A Practical Economic Transformative Policy Framework for Solomon Islands Over the Next Decade (2026 – 2036)

By: Martin Baddeley Housanau (An Economist & Accountant by Profession)

1. Executive Summary

This policy framework outlines a pathway for Solomon Islands to achieve long-term, self-reliant economic transformation by leveraging its natural assets, human capital, and strategic geography. The framework emphasizes that sustainable development, domestic revenue generation, local manufacturing and processing – value addition, good governance, and political will from our leaders in all works of life can drive the economic growth of Solomon Islands without much reliance on external donor funding.

It is inevitable that whilst donor funding is helpful in many areas, it will never grow the Solomon Islands economy in a sustainable and transformative manner as expected by many Solomon Islanders. We have heard of billions of dollars coming in through many aid programs over the past four decades, but we have neither seen nor experience any real tangible development, let alone economic growth. The reason is simple, and that is donor funding is not designed for economic transformation, instead it creates dependency and not productivity, often short-term and fragmented, does not build local private sector, vulnerable to politics and external agendas of the donor.

2. Brief Introduction

Solomon Islanders must not forget that real economic growth can only come from within because it is driven by a nations own people, resources, institutions, and capacity to produce, innovate and trade. Real economic growth in Solomon Islands will not be driven by foreign advisors in Government, external donor funding as handouts or temporary support. We must be at the forefront and be in-charge of our own economic destiny, and must not be influenced and dictated by donors or foreigners.

It is evident that achieving economic growth from within is essential for Solomon Islanders and Solomon Islands in the next decade or so. Because that’s the only kind of growth that lasts forever, it creates real independence, empowers our resource owners and government, and builds national resilience. It is our plea that those who hold responsible positions in government and other institutions charged with the task of negotiating and monitoring donor funds to ensure that these programs serve the interest of Solomon Islands and are not donor driven.

3. Vision & Objectives

Vision:

To build a resilient, inclusive, export-driven and self-sustaining economy that delivers equitable development for all Solomon Islanders.

Strategic Objectives:

• Strengthen domestic revenue and reduce fiscal dependence.
• Promote Special Economic Zones (SEZ’s) to attract investment and growth.
• Add value to natural resources through local processing.
• Invest in human capital and digital capacity.
• Promote sustainable, inclusive, and locally driven growth.
• Foster private sector development and innovation.
• Ensure environmental and climate resilience.

4. Transformation Pillars

The Pillars deemed as critical towards transforming the Solomon Islands economy in the short, medium and long-term are as follows.

1. A) Macroeconomic Stability
2. B) Public Efficiency & Good Governance
3. C) Resource-Based Industrialization
4. D) Agriculture & Rural Development
5. E) Sustainable Tourism
6. F) Mines & Minerals Fair Share
7. G) Digital & Knowledge Economy

1. A) Macroeconomic Stability

• Maintain low inflation and a stable currency.
• Implement fiscal responsibility laws and improve budget transparency.
• Strengthen public financial management and revenue collection.

1. B) Public Sector Efficiency & Good Governance

• Strengthen tax administration and combat leakages.
• Improve public financial management.
• Decentralize budgeting to provinces with accountability systems.

1. C) Resource-Based Industrialization

• Develop agro-processing, timber milling, fish processing & filleting, and mineral refining industries.
• Introduce incentives for domestic investors to lead in value-added production.
• Implement stricter sustainability regulations and revenue transparency.

1. D) Agriculture & Rural Development

• Boost smallholder productivity and market access.
• Promote high-value crops (cocoa, coconut, spices) and organic certification.
• Invest in rural infrastructure (feeder roads, storage, irrigation).

1. E) Sustainable Tourism

• Position Solomon Islands as a niche eco-cultural tourism destination.
• Prioritize community-based and locally owned tourism ventures.
• Upgrade domestic airstrips, sea transport, and hospitality training.

1. F) Mines & Minerals Fair Share

• Enhance benefit sharing for local resource owners and government.
• Prioritize safeguard of environmental and impact on peoples wellbeing.
• Invest in mineral resources and local capacity for research and exploration.

1. G) Digital & Knowledge Economy

• Expand rural internet and mobile connectivity.
• Develop a local digital services industry (outsourcing, Solomon Telekom).
• Invest in ICT training and digital entrepreneurship.

5. Applicable Economic Policy Framework for Solomon Islands

 

Policy Objective:

Enable the Solomon Islands economy to grow at 10% per annum through self-reliant, inclusive, and diversified development, driven by natural resource value addition, human capital, and private-sector-led investment.

Policy Outline:

To achieve a 10% annual economic growth in Solomon Islands is a bold and challenging goal. It is an ambitious undertaking, but practically, it is possible through a well-coordinated economic policy framework targeted towards driving productivity, investment, exports and job creation across sectors.

The key components of the policy framework are cross cutting in nature which indicates the complexity involved in building a diverse economy. However, the context in which Solomon Islands has evolved over the years requires the right policy mix that will drive growth and improved wellbeing of all Solomon Islanders. In this setting, the right policy mix to grow the Solomon Islands economy includes the following.

• National Industrialization and Value Addition Policy
• Agriculture and Fisheries Transformation Policy
• Domestic Revenue Mobilization and Fiscal Reform Policy
• Digital Economy and Youth Employment Policy
• Strategic Infrastructure Investment Policy
• Investment and Private Sector Development Policy
• Good Governance and Anti-Corruption Policy
• Climate-Resilient and Inclusive Development Policy

1) National Industrialization and Value Addition Policy

Goal: Shift from raw exports toward local processing and manufacturing.

Key Measures:

• Ban raw exports of all exportable commodities – logs, copra, cocoa, fish, minerals and others within 2 years from 2027 onwards.
• Establish manufacturing and processing of all exportable domestic commodities – copra, cocoa, fish, timber, minerals and others.
• Establish special economic zones for manufacturing and processing of domestic commodities.
• Provide tax incentives for domestic investors who invest in agro-processing and manufacturing.
• Introduce import substitution where viable (e.g. poultry, packaged goods).

Expected Growth Contribution: High employment and multiplier effect; 3–4% annual GDP growth if successful.

2) Agricultural and Fisheries Transformation Policy

Goal: Boost productivity and exports from rural livelihoods.

Key Measures:

• Fund local farmer cooperatives and fisheries groups with access to finance and tools.
• Create agro-industrial clusters in high-potential provinces.
• Introduce a “Cocoa & Coconut Revitalization Program” to double yields.
• Invest in cold chains, boat networks, and rural roads.
• Impose sustainable fishing quotas, but ensure domestic processing of tuna.

Expected Growth Contribution: Rural income rise up to 2–3% of GDP from annual exports.

3) Domestic Revenue Mobilization and Fiscal Reform Policy

Goal: Replace donor reliance with efficient domestic revenue.

Key Measures:

• Simplify tax code; introduce broad-based VAT with exemptions for essentials.
• Expand tax net to informal sector through incentives and education.
• Digitize tax collection to reduce leakages and improve compliance.
• Redirect all windfall revenue (e.g. mining royalties) to a national productivity fund.

Expected Growth Contribution: Enables strategic investment; and improves public sector capacity.

4) Digital Economy and Youth Employment Policy

Goal: Unlock productivity and job creation through technology.

Key Measures:

• Launch a “Digital Villages Program”: free public Wi-Fi, digital skills, online services.
• Train 10,000 youth in digital skills, coding, and remote freelancing.
• Introduce e-commerce support for local products (cocoa, handicrafts, tourism).
• Require all government services to be digitized by 2028.

Expected Growth Contribution: Increased efficiency, youth income, and service exports.

5) Strategic Infrastructure Investment Policy

Goal: Build enabling infrastructure for productivity and market access.

Key Measures:

• Prioritize feeder roads, inter-island ferries, airstrips, and rural energy.
• Create an Infrastructure Investment Fund using mining/timber revenues.
• Partner with private firms for build-operate-transfer (BOT) projects.
• Cap large, non-productive government capital projects.

Expected Growth Contribution: Unlocks private investment, reduces costs — ~1–2% growth potential annually.

6) Investment and Private Sector Development Policy

Goal: Attract domestic and diaspora investors; simplify doing business.

Key Measures:

• Launch a “Made in Solomon” campaign promoting domestic brands.
• Simplify business registration to 3 days; digitize licensing.
• Establish Provincial Economic Zones to encourage regional industries.
• Create a Solomon Islands Investment Authority (SIIA) to fast-track high-impact projects.

Expected Growth Contribution: Boosts FDI, SME growth, and job creation.

7) Good Governance and Anti-Corruption Policy

Goal: Ensure public funds are used productively and transparently.

Key Measures:

• Strengthen anti-corruption commission and public procurement monitoring.
• Introduce citizen budget tracking tools.
• Link public funding to performance-based budgeting.
• Publish all government contracts and audits online.

Expected Growth Contribution: Builds investor confidence, reduces wastage, and improves service delivery.

8) Climate-Resilient and Inclusive Development Policy

Goal: Ensure long-term sustainability and participation.

Key Measures:

• Mainstream climate risk and disaster planning in all sectors.
• Scale eco-tourism and community-based conservation as income sources.
• Prioritize women and youth entrepreneurship with targeted funds.
• Introduce carbon credits or payments for ecosystem services (e.g. mangroves, forests).

Expected Growth Contribution: Attracts green capital, and creates new sectors.

6. Macroeconomic Targets (2026–2036)

Table 1:      Economic Indicator Targets

Indicator	Target
1. Real GDP Growth	§  10% annually
2. Inflation	§  Less than 5%
3. Investment-to-GDP	§  30%
4. Tax-to-GDP	§  25%
5. Export Growth	§  15%
6. Unemployment	§  Less than 10%
7. Donor Dependence	§  Less than 5% of budget by 2030

 

7. Countries that Successfully Grow their Economies from Within

(With very little or No Donor Support)

 

         Table 2: Successful Economies from Within

Country	Growth Drivers
1) Singapore	§  Export-led industrialization, education and investment.
2) Botswana	§  Good governance of diamond wealth.
3) Vietnam	§  Agriculture reforms, manufacturing and trade.
4) Mauritius	§  Services, manufacturing and tourism.

 Aid funding from donors may have helped at certain points, but internal leadership, reform, enterprise and political will power were the main drivers of growth within these economies. This is an important lesson for Solomon Islands leaders, policy makers and planners to learn from and see how it can develop the economy from within. Especially as we are preparing to transition from being a Least Developing Country (LDC’s) status in December 2027 according to UNGA resolution.

8. Implementation Enablers

• Political will and long-term vision: Align parties and provinces behind a shared 10-year transformation plan.
• Strategic partnerships: Use PPPs and diaspora financing.
• Human capital: Massive upskilling campaign.
• Monitoring: Annual National Productivity and Growth Review.

9. Mindset Shift: Aid as a Lever, Not a Lifeline

 

DO:

• Use aid to unlock domestic potential
• Build systems, not parallel structures
• Treat aid as seed capital for self-sustaining programs
• Focus on outcomes, not activities

DON’T:

• Use aid for recurrent costs (salaries, office operations)
• Let donors dictate national priorities
• Allow fragmentation across uncoordinated projects
• Create dependency on free service.

10. Challenges to Overcome

1. Lack of national identify and perseverance to attain self-reliance.
2. Geographic fragmentation and infrastructure deficits.
3. Risk of elite capture and corruption.
4. Low domestic savings and investment rates.
5. Climate change and external shocks.
6. Donor’s aid funding dependency syndrome.
7. Implementation Framework
8. Setting up of a National Economic Council under the Ministry of Planning to oversee implementation.
9. Setting up of an Economic Advisory Board comprising of the Ministry of Planning, Finance, Provincial Governments, and Private Sector Representatives.
11. Monitoring & Evaluation

 

1. Annual Economic Transformation Scorecard.
2. Community-level scorecards for local impact tracking.

13. Risks and Mitigation

Table 3:      Risk Mitigation Strategy

Risk	Strategy
1) Political instability	§  Promote bipartisan support and community consultation.
2) Climate vulnerability	§  Mainstream climate adaptation in all sectors
3) Corruption	§  Strengthen accountability systems, audits, and enforcement
4) Infrastructure gaps	§  Prioritize catalytic investments with highest multiplier

14. Conclusion

Solomon Islands is now at a cross road in terms of fully realizing and benefiting from its rich resource based economic potential. By harnessing its internal strengths and prioritizing inclusive, sustainable development, the Solomon Islands can reduce dependence on external donors and build a resilient economy that reflects its unique identity, geography, and potential.

Donor support should be a strategic accelerator — not a substitute — for Solomon Islands’ long-term economic growth. The key is to channel aid into high-impact, catalytic areas, build capacity for self-reliance, and ensure every dollar contributes to inclusive, sustainable development that outlives the funding.

The economic future of Solomon Islands depends entirely on smart use of its natural resources, empowered local economies, and a modern skilled workforce. A strong national economic transformative policy – aligned with community needs and private sector realities – can unlock long term, inclusive prosperity for all Solomon Islanders and its future generations.

 

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