A new spirit of enterprise

Small countries with a limited resource base are frequently buffeted by economic forces over which they have no control. If you live in Western Samoa, however, you are likely to be preoccupied by forces of a different kind. For while most of the time, Mother Nature presents a benign face in this attractive and fertile Pacific state, every once in a while, she loses her temper.

Tropical storms are an unavoidable reality in much of the Pacific and they breed a special form of resilience which should impress the inhabitants of more temperate climes. The people of Samoa, and other cyclone prone countries in the region, are adept at picking themselves up and, if necessary, starting all over again, once the winds have passed. But between 1989 and 1993, the Samoans' capacity for renewal was to be tested more than ever before. Like a plucky boxer facing a much stronger opponent, the country would just be struggling back to its feet when another hammer blow would send it reeling.

The closest to a knock-out punch came in December 1991 in the shape of Cyclone Val-the worst storm to hit the islands in more than a century. This brought death and injury, as well as widespread economic devastation. The coconut and coffee trees on which the country depends for much of its export income were either swept away or stripped bare. Many homes were also destroyed and infrastructures were severely damaged. (The 1993 cyclone, although less powerful, caused further crop destruction.)

Over the last five years, virtually all the damage has been repaired. Indeed, a great many facilities have been upgraded with plans for further improvements in the pipeline. To some extent, the credit for this remarkable recovery must be shared. Overseas donors played an important part in restoring key infrastructures while expatriate Samoans, whose remittances are an important 'invisible' earning for the country in normal times, also rallied round. But the key players, of course, were the people themselves, who rose to the challenge of reconstructing their country.

Today, Western Samoa - which has a population of 165 000-is experiencing an economic mini-boom. Growth during 1996 is expected to be between 5% and 6% for the second consecutive year and there are encouraging signs of a new, home-grown entrepreneurial spirit. This is not to say that everything in the garden is rosy. The latest growth figures need to be set against the unavoidable recession caused by Cyclones Val and Ofa (which struck in 1990) and a mediocre economic performance throughout the 1980s. And while there is some evidence of diversification, the economy is still very narrowly based. There is also considerable room for improvements in health care and education provision. Doubts have been expressed, for example, as to the accuracy of the official literacy figures. Finally, there is a high level of dependence on foreign aid (the country's main donors are the Asian Development Bank, Japan, Australia and the European Community).

Economists will tell you how notoriously difficult it is to express the wealth of a developing nation in statistical form. GDP figures can offer a pointer, but they do not present the whole picture as they take no account of the informal economy. Western Samoa provides a particularly good illustration. At US $950, the estimated per capita GDP is very low by Pacific standards. Yet there is clearly no starvation. A great deal of the food consumed by the Samoans simply does not 'show up' in the cash economy. The term subsistence agriculture seems peculiarly inappropriate here since locally available food sources are many and varied.

Similarly, many of the materials used to build the 'fares' (traditional houses) in the villages are obtained without recourse to builders' merchants. And when a Samoan wants a new house, he builds it himself-with the help of his family and neighbours. This involves skilled carpentry work-for which people would pay highly in industrialised societies - and which does not register either in the country's economic statistics. So it is clear that the basic GDP figures do not paint a complete picture. Nonetheless, they illustrate the relatively underdeveloped state of the formal economy.

Agriculture

Looking at exports, Western Samoa's traditional agricultural sector has gone through some rough times, for a variety of reasons. In the past, the mainstays were copra and coconut products (oil and cream), cocoa and tarot

The storms destroyed or damaged many of the coconut and cocoa trees, wiping out exports for a number of years until new plantings could reach maturity. The market in food products derived from the coconut had been depressed in any case. One reason for this was negative publicity over the high cholesterol content of coconuts, although more recent research, suggesting that not all types of cholesterol are bad for you, has at least partly restored the reputation of this highly flexible crop.

Taro, which is Western Samoa's staple food crop, was exported in ever increasing quantities during the 1980s but the trade has suffered badly in recent years because of an outbreak of taro leaf blight.

Today, Western Samoa's most important primary exports are, once again, coconut-based (oil and cream). With the new trees reaching maturity, production recommenced on a small scale towards the end of 1994. The following year saw a big jump in exports and the figures for 1996 are expected to - come close to pre-cyclone levels,The marketing situation has also improved as a result of privatisation. The old Copra Board, a parastatal with a reputation for inefficiency, was abolished in 1990, its assets being bought for a nominal sum by a Samoan businessman who has invested heavily in refurbishment. This has all been achieved despite continuing low prices for coconut products in the world markets.

Cocoa takes longer to recover but harvesting of the first new crop is due to take place this year with the emphasis on a high value, fine tasting variety. A new chocolate factory (Wilex C.C.P. Ltd), also masterminded by a local entrepreneur, Eddie Wilson, has been built with assistance from the EU's Centre for the Development of Industry (CDI) and a credit from the European Investment Bank (EIB) channelled through the Development Bank of Western Samoa (DBWS). This is a particularly significant venture since it aims to maximise added value before export. The factory is currently operating well below full capacity, awaiting the arrival of the first local crop, but there are high hopes for its long term success.

The other main crops exported are bananas and kava. The latter is a mild narcotic based on the root of the pepper plant, which is used in pharmaceutical preparations. It also has an important place in Samoan (and wider Pacific) culture, being drunk in diluted form on ceremonial occasions.

With a view to achieving further export diversification, a number of other agricultural/horticultural export possibilities have also been identified. These include asparagus, mangos and cut flowers. The most likely potential market for new tropical production is New Zealand-already the destination for more than half of Western Samoa's exports. However, this country has stringent health rules with rigorous controls on the import of plant and animal material. The understandable aim is to protect the local farming sector from diseases introduced from outside, but it creates an additional hurdle for potential exporters in the developing countries of the Pacific. In particular, Western Samoa needs to come to grips with the fruit fly problem, if it wishes to make inroads into the New Zealand market.

Timber also once featured prominently in the trade statistics before declining at the end of the 1980s. There are hopes for a revival here with the authorities keen to encourage value added processing of wood products within the country.

Despite its obvious association with the sea, Western Samoa has never really gone in for commercial fishing. While the Exclusive Economic Zone is small by Pacific standards, the country being 'hemmed in' by other island nations and territories, it is still more than 40 times the land area. The government would particularly like to attract foreign investment in fish processing and canning.

Industry

It is probably unrealistic to expect a small and geographically isolated nation such as Western Samoa to develop a highly diversified industrial base but there have been one or two notable ventures which show signs of potential. The above-mentioned chocolate factory is one such. The country also has a highly successful brewery. It is not uncommon for developing nations to produce their own local beer but Western Samoa's Vailima brand has managed to break out successfully into the regional market, bringing in useful foreign exchange in the process.

The biggest industrial success story-dwarfing all other manufacturing ventures-has been the establishment of a factory by the Japanese company Yazaki to produce wire harnesses for cars. The business employs some 2500 people (mainly women) in a highly labour-intensive operation-and it makes a significant contribution to the trade balance. The value-added electrical components are re-exported for incorporation into cars sold mainly in Australia.

The company was attracted by a number of factors including low labour costs in this non-unionised society, and the political stability of Western Samoa. Perhaps most important, however, were the incentives offered by the government. These went well beyond the usual tax holidays provided by developing countries to attract foreign investors. Indeed, it was the government that built the factory and the company was allowed to occupy it rent-free. Some observers have expressed concern at such largesse but the authorities are insistent that it was still a good deal. They point to the jobs that were created (a huge number by Samoan standards) at a time when many people's livelihoods were threatened by taro blight. They also argue that the profits of the operation are retained in Western Samoa, thereby helping to boost the wider economy.

Services

The service sector offers perhaps the best potential for expansion of Western Samoa's formal economy. Top of the list here comes tourism (featured in a separate article), which has been expanding much faster than the underlying rate of economic growth. Despite the increase in both visitors and income, tourism is still underdeveloped. The government (supported by the opposition) believes that this is one field where Western Samoa definitely has a 'comparative advantage'.

Linked to tourism, of course, is the air transport business. Although it might still be possible to obtain passage on a merchant ship bound for the South Sea islands, the vast majority of visitors arrive by plane, and good air connections are obviously essential. The history of the country's national carrier, Polynesian Airlines, offers two object lessons. The first is how not to run an airline and the second, more recent and encouraging one, is how to grasp the nettle when the crisis finally breaks. In 1992, with tourism in mind, the government owned airline decided to expand its operations substantially. It leased three long-haul aircraft which it hoped to fill with visitors in search of a new tropical haven. The market research was clearly inadequate and the planes flew with many empty seats. Other aspects of the company's management proved deficient and there was a chronic lack of financial. Debts mounted at such a frightening rate that the budgetary position of the entire country was threatened.

In 1994, the government took decisive action, bringing in Richard Gates, the experienced airline entrepreneur, who is credited with having turned Air New Zealand around. Relatively small airline businesses in the Pacific are not likely to make a.fortune for anyone, but with proper management, they should at least be able to break even and perhaps even turn in a small profit. This was not something that even the prodigious talents of Mr Gates could achieve, however, with the crushing burden of debt accumulated by Polynesian Airlines. So the government assumed responsibility for the debts and then gave the new manager a free hand, on the firm understanding that the taxpayer would not come to the rescue again.

On the airline side, the operation was drastically slimmed down. The leases on the large aircraft were terminated, staff 'down-sizing' took place and bath ticketing and financial management were tightened up. The positive impact of these measures was soon evident, with a small operating profit registered in 1995.

Left with huge debts, the action of the authorities was equally impressive, although it entailed discomfort for most Western Samoans. In order to restore its own financial position, the government instituted 15% public expenditure cuts across the board. In macro-economic terms, it is generally acknowledged that this strong medicine was needed, but the social consequences were all too clear as well: reduced funds for health and education, and pressure on important capital investment budgets. Perhaps fortuitously for the country, the financial crisis caused by the Polynesian Airlines debacle coincided with the payment of a substantial Stabex payment from the European Community. The country's was eligible for Stabex funds because of the collapse in agricultural export receipts following the cyclones, and the money-which was directed mainly into infrastructure projects-could hardly have come at a better time. Meanwhile, the government has paid off a large portion of the airline's debt with the residue rescheduled for payment over a five-year period.

The government has taken a number of steps aimed at attracting offshore finance business to the country. Western Samoa now has a comprehensive legal framework governing such activities, including crucial provisions guaranteeing secrecy. Another vital factor in attracting offshore funds, which has already been mentioned, is political stability. There is even the suggestion that the country's time zone, which puts it almost a day behind Australia and New Zealand, might somehow be turned to its advantage in global financial dealings (although it is not clear how the benefit would be derived in otherwise legitimate transactions).

The last three years have seen a big increase in company incorporations and there are now more than 2500 offshore companies (including 15 banks and eight insurance companies) registered. It is difficult to imagine Western Samoa ever challenging the likes of Liechtenstein, the Bahamas or Jersey in this market, given its geographical distance from the main industrialised nations, but even a successful 'niche' operation could bring some useful income to the country.

Politics

Five years ago, when the Courier last covered Western Samoa, the emphasis was heavily on recent constitutional changes and most notably, the introduction of universal franchise. At the time, there was a lot of interest in how the traditional Samoan way of life (faa-Samoa) would be affected. This is based on the village structure and the matai system which vests considerable authority in family heads. There is also a strong attachment to the Christian faith, as exemplified by strict Sunday observance rules (also found in Tonga and other Pacific countries).

In fact, the Samoans appear to have embraced their more 'westernised' system of government without any difficulty. Although everyone over 21 has a vote, one still has to be a matai to be eligible to stand for Parliament. In contrast to hierarchical structures elsewhere in the Pacific, however, the system here seems to be based largely on merit and it is not particularly exclusive (there are an estimated 19 000 matai). The matai, nonetheless, exercise considerable authority in village affairs, most notably over the use of customary land.

In short, the change seems to have caused few problems because Western Samoa already had its own decentralised form of democracy. It was not a question of educating people about hitherto alien concepts.

The fact that change in Western Samoa is slow and progressive rather than sudden and violent, is recognised by most observers to be a good thing. An illustration of this evolutionary approach is the arrangement governing the position of Head of State. The post, which is held by His Highness Malietoa Tunamefili 11, currently appears to be a cross between a presidency and a monarchy. Under the 1962 independence constitution, two of the country's four paramount chiefs were given the position, to be held jointly, for life. With the death of Tupua Tamasese Meaole in 1963, the surviving incumbent became sole Head of State. There will be no automatic succession, however, and Parliament will decide who should have the post in future, with the term of office limited to five years. There is obviously a great deal of respect for the Head of State and his office among Western Samoans, although it should be stressed that his role is largely ceremonial, with political authority being vested in the elected government.

As for party politics, there are two groupings represented in Parliament, the ruling Human Rights Protection Party and the opposition Samoa National Development Party. The party system is not particularly strong, however, being based more on personalities than ideology. Corruption is not seen to be a major problem although a major row did blow up recently over a critical report issued by the Auditor-General for 1994. This led to him being suspended and this issue had not yet been resolved at the time The Courier went to press.

Western Samoa is not unique in having to adapt to a rapidly changing world. The phenomenon affects all societies, with modern communications technology increasingly breaking down the 'protection' that geographical isolation used to afford. In Westem Samoa, as elsewhere, there must be concern about the impact of this on the country's traditional way of life. Yet the indications are that this Pacific nation is managing the transition rather better than many other developing countries. The people seem to combine an unselfconscious pride in their traditions and cultural assets with a pragmatic welcoming of ideas from outside which help to improve their material wellbeing. The hope must be that this process can continue as we approach the third millennium. S'imon Homer

Historical summary

According to archaeological evidence, the islands of Samoa were first settled about 3000 years ago, after gradual migration within the Pacific from people originally from South East Asia. Samoa, it seems, was the cradle of the Polynesian culture, and settlers from there spread to other islands of Polynesia in the east, north and south.

The first European to sight the group in 1722 was Jacob Roggeveen, and although there was intermittent contact between European sailing vessels and the islanders during the 18th century, more permanent contact was established with the arrival of the European missionaries in the early 1980s. They were soon followed by traders looking for copra, beche de mer, sandalwood and other products. Later, some of the trading firms, notably German, fumed to large-scale production of copra and other products such as cotton, cacao and rubber, which also led a corresponding increase in interest on the part of colonial powers.

In the late 1800s, the Samoan group became the focus of colonial rivalry between Great Britain, the USA and Germany, leading, in 1900, to the partitioning of the islands between Germany and the United States. The eastern part of the group came under American control and has remained so to this day, while Germany controlled the western islands. Britain received territorial concessions elsewhere in the Pacific.

At the outbreak of World War I, New Zealand took over what had come to be known as German Samoa, and became the administrative power there under the League of Nations and later the United Nations until Western Samoa became the first Patific island nation to become an independent state in 1962.

(Source: Government of Western Samoa. this text is taken from the information brochure prepared by the authorities for distribution to delegates at the recent ACP-EU Council of Ministers meeting).

Dream ticket ?

Depart Nuku'alofa-12.00, January l 2000 Arrive Apia - 14.00, December 37 1999

People with cash to burn are often ready to spend surprising amounts of money in their pursuit of the unusual. Tonga has already recognised this as it begins preparing for the third millennium Lying just to the west of the International Dateline, it believes it will the first country to see the sun rise on the new millennium, although other Pacific territories have also made the claim. (For this purpose, we ignore the purists who point out that the third millennium will not actually begin until January 1, 2001.) Celebrations are planned and bookings are already being taken.

Westem Samoa is obviously not in the running for this distinction since it is east of the dateline, but what this means is it will be the last nation in the world to say goodbye to the old millennium. This surely presents an opportunity for the local tourist industry.

And what about those intrepid voyagers who fancy greeting the year 2000 in Tonga and then 'seeing out' the old millennium 24 hours later in Samoa. If i were an airline manager, I would be examining the possibility of extra flights from Nuku'alofa on the big day. (Let's hope it's not a Sunday I)