Kiribati country case study AusAID Pacific social protection series: poverty, vulnerability and social protection in the Pacific March 2012 Cover images from left to right: Scenes of overcrowding in South Tarawa, Kiribati. Photo: Lorrie Graham for AusAID Social welfare beneficiaries receive training on their new Westpac bank cards in Fiji. Photo: Mere Senikau/Pacific Financial Inclusion Program © Commonwealth of Australia 2012 Published by the Australian Agency for International Development (AusAID), Canberra, March 2012. This document is online at www.ausaid.gov.au/publications The principal authors of this report are Stephen Kidd and Ueantabo Mackenzie. Disclaimer: The views expressed in this publication are those of the authors and not necessarily those of AusAID. For further information, contact: AusAID GPO Box 887 Canberra ACT 2601 Phone (02) 6206 4000 Facsimile (02) 6206 4880 Internet www.ausaid.gov.au Contents 1. Introduction to the research 1 2. About this research paper 3 3. About Kiribati 7 4. Livelihoods in Kiribati 9 5. Stresses on the Kiribati economy and society 12 6. Poverty, inequality and vulnerability in Kiribati 16 7. Social protection in Kiribati 31 8. Conclusions and recommendations 45 9. References 48 ii AusAID Pacific social protection series www.ausaid.gov.au 1.Introductiontotheresearch Pacific Island countries have varying social protection systems, informal and traditional. These systems are important in supporting the most vulnerable members of society and those affected by personal and natural disasters. In the Pacific Islands social protection has typically been an area of low government involvement. Knowledge about formal social protection in the region is limited, and there have been no studies on the impact of such schemes on poverty, human development and economic growth. There is no one agreed definition of social protection, but this body of research—commissioned by AusAID—uses the term to refer to the set of public actions aimed at tackling poverty, vulnerability and social exclusion, as well as providing people with the means to cope with major risks they may face throughout their life. Social protection’s core instruments include regular and predictable cash or in-kind transfers to individuals and households. More broadly, social protection includes instruments that improve people’s access to education, health care, water, sanitation, and other vital services. Traditional social protection in the Pacific Islands is stretched by new challenges, most recently the 2008–09 global food, fuel and financial crisis. This has led to greater attention to innovative social protection mechanisms that tackle chronic poverty, mitigate the impact of shocks, improve food security and overcome financial constraints to accessing social services. This attention has been driven by the success of mechanisms in other parts of the world. In an environment with limited or conflicting information about patterns of poverty and vulnerability, knowing whether social protection represents a sound, or even appropriate, policy choice is difficult. This research looks at poverty, vulnerability and social protection across the dimensions of health and education, gender, social cohesion, economic growth, and traditional protection networks in the Pacific Islands. It aims to improve the evidence base on formal and informal social protection programs and activities in the Pacific region and make recommendations on support for strengthening and expanding social protection coverage so it can contribute to achieving development outcomes. www.ausaid.gov.au AusAID Pacific social protection series 1 The research was conducted by social protection experts and is based on case studies in Kiribati, Samoa, Solomon Islands and Vanuatu— representing the three sub-regions of Melanesia, Micronesia and Polynesia—and a review of secondary literature. It also commissioned a set of research papers: > an overview of poverty and vulnerability in the Pacific, and the potential role of social protection > a briefing on the role of social protection in achieving health and education outcomes > a life-cycle approach to social protection and gender > an assessment of the role of social protection in promoting social cohesion and nation-building in the Pacific > an assessment of the relationship between social protection and economic growth > a review of the strengths and weaknesses of informal social protection in the Pacific > a micro-simulation analysis of social protection interventions in Kiribati, Samoa, Solomon Islands and Vanuatu. 2 AusAID Pacific social protection series www.ausaid.gov.au 2.Aboutthisresearchpaper This research paper, ‘Kiribati country case study’, examines the adequacy of social protection in Kiribati—formal and informal, and core and crosscutting. It begins by describing the nature of the livelihoods in-country and then examines the stresses and challenges facing Kiribati’s economy and society. The research paper then assesses the country’s poverty and vulnerability and describes its current social protection. Throughout the research paper, reference is made to alternative forms of formal social protection that could be put in place. These are not policy recommendations, but rather ideas to stimulate debate on social protection direction in Kiribati.1 The research involved the following activities: > a comprehensive review of relevant literature, databases and Internet resources in the Pacific region and in Kiribati > an analysis of 2006 national household survey data for Kiribati, undertaken by David Abbott and Michael Samson of the research team > consultations in-country with stakeholders, including with government, civil society organisations, academics, donors and international organisations, private sector and a sample of households in urban and rural areas > consultations by email and phone with relevant international stakeholders. In this research paper, formal social protection is understood to comprise two complementary dimensions, one narrow and one broad: > In a narrow sense, core social protection is a country’s system of regular and predictable cash transfers (although, in some contexts, in-kind transfers—such as food—can be included). These transfers can be financed by government, through contributions or by employers and could be legislated. Core social protection is often referred to as the social security system. > In a more broad sense, social protection can be understood as cutting across other basic services, such as health and education, enabling people to overcome the financial barriers they face when accessing these services. 1 A description of the methodology is in Annex A. www.ausaid.gov.au AusAID Pacific social protection series 3 Since Independence in 1979, the Republic of Kiribati’s economy has depended on migration, remittances, fishing fees, aid and bureaucracy. Over the past decade the economy has stagnated, with per capita gross domestic product (GDP) falling. The 2008–09 global recession intensified pressures, resulting in significant falls in remittances and the value of the stabilisation fund. This increased pressure on government finances, with the national budget falling by around 10 per cent between 2008 and 2010. Kiribati is in a relatively weak position to respond to its economic challenges. It is significantly disadvantaged by distance from global markets and the dispersion of its many islands. Its workforce is generally low skilled. Schools are not delivering education of adequate quality, with only around one third of children finishing secondary school. The low skills of many young people mean that, despite a youth bulge, Kiribati cannot take full advantage of this segment of the population to generate economic growth. The population is also gradually ageing. The private sector is poorly developed and there is significant dependence on public sector employment, characterised by low wages and productivity. Livelihoods vary significantly between South Tarawa and the Outer Islands. On the Outer Islands, households with sufficient labour capacity engage in subsistence agriculture and fishing. There are few employment opportunities and an increasing number of households struggle due to limited labour capacity. The main exception is in the eastern Line Islands, which has more land and significant in-migration. Forty-four per cent of the population live on urban South Tarawa, now effectively full. Subsistence activities are not viable, unemployment is high and wages generally low. Sanitary conditions are not good, especially in squatter housing. One lucrative livelihood for male I-Kiribati is to work as seamen, although only a minority of the 4000 trained have jobs. Salaries are reasonably good. Employment on foreign ships was hit badly during the global recession. Poverty is a reality on Kiribati and it is no longer a rural idyll. People need cash to buy food, clothes and durables, pay for education and some health costs, and finance churches that do not give back in a material sense. The 2006 national household survey calculated a poverty rate of 22 per cent, although this may have risen to 24 per cent by 2010. But people move in and out of poverty, so a more realistic measure of the number of poor people—those who spend some time in poverty over some years—would be the proportion of those living under double the basic needs poverty line. This indicates that 57 per cent of the population should be considered poor and seems consistent with a 2010 United Nations Children’s Fund