[Yaren, Nauru, 6th November 2011] Nauru is taking steady action towards improving development effectiveness on the small island nation.


The world's smallest republic, covering a mere 21 square kilometers, Nauru isn't short of drive to improve the lives of its 10,000 or so citizens. This proud island nation has seen its share of challenges. From its heyday during the late 1960s and early 1970s boasting the highest per-capita income in the world thanks to the island's phosphate returns, to the present where a mined-out atoll has left a people struggling to regain their identity and purpose: Nauru pushes on.

A founding member of the Pacific Islands Forum 40 years ago, Nauru is far from shy of taking charge at the regional level in pursuit of national benefits for its people. Regionalism has provided an opportunity, particularly for the Pacific's Smaller Island States, such as Nauru, to find strength in numbers.

Nauru was the first country to volunteer to undertake a Peer Review under the Cairns Compact for Strengthening Development Coordination (Forum Compact) in March 2010.

The Forum Compact is a commitment by Pacific Islands Forum Leaders to intensify national and regional efforts to strengthen coordination and use of all development resources in the Pacific.

The Compact seeks to accelerate the achievement of the Millennium Development Goals (MDGs), including through supporting the implementation of the Pacific Plan and national development plan priorities, providing the principles and processes for coordinated delivery.

Regular peer reviews of Forum Island Countries' national planning, budgeting, public financial and aid management systems are aimed at promoting international best practice in these areas through strengthened national systems and guided support from development partners.

"With minimal resources, Nauru has been able to implement a lot of the key recommendations of their Peer Review by mobilizing their own and development partner resources in a practical and effective way," said Secretary General of the Pacific Islands Forum Secretariat, Tuiloma Neroni Slade.

"I commend them for that, and believe that strong political leadership, a responsive donor community and the resolve and hard work of the Nauruan people are responsible for this progress."

Tapping into Pacific expertise

"The concept of a Peer Review is based on the idea that if a Forum Island Country wants to make improvements in its development efforts, it may be better to seek advice from Pacific neighbours, their peers," explained Mr Slade.

"The thinking is that other island countries may be facing, and could have found solutions to, exactly the same dilemmas confronting the country requesting a review."

A Peer Review is therefore conducted by a three-member team of two government officials from other Forum Island Countries, plus a development partner representative chosen and invited by the country volunteering to undertake a review.

Peer Reviews look at how countries formulate their priorities, turn them into budgets, implement plans and monitor and report on results; and just as importantly, how development partners act collectively and individually to support those priorities and processes.

"The reviewers do not question the policy direction of the country being reviewed," added Mr Slade. "But consider how the choices made by that country are supported through planning, budgeting and coordination of resources.

"They aim to come up with simple and practical actions tailored to local circumstances and based on regional experience, which can be implemented in the short to medium-term to improve development coordination in a country."

Kiribati was next to volunteer to undergo a Peer Review in 2010, followed by Vanuatu, Tuvalu and Niue in 2011.

Pioneering the Peer Review: Nauru's experience

Nauru's commitment to undertake a Peer Review was made by Minister for Foreign Affairs, Trade and Finance, Hon Dr Kieren Keke, at the 2009 Forum Economic Ministers' Meeting (FEMM) held in the Cook Islands.

Addressing the Peer Review team in-country in March 2010, Minister Keke said: "Given the energy behind the Compact when Forum Leaders endorsed it in 2009 and what we have been doing in Nauru in terms of developing our planning and aid management systems, we see this as an opportunity to take this energy and translate it into improvements to our planning and other connected processes."

Minister Keke urged the Peer Review team not only to make recommendations but to match them with inputs that will be needed to turn them into results.

Eighteen months on, a follow-up team from the Forum Secretariat was in Nauru last month for consultations on related progress and a way forward.

"From Nauru's perspective we found the Peer Review process quite timely as it coincided with our own timeline for development planning," Nauru's Secretary for Finance, Mr Seve Paeniu, told the follow-up team.

"It came after we had done a major review of our National Sustainable Development Strategy (NSDS) and had looked at internal development planning processes that could better support delivery and implementation of the Strategy. We also looked at how development partner resources could be mobilised to support its implementation."

Mr Paeniu highlighted that Nauru is relatively new compared to other island countries to this sort of conventional development planning and budgeting processes.

"But I think over the recent years Nauru has advanced considerably given the commitment by Government on continued reform," said Mr Paeniu.

"This spells a very bright prospect for Nauru in the foreseeable future."

Strengthening financial management

In particular, the Government of Nauru has moved forward significantly on strengthening its public financial management systems and procedures.

Following the internationally recognised Public Expenditure Financial Accountability (PEFA) assessment carried out in Nauru late 2010, complemented by the Nauru Peer Review held earlier in the year, several recommendations have been actively pursued.

With the support of its major development partner AusAID, Nauru has been able to install a new electronic Financial Management Information System (FMIS).

"We have initiated roll out of the system in the Health and Education Departments and will be ready to roll out the full system to all Ministries over the next few weeks," said Mr Paeniu. "The new system is designed to allow us to be accountable and transparent in the use of government resources as well as the funding provided by partners.

"Nauru's general procurement processes also required further improvements according to the PEFA, and we have scoped out the kind of processes that would meet international best practice. This is something the government now is working on improving."

Mr Paeniu said the Nauru Government was also looking at improving internal planning and coordination processes.

"We have established our National Development Committee (NDC), which comprises of key heads of departments, and that body reviews progress on the implementation of the NSDS and provides advice to Government in terms of major policy initiatives," said Mr Paeniu.

Challenges and the way forward

"For Nauru the challenge has always been one of capacity - being able to have enough people with the appropriate skills to be able to work with and sustain these new systems that we are putting in place," Mr Paeniu emphasised.

"We will continue in the foreseeable future to rely on our development partners to bridge that capacity gap."

The challenge with Development Partners, according to Mr Paeniu, is how their resources can be further tailored to meet the current Government systems.
"This would involve channeling their resources through Nauru's national planning, budgeting, public financial and aid coordination systems preferably in the form of general budget support to meet the Government's priorities," said Mr Paeniu.

"Actively engaging the private sector and Non-State Actors is also important for Nauru, and the Government continues to seek ways of including these key players in these important processes."

Forum Leaders welcome progress

At their meeting held in Auckland last month, Pacific Islands Forum Leaders welcomed progress made under the Forum Compact in 2011 and recognised the efforts of Forum Members, the Forum Secretariat, partner agencies and development partners in strengthening development coordination across the region.

In their 2011 Communique, Forum Leaders recognised the importance of increased effort across the region to strengthen public financial management through the use of diagnostic tools and processes such as Public Expenditure and Financial Accountability assessments.

Leaders agreed to showcase evidence and experience gathered during implementation of the Forum Compact as part of a coordinated regional position at the Fourth High Level Forum on Aid Effectiveness (HLF4) to be held in Busan, Republic of Korea from 29 November to 1 December 2011.