Development assistance in the Pacific
Pacific regional – economic growth and private sector development
This page gives an overview of Australia’s work in the Pacific economic sector under Pillar 3 (Economic Recovery) of Australia’s Partnerships for Recovery: Australia’s COVID-19 Development Response.
Working with Pacific partners to build a region that is secure, stable and economically strong is one of Australia’s highest foreign policy priorities. Closer integration among Pacific countries, and with larger economies such as Australia, is essential to the region’s long-term economic prospects.
Australia’s response to COVID-19
Strict border measures have been largely effective in reducing the health impacts of COVID-19 in much of the Pacific. However, combined with lower demand for Pacific exports and a collapse in tourism, border closures have come at a high economic cost for many in the region.
The Partnerships for Recovery: Australia’s COVID-19 Development Response [PDF] strategy sets out how Australia’s development efforts will work alongside the full suite of our national capabilities—diplomacy, defence, security, commercial links, scientific skill, people-to-people ties—to address the challenges of COVID-19 in the Pacific and beyond.
Australia has committed $304.7 million to deliver critical financing to the Pacific and Timor-Leste to help mitigate fiscal crises, maintain critical social services, protect the most vulnerable people, and support economic recovery.
Australia has reopened Pacific labour mobility, working with industry and whole-of government partners to identify additional sectors and new pathways for labour mobility to Australia. We support the continuation of remittance flows to the Pacific, and meet labour market needs in rural and regional Australia. More than 3,000 workers have been recruited under the Seasonal Worker Program and Pacific Labour Scheme from September 2020 – March 2021, following National Cabinet agreement to re-start recruitment in August 2020.
We will support the implementation of the Pacific Agreement on Closer Economic Relations (PACER) Plus to boost regional trade and investment. PACER Plus will play a role in economic recovery and strengthening the rules-based system that underpins international trade.
We will support inclusive skills development across the region through the Australian Pacific Training Coalition (APTC). We will adapt training to ensure future offerings reflect the new needs of Pacific employers, including digital literacy, and those industries hardest hit by COVID-19, and maximise the opportunities created by labour mobility.
Our partnerships with multilateral development banks and International Financial Institutions (IFIs) will support Pacific nations to access global finance. By August 2020, 46 per cent of the USD1.5 billion requested from the IFIs by Pacific countries had been approved or disbursed.
Australia will continue to work with Pacific island governments, the World Bank, ADB and the United Nations to access finance, policy and technical assistance and improve crisis response and multilateral system reform to build back better.
- Support for private sector development
- Banking and financial inclusion
- Trade promotion
- Strengthening economic governance
- Multilateral engagement
Support for private sector development
Australia invests in a number of programs that support economic growth in the Pacific including in the fisheries sector. Tuna fisheries are major source of revenue for Pacific island governments and growing local fish processing and employment is a high priority in the region. Australia’s fisheries assistance supports sustainable management at the national and regional level as well as work to improve the business-enabling environment in the Pacific. This includes support for businesses that are important to growth, connecting investors with Pacific business opportunities and supporting the Pacific derive maximum benefit from their fisheries through regional trade and investment opportunities.
Pacific Biosecurity Partnerships Program
$4.4 million, 2020-2024
In response to growing biosecurity threats in the Pacific and the Australian Government’s priorities in the region, the Department of Foreign Affairs and Trade and the Department of Agriculture, Fisheries and Forestry have entered into the Pacific Biosecurity Partnerships Program. Aimed at enhancing Australia's contribution to Pacific agricultural sector growth and improving food security through better market access and biosecurity outcomes, the partnership seeks to:
- Support safe trade in plant products from the Pacific region to Australia by addressing regulatory issues and improving export pathways thereby increasing returns to rural communities and exports. This will enable Pacific trade and market access issues to be actioned as a priority by the department and support completion of training and mentoring, risk assessments and development of import conditions.
- Implement International Plant Protection Convention (IPPC) Generic ePhyto National System (GeNS) to a number of South West Pacific countries that do not have the capability via this national system to produce and receive ePhytos. This will allow Pacific countries to exchange phytosanitary certificates electronically in an innovative, cost effective and globally harmonised way to enhance Pacific countries international market access and trade.
- Develop and deliver a plant export pathway operational training program to strengthen Pacific Island countries biosecurity operational capabilities. The training will target staff within Pacific National Plant Protection Organisations (NPPOs) and stakeholders along the plant export pathway to meet the phytosanitary requirements of importing countries for plant products and reduce non-compliance incidences. This will reduce wastage and remedial costs and boost the return on investment to rural communities and small exporter businesses.
- Implement the regional trade and market access communication strategy to improve the way we manage and coordinate our communication activities. We are implementing ways to improve how, what and when we communicate with the region to build respectful, collaborative connections with exporters, plant and animal scientists and biosecurity and trade officials.
- Work with the Pacific Community (SPC) to upgrade the Pacific Island pest list database. The database will become the trusted primary source of data on plant pests, plant hosts and pest distribution for the region and international trading partners to use during the import and export of plant products. This information is required to develop pest risk analysis, facilitate trade, and manage biosecurity risk in accordance with international obligations under the IPPC.
- Build capacity to assist countries in the region in establishing the sea container offshore quality system and raise awareness of the importance of sea container cleanliness.
The partnership will focus predominantly on Papua New Guinea, Fiji, Solomon Islands, Vanuatu, Tonga, Samoa and Timor-Leste, but will also involve other Pacific island countries, particularly the ePhyto component. The partnership will play an important role in operationalising Australia's PACER Plus commitment to facilitating trade with Pacific Island countries. The partnership will work closely with the Australian Pacific Horticultural and Agricultural Market Access Program (PHAMA).
Pacific Horticultural and Agricultural Market Access (PHAMA) Plus
Up to $52.9 million, 2018-2026
The Pacific Horticultural and Agricultural Market Access Program (PHAMA) Plus program is the successor program to PHAMA (2010-2017), initially assisting Papua New Guinea, Fiji, Tonga, Samoa, Vanuatu and Solomon Islands. As small island states ratify PACER Plus, the Program has also commenced engagement with them. PHAMA Plus is now operating in Kiribati, Cook Islands and Niue and is in the process of shaping a program of engagement for Tuvalu, where PACER Plus came into force on 3rd April 2022.
By the end of its first phase, PHAMA Plus had benefited 308,000 households through increased income (earned or protected), against an original target of 200,000 households. A significant proportion of this benefit was attributable to PHAMA Plus African Swine Fever containment work in PNG through a partnership with the National Agriculture Quarantine and Inspection Authority (NAQIA).
As PHAMA Plus moves into its second phase, the focus of the Program will remain on facilitating increased agricultural and horticultural exports through sustainable partnerships with public and private operators and on protecting income and livelihoods from biosecurity threats, which continues to include ASF but also extends to Fall Army Worm, Coconut Rhinoceros Beetle and Foot-and-Mouth Disease.
Increased emphasis is being placed on interventions that capture opportunities to support Women’s Economic Empowerment, Youth and People with Disabilities in prioritised sectors. A number of businesses led by women will be included in the investment portfolio over the coming four years, building on existing women-led businesses supported by PHAMA Plus in PNG, Vanuatu and the Solomon Islands.
PHAMA Plus is strongly associated with support to the kava sector in multiple Pacific Island countries and the program continues to support the implementation of the Australian Government’s commercial kava export trial. Ensuring the environmental sustainability of kava production is an important focus of PHAMA Plus support during its second phase and in other sectors where environmental pressure and climate change represent a risk to export revenue, rural livelihoods and food security across cocoa, coffee, coconuts, root crops, fresh produce and other commodities where PHAMA Plus is active.
With partnerships established with Australia’s Department of Agriculture, Fisheries and Forestry and collaboration agreements with other DFAT-funded programs in the Pacific, PHAMA Plus emphasises the need for, and value of, good coordination and alignment of effort to achieve the best possible development outcomes.
|Name of document
|Pacific Horticultural and Agricultural Market Access Program (PHAMA) Plus Investment Design Document
|Pacific Horticultural and Agricultural Market Access Program (PHAMA) Evaluation Report
|Partnering for more secure South Pacific trade
|Annual Strategic Plan 2014/2015
|Annual Strategic Plan 2013/2014
|Independent Review of the Pacific Horticultural and Agricultural Market Access (PHAMA) Program
Pacific Private Sector Development Initiative (PSDI) Phase IV
Up to $33.6 million, 2020-2024
Australia has been a long-standing supporter of the Asian Development Bank’s Pacific Private Sector Development Initiative (PSDI). PSDI works with the ADB’s 14 Pacific developing member countries to reduce constraints to doing business to support inclusive, private sector-led economic growth.
Countries benefiting from the program include Cook Islands; Federated States of Micronesia; Fiji; Kiribati; Nauru; Niue; Palau; Papua New Guinea; Republic of Marshall Islands; Samoa; Solomon Islands; Tonga; Tuvalu; and Vanuatu.
The overall goal of PSDI is to reduce unnecessary costs of doing business in the Pacific and enable private sectors to formalise and grow, to create jobs, increase tax revenues, and lift people out of poverty.
To achieve this, PSDI focuses on:
- Streamlining cumbersome business laws and regulations
- Improving financial markets and services that increase access to finance
- Reforming state-owned enterprises and pursue public-private partnerships
- Establishing effective competition and consumer protection frameworks
- Advancing the economic empowerment of women
The economic impacts of COVID-19 are widespread across the Pacific, threatening the survival of many businesses and raising unemployment across the region. The private sector will also play an important role in economic recovery.
PSDI’s long-standing work improving businesses’ ability to access finance; ensuring that legislation and policy make it easy for businesses to start and operate; increasing the efficiency and reliability of state-owned enterprises; and protecting consumers; and continuing to develop competitive markets, will be critical to helping the private sector drive economic recovery from COVID-19.
PSDI will provide crucial assistance to this recovery by drawing on its strong track record, regional experience, the complementarity of its work areas, and long-standing relationships with Pacific governments and private sector stakeholders, while continuing to boost the resilience of the private sector to protect against future economic shocks.
|Name of document
|Pacific Private Sector Development Initiative, Mid-term review [PDF]
|Management response to the Pacific Private Sector Development Initiative, Mid-term review [PDF]
|Management Response to the mid-term report
- ADB–Pacific Private Sector Development Initiative
- International Finance Corporation (IFC) Pacific Partnership (Regional)
Partnerships for Social Protection
Up to $18 million, 2021-2025
The Pacific region faces severe economic shock due to the COVID-19 crisis, including increasing rates of poverty and vulnerability. Despite the limited health impacts so far, the economic impacts of COVID-19 are significant – with varied and evolving impacts across different Pacific Island Countries (PICs). Before the crisis, hardship was common, with approximately 20 percent of the population across the PICs unable to meet basic food and other needs. The effects of COVID-19 could push poverty up by 40 percent on pre-crisis levels. The risk of other shocks (such as experienced in some countries with Tropical Cyclone Harold) remains very high.
Social protection systems are being used by most countries to weather COVID-19 shocks and speed recovery, but few PICs have existing social protection schemes to directly support low-income households. Government provided safety nets have large holes and in some countries, do not exist at all. In this context, PIC Governments are re-thinking their approaches to dealing with poverty and vulnerability on an ongoing basis and in response to shocks – particularly as natural disasters will increase in frequency and severity. The COVID-19 crisis presents an important opportunity for Australia to support PICs to develop and strengthen their social protection systems. It provides an opportunity for developing enduring technical partnerships, drawing on Australia’s global, regional and country-level partnerships, experience and evidence on social protection.
Partnerships for Social Protection is helping establish and strengthen social protection (social security) systems in PICs. Currently in a first phase of limited support, the program is providing responsive and catalytic technical assistance to PICs. A second phase is under design and will be mobilised in late 2021. It will continue to provide expertise and advisory services as well as provide support analysis for system and program development, facilitate cross country cooperation and learning and fund pilot programs, where required.
|Name of document
|Partnerships for Social Protection Investment Concept Note
Banking and financial inclusion
AUSTRAC Pacific Islands Partnership
$1 million, 2020-2023
The Australian Transaction Reports and Analysis Centre (AUSTRAC) is working closely with Pacific financial intelligence units to strengthen capabilities and promote greater regional collaboration to address financial crime threats such as money laundering, corruption and narcotics trafficking in the South Pacific. This partnership seeks to maintain integrity and trust in the Pacific financial system, enhance economic security and governance, and increase confidence that the Pacific remains a safe destination for the conduct of remittances.
Empowering Migrants through Pacific Remittances
$3 million, 2021-2025
Remittances represent a vital source of income for many countries in the region, and are an important avenue to greater financial inclusion. Pacific island countries are more dependent on remittances than other countries in the world. In Tonga for example, the value of remittances is equivalent to over 40 per cent of GDP.
Recognising the role of remittances in advancing inclusive and sustainable development, Australia places a high priority on facilitating remittance transfers to the Pacific. At the household level, money remitted by overseas workers to their families can help smooth consumption, cover essential costs such as education and healthcare, and cushion the effects of shocks caused by economic downturns or natural disasters.
However, the cost of sending remittances to the Pacific from Australia remains high, and above the global average. The high cost is in part driven by structural factors such as the high number of regulatory regimes relative to market size. Costly remittances also reflect consumer decisions - a lack of awareness of remittances options, and low levels of financial or digital literacy, can make it hard to identify the best-value remittance service.
To address these problems, the Department of Foreign Affairs and Trade is supporting a range of activities to ensure that financial channels remain open, safe and affordable. This includes Send Money Pacific, a remittance price comparison website, co-funded with the New Zealand Ministry of Foreign Affairs and Trade, that allows users to compare the cost and speed of sending remittances from Australia and New Zealand to 11 Pacific countries (Cook Islands, Fiji, Kiribati, Niue, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste, Tonga, Tuvalu and Vanuatu).
Send Money Pacific aims to increase price transparency of remittance costs and awareness of different services available in Australia and New Zealand. The service enables people to skilfully use remittance service products to make informed decisions that minimise cost and maximise the value of remitting to Pacific island countries
|Name of document
|Empowering Migrants through Pacific Remitances Mid-term Review and management response
Pacific Digital Economy Programme (PDEP)
$8.7 million, 2021-2023 (Inception Phase)
The Pacific Digital Economy Programme (PDEP) aims to create inclusive digital economies by applying digital solutions to meet the needs of vulnerable islanders, in sectors such as agriculture, education, energy and entrepreneurship, narrowing the digital divide. This will, in turn, have a positive impact on the lives of Pacific Islanders, reducing poverty, improving livelihoods and contributing to economic growth.
PDEP is jointly administered by UN Capital Development Fund (UNCDF), UN Conference on Trade and Development (UNCTAD), and UN Development Programme (UNDP). This unique partnership builds on UNCDF’s long-term work on digital finance in the Pacific region and UNCTAD’s extensive work in the area of e-commerce and the digital economy. Country-specific activities are planned for Fiji, Kiribati, Samoa, Solomon Islands, Tonga and Vanuatu, alongside region-wide research and capacity building activities.
The design and implementation of the PDEP benefits from a close cooperation with the Pacific Island Forum Secretariat (PIFS) and its activities are directly linked to PIFS Pacific E-commerce Strategy and Roadmap. PDEP also relies on close collaboration with a wide variety of other public and private sector stakeholders from across the region to create a conducive market environment for digital innovations to thrive, leaving no-one behind in the process.
Pacific Insurance and Climate Adaptation Programme (PICAP)
$2 million, 2021-2022 (Inception Phase)
Climate related disasters are the number one cause for displacement within countries. Millions of people globally are forced to leave their homes each year. Seven of the ten countries facing the highest risk of internal displacement from extreme weather events are located in our Pacific region. The accelerated frequency and severity of disasters due to climate change have disrupted economic and social progress as well as development gains across the region. Despite the high exposures to natural hazards most people in the Pacific do not have any form of insurance protection.
The Pacific Insurance and Climate Adaptation Programme (PICAP) aims to improve the financial preparedness and resilience of Pacific people towards climate change and natural hazards. PICAP will develop sustainable interventions and build on the successes achieved under the Pacific Financial Inclusion Programme (2008-2021). The primary focus will be on market-based climate risk insurance and other disaster risk financial instruments targeted at the most vulnerable segments in our region. Countries covered under the multi-year programme include Fiji, Papua New Guinea, Samoa, Solomon Islands, Tonga and Vanuatu.
PICAP is jointly implemented by UN Development Programme (UNDP), UN Capital Development Fund (UNCDF) and UN University Institute for Environment and Human Security (UNU-EHS). Financial support is received from the Governments of Australia, Fiji, India, Luxembourg and New Zealand.
PACER Plus Implementation Unit
Up to $19 million, 2020-2025
PACER Plus entered into force on 13 December 2020. Australia, Cook Islands, Kiribati, New Zealand, Niue, Samoa, Solomon Islands,Tonga and Tuvalu are Parties to the Agreement, with Vanuatu’s Parliament ratifying on 24 May 2022. Nauru has signed the Agreement but has not ratified.
As a trade and development agreement, PACER Plus provides a platform to help keep markets open, and to develop common protocols and guidelines to facilitate trade. PACER Plus also offers a regional framework for additional trade related assistance, which will help support the region's economic recovery.
Australia and New Zealand are jointly funding this AUD25.5 million (AUD19 million and NZD7 million) development and economic cooperation package over 5 years to help Pacific island countries meet their commitments under the Agreement and realise its benefits. The work program of activities will be informed and agreed by Parties and will be delivered by the Implementation Unit.
Pacific Trade Invest Australia
$10 million, 2019-2022
Pacific Trade Invest (PTI) Australia is a trade and investment promotion agency focussed on developing and promoting businesses and people from the Pacific through trade, investment, tourism and labour mobility. PTI Australia is an agency of the Pacific Islands Forum Secretariat and supports 16 Forum countries.
In 2019, PTI Australia facilitated over $26 million of trade and over $2 million of investment for the Pacific, including assisting over 200 women-led businesses.
Strengthening economic governance
Pacific Financial Technical Assistance Centre (PFTAC)
Up to $28 million, 1995-2023
The IMF's Pacific Financial Technical Assistance Centre (PFTAC) based in Suva supports macro-financial stability in the Pacific (16 member countries) by assisting Pacific Island Country (PICs) policy makers to develop more sustainable fiscal policies, respond to macroeconomic shocks, and maintain sound financial systems. Australia is a founding donor of PFTAC and provides around one quarter of PFTAC's funding. The Asian Development Bank, Canada, European Union, Japan, Korea and New Zealand also fund PFTAC operations. PFTAC has been a strong partner for Australia to support economic policy reforms in the region.
As an arm of the IMF embedded in the region, PFTAC is well positioned to play a key role in supporting Pacific Island Countries (PICs) to manage macro-economic shocks from COVID−19. PFTAC's early response has included redirecting resources to support the IMF's surveillance work, and assisting PICs seeking additional or debt relief. Resources are being reallocated to support adjustments to macro-economic projections to reflect COVID−19 impacts; and capacity development in areas including better spending, revenue mobilization and financial sector stability. The IMF/PFTAC is in discussion with other donors on enhanced support for debt management in the region. PFTAC has commenced work on an 18-month project to address Correspondent Banking Relationships (CBR) and remittance challenges in the region, as part of the work undertaken by the South Pacific Central Bank Governors group.
Ten Year Pacific Statistics Strategy
$16.4 million, 2014 to 2021
Australia is providing support to the Ten Year Pacific Statistics Strategy (TYPSS) to help develop the capabilities of national statistical offices in the Pacific. The TYPSS adopts a regional approach to maximise and coordinate resources to provide regional statistical leadership, and thereby improve the scope and quality of national statistics. Our support is being provided through the Australian Bureau of Statistics (ABS), the Secretariat for the Pacific Community (SPC) and the OECD’s Partnership in Statistics for Development in the 21st Century (PARIS21),
Asian Development Bank Pacific Partnership Facility (ADB PPF)
$33.0 million, 2017 to 2022
The Pacific Partnership Facility (PPF) is a multi-donor trust fund, operated by Asian Development Bank (ADB) to supplement their Pacific operational budget to fund staffing and operational resources for a significant scale up of the ADB portfolio in the Pacific through the Asian Development Fund (ADF). The PPF is assisting the ADB deliver more, stronger, and faster results in the region. ADB is responding to the expansion of its Pacific portfolio with an increased operational budget allocation. Initially, the total value of this contribution was $15.0 million over 5 years, starting 2017-18.
International Finance Corporation (IFC) Pacific Partnership Phase II (Regional)
Up to $35 million, 2017-2023
The IFC Pacific Partnership Phase II (PP-II), is jointly funded by Australia and New Zealand. It builds on the work of the first phase of the Partnership, from 2012 to 2017. PP-II combines advisory services with investments to generate private sector development and sustainable economic growth for Pacific island countries.
IFC's work is aimed at improving domestic business opportunities, and accessing and creating new markets. IFC's focus to improve policies, build sustainable business environments, reform the regulatory environment, provide alternative dispute resolution mechanisms and improve access to finance will increase opportunities for trade and improve economic prosperity in the Pacific.
A key focus is increasing women's economic empowerment, particularly by leveraging opportunities and addressing challenges to women's employment and leadership in the workforce, supply chain, customer base and leadership of companies to produce better business and development results.
Since 2012, the Pacific Partnership has mobilised over USD1.23 billion in investment, delivered over USD186 million of direct IFC investment, increased access to financial services for 1.98 million Pacific Islanders, including economically empowering over 606,000 women, and improved access to basic infrastructure for 1.61 million people.
|Name of document
|In Partnership: Australia, New Zealand and the International Finance Corporation
Pacific Regional Infrastructure Facility (PRIF) Phase 2
$6.0 million, 2019 to 2024
The Pacific Regional Infrastructure Facility (PRIF) is an informal partnership of regional development partners established to increase coordination and improve delivery of development assistance and investments in infrastructure in the Pacific islands. The work of the PRIF covers 13 countries in the Pacific: Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Nauru, Niue, Palau, Republic of the Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu.
The PRIF supports five economic infrastructure subsectors: (i) energy, (ii) telecommunications, (iii) transport (land, air, sea), (iv) urban development, including solid waste management, (v) water and sanitation, and other cross-sectoral themes.
PRIF was formally launched in 2008 by the Australian Government, the New Zealand Government (Ministry of Foreign Affairs and Trade – NZMFAT), the ADB and the World Bank Group. The European Union (EU) and the European Investment Bank (EIB) joined in December 2010, and the Japan International Cooperation Agency (JICA) joined in November 2013.
World Bank Pacific Facility IV (PF4)
$65.0 million, 2013 to 2022
The World Bank Pacific Facility IV (PF4) multi-donor trust fund aims to assist in shaping and accelerating economic growth and poverty reduction in the Pacific region by increasing access to the World Bank’s resources and expertise. PF4 objectives aim to support the drivers of growth including infrastructure development, telecommunications, private sector, aviation safety, community services, electricity, fisheries management, access to finance, participation by women, health and education.
PF4 is designed to support implementation of flexible earmarked projects in some of the most isolated and challenging environments in the world. Using a single trust fund to resource a range of activities and expertise across all of these countries reduces transaction costs for the World Bank, Australia and the Pacific recipients. Furthermore, the bank’s convening power and strong trust fund systems allow it to manage large-scale projects in remote and challenging environments.
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