SINGLE PROGRAMMING DOCUMENT FOR THE 9TH EDF OF THE NETHERLANDS ANTILLES 2004-2007
The Government of the Netherlands Antilles and the European Commission hereby agree as follows:
The Government of the Netherlands Antilles, here represented by Mr Ralph James, Territorial Authorising Officer, and the European Commission, here represented by Mr Per Eklund, Head of Delegation of the European Commission in Guyana, hereinafter referred to as the Parties, held discussions with a view to determining the general orientations for co-operation for the period 2004 – 2007.
In the course of these discussions, the Single Programming Document (SPD) including an Indicative Programme of Community Aid in favour of the Netherlands Antilles were drawn up in accordance with the provisions of the EU/OCT Association, as mentioned in the Treaty establishing the European Community and in particular Article 182, as well as in both the Council “Overseas Association Decision” 2001/822/EC of 27 November 2001 and in the Commission Regulation No 2304/2002 of 20 December 2002. These discussions complete the programming process relating to the Ninth European Development Fund in the Netherlands Antilles.
Signatures
For the Government of the Netherlands Antilles For the European Commission
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Mr. Ralph L. JAMES Mr. Per EKLUND
Place : Place : Date : Date :
MAP, Netherlands Antilles
Summary data, Netherlands Antilles Surface 802km2 Geographic region Caribbean Population, total (2001) 175,653 Membership of regional/international organizations CARICOM (observer), ACS (associate member), W.T.O., CHA Population growth (average % past five years) -2.9 Life expectancy at birth (years), male and female 71.8 and 77.7 Fertility rate (births per woman) 2.1 Mortality of under 5 years (per 1000 children) n.a. Illiteracy total (% age 15 –24 year olds) 1.1 Illiteracy female (% age 15 –24 year olds) 1.0 Primary enrolment (% of relevant age group), 2001 99.6 Secondary enrolment (% of relevant age group), 2001 92.6 Secondary enrolment, female (% of age group), 2001 93,9 Unemployment rate (% of labour force), 2001 14.6 Unemployment rate, females (% of female labour 16.8 force), 2001 Poverty rate (percentage population below poverty 22 line), 2001 HIV incidence (per 1000 population) 7.6 Main natural resources (items) Deep harbours, Inflation rate (% average past three years) 2.1 GDP per capita, 2001 €12,441 (US$ 15,800) GDP growth (average % past five years) 0.4 Value added in agriculture (% of GDP), 1999 0.8 Value added in industry (% of GDP), 1999 12.3 Value added in services (% of GDP), 1999 86.9 Exports of goods and services (% of GDP), 1999 72 Imports of goods and services (% of GDP), 1999 77 Number of tourists, average over past three years About 1 million (stay-over visitors) Total debt (percentage of GDP), 2003 80 Foreign direct investment, flow (€ million, 2002) €10.9 Overall government budget balance (% of GDP), 2003 -7.8 Fixed lines and mobile phones (per 1000 people) 233 (fixed), 194 (mobile) Personal computers (per 1000 people) 107 Internet users 67 Note: The average exchange rate for November 2004 (€1= US$1.27) has been used to convert US$ values into Euro.
Table of Contents
Executive summary 1
1 The EC co-operation objectives 2
2 Policy agenda of the Netherlands Antilles 2
3 Description and assessment of the political, economic and social situation 4 3.1 Constitutional and political situation 4 3.2 Economic situation 5 3.2.1 Main features of the economy 5 3.2.2 Recent economic developments 6 3.2.3 Public finance 7 3.2.4 Trade and regional integration 8 3.3 Social situation 8 3.4 Medium-term challenges and prospects 12
4 Assessment of past and ongoing EC co-operation 13 4.1 EC Support under previous EDF Cycles 13 4.1.1 The Territorial Indicative Programmes 13 4.1.2 Regional cooperation 15 4.2 Programmes of the Dutch Government 15
5 Response strategy 16 5.1 The rationale for the response strategy 16 5.2 The EC response strategy 17 5.3 Funds available 17 5.4 Priority areas 18 5.5 Consistency with Government policy and donor interventions 19 5.6 Coherence with EU Policy 20
6 Indicative programme 20 6.1 Introduction 20 6.2 Financing envelope 21 6.2.1 9th EDF allocation: EUR 23.2 million 21 6.2.2 9th EDF OCT regional funds 21 6.2.3 Other sources of financing 21 6.3 Focal sector 21 6.3.1 Overall objective 21 6.3.2 Intervention objectives 22 6.3.3 Expected results 22 6.4 Monitoring and indicators 23 Annexes Annex 1 Assistance framework Annex 2 Chronogram of Activities Annex 3 Indicative Commitments Timetable Annex 4 Indicative Disbursements Timetable Annex 5 Main Ongoing Projects Financed by EU
Annex 6 Priority Areas for NGOs Annex 7 Donor Matrix
ACRONYMS
ACP - Africa Caribbean Pacific ACS - Association of Caribbean States AMFO - Antilliaans Mede-financierings Organisatie CARICOM - Caribbean Community CDE - Centre for the Development of Enterprise CHA - Caribbean Hotel Association CITES - Convention International Trade Endangered Species CTO - Caribbean Tourism Organization CXC - Caribbean Examination Council EC - European Commission EDF - European Development Fund EIB - European Investment Bank EU - European Union ERNA - General Regulations of the Island Territories (Eilanden Regeling NEA) FTAA - Free Trade Area of the Americas GDP - Gross Domestic Product IMF - International Monetary Fund ANG - Netherlands Antilles Guilder NEA - Netherlands Antilles NGO - Non-Governmental Organization OCT - Overseas Community Territories SESNA - Small Enterprises Stimulation Programme in the Netherlands Antilles SME - Small and Medium Enterprises SNAYDP - The Support to the Netherlands Antilles Youth Development Programme SONA Stichting Ontwikkelingsfonds Nederlandse Antillen SPD - Single Programming Document SSSB - Sewerage and Sanitation System Bonaire TAO - Territorial Authorizing Officer TCF - Technical Cooperation Facility TGS - Training Grant Scheme UNDP - United Nations Development Program VAT - Value Added Tax WTO - World Trade Organization W.T.O. - World Tourism Organization
PART A CO-OPERATION STRATEGY
Executive summary
In July of this year a new Central Government took office. All islands are duly represented in this Government. The coalition parties which support the current Central Government have endorsed an Emergency Accord (May 2004) and an Emergency Program (July 2004) which will be used as the guiding policy and political documents for the remaining period of office 2004 – 2006.
According to the policy agenda of the present Central Government, Social development and poverty reduction are the highest priority objectives, together with stimulating GDP growth.
After a period of economic stagnation, there have recently been encouraging signals of economic recovery. The country has in principle a strong development potential, based on a developed tourism sector and a diversified economic base, including transit port activities, oil refining, telecommunications and financial services on the largest island, Curacao. However, substantial macro-economic imbalances, increased poverty and the continuation of structural weaknesses are important obstacles to achieving sustainable economic growth. The high and increasing national debt is of particular concern.
An important social problem is the high and increasing number of poor households living on a monthly income of less than ANG 1,000 (€440 at the exchange rate of November 2004). The incidence of poverty is highest on the larger islands of Curaçao and St. Maarten, but it is also growing on the smaller islands of Bonaire, Saba and St. Eustatius. Increased poverty is reflected by the growth of urban slum areas which have low-quality social infrastructure (e.g. water and low-income housing) or no social infrastructure at all. In addition, poor social infrastructure is contributing to low levels of community and labour participation. It is clear that there is a strong need for investments in urban infrastructure in these and community development on all islands in order to combat poverty.
Based on the development needs of the Netherlands Antilles, supported by the EU co-operation objectives for the OCTs, which concentrate on the promotion of economic and social development, the Netherlands Antilles and the Commission have agreed to focus the EC financial assistance under the 9th EDF on poverty alleviation through social development. In consultation with the relevant state and non-state actors it was agreed that within the social sector assistance would be targeted at one focal sector: urban infrastructure for socially deprived areas. The following actions were identified: • Improving the living conditions of existing neighbourhoods: infrastructure improvement of utilities, support for institutions with a view to better urban governance. • Creating the conditions for new housing areas to be developed (site and service schemes): including infrastructure (water supply, drainage, roads, electricity) and promotion of innovative house-building technologies.
The establishment of a Programme Management Unit will assist the Territorial Authorizing Officer to manage the implementation of these actions.
The programme will be implemented in the form of projects.
1 The EC co-operation objectives
In accordance with Article 182 of the Treaty Establishing the European Community (EC), the purpose of the association between the European Community and the Overseas Countries and Territories shall be “to promote the economic and social development of the countries and territories and to establish close economic relations between them and the Community as a whole”. These objectives have been confirmed and reinforced in Article 1 of the Council Decision of 27 November 2001 on the association of the overseas countries and territories with the EC. In accordance with Article 1, such objectives will be pursued in accordance with the principles set out in Articles 184 to 188 of the Treaty by focusing on the reduction, prevention and, eventually, eradication of poverty and on sustainable development and gradual integration into the regional and world economies.
In their Statement of 10 November 2000 on the EC’s Development Policy, the Council of the European Union (EU) and the European Commission determined a limited number of areas selected on the basis of their contribution towards reducing poverty and for which Community action provides added value; these were the link between trade and development; support for regional integration and co-operation; support for macro-economic policies; transport; food security and sustainable rural development; institutional capacity-building, particularly in the area of good governance and the rule of law. The Statement also specifies that in line with the macro-economic framework, the Community must also continue its support in the social sectors (education, health, water, and housing), particularly with a view to ensuring equitable access to social services.
Under the terms of the Treaty establishing the EC the Community and the Member States shall co-ordinate their policies on development co-operation and shall consult each other on their aid programmes. Efforts must be made to ensure that Community development policy objectives are taken into account in the formulation and implementation of other policies affecting the developing countries. Furthermore, systematic account shall be taken in mainstreaming into all areas of co-operation the following thematic or crosscutting themes: gender issues, environmental issues and institutional development and capacity building.
The above objectives and principles and the territorial policy agenda presented in the next chapter constitute the starting point for the formulation of the present Single Programming Document (SPD), in accordance with the principle of territorial ownership of development strategies.
2 Policy agenda of the Netherlands Antilles
Socio-economic policy is framed at national level with respect to overall policies and at the level of the individual islands, which enjoy a high degree of autonomy with respect to economic and social development, as their development needs and priorities (sectors, scope, markets) strongly vary from island to island. The islands formulate their own multi-annual socio-economic development plans. The main objectives of the development plans of the islands are to achieve balanced development in the economic, financial and social welfare of the population, especially
2 for the most vulnerable and lower-income groups through promoting creation of employment, increased investment in social infrastructure focusing on deprived living areas.
At national level, the policy agenda and priorities of the new Government of the Netherlands Antilles for the period 2004-2006 are outlined in an Emergency Accord and an Emergency Program, which set out the policy agenda for the partnership between the coalition parties of the five islands. In these documents the Government of the Netherlands Antilles is committed to foster sustained economic growth and accelerate social recovery over the long term. Based on lessons learned, this commitment recognizes amongst others the following principles:
• The integrated residential improvement approach will be continued. • Compulsory social education will be introduced for non-active young people between 18 and 24 years old. • Backlog projects on the smaller islands will be identified. • Cross-border crime, especially drugs-related criminal activities, will be considered as joint responsibilities of the Kingdom Partners. • An emergency health plan will be drafted for each island whereby the Central Government will be extending support to the individual islands. Points of departure will be the quality, accessibility and the costs of the health care system. • Implementing the multi-annual economic development plan of the Central Government. • Improvement of the Central Government apparatus. • Healthy government finances and reduced budget deficits.
The government is concentrating on the following strategies for economic and social development: 1. Fostering sustained economic growth and sound finances through reducing costs, raising productivity, improving access to finance for micro- and small enterprises, creating business incentives and new sources of employment, and enhancing growth. 2. Accelerating social recovery with special emphasis on alleviating poverty and improving living conditions through: • Education: e.g. widening access to and improving the quality of vocational training, lowering rate of school drop-outs, curriculum development, after-school activities, support for bringing up children, matching demand and supply on the labour market. • Health: e.g. reducing costs in primary and preventive care services, improved health infrastructure, prevention of teenage pregnancies. • Improving infrastructure in socially deprived areas, particularly in water and water- related infrastructure, as well as neighbourhood improvement. • Preventing and reducing crime, drug abuse and domestic violence.
The improvement of living conditions in socially deprived neighbourhoods through infrastructure improvements is a key component of the government’s poverty alleviation strategy. The government has established an interdepartmental committee on Integrated Urban Neighbourhood Development to coordinate urban improvement programmes. An important new programme which will start in 2005 for completion in 2006 targets infrastructure improvements in specific socially deprived neighbourhoods benefiting 450 households (200 on Curaçao, 65 on Bonaire, 125 on St Maarten, 40 on St Eustatius and 20 on Saba). Plans have also been developed for water supply projects on St Maarten and St Eustatius. The programme is funded by the national government and the Dutch government, which each contribute 50 percent of the cost of the programme (estimated at € 4.4 million)
3 3 Description and assessment of the political, economic and social situation
The Netherlands Antilles is a small but complex country of 175,653 inhabitants (2001) in the Caribbean Sea. It consists of two island groups. The Leeward Islands near the coast of Venezuela and the Windward Islands located about 180km east of Puerto Rico and 900km north-east of the Leeward Islands. The Leeward Islands consist of the island territories of Curaçao (444km² - 130,627 inhabitants) and Bonaire (288km² - 10,791 inhabitants). The Windward Islands comprise three islands: the southern part of the Island of St. Maarten (34km² - 30,594 inhabitants), Saba (13km² - 1,349 inhabitants) and St. Eustatius (21km² - 2,292 inhabitants).
3.1 Constitutional and political situation
The Netherlands Antilles forms an integral part of the Kingdom of the Netherlands. The Netherlands Antilles has been an autonomous part of the Kingdom since 1954, with its own elected parliament. Its relations with the other partners of the Kingdom (Aruba and the Netherlands) are governed by the Charter of the Kingdom. The Sovereign of the Kingdom is Head of the State.
The Charter regulates in Article 3, paragraph 1 the main responsibilities which fall under Kingdom affairs. These are (a) maintaining the sovereignty and defence of the Kingdom, (b) foreign affairs, (c) the Dutch citizenship, (d) regulation of the knighthood, flag and weapon of the Kingdom, (e) regulation of the nationality, safety and navigation of ships and flying the Flag of the Kingdom, (f) supervision of the general regulations regarding admission and expulsion of Dutch citizens, (g) regulation of the general conditions regarding admission and expulsion of foreigners and (h) extradition.
The Governor General represents the Sovereign in the Netherlands Antilles. The Netherlands Antilles has two levels of Government: a central (federal) and insular (territorial) level. At the central level there are four bodies, (1) the Governor-General, who is appointed by and represents the Sovereign in the (2) Council of Ministers, together forming the Central Government, which takes care of State affairs, and (3) the Parliament of the Netherlands Antilles, consisting of 22 members, which is elected every four years on the basis of universal suffrage by the entire population of the Netherlands Antilles. This Parliament is the legislative body. The Governor General, who is nominated by the Parliament, appoints the ministers. The Central Government has executive powers in internal affairs. The Council of Ministers of the Netherlands Antilles is represented in the Council of Ministers of the Kingdom by a (4) Minister Plenipotentiary, who resides in The Hague and has full voting power. The Central Government resides in Willemstad, the capital of Curaçao island.
At the island level there are three bodies on each of the five Island Territories: (1) a Lieutenant Governor appointed by the Sovereign upon nomination of the Central Government after consultation with the relevant island, (2) an internally appointed Executive Council consisting of Commissioners with joint responsibility for decision-making, and (3) an Island Council with legislative power, elected every 4 years on the basis of universal suffrage by the inhabitants of the Island concerned. The Lieutenant Governor heads the Executive Council and represents therein the Central Government and is also the Chairman of the Island Council. The Executive Council together with the Island Council form the Island Government.
4 It should be noted that the elections for the national parliament and the island councils are not held at the same time. The Central and Island Governments have been discussing and are exploring the possibility of synchronising the two elections.
Political decision-making in the Netherlands Antilles is complex because of the two-layered governing structure. The responsibilities and tasks of the Central Government and the Island Governments are defined and regulated in the Constitution (Staatsregeling) of the Netherlands Antilles and the General Regulation for the Island Territories (ERNA-Eilandenregeling Nederlandse Antillen). According to the ERNA, each Island Territory governs its own territorial affairs and enjoys a high degree of autonomy with respect to economic and social development. Development needs and priorities (sectors, scope, markets) vary considerably from island to island. The role of the Central Government is limited to that of facilitator and, especially, regulator. The latter function covers mostly state affairs (legislation, inspection) and includes as main areas: jurisdiction, prosecution and legal action, police, communications, taxation, public health, social security insurance, education, control of the economy, establishment of enterprises, labour legislation, monetary affairs and banking, as well as foreign currency, foreign affairs (in consultation with the Kingdom of the Netherlands), customs and duties and zoning framework legislation.
The constitutional status of the islands is being debated and the relationship between the Islands and the Central Government and also with the Government in The Hague is bound to change. The Government of the Netherlands Antilles and the Dutch Government are appointing a Joint Committee to study the matter and give advice. The New Treaty establishing a constitution for Europe which was recently signed offers a possibility, but still needs to be ratified in order to change the status of the Netherlands Antilles from an Overseas Territory of the Netherlands to an Outermost Region of the European Union. This step would entail major constitutional changes and result in the NEA becoming part of the European Union. The Netherlands Antilles and the Netherlands (and Aruba) have established a Joint Committee to study and analyse the advantages and disadvantages of such an option.
The present Central Government came into power in July 2004. It consists of a broad coalition of seven political parties which represent all the islands, including three from Curaçao and the biggest parties on Bonaire, St-Maarten, Saba and St-Eustatius (in total 15 members of parliament). The opposition has seven members in parliament, namely one from Bonaire, one from St-Maarten and five from Curaçao. The new Government has improved relations with the Dutch Government, resulting in the concluding of a cooperation agreement for the implementation of an Emergency Programme.
3.2 Economic situation
3.2.1 Main features of the economy The NEA Antilles has a relatively open economy, with tourism, trade, transport and storage (oil storage and bunkering), and international financial services being the most important sectors. The main natural resources with which the country is endowed include several deep harbours and a tropical environment attracting tourists. However, poor soils and inadequate water supplies hamper agriculture development.
The NEA enjoys a relatively high GDP per capita compared with most Caribbean countries (€12,441 per capita in 2002). The average annual GDP growth of the Antillean economy during 2001, 2002 and 2003 was 0.6 percent, 0.2 percent and 0.5 percent respectively. Real GDP per
5 capita increased by higher rates as is shown in Table 3.1. Substantial net emigration explains the difference between total and per capita GDP growth. The island of Curaçao accounts for about 70 percent of the NEA economy and Bonaire 5 percent. The Windward Islands together account for about 25 percent of the economy (World Bank, 2001).
The NEA’s labour force is divided into two unequal parts, consisting of a small pool of relatively well-educated workers and a large pool of workers with low skills and education. Unemployment is high, at about 15.6 percent in 2002 (See Table 3.1). In Curaçao it is 15.8 percent, in St. Maarten 12.8 percent, in Bonaire 9.1 percent, in St. Eustatius 8.4 percent and in Saba 6.1 percent. The unemployment rate is especially high among young people (29 percent-35 percent in 2001). At the same time, however, the labour market of the Netherlands Antilles has attracted a considerable number of immigrant workers. Close to one-third of the employed workforce was born outside the NEA. Many come from other Caribbean islands, especially Haiti and the Dominican Republic, and from nearby countries in Latin America. For the Netherlands Antilles as a whole 20 percent of the work force was born in these countries. But there are substantial variations between the islands. In St Maarten, persons born in Caribbean and South American countries account for almost 60 percent of the workforce. On Curaçao the figure is 9 percent.1 In quite a few cases immigrants fill skilled positions for which local workers are not available. However, many of the immigrants from the Caribbean and South America also do unskilled work at low wages and under poor conditions.
The economy of Curaçao is the largest and most diversified among the islands of the Netherlands Antilles. Its main productive sectors comprise an oil refinery, small and medium size industrial plants, a telecommunications sector, trade and storage (Curaçao has one of the largest bunkering facilities in the world), tourism, and financial services. The economies of the other islands are characterized by their small size and dependency on tourism and Government support. In addition, St. Eustatius has important oil transhipment and bunkering facilities. Both Saba and St. Eustatius host small, privately-owned medical faculties2. On the islands of Curaçao and St. Maarten tourists are cruise ship passengers and stay-over visitors. Tourists on the smaller islands are mostly day-trippers attracted to the marine environment. Bonaire’s main economic pillars are tourism, construction and transport.
The government is promoting private sector development by implementing programmes of business support services and facilitating access to credit for micro and small businesses. Investment incentives are also provided to promote both foreign and domestic investment. Furthermore, there are facilities for promoting exports and for introduction of new technologies.
3.2.2 Recent economic developments Following more than a decade of relatively strong economic growth, the Antillean economy went through a period of recession during the second half of the 1990s, followed by a decline in tourism after the 11 September terrorist attack leading to a substantial increase in unemployment. Other external developments that adversely affected the economy of the Netherlands Antilles included reduced activity of the oil refinery, and several severe hurricanes, which damaged the local housing stock and tourism facilities in the Windward Islands. The financial sector is experiencing a slowdown as a restructuring is taking place in response to international and domestic measures to bring the regulatory regime for this sector into line with OECD requirements. Internal factors that have adversely affected the economy include high
1 Data on immigrants have been taken from the 2001 population census results. 2 These faculties attract some 200 to 300 students from the US and Caribbean region. Their economic contribution (mainly in terms of rents and retail sales) is important for the islands. Bonaire has recently started a similar operation.
6 industry-wide wage increases and increased government deficits. Underlying fiscal imbalances, vulnerability in the main economic sectors and a fixed exchange rate regime have undermined the economy’s flexibility to adjust to these shocks.
Over recent years both the current account and trade balances have been negative (see Table 3.1). However, the level of reserves has increased, mainly as a consequence of the inflow of development aid from The Netherlands.
Table 3.1 Some economic indicators 1999 2000 2001 2002 2003 Domestic Economy Real GDP change (in %) -0,7 -2,0 0,6 0,2 0,5 Real GDP per capita (US$)1) 14.300 14.700 15.200 15.800 … Real GDP/capita (change in %) 2,2 2,7 3,2 4,2 … Unemployment rate (% of labor force) 16,5 14,0 15,8 15,6 … Exchange rate Exchange rate regime Fixed exchange rate (1,7895 NA guilder/U.S. dollar) Public finance In percentage of GDP Total revenue/GDP (percentage) 25,6 26,5 Total expenditure/ GDP 30.9 34.6 Share of capital expenditure in total expenditure 9,3 3,3 General government balance -4,0 -4,1 -4,1 -5,3 -8,1 Public debt 67,2 66,5 68,5 74,6 80,8 Balance of Payments In percentage of GDP Current account balance -7,8 -2,7 -5,5 -4,7 -4,5 Trade balance (goods & non-factor services) -36,9 -38,6 -39,8 -40,0 -41,1 1) In Euro at the exchange rate of November 2004, the GDP figures are: 1999: € 11 260, 2000: € 11 575, 2001:11 970 and 2002: € 12 440. Sources: IMF Public Information Notice (PIN) no 03/07, June 13, 2003 and Rapport Commissie Schuldenproblematiek, July 2003
Notwithstanding these earlier developments, the last three years have shown a modest economic recovery. Improvements in the performance of the tourism sector and in private investment were the main contributing factors. However, the deterioration in the current account, as well as in public finance, combined with a high public debt, continue to cloud economic prospects.
3.2.3 Public finance The public finance situation of the Netherlands Antilles is a cause for concern. Its poor state is due to a number of factors, including a weak tax administration, high wage increases in the civil sector and large increases in health costs and extra budgetary expenditures and weak GDP growth. In 2003, public debt is expected to increase to more than 80 percent of GDP. The government budget deficit has increased to some 8 percent of GDP in 2003 (see Tables 3.1). With the exchange rate pegged to the US dollar, inflation has remained low. The consumer price index increased by 0.5% in 2002, and is expected to rise by around 2% in 2003.
In consultation with the IMF the government has taken measures to reduce government expenditure and its budget deficit. Since the new Government took office, the Netherlands Government has relaxed the conditions for the disbursement of its aid. A recent co-operation agreement, which is the basis for support by the Dutch Government for the implementation of an Emergency Program, is also aimed at improving the government’s financial situation.
7 Over the period 1998-2002, development aid by the Netherlands amounted to about 6 percent of total government expenditure and EU funding to about 0.2 percent.
3.2.4 Trade and regional integration The economy of the Netherlands Antilles is characterized by a high trade dependency. Almost all consumer and capital goods are imported, with Venezuela, Mexico and the US being the major suppliers. Non-oil, merchandise export activity in the Netherlands Antilles is mainly concentrated in two free zones (port and airport) and an industrial park. The latter specializes in re-exporting merchandise to the EU and the USA under the OCT statute and the Caribbean Basin Initiative.
Under a special agreement between Aruba and the Netherlands Antilles, imports and exports between the two territories are duty-free. The three Windward Islands form a de facto duty-free zone with low turnover tax rates. Trade between the Windward and the Leeward Islands is limited, because of the low production base in both groups of islands, high transport costs (900 km distance) and a high import duty regime in Leeward Islands.
Imports into the Leeward Islands are subject to an import duty regime aimed at generating government revenue and at protecting domestic sectors, particularly in manufacturing. In recent years protection through import licensing has been largely phased out. Further measures to reduce protection are under review. In controlling trade flows, considerable efforts are invested in combating illegal import, export and transhipment of drugs, merchandise and weapons, and in ensuring compliance with the CITES Treaty (related to trade in endangered plant and animal species). A number of important initiatives have been taken including the upgrading of ”Asycuda” (automated system for customs to improve efficiency and customs procedures) and participation in the “Information Coordination project” (coordination of regional/international information on drugs abuse and fraud and control on illegal transports). Other actions are geared towards updating existing customs legislation, creation of new customs legislation, in-house training and institution building.
The Netherlands Antilles aims to strengthen and improve its trade relations with regional trading partners, and is strengthening its participation in trade blocks, both in the wider Caribbean region (i.e. CARICOM, where it has observer status, and ACS (Association Caribbean States) of which it is an associate member) and on a global level (WTO). The NEA participates in the Caribbean Tourism Organization (CTO). In the longer term, there are plans to participate in the FTAA (Free Trade Agreement of the Americas).
The NEA wishes to be closely associated with the ACP-EU negotiations on establishing Economic Partnership Agreements (EPAs). In this context the NEA is exploring the benefits of a closer association.
3.3 Social situation
Although the socio-economic situation of the Netherlands Antilles is characterized by a relatively high per capita GDP, there is nonetheless a considerable degree of poverty, due to a substantial disparity in the distribution of income. Based on a household survey carried out in 1997, it is estimated that about 40 percent of the households can be classified as poor, with a household income below the poverty line estimated at approximately €395 (US$500) per month. The poor include unemployed young people with low levels of education, single mothers who are heads of household, the elderlyt and drug addicts. In St. Maarten, immigrants constitute a growing group of poor.
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Rising unemployment has contributed to increased rates of emigration, especially to the Netherlands and the USA. At the same time the inflow of significant numbers of immigrants has increased pressure on the social services systems of the islands.
Island governments are ultimately responsible for formulating and implementing social development programmes for their populations. However, NGOs play an important role in the implementation of social programmes. Most NGO activities are concentrated on helping the most vulnerable groups, with the majority of the expenditure flowing to education-related activities. The island governments’ poverty alleviation programmes have suffered from the need to reduce government expenditure.
The Government of the Netherlands Antilles is launching a Country Poverty Assessment Study, to be conducted by the UNDP and World Bank and financed by the Dutch Government. This assessment will help 1) define poverty in relation to the specific life situations and local realities of the population of the five islands of the Netherlands Antilles; 2) identify the root causes of poverty in the islands, identify policies, strategies and programmes that would reduce the incidence and severity of poverty and improve the overall quality of life in a sustainable way; and 3) examine the processes and policies that foster conditions of poverty.
Social welfare. Households with heads of household who are unemployed and without income are entitled to welfare allowances provided by the Social Welfare Departments of the islands. In 2001 about 25 percent of the households received welfare allowances amounting to an average of € 220 (US$ 280) per household per month. Other social welfare coverage includes old age benefits, allowances for widows and orphans, subsidies for school fees and for meeting the costs of public utilities.
Education and training. Both primary and secondary education are almost wholly subsidized by the government. The share of total government expenditure on education in GDP amounts to 6.7 percent (1999 data). The education system is characterized by six years of basic education (from age 6), preceded by two years of pre-school education. Basic education is followed by a number of streams of secondary education preparing for different levels of higher education. In St. Maarten and Saba a significant number of students follow secondary education in English leading to the CXC examination. Enrolment in basic and secondary education is virtually universal. However, repetition and dropout rates in primary and secondary schools, especially among students coming from the low-income groups, are reported to be high and are a great source of concern (at primary and secondary levels the dropout rate is estimated at 38 percent and 18 percent respectively).
At tertiary level, there is the University of the Netherlands Antilles (UNA) and a Teacher Training College, located in Curaçao and a community-type college located in St. Maarten. There are also a number of courses, partly subsidized, at the tertiary vocational level. Many Antilleans pursue tertiary education in the Netherlands and, increasingly, in the USA. There are a few vocational schools within the formal education system, but they are operating with poorly qualified teachers and poorly designed curricula and therefore producing graduates with skills that are of limited relevance. There is a lack of vocational and empowerment training for dropouts and out-of-school youth. Consequently, in the labour market there is a severe shortage of trained local workers and during the past years a significant share of the need for skilled labour has been met by immigrants. The present school system, therefore, while successful in generating a high level of literacy - estimated at 98.9 percent - produces a large proportion of school leavers with low levels of relevant training, which leads to difficulties in finding employment.
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The Government has initiated reforms in education to create a system which is better able to serve the economic needs and assist the people of the Netherlands Antilles to attain their desired level of personal development. The reforms are being supported by the Netherlands.
In January 2002 a protocol of agreement was signed between the Netherlands and the NEA for a five-year cooperation programme in education (2002 – 2006), focusing on basic education, vocational education and institutional and organizational strengthening. Some of the core improvement objectives identified for basic education include school models, basic curriculum improvement, language education, ICT in education, school infrastructure, quality assurance and teacher training and upgrading. Some of the core improvements needed in vocational training that have been identified include: syllabuses and training plans, language policy, student tracking and care system, school management and organization, legal framework and educational tools and its inventory. There are plans for technical support (local and external) for the education departments of the NEA at island and national level, as well as tailor-made workshops and on-the-job training for professionals in the field.
With respect to vocational training, a Youth Development Programme (SNAYDP) has been initiated with support from the EU amounting to € 4.5 million. This programme builds on the Dutch intervention in strengthening vocational training. The overall objective of SNAYDP is to contribute to the strengthening of the integration of young people into the economic development and the socio-cultural fabric of the country, with particular emphasis on the 16-24 age group. The purpose of the programme is (i) to support the formulation and implementation of the national youth integration strategy, and (ii) to provide the target group of young people with viable local training and business opportunities.
In order to tailor vocational training more closely to the needs of the labour market, the government is planning to conduct a survey of the present training status and training needs of the economic and social sectors. Based on this survey the vocational training strategy will be further developed.
Health. The health situation is favourable, with an average life expectancy of 74 years for males and 78 years for females. Most of the population is covered by health insurance under various public and private schemes. Additionally, the government subsidizes the operations of public hospitals. Government expenditure on health amounts to 1% of GDP. The health sector faces considerable problems, including low efficiency, obsolete equipment, poorly trained nurses in public hospitals, a shortage of medicines and the recurrent non-availability of doctors on the smaller islands, resulting in a declining quality of services. Growing unemployment and large- scale immigration are putting additional pressure on the delivery of public health services. The limited availability of financial resources to implement preventive measures and awareness campaigns (HIV and drugs) is one of the main problems to be solved in the short term.
Urban infrastructure. The low-income groups of the population are concentrated in urban (sub-standard) neighbourhoods with dilapidated basic infrastructure, including water supply and sewage, waste disposal, roads, streetlights, pavements and drainsplus poor and overcrowded housing conditions. These low-income communities are also characterised by high rates of unemployment, low levels of education, a high percentage of single mothers, high drug use and a high proportion of immigrants.3 It is estimated that in 2001 in Curaçao 26,000 people or 20
3 As presented in: Atakonda Pobresa, Armoedebestrijding door integrale wikjaanpak (poverty alleviation through an integrated neighbourhood approach), Reda Social, September 2003.
10 percent of its population lived in twelve such socially deprived communities.4 In St Maarten, 10,150 people live in seven socially deprived neighbourhoods, or about one third of its population.5 In Bonaire two deprived neighbourhoods have been identified with a population of 2,800 people (28 percent of the population of Bonaire).6 In St. Eustatius most of the population is living in deprivation. In Saba, people living in poor conditions are not so concentrated in specific neighbourhoods, but more spread out over the island.7 Reda Sosial, a foundation for socio-economic development, has developed an integrated community/neighbourhood development approach, which has been adopted by the government and which stresses the improvement of urban infrastructure in combination with education and income promotion programmes as a key element in poverty alleviation.8
Water and sanitation. Drinking water is scarce and expensive in the NEA. In all islands except Saba and St. Eustatius, seawater is desalinated and converted into drinking water. In Saba and St. Eustatius, rainwater is collected in cisterns and/or in deep wells. Water distribution systems exist on all islands except in Saba and St. Eustatius. In Saba and St. Eustatius, water is distributed to households by truck, since no water distribution network is in place. Water distribution, especially to low-income communities, is often of low quality with substantial losses through leakage. The availability of sanitation facilities (for sewage, solid waste and waste water disposal) is not really a problem, as almost every household has access to these facilities. However, the deterioration in the quality of sanitation facilities is a major concern in the urban centres of Curaçao and St. Maarten and in the capital of Bonaire, where no adequate sewerage system exists. This deficiency is being addressed through an EU-financed sewerage and sanitation project.
Water supply and sewerage systems in the islands are operated by public corporations, Aqualectra in Curaçao, WEB (Water and Electricity Corporation of Bonaire) in Bonaire and the GEBE (Gemeenschappelijk Energiebedrijf Bovenwindse Eilanden) in the Windward Islands. The fees charged by these corporations cover the operating costs. The functioning of these corporations is governed by ordinances for each island. At the national level, water supply is subject to legislation regarding quality and hygiene standards. It should be noted that GEBE St. Maarten is experiencing serious problems with its seawater intake, which suffered considerable damage in the past decade due to hurricanes. Furthermore, the intake is exposed to penetration of seaweed and other pollutants.
Regarding water and electricity distribution in Curaçao, in December 2004 Aqualectra updated its list of “Water & Electricity Distribution” projects to be implemented in the period 2005- 2009. The list of projects includes several projects in socially deprived areas.
Housing. It is estimated that about 7 percent of households in the Netherlands Antilles live in inadequate dwellings. However, this estimate does not take into account overcrowding in existing housing units and considerable differences between islands. On St. Maarten, about 14 percent of housing is considered inadequate. As there has been no new housing construction at the low-income end over the past years, a considerable shortage of low-income housing has emerged. Housing Development Foundations have been established by the governments of each island to take charge of the development of social housing, but have been driven into financial
4 These communities include: Berg Altena, Kanga-Dein, Koraal Specht, Otrobanda, Paradijs, Rooi Santu, Rosendaal, Seru Fortuna, Seru Grandi, Soto, Souax, and Wishi. 5 In St Maarten the deprived neighbourhoods include: Dutch Quarter, Middle Region, Over the Pond, Sentry Hill, Cay Bay, Over the Bank, Sucker Garden. 6 On Bonaire the two poor neigbourhoods are Antriol and Amboina. 7 Data on population by neighbourhood are from the 2001 population census. 8 Reda Social is funded joitly by the NEA Government, Dutch development aid and local private sources.
11 trouble as tenants have become increasingly lax about paying rent. There have been some modest initiatives in promoting private, low-income housing development in an effort to improve the hurricane resistance of the housing stock; the national authorities of the Antilles are co-operating in a UNDP-sponsored Caribbean-wide initiative to develop building codes which ensure hurricane resistance.
Gender. During the last 5 to 10 years, the process of women’s emancipation and empowerment has borne fruit, due to the valuable contribution of NGOs and Government. However, women still have a smaller share of the job market, are mainly employed in subordinate and low-paid jobs and are under-represented in the policy-making process at island and national levels, though this situation is improving. Among the poverty groups, households headed by women are among the most vulnerable groups in the society, making this a issue requiring urgent attention.
Crime and drugs abuse. Crime and drugs abuse are of great concern to the Government of the NEA. The drugs trade and drug use are one of the main causes of the more violent crimes. Increased domestic consumption and direct access to the Netherlands and the European market have led many of the young and poor to take up drug use and trafficking, with serious consequences for their social and economic situation and that of their families. Drugs abuse is not only a social problem, but also a threat to the tourism industry and, in the long run, a risk for economic development. Although increased policing is seen as a necessary response, the solution to the problem lies in improving the social development of the islands.
With respect to environmental protection, the increased population density in low-income areas and the influx of mass tourism, especially on St. Maarten, have contributed to growing environmental problems. Liquid waste is already reaching the sea through the groundwater in some areas, causing ecological hazards for the sea. Landfills are reaching their maximum capacity, increasing risks of groundwater contamination. There is a need for better waste management and further development of policies to effectively manage water resources and preserve the country’s bio-diversity. Appropriate national and island environmental regulations exist, but enforcement is limited by institutional capacity. Other main environmental problems are the air pollution by the refinery on Curaçao and the large tar lake left by earlier operators of the refinery.
3.4 Medium-term challenges and prospects
Together with the slowly reviving global economy, the economy of the Netherlands Antilles is currently recovering from its steady decline. Yet, persistent structural weaknesses and large macroeconomic imbalances are hampering sustainable economic growth. The increase in the national debt needs to be halted and the national budget substantially reduced. At the same time the country is characterized by serious poverty problems among large parts of the population.
In addition to the fiscal adjustment and consolidation to avoid further financial crisis, the government of the Netherlands Antilles is aiming to ensure future growth and social development on a sustained basis. Increasing the efficiency of existing activities will be challenging since the government, public enterprises and commercial activities are subject to the low-scale economies prevailing in small island economies. Efforts need to be made to identify and utilise the potential for national, inter-island and international Caribbean cooperation and integration.
Economic diversification is needed in order to increase export revenues. Once a major currency earner, the offshore financial sector is seeking new areas of business opportunities including
12 captive insurance and mutual funds, in a highly competitive but moderately recovering market, with a reformed regulatory framework which meets international requirements. The Government also faces the challenge of providing additional stimulus for the private sector, as well as opportunities to diversify economic activities in order to increase labour market flexibility and entrepreneurship. As tourism is the key economic sector of the territory, investments to further develop the tourism sector are critical in order to maintain its competitiveness relative to neighbouring islands and to speed up its recovery following the 11 September terrorist attacks and the fallout from the war with Iraq.
It is a challenge to mobilize funding to make major investments in the physical and social infrastructure in low-income communities, such as improving water supply and sewage, as well as other areas of urban infrastructure. For an effective programme of social infrastructure development in low-income communities, it is necessary to strengthen the institutions responsible for the delivery of these services, including the water distribution companies and, for housing, the national Social Safety Net Foundation, Reda Sosial, and the island housing foundations. Moreover, it will be a challenge to involve the population of the low-income communities in this improvement process, requiring empowerment training through involvement of NGOs. Investments also need to be made in the human resources of the NEA.
4 Assessment of past and ongoing EC co-operation
Table 4.1 shows the amount of development aid received from the two major donors, the Netherlands and the EU, during the last 10 years (a donor matrix is attached hereto). The amount of aid expressed in ANG has decreased, partly as a consequence of the devaluation of the Euro against the US dollar over this period, but the assistance remains substantial in terms of its contribution to the General (Central and Island) Government budget of the Netherlands Antilles and to its GDP9. Foreign funding covers nearly all capital investments made by the Government.
Table 4.1 Development aid (million US$, 1993-2002) Donor 1993-1997 1998-2002 GDP 2.295 4.769,2 4.826,4
US$ million Percentage US$ million Percentage Netherlands 311 93% 240 97% European Development Fund 21 7% 6 3% Total 332 100% 246 100% Source: IMF Country report No. 03/159, Table 24, p.42
4.1 EC Support under previous EDF Cycles
4.1.1 The Territorial Indicative Programmes Table 4.2 contains information about the size and distribution of the overall EDF funding to the Netherlands Antilles during the last ten years. Total aid received represented some 7% of total General Government expenditures during the period 1990-1999.
9 According to the Dutch Authorities, official development assistance from the Netherlands (actual expenditures) in 1999 amounted to Naf335 million, or more than Naf1600 per capita. However, this flow includes support for capital investments, technical assistance, pension supplements, support for the judicial system, guarantees, debt rescheduling, interest subsidies, transfer to the solidarity fund, as well as contributions to the coast guard, NGOs, and cultural cooperation. The amount for project assistance is only one-third of this total.
13
Table 4.2 Aid from the European Development Fund, Distribution by Sectors and Authorities (1990-1999) 1990-1994 1995-1999 US$ million Percentage US$ million Percentage Total 30.5 100,0% 15.8 100,0% Public utilities 3.9 12,8% 0,0 0,0% Physical infrastructure 4.4 14,3% 0,1 0,4% Education 0,2 0,5% 1.2 7,4% Tourism 12.9 42,3% 9.6 60,4% Other 9.2 30,0% 5.0 31,8% Source: IMF Country Report No 03/159, June 2003, Table 26
The total amount of European Community aid given to the Netherlands Antilles under the EDF 5th to 8th EDFs is estimated at €82 million and is mainly channelled through the Territorial Indicative Programmes (TIP).
Under the 5th and 6th EDFs, funding for the TIP - a major Tourism Development Programme for the Netherlands Antilles totalled €19.18 million.. The 7th TIP amounted to €22.7 million. The focal sector was Economic Development. Two of the largest projects and programmes being financed from the 7th EDF are the Restoration of Queen Emma Bridge (€ 9 million), a main tourist attraction in Curaçao, and the Small Enterprises Stimulation Programme in the Netherlands Antilles (SESNA, €7,5 million). The aim of the SESNA programme is to strengthen the contribution of the small business sector to economic growth and to generating and maintaining structural employment throughout the five islands. The program features financial and non-financial activities. The non-financial component encompasses advisory services, training and business information. The financial component consists of a loan facility for MSE loans and capacity building in the local banking sector.
Under the 8th EDF TIP (1999-2003) the Netherlands received €18.5 million. The focal sectors were (a) rehabilitation and expansion of urban infrastructure (70% of the TIP), and (b) social sector support (30% of TIP). Non-focal areas included enterprise development and regional cooperation. The Support to the Netherlands Antilles Youth Development Programme (SNAYDP, €4,5 million) and the Sewerage and Sanitation System Bonaire (SSSB, €14 million) are the two most important programmes.
The last evaluation of the EDF support programmes to the Netherlands Antilles took place in 2001 and one of the main observations was the low level of commitments and disbursement, especially under the 8th TIP, which was subsequently limited to the first tranche. The main constraints encountered were attributable to the following factors: (i) the complex decision- making structure of one Central Government and five Island Governments, making it difficult to reach agreement quickly on programmes at national level; (ii) limited technical expertise and human resource constraints in the agencies charged with preparation and implementation of projects; (iii) general downsizing of Government services (including the TAO office); (iv) limited financial means due to further reductions in the Central Government budget; and (v) complex land ownership rights on the Islands. (vi) The closure of the Delegation in Curaçao and the transfer of responsibilities for the Netherlands Antilles via Trinidad and Tobago to the Delegation in Guyana.
14 4.1.2 Regional cooperation The Netherlands Antilles also benefit from EU regional programmes. With the aim of addressing common problems and taking advantage of economies of scale, EC support is given at inter-regional, inter-OCT and inter-ACP level. The regional support is aimed at greater integration of the OCTs with their region, surrounding ACPs, other OCTs and Outermost Regions of the EU. The focal sector for Community aid under the 6th EDF was Tourism Promotion, for which a global envelope of €4.1 million (of which €2.6 million as grants and €1.5 as a loan through the EIB) was available (for the Netherlands Antilles and Aruba). Under the 7th EDF a global envelope of €4.0 million was made available (NEA only) and the focal sectors were Tourism Promotion and Human Resources Development & Education.
Under the 8th EDF an amount of €10.0 million was made available as a single amount for all OCTs worldwide. However, the Netherlands Antilles did not make use of this funding. Under the 9th EDF an amount of €25.9million has been made available for all OCTs. This amount comprises the €8 million allocated under the 9th EDF, plus €17.9 million of unused balances from previous EDFs. A proposal “Support for the National HIV/AIDS programs in Aruba and the Netherlands Antilles”, which did not fully meet the EC eligibility criteria for regional cooperation, will be revised and resubmitted to the EC. Traditionally the Caribbean OCTs have also cooperated on a sub-regional basis between the Dutch and British OCTs. In the framework of cooperation with the CARIFORUM, the NEA participates in two regional programmes: (1) Strategic Planning in Public Services in OCTs and (2) Strengthening the Medical Laboratory Services in the Caribbean.
Regarding participation in regional ACP programmes, the experience with the 7th EDF has been rather limited for the Netherlands Antilles owing to its reduced involvement in project preparation and formulation, and to the complex implementation structures of the programmes.
4.2 Programmes of the Dutch Government
The Netherlands is the main development aid donor. The Dutch government approves a budget for development aid to the Netherlands Antilles on an annual basis. The way in which “project aid “ funding was distributed over sectors and island authorities is shown in Table 4.3. The total of these aid funds amounts to some € 100 million annually.
Table 4.3 Multi-year Plan Disbursements by Sectors and Authorities (1993-2002) 1993-1997 1998-2002 US$ million Percentage US$ million Percentage Total 274.2 100,0% 227.2 100,0% Public utilities 14,7 5,4% 0,2 0,1% Physical infrastructure 38.9 14,2% 29.1 12,8% Education 62.6 22,8% 44.6 19,6% Health 19,0 6,9% 29.6 13,0% Housing 67.5 24,6% 23.8 10,5% Tourism 3.1 1,1% 11.2 4,9% Other 68.4 24,9% 88.7 39,0% Source: IMF Country Report 03/159, June 2003, Table 25
As a result of a long period of relatively high levels of capital investment support from the Netherlands, infrastructure and public facilities are generally better developed than elsewhere in
15 the Caribbean. However, since these projects have not been integrated in the Government budgets of the Netherlands Antilles, ownership and consequent availability of adequate funding for operating expenses and maintenance is not always assured. In addition, the overall effectiveness of the assistance in the past has been questioned because of the lack of consistency in the development policy and unfocussed direction of aid instruments, factors which undermine the efficiency of the assistance. Improvement in this situation came with the joint declaration on development cooperation signed in 2001, stating that Dutch aid will be concentrated on three main sectors: (i) sustainable economic development, (ii) education, and (iii) good governance. In addition, social development (through NGO’s) and law and order programmes are financed by the Netherlands. (See annex 7, Donor Matrix)
Instruments for implementing the Dutch aid on the islands are currently being reorganized. In future there will be two funds for distribution of aid: the AMFO fund covering social development projects through NGOs, and the SONA fund, an independent development fund for initiatives within the three concentration sectors. Under this development fund an implementation unit will be established to appraise, monitor and evaluate programmes to be implemented. An indicative programme for NGO financing has been drafted to guide investments in the social sector. The two funds will place more responsibility and decision- making power on the Netherlands Antilles. Support for capital investments, technical assistance, pension supplements, support for the judicial system, guarantees, debt rescheduling, interest subsidies, transfer to the solidarity fund, and contributions to the coast guard continue to be directed through other channels.
Since the new government took office the following developments have taken place in the context of development co-operation between the Dutch Government and the Government of the Netherlands Antilles: 1. On 8 October of this year the Netherlands Antillean Government and the Dutch Government signed a cooperation agreement which constitutes the basis for support by the Dutch Government for the implementation of an Emergency Program. Within the context of the Emergency Program the Dutch support is primarily centred on the areas of poverty eradication, improvement of the financial situation, good governance and law and order. In the meantime both the Dutch Government and the NEA government have each made € 2.2 million available to support residential improvement programs on all five islands. 2. A Monitoring Committee has been set up, led by the President of the Central Bank of the NEA, which reports to the Government as well as to the Parliament on a regular basis on the progress of the implementation of the Emergency Program. 3. In early December an agreement will be signed between the UNDP, the World Bank, and the Dutch and NEA governments to conduct an in-depth Poverty Assessment in the NEA. This assessment will start in 2005 at a cost of US$. 2.6 million A quick scan will also be carried out under the auspices of UNDP of the poverty situation on all five islands, on the basis of which a number of emergency interventions will be made. The Dutch Government has pledged financial support to co-fund the implementation of programmes to be recommended by these studies.
5 Response strategy
5.1 The rationale for the response strategy
The EC response strategy is derived from the economic and social analysis, the government strategy and the activities of other co-operation partners. It takes into account past EU co-
16 operation performance and results of EC co-operation, and is based on consultations of the civil society groups. In the course of preparing the SPD extensive consultations have taken place with government representatives at national and island level, as well as with representatives of civil society groups including NGOs, community-based organisations and private business. The response strategy was also discussed at a national workshop on September 6, 2003, and a workshop on September 26 for the Windward Islands, where the above-mentioned groups were all represented.
The response strategy is designed to respond effectively to the diverse needs of the five island territories. The proposed programme incorporates policy work for institutional development and capacity building in the local authorities. The need to extend basic services must be addressed in environmentally sustainable ways. This is especially important in the NEA, as the country is highly dependent on the attractiveness of its natural endowments to support the main pillar of the economy, tourism.
The EC development policy is centred on the objective to reduce and to eradicate poverty. Addressing the needs of the poor is a major challenge. This will require a holistic and integral approach. Government policies and services, empowerment of communities and marginalized groups and improving their living conditions are important tasks, which need to be addressed in a coherent manner. Accordingly, the EC response to the Netherlands Antilles’ poverty reduction objective should be primarily focused on the provision of basic (social) infrastructure.
5.2 The EC response strategy
Against this background the overall objective of the EC response strategy is to create adequate and accessible social infrastructure in low-income communities, enabling poverty to be reduced and facilitating social and economic integration.
The components of the strategy are strongly interlinked and mutually enforcing. The main elements of the strategy are: improving the physical environment of people living in low-income communities through improving the availability of safe and sufficient drinking water, sewerage and related infrastructure. This will enhance the living conditions of vulnerable groups and improve their health and productivity.
5.3 Funds available
A total of €20 million has been allocated to the Netherlands Antilles in Annex II A of the OCT Decision.
The transfers of non-committed funds from the 6th, 7th and 9th EDF amount to €26.3 million resulting in a total amount of € 46.310 million available for programming under the 9th EDF.
As specified in Annex 5, a total of €23.1 million has been earmarked for projects already identified and approaching implementation. This leaves an amount of €23.2 to be programmed by means of this Single Programming Document, including the TCF.
10 This figure is calculated on the basis of figures by the TAO office and the Delegation in Guyana as per September 2004.
17 5.4 Priority areas
The response strategy for NEA in the social sector will focus on improvements in urban infrastructure for socially deprived communities as provided for in the Council Regulation 2001/822/EC on the association of overseas countries and territories with the European Community (OCT Decision) and in Commission Regulation 2304/2002 on its implementation.
The intervention will be of a cross-cutting nature and consist in improving urban infrastructure for socially deprived areas. This focal sector will have two components: • Improving the living conditions in existing neighbourhoods, including infrastructure improvements (water, sanitation, electricity, roads, street lighting) and institutional strengthening of urban infrastructure providers. • Creating the conditions for new areas to be developed (such as sites and services schemes), which would include basic infrastructure, as well as such specific activities as dissemination of hurricane-resistant building techniques, the design of low energy consumption dwellings, and promoting the use of re-cycled and other innovative construction materials.
The second component of the focal sector is also expected to stimulate private sector investment in housing. Furthermore, community participation in the programme is essential and will be promoted through a number of instruments, including community empowerment training and capacity building.
The delivery of the intervention will be managed by a Programme Management Unit (PMU).
For effective implementation, and taking into account the differences in implementation technology and partner institutions, the programme will be implemented as two projects: urban neighbourhood improvement projects and water supply projects.
The components to be undertaken under each of the two projects are expected to include: • Rehabilitation and construction of urban infrastructure in deprived neighbourhoods. The urban infrastructure to be addressed includes sewerage, drainage, roads, pavements, streetlights and water supply. Urban infrastructure improvement will also include creating the necessary conditions in new areas to be developed, as well as promoting innovative building techniques. The neighbourhoods which will be targeted by this project will be selected from among the socially deprived neighbourhoods as identified by Reda Social. Most of these neighbourhoods are on Curaçao, with 12 such neighbourhoods and a population of 26,000, on St Maarten, six neighbourhoods and 10,150 people and on Bonaire, two neighbourhoods and 2,800 people. 11 Criteria for selection include income levels, unemployment and other social indicators. Island governments have adopted the same communities as target neighbourhoods for their neighbourhood improvement programmes.12 The project will complement a € 4.4 million neighbourhood improvement programme due to start, according to the report of Reda Social, in 2005.13 The total expenditure for this project is estimated at € 13.7 million
11 Atakonda Pobresa, Armoedebestrijding door integrale wikjaanpak (poverty alleviation through an integrated neighbourhood approach), Reda Social, September 2003. 12 See Section 3.3, where these neighbourhoods are specified. 13 The Reda Social programme targets 445 households in selected neighbourhoods on the four islands and is funded for 50 percent by the Antillean government and for 50 percent by the Dutch government. The neighbourhood projects will be implemented by Reda Sosial in close cooperation with the appropriate island organisations through tendering.
18 • Urban infrastructure specifically related to water supply facilities in the Windward Islands, i.e.: on St Maarten: the construction of a new seawater intake and water storage facilities; on St Eustatius: development of a water distribution system, and on Saba: the building of water storage facilities and cisterns. The investment in this project is estimated at about € 7.5 million. These projects will benefit most of the populations of St Eustatius and Saba (2,500 people) and approximately 33% percent of the population of St Maarten.
Both projects will involve institutional strengthening. The intervention will, however, allow for flexibility in order to meet the specific needs of the individual islands to be based on further studies investigating urban infrastructure rehabilitation needs in deprived neighbourhoods and associated institutional strengthening needs, as well as making more detailed cost estimates.
5.5 Consistency with Government policy and donor interventions
During the opening ceremonies of the new legislative year of Parliament of the Netherlands Antilles in September 2003, the Government called for a renewed effort to combat poverty and to create economic opportunities. The Government called for measures to improve social services and the living environment of poor people. The EC response is consistent with and supportive of Government policies as enunciated in its Government Accord and detailed in the Social development and poverty reduction programme.
The Government of the Netherlands Antilles realizes that economic development can only be enjoyed when the vital elements of social infrastructure and services are in place. Improved access to social infrastructure and services will create an environment that will encourage and support people to improve their participation in society, and promote health and productivity.
The proposed EU programme assists the Government’s own efforts to improve the living conditions of people in the poor neighbourhoods through improving the availability of safe drinking water and other urban infrastructure services to raise living standards in the islands. The programme will complement government programmes aiming at improving non-material welfare in the same socially deprived communities. Some aid from programmes targeting deprived neighbourhoods is also available through NGOs.
In light of the circumstances described above and the results of the consultation with the non- state actors, the Netherlands Antilles Government endorsed the focus on the deprived neighbourhood areas to reduce poverty.
• It recognizes the diverse needs of those on low incomes in the five territorial entities making up the country. • It creates benefits for other sectors of the economy through the enhancement of purchasing power, and other multiplier effects in the short and long term in the national economy. • It builds on and complements past and ongoing EC co-operation programmes and takes into account the Dutch intervention. • It strengthens the policy and legislative framework as well as the capacity of local authorities to act in these areas. • It complements the government’s own programmes for improving living conditions in socially deprived neighbourhoods. • It promotes private investment in low-income housing. • It promotes empowerment of the population living in socially deprived areas.
19
During the process of elaborating the implementation of the EC strategy, stakeholders from civil society which are directly or indirectly involved in, and/or which stand to benefit from improvements in the living environment of neighbourhoods will be consulted, with mechanisms being established for informed dialogue and the systematic exchange of information.
5.6 Consistency with EU Policy
There are obvious linkages between the proposed response strategy for the Netherlands Antilles and the Trade and Development policies of the Community. • Support for the social sector constitutes an integral part of the association between the European Community and the Overseas Countries and Territories for the reduction, prevention and eventual eradication of poverty and promotion of the sustainable economic and social development of the OCTs • With respect to infrastructure for deprived areas, the aim shall be to provide support to drinking water supply and sanitation services and associated infrastructure which contributes directly to human resources development by improving the state of health, and thus increasing the productivity, of people who do not already have access to these services. • Support is provided for private investment in low income housing projects and programmes. • Trade policy will be assessed in the context of the on-going OCT / MS / EC policy dialogue. An impact assessment study of EPA (Economic Partnership Agreements) on OCTs (including NEA) is under discussion between OCTs, Member States and European Commission.
Coherence with development cooperation policy and other EC policies (poverty reduction, social sectors, and institutional capacity-building) which are relevant for the Netherlands Antilles will be assessed on a continuing basis. Improving the coverage, quality of and access to basic social infrastructure and services, constitutes an integral part of the OCT-EU strategies for the promotion of human and social development and the contribution to poverty alleviation. The promotion of equitable access to social services is one of the areas of concentration for Community development policy14. Coherence with crosscutting issues related to gender mainstreaming, environmental considerations and principles of good governance will be observed in future projects.
PART B THE INDICATIVE PROGRAMME
6 Indicative programme
6.1 Introduction
Within the framework of the present Single Programming Document (see part A) and according to the provisions of Article 4, Annex IV of the Cotonou Agreement, the Parties have agreed on the main priorities for their co-operation and on the sector on which Community support will be concentrated. A detailed Indicative Programme, including a set of tables on commitment and
14 Statement by the Commission and the Council, November 2000.
20 disbursement forecasts, as well as a preliminary chronogram of the different activities envisaged under the Programme within the project cycle, is presented hereunder.
6.2 Financing envelope
The implementation of the co-operation strategy of the EC with Netherlands Antilles will be financed from a number of different financing instruments, which include the following:
6.2.1 9th EDF allocation: EUR 23.2 million A total of € 21.2 million will be used to fund the development activities in the focal sector. This includes an amount from uncommitted balances of previous EDFs, totalling €3.2 million. The remaining balance of €2 million will be used to finance the PMU. The allocation will be disbursed by way of project support over the duration of the 9th EDF. Support will cover both physical infrastructure, and capacity building and institutional strengthening initiatives. The intervention will be implemented as two projects, one on urban neighbourhood infrastructure in socially deprived areas for approximately € 13.7 million and one on infrastructure specifically related to water supply in the Windward Islands for approximately € 7.5 million.
6.2.2 9th EDF OCT regional funds Proposals for finance under the OCT regional envelope include HIV/AIDS, Strategic Planning in the Public Sector, and Strengthening of Medical Laboratories. Feasibility studies, short-term TA, conference and training activities will be funded under the 9th EDF OCT regional envelope of €4 million. Additional funding may be available for projects that are submitted in the framework of regional and sub-regional cooperation and integration.
6.2.3 Other sources of financing Investment Facility: Apart from the above-mentioned financial instrument, the 9th EDF also includes the “Investment Facility” as a financing instrument managed by the European Investment Bank. The Investment Facility does not form part of the Indicative Programme. Centre for the Development of Enterprise (CDE). Support for enterprises in Netherlands Antilles in the field of non-financial services to the private sector is available through CDE, to be funded from the 9th EDF Netherlands Antilles TIP. However, there are no plans at present for any specific activities under this type of programme. Community budget lines: Specific activities can be supported through the various Community budget lines, including NGO co-financing, decentralized cooperation, European Initiative for Democracy and Human Rights, food security and disaster prevention. Humanitarian and emergency assistance shall be accorded to the population of the Netherlands Antilles concerned in case of serious economic and social difficulties resulting from natural disasters or man-made crises. Approval of proposals and implementation of support measures under the available budget lines will be decided in accordance with the procedures in place for each respective financing instrument.
6.3 Focal sector
6.3.1 Overall objective Within the general framework of the present Single Programming Document, the Parties have agreed on the focal sector, i.e. the social sector, focusing on developing urban infrastructure in socially deprived areas, on which the support of the Community will be concentrated. The overall objective is reducing poverty by creating adequate and accessible urban infrastructure in
21 socially deprived areas, and to facilitate social and economic integration of the population in these areas.
6.3.2 Intervention objectives The programme is expected to contribute to improved urban infrastructure in socially deprived communities related to water and water-related infrastructure, as well as other infrastructure (roads, electricity). 15 It will include: • Improving living conditions in existing neighbourhoods, including infrastructure improvements and institutional strengthening of institutions delivering institutional services. • Creating the conditions for new areas to be developed, such as sites and services schemes, and promotion of the introduction of innovative house building techniques.
Participation of the population in the planning and implementation of the programme will be promoted.
Further detailed studies will be carried out to define the scope and nature of specific urban infrastructure needs in socially deprived areas in the islands. The funding of such studies following the Project Management Cycle is included in the indicative envelopes of the above intervention in case these studies cannot be funded through another instrument. Ensuring the sustainability of their impact will have high priority in the design of activities under the above interventions. Bearing in mind the pressure on the environment due to mass tourism and the water sanitation concerns of the islands, a Country Environmental Profile (CEP) will be drafted and its findings will be taken into consideration for the revision of the programming document.
The programme will be implemented as two projects, each of which will have island-specific components. In order to implement the project effectively, the establishment and operation of a project management unit (PMU) will be an integral part of the programme. This PMU will be attached to the TAO. The PMU will organise the preparatory studies for the programme, as well as planning and supervising the implementation of the programme components. The PMU’s funding will also cover the costs for audits and evaluation of projects in case these actions cannot be funded within the (OCT-global) Technical Co-operation Facility.
6.3.3 Expected results Within the proposed focal sector, the following results are expected within the duration of the programme:
Urban infrastructure for housing for the socially deprived (indicative allocation € 21.2 million) • Identification of infrastructure improvement needs in specific socially deprived communities. • Any social utility investment will have to be accompanied by a clear legal agreement binding the beneficiaries and the municipalities that no claim will be raised by landowners if the works are undertaken on private land. • Improvement in water supply systems (water reserve capacity, sea water intakes, extension of distribution systems).
15 More details are found in Annexe 1
22 • Provision of other basic neighbourhood public infrastructure for existing as well as new housing areas to be developed (e.g. access road, drainage, sewerage systems, street lamps). • Policy formulation and legislative reform governing urban development. • Strengthening and capacity building of the local authorities implementing these programmes to ensure sustainability. • Promotion of the introduction of innovative building technologies, including hurricane resistant building techniques, designs of low energy consumption dwellings, use of re- cycled or other innovative construction materials. • Community participation.
The establishment of a PMU will facilitate the effective implementation of the programme.
6.4 Monitoring and indicators
The present SPD shall be evaluated according to Article 25 of the Regulation of the Commission. On the basis of the procedure of examination mentioned in Articles 21 and 22 of the same Regulation (yearly review and at half-time), an evaluation will be held at the end of the exercise.
A complete set of indicators commonly agreed with the other development partners will be identified to assess programme performance. These will include social sector indicators, budget indicators and other general, environmental and economic indicators. Some indicators have been included in the Assistance Framework (Annex 1). Prior to the execution of any intervention, baseline data are collected in order to be able to make comparisons of the situation before and after the implementation of programme interventions. The next stage would involve monitoring the progress and impact of physical, organizational, social and financial indicators. At the end of the EDF 9th period, an overall programme evaluation will be carried out to determine whether or not the objectives of the programme have been achieved.
Details of the intervention framework, an activity chronogram and a tentative forecast of commitments and disbursements of the 9th EDF over the next years are presented in Annexes 1- 4.
23
Annex 1 Assistance framework in the focal sector of the 9th EDF Indicative Programme for the Netherlands Antilles
VERIFIABLE SOURCES OF ASSUMPTIONS PERFORMANCE VERIFICATION (external factors) INDICATORS LONG-TERM TERRITORIAL SECTOR TARGETS Social and economic integration and poverty • GDP • Central Bureau of reduction through • Reduced poverty Statistics (CBS), • Better quality urban infrastructure • Lower Unemployment • Reports and data of • Better access to water • Lower Crime Rates selected • Improved basic living conditions neighbourhoods • Special surveys reports • Reports of associated Government/authority • NGOs quarterly reports INTERVENTION • Number of households with OBJECTIVE improved access to water, water-related services and 1. Urban infrastructure for socially deprived other infrastructure areas
RESULTS: • Water intake, storage and supply • Number of households in • Project quarterly • Local facilities constructed/improved. socially deprived progress reports governments/public • Improved quality of drinking water communities benefiting • NGO quarterly progress water/electricity • Prevention of additional erosion from improved water and reports companies develop • Reduction of illness resulting from poor other infrastructure. • Water Authorities adequate funding for drinking water • Number of persons trained progress and financial sustainable • Improvements in other urban in the implementing reports maintenance infrastructure in socially deprived institutions. • Island Specific Health neighbourhoods, including roads, • Reduced operating costs statistics electricity, and water. and reduced losses due to • Capacity for effective maintenance poor maintenance. system in place • Number of staff trained in • Financing of maintenance activities planning and management secured in a sustainable manner of operations. • Management capacity of the authorities • Financial recovery providing urban infrastructure services improved. and utilities strengthened. • Population of communities empowered.
Annex 2 Indicative Chronogram of activities, 2004 – 2008 Amounts Identification Appraisal Financing decision (€ million) Urban infrastructure to socially deprived areas a) Urban infrastructure 21.2 April 2004 June 2005 Third quarter 2005 b) PMU 2.0 April 2004 June 2005 Third quarter 2005
23.2 The time frame is subject to the date of approval of the SPD/TIP 9th EDF.
Annex 3 Indicative commitments timetable, 2004 – 2008 (€ million) Indicative 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 Total /1 /2 /1 /2 /1 /2 /1 /2 /1 /2 EDF co-operation programme Urban infrastructure for 21.2. 21.2 socially deprived areas Urban infrastructure for socially deprived areas PMU 2.0 2.0
Grand total financial 23.2 23.2 envelope
Annex 4 Indicative disbursements timetable, 2004 - 2008 (€ million) Netherlands Antilles Indicative 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 Total /1 /2 /1 /2 /1 /2 /1 /2 /1 /2 EDF co-operation programme Urban infrastructure for socially 21.2 1.2 5.0 5.0 5.0 5.0 deprived areas PMU 2.0 0.25 0.5 0.5 0.5 .25 Grand total financial 23.2 1.7 5.5 5.5 5.5 5.25 envelope The disbursement schedule is subject to the date of approval of the SPD/TIP 9th EDF and the ability to mobilize the feasibility studies at the end of 2004.
Annex 5 Main ongoing projects financed by EU Project Title EDF Amount M € Objective Status
Small Enterprise 7 7.488 To strengthen the contribution of the Ongoing since 1999. FA expires July 2007. Mid Term Stimulation in the small business sector to economic Evaluation conducted 2003 with remarks that the Netherlands Antilles growth and to structural employment program is relevant, as the stimulation of the MSE (SESNA) (7PTN NEA generation and preservation sector is important to counterbalance the downward 47) throughout the five islands. The trend of the local economy and to achieve program features financial and non- diversification of the economy which is too dependent financial activities. Non-financial on the tourism sector. Each island has a SESNA unit component encompasses advisory providing advisory, training and business information services, training and business services to the local small and micro enterprises. information. Financial activities After a pilot with one bank, the main phase Financial consist of a loan facility for MSE Component was launched with the first loans and capacity building in the disbursements made for the three implementing local banking sector. banks in March 2004. International technical assistance is to be extended until mid 2005, after which a local counterpart is to take over and provide TA for the project until the end of the programme in 2007. Support to the 8 4.5 To contribute to the strengthening of Programme started on February 2nD, 2004 with PMU Netherlands Antilles the integration of young people into housed at TAO Office. Start-up PE for six months has Youth Development the economic development and the been executed. First TA/PE and Islands/PE approved Programme (NAYDP) socio-cultural fabric of the country, and signed. Implementation thereof is ongoing. (8PTN NEA 8) with a particular emphasis on the 16- 24 age group. The purpose of the program is to (i) support the formulation of and to implement the national youth integrated strategy, and (ii) provide the targeted youth group with viable local training and business opportunities Restoration of Queen 8 9 To safeguard and enhance the Component Superstructure: Direct Negotiations Emma Bridge attractiveness of the city centre of Report finalized and approved. Component Ancillary Willemstad so as to improve and Works: Direct Negotiations Report approved, develop the tourism industry in contracts for both components are being finalized to Curaçao. be signed in December 2004. Component Supervision: Contract signed and endorsed by HOD/EU DelGuy. Sewerage & Sani- 6/8 14 To improve the quality of life on DetailedTechnical Design and Tender Dossier for tation System Total Bonaire through protection of the implementation is being prepared under separate Bonaire earmarked quality of the marine biological contract with Consultant Dorsch Consult. budget environment and ground water resources and thereby reduce health risks to the population of Bonaire. Curaçao Library 0.7 To improve the educational and Component Automation: Provisionally accepted since Total cultural standard of living of the Sept. 11TH, 2003. Component Book Mobile: earmarked population of Curaçao, by rendering Provisionally Accepted March 5TH, 2004. Certificate of budget widely available a variety of reading Provisional Acceptance forwarded to the EU DelGuy and other learning material and to for endorsement. Front Desk: Provisionally Accepted
Project Title EDF Amount M € Objective Status
ameliorate general access to on 19 December 2003. Final Acceptance after information and culture. warranty period, end of March 2004. Public Library Authorities requested TAO to use the balance funds in Primary commitment for purchase of books. TAO to consult this with EC Delegation. Technical Design 9 0.525 To prepare a Detailed Technical Draft Tender Documents prepared and submitted by Sewerage & Sani- Design, Tender Documents for Dorch Consult. tation System implementation and assistance with Bonaire Tender procedure and Evaluation. Technical 9 1.0 Technical assistance in the main Approved and Signed by the Commission in Cooperation Facility stages of the project cycle to December 2004 (TCF) ensure the effective implementation of the SPD/TIP and other EC programmes in favour of NEA’s development strategy; specific tasks may include: studies and short-term consultative assistance to the TAO related to financing proposals for upcoming projects, project identification, preparation, assistance with tender procedures and with evaluation and monitoring or audits.
Annex 6 Priority areas for NGOs Type of indicative NGO programmes (a) Curaçao Bonaire St. Maarten St. Saba Overall Eustatius 1. Youth related programmes XXX (b) X XX XXX XX 2. Programmes related to other socially deprived groups XX X XX XXX XX 3. Programmes related to economic and community participation XXX XXXX X 4. (New) housing and district rehabilitation & community development programme XX XXX XX X 5. Programmes related to other problems X XXX X XX XX XX 6. Strengthening of NGOs XX XX XX XX XX XX (a) Mission team analysis, based on the indicative NGO Year Programmes 2002-2006, pages 11 and 12. The NGOs define their priorities in partnership with the Governments (b) X: deserves priority, XXXX: highest priority
Annex 7 DONOR MATRIX Approximation of Donor Contribution
DONOR Economic Education Good Governance Social Development Law and Order Development Dutch Government Island Specific Basic Education Checks/Balances Programmes related Drugs to: Occupational Public Sector Weapon Education Confidence Youth (possession/use/trad e) Finance and Socially deprived Budgetary Control groups Youth crime
Public Apparatus Economic and Domestic Violence community Administrative participation Public Order and Apparatus Safety Limited district rehabilitation and Terrorism community development Corruption
Strengthening of Human Smuggling NGO’s Money Laundering Others Coast Guard
2004: € 35 million 2004: € 17.5 million 2004: € 17.5 million 2004: € 9.5 million 2004: € 2.5 million
DONOR Economic Education Good Governance Social Development Law and Order Development UNDP/World Bank Poverty assessment
EU 7th EDF Support to SMEs (SESNA), € 7.5 million Restoration of Queen Emma Bridge, € 9 million EU 8th EDF Netherlands Sewerage and Antilles Youth Sanitation System Development Bonaire (SSSB), € Programme 14 million (SNAYDP), € 4.5 million EU 9th EDF Infrastructure for socially deprived areas € 15 million Pilot projects in low cost housing € 5.5 million
Technical Cooperation Facility € 1.0 million
Technical assistance to the TAO (PMU) € 2.5 million.