Building on a unique trade ecosystem in Tuvalu

KEY RESULTS

• The presence of the Enhanced Integrated Framework (EIF) in Tuvalu is unique for developing a trade ecosystem: the small funding provided has garnered catalytic and disproportionately large results in strengthening the policy environment and sector‑specific capacity‑building. Through EIF resources, Tuvalu developed a concerted national trade development strategy, a tourism strategy and an e-commerce strategy, as well as improved investment and standards regulations. This policy environment enables effective interventions in promising sectors, such as coconut oil, dried fish, tourism and productive capacity, down to local businesses and shareholders at the grassroots level.
• The EIF has also helped establish the EIF National Implementation Unit (NIU) as a public good. It has supported the coordination of different development partners in Tuvalu, including the UN Economic and Social Commission for Asia and the Pacific (UNESCAP), the Pacific Islands Forum and the Australian Agency for International Development.

Tuvalu, a small set of islands in the Pacific Ocean, is having to work harder than most other least developed countries to find ways of improving the lives of its population. Trade for development provides an opportunity, but its size, insularity and remoteness constrain trade in terms of supply capacity, global and regional market access and trade competitiveness. To respond to these challenges, the Government of Tuvalu, in collaboration with its development partners, embarked on major reforms embodied in the National Development Plan – Te Kakeega III (TK3) – and the National Policy for Sustainable Development (Te Kete) towards meeting the 2030 UN Sustainable Development Goals agenda and increasing the effectiveness of Tuvalu's participation in international trade.

An evidence-based policy foundation to support sustainable trade

Under the Ministry of Fisheries and Trade, Tuvalu's Department of Trade (DOT) and the EIF developed a unique trade ecosystem by putting in place a policy environment and productive capacity for local businesses and producers at the grassroots level.

The initiative began with the 2010 Diagnostic Trade Integration Study (DTIS) and its Action Matrix, supported by the EIF and fully owned by the Government in terms of identifying evidence-based constraints, challenges, opportunities, solutions and priorities. 

The EIF then supported the development of policies and strategies that would enable the participation of Government agencies, producers, suppliers, the private sector, exporters, regional institutions and investors in developing, providing and collecting value for the common good. Key enabling policies developed, based on the findings of the DTIS, were the National Strategy for Sustainable Development, the Trade Policy Framework (TPF), a tourism strategy and an e-commerce strategy. A 2016 DTIS Update was aligned with Tuvalu's 2014 TPF, focusing on trade development and expansion through the private sector with trade‑related activities in agriculture, fisheries, tourism and labour mobility as priorities, and especially considering that rising sea levels are reducing the country's land mass. 

The strategies and policies are in line with the objectives of the TK3 and the Te Kete and contribute to mainstreaming trade into the national development strategies and policies. 

The Government–EIF partnership has also contributed to building institutions and systems and has supported the development of human resources that can support trade that works for all, from small-scale farmers and fisheries to exporters. 

A key catalyst has been the stimulation and coordination of development partners on a range of trade reforms and investments in an environment that previously received limited support. 

Creating partnerships in action

The work of building the Tuvaluan producers' capacity for resilience at home, along with greater competitiveness in regional and wider markets, has been achieved through extensive partnerships. These have been mobilized in line with the DOT's resource mobilization strategy and yielded positive results in identifying new development partners, mobilizing existing partners and securing funding for trade and private sector development initiatives. 

Among the achievements is the Government-EIF collaboration with UNESCAP on the development of the Tuvalu National Trade Development Strategy. UNESCAP provided funding and technical assistance towards the Strategy, while the EIF supported the operational costs. The South Pacific Tourism Organisation and the UN Development Programme's Fiji Office were partners in the development of the Tuvalu Sustainable Tourism Policy. The EIF provided funding for the Rapid e-Trade Readiness Assessment in Tuvalu led by the UN Conference on Trade and Development, which was also supported by the Pacific Islands Forum Secretariat. The goal of the Assessment was to boost e-commerce.

An EIF-supported donors forum successfully raised funding from multiple partners, including UNESCAP. A World Bank-financed container clearance strategy that aims to fast-track container movements in the port at Funafuti has been endorsed and is being operationalized. It also led to the Government of Portugal committing to assist with financing after the EIF project ends in 2023. In addition, Tuvalu also participates in regional projects, such as the Pacific Agreement on Closer Economic Relations (PACER) Plus. 

The Australia High Commission Office in Tuvalu is the EIF Donor Facilitator for the Tuvalu programme and is active in the role of leveraging resources from donors in the country.

A key private sector partner of the Government-EIF programme is the Tuvalu National Private Sector Organization (TNPSO), which collaborated in the development of the first Business Incubator in Tuvalu. 

Building institutional and productive capacity for trade and development

The benefits of trade integration to grassroot stakeholders have been achieved through catalytic EIF-supported projects, which demonstrate inclusive and sustainable productive capacity development. This in turn encourages partnerships and additional financing. 

The Business Incubator emerged as one of the major activities from the Government's strategy to build productive capacities for private sector development and trade. The Incubator provides an enabling environment, where small businesses can come in and receive training – and possibly seed funding. The focus is on value addition of, among others, salted fish, coconut syrup, oil and breadfruit, as well as the procurement of equipment and fuel.

Tourism operators are also benefitting from the Business Incubator. The sector currently plays a limited role in the country's economy but has great potential and presents opportunities for job creation. Further growth is limited by travel costs and an insufficient number of quality hotels. The sector was also badly affected by COVID-19 travel restrictions. The EIF supported the National Tourism Organization's participation at the World Expo in Dubai and improvement of infrastructure of the Waimasiri Lodge, the Afelita Resort and the Funafala Island Resort.

The Tau Maketi ("your market") initiative was developed to help vulnerable small businesses play a more active role in Tuvalu's domestic market and make up for a lower foreign demand. The market provides a collective platform for small businesses to display and trade their products. This plays an important role in supporting and developing small enterprises to be more involved in trade, with the goal of building their export capacity. 

Tau Maketi also has a strong gender dimension, drawing from the TPF, which recognizes gender equality and employment of women as important for promoting and sustaining Tuvalu's development goals. Government–EIF support has also been extended to capacity-building programmes organized by the Tuvalu National Council of Women. The support enables the Council to reach out and train different remote island communities and provide equipment needed for them to engage in trade. Working through existing local organizations ensures that there is a legacy of strengthened capacity for both individuals and institutions to continue progress on inclusive trade. 

These small projects have done their job of demonstrating potential and catalysing interest from other development partners and Government agencies to finance on a greater scale, which are key to achieving inclusive and long-lasting financial, human resource and institutional results. 

Sustaining and scaling up results

Government ownership and leadership following on achievements from the catalytic projects has been encouraging. It is spearheading several support initiatives, including improving access to affordable and reliable telecommunications services, especially information and communications technology infrastructure across Tuvalu. This comes in the wake of the Tuvalu Rapid e-Trade Readiness Assessment. 

The positive results from the Tau Maketi, particularly for women entrepreneurs, have spurred the Gender Affairs Department to recommend a collaboration with the DOT to further develop the market and support training for women in domestic and international trade. 

There is generally increased awareness, interest and demand for collaboration and support with the DOT from other ministries and departments on cross-cutting issues. Through PACER Plus, the DOT has assisted the Department of Labour in negotiating new Tuvaluan labour contracting opportunities in New Zealand and Australia for the food industry, hospitality, construction and aged care sectors, in addition to the existing fruit picking labour scheme. The Office of the Attorney General (OAG), which currently provides technical legal support to the DOT in activities such as PACER Plus agreement implementation and backstopping on the development of e-commerce laws, has recommended that the DOT include the OAG in any work related to the development of new legislation or policies.

Public–private partnerships have also been strengthened based on the outcomes of the catalytic projects. An example is the TNPSO, which, following on the success of the Business Incubator, where it was an important player, has expressed interest in extending partnerships with the DOT. 

Making the most of what you have

The partnership between the EIF and Tuvalu has placed emphasis on the importance of investing in Tuvaluan’s livelihoods as part of the process of trade integration. According to Nikolasi Apinelu, Permanent Secretary and EIF Focal Point, Ministry of Fisheries and Trade:

The EIF's flexible approach has ensured full ownership of priorities and processes by the Government, given the people of Tuvalu a chance to see what is possible and has inspired other external partners. The EIF's small investment of USD 3.2 million in Tuvalu has shown that innovation, flexibility, partnership, leadership and ownership can bring about change. Change is not always immediately visible but, based on Tuvalu's available resources, it is demonstrating that transformation can spread through the system and, with supportive connections and linkages, its people can build resilience through trade and prosper. 

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As the second phase of the Enhanced Integrated Framework (EIF) comes to an end in 2024, the objective is to produce a catalogue of impact stories showcasing the efforts of the EIF partnership in the least developed countries (LDCs) and recently graduated LDCs where it has been actively engaged. This impact story makes up one of the stories in the catalogue. Essential input and reviews were received from the country‑based EIF National Implementation Units (NIUs) and the wider EIF team. 

The primary objective of each impact story, as well as the entire catalogue, is to adopt a journalistic approach in recounting the EIF's engagement in the LDCs during both Phase One and Two. The aim is to offer valuable insights and to document outcomes and impacts, as well as some lessons learned from the work of the EIF partnership in the LDCs. These stories do not provide a comprehensive overview of every aspect of EIF partnership engagement such as precise timelines or the exact extent of involvement (i.e., financial contributions). Instead, they serve as one of several means of information about the work of the EIF partnership. Interested readers are encouraged to supplement these impact stories by consulting other sources, including EIF Annual Reports, Trade for Development News articles, EIF social media channels, and, where applicable, the NIUs in the LDCs as well as the EIF Executive Secretariat.

It is essential to acknowledge that the information provided is neither exhaustive (e.g., it is based on the latest available data at the time of writing in 2023) nor evaluative in nature. 

Lastly, while each impact story adheres to a similar structure, the diverse range of countries, contexts, and EIF engagements means that each story is unique.