The Republic of Kiribati's per capita Gross National Product of US$1,420 (2010)[6] makes it the poorest country in Oceania. Phosphates had been profitably exported from Banaba Island since the turn of the 20th century, but the deposits were exhausted in 1979. The economy now depends on foreign assistance and revenue from fishing licenses to finance its imports and development budget.
The Asian Development Bank’s assessment of Kiribati’s growth potential point identifies constraints imposed by “(i) land area, (ii) geographic dispersion across 5,000km of ocean, (ii) remoteness from major markets with associated high external transport costs, (iii) high vulnerability to natural forces including climate change and sea level rise, and (iv) scarce natural resources.”[7]
Government revenue
The expiration of phosphate deposits in 1979 had a devastating impact on the economy. Receipts from phosphates had accounted for roughly 80% of export earnings and 50% of government revenue. Per capita GDP was more than cut in half between 1979 and 1981. A sovereign wealth fund financed by phosphate earnings was established in 1956. In 2008, the Revenue Equalization Reserve Fund was valued at US$ 400 million.[8] Prudent management of the Reserve Fund will be vital for the long-term welfare of the country.
In 2009 the RERF was valued at A$570.5 million.[9] The RERF assets declined from A$637 million (420 percent of GDP) in 2007 to A$570.5 million (350 percent of GDP) in 2009. As the result of the Global Financial Crisis (GFC) the RERF was reduced due to failed Icelandic banks, as well as withdrawals made by the government of Kiribati to finance budgetary shortfalls.[6]
In May 2011 the IMF country report described the impact of the GFC as being that “Kiribati has been affected by the global crisis through a fall in remittances and large decline in the value of its wealth and pension funds—the Revenue Equalization Reserve Fund (RERF) and the Kiribati Provident Fund. The spike in food and fuel prices in 2008 has already taken a toll on economic activity. Vulnerabilities to climate change, including coastline erosion, have also worsened.”[6]
In one form or another, Kiribati gets a large portion of its income from abroad. Examples include fishing licenses, development assistance, worker remittances, and tourism. Given Kiribati's limited domestic production ability, it must import nearly all of its essential foodstuffs and manufactured items; it depends on these external sources of income for financing .[citation needed]
Fishing fleets from South Korea, Japan, People's Republic of China, Taiwan, and the United States pay a licensing fee in order to operate in Kiribati's territorial waters.[6] These licenses produced A$25.4 million in 2007, A$32.2 million in 2008 and A$29.5 million in 2009.[6] The existence of El Niño climatic conditions boosted the local catch. Due to its small size and spread-out nature, however, Kiribati also loses untold millions of income per year from illegal, unlicensed fishing in its exclusive economic zone.
Visitor arrivals are predominantly business-related with total visitor arrivals of 3,380 in 2008 and 3,915 in 2009.[6] These visitors provide $$5–$10 million in revenue. Tourism attractions include World War II battle sites, game fishing, ecotourism, and Caroline Island, situated just inside the International Date Line and the first place on earth to celebrate every New Year.
Most islanders engage in subsistence activities ranging from fishing to the growing of food crops like bananas, breadfruit, and papaya. The leading export is the coconut product copra, which accounts for about two-thirds of export revenue. Other exports include pet fish, shark fins, and seaweed. Kiribati's principal trading partner is Australia.
Remittances from Kiribati seamen working on foreign flagged ships provided A$11.6 million in 2009.[6]
In May 2011 the IMF country report assessment of the Economy of Kiribati is that: “After two years of contraction, the economy recovered in the second half of 2010 and inflation pressure dissipated. It is estimated to have grown by 1¾ percent for the year. Despite a weather-related drop in copra production, private sector activity appears to have picked up, especially in retail. Tourist arrivals rebounded by 20 percent compared to 2009, although from a very low base. Despite the rise in world food and fuel prices, inflation has bounced from 2008 crisis-highs into negative territory, reflecting the strong appreciation of the Australian dollar, which is used as the domestic currency, and a decline in the world price of rice. Credit growth in the overall economy declined in 2009 as economic activity stalled. But it started to pick up in the second half of 2010 as the recovery gained traction.”[6]
Financial sector
A supermarket in Kiribati
The financial institution in Kiribati are the Development Bank of Kiribati (DBK) that is wholly government-owned and ANZ Bank (Kiribati) Limited (formerly known as Bank of Kiribati), which is the sole commercial bank in Kiribati. Insurance services are provided by another government financial institution, the Kiribati Insurance Corporation. The Kiribati Provident Fund (KPF), also government-owned, manages the assets of the pension system, about 60 percent of GDP in 2010.[6]
International development assistance
The economy of Kiribati benefits from international development assistance programs. The multilateral donors providing development assistance in 2009 were the European Union (A$9 million), the United Nations Development Program (A$3.7 million), and the World Health Organization (A$100,000).[9] The bilateral donors providing development assistance in 2009 were Australia (A$11 million), Japan (A$2 million), New Zealand (A$6.6 million), Taiwan (A$10.6 million), and other donors providing A$16.2 million, including technical assistance grants from the Asian Development Bank.[9]
Kiribati joined the Asian Development Bank (AsDB) in 1974. The AsDB has provided US$27.14 million over seven project loans to Kiribati from Asian Development Fund (ADF). The AsDB has also provided technical assistance funding of US$13.9 million for 41 projects.[6][11]
Australia continues as the largest donor to Kiribati and has committed to provide A$28.2 million in development assistance in 2011-12. The Australia-Kiribati Partnership for Development (signed in January 2009), provides to Australian aid to focus on improving basic education standards, developing workforce skills, and strengthening economic governance.[12] The development assistance from Australia is allocated to: AusAID country program A$18.3 million (2011–12 est.); Regional assistance estimate A$9.9 million (2011–12 est.)[13]
New Zealand has committed to provide NZ$14.3 million in development assistance in 2011-12, which is allocated primarily through the NZAID bilateral programme to projects related to economic development, education and developing workforce skills, and addressing vulnerabilities in Kiribati.[10]
Kiribati became a member of the World Bank in 1986. On 1 March 2011, the World Bank announced a Country Assistance Strategy (CAS) for Kiribati, which is structured around the themes of: (i) addressing the existential threat posed by climate change; and, (ii) mitigating the effects of geographic isolation. The CAS is intended to be implemented through grants and trust fund investments of up to US$50 million during the period 2011 to 2014.[14]
The economic activity of the Federated States of Micronesia consists primarily of subsistence agriculture and fishing. The islands have few mineral deposits worth exploiting, except for high-grade phosphate. The potential for a tourist industry exists, but the remoteness of the location and a lack of adequate facilities hinder development. Financial assistance from the US is the primary source of revenue, with the US pledged to spend $1.3 billion in the islands in 1986–2001. Geographical isolation and a poorly developed infrastructure are major impediments to long-term growth.
The economy of Grenada is a largely tourism-based, small and open economy. Over the past two decades, the main thrust of Grenada's economy has shifted from agriculture to services, with tourism serving as the leading foreign currency earning sector. The country's principal export crops are the spices nutmeg and mace. Other crops for export include cocoa, citrus fruits, bananas, cloves, and cinnamon. Manufacturing industries in Grenada operate mostly on a small scale, including production of beverages and other foodstuffs, textiles, and the assembly of electronic components for export.
The economy of Malawi is $7.522 billion by gross domestic product as of 2019, and is predominantly agricultural, with about 80% of the population living in rural areas. The landlocked country in south central Africa ranks among the world's least developed countries. In 2017, agriculture accounted for about one-third of GDP and about 80% of export revenue. The economy depends on substantial inflows of economic assistance from the IMF, the World Bank, and individual donor nations. The government faces strong challenges: to spur exports, to improve educational and health facilities, to face up to environmental problems of deforestation and erosion, and to deal with the problem of HIV/AIDS in Africa. Malawi is a least developed country according to United Nations.
The economy of Nauru is tiny, based on a population in 2019 of only 11,550 people. The economy has historically been based on phosphate mining. With primary phosphate reserves exhausted by the end of the 2010s, Nauru has sought to diversify its sources of income. In 2020, Nauru's main sources of income were the sale of fishing rights in Nauru's territorial waters, and revenue from the Regional Processing Centre.
The economy of Palau consists primarily of subsistence agriculture and fishing. The government is the major employer of the work force, relying heavily on financial assistance from the United States. The population enjoys a per capita income of more than twice that of the Philippines and much of Micronesia. Long-term prospects for the tourist sector have been greatly bolstered by the expansion of air travel in the Pacific and the rising prosperity of leading East Asian countries.
The economy of the Republic of the Congo is a mixture of subsistence hunting and agriculture, an industrial sector based largely on petroleum extraction and support services. Government spending is characterized by budget problems and overstaffing. Petroleum has supplanted forestry as the mainstay of the economy, providing a major share of government revenues and exports. Nowadays the Republic of the Congo is increasingly converting natural gas to electricity rather than burning it, greatly improving energy prospects.
The economy of Senegal is driven by mining, construction, tourism, fishing and agriculture, which are the main sources of employment in rural areas, despite abundant natural resources in iron, zircon, gas, gold, phosphates, and numerous oil discoveries recently. Senegal's economy gains most of its foreign exchange from fish, phosphates, groundnuts, tourism, and services. As one of the dominant parts of the economy, the agricultural sector of Senegal is highly vulnerable to environmental conditions, such as variations in rainfall and climate change, and changes in world commodity prices.
The economy of Seychelles is based on fishing, tourism, processing of coconuts and vanilla, coir rope, boat building, printing, furniture and beverages. Agricultural products include cinnamon, sweet potatoes, cassava (tapioca), bananas, poultry and tuna.
The economy of Sierra Leone is $4.082 billion by gross domestic product as of 2018. Since the end of the Sierra Leone Civil War in 2002, the economy is gradually recovering with a gross domestic product growth rate between 4 and 7%. In 2008 it in PPP ranked between 147th by World Bank, and 153rd by CIA, largest in the world.
The economy of Tanzania is a lower-middle income economy that is overwhelmingly dependent on agriculture. Tanzania's economy has been transitioning from a command economy to a market economy since 1985. Although total GDP has increased since these reforms began, GDP per capita dropped sharply at first, and only exceeded the pre-transition figure in around 2007.
The economy of Togo has struggled greatly. The International Monetary Fund (IMF) ranks it as the tenth poorest country in the world, with development undercut by political instability, lowered commodity prices, and external debts. While industry and services play a role, the economy is dependent on subsistence agriculture, with industrialization and regional banking suffering major setbacks.
The economy of Madagascar is US$9.769 billion by gross domestic product as of 2020, being a market economy and is supported by an agricultural industry and emerging tourism, textile and mining industries. Malagasy agriculture produces tropical staple crops such as rice and cassava, as well as cash crops such as vanilla and coffee.
The economy of Fiji is one of the most developed among the Pacific islands. Nevertheless, Fiji is a developing country endowed with forest, mineral and fish resources. The country has a large agriculture sector heavily based on subsistence agriculture. Sugar exports and the tourism industry are the main sources of foreign exchange. There are also light manufacturing and mining sectors.
The economy of São Tomé and Príncipe, while traditionally dependent on cocoa, is experiencing considerable changes due to investment in the development of its oil industry in the oil-rich waters of the Gulf of Guinea.
The government of the Marshall Islands is the largest employer, employing 30.6% of the work force, down by 3.4% since 1988. GDP is derived mainly from payments made by the United States under the terms of the amended Compact of Free Association. Direct U.S. aid accounted for 60% of the Marshall Islands' $90 million budget.
Tuvalu is a Polynesian island nation located in the Pacific Ocean, midway between Hawaii and Australia, with a population of 11,192 per the 2017 census. The economy of Tuvalu is constrained by its remoteness and lack of economies of scale. Government revenues largely come from fishing licences ; direct grants from international donors ; and income from the Tuvalu Trust Fund. The lease of its highly fortuitous .tv Top Level Domain (TLD) also contributes revenue. The sale of stamps since the independence of Tuvalu in 1976 has been an important source of revenue for the country and government. However, such revenue has significantly declined in recent years. Tuvalu has hardly any tourism. It has no tour guides, tour operators or organised activities and no cruise ships visit.
The economy of the Comoros is based on subsistence agriculture and fishing. Comoros has inadequate transportation links, a young and rapidly increasing population, and few natural resources. The low educational level of the labor force contributes to a subsistence level of economic activity, high unemployment, and a heavy dependence on foreign grants and technical assistance. The Comoros, with an estimated gross domestic product (GDP) per capita income of about $700, is among the world's poorest and least developed nations. Although the quality of the land differs from island to island, most of the widespread lava-encrusted soil formations are unsuited to agriculture. As a result, most of the inhabitants make their living from subsistence agriculture and fishing. Average wages in 2007 hover around $3–4 per day.
A per capita GDP of $3,200 ranks Solomon Islands as a lesser developed nation. Over 75% of its labour force is engaged in subsistence farming and fishing.
The economy of the Gambia is heavily reliant on agriculture. The Gambia has no significant mineral or other natural resources, and has a limited agricultural base. About 75% of the population depends on crops and livestock for its livelihood. Small-scale manufacturing activity features the processing of peanuts, fish, and animal hides.
The Revenue Equalization Reserve Fund (RERF) is the sovereign wealth fund of the Pacific island republic of Kiribati.
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