Kiribati is overcoming challenges integrating into the global trading system

KEY RESULTS

• Advancement of key new policies | Support by the Enhanced Integrated Framework (EIF) helped strengthen Kiribati’s institutional capacity, which resulted in the formulation and implementation of trade-related policies, including the Trade Policy Framework, the Investment Policy Framework (IPF) and an e-commerce policy. 
• Aid for trade coordination | The EIF contributed to improved donor coordination and Aid for Trade delivery in Kiribati, in line with the Paris Declaration on Aid Effectiveness and the Forum Compact – A Pacific regional enabling mechanism to achieve sustainable development.
• Scaled-up virgin coconut oil sector capacity | The EIF, together with partners, supported Kiribati’s virgin coconut oil sector, including targeted training on processing, packaging and marketing, as well as the construction of a new processing centre.

Kiribati is made up of 33 atolls, which occupy a vast area in the equatorial Pacific. With a population of approximately 123,000, Kiribati is one of the world’s smallest and most isolated countries, posing a number of economic and global trade integration challenges, including the lack of economies of scale and isolation from major markets. It also faces several developmental challenges that are further impacted by climate change and a lack of employment opportunities. Most of the atolls are very low-lying and at elevated risk from climate change-induced sea level rise.

Kiribati’s long-term development path is enshrined in the Kiribati 20-Year Vision 2016-2036  (KV20) development plan, which the country aims to use as a pathway to becoming a wealthy, healthy and peaceful nation. Together with local stakeholders and development partners, the EIF has been supporting Kiribati through the needed analytical work to ensure trade is prioritized in its national development plan and economic policy. In 2010, the Diagnostic Trade Integration Strategy (DTIS) found that Kiribati had no official policy covering the various trade agreements to which it was a signatory. The DTIS therefore formed the basis of such a policy and recommended a general realignment of government priorities in favour of service exports, including tourism.

In June 2016, the Kiribati Development Partners Forum – a meeting between the Government and development partners – was organized by the Government to introduce the Kiribati Development Plan and request support for its implementation. At the Forum, it was agreed that better coordination of development projects was key to improving economic productivity and trade. The Kiribati Trade Capacity Development and Institutional Strengthening Project – which began in 2016 – aimed to accomplish these goals by integrating Kiribati into the global trading system, strengthening its capacity to implement trade strategies, and by mainstreaming trade into national development planning. Throughout the project, the EIF supported the operations and activities of the Ministry of Commerce, Industry and Cooperatives (MCIC), especially in terms of helping it formulate and implement trade-related policies.

Building institutional and management capacity

With the EIF’s support in the operations and activities of the MCIC to strengthen trade capacity and institutions, the Government of Kiribati made significant efforts to create an enabling trade policy environment by developing a range of critical policies and framework documents and by training government officials on the implementation of the new policies as well as reviewing outdated ones.

With financial and technical assistance from the EIF, and together with the United Nations Development Programme (UNDP), the Government unveiled the Kiribati Trade Policy Framework 2017-2027 in 2017, the first of its kind for the country. The policy fills an important gap in Kiribati’s overall policy framework for economic transformation and is aligned with the Sustainable Development Goals.

In 2018, the Government of Kiribati also launched its Investment Policy Framework (IPF), which was also supported by both the EIF and UNDP. Aligned with KV20, the IPF harmonizes policies and regulations relating to foreign investment, while promoting economic growth, inclusive sustainable development and poverty reduction. The framework recognizes the need for Kiribati to boost investor confidence as a gateway for further investment, more jobs and higher incomes. 

In 2019, the EIF provided support for an e-trade readiness assessment in Kiribati. The assessment – which was implemented by UN Trade and Development (UNCTAD) – provided a framework and recommendations that the Government can use to further develop e-commerce in the country. Additionally, the EIF undertook capacity-building efforts to help policymakers better assess the strengths, weaknesses, gaps and opportunities in Kiribati’s quest towards having a fully functional digital economy. In 2022, the Kiribati Government drafted and submitted an E-Commerce Policy. 

Ensuring ownership and sustainability

Throughout its engagement in Kiribati, the EIF ensured that the planning and implementation of trade-related capacity-building and institutional strengthening activities were undertaken in collaboration with the MCIC’s Trade Promotion Division, other MCIC divisions and relevant line ministries. Ministry staff also participated in the design and discussion of recommendations for trade-related reforms and were involved in training for staff to produce more reliable and actionable trade policies. These efforts provided an essential contribution towards ensuring country ownership and the sustainability of EIF support by mainstreaming trade into national development policies.

In order to strengthen institutional coordination of trade and development, Kiribati’s National Implementation Unit (NIU) has been integrated into the government system. The NIU is comprised of MCIC staff, who would return to their former positions after project completion. This integration provided a strong link and synergies between the EIF trade capacity development project and the Government at large.

The EIF continued to facilitate the building of institutional and management skills among government staff to allow them to prioritize trade in national strategies and create a positive environment for trade to flourish. The EIF also coordinated the delivery of Aid for Trade by donors and implementing agencies, ensuring that an aid coordination meeting dedicated to trade was held at least once a year. This has been key to solidifying trade as a government priority and in leveraging trade for growth. 

Supporting Kiribati's integration on the global stage for trade

The EIF has also supported Kiribati's participation in a range of regional and global meetings. These meetings featured dialogues on job creation and increasing exports from Pacific Island countries, while at the same time lowering barriers and providing greater certainty for foreign businesses operating in the region. With the help of the EIF, Kiribati also signed and ratified the Pacific Agreement on Closer Economic Relations (PACER) Plus in 2019. This development-centred free trade agreement helps better integrate the country into regional markets. Furthermore, Kiribati began the process of acceding to the Pacific Area Standards Congress (PASC) – an independent and voluntary organization of Pacific Rim National Standards Bodies – after participating in its 2018 annual general meeting. The country is now able to benefit from PASC’s support, shared expertise, and resources on standardization issues in the region.

Developing natural resource value chains

Coconut production is an integral part of Kiribati’s cultural traditions and economy. With linkages to the tourism sector and the cultural capital component of KV20, the coconut sector is ideally suited to help achieve Kiribati’s long-term development goals. The coconut oil value chain plays a vital role by providing a safety net for the inhabitants of the capital and outer islands.

To this end, the EIF has also supported the Virgin Coconut Oil (VCO) sector. A VCO processing center targeting the production of value-added coconut products was already established and equipped with production equipment on one of the outer islands (Butaritari island) in 2020 with funding from the IBSA Fund in order to support the development of inclusive trade and private sector growth. One of the challenges faced by micro-, small-, and medium-sized enterprises and local producers in the VCO value chain is a lack of production equipment. Building on the first centre, and with help from UNDP, a second outer island (Tab-South) VCO centre was constructed in 2022 and equipped with production tools and equipment with EIF funding to assist producers – especially women and youth – in taking advantage of the skills gained in producing coconut value-added products, including VCO and coconut milk. 

Speaking about the VCO centre, the Kiribati President, Taneti Maamau, said that it will provide three key benefits:

Towards a national and trade development agenda

With support from the EIF and its other development partners, the Government of Kiribati has moved towards achieving a number of goals set out in its Trade Policy Framework. These achievements include the formulation and implementation of trade policies, as well as becoming a more fully integrated and active player in regional and global trade. The EIF has made a lasting contribution to Kiribati’s trade-related capacity and engagement, which continues to help guide the country’s path to development.