Annex C. Field visit to Solomon Islands

As part of the peer review of Australia, a team of examiners from Belgium and the OECD visited Solomon Islands in July 2017. The team met with Australian officials from DFAT, ministers and other officials from the government and parliament of Solomon Islands, other bilateral and multilateral partners, implementing partners, and representatives of civil society and private sector organisations.

Solomon Islands faces a number of development challenges

Solomon Islands is a fragile, least developed and small island country. It ranks 156th out of 185 countries on the UNDP Human Development Index (OECD/UNDP 2016). According to the Asian Development Bank, 12.7% of its population live below the national poverty line and only 23.7% were employed in 2014.1 Natural resources are the main economic driver and account for more than 50% of the gross domestic product (GDP). The forestry sector alone accounts for approximately 25% of Solomon Islands GDP. Mining and commercial fishing are also significant contributors to the economy. Despite the country’s natural resource wealth, nominal GDP per capita in 2016, as calculated by the World Bank, was USD 2 006 in 2016, putting Solomon Islands in 131^st place of 178 countries measured.2

In general, the country’s economy lacks diversification. Many businesses and investors fled the country following the outbreak of violence in the early 2000s and have been slow to return. The country’s growth prospects also are limited by its geography: it is a remote and small island nation that comprises more than 900 individual islands. More than 300 of its islands are inhabited, making service delivery to all parts of the country extremely challenging. Finally, its severe exposure to disaster and climate risk is its other main development challenge.

Towards a comprehensive Australian development effort

The Regional Assistance Mission has helped Solomon Islands achieve stability following the breakdown of law and order

In 2003, when the Regional Assistance Mission to Solomon Islands (RAMSI) programme was started, Solomon Islands state was facing near-collapse. Intimidation of politicians was rampant and there was widespread disorder and violence (see Box 5.1). Over the last 14 years, RAMSI has worked with Solomon Islands government to improve policing and restore the functions of the state. From 2013, the work on rebuilding state institutions other than the police was through Australia’s bilateral governance and justice programmes. Australia played a central role in RAMSI and supported Solomon Islands government to improve security and policing, retraining the police force and working to reduce family violence. Through its aid programme, Australia is continuing to provide support in these areas following the end of RAMSI. RAMSI has proven a successful model for stabilisation from which other partners can now seek to learn.

Several factors contributed to RAMSI’s success and to Australia’s willingness to invest such significant human and financial resources in Solomon Islands to help achieve security and development. One factor was Australia’s recognition that “a stable, prosperous Solomon Islands is in Australia’s national interest” and that it has a deep solidarity and close partnership with Solomon Islands (DFAT, 2017c). The government invited RAMSI to the country in 2003 and has welcomed Australia’s development efforts and large-scale investments in the country. Since the early 2000s Australia’s aid to Solomon Islands has been strongly concentrated on supporting stability and rebuilding the state. Over time and as security was established, Australia and other nations drew down their personnel; RAMSI was officially closed in June 2017. There is overwhelming agreement that RAMSI has achieved its objective of stabilising Solomon Islands and that Australia’s contribution has been pivotal.

Australia's policies, strategies and aid allocation

Australia’s policy and strategy in Solomon Islands has evolved over time to a broader focus on human and economic development

In the early days of RAMSI, Australia invested a large percentage of its human and financial resources for the mission in stabilisation and policing. At RAMSI’s peak, hundreds of Australian nationals were working in the country as technical advisors and many of those were involved in building the capacity of Solomon Islands’ police force. Australia also focused on restoring the legitimacy of the central government in Honiara. Over time, DFAT has increased focus on human development including the provision of health and education services throughout the Islands. The balance of Australian efforts have shifted from security to longer-term development.

DFAT’s current Solomon Islands Aid Investment Plan (AIP) covers the period from 2015-2019 and rests on three pillars: stability, economic growth and human development. The current strategy, while still maintaining a focus on stability, puts greater emphasis on developing an enabling environment for business in order to encourage economic recovery and promote inclusive growth. DFAT has worked closely with the government to ensure the delivery of social services throughout the Islands – including through sector budget support in health and education – and has worked with civil society groups to promote women’s economic empowerment and to combat domestic violence.

In the next phase of Australian support, DFAT’s theory of change would benefit from a more poverty-centred, decentralised approach. This could support a socially inclusive and cohesive society.

Australia has a long-term commitment to Solomon Islands and provides significant volumes of ODA

Australia is widely appreciated for its leadership, significant resources and for the high level of capacity it brings to Solomon Islands. The small pool of development partners recognise that Australia’s sustained support will be critical for the county’s future development. DFAT acknowledges that geography limits the country’s growth prospects and that Solomon Islands can benefit from continued official development assistance and support from larger economies like Australia.

Australia is the largest donor in Solomon Islands (Figure C.1). Not surprisingly, this means its influence is significant. In 2016, Australia provided USD 115 million (AUD 154.7 million) as official development assistance. Australia works strategically and co-ordinates with other donors such as New Zealand and Japan and with the UN, the Asian Development Bank and World Bank to help to bring additional expertise to the country. Other development actors generally appreciate Australia as a reliable, predictable partner in Solomon Islands.

Australia has been increasing its focus on private sector growth to attract business and empower women

In 2017, DFAT introduced Solomon Islands Growth Program (SIGP), which is meant to be the flagship example of Australia’s private sector efforts. It is an umbrella initiative that consists of DFAT’s existing partnerships and programmes along with a new programme to work with businesses on developing stronger value chains. DFAT has focused on funding large-scale economic infrastructure projects in Solomon Islands such as the Tina River hydropower project and on promoting investments in specific sectors (tourism and cocoa). At the same time, it is working to improve the enabling environment for businesses and attract investment. Australia’s private sector development strategy is line with the Solomon Islands National Development Strategy, which emphasises the further development of the country’s natural resources such as agriculture, fisheries, tourism and mining.

Australia’s investment in economic growth in Solomon Islands consists of a balance between bilateral funding and regional funding for programmes such as the Pacific Financial Inclusion Program, the Private Sector Development Initiative and PACER Plus). These bilateral and regional programmes are meant to be aligned with DFAT’s global funding for trade facilitation. DFAT’s private sector strategy in Solomon Islands aims to enhance the involvement and integration of poor people into local, national and regional markets.

Australia promotes women’s economic empowerment throughout the Pacific and has designed specific programmes in Solomon Islands with this objective. Australia’s work on gender equality in Solomon Islands is impressive and DFAT maintains a strong gender focus across all aspects of its programmes. DFAT has developed a range of specific tools and an internal, whole of post working group on gender that emphasises effective programming and internal learning.

Australia could better mainstream environment, climate change and disaster resilience across its development portfolio

DFAT has the opportunity to help Solomon Islands broaden its economic base and also work on important environmental issues. As the forestry sector is crucial to the national economy3, DFAT’s private sector engagement could focus on responsible business practices and sustainable value chains to support sustainability and economic growth. DFAT’s private sector plans to expand cocoa farming businesses, build new roads and encourage economic development in Solomon Islands are promising. They will need to continue to pay attention to safeguards and efforts to minimise environmental impacts. While DFAT does not currently see a role for Australia in influencing the management of national resources,4 DFAT can still seek to further mainstream environment, climate and resilience within existing programmes. DFAT-funded programmes managed by the Asian Development Bank and the World Bank include environmental safeguards.

Going forward Australia can continue its focus on thinking and working politically

In order to push for progress on underlying development challenges in Solomon Islands, Australia can continue its work with other donors, international organisations and local civil society to forge a common political voice. Australia has built a strong relationship with the government of Solomon Islands and can continue to promote Solomon Islands’ development plans and country-level ownership while also addressing underlying challenges. DFAT has provided substantial, sustained support for Solomon Islands state institutions and state service delivery. DFAT may consider further enhancing support to local civil society to working towards collective accountability at all layers and reaches of society. DFAT has indicated plans to potentially partner with local faith-based organisations, which would further strengthen DFAT’s approach and community reach.

Organisation and management

Whole of government co-ordination has worked well in Solomon Islands to balance security, stability and policing with development efforts

Australia’s post-RAMSI development programme is informed by a rich contextual and political economy analysis. The integration of AusAID and DFAT facilitated this holistic approach to analysis by bringing together a range of policy perspectives and experience.

Australia uses a range of aid modalities that are aligned with government priorities and adapted to needs on the ground

As outlined in Australia’s Aid Investment Plan for Solomon Islands, DFAT is using a mix of modalities. Most notably, DFAT continues to use sector budget support in the health and education sector and has focused on being “on plan, on budget, and on system” - meaning that DFAT strives to ensuring that the development assistance it provides is aligned with the development plans of the Solomon Islands government, is reflected in the government’s budget and uses government systems when feasible. DFAT’s specific partnership agreements for the use of sector budget support include its agreement with the Solomon Islands government on its health sector-wide approach. This agreement contains the guiding principles and shared objectives of the partnership, outlines the commitments of both partners, and sets out the division of responsibilities.

In the case of budget support provided through the Solomon Islands Ministry of Health and Medical Services (MHMS), both the ministry and DFAT conduct annual reviews of performance that involve partner dialogue and agreement on indicators, findings and independent assessments. This aspect of DFAT’s engagement is important because part of DFAT’s support in the health and education sectors is based on performance-linked funding. Australia’s use of performance-linked funding appears to be successful in incentivising reforms in Solomon Islands. In addition, there is evidence from recent independent assessments that these arrangements have led to improvements in the government’s data collection in these sectors over time.

DFAT generally has appropriate and effective management processes in Solomon Islands, which as one of the larger overseas posts maintains a privileged relationship with DFAT staff in Canberra. The process for quality assurance and peer review of new investments in Solomon Islands includes ongoing dialogue with Canberra and provides robust checks and balances for delivering efficient and effective programming.

In line with its global policy, DFAT seeks to introduce innovation in the Solomon Islands programme where such innovation is appropriate and adds value, including with the private sector. The context of Solomon Islands, however, demonstrates the need to carefully calibrate innovation initiatives to local capacities and needs to enhance their eventual adoption. These include initiatives led from Canberra.

Australia could do more to incorporate the knowledge and expertise of technical advisors and locally engaged staff into strategic development planning

Australia recognizes the need to remain flexible and creative in addressing the continuing capacity challenges, including succession planning for in-line technical assistance posts, and gradually reducing dependence on external advisors. DFAT could further strive to make better use of the skills and intelligence gathered by the broad network of advisors in country, including for informing policy and programming decisions.

To ensure that institutional memory is maintained and to further maximise the use of available knowledge and skills, DFAT also may wish to consider how it draws on the capacities of locally engaged staff and how it can better capture their local knowledge in strategic programming decisions. In this regard, DFAT could seek to provide clarity regarding opportunities for career progression and learning for locally engaged staff, in line with DFAT’s broader approach to human resource management and capability improvement for all staff.

Partnerships, results and accountability

Australia has a strong, structured partnership with Solomon Islands government that is embodied in DFAT’s partnership agreement

Australia’s partnership agreement, signed in July 2017, complements the multi-annual Aid Investment Plan and outlines the objectives of Australian aid, preferred delivery modalities, and the commitments and mutual obligations of each partner. The partnerships agreement is an example of good practice and is based on partner dialogue on Solomon Islands’ goals and objectives for development. This creates a strong framework for mutual accountability.

Australia has a clear performance and results framework for its work in Solomon Islands

DFAT has supported the government of Solomon Islands to measure progress on the targets outlined in its National Development Strategy.5 Another tangible example of DFAT’s efforts to support monitoring towards development goals is its support, through the Ministry for Infrastructure Development’s Gender and Disability Plan, for monitoring gender issues and challenges related to discrimination against women. DFAT has regularly funded advisors to assist Solomon Islands ministries to formulate monitoring and evaluation plans and to help report performance against targets. DFAT also funded a position in the World Health Organization to support data collection and analysis in the health sector in support of the District Health Information System. Similarly, DFAT has used technical assistance to support the Ministry of Development Planning and Aid Coordination (MDPAC) to establish the appropriate systems for monitoring and evaluating implementation of the development budget. All of the above actions are positive examples that demonstrate Australia’s strong efforts to assist Solomon Islands to effectively monitor its progress towards meeting the Sustainable Development Goals steadily over time.

Australia could do more to ensure that lessons of its successful efforts in Solomon Islands are shared across DFAT and with partners

The Australian and Solomon Islands governments agree that RAMSI has been a success and that Australia’s efforts have helped to rebuild the authority of the state and restore the provision of basic services. Particularly now, with the drawdown of RAMSI, a formal, independent evaluation would be useful to capture lessons from the mission’s operations and from the transition. A formal evaluation would help Australia and the region learn from the successes and ongoing challenges in Solomon Islands and would contribute to informing global peacekeeping architecture discussions.

There also is room for DFAT to improve access to documentation and evaluations undertaken in Solomon Islands. In order to meets its transparency commitments, Australia will need to make more efforts to make investment-level information available in a timely manner.

Bibliography

Government sources

DFAT (2017a), “Solomon Islands, Aid fact sheet,” October 2017, DFAT, Canberra, http://dfat.gov.au/about-us/publications/Documents/aid-fact-sheet-solomon-islands.pdf

DFAT (2017b), Aid Investment Plan, Solomon Islands, 2015-16 to 2018-19, DFAT, Canberra, http://dfat.gov.au/about-us/publications/Pages/aid-investment-plan-aip-solomon-islands-2015-16-to-2018-19.aspx.

DFAT (2017c), Solomon Islands Growth Program Investment Design Document, DFAT, Canberra, http://dfat.gov.au/about-us/business-opportunities/tenders/Documents/solomon-islands-growth-program-strongim-bisnis-design.pdf.

DFAT and Solomon Islands Government (2017), “Solomon Islands-Australia Aid Partnership”, 29June 2017, (unpublished).

DFAT (2016), Aid Program Performance Report 2015-16, Solomon Islands, DFAT, Canberra, http://dfat.gov.au/about-us/publications/Documents/solomon-islands-appr-2016-17.pdf.

DFAT (2015), Partnership Arrangement Between Solomon Islands Government and Development Partners in the Health Sector-Wide Approach, 2016-2020

Other sources

OECD/UNDP (2016), Making Development Co-operation More Effective: 2016 Progress Report, OECD Publishing, Paris, https://doi.org/10.1787/9789264266261-en.

Notes

← 1. See www.adb.org/countries/solomon-islands/poverty.

← 2. See https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=SB

← 3. Between 2009 and 2014, logging, forestry and sawmilling have grown at an average real annual rate of 14%. The volume of production in the logging sector is now double what it was in 2009.

← 4. “Whether or not mining expands in the country will be a matter for [the Solomon Islands government] and for individual investors, and the role of development partners can only be to support and/or influence at the margin.” See http://dfat.gov.au/about-us/business-opportunities/tenders/Documents/solomon-islands-growth-program-strongim-bisnis-design.pdf.

← 5. For instance, DFAT funded a National Development Strategy tracker, through the Australian National University, to provide data to MDAC and other stakeholders. MDAPC was involved in this process and in developing the questions for the survey, while the Australian National University trained local interviewers to conduct focus groups to collect data.