 10 years. The Solomon Islands National Development Strategy 2011‐2020 is intended to be a catalyst for development in the next 10 years in an effort to achieve the goals of Solomon Islands development agenda.
This NDS is focused on Solomon Islands‐ as a united nation in its diversity, hence the National Vision “A United and Vibrant Solomon Islands”. The strategy embodies the aspirations and hopes of the people of Solomon Islands with the overarching theme – “To build Better Lives for all Solomon Islanders”.
It must be strongly emphasised here that achievement of the Objectives and Goals of the National Development Strategy will take time and will require the concerted actions of all of us on many fronts. Reforms are keys to successful implementation of the Strategy and all Solomon Islanders should work together at all levels of our societies and governments if we want to see and enjoy real development results in Solomon Islands.
The NDS also underlines the importance of good governance and public sector reforms. Good Governance, credible and stable policies are fundamental conditions for private sector growth. The Public Sector Reform Program will impart a clear sense of directions on our public service, improve accountability and enhance the efficiency of service delivery. Fiscal governance is critical for achieving the goals of the NDS and the Government’s expenditure program will be driven by the Strategy.
Effective implementation of the NDS all depends on the clear instructions and understanding by our political leaderships. By entering into strategic partnership with our key stakeholders, implementation and ownership will be strengthened. The partnership with development partners, provincial governments and other stakeholders will be crucial. Given that governments at all levels face financial and capacity constraints, our development goals will only be achieved if we pool our resources and work together. To ensure strong ownership of the NDS, the Ministry of Development Planning and Aid Coordination has taken a broad consultation process which includes the Government Agencies, Non State Actors, Civil Societies, Private Sectors and the Provincial Governments as well as the Development Partners. To this effect, much appreciation is given to those people who have sacrificed their time to participate in the consultations, provide more information, guidance and comments to our Teams. At this juncture on behalf of the Government of Solomon Islands I wish to thank you all for all your contributions and insights.
I would also like to recognize and appreciate the contributions from the Asia Development Bank for its financial support and technical inputs in the initial phase of this Strategy until its completion. I also wish to acknowledge the financial support that other development partners including the European Union also contributed to the Ministry in the consultation process. All these efforts have contributed enormously to the successful completion of our responsibilities in this regard.
Finally but not the least, I wish to express my personal gratitude to my Staff of the Ministry of Development Planning and Aid Coordination for their commitment and dedication to finalize this document. They have contributed immensely and did so willingly, despite many difficulty circumstances and challenges encountered during the process of preparing, compiling and finalization of this NDS.
As a nation, and human as we are, we have made our share of mistakes. The true test of the quality of our nation however, is its ability to learn from its past and move forward in a positive and confident fashion. The NDS is indeed, our road map for the journey that lies ahead of us as we map our country towards inclusive developments that will take better care of our people and improve their livelihoods in a safe and stable society.
With these few remarks, I dedicate this National Development Strategy and more importantly its implementation to all the people of Solomon Islands. Hon.
Hon. Snyder Rini
Minister for Development Planning and Aid Coordination
Solomon Islands: National Development Strategy 2011-2020
Contents
1 Preparation of the National Development Strategy .................................................... 1
1.1 Ownership ......................................................................................................... 1
1.2 Alignment .......................................................................................................... 2
1.3 Harmonisation ................................................................................................... 3
1.4 Managing for Results ........................................................................................ 3
1.5 Mutual Accountability ........................................................................................ 3
1.6 The Way Ahead ................................................................................................. 3
2 National Vision, Mission and Strategy ....................................................................... 4
2.1 National Vision .................................................................................................. 4
2.2 National Mission................................................................................................ 4
2.3 National Development Strategy ......................................................................... 4
3 Sustaining Macroeconomic Stability .......................................................................... 6
3.1 Economic Performance ..................................................................................... 6
3.2 Fiscal Situation .................................................................................................. 7
3.3 Monetary Situation ............................................................................................ 8
4 To Build Better Lives for All Solomon Islanders ......................................................... 8
4.1 Objective 1: Alleviate Poverty and Improve the Lives of Solomon Islanders in a Peaceful and Stable Society .......................................................................................... 8
5 Taking Better Care of All the People of the Solomon Islands .................................. 13
5.1 Objective 2: To Support the Vulnerable. ......................................................... 13
5.2 Objective 3: Ensure all Solomon Islanders have Access to Quality Health Care and Combat Malaria, HIV, Non-communicable and Other Diseases .......................... 17
5.3 Objective 4: Ensure all Solomon Islanders can Access Quality Education and the Nation’s Manpower Needs are Sustainably Met.................................................... 19
6 Improving Livelihoods of All the People of the Solomon Islands ............................. 22
6.1 Objective 5: Increase Economic Growth and Equitably Distribute Employment and Income Benefits .................................................................................................... 22
6.2 Objective 6: Develop Physical Infrastructure and Utilities to Ensure all Solomon Islanders have Access to Essential Services and Markets ......................................... 31
7 Creating and Maintaining the Enabling Environment............................................... 36
7.1 Objective 7: Effectively Respond to Climate Change and Manage the Environment and Risks of Natural Disasters ............................................................... 36
7.2 Objective 8: Improve Governance and Order at National, Provincial and Community Levels and Strengthen Links at All Levels ................................................ 41
8 Links for Effective Implementation ........................................................................... 48
8.1 The Chain ........................................................................................................ 48
Solomon Islands: National Development Strategy 2011-2020
8.2 The Links ......................................................................................................... 50
9 Project Cycle Management and MDPAC ................................................................. 52
9.1 Project Cycle ................................................................................................... 52
9.2 MDPAC Structure for Project Cycle Management .......................................... 55
9.3 Sector and Programme Planning .................................................................... 58
9.4 Corporate Plans and Budget Processes ......................................................... 62
9.5 Medium Term Development Plan .................................................................... 65
List of Figures
Figure 1: National Development Strategy Implementation Linkages ................................ 2
Figure 2: The Structure of National Development Strategy .............................................. 5
Figure 3: Recent and Projected GDP Growth in MTFS 2010 ........................................... 6
Figure 4: Expenditure Growth under Alternative MTFS Scenarios ................................... 7
Figure 5: Matrix for Objective 1 ....................................................................................... 10
Figure 6: Matrix for Objective 2 ....................................................................................... 14
Figure 7: Matrix for Objective 3 ....................................................................................... 18
Figure 8: Matrix for Objective 4 ....................................................................................... 20
Figure 9: Matrix for Objective 5 ....................................................................................... 26
Figure 10: Matrix for Objective 6..................................................................................... 34
Figure 11: Matrix for Objective 7..................................................................................... 38
Figure 12: Matrix for Objective 8..................................................................................... 43
Figure 13: National Development Strategy Implementation Links .................................. 48
Figure 14: MDPAC and the Project Cycle ....................................................................... 53
Figure 15: Possible MDPAC Structure for Project Cycle Management .......................... 55
Figure 16: Format for Monitoring and Evaluation Framework......................................... 57
Figure 17: The IFèANDèTHEN Logic of the Framework............................................. 58
Figure 18: Logical Framework Alignment to National Objectives .................................... 59
Figure 19: Format for Financial Plan by Component ...................................................... 61
Figure 20: Standard Format for Multi-Year Expenditure Budget ..................................... 61
Figure 21: Input of Key Macroeconomic Parameters ...................................................... 62
Figure 22: Integrated Corporate Planning Process ......................................................... 63
Figure 23: Possible Corporate Plan Financial Projection Format ................................... 64
Solomon Islands: National Development Strategy 2011-2020
Abbreviations and Acronyms
AG Chamber – Attorney General’s Chamber
AIDS – Acquired Immune Deficiency Syndrome
ANZ – Australia New Zealand Bank
AusAID – Australian Agency for International Development
BSP – Bank of the South Pacific
CAASI – Civil Aviation Authority of the Solomon Islands
CBSI – Central Bank of Solomon Islands
CEDAW – Convention on Elimination of Discrimination Against Women
CSO – Civil Society Organization(s)
CSSI – Correctional Service of the Solomon Islands
DAD – Development Assistance Database
DRM – Disaster Risk Management
ECE – Early Childhood Education
EEZ – Exclusive Economic Zone
EU – European Union
GDP – Gross Domestic Product
HIV – Human Immunodeficiency Virus
HRD – Human Resource Development
IPAM – Institute of Public Administration and Management
IPP – Independent Power Provider
JICA – Japan International Cooperation Agency
MAL – Ministry of Agriculture and Livestock
MCA – Ministry of Communications and Aviation
MCT – Ministry of Culture and Tourism
MCILI – Ministry of Commerce, Industry, Labour and Immigration
MDG – Millennium Development Goal
MDPAC – Ministry of Development Planning and Aid Coordination
MECDM – Ministry of Environment, Climate Change, Disaster Management and Meteorology
MEHRD – Ministry of Education and Human Resource Development
MFMR – Ministry of Fisheries and Marine Resources
MFR – Ministry of Forestry and Research
MoFT – Ministry of Finance and Treasury
MHA – Ministry of Home Affairs
MHMS – Ministry of Health and Medical Services
MID – Ministry of Infrastructure Development
MJLA – Ministry of Justice and Legal Affairs
MLHS – Ministry of Lands, Housing and Surveys
MMERE – Ministry of Mines, Energy and Rural Electrification
MNURP – Ministry of National Unity, Reconciliation and Peace
MPGIS – Ministry of Provincial Government & Institutional Strengthening
MPNS – Ministry of Police, National Security and Correctional Services
MPS – Ministry of Public Service
MRD – Ministry of Rural Development
MSG – Melanesian Spearhead Group
MTDP – Medium Term Development Plan
MTDS – Medium Term Development Strategy
MTEF – Medium Term Expenditure Framework
MTFS – Medium Term Fiscal Strategy
MWYCFA – Ministry of Women, Youth, Children and Family Affairs
Solomon Islands: National Development Strategy 2011-2020
NACC – National Advisory Committee on Children
NCD – Non-Communicable Diseases
NCW – National Council of Women
NDMO – National Disaster Management Office
NDS – National Development Strategy
NGO – Non-Government Organization
NHRDTC – National Human Resource Development and Training Council
NHRDTP – National Human Resource Development and Training Plan
NJ – National Judiciary
NPO – National Parliament Office
NPP – National Population Policy
NSO – National Statistical Office
NTP – National Transport Plan
NTFB – National Transport Fund Board
OECD-DAC – Organisation for Economic Cooperation and Development - Development Assistance Committee
OIE – Oficina Internacional de Epizootias (World Organisation for Animal Health)
OPMC – Office of the Prime Minister and Cabinet
PACER – Pacific Agreement on Closer Economic Relations
PGSP – Provincial Government Strengthening Programme
PICT – Pacific Island Countries and Territories
PICTA – Pacific Island Countries Trade Agreement
PS – Permanent Secretary
PSC – Public Service Commission
PTD – Policy Translation Document
RAMSI – Regional Assistance Mission to Solomon Islands
RSIPF – Royal Solomon Islands Police Force
SI – Solomon Islands
SICHE – Solomon Islands College of Higher Education
SICUL – Solomon Islands Credit Union League
SIEA – Solomon Islands Electricity Authority
SIG – Solomon Islands Government
SISBEC – Solomon Islands Small Business Enterprise Centre
SIWA – Solomon Islands Water Authority
SMEC – Small and Micro Enterprises Centre
SOE – State Owned Enterprises
SPS – Sanitary and Phytosanitary Standards
STI – Sexually Transmitted Infection
SWAp – Sector Wide Approach
TCSI – Telecommunications Commission of Solomon Islands
UNDP – United Nations Development Programme
UNICEF – United Nations Children’s Fund
WTO – World Trade Organisation
1 Preparation of the National Development Strategy
Government recognizes the need for a comprehensive National Development Strategy (NDS) to guide development activities and programmes to Build Better Lives for All Solomon Islanders.
Preparing this National Development Strategy, Government has carefully chosen approaches most able to produce a sound strategy which reflects the priorities of the people and which is able to be effectively implemented to produce real results:
· Importance of the NDS is reflected in the High Level Task Force which Government established to guide its preparation, including the Permanent Secretaries of MDPAC, the Bureau, Finance and Treasury, Health, Education, Infrastructure, Provincial Government and Commerce, the Secretary to the Prime Minister and Cabinet, and the Governor of CBSI.
· For the first time in the Solomon Islands, a broad consultation process has been undertaken which includes government agencies, non-state actors, civil society and the private sector. Particularly, this consultation process has included every Province and Honiara City with local consultations involving provincial governments, non-state actors, civil society and the private sector. The provincial consultations gave a clear and consistent picture of the needs and priorities as seen by provincial stakeholders. These priorities have been firmly embedded in this NDS, with National Objectives reflecting the People’s Priorities.
· For the foreseeable future, most development spending will be funded by development partners. Government is committed to international agreements on development, especially the Rome and Paris Declarations, and the preparation of the NDS has been set in the context of these international commitments. This is not to serve the interests of development partners but to strengthen Solomon Islands partnership so that all development activities are Harmonised and made more Effective to increase the benefits enjoyed by Solomon Islanders.
1.1 Ownership
The Paris Declaration of 2005 included the commitment on ownership that: “Partner countries exercise effective leadership over their development policies and strategies and coordinate development actions.” To meet this commitment, developing countries are committed to three tasks:
· “Exercise leadership in developing and implementing their national development strategies through broad consultative processes.”
Government has fully met this commitment in this National Development Strategy, which clearly states the National Objectives, National Policies, and National Strategies founded on a broad, nation-wide consultative process.
· “Translate these national development strategies into prioritised results oriented operational programmes as expressed in medium-term expenditure frameworks and annual budgets.”
Government has set out the linkages and processes by which this commitment will be met and the NDS translated into the implementable programmes of sectoral and provincial strategies aligned to the NDS and prepared under the technical leadership of sectoral agencies supported by MDPAC and development partners. These plans will link to Corporate Plans and, hence, to the MTEF currently being introduced by MoFT and to the annual budget process. The links through which the NDS will be translated into development actions are summarised in Figure 1 and set out in Part II.
Figure 1: National Development Strategy Implementation Linkages
1
Provincial Plans are funded through the Corporate Plan of the MPGIS
· “Take the lead in co-ordinating aid at all levels in conjunction with other
development resources in dialogue with donors and encouraging the
participation of civil society and the private sector.”
Government has on-going partnership agreements with civil society organisations and seeks increased private sector participation to lead growth. Aid Co-ordination Management is being strengthened to better coordinate donor inputs, including a Development Assistance Database (DAD), and this coordination will be extended to include outputs and outcomes in the results-oriented management in Section 1.4.
1.2 Alignment
The Paris Declaration commits that “Donors base their overall support on partner countries’ national development strategies, institutions and procedures”. The Declaration notes that such alignment depends on a necessary level of capacity in national planning agencies: “The capacity to plan, manage, implement, and account for results of policies and programmes is critical for achieving development objectives
- from analysis and dialogue through implementation, monitoring and evaluation.”
In this last statement the Declaration summarises the needs of Project Cycle Management as a means to align donor support to NDS objectives. To meet Solomon Islands part of this commitment it is proposed in Section 9.1 to apply Project/Programme Cycle Management to implementation of the NDS and to facilitate donor alignment to the NDS.
1.3 Harmonisation
The 2003 Rome Declaration on Harmonization seeks to “harmonize the operational policies, procedures and practices of our institutions with those of partner country systems to improve the effectiveness of development assistance”. The Declaration notes that “the totality and wide variety of donor requirements and processes for preparing, delivering and monitoring development assistance are generating unproductive transaction costs for partner countries”.
The Solomon Islands has had planning manuals for internationally standard practice in Project Cycle Management for some years, but they have not been effectively implemented. In Part II, it is proposed to implement standard practices for “preparing, delivering and monitoring” development activities through Logical Framework methods (see Section 9.3.1) for Project Cycle Management and as the tool for Alignment, Harmonisation and Managing for Results.
1.4 Managing for Results
The Paris Declaration commits to “Managing resources and improving decision making for results.” In addition to strengthening the links between NDS and the MTEF and budgets and the coordination of aid inputs, both discussed above at 1.1, the Declaration includes a partner country commitment to:
· “Endeavour to establish results-oriented reporting and assessment frameworks that monitor progress against key dimensions of the national and sector development strategies; and that these frameworks should track a manageable number of indicators for which data are costeffectively available”.
There has been no formal government wide M&E system thus far, but the adoption of a Logical Framework approach for all development activities (projects, programmes, SWAps etc.) will provide a monitoring framework for every development activity and the basis for them to be accumulated to sector and national level reporting of achievement of outputs and outcomes, as discussed in Section 9.2.3.
1.5 Mutual Accountability
The final Paris Declaration commitment is that “Donors and partners are accountable for development results”.
Government will be accountable to donors but is, first, accountable to the people of the Solomon Islands and Cabinet will adopt proposals to set out the accountability of the Prime Minister and Ministers, Permanent Secretaries, and Provinces as well as Donors.
1.6 The Way Ahead
Prepared with such broad consultations and with regard to internationally accepted conditions for effectiveness it is confidently expected that this National Development Strategy 2011-2020 will deliver:
A United and Vibrant Solomon Islands
Government of the Solomon Islands
National Development Strategy
2011 to 2020
Part I: The Strategy
2 National Vision, Mission and Strategy
2.1 National Vision
The National Vision is of “A United and Vibrant Solomon Islands”.
2.2 National Mission
The National Mission is to:
· create a modern, united and vibrant Solomon Islands founded on mutual respect, trust and peaceful co-existence in a diverse yet secure and prosperous community where tolerance and gender equality are encouraged and natural resources are sustainably managed; and
· enable all Solomon Islanders to achieve better quality of life and standard of living for themselves and their families through constructive partnership for social, economic, political and spiritual development.
2.3 National Development Strategy
The National Development Strategy embodies the aspirations and hopes of the people of the Solomon Islands. The overarching theme of the NDS is “To Build Better Lives for All Solomon Islanders”. Achieving this aim will take time and require concerted actions on many fronts. Reforms are keys to successful implementation of the strategy and all Solomon Islanders should work together at all levels of the communities towards this goal.
The National Objectives are long term in focus and are at national level - they are the desired outcomes which can only be delivered progressively in the long term -typically more than the ten year life of the NDS. They are universal and reflect the aspirations of the people of Solomon Islands. While they may be reviewed from time to time, these National Objectives are expected to be applicable for a long time and to bridge multiple national elections and governments.
The NDS presents four major areas of focus which reflect the challenges facing the people of Solomon Islands. Government recognizes that development must benefit the people. Poverty must be alleviated. Access to quality health care and education are essential to both social and economic development. Living standards of all communities must be raised. Livelihoods must improve. The benefits of development must be more equitably shared. These are some of the ideals to which all people in the Solomon Islands aspire.
2.3.1 The Overarching Focus Area: To Build Better Lives for All Solomon Islanders.
The aspiration of all Solomon Islanders is to build a better life for their families and communities and for the future generation. Development must make a difference to this universal goal in a way which is fully inclusive of every Solomon Islander, especially those who live in remote areas or have benefited least from past development. Alleviating poverty, empowering people to be self-reliant and equitably sharing development benefits are critical for building better lives in a society secure in social and political stability and with peaceful relations amongst all the people.
Therefore, the overarching focus area of the NDS is “To Build Better Lives for All Solomon Islanders”.
Objective 1 To Alleviate Poverty and Provide Greater Benefits and Opportunities to Improve the Lives of Solomon Islanders in a Peaceful and Stable Society
2.3.2 Central Focus Area: Taking Better Care of all the People of the Solomon Islands
Below the overarching focus area are two pillars which are essential to fulfil the requirements of the overarching focus of the NDS and are the core of the strategy.
“Taking Better Care of all the People of the Solomon Islands” is concerned with fulfilling social needs of the people, including support for the vulnerable and better access to education and health care for all.
Objective 2 To Provide Support to the Vulnerable.
Objective 3 To Ensure that all Solomon Islanders have Access to Quality Health Care and to Combat Malaria, HIV, Non-communicable and Other Diseases
Objective 4 To Ensure that all Solomon Islanders have Access to Quality Education and for the Country to Adequately and Sustainably Meet its Manpower Needs.
Figure 2: The Structure of National Development Strategy
Islands” and is about improving the economic benefits to the people through higher growth, increased employment and the distribution of the benefits of development.
Objective 5 To Increase the Rate of Economic Growth and Equitably Distribute the Benefits of Employment and Higher Incomes Amongst all the Provinces and People of the Solomon Islands
Objective 6 To Build and Upgrade Physical Infrastructure and Utilities to Ensure that all Solomon Islanders have Access to Essential Services and to Markets.
2.3.4 Underlining Focus Area: Creating and Maintaining the Enabling Environment
Creating and maintaining an enabling environment is essential to achieving and fulfilling the objectives of the Strategy - providing the solid foundation for successful implementation of the NDS. This enabling environment includes protecting the environment and managing natural resources, effectively working with international partners, and strengthening good governance within Solomon Islands national, provincial and community level governments.
Objective 7 To Effectively Manage and Protect the Environment and Eco-Systems and Protect Solomon Islanders from Natural Disasters
Objective 8 To Improve Governance and Order at National, Provincial and Community Levels and Strengthen Links between Them
3 Sustaining Macroeconomic Stability
3.1 Economic Performance
Historically, real GDP growth rate has been volatile but in 2010, GDP growth rate was expected to be 5% and the forecast for 2011 is also 5%.
Figure 3: Recent and Projected GDP Growth in MTFS 2010
However, assuming no changes in current policy, the Medium Term Fiscal Strategy 2010 (MTFS) expects growth will decline and remain at a lower level during the first part of the NDS period. In 2011 the logging sector is expected to decline by 18% and continue to decline by 25% per year over the next four years. However, Gold Ridge mine is expected to come into full operation in mid 2011 and contribute around 4% to growth. The demise of logging and stabilization of gold output will result in real GDP growth levels just over 3% which, given population growth at a similar rate, will mean little improvement in GDP per capita in the medium-term.
3.2 Fiscal Situation
3.2.1 Budget Outlook
In 2008 and 2009 there were small budget surpluses whilst in 2007 and 2010 the budget was in deficit. Over the period 2007 to 2010, government revenue more than doubled, mainly from domestic activities (production) and customs duties, but expenditure also increased, though in most years by less than the increase in revenue. However, declining log output and slower growth to 2015 means revenue growth will slow substantially and the recent expenditure growth must slow down abruptly from around 29% to 8%.
Figure 4: Expenditure Growth under Alternative MTFS Scenarios
Figure 4 shows the projections of current expenditure growth against the expenditure growth needed to maintain a balanced budget. To avoid deficits and provide sufficient funding for the development budget, government must reduce its current expenditures to reduce the gap between current expenditure growth and expenditure required for a balanced budget. The 2010 MTFS sets the budget strategy in the first part of the NDS period as “an affordable and sustainable Government budget which limits debts to a manageable level, improves Government decision making processes, and focuses on achieving the development goals of the Solomon Islands”.
3.2.2 Public Debt
Solomon Islands have had a difficult history with debt and, in the past, much of the debt incurred by government and SOEs was not used wisely. By 2003 the country was in default on all its debts and major changes have been required to rebuild public finances and fix debt problems. The 2005 Honiara Club Agreement committed
Government to applying a basic set of financial management principles in its fiscal and debt management strategies including: (i) balanced recurrent budgets; (ii) a freeze on all new borrowing; and (iii) setting aside a fixed proportion of Government revenue for debt servicing. The principles developed with the Honiara Club Agreement remain central to Government’s approach to managing its debts.
Consistent with Government’s budget strategy in the face of constrained revenues, the Government is committed to reducing the burden of public debt on the nation’s finances and future prosperity and will continue to be guided by the principles established under the Honiara Club Agreement in the management of debts.
3.3 Monetary Situation
3.3.1 Inflation
Inflation in 2008 rose to 19.4% due to high food and fuel prices in the first half of the year. From 2009, however, inflation stabilized as (i) oil prices fell, leading to a fall in global inflation; (ii) from 2009 the Solomon Island dollar rose in value; (iii) competition reduced prices in rice (due to the MSG trade agreement) and telecommunication markets; and (iv) tightening of monetary policy in 2008 by the Central Bank helped contain inflation.
The annual inflation rate to March 2011 in Honiara was 2.9%, led by a 4.8% rate for imported items, on a rising trend, whilst other items were 1.6%. The monetary policy target is to contain inflation to a single digit inflation rate.
3.3.2 Foreign Exchange and Reserves
The exchange rate has depreciated continuously over the last 20 years, on average by 0.52% per month. There has been a significant rise in foreign reserves so that mid-2011 reserves are some 9 months equivalent of import cover as a due to large inflows of donor funds. The long term decline in exchange rate combined with large foreign reserves prompted CBSI to appreciate the exchange rate by 5% in May 2011.
Monetary policy targets for exchange rates and reserves are: (i) to maintain a stable exchange rate; and (ii) to maintain minimum foreign reserves equivalent to three months of import cover.
4 To Build Better Lives for All Solomon Islanders
4.1 Objective 1: Alleviate Poverty and Improve the Lives of Solomon Islanders in a Peaceful and Stable Society
4.1.1 Challenges
Poverty
The Solomon Islands Statistical Office analysis suggests that almost 23% of the population faces difficulties in meeting basic food and essential non-food needs and that there are “many more households and individuals who have expenditure only just above the basic needs poverty line and who are therefore vulnerable…to rising prices and/or declining incomes/expenditure.” Female-headed households are disproportionately represented among the poor.
Government’s analysis concludes that this is income rather than asset poverty and needs to be addressed by increasing employment and income-earning opportunities in urban and rural areas.
Population Growth and Rural-Urban Migration
Rapid population growth impacts social and economic conditions of Solomon Islanders, including: distribution of income, urban drift, high unemployment rates and access to basic needs like education, health and housing. Many agencies participate in the National Population Policy, which is currently being finalised and is integrated into this National Development Strategy.
The current age structure results in a high dependency burden. Dependency ratios will only become favourable to economic growth when dependency levels fall to about 50 dependents to every 100 economically active adults, compared to the present level of over 80. The current slow fertility decline will take several decades to reduce the dependency ratio to 50.
Solomon Islands has serious problems with rapid, unplanned urban expansion, which harms urban communities through increased crime, urban squalor, housing pressure, public health risks, and costs for urban-based businesses. Such problems can be reduced by improving rural living standards, to discourage migration, and helping those in squatter settlements to escape from poverty through better basic services, adult education and skills training.
Urbanization has benefits, bringing people to larger population centres better able to provide varied productive skills and more efficient local markets. Urbanization also enables more cost-effective provision of services, including health, education and law enforcement. But such benefits depend on planned urbanization.
Social and Communal Stability
The Solomon Islands have made significant progress in promoting and maintaining stability after the ethnic tensions ended in 2003. The root causes of the tensions may include the uneven distribution of public resources, land issues, and a growing unemployed youth population. Policy responses address reconciliation, political stability, constitutional reforms and land issues. Stability is a necessary condition for building a better future of all Solomon Islanders and the reconciliation and peace process is an ongoing challenge.
The Truth and Reconciliation Commission was established in 2009, and began work in early 2010, convening public hearings about victims’ testimonies during and after the ethnic tension. The Rehabilitation Programme remains pending, with UNDP indicating its willingness to assist.
4.1.2 National Strategy
Millennium Development Goals
The first MDG is to “Eradicate extreme poverty and hunger”. The Millennium Development Goals 2010 Report indicates “mixed progress” as many people are seen to be “cash poor” even though subsistence means there is no large population living in extreme poverty. The proportion of the population who suffer from hunger has been halved compared to the 1990 baseline - impacted by subsistence production - but the level of employment and growth of GDP per capita have yet to achieve satisfactory levels.
In this context, the policies and strategies supporting this first objective seek to further strengthen the subsistence sector, to better achieve food security, reduce hunger, and facilitate marketing of surpluses from subsistence as well as income generation from smallholder cash production and commercial development. These measures will strengthen performance against MDG1 and increase the probability of achieving the goal.
Policies and Strategies
Policies and strategies in Figure 5 address the challenges discussed above and aim to achieve Objective 1. There are four policy groups supporting this objective:
The Poverty Alleviation and Rural Livelihoods policy addresses poverty as income poverty and the strategies seek to improve both cash and non-cash income streams in the context of the major role played by subsistence activities. Most livelihoods are based on natural resources and the strategies aim to improve such livelihoods as well as promoting non-natural resource based livelihoods and small and micro-enterprise (SME) development. Supporting strategies also seek fairer returns to resource owners and improved rural infrastructure.
Social and Community Development policy is concerned with improved service delivery and strengthened community capacity to participate in planning activities.
A major part of the National Population Policy, currently being finalised, addresses poverty alleviation and equity issues and is included here.
Social and Communal Stability policy continues to address issues of national unity and peace, focusing on youth through the Youth and Peace-building component of National Youth Policy.
Figure 5: Matrix for Objective 1
5 Taking Better Care of All the People of the Solomon Islands
5.1 Objective 2: To Support the Vulnerable.
5.1.1 Challenges
This challenge concerns Millennium Development Goals for women and children and other vulnerable groups. As cross-cutting issues many agencies must contribute to meeting the challenge. Given past social instability, the needs of youth particularly need to be addressed.
Capacity to implement development projects is a constraint but the total budget allocation is rising and donor support is increasing. UNICEF provides institutional support and continues child protection activities, AusAID is addressing gender-based violence and RAMSI is also promoting the role of women in Government.
5.1.2 National Strategy
Millennium Development Goals
The third MDG is to “Promote Gender Equality and Empower Women”. The 2010 MDG Progress Report concludes that performance has been mixed and that the probability of meeting this MDG by 2015 is considered low.
Good improvements are noted in improved female participation in primary education (though secondary education has poorer performance) and in the civil service. Poor performance is noted in the absence of women amongst politicians and cabinet members and, of wider concern, lower participation in formal employment, which is a traditional female stronghold.
In terms of eliminating gender disparity in education, the ratio of girls to boys in primary education had reached 0.97 by 2007 but in secondary education only 0.84. Compared to the baseline 0.60 for secondary education in 1990 there has been a substantial improvement, but the lack of progress since 2004 suggests that 2015 equality is not likely to be achieved. At tertiary level the ratio had doubled from 0.41 in 2000 to 0.80 in 2010 with the prospect of substantial achievement by 2015.
Data on women’s employment in the formal sector is incomplete, but the share of women in waged employment in professional and technical jobs fell from 27.3% in 1990 and 31.3% in 2000 to just 25% in 2010.
Renewed efforts are required to reverse the apparent decline in formal employment of women and to restart the progress of women in secondary education. The economic and income generation strategies supporting Objectives 1 and 5 need to be more inclusive and address gender employment within the distributional dimensions of growth.
Policies and Strategies
Policies and strategies in Figure 6 address the challenges discussed above and aim to achieve Objective 2. Supporting this objective, there are six policy groups, serving different vulnerable groups:
Social Security policy seeks to develop proposals for social security measures supporting vulnerable and marginalised community members.
People with Disabilities policy includes strategies to ensure fair access to education and other services and a focus on enabling people with disabilities to lead fuller lives, including increased opportunities for employment.
National Food Security, Food Safety and Nutrition Policy, partly included here, aims for food security and promotion of nutrition and healthy food for all.
National Children’s Policy seeks to promote children’s rights and welfare.
National Youth Policy seeks to increase access of young women and men to education and health services and give greater opportunities to participate in social, economic and cultural development.
Policy on Gender Equity and Women’s Development addresses equity in access to education and productive resources and in decision making and “mainstreamed” strategies in human rights, crime, government and energy.
Figure 6: Matrix for Objective 2
5.2 Objective 3: Ensure all Solomon Islanders have Access to Quality Health Care and Combat Malaria, HIV, Noncommunicable and Other Diseases
5.2.1 Challenges
Access to quality health care is a universal aim of all Solomon Islanders. Life expectancy has not improved since 2000. Women’s access to health and family planning services is particularly poor in rural areas, and infant mortality and child mortality rates are high, although they have fallen since 1990.
The Ministry of Health and Medical Services delivers its programs and activities with donor assistance through the Health Sector Support Program 2008-2015 (HSSP), with AusAID as the leading agency. The Sector Wide Approach is the preferred vehicle for donor support to the health sector. The HSSP 2008 Annual Report identifies major communicable health issues - malaria, acute respiratory infections, STI/HIV, diarrhoea, skin diseases and yaws, TB and leprosy - as well as NCDs mainly diabetes and cancer - and mental health illnesses.
According to the 2009 Health Annual Report, over the last few years over US$50 per person has been allocated to the Health Sector, compared to just US$25 as recently as 20061. Of the total funding for the health sector, more than 50% comes from donor partners and actual development expenditure for health is over 90% donor funded.
With the singular exception of Gizo Hospital development, donor funding is focused on the provision of medical services rather than infrastructure and facilities and the Government development budget aims to establish health facilities. However, the failure to utilize budgets - less than 10% in 2008 and 2009 but reaching 40% in 2010
- leaves important facilities undeveloped, including upgrading the National Referral Hospital, renovated rural health clinics and staff housing - delaying the provision of health services in the provinces and rural areas.
5.2.2 National Strategy
Millennium Development Goals
The fourth MDG is to “Reduce Child Mortality”, the fifth is to “Reduce Maternal Mortality” and the sixth to “Combat HIV/AIDS, Malaria and Other Diseases”. The
1
As per 2006 Solomon Islands Heal
th Sector Support Program preparation and design documents.
2010 MDG Progress Report concludes that Child Mortality and Maternal Mortality have achieved good progress and are on track with a high probability to meet the MDG 2015 targets, noting that 95% of births are now attended by skilled health personnel.
For MDG 6, the report concludes “mixed progress but erring on the good side” with a medium probability of achieving the MDG by 2015. The report notes good progress on malaria, tuberculosis and measles but is concerned with under-reporting of HIV/AIDS cases. There is also a general lack of data on HIV/AIDS.
Continuing efforts under the SWAp programmes for health will sustain progress in child and maternal mortality and strengthen efforts not only on the communicable diseases covered by MDG 6 but also the increasingly important Non-Communicable Diseases (NCD) now included under this Objective 3.
Policies and Strategies
Policies and strategies in Figure 7 address the challenges discussed above and aim to achieve Objective 3. Supporting this objective is the integrated health sector agenda, represented by the SWAps programme, to improve health service provision and complemented by health aspects of the National Food Security, Food Safety and Nutrition Policy and the National Population Policy, being finalised.
Figure 7: Matrix for Objective 3
5.3 Objective 4: Ensure all Solomon Islanders can Access Quality Education and the Nation’s Manpower Needs are Sustainably Met
5.3.1 Challenges
Millennium Development Goals are amongst the targets of this challenge, which is essential to building capacity and improving livelihoods, including in overseas employment. There has been gradual improvement in primary school enrolment and adult literacy rates. Better access to education for women has important ramifications in reducing poverty and improving the probability of educating their children. The geographically dispersed population increases the cost of delivering education services across the islands.
The education system has undergone significant restructuring and reform in response to needs identified through the Education Sector Investment and Reform Program (ESIRP) and the Education Strategic Plan (ESP). The Ministry of Education and Human Resource Development is responsible for 1,245 schools2, employs over 6,500 personel and provides education to around 130,000 pupils. Early Childhood Education (ECE) is a community-based system based on partnerships of Government, communities, churches and private initiatives. The national ECE Policy was approved by Government in 2008.
2 In 2009, the total 1,245 schools included: 520 Early Childhood Education (ECE), 507 primary schools; 167 community high schools; 16 provincial secondary schools, 9 national secondary schools, and 26 rural training centres.
Tertiary education is provided by the Solomon Islands College of Higher Education (SICHE), the extension centre of the University of the South Pacific (USPSI), the SICHE/UPNG Open Campus, and scholarships to overseas institutions. Overseas training is high cost, and development of in-country training may be more cost effective over the long term.
5.3.2 National Strategy
Millennium Development Goals
The second MDG is “To Achieve Universal Primary Education”. The 2010 MDG Progress Report concludes that good progress has been made and this MDG is likely to be achieved by 2015. MDG Plus goals have enjoyed less progress, though there have been significant increases in net enrolment rates in secondary schools - 38% Junior Secondary and 23% Senior Secondary4 - and adult (15+) literacy rates - 84.1% in 2009 against the baseline 76% in 19903.
For primary education achievements by 2010 of MDG Indicators included: (i) 99% net enrolment; (ii) 87% of those starting primary school reaching the last grade; and (iii) 89% literacy rate for women and men aged 15-24 years. After improvements in dropout rates up to 2008 the rates increased at all school levels. In primary schools 11% dropped out and only 4% (but 10% of girls) in junior secondary but 51% in senior secondary (48% girls, 52% boys)4.
Policies and Strategies
Policies and strategies in Figure 8 address the challenges discussed above and aim to achieve Objective 4. Two policy groups are directed at Education and at Human Resource Development and Employment, reflecting National Policy and the focus on HRD to meet the employment aspirations of Solomon Islanders as well as facilitate economic growth. The strategies build on a series of donor supported plans and the present SWAps approach.
Figure 8: Matrix for Objective 4
3 “Census 2009: Basic Tables and Census Description”, Statistical Bulletin 06/2011 4 “Performance Assessment Framework (PAF) 2007-2009”, MEHRD December 2010. Note that gender aspects of education are discussed on page 13.
6 Improving Livelihoods of All the People of the Solomon Islands
6.1 Objective 5: Increase Economic Growth and Equitably Distribute Employment and Income Benefits
6.1.1 Challenges
This challenge concerns the disadvantages, shared with other small island states, in promoting economic development5 and equitably distributing the benefits of such development between all parts of the country.
Enabling Environment for Private Sector Led Growth
The World Bank’s “Ease of Doing Business Rankings” put Solomon Islands 162nd on the issue of registering property - amongst the most difficult 10% of countries in the world. In this context, private sector development has been limited and economic growth is too low to provide jobs for a growing population. For the private sector to lead and lift economic growth there must be major improvements in the “ease of doing business”. Government must maintain macroeconomic stability and provide public goods and services, including economic infrastructure and a regulatory framework. But Government cannot provide the entrepreneurship to discover the profit opportunities and productivity improvements that drive sustainable growth. Government’s “commercial activities” perform badly in terms of cash flow, service, and contribution to growth.
Government recognizes that promotion of private sector development needs reduced costs of doing business and has initiated far-reaching reforms of laws governing commercial activity, but these need to be effectively implemented and far more needs to be done - including weights and measures regulations and quality standards - to develop a predictable regulatory framework that protects the public interest and consumers while encouraging private sector development through increased certainty of business conditions and reduced transaction costs of doing business.
About 87% of land is customarily owned, 9% by government, 2% by individual Solomon Islanders, and 2% is leased to foreigners. This seriously handicaps
5 (i) remoteness from world markets; (ii) difficulty achieving economies of scale in goods and services; (iii) risks due to a narrow economic base; and (iv) vulnerability to natural disasters.
economic and social development. Improved security of land tenure and use is needed to increase development, including for resource owners’ participation in development. Reforms must clarify ownership and provide secure, transferable use of land within clearly identified boundaries, without a rigid codification which would block the evolving character of customary rights.
Urban development is usually on alienated land but has problems due to maladministration, rent seeking, poor planning, unequal distribution and illegal squatting. Reforms will: (i) legalize occupation of crown lands with renewable and transferable rights up to 50 years; and (ii) register undeveloped sites in Honiara and urban centres to be tendered for economic and social development. The distorted market for urban land contributes to the high cost of housing, unaffordable for workers and a high, non-productive cost and disincentive for the private sector.
Rural development must address a broad range of issues, including economic, business and social measures. Distribution of economic activities broadens participation but disadvantages businesses through loss of economies of scale and weaker local capacity, reducing efficiency and effectiveness of service delivery and viability of enterprises. Economic rural development, including in Growth Centres, will be substantially dependent of small and micro-enterprise development but programmes to support SME development are ineffective in providing technical and entrepreneurial training, support for business planning and management and facilitating access to finance. Taxation of individuals from levels little above the basic minimum wage discourages formal employment and hinders accumulation of personal savings which typically finance SME development.
Developing Natural Resource Based Sectors
Broadening the range of productive activities is constrained by the number of viable opportunities which exist. Many possible products cannot be produced, processed and transported to markets at a price which is attractive to end consumers and at the same time offering an acceptable return to producers. To increase economic growth rates in a sustainable manner it is essential to invest in those products which meet the price expectations of both producers and consumers.
Agriculture
Agriculture is a major economic sector, the largest export earner, and main source of rural employment and livelihoods. Agriculture has three sub-sectors: (i) subsistence smallholder farming; (ii) market production; and (iii) commercial export crops.
Some 84% of Solomon Islanders engage in subsistence smallholder farming and rural communities rely on agriculture and forest products for their food and fuel. Food production has kept pace with population growth through considerable intensification of land use as traditional fallow periods of 15+ years have fallen in some cases to less than 5 years. Combined with lack of improved husbandry, soil fertility has fallen, yields have declined, and pest and disease problems have increased.
Domestically marketed production is an increasing source of cash income for rural villagers as upgraded markets in Honiara and provincial centres of Noro, Auki, Tulagi and Gizo have facilitated marketing and flourishing markets led to diversification in the range of products and the tastes of rural and urban consumers.
Commercial export crops have grown to a larger scale to increase cash income for rural households and are now the main contributors to the economy. Crops include: cocoa, coffee, kava, vanilla, copra and coconut oil, oil palm, and honey. Further development needs improved infrastructure, in terms of wharves, shipping, marketing,
and a regulatory authority for food security, food safety and goods and services standards to meet the requirements of domestic and international markets.
Fisheries
For commercial fisheries, the major income earning activity is the licensing of Foreign Fishing Vessels, who pay license fees to target the country’s tuna resources. Development potential is substantial and Tuna is a major export with numerous distant fishing nations operating in the EEZ. Government wants to see foreign investors set up processing and value adding establishments in the country.
For inshore and coastal fisheries, most Solomon Islands villages are sited on the coast and rely heavily on marine resources for food and cash incomes. However, over-fishing, illegal, unregulated and unreported fishing are threatening this resource. Coastal fisheries are an essential supply of protein and there is a need for their better management. A control mechanism and legislation are needed to manage this resource and provide funds to regulate, monitor and manage small scale fisheries.
Forestry
Traditionally, forests are a source of food, fuel, building materials and traditional medicines. Unsustainable logging has risked social, environmental, and economic disadvantage and will cause the loss of benefits for a time - including fiscal impact on Government. Challenges include: (i) lost forest and biodiversity; (ii) negative impacts on forest-dependent communities; (iii) lost rural employment; (iv) lost foreign earnings and Government revenue both from poor monitoring and decline in actual exports; (v) lost revenue opportunities for rural landowners; and (vi) lost opportunities in emerging markets, such as the forest carbon market.
Village/family based smallholder plantation development started in the late 1990s and totals over 12,500 ha. With Government support, smallholder plantations are expected to increase over the coming years.
Tourism
Tourism is among the smallest sectors but is growing strongly. Solomon Islands offer tourists a range of products, including dive tourism, adventure tourism related to nature and culture, kayaking, game fishing, village stay tourism and World War II heritage tourism. Growth is constrained by limited human resources, weak marketing, and poor infrastructure and services - roads, airports, shipping, communications, electricity, water supply and sanitation, waste disposal - compounded by value for money concerns in the absence of tourism standards. Development of tourism experiences - such as attractions and tours - depends on Private Sector SMEs to provide services which can increase tourism yields.
Mining
Solomon Islands have a significant endowment of mineral resources, including gold, copper, nickel, cobalt and bauxite. There are identified sites of potential mineral deposits in Isabel, Choiseul, and Guadalcanal provinces. The largest commercial operation, Gold Ridge mine is estimated to have access to 1 million to 2.5 million ounces of gold. Nickel prospecting continues in Isabel and Choiseul provinces, where high occurrences of nickel are confirmed.
The mineral sector has a lot of economic potential but there is a need to develop and enforce mining regulations and ensure proper financial, contracting, renting, licensing and resource allocation. Environmental protection measures are needed to address:
(i) low grade ores involving large land excavations, risking soil degradation, disturbed biodiversity, ecosystems and natural beauty; (ii) sustainable management to ensure resources are extracted according to environmental regulations and that all stakeholders reap full benefits; and (iii) set aside funds for restoration of biodiversity, land reclamation and new development opportunities after the project is closed.
Government is ill-equipped for these tasks. Present availability of surveys is very limited and at reconnaissance level, surveys are needed to identify potential mineral and hydro-carbon resources both on and offshore. Laboratory facilities are old and inadequate to the tasks, including to check ore quality - thus revenue - or to actually undertake the tests needed for environmental protection.
6.1.2 National Strategy
Programme of Action for the Least Developed Countries
Although economic growth and productive sectors are not directly targeted in MDGs the “Programme of Action for the Least Developed Countries for the Decade 20112020” agreed at the 4th UN Conference on the Least Develop Countries in Istanbul in May 2011 assigns the highest priority to development of:
(A) Productive Capacity
(B) Agriculture, Food Security and Rural Development; and
(C) Trade6
These reflect NDS’s consultation-based economic development strategies:
· The first of 5 Objectives of the Programme is to “Achieve sustained, equitable and inclusive economic growth in least developed countries, to at least the level of 7 per cent per annum, by strengthening their productive capacity in all sectors through structural transformation and overcoming their marginalization through their effective integration into the global economy, including through regional integration.”
· The Principles of the Programme include that “The State also plays a significant role in stimulating the private sector towards the achievement of national development objectives and creates an appropriate enabling stable, transparent and rules-based economic environment for the effective functioning of markets.”
· The Programme’s Goals and Targets for developing productive sectors are also consistent with the proposals of this NDS, including:
o “(c) Establish or upgrade quality assurance and standards of products and services to meet international standards;
o (d) Strengthen the capacity of domestic financial institutions to reach out to those who have no access to banking, insurance and other financial services, …. {and} in creating and expanding financial services targeted to poor and low-income populations, as well as small- and medium-size enterprises; and
6 (D) Commodities; (E) Human and Social Development; (F) Multiple Crises and Other Emerging Challenges; (G) Mobilizing Financial Resources for Development and Capacity-Building; and (H) Good Governance at All Levels.
o (e) Foster economic activity by promoting, inter alia, economic clusters, removing obstacles to business and prioritizing domestic and foreign investments, which increases connectedness;”
Policies and Strategies
Policies and strategies in Figure 9 address the challenges discussed above and aim to achieve Objective 5. The matrix presents 3 policy groups summarised as:
Enabling Environment for Private Sector Led Growth includes three policies and supporting strategies to: (i) remove obstacles to investment and commercial activity as identified by the private sector, including land, housing, infrastructure maintenance, simplified taxes, weights and measures, standards, and increased supply of skilled workers with internationally accredited qualifications; (ii) increased opportunities for international and domestic trade facilitated by regional trade agreements and the promotion of Solomon Islands trade interests; and (iii) increased opportunities for employment through bi-lateral, regional and multi-national arrangements.
Development of Economic Growth Centres, complementing increased economic growth with measures to increase the share of rural areas in economic development, including infrastructure development and promotion of cottage industries and small and micro-enterprises (SMEC).
Development of Natural Resource Based Sectors to increase value added and support sustainable rural growth in agriculture, livestock, fisheries, forestry, tourism and mines.
Figure 9: Matrix for Objective 5
6.2 Objective 6: Develop Physical Infrastructure and Utilities to Ensure all Solomon Islanders have Access to Essential Services and Markets
6.2.1 Challenges
Water and Sanitation
In consultations with provincial stakeholders and governments, high priority is assigned to improvement of water supply and sanitation infrastructure, responding both to their importance to quality of life and health and to the present poor provision in rural areas with no piped water for 75% of rural households and no sanitation for over 80% of rural households.
The most common source for water supply systems is surface water supplied using gravity feed systems. On some islands and coral atolls, underground sources and rain catchment are used and in rural areas dug wells are used. The HIES 2005/2006 shows 64% of urban households have piped water but only 25% in rural areas.
Urban areas are supplied by the Solomon Islands Water Authority (SIWA) and rural areas by the Rural Water Supply and Sanitation project under MHMS (RWSS). SIWA monitors the quality, service delivery and management of the water supply and sanitation system. Frequent water cuts in urban centres, mismanagement of funds, capacity weakness of the management and technical staff, and wantok system have tarnished the image of SIWA.
Water infrastructure is rundown and needs substantial investment for urgent upgrade, rehabilitation and maintenance of pipe tanks, boreholes, new treatment plant, pipelines and household supplies. There is a growing trend of landowners claiming rights to existing and potential water sources and this has caused disruption to water supplies and is having an effect on investments. Illegal connections also contribute to the problem of unreliable water supply as they affect the flow of water.
Urban sanitation is a major concern as there are no centralised sewerage systems in Honiara and provincial centres, contributing to contamination of groundwater. Widespread use of septic tanks in urban areas is a problem due to poor construction and lack of resources to monitor and enforce construction and operating standards. In rural areas sanitation coverage is around 18%, leaving 355,000 people at unmitigated risk of debilitating water-borne diseases - including about 80% of schools. Poor hygiene, lack of on-site waste treatment, and poor access to sewerage are the main issues affecting the sanitation sector, particularly in rural areas.
Energy
Solomon Islands has challenging conditions for sustainable energy development due to the widely scattered market on islands which are separated by large areas of sea and which have small, isolated communities. The main electricity provider is Solomon Islands Electricity Authority (SIEA), an SOE, with mismanagement of funds, and wantok system in employment and service delivery creating additional challenges.
Most of rural communities have limited access to basic energy services and use of traditional fuels - wood, dung and crop residue - is common. There is growing use of kerosene and lanterns and the poor, particularly in remote areas, pay a large proportion of their income for kerosene and Liquefied Petroleum Gas. More than 95% of rural households use wood for cooking. Providing electricity from renewable sources is a long term task, which generally requires high up-front, capital costs. Most approaches to renewable energy in the Pacific have failed to develop into viable alternatives, while a number of small-scale renewable energy-based rural electrification projects have been carried out, they have had little impact.
Improving energy efficiency can help manage the demand for energy but the region has been slow to adopt energy-efficiency practices and has had difficulty incorporating efficiency into energy planning, building codes, appliance standards, power system operations and industrial development policies.
Transport
Domestic Shipping
Domestic shipping service has deteriorated. Some 35 ships, 20 to 50 years old, operate services but information is limited and coordination is poor. Maritime infrastructure has deteriorated and is often damaged and defunct. Current programmes include wharf building, for which a new development partner is being sought, and navigational aids, which generate revenues of about SBD12million per year from international shipping.
Passenger wellbeing and safety are major problems and reinforce the need for proper enforcement of the Maritime Safety Administration Act 2009 and recently completed shipping regulations. Most services have been ad hoc, unpredictable and unreliable but the Franchise Shipping Service has now begun and provides regular services, which need to be extended and maintained. Regular services are already observed to increase domestic trade and economic activity. In the longer term, provincial governments need to proactively lead stakeholders to revive a once thriving and viable transport sector.
There are only two shipyards servicing vessels and development of more yards is needed in anticipation of future expansion of the industry. Institutional strengthening is necessary for shipping institutions to develop the maritime sector and review and revise regulations.
Roads
The road network is 1,751 km with 188 bridges spread over 30 islands. Roads had deteriorated due to lack of maintenance, destruction during ethnic tension and natural disasters but a new programme of labour-based community contracts is improving the status of roads. Government programs are under-funded, resulting in poor delivery and deferred programs. National and provincial governments must be proactive in ensuring that infrastructure development programs meet the highest quality standards and are implemented within the proposed time frame.
Infrastructure development tends to be focused on building roads and bridges connecting densely populated areas to the urban centres. Areas where there are economic resources that can be developed are sometimes ignored on the grounds of geographic location or low population density. A major problem is that roads have been developed but that the more expensive bridges connecting them have not, a lack of connectivity which needs to be corrected. Programs in road development
must address economic development needs to create incentives for more economic activities which will contribute to expanding the economic base.
Aviation
The Civil Aviation Act 2008 opened the market, allowing Virgin Pacific to begin services, and visitor numbers have increased but load factors remain low, only 50% on the Brisbane-Honiara route. The continuing low number of international flights into Honiara Airport limits financial viability and reduces financing options for maintenance and development. The airport and sector struggle to meet International Civil Aviation Organization (ICAO) standards as poor infrastructure, broken and out of date equipment make operations fall below international standards.
Domestic aviation is hindered by institutional issues between the Civil Aviation Authority and Civil Aviation Department, leading to ineffective implementation. Use of larger, more economical aircraft is hampered as most provincial airstrips cannot handle such aircraft or operate in all weathers and a number of strategic airstrips are held under customary land ownership, constraining upgrades and maintenance. Solomon Airlines, the only domestic carrier, must use profits from international routes
- now facing competition - to subsidise domestic routes.
Communications
Information and Communications Technology (ICT) is under prioritized, and amongst the poorest in the Pacific region. Current communications development focuses on telecommunication services whilst media developments are under prioritized and regulatory enforcement is lacking. The Telecommunications Act 2009, which requires increased capacity for enforcement, seeks to increase competition by having extra mobile services whilst there is still no competition in internet and landline services, which remain exclusively with Our Telekom. Internet services are growing and a local NGO (PFnet) operates a total of 24 email stations in the provinces.
6.2.2 National Strategy
Figure 10 presents the policies and strategies supporting Objective 6, grouped into the 7 categories of utilities and infrastructure addressed, each with a single policy.
Water Supply and Sanitation was considered in consultations to be the highest priority need in rural areas and with also urgent need for improvement of both water supply and sanitation in Honiara and urban centres.
Energy is in short supply in rural areas and high cost in relation to people’s ability to pay, requiring affordable energy development, including renewable.
Telecommunications needs better, more efficient and cost effective services with a wider coverage.
Shipping is the major domestic transport mode and strategies will strengthen services and infrastructure to support market access and development.
Aviation policy aims to reduce costs and increase quality of services whilst improving infrastructure and complying with International Civil Aviation Organization standards.
Roads policy prioritises maintenance and rehabilitation of existing roads over new roads and will apply transparent and objective criteria in prioritising work.
Local Transport Services will be encouraged to improve services on the improved maritime and land transport infrastructure.
7 Creating and Maintaining the Enabling Environment
7.1 Objective 7: Effectively Respond to Climate Change and Manage the Environment and Risks of Natural Disasters
7.1.1 Challenges
Climate Change and Environmental Management
Solomon Islands is extremely vulnerable to climate change and sea level rise is a daily threat to the survival and livelihood of Solomon Islanders who live on artificial and low-lying islands. The concentration of settlements and infrastructure in coastal areas makes the country very vulnerable to the adverse effects of climate change. Historical evidence points to the fact that, over time, climate change has intensified the threats of increased natural disasters, coral bleaching, coastal erosion, extreme
weather events, storms, droughts, disruption of agricultural activities, decreasing resilience of forests, salt water intrusion of ground water systems in low-lying atolls, effects on crops and fisheries, and effects on and control of vector borne diseases. The frequency of these events has also increased with time.
The increasing variability associated with climate change as well as extreme whether events require increased meteorological capacity to monitor and predict such events. Accurate predictions are needed to provide reliable early warning of impending natural disasters. The present lack of meteorological equipment, coverage of stations, communications equipment and early warning systems and expertise limits the forecasting capacity for disaster management as well as warnings for maritime and air transport.
Wastes and pollution from solid, hazardous and toxic wastes are a major threat to sustainable development. There is limited capacity for and awareness of waste management. There is land suitable for waste disposal but little is made available. There is a need to address the growing sources and extent of waste and pollution. Inadequate sanitation systems to treat liquid wastes have resulted in contamination of rivers, coastal waters and groundwater near urban areas, with severe health and environmental implications.
Most Solomon Islanders depend on coastal and marine resources and economic development is expected to continue to place pressure on wetlands, swamps and mangroves, increase land-based sources of pollution, and increase subsistence and cash demand for living marine resources.
Reefs are among the most biologically diverse ecosystems in the world but many of these have been destroyed by human activities and suffered additional impacts from climate change and sea-level rise. Coastal fisheries management is constrained by ‘open access’ to the resource, limited scientific data, poor awareness of the impacts from overexploitation by stakeholders, limited funds for research, and poor capacity to monitor the EEZ. Traditional fisheries protection strategies have re-emerged, including closed seasons and areas (tabu area), and restrictions on fishing gear, species caught, and access to resources.
Threats to biodiversity include: large-scale forest logging, commercial agriculture, associated land clearing and fires, habitat alteration and loss, pollution, exploitation of natural resources, bio-prospecting, urbanization, natural phenomena and invasive species.
Management of the existing water resources is a greater challenge than identifying new sources. Improvement requires coordination across many sectors including: improvements in watershed management; reductions in deforestation rates; raising public awareness of wise water use; controls on agricultural activities; and improvements in waste disposal, especially sewage disposal facilities
Degradation of land resources is becoming a primary environmental concern, with significant implications for sustainable development and economic activity. Food security and quality is threatened and rural labour opportunities diminish. Where land degradation and structural decline occur or invasive species are prominent, land is often abandoned, triggering additional pressures. Abandoned lands are havens for invasive species, sources of sediment, and can lead to additional tenure disputes.
The customary communities have unique inheritance and limited redistribution mechanisms with land and resources managed through village and family units. Conflicts over land usually result in fragmentation, without mechanisms to
reconsolidate fragmented land. To avoid conflict, families reduce the shifting nature of land use, shortening fallow periods and placing a heavier reliance on the use of fertilizers, leading to further land degradation. Alternatively, they shift their efforts to family land, which is invariably primary forest.
Natural Disaster Management
Solomon Islands is seriously threatened by natural disasters, such as cyclones, flooding, landslides, earthquakes and tsunami, which have destroyed lives and livelihoods, damaged essential infrastructure and natural resources and have incurred economic losses for the country in reduced GDP.
There is a need for greater awareness and commitment to national disaster risk management planning, and capacity building. There is a lack of information on the complex nature of disasters, models of good practice for disaster preparedness and response, as well as a lack of building codes and regulatory frameworks to support more effective urban planning processes. There is a need to improve disaster communication, early warning systems, coordination systems and practices -including in outer island communities.
7.1.2 National Strategy
Millennium Development Goals
The seventh Millennium Development Goal is “Ensure Environmental Sustainability”. The 2010 MDG Progress Report assesses progress as “Mixed” and with a low probability of achieving the MDG by 2015. The report acknowledges the newness of MECDM and the initial efforts made but expresses concern that existing environmental dangers, such as deforestation, are not yet under control and likely to be exacerbated by increasing dangers from climate change, sea level rise, water quality and challenges in sanitation.
Policies and Strategies
The present status of sustainable natural resource management and the anticipated increasing need to address climate change require the substantial increase in activities and performance set out in the policies and strategies for Objective 7, presented in two policy groups:
Climate Change and Environmental Protection encompasses strategies in climate change, meteorology and conservation and management which anticipate the effects of climate change - and contribute to a reduction in greenhouse gas emissions and forest destruction - increase capacity for prediction and early warning of extreme weather events and, within this context, promote continued but sustainable use of natural resources and protection of bio-diversity.
Natural Disaster Risk Reduction and Management policies encompass strategies to increase awareness and preparations to better respond to natural disasters, including related aspects of the National Food Security, Food Safety and Nutrition Policy.
7.2 Objective 8: Improve Governance and Order at National, Provincial and Community Levels and Strengthen Links at All Levels
7.2.1 Challenges
National Governance
Good governance at national, provincial and community levels, including maintenance of law and order, is essential to achievement of a better future and achieving the full potential of the country, hence the importance of the challenge to improve and strengthen them. RAMSI’s Machinery of Government (MOG) program has sought to strengthen the accountability, efficiency, effectiveness and responsiveness of different components of government.
The National Parliamentary Strengthening project aims to ensure that leaders have access to good advice to assist them in making well-informed decisions. It seeks to improve communication flows across government - and with the community - to improve coordination between different branches of government. The Electoral Commission has been supported to ensure that elections are well managed, free and fair. Parliamentary issues addressed include: (i) lack of independence of Parliament and dominance of the executive; (ii) lack of access to information for Members to perform their roles effectively; (iii) infrequent and poorly attended parliamentary and committee meetings; (iv) limited human resource development; (v) limited technical and physical resources; and (vi) lack of understanding of the role of parliament by Members and the public.
MOG also works with the Ministry of Public Service to improve planning, strengthen management systems, and develop a professional and committed public service workforce to improve public service delivery.
Government targets corruption and develops strategies for public administration reform and management to help ensure that Government and the public service are run fairly and transparently so resources are used for their proper purposes. Institutions that serve as watchdogs on government are supported to uncover corruption and mismanagement and appropriately discipline offenders.
Provincial Government
The donor supported Provincial Governance Strengthening Program (PGSP) seeks to improve administrative systems and communication links between national and provincial administrations, build capacity of provincial administrators, and strengthen links between national and provincial planning and service delivery. Areas to improve provincial governance include:
· to clarify and expand the responsibilities of provincial governments for local infrastructure, service delivery, and economic development management;
· to increase the flow of public funds to provincial governments to align their resources with their mandated responsibilities, and to build capacity through incentives for improved performance;
· to build capacity of provincial governments - assemblies and administrations for pro-poor policy-making and implementation, focusing initially on improving the institutions of public expenditure management; and
· to be inclusive in planning reforms, which are currently concentrated at national level with little input from provincial governments, though economic activity takes place in a provincial context. Inclusion of the provinces will promote understanding of the importance of reforms for provincial development.
Law, Order, and Border Security
The Regional Assistance Mission to Solomon Islands (RAMSI) has helped maintain peace and stability in the country. Progress is evident from: (i) improved community perception of living in a safe and peaceful environment; (ii) general public’s confidence in the Royal Solomon Islands Police Force (RSIPF); and (iii) the Correctional Services upgraded infrastructure to meet UN requirements and is now one of the best in the Pacific region. However, despite these achievements, MPNS continues to be faced with challenges to effectively and efficiently carry out its mandates and donor assistance through RAMSI is still essential for the sector.
Rule of law and justice are basic human rights and fundamental preconditions for a well-functioning market economy. Challenges to enhancement of law and justice include: (i) remoteness of provinces and large rural population resulting in high costs of delivering judicial services in the provinces and constrained access; (ii) decisions usually take months and years to be dispensed, delaying justice; (iii) recruitment of appropriately skilled and experienced legal and support staff; (iv) training and skills improvement is vital for continuous, effective, and responsive service delivery; and
(v) need for staff accommodation through direct provision or allowances.
7.2.2 National Strategy
Millennium Development Goals
The eighth Millennium Development Goal is to “Develop a Global Partnership for Development.” The 2010 MDG Progress Report concludes that results are mixed and observes that “Goal 8 addresses ways in which partnerships between developed and developing countries can assist developing countries to achieve the other seven MDGs through a combination of additional development assistance, improved accessibility to markets, debt relief and private sector development. This is an ongoing process and is not expected to be achieved by 2015”.
This NDS seeks to promote the partnership through emphasising private sector led growth and providing a long term strategic framework to which partners can align and harmonise their development programmes, furthering implementation of the principles of the Paris Declaration as discussed in Section 1.
Policies and Strategies
Policies and strategies supporting Objective 8 are presented in Figure 12 in 6 policy groups:
National Level: Executive with strategies addressing national government issues to improve effectiveness of government in finance, development coordination and public service reform.
National Level: Legislature with strategies to strengthen representative democracy, electoral processes and the capacity of Parliament to legislate and over see the executive branch.
Provincial and Community Levels with strategies to strengthen provincial governments, increase accountability and transparency in the use of public funds and improve service delivery.
Law and Order policy encompassing police, fire and correctional services with strategies to increase community confidence in the law and order services and extend coverage over rural areas.
Justice and Legal Affairs policy to increase capacity and accessibility through strategies including strengthening the court system in Provinces and HRD strategies to increase the supply of qualified legal staff.
Border Security and Quarantine policy supported by strategies to better secure and guard borders, increase police maritime capacity in the EEZ, and protect natural resource based sectors from exotic pests.
Government of the Solomon Islands
National Development Strategy
2011 to 2020
Part II: Implementing the Strategy
8 Links for Effective Implementation
8.1 The Chain
The NDS sets out national objectives and the policies and strategies supporting those objectives. However, these are not implementable plans. For the NDS objectives to be achieved they must be linked to the detailed plans of implementation actions of line ministries, provinces and communities working to benefit the people of the Solomon Islands.
As with a chain, there must be no weak links if the NDS objectives are to be achieved effectively. Any break in the chain will stop implementation of a part or the whole of the NDS. The preparation of the NDS has, thus, paid considerable attention to the implementation arrangements and processes required to connect the national strategy to actions on the ground impacting on people’s lives.
1
Provincial Plans are funded through the Corporate Plan of the MPGIS
Figure 13 summarises the necessary links which must be used to implement the NDS. These exist at different time horizons and throughout government.
8.1.1 Medium and Longer Term: Priorities and Plans
The ten year NDS is intended to guide a “generation” of plans through at least parts of 3 Parliaments and at least 3 Governments. Within the ten years, a range of plans will be made, including: (i) Government Policy Frameworks and Translation Documents (PTD) and (ii) Strategic Plans and Programmes for Provinces and Sectors / Line Ministries. Each of these will objectively analyse medium term challenges and objectives within the NDS framework and establish priorities for projects and programmes at National, Provincial and Sectoral levels.
These plans are multi-year for periods varying from 2 or 3 years up to 15 or 20 years. The plans are not made to a fixed schedule linked to the NDS or budget cycles but in response to needs and the willingness of government and development partners to address those needs. The NDS, therefore, must be able to accommodate the
flexibility of sectoral and provincial plans in terms of planning and implementation processes (discussed in Section 9).
8.1.2 The Three Year Rolling Horizon
Figure 13 shows the alignment of Provincial and Corporate Plans on a governmentwide three year time horizon. Development budgets also include 3 year projections, which need to be strengthened. The NDS must link with each of these activities but with strengthened links.
Provincial plans, within the context of longer term provincial strategic plans, have been established as 3 year rolling plans by the Provincial Government Support Programme (PGSP) under the MPGIS. The guidelines for the Corporate Plans require core 3 year rolling plans with a minimum format encompassing policy context and financial requirements but, as discussed in Section 9.4, the corporate planning process requires firmer guidance from the OPMC.
Plans for provincial and sectoral development also present a funding reality which NDS implementation must accommodate. Typically, the largely government funded appropriated development budget is about 20% of the total development budget. In the existing budget process, implementing agencies receive short notice of activities to be funded so that, typically, almost half of the government development budget is unspent - 66% in 2008 - so that government development expenditure is roughly 10% of the total and 90% is donor funded.
Government’s MTFS has provided a medium term view to complement the short term budget horizon. But, under MoFT, Government is addressing this situation by developing a 4 year rolling Medium Term Expenditure Framework (MTEF) to better inform the planning activities of ministries and provinces in their 3 year rolling Corporate and Provincial Plans.
With Corporate and Provincial Plans thus strengthened by the MTEF, the present 3 year projections included in the annual development budget can also be improved into a rolling 3 year Medium Term Development Plan (MTDP), incorporating a 3 year development budget, with details of development programmes and projects, and an annual NDS Performance Evaluation Report in the MTDP as outlined in Sections
9.2.3 and 9.5.
8.1.3 Annual Plans and Budgets
Given the strengthened MTEF, provincial and corporate plans and MTDP, the Annual Development Budgets will be the first year time slice of the 3 year rolling plans and will be extracted from them.
The greater certainty provided for development planning by the longer term expenditure horizon will allow preparation of better implementation plans in the form of the Annual Work Plan, which should improve performance, and better Corporate Plans will allow preparation of more focused Annual Reports 7 reporting on the success of implementation in relation to quantifiable indicators included in Corporate Plans and reflecting progress in achieving NDS objectives. The Annual Reports will form part of the NDS monitoring and evaluation system, built on the project and programme M&E aspects of Project Cycle Management, and their outputs will be consolidated by MDPAC as part of the rolling MTDP.
7
Annual Work Plans and Annual
Reports form part of the existing Corporate Plan Handbook.
8.2 The Links
8.2.1 Government Policy and National Priorities
The Government of the day has the mandate of the people to set National Priorities within the strategic framework of the NDS and use the NDS structure to capture its priorities, policies and strategies. The Government will benefit from the mechanism, structures and processes that have been built around the NDS to set the medium term national priorities. This would improve delivery of its policies and strategies.
The national objectives of the NDS have been compared to the actual Policy Frameworks of the last four national governments to ensure that they represent a consensus on the long term development of the Solomon Islands. Within this consensus each government indicates different emphasis on aspects of development and the NDS will have the flexibility, as a strategic document, to accommodate the emphasis and priorities of successive governments.
Governments translate their Policy Frameworks into a Policy Translation Document as the first stage in developing policies into implementable plans. The present PTD has been compared with the NDS to check that the overarching national strategy and PTD are complementary in sharing directions to national objectives. The NDS does not include every strategy in the PTD and that is not necessary - it is sufficient that each government’s policies and strategies are aligned to the national objectives.
To assist in the alignment process at all levels of government it is proposed that an NDS objective related reference system is applied throughout the hierarchy of government and donor planning documents.
8.2.2 Sectoral Priorities, Plans, Programs and Donors
Donors fund over 80% of the Solomon Islands development programs and it is essential that the links between the NDS and donor programs are effective. A stock take of current practice shows a serious need for better donor coordination and alignment to Government’s objectives and priorities, consistent with Rome and Paris Declarations.
Some donors operate independently in their chosen sectors and go directly to line ministries and provinces without consulting central ministries, particularly MDPAC, which is charged with coordination. This lack of coordination has been attributed to the lack of capacity in the relevant agencies to align donor programs and effectively participate in development planning. There is, therefore, a clear and urgent need to reform donor coordination in the Solomon Islands and to assess and strengthen the capacity of central agencies and line ministries to work effectively with development partners.
Section 9 sets out proposals for more effective Project Cycle Management to complement on-going development of Aid Coordination Management. It is proposed that all development projects and programs, including those funded by donors, must be prepared and implemented only through this process (see Section 9.1) and that existing projects being prepared or implemented be brought within this framework, including proposed M&E systems (see Section 9.2.3).
8.2.3 Expenditure Forecasts and the National Budget Process
Cognisant of the need for a multi-year planning horizon and to move to a more programmatic approach for government’s development activities, Government proposes development of a Medium Term Expenditure Framework (MTEF) by MoFT:
“The Medium Term Expenditure Framework will be supported by the development of forward estimates. This will give the Government the capacity to plan expenditure over four years enabling the phasing of projects to ensure:
· Projects are deliverable with sufficient budget allocations;
· Projects that fail to be delivered can be replaced by projects that
can be delivered;
· Industry has greater certainty on projects in the Government’s
pipeline which will give them the confidence to build up resources
necessary to complete and deliver projects;
· Greater donor confidence in managing stable budgets and
capacity to deliver development and social programs.”8
This will substantially improve the certainty with which line ministries and provinces can plan their development activities. The multi-year Corporate Planning process will then have the necessary information on future resource availability to be able to plan more effectively.
The MTEF will then form the link between the NDS and Government’s macroeconomic strategies. The MTEF will require inputs from the MTFS and take into account revenue projections and debt management considerations - determining the projected levels of budget deficit under which the MTEF must accommodate recurrent and development budget allocations. The rolling four year MTEF will provide the medium term framework needed to plan development activities in a coherent and effective manner without the need for any macro-economic input from MDPAC, important given limited resources - see Section 9.2.
8.2.4 Corporate Plans
Corporate Plans are required from each ministry and are submitted for approval by OPMC. This process, with MTEF’s improved projection of resource availability, will be the key planning document for government funded development activities and donor funded activities will be coordinated with the Corporate Plans to give a complete picture of sectoral plans supporting the NDS.
The corporate planning process was approved by Cabinet in July 2004 and guidance was set out in the Handbook for Departments issued by OPMC in April 2005. The Handbook says it “is a guideline rather than an instruction” and allows “departments to exercise initiative in the preparation of corporate plans”9. Whilst the Handbook sought “to produce a degree of standardization and to define minimum acceptable standards” the lack of instruction and the flexibility allowed has failed to produce either standardization or minimum standards.
8 Policy No. 4.3.4 (a), page 53, Policy Translation Document, Bureau of Social and Economic Reforms, OPMC, 2010
9 Handbook for Departments, Section 3.2, OPMC, 2005
The proposals in the Handbook meet the needs for an effective link between NDS, ministries, MDPAC and budgets if they are enforced instructions for Core Corporate Plans rather than flexible guidelines. Proposals to do this are made in Section 9.4.
8.2.5 Provincial Plans
One of the critical linkages of the NDS is to the provincial plans. To improve this linkage, the three year, rolling provincial development plans should adopt similar structures and processes as the Core Corporate Plan.
All provinces prepare three year rolling plans as a result of progress made by PGSP. MPGIS is responsible for coordinating these plans and standardizing their contents. MDPAC will also assist this process with provinces and MPGIS, in cooperation with PGSP, to ensure that provincial plans are aligned to the NDS. MPGIS will consolidate these into three year development budget proposals and discuss with relevant ministries for inclusion in their corporate plans. In turn, the proposals included in the Corporate Plan process will be included in the three year rolling Medium Term Development Plan (MTDP) prepared by MDPAC. To facilitate this planning process the following will be applied:
· Provinces should use the NDS as a reference in preparing their own plans,
applying the provincial priorities in recognition of the unique characters
and opportunities of each province.
· The provincial planning process should follow closely the budget and NDS
processes and schedules.
· All provinces should adopt a calendar year as their financial year to bring
it in line with the central government budget processes.
· The planning process in the provinces should be reviewed to adequately
reflect the views of the wider communities.
9 Project Cycle Management and MDPAC
9.1
Project Cycle
10
Most donors and development partners operate Project Cycle Management following formats substantially as indicated in Figure 14 - variations being of form rather than substance. The cycle is an ongoing process with multiple projects programmed and completed each year.
Donors often program activities at intervals of about 3 years - the country strategies which provide an opportunity for alignment of NDS and donor objectives. Whilst there may be coordination between several donors it is expected that SIG will continue to agree country strategies and programmes (under different names) with each individual donor.
Activities included in the country strategies will not usually be completed within three years. Once programming is agreed, time is needed, first, to identify activities to implement the strategy and secure concept approval before moving on to the time and resource consuming process of project formulation. Once formulated, projects need to be objectively appraised and recommendations made as to whether to
10 Though named “project cycle” the cycle applies equally to programmes and sectoral plans, including SWAPs.
proceed. Even after the country strategy/programming is agreed the time taken to get an agreed project design is likely to be 2 to 5 years.
Mobilisation after approval can take some time and then implementation is unlikely to be less than 5 years and possibly significantly longer for some programmatic modes, such as Multi-tranche Financing Facilities. So the whole project cycle for each individual programme may typically be 8 to 10 years but in some cases much longer.
To be an effective development partner, MDPAC and other government agencies need to acquire the skills to participate in each stage of the project cycle. This requires effective contributions to the process, not simply attendance at steering committee meetings.
The proposed role of MDPAC in linking NDS objectives to development activities is indicated for each stage of the project cycle in Figure 14, consistent with the discussion at 8.2.2. MDPAC is the central agency for development planning and has a brief for the planning functions of both line ministries and provinces. Complementary planning responsibilities include those of OPMC for Corporate Plans of all ministries, MPGIS for Provincial Plans, and MoFT and CBSI for macroeconomic planning and inputs to the MTEF and programme costing (see Figure 21).
Under MDPAC leadership, the central and line/implementing agencies should be responsible for promoting congruence between donors and government to enhance alignment to NDS objectives, consistent with priorities expressed in government policy documents. This will increase the effectiveness of development partnerships. Procedures for Project Cycle Management will be developed and guidelines presented to Cabinet for approval. Simplified Project Cycle Management activities may be outlined as:
Policy and Programming
MDPAC, OPMC, MPGIS, MoFT and relevant lines agencies and provinces will participate in high level discussions and negotiations with the donor(s) at the Policy and Programming stage to align donor participation to the NDS and the priorities of Government. In addition to the nature and number of activities to be programmed, it
will also be necessary to agree an indicative financing plan for each activity including SIG and donor contributions, in grants and loans, over the expected lives of each activity, i.e. up to 10 years and more.
Project Identification and Formulation
Activities included in the country programme will require varying degrees of “identification” depending on prior preparatory work - some simply updating earlier designs and some being completely new. This work should be led by the donor and line agency with MDPAC in a monitoring roll, along with OPMC for national projects and MPGIS for provincial projects. In all cases the identified design will be subject to review to ensure alignment with the NDS and continued consistency with the agreed financing envelope before proceeding to Project Formulation.
Formulation will continue under the technical leadership of donor and line agency with MDPAC and OPMC or MPGIS in a monitoring role. Any issues which may influence the financing requirement, e.g. unexpected technical obstacles increasing costs, decision to increase the project area etc, would require early agreement of donor and MoFT on any changes in finances prior to completion of formulation.
Project Appraisal
Donor procedures will include some form of appraisal prior to approval to proceed and SIG should also apply its own appraisal process to both donor and SIG funded projects. MDPAC will be responsible for formal Appraisal of the designed project and recommendation to government for final approval. Appraisal, including as input to analysis of financial and economic viability, should include detailed costs (see Section 9.3.2) and a final financial plan including grants, loans and SIG funding confirmed by MoFT and the donor.
Project Financing
After the appraised project is approved it is necessary to negotiate with the donor to finalise financing and loan agreements as well as the detailed project/programme implementation and administration arrangements. Financing aspects will be led by MoFT to complete the financing arrangements developed since the initial Policy and Programming stage with the participation of MDPAC and implementing/executing agencies.
Project Implementation
Implementation will be led by the line agencies acting as executing and implementing agencies, with MDPAC and OPMC or MPGIS as members of the Steering Committee throughout implementation. During this time MDPAC will be responsible for the coordination and monitoring activities described in Section 9.2.
Project Monitoring and Evaluation
Donors and MDPAC will ensure that project design includes a Monitoring and Evaluation Framework for each project which effectively records inputs, outputs and - to the extent possible - achievement of outcomes during implementation and enable implementing agencies to continue monitoring outcomes and impacts after completion.
9.2 MDPAC Structure for Project Cycle Management
A recognized weakness of previous plans has been the lack of any effective Monitoring and Evaluation (M&E). The MTDS 2008-10 included a substantial results oriented M&E framework but MDPAC does not currently have capacity to undertake such work. With UNDP support, MDPAC’s Aid Coordination Management capacity is being strengthened to address the previous lack of information on budgeted and actual inputs. For effective Project Cycle Management it will also be necessary to develop results oriented M&E capacity within MDPAC.
10 staff = now+ 5 13 staff= now - 2 9 staff = now +9
Figure 15 summarises the required activities within MDPAC if it is to cover the scope required by Project Cycle Management, with each departmental function briefly described in the sections below. A new department for M&E will clearly require additional resources, including possible transfers of existing staff.
The numbers of staff indicated for each department are simply based on the staffing of similar departments in PNG’s Department of National Planning and Monitoring, pro-rated to present development budget volumes, including the balance between bilateral and multi-lateral aid. Additional professionals are needed for effective ACM and M&E whilst the suggested reduction of 2 from planning does not reflect “excess resources” but a proposed refocusing of planning activities, discussed below.
The total additional 14 professional staff indicated is not possible under present budget constraints but is a medium term requirement if MDPAC is to effectively address the three Project Cycle Management activities. Achievement of the necessary capacity will require increased resources and equipment over a number of years.
9.2.1 Development Planning
Planning activities have included collection of donor development budgets, now transferred to Aid Coordination, and SIG development budgets, as well as strategic planning, sectoral planning and macro-economic planning. To focus planning and best use MDPAC’s specialist planning skills it is suggested that: (i) macro-economic planning be formally dropped, relying on MoFT and CBSI as required; (ii) the small SIG development budget activity be accommodated within the DAD in a consistent
format with the donor funded development budget; and (iii) technical leadership for sectoral and programme planning should be taken by line agencies with MDPAC providing specialist planning support.
Development Planning would then manage the first stages of the project cycle -Policy and Programming, Project Identification, Project Formulation, and Project Appraisal - and as part of that task will be responsible for the tasks in Sector and Programme Planning in Section 9.3 and Corporate Planning in Section 9.4, ensuring that minimum standards are applied and activities consistently aligned to the NDS.
The ACM management strategy in 9.2.2 proposes a range of coordination meetings within Government and between MDPAC and donors. It is suggested that planning issues requiring coordination and consultation be included as needed to fulfil Project Cycle Management. For planning coordination the key forums are likely to be meetings of: MDPAC with individual donors; MDPAC with other ministries and agencies; and SWAP meetings.
9.2.2 Aid Coordination
The “SIG Strategy for Aid Coordination and Management” 11 is currently being processed and is not repeated here. These proposals for MDPAC seek to build upon and complement those for ACM, highlighting two aspects of particular relevance to the Development Planning and proposed M&E tasks.
The ACM strategy proposes a set of multi-level consultations involving MDPAC, donors and other ministries. It is proposed to build this consultative framework to also address Planning and M&E needs in a holistic process of consultations and coordination. The full set of consultations proposed is:
· MDPAC with all donors: this apex consultation has lapsed and will be revived.
· MDPAC with individual donors: monitoring Partnership Agreements and projects.
· MDPAC with other ministries and agencies: checking the SI side of ACM in action.
· donor-to-donor on matters of common concern: MDPAC involved if requested.
· donors all together without SIG participation: MDPAC informed as courtesy.
· SWAP lead donor with SIG sector ministry and other donors: MDPAC in attendance.
The core of the Aid Coordination work is the Development Assistance Database (DAD) which, for the first time, will provide an accurate and up to date record of donor funded aid flows, including budgeted and actual expenditures by donor and activity. In addition to providing more accurate budget information this will also provide a complete picture of donor funded inputs, thus fulfilling the needs of input monitoring (see Figure 18) and allowing the proposed M&E function to focus on outputs and outcomes and, thus, aid effectiveness.
9.2.3 Monitoring and Evaluation
The Paris Declaration commits to “Managing resources and improving decision making for results.” Solomon Islands, as a partner country, committed to “Endeavour to establish results-oriented reporting and assessment frameworks that monitor progress against key dimensions of the national and sector development strategies; and that these frameworks should track a manageable number of indicators for which
11
Tony Hughes for MDPAC, Jun
e 2011
data are cost-effectively available”. The proposed Monitoring and Evaluation will develop and implement systematic results-oriented monitoring, focussing on outputs and outcomes. The proposed system will use two sources of inputs.
First, the logical framework planning (Section 9.3.1) requires every project and programme to include performance indicators at every level, including outputs and outcomes. Projects and programmes will be required to monitor implementation and detail achievement against the performance indicators. These M&E reports will be incorporated in the implementing line ministry’s Annual Report and Corporate Plan (see Section 9.4.2). MDPAC will establish an M&E framework for the NDS incorporating the project level performance indicators and M&E reports.
Second, M&E will also use a participative approach, similar in principle to RAMSI’s “People’s Survey”, to assess Solomon Islanders’ perceptions of achievement. This will provide a context for the formal monitoring activity and complement it with more qualitative views, like the “People’s Survey”, from those the NDS is intended to benefit.
The M&E unit will establish an M&E framework in the format suggested in Figure 16, identifying the indicator and the target as Key Performance Indicator, a specified source of the indicator, the use of the indicator and the responsible agency for providing the indicator. In this example, from the MTDS 2008-2010, published international sources are used for high level indicators of impacts, such as MDGs. Most of the Framework will be populated by output and outcome indicators from sectoral plans and programmes and the source will be the M&E activities of the plans and programmes. The framework for the NDS need not include every such indicator but should focus on indicators representative of progress and with emphasis on outcomes to stress the results oriented nature of the M&E.
The NDS is based on a consensus to guide future government objectives but also reflects the objectives of previous governments. So the M&E framework does not need to wait for implementation of programmes developed under Project Cycles initiated under the NDS. The M&E system can be established based on existing
programmes, indicating the NDS objective to which they are aligned and learning at the earliest date which interventions are most effective in delivering results.
MDPAC will produce the apex Performance Evaluation Report, building on the ministries’ Annual Reports at sector level which, in turn, will build on the programme M&E reports. The Performance Evaluation Report will follow the generally used guidelines of the Organisation for Economic Cooperation and Development-Development Assistance Committee (OECD-DAC) approach, emphasising the criteria of Relevance, Effectiveness, Efficiency, Impact and Sustainability.
9.3 Sector and Programme Planning
9.3.1 Logical Framework Planning
Principles
Most donors and development partners employ Logical Frameworks. Different names are used and there are differences in presentation but no differences in substance. It is proposed that MDPAC, line agencies and provinces develop capacity for Logical Framework planning and that this is then used as the tool for coordination with donors in the Project Cycle Management activities.
UNESCAP prepared a Solomon Islands Project Planning Guide in 200612 using the Logical Framework. Like the Corporate Planning Handbook of 2005, this guide has also never been implemented but, with some adaptations for the specific context of coordination with development partners, it can form the basis for use of Logical Frameworks to make the NDS links effective.
The use of the Logical Framework is appropriate for every stage of the Project Cycle as it imposes a similar logical structure and discipline from project identification through formulation to monitoring and evaluation - for which it provides measurable performance indicators and targets. As a standard methodology it is easy for planners to use and for other planners to understand and identify the plan logic/structure and assess whether the logic and the assumptions and risks are likely to work.
12
SI Project Planning Guide, UN-ESCAP Pacific Operations Centre, Sept 2006.
58
Figure 17 presents the logic in a framework of 4 standard columns and five rows, reflecting the program design. The logic can be simply stated as:
· IF these inputs are made AND these assumptions hold true and these risks are avoided THEN these activities can be undertaken; · IF these activities are undertaken AND these assumptions hold true and these risks are avoided THEN these outputs can be achieved; · IF these outputs are achieved AND these assumptions hold true and these risks are avoided THEN these outcomes will result; · IF these outcomes are achieved AND these assumptions hold true and these risks are avoided THEN these impacts/ national objectives will be achieved.
The middle two columns enforce the logic in the plan design by requiring quantified performance targets AND identification of monitoring mechanisms which can be used to assess performance against these targets and indicators.
Practice - Alignment with NDS Objectives
The logic demanded by the framework places discipline on those designing the project to produce a robust design which is effectively aligned to NDS objectives and medium term plans of government. This discipline and use of the framework in all stages of processing - including MDPAC’s appraisal and recommendation - will improve the quality of development projects and increase alignment to the NDS.
The logical structure facilitates alignment of all development projects, programs, sectoral plans and SWAps towards the NDS objectives and government policies and priorities, whether with development partners or purely SIG designed and funded projects. Figure 18 illustrates the logical framework proposed to align all development activities to the NDS.
All development projects must adopt one of the NDS National Objectives as the Impact of the project or program. Impacts, like National Objectives, are long term and will not be achieved by a single project or program but through the implementation of the complementary policies and strategies of the NDS.
Outcomes are nearer-term benefits than the National Objectives. The framework can be further aligned to government policy and priorities by using agreed medium term (5-10 years) objectives of Government policy documents, e.g. National Transport Policy, or sector strategies.
The Outputs are the immediate results of the development activities described in the Activities section. Inputs summarise the financial resources required and is the point at which availability of resources from the development budget, donors and development partners is addressed in Aid Coordination and Management.
9.3.2 Detailed Costs and Financial Plans
The Inputs included in the framework are very summary but rely and build on much more detailed costs and financial plans.
Planning and decision making are made much more effective by use of standardised formats, as with the Logical Framework and the set of Corporate Plans, Annual Work Plans, and Annual Reports in 9.4. A standardised format for costs and financing is also preferable and must be capable of meeting all the requirements of project costing:
· financial and economic costs over the project life, including implementation and operation and, thus, development and recurrent costs, are required to establish the cash flows needed to assess financial and economic viability of the activity;
· a full set of costs, including physical and price contingencies, is needed for financial planning for the whole project, for each year, and for each line item - who will pay for the extension staff? who will pay for the extension materials? who will pay for the 4WD vehicles needed?
· the full costs need to be expressed in physical quantities and unit rates not only to provide more accurate costs but also to guide implementation and as the basis for financial monitoring - is a cost over-run due to higher prices or wasteful use of staff or materials?
· as a minimum, the detail of the costing needs to be compatible with the chart of accounts used for government finances so that project and
programme plans can be readily carried forward to Corporate Plans and budget submissions.
The World Bank has developed a costing model - COSTAB - which meets these requirements and is used by other development partners. This has the advantage of being a freely available and effective tool, producing standardised outputs as indicated below. Some such tool is needed to ensure rigor in the financial planning and implementation of projects.
Figure 19: Format for Financial Plan by Component
(US$ '000) Government ADB EIB NSA Total
Amount % Amount % Amount % Amount % Amount %
The summary formats, such as that in Figure 20 allow definition of any number of components in the activity - matching the structure of the Log Frame - and any number of sources of finance and financing conditions, including interest charges, commitment fees, front end charges and so on. These financing costs are calculated within COSTAB to give a consistent calculation and presentation from every project preparation activity.
Detailed Cost Tables, too large to reproduce here, calculate and present breakdowns of unit costs and rates, annual schedules of cost, currency of expenditure, impacts of projected inflation, source and quantity of finance for each line item, taxes and duties. These provide a detailed database which can output numerous tables, including the Detailed Cost Tables with selected data columns, in Excel spreadsheet formats readily usable by all.
Base Cost
A large number of formats can be designed or standard tables used, such as “expenditure accounts by year” in Figure 20. The tables can be presented, as here,
with base costs for each expenditure account with physical and price contingencies identified separately, or with contingencies included in total line item costs.
The expenditure accounts A to L in the example can be standardised on the Government chart of accounts and the annual schedules can be produced for the whole cost for the line item or sub-divided to show the share of the costs funded by each financier. This table for the SIG financed part, with the Government’s chart of accounts, can immediately feed forward to the Corporate Plan and Budget Process.
Taxes and foreign exchange costs are also calculated as inputs to macro-economic planning. The taxes paid by the project are usually treated as part of the Government’s financing share even though the revenue and expenditure implications balance out to zero.
The tax and duty rates for each line item are included in the model - and will be standard for all project and programme costing. Inputs from macro-economic planning are also required for projections of local and foreign inflation rates and exchange rates, in the format indicated in Figure 21. Foreign inflation projections are readily available from the World Bank’s 10 year projection of the Manufacturers Unit Value Index (MUV). Unfortunately, similar 10 year projections, needed to cover implementation and at least initial operations, are not produced for local inflation or exchange rates and the present policy targets (see Section 3.3) are too general in format to be used, e.g. inflation at less than 10%.
MDPAC, as the mandated planning agency, should identify a source of 10 year local inflation projections which can then be used by all planning activities to maintain consistency. The COSTAB model will itself make the necessary projections of Purchasing Power Parity exchange rates to ensure that multi-currency costs and financing plans remain reasonably realistic.
9.4 Corporate Plans and Budget Processes
9.4.1 Government Corporate Plan and Budget Process
The Cabinet approved Corporate Planning process, referred to in Section 8.2.4, is an integrated, three year rolling plan for each Ministry with OPMC supervising the corporate plans and setting the priorities and broad directions as a context for the budget submission. As indicated in Figure 22, the process includes the Annual Work Plan, to detail the use of budgeted funds in the year ahead, and the Annual Report,
to feedback performance on the delivery of services and the achievement of objectives.
Figure 22: Integrated Corporate Planning Process
Second Quarter Third Quarter Fourth Quarter First Quarter
Government
Ministry
Ministry
Ministry Annual
Ministry Annual
The budget orientation of the 2005 Handbook is very much towards the recurrent budget with the development budget as an after thought. Practically, the government funded development spending in 2005 was non-existent but in 2011 is budgeted at SBD 500million and actual estimated spending in 2010 was SBD 263million. Rather than an after-thought, the development budget requirements and performance targets should be distinguished from the recurrent.
Further, to be an effective link in NDS implementation, the Corporate Plan of each line ministry needs to reflect the whole of the ministry’s activities, including donor funded activities, so that Corporate Plans reflect the contribution to implementation of government policies and strategies rather then simply a stage in the budget process - essential though it is to maintain and improve this function.
Building on the 2005 Corporate Plan format and the present 3 year Development Budget projections Figure 23 suggests a format for Corporate Plan financial projections for possible adoption by OPMC.
The 2004/5 corporate planning process was intended to correct weaknesses in earlier processes, particularly the lack of attention given to the availability of resources to implement planned activities. It is proposed that the Corporate Plans be developed to better accommodate: (i) the majority development funding by donors, so that the OPMC prioritised Corporate Plans are more complete planning documents; and (ii) respond to the 4 year rolling MTEF by requiring more robust projections of development expenditures to complement those of donors.
9.4.2 Core Corporate Development Plans
Reviewing many existing corporate plans suggests that the intended “minimum requirements” are often missing and that their scheduling and content is not consistent with the Handbook proposals. It is proposed that requirements are enforced so that all Corporate Plans are three year rolling plans, updated annually and have Core contents in a standard format. This standard format will ease review between ministries and year to year but particularly will produce standard financial schedules, performance reports and the like to be carried forward to budget submissions and MTDP. Building on the previously proposed minimum contents it is proposed that the Core Corporate Plans should include:
Policy Context
This will identify the NDS objectives and policies which the ministry will support through its corporate plan and will also refer to the other government policies which it is seeking to implement, such as those from the Policy Translation Document and approved sectoral plans and programmes.
Solomon Islands: National Development Strategy 2011-2020
64
Performance Report
The Annual Report will report on performance of the previous year’s development activities, comparing actual results to target indicators. The Report will explain performance, particularly addressing adverse variances and indicating corrective measures to be taken in implementation. The report included in the Corporate Plan should include any subsequent information and report on corrective measures included in the Corporate Plan.
Ministry Policies and Strategies
The discussion of policy context will lead in to a statement of the rationale for the development activities proposed and indicate priorities and choices being applied. This will include proposed changes in policies, strategies and priorities in response to the Performance Report and changed conditions. The review by OPMC will include confirmation that the priorities and choices reflect those of government and, if not, suggest changes.
Development Expenditures
This will present the whole of ministry development activities based on both donor and government funded programmes. It will include a table grouped by each program, expenditure category and financier and covering as a minimum the present year’s estimated actual expenditures, the next budget year and two subsequent years.
The table should include all on-going and completed projects for which expenditures were incurred in the period as well as projected expenditures in the period. A second table should extract the government funding required each year as preparation for the development budget submission.
Development Results
The time bound performance indicators of activities, outputs, outcomes and impacts derived from Logical Frameworks of development activities should be presented as a summary Monitoring and Evaluation Framework for the corporate plan period.
Facilitated by the MTEF, it is expected that an increasing proportion of government development expenditure will become more programmatic and be formulated on a Project Cycle basis using Logical Frameworks. For activities undertaken without such preparation a set of time bound performance indicators must be included in the M&E Framework and justified at the commencement of the activity.
9.5 Medium Term Development Plan
Reporting and supporting implementation of the NDS, MDPAC will annually produce its contribution to the set of 3 year rolling plans in the form of a Medium Term Development Plan (MTDP. This will link together the Corporate and Provincial Plans and the Medium Term Expenditure Framework to provide a complete report on implementation.
Much of the MTDP will be based on an edited consolidation of other documents, each contributing through the links to the NDS. The proposed format for the MTDP is summarised below and would provide a concise statement, in a readily accessible and standardised format of achievements to date and development activities planned and funded over the next three years.
Performance Evaluation
This section would present findings output from the M&E unit activities described in Section 9.2.3 to present performance during the previous year and building on the ministries’ Annual Reports.
The report would highlight good examples to be followed and underperformance to be corrected related to the criteria of: Relevance, Effectiveness, Efficiency, Impact, and Sustainability. The measures proposed to correct underperformance would be stated and explained. Ministry Annual Reports and Corporate Plans would address every activity and project whilst the MDPAC report will take a wider view of programmes, sectors, and NDS Policies and Strategies.
Priorities, Policies and Strategies
This section, from the Development Planning unit, will summarise changes in priorities, policies and strategies within the context of the NDS. Priorities will be as expressed by Government primarily in new policy statements, the Policy and Programming stage of the Project Cycle, and preparation of sector plans.
Adjustments of policies and, especially, strategies may arise from feedback from performance evaluation, changed circumstances, or new information developed during the Project Formulation stage. MTDP would briefly state the reasons for such changes and indicate their impact on achievement of NDS objectives.
Funding and Aid Coordination
This section, from the Aid Coordination unit, will summarise donor funding activities over the previous year and projected funding over the next three years, drawing on information in the Development Assistance Database (DAD).
The section will also highlight important issues in Aid Coordination raised and addressed by the multi-level consultations described in Section 9.2.2. In particular, it will present problems which are hindering coordination and/or aid delivery and indicate measures taken or to be taken in order to improve coordination and better achieve NDS objectives.
Development Programmes
This section will be a joint output of Development Planning and Aid Coordination, drawing on the Corporate Plans and DAD.
Individual development programmes would appear the annual MTDP for five or more years and need not be described other than in a very summary manner, perhaps with a cross reference to the relevant planning document, such as an appraisal report.
Details of each development programme would be presented in the format in Figure 23, taken from the relevant Corporate Plans with aid inputs checked by Aid Coordination unit, with line items summarised to components and major subcomponents (if any) of each development programme.