Vanuatu
Prospects for the Post-pandemic Tourism and Economic Recovery in Vanuatu
Inclusion inspires global financial agenda but how does it fare in the small Pacific island economies? The case of Vanuatu
The objective of this study is to fill a gap in the expanding literature on country-specific regional and global financial inclusion. This is the first study in which the issue of inclusion in the context of the Pacific island economies is systematically investigated. Using Vanuatu as a case and recently available demand side survey data provided by the countrys central bank the results of the study indicate that exclusion is mainly voluntary. Determinants motivations and barriers of financial inclusion in Vanuatu are discussed using a range of controls. The use of a formal bank account is more popular in Port Vila and Luganville compared to other regions of the country. Higher income better education and age are positively associated with greater use of formal accounts. Women are more likely to have general savings and formal credit compared to men. However regardless of the ownership of a bank account women are more likely to report savings over the past 12 months and make deposits and withdrawals from their bank accounts more frequently. Policy implications are discussed.
In Vanuatu, ‘market mamas’ are taking care of business
The island nation of Vanuatu is surrounded by bright blue ocean so it should come as no surprise that tourism makes a hefty contribution to the country’s economy. That model was disrupted in March 2015 when Cyclone Pam struck devastating the country and its tourismdependent income. Its recovery from that natural disaster has been assisted in no small part by the hands of women whose livelihoods depend on tourism dollars.
Harnessing Agricultural Trade for Sustainable Development: Vanuatu Cocoa and Coconut
The study builds on the National Green Export Review (NGER) of Vanuatu and leverages UNCTAD expertise in key analytical areas including non tariff measures voluntary sustainability standards (VSS) the trade agriculture gender nexus and pro poor structural rural diversification through trade. Invaluable support was provided by the Government of Vanuatu in particular the Department of Industry which generously shared information facilitated multi stakeholder consultations and reviewed the final draft. The information in this report has been gathered from various sources including interviews with key stakeholders in the country. To this purpose missions were carriedout in Port Vila Vanuatu in 2017 and 2018. Interviews were conducted with public and private stakeholders including representatives from the Department of Industry the Department of Agriculture and Rural Development the Department of Women’s Affairs the National Statistics Office the Government Chief Information Officer the private sector International Organisations and the donor community.
Acknowledgements
This publication was prepared by the Trade Environment Climate Change and Sustainable Development Branch of the Division on International Trade and Commodities of UNCTAD. The principal authors were Maria V. Sokolova Rodrigo Saavedra Zepeda and Eugenia Nuñez who also lead the team of authors under direct guidance of Marisa Henderson and supervision of Lucas Assuncao Pamela Coke-Hamilton and Shamika Sirimanne.
Policy recommendations
Vanuatu is at a critical juncture in its development pathway: the country needs to dynamise and transform its rural economy by building on its small-scale and diversified farming system and leveraging traditional agro-ecological approaches. Expanding on the NGER this study has outlined upgrading trajectories in the cocoa and coconut sectors that amplify the competitive strengths of small-holder agriculture leverage agro-ecological practices and place emphasis on women’s roles and knowledge. These trajectories combine social welfare objectives (food security and nutrition and social inclusiveness including gender equality) environmental goals (protection of biodiversity and climate-change resilience) and economic objectives (increased income). They cater to both domestic and export market outlets. They show how trade can drive transformational systemic changes at the local and national level towards achieving inclusive sustainable development beyond aggregate welfare gains.
Sustainability outcomes
The goal of this report is to assess the social inclusiveness and pro-poor sustainability of efforts to upgrade expand and diversify the cocoa and coconut sectors in Vanuatu. Specifically the analysis screens trade upgrading and diversification policies in the two sectors for their potential to either benefit or negatively impact the goals and targets embedded in the country’s NSDP. Called “Vanuatu 2030: The People’s Plan” it is the country’s highest-level policy framework. It provides an inescapable normative benchmark for assessing the legitimacy of trade policy options. The Plan charts a holistic development path that strikes a balance between the social environmental and economic pillars of sustainable development. Tailoring the 2030 Agenda to Vanuatu’s context the Plan re-assesses material wealth objectives through Melanesian values of respect harmony unity and forgiveness and brings to the forefront of policy discourse intangible values and communal assets.
Upgrading trajectories in cocoa and coconut: Opportunities and challenges
As previously mentioned Vanuatu faces a pressing need to dynamise its traditional rural economy. The challenge is not just to expand the existing agricultural system but also to instigate a pattern of structural rural transformation. This entails raising agricultural incomes while generating non-farm income opportunities in rural areas. Value-addition and diversification in the cocoa and coconut sectors can catalyse this structural rural transformation process both products offering as noted in chapter 3 a range of market outlets and several diversification options. There is significant room for harnessing synergies between agricultural upgrading agro-processing handicraft and tourism. Viable commercial options to unlock this potential in cocoa and coconut include any one or a combination of: product differentiation through organic certification; compliance with sustainability standards; indications of origin and branding/ packaging strategies; downstream agro-processing into higher value-added products (e.g. artisanal VCO and grated coconut; personal care products; artisanal chocolate); valueaddition to marketable by-products (husks and shells); and commercialisation of related handicraft production. Demandside coordination mechanisms can kick-start the process. Boutique export outlets the hospitality industry (hotels restaurants cruise lines etc.) and to a different extent the biofuel sector are key demand factors that can spearhead the transition towards a more diversified rural economy in Vanuatu. However as pointed out below while they offer viable options to harness the synergies between traditional subsistence modes of production and the rural non-farm economy a certain number of pre-requisites need to be fulfilled to enter export niche markets.
Introduction
Since the vast majority of Vanuatu’s inhabitants live and work in rural areas rural development is the main driver of poverty reduction and will be essential to achieving Sustainable Development Goals (SDGs). It is anticipated that raising rural incomes to the level of urban incomes will help reverse the current pattern of rural-urban migration that is fuelling unsustainable urbanisation in Vanuatu.
Executive Summary
This study is part of a series of UNCTAD publications that focus on upgrading and diversifying specific agricultural sectors of rural economies in developing countries with a view to raising living standards among small-scale farmers in a context of sustainable development female empowerment and food security.
Country overview anddevelopment background
The analysis in this chapter provides a brief country overview and singles out the key socio-economic vulnerabilities and environmental issues to set the stage for the ensuing sectoral analysis.
Cocoa and coconut: Commodity chain overview
UNCTAD’s National Green Economy review (NGER) for Vanuatu has identified coconut and cocoa as dynamic sectors in which the country has a clear comparative advantage. According to the NGER the two sectors offer significant opportunities for downstream processing and increased export value through product differentiation including organic certification. The impacts on sustainability of upgrading trajectories in cocoa and coconut are assessed in chapter 4. To inform the analysis it is important first to consider key aspects of the domestic production and marketing chain. Indeed technical details about farming structures marketing channels and processing techniques are of major importance in assessing social inclusiveness food security and environmental impacts. Detailed assessments of Vanuatu’s cocoa and coconut chains have been carried out elsewhere (AECOM Services Pty Ltd. and PHARMA 2016; Pacific Agribusiness Research & Development Initiative 2011; Pacific Agribusiness Research & Development Initiative 2012; UNCTAD 2014a; UNCTAD 2016). Suffice it here to recall some of the main features of cocoa and coconut production processing and marketing that have a significant influence on the analysis in the following chapters.