1.1 Introduction

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Vanuatu is a least developed country with an estimated 193,000 people, of which approximately 98% are native Ni-Vanuatu. The country gained its independence from Britain and France in 1980 after almost 75 years of dual administrative authority over the country. The country is divided into 6 administrative provinces. Apart from a few larger cities, transportation routes are limited and access to imported goods is variable, with many communities not having electricity, television or much in the way of consumer goods. Access between islands is costly and distances can be quite substantial. Compared to some Pacific island nations, Vanuatu is less urbanized and more geographically spread out.

1.2 Geography

Vanuatu is an archipelago comprising approximately 83 islands situated in the South-western Pacific Ocean, approximately 1,750 kilometers east of Australia and 500 kilometers northeast of New Caledonia. The total land area is approximately 14,700 square kilometers of which only approximately 10% is inhabitable due to rugged mountain ranges and active volcanic activity. Vanuatu lies along the top of the Pacific Ring of Fire and has nine active volcanoes.

Source: Ministry of Foreign Affairs, Kingdom of Thailand

1.3 Socio-economic Profile

Demographics

The people of Vanuatu speak over 100 indigenous languages. English and French are the official languages, while Bislama is the national language. Business is conducted primarily in English, although there are many French companies who conduct their business in both French and English. The Ni-Vanuatu are religious with the most prevalent religions comprising Presbyterian (37%), Anglican (15%), Catholic (15%), Seven Day Adventist (6%), Church of Christ (4%) and indigenous beliefs (8%).

Table 1

Table 2

Source:National Statistics Office

Table 3

Source: National Statistics Office

Table 4

Table 5

The formal employment sector excludes subsistence farming and unpaid voluntary workers. Table 6 highlights the number of people employed in the formal sector at only 17,385 out of a total labor force of 76,370.

Table 6

Poverty Levels:

Information on the level of poverty throughout Vanuatu is limited. However, according to the Asian Development Bank (ADB), the absolute level of poverty in terms of starvation and destitution is not a problem in Vanuatu. Many people have income below the international poverty line as measured by US$1 per day. Recent estimates indicate that 40% of all Ni-Vanuatu and 51% of those living in rural areas have incomes below this level.

In 2002, the Government initiated a "Participatory Hardship Assessment." Ni-Vanuatu from all walks of life, especially the poor, were asked to describe poverty and hardship from their point of view and suggest the most important priority actions to improve their lives. Interviews were held at the household level, and focus group discussions and workshops were held with the communities.

The Department of Economic and Social Development led the effort to consult with traditional and elected officials and women and youth leaders in 12 village and settlement communities in Torba, Penama, Shefa, and Tafea Provinces. The sites were selected to represent both rural and urban areas, various levels of access to services, and geographic regions. The assessment was funded by the Asian Development Bank (ADB).

Based on the United Nations Development Programs human poverty index, Vanuatu rated a 46.4 as compared to other Oceania countries of Papa New Guinea at 52.2 and Cook Islands of 6.1.

Economic Indicators

Vanuatu has an open economy with exports providing a major market for domestic production and imports providing a significant proportion of the goods and services required for domestic consumption and investment. Movements in government final consumption expenditures are affected by changes from year to year in the level of technical assistance provided by overseas donors.

Gross Domestic Product (GDP)

GDP contracted by 0.3% in 2002 following a contraction of 2.7% in 2001 reflecting the effects on agriculture and tourism of several major cyclones and weak demand. According to the ADB, modest economic recovery is forecasted in the medium term with growth of 1.3% in 2003 and 2.2% in 2004. Inflation is projected to be moderate at 2.5% in 2003 and 2004

Figure 3

Percentage Share of GDP by Sector 2001

Budget

The 2003 budget forecasts a modest overall surplus of 0.4% of GDP, which is projected to increase marginally in 2004. Much of the surplus will be realized from a reduction in the Government's development expenditures.

Table 8

Table 9

Imports

A gradual shift from intermediate and investment goods to consumer goods in the import sector has taken place over the last ten years.

Table 10

Exports

Table 11

Figure 4

Exports by Country 2001

1.4 Government

The Republic of Vanuatu is an independent parliamentary democracy, with 52 members of Parliament, for which general elections are held every 4 years. The most recent national election was held in May 2002. The head of state is the President of the Republic, who is elected for a period of five years by an electoral college consisting of Members of Parliament and the Presidents of the Regional Council. The Prime Minister and the 12 co-members of the council of ministers oversee the administration of Vanuatu's 13 government ministries.

Vanuatu is a full member of the British Commonwealth, the French League of Nations, the United Nations, Agence de Co-operation Culturelle et Technique, The South Pacific Bureau for Economic Co-operation (SPEC), The South Pacific Commission, the World Bank and the Asian Development Bank. Figure 5 highlights the Government organizational structure.

Figure 5

The Government Organizational Structure

1.5 National Social Welfare System

There is currently no specific social welfare system in Vanuatu. However, the Government established a National Provident Fund (the Fund), in 1986, to provide for contributions to and the payments of benefits out of the Fund. The Fund is designed to provide employees and their families a measure of financial support when income is affected by the onset of old age or permanent incapacity for work or the death of a Fund member. The Fund provides a lump sum payment comprising contributions paid to the Fund by the member and his employer, plus interest. The amount payable to the beneficiaries of members who die before becoming entitled to withdraw his credit in the Fund, is enhanced by a Special Death Benefit provided through a supplementary scheme. A member of the Fund who leaves Vanuatu permanently may withdraw their credit when leaving the country.

As of the end of 2001, there were 18,607 contributing members to the Fund and as of December 2002 member funds totaled 4.04 billion Vatu (US$27.6 million).

Coverage of the Fund

The Fund covers employees over the age of 14 in regular employment, with the following exceptions:

• Persons covered under employer-provided retirement programs if approved by the Board of the Provident Fund
• Employees earning less than 3,000 Vatu a month. Also exempt are temporary workers in agriculture and forestry
• Ministers and members of religious organizations may pay into the program on a voluntary basis.

Source of Funds

• Employee: 8% of earnings (amended as of 2004)
• Employer: 8% of payroll (amended as of 2004)
• Government: None

Qualifying Conditions

• Old-age benefit: Age 55; or permanent departure from the country. Lump sum equal to total employee and employer contributions, plus at least 4% compound interest
• Disability benefit: Permanently incapable of employment of any kind due to physical or mental impairment. Lump sum equal to total employee and employer contributions, plus at least 4% compound interest
• Survivor benefit: Death of insured worker prior to retirement. Lump sum equal to total employee and employer contributions, plus at least 4% compound interest, plus special death benefit

1.6 Education Profile

Vanuatu's long-term educational development goal is to provide universal primary schooling and equitable access to secondary education. The educational environment is unique in Vanuatu, as there are more than 105 vernaculars, two official languages (English and French) and one national language (Bislama) with schools located over more than 60 islands in the archipelago. Vanuatu experiences a low level of formal education throughout the majority of the adult population.

Education System:

The formal school system consists of 6 years of primary education, 4 years of junior secondary and 2 to 3 years of senior secondary education. Upon completion of primary schooling an examination is administered for extreme competition for the limited number of secondary school seats.

The educational system in Vanuatu requires tuition fees to be paid, which is not provided for by the Government. Both Government run and Private operated schools have varying fee schedules, which include sports and building fees among a host of others. According to the Disability Promotion and Advocacy Association (DPA), school fees for government operated schools average approximately 20,000 Vatu (US$138) per child, per quarter, while privately operated schools average approximately 225,000 Vatu (US$1,550) per quarter.

Enrolment Ratios:

According to UNICEF, net primary school enrolment for the period of 1997-2000 was 92% for males and 100% for females. Gross secondary school enrolment for the same period was 31% and 26% for males and females respectively.

Table 12

Public Expenditure on Education

The trend in Government budgetary resources to the education sector has been steadily increasing over the past 6 years from 15.6% of the total budget in 1996 to almost 27% in 2001.

Table 13

Literacy Rates

According to the National Statistics Office, the literacy rate was defined as the population aged 15 years and over who have completed four years of schooling in the 1999 Census. Based on this definition, the literacy rate for Vanuatu as recorded in the 1999 Census was 74%, 90% in urban areas and 69% in rural areas.

Besides the national census, there are no other consistent recent statistical indicators on adult literacy in Vanuatu. According to the ADB, adult literacy in 1989 was reported to be 68% for males and 60% for females. However, this differed significantly from a joint Vanuatu / United Nations report quoting a 30% adult literacy rate in 1991. The significant difference in the figures quoted may be due to the definitions of literacy used.

1.7 Health Profile

Key indicators have suggested that the country's health status has improved over the last two decades. Life expectancy increased for males from an estimated 61.5 to 65.6 years and for females from 64.2 to 69 years over the 10 year period of 1989 to 1999 period. Infant mortality, maternal morality and crude death rates also showed improvement. The Australian Agency for International Development (AuzAID) provided the Government with technical assistance for health information gathering and analysis systems, which has aided in the collection of the information in Table 13.

The Ministry for Health's budget included in the total Government's re-current expenditures has steadily increased over the past 6 six years to a current 12.3% of the overall budget. There are a total of 127 health facilities in the country, which there are a total of 5 hospitals, 25 health centers and 97 dispensaries.

HIV/AIDS has not been a significant threat to Vanuatu. The WHO has indicated that as of the end of 2002, there was one reported case of HIV/AIDS in Vanuatu. There have been no reported HIV/AIDS deaths.

1.8 Information Communication Technology

According to the National Statistics Office, as of December 2003, there were a total of 235 fixed telephone lines and 1,204 mobile phone subscribers. As of 2000, there was 1 internet service provider in Vanuatu with an estimated 3,000 internet users according to the United States Central Intelligence Agency. The internet code for Vanuatu is .vu.