OP-Ed by Sameer Chand and Lasse Melgaard
Fiji recorded its strongest post-independence period of economic growth in the decade before COVID-19, underpinned by rising productivity and investment, political stability, and a booming tourism industry. While the impact of the pandemic lingers, amid a climate crisis that remains the defining challenge of our time, there are enormous opportunities that can usher in a new era of shared prosperity for Fijians.
The pandemic has taken a heavy toll on Fijians. Lives and livelihoods have been affected, and supply chains disrupted, reversing much of the country’s recent development progress.
Fiji, together with other Pacific Islands countries, is also on the frontline of the climate crisis. Extreme weather events are occurring with increased frequency and ferocity, with 14 cyclones having struck the country since it signed the Paris Agreement. That includes Tropical Cyclone Winston in 2016, the most intense cyclone recorded in the Southern Hemisphere to date, which wiped out over a third of Fiji’s GDP.
Yet most houses in Fiji remain uninsured against disaster risk, while many firms are located in disaster-prone areas with limited insurance coverage. Critical infrastructure is often in climate sensitive location such as coastal areas. An estimated FJ$9.3 billion (US$4.65 billion) is needed to address Fiji’s climate-change exposure by 2030.
The combined economic damage of the pandemic and increasingly extreme and costly weather events make clear that Fiji must nurture new and emerging growth sectors. In the short run, recovery oftourism must be supported, but over the medium to longer term, promoting economic diversificationwill be key, including within the tourism sector itself, as well as leveraging Fiji’s geographic location and natural endowments.
Against this backdrop, we believe there are many reasons for optimism. Fiji can create climate resilient growth and the better jobs that Fijians need. The time is ripe for Fiji to build back better in the wake of this pandemic and the devastation climate change is inflicting on the country.
The Country Private Sector Diagnostic (CPSD), a flagship report by International Finance Corporation (IFC) and the World Bank, highlights Fiji’s potential and how diversifying its economy and developing a more robust private sector can help produce a more resilient growth model, more capable of withstanding external shocks – spanning the climate and the possibility of future pandemics – while supporting the nation’s ambitions.
Central to Fiji’s sustainable growth strategy is unlocking new sources of growth beyond tourism. With fiscal space limited, private sector financing is necessary to deliver the bold solutions Fiji needs.
The World Bank, like many other partners, has been supporting Fiji’s ongoing COVID-19 response and recovery efforts for example through support for the health sector; supporting cash benefits delivered through the Fiji National Provident Fund; as well as building Fiji’s resilience to future economic and climate-related emergencies. However, given the ongoing global pandemic and threats of natural disasters, a lot more needs to be done. As Fiji navigates its way through the new norm with its borders now open, opportunities for innovative solutions in the private sector are indeed worth exploring.
The CPSD outlines how Fiji can diversify its economy, but in particular underscores the benefits that will come from building on Fiji’s standing as a modern hub for the South Pacific and connecting smaller island states to each other and major trading partners. With its central location in the Pacific and strong transport links, Fiji can aspire to consolidate its role as an engine for economic development in the region.
A focus on healthcare, agri-logistics and outsourcing services (OS) in particular can generate more and better jobs, especially for women and youth. Indeed, in Fiji it is women and young people who have historically faced greater unemployment and were hardest hit, economically, by COVID-19. And while women are a growing majority in higher education, their representation in Fiji’s workforce is disproportionately lower with the gap wider in Fiji than other Pacific Island countries.
A greater emphasis on these industries would accelerate digital transformation and deliver digital dividends in Fiji, that could have economy-wide spillover effects and attract further private-sector investment in the next three to five years.
The OS sector has significant potential. A friendly service culture, competitive labor costs and proximity to regional markets, including Australia and New Zealand, already make Fiji attractive. Further development of the sector would enable the country to tap a global OS market estimated at nearly FJ$2.1 trillion (US$1 trillion). Outsourcing could also create jobs for Fiji’s young population—around half are under 27 years of age—including the significant number of increasingly tech-savvy university graduates.
Fiji has experienced harsh economic shocks, putting the nation at a challenging, yet opportune juncture.
By harnessing the potential for greater private sector led growth, Fiji can position itself to deliver a more prosperous, clean, and equitable country for all Fijians, and for the next generation.
*Sameer Chand, Acting IFC Resident Representative to Fiji, Kiribati, Samoa, Tonga and Tuvalu.
*Lasse Melgaard, World Bank Resident Representative
SOURCE: IFC/WORLD BANK/PACNEWS