MANILA — The Asian Development Bank will be extending close to $30 million in loans and technical grants to some Pacific member countries to aid in rehabilitation projects protect the of livelihood of residents and carry out studies on transport and AIDS prevention.

A big chunk of the official development assistance is a $25 million loan to the Fiji government to help improve the standard of living of people who may lose jobs due to the impending restructuring of the sugar industry.

ADB has also approved a $2.83 million loan and a $600 000 grant to aid the restoration of basic social services and economic activities in the Cook Islands which was devastated by several tropical cyclones earlier in 2005.

A technical assistance grant of $495 000 has been approved to improve the efficiency and effectiveness of inter-island sea transport services in the Solomon Islands while another TA grant of $300 000 has been approved to help strengthen the Pacific region’s response to the HIV/AIDS epidemic in the region.

The ADB project for the Fiji government targets about 8 000 sugarcane farmers 17 000 cutters about 1 000 mill workers and indigenous Fijians in sugarcane areas of the Western and Northern divisions on Viti Levu and Vanua Levu the main islands of Fiji.

Sirpa Jarvenpaa regional director for ADB’s South Pacific Subregional Office said “The project will support viable alternatives to improve income by promoting agricultural diversification strengthening agricultural services and developing effective public-private sector partnerships in commercial agriculture.”

The project also aims to rehabilitate about 600 kilometers of farm-to-market roads he said.

The project will enable sugarcane farmers to plant higher-value crops within the sugarcane fields and workers to enter into other viable sources of livelihood outside the farm. This will be done by developing and strengthening existing rural financial institutions which can extend loans to the sugarcane beneficiaries so they can establish micro-enterprises.

Due to a slide in local sugar productivity efficiencies an ineffective pricing system and uncertainties over the renewal of farm leases there are indications that the industry will no longer be able to make a substantial contribution to the Fiji economy.

According to Kunhamboo Kannan head of project administration of the ADB’s Pacific Department Fiji’s sugar industry “has long benefited from artificially higher than market prices from the European Union under the Sugar Protocol supporting African Caribbean and Pacific countries. With the recent [World Trade Organization] developments these preferential prices will disappear within a few years. In this context Fiji’s sugar industry cannot survive in a competitive market. Thus the industry needs to be reformed to stay competitive. To stay competitive the systems and human resources need to be prioritized for improvement. The sugar restructuring is in progress and the most urgent reform that needs to be implemented immediately is the introduction of the cane-quality payments to give growers the opportunity to respond to prices.”

Because of the preferential treatment given to ACP countries under the Sugar Protocol Kannan said Fiji farmers are paid around $29.60 per ton. The country sold raw sugar at an average of $382.28 per metric ton almost three times higher than the world market price.

At present there are about 60 000 hectares farmed by some 20 000 individuals. The industry directly employs about 40 000 with 190 000 MT exported to the EU annually. This contributes to about 7% of the country’s gross domestic product or the total amount of goods and services produced by the local economy.

Apart from the removal of sugar subsidies by the EU to ACP countries land leases have been expiring with no promise of renewal. Also the four main sugar mills on Fiji are old and worn out unable to produce high-grade sugar needed in the international market.

The government-owned Fiji Sugar Corp. has been largely blamed as the cause of the poor quality cane being shipped to other markets. In 2003 for example Japan rejected a shipment of Fiji sugar due to its poor quality.

Kannan also said several high-value crops are being targeted for intercropping in the sugarcane fields to give farmers an alternative income-generating livelihood. He failed to identify what crops these were.

The loan project will also encourage people to get into other jobs off-farm by promoting the development of micro-enterprises and supporting vocational training. At the same time it will develop sustainable microfinance institutions in areas poorly served by commercial banks.

Kannan told the Journal “Rural and poor households are denied access to basic financial services for small savings and credit. The formal financial institutions have largely focused on big borrowers and savers. In Fiji there are 44 savings and credit unions with about 11 000 members affiliated with the Fiji Savings and Credit Union League. There are also about 104 thrift and credit cooperatives that provide small credits but no savings services. The project will focus on financial systems by strengthening the apex institutions such as FSCUL to extend the current networks to mobilize rural savings and increase the flow of funds to support small lending to the poor.”

The total project cost is $50 million about half of which will be financed by the ADB loan. The Fiji government will put up counterpart funds amounting to $8.7 million while the Fiji Development Bank will contribute $8.8 million and other beneficiaries $7.3 million. The project is scheduled for completion in December 2010.

Apart from the ADB loan the Japanese government is also expected to grant $600 000 in technical assistance to help strengthen commercial agriculture development to ensure that appropriate policies institutions and capacities are in place by the time the project is completed to sustain the performance of the private agriculture sector.

Elsewhere the ADB’s $2.83 million loan to Cook Islands will make available low cost funds to enable the government to restructure infrastructure and rebuild businesses damaged by four powerful tropical cyclones which hit between Feb. 4 and March 8 this year.

Government estimates put the total damage at about $8 million a considerable amount that could unduly burden its budget and imperil vital development programs as well as cut the foreign reserves needed for debt restructuring.

“The loan will mitigate the otherwise extended negative impacts of the 2005 cyclone damage particularly on the poor and enable the country to recover from the emergency with only a temporary setback ” Philip Erquiaga director general of ADB’s Pacific Department said.

He said the loan would cover the cleanup reinstatement of infrastructure restoration of basic service delivery structures and facilities and restoration of essential materials and supplies related to roads ports power supply water supply waste management and buildings.

Apart from the loan the ADB also extended $600 000 in technical aid to help the country manage and mitigate disasters owing to cyclones.

ADB’s loan which carries a 40-year term at an interest rate of 1% per year covers 35% of the entire rehabilitation cost in the Islands.

The bank had also implemented a similar disaster recovery project in 1997 after Cyclone Martin damaged the islands of Manihiki Pukapuka and Rakahanga.

Lastly the ADB will be studying the socioeconomic implications of HIV/AIDS in the Pacific especially in Papua New Guinea and Fiji Islands the two bank members hardest hit by the infection. MBJ