Solomons Stimulus Strategy!

               

J. Roughan

19 February 2009

Honiara

 

Last week the US Congress past an $800 billion economic stimulus package. Country after country--UK, Japan, EU, Russia, China, Australia, New Zealand to name but a few--are either in the midst of passing huge stimulus packages or have already done so. What's happening? Why are all the leading nations of the world pushing the panic button? In short, the financial world they knew, really controlled, has slipped out of their hands. Their fear is that the once almighty banks, financial giants and other money spinners have lost their way and people's life essentials are fast disappearing.

 

Stimulus strategies are meant to kick start a country's economic well being. In the States, for instance, President Obama's Stimulus Package is suppose to deliver 3 to 4 million new jobs. These new jobs are suppose to replace the ones already lost over the whole of 2008. America's new jobs will come from re-building its decaying highways, setting up new school rooms, repairing run down school buildings, insulating hundreds of thousands of homes to save on electricity, etc.

 

The Stimulus Strategies of other nations are built much along the same kind of thinking: convince the typical citizen to once again go out to stores and shops to buy up things--household items, cars, clothing, shoes, homes, etc. Then, so the theory goes, fewer and fewer jobs will be lost and in fact, more and more people will begin to work again, taxes will start to flow back to government and economic growth takes off once again.

 

Such a strategy, however, is certainly not based on past history. In fact, the world has currently entered unchartered waters. The world has become very much like a ship sailing close to land where there are many reefs but the captain doesn't have a clue about where the hidden reefs lie. Unfortunately, most nations currently face a serious recession, money is tight and jobs are disappearing from the largest and most powerful companies in the world. Yet, no one has yet come up with a better plan.

 

But the current financial tsunami doesn't mean the Solomons must simply throw up its hands in despair and wait until some one else saves us. In a sense, we sit in a better position than many other nations. Most of our people feed themselves from their own gardens and the ocean's bounty, build their own homes, secure sustainable energy sources--fire wood for cooking, coconut oil for lighting and a substitute for diesel--access drinkable water, use bush medicine, enjoy abundant sea resources, etc. In a word, 8 out of 10 Solomon Islanders have a basic resource base to keep themselves alive. 

 

However, our political leaders, elite members of society, those who live off the dollar, the highly educated and foreigners, found in Honiara and provincial capitals, are particularly poorly  placed to ride out the coming financial storm. Just as it was the village that pulled the Solomons through during its Social Unrest years of 1998-2003, so will the villager have to once more repeat this fundamental work during the up coming Financial Unrest period. But villagers are unable to do this on their own. 

 

The cash economy nations, the developed world mostly, have been severely shell shocked by the current financial mess.They react in a  predicable ways. Money rules their thinking. National treasurers can only think of jobs, money, banks, stock market, etc. They have little else to fall back on.  We on the other hand by focusing on the majority of our people, the 8 out of 10 who live village life, live off their own resources.

 

A Solomons Stimulus Strategy, however, taking into account the nation's strong food, housing, energy, medicine resource base of food, can fashion a worthwhile strategy which both enhances people's ability to feed themselves and strengthen their livelihoods as well. Although copra and cocoa prices are currently at historical highs, so too are shipping charges. So no matter how much a copra cutter gains in selling his copra, much of that profit is eaten up by shippers demanding sky-high freight charges. All of this in spite of the dramatic drop in fuel prices since August, 2008. Government must be vigilant along this line. Shipping companies have a right to modest profits but not soaking village copra and cocoa producers.

 

If the village sector remains strong during this serious financial tsunami and is assisted to gain modest amounts of money from food production, copra/cocoa work and fishing, this will be the best stimulus for the whole of the cash economy nationwide. The solution to Solomon Islands coming trouble, as is usual the case, lies in strengthening villagers' lives--84% of the nation--who in turn will help the cash economy weather the coming storm.