Sustainable Economic Development Plan 2012/13 - St Helena

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Sustainable Economic Development Plan P a g e | 3 Section 1: Background and Strategic Context The Situation The size of an economy is traditionally measured through Gross Domestic Product (“GDP”). In real terms GDP on Saint Helena increased annually by only 0.7 per cent on average between 1999/00 and 2009/10. All of this change has been due to financial support from the UK Government – particularly from DFID – and other overseas donors. Saint Helena is in the bottom 20 per cent globally in terms of GDP growth over this period. 1 The most significant factors contributing to Saint Helena’s weak economic performance have been: 1. A lack of significant export earnings. 2. A massive decline in the population. 2 3. Weak productivity growth. 3 4. Little private sector consumption, capability, capacity or investment. In order to maximise the benefits of air access, Saint Helena will need to overcome these issues. With the recent announcement that a contract to construct an airport has been signed between Saint Helena Government (“SHG”) and Basil Read (“BR”), the future outlook for the economy is much brighter. With the right conditions in place Saint Helena could achieve a top 10% ranking globally for GDP growth over the next ten years. Sustainable Development Plan (“SDP”) Sustainable Development Plan (SDP) SDP National Goal 1: A vibrant economy providing opportunities for all to participate SDP National Goal 2: Strong community and family life SDP National Goal 3: Effective management of the environment Sustainable Economic Development Plan Social Policy Plan Environmental Management Plan SHG Strategic Plan SHG Strategic Objectives SHG Directorate Plan SHG individual staff performance targets 1 IMF World Economic Outlook 2 Between 1999/00 and 2009/10 there was a 20 per cent decline in the resident population. 3 GDP per worker growth stagnated in real terms between 1999/00 and 2009/10, averaging a rate of -0.1 per cent. Saint Helena a tourism driven economy: Small Footprint, Huge Step Forward
Sustainable Economic Development Plan P a g e | 4 Saint Helena’s SDP is the island’s highest level planning document. It sets out the strategic vision for the island over the next ten years. It outlines how over the next ten years the island will have an unparalleled opportunity to improve standards of living and the island should strive for: “Strengthened community and family life through vibrant economic growth, a healthy environment and with opportunities for all to participate, within a framework of effective government and law.” In order to achieve this, three National Goals have been set: 1. A vibrant economy providing opportunities for all to participate 2. Strong community and family life 3. Effective management of the environment Vibrant economic growth with opportunities for all to participate is highlighted as the key to achieving the vision of strengthened community and family life. Within this, developing the private sector is viewed as the vital ingredient. Furthermore, the tourism sector – through large scale investment – is seen as critical to developing the private sector. Therefore, an Sustainable Economic Development Plan is needed to implement National Goal 1 of the SDP. Memorandum of Understanding (“MOU”) In July 2010 SHG and DFID signed a MOU. In it DFID agreed to fund the airport on Saint Helena providing four conditions were met. Three of those conditions were related to technical aspects of the airport. The fourth condition, however, requires SHG to: “Implement the reforms needed to open the island’s economy to inward investment and increased tourism” 4 . As such, the fourth MOU condition and Goal 1 of the SDP align and support each other, both recognising that it is growth in the private sector that will stimulate improvements in the standard of living on Saint Helena, provide the basis to reverse recent social and economic decline and put the island on a new path to prosperity. This Sustainable Economic Development Plan is designed to build on recent reforms, in areas such as: Tourism: Recognising that Tourism will be the key driver of economic growth, a Tourism Development Project and a five year Tourism Strategic Plan have been introduced. The latter document sets out in detail how Saint Helena will develop its “high value low volume” tourism product and how the island will “maximise the visitor experience and develop a desirable, sustainable tourist destination”. This includes details of the approach to branding, products, standards, to the environment and heritage, infrastructure and the labour market. The SEDP has built on this by outlining a plan to developing an economy which can support this type of tourism. Investment: With investment critically important for maximising the benefits arising from air access, a revised Investment Policy was introduced, which aims to remove barriers, promote investment and improve fairness, transparency and consistency in decision making. The Policy sets out five basic principles. Saint Helena must step up efforts to achieve all of these principles and the SEDP aims to support it in doing to. The principles are: Make Saint Helena a desirable and competitive destination to do business by removing barriers to investment. Consultations with stakeholders suggest that this is a key issue on Saint Helena. Barriers to investment can mean that some investments don’t take place, or that the benefits of them are not 4 MOU on Condition 4, December 2010, SHG & DFID Saint Helena a tourism driven economy: Small Footprint, Huge Step Forward
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Sustainable Economic Development Plan 2012/13 - St Helena

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