The World Bank’s inaugural Fiji Country Economic Memorandum (CEOM) has found that the Fijian government’s extensive ownership in various companies is impeding economic growth due to anti-competitive practices. It has recommended that the government must clearly define and understand the extent of its ownership footprint across the economy to strategically reduce its involvement in sectors where private companies can thrive.
During the launch event held in Suva, World Bank senior economist Mehwish Ashraf stated the importance of minimizing state ownership to areas where its presence is essential and private sector investment is unlikely. She highlighted the need for divestiture or liquidation of state-owned enterprises that operate in competitive sectors, especially those that are financially draining the government’s resources. By doing so, resources could be redirected to more constructive uses, potentially freeing up 1% of Fiji’s GDP from public budgets. This could be reallocated towards public investments, particularly in infrastructure, to encourage higher economic growth.
A new methodology revealed that Fiji’s state involvement is more substantial than previously recognized, as it encompasses businesses indirectly controlled by the government. As of 2019, government ownership extended across 59 domestic business entities, involving several key ministries, including Communications, Finance, and Agriculture. The data underscores an urgent need for comprehensive mapping of state ownership to streamline efforts in reducing this footprint.
This approach aligns with the government’s broader strategic goals as outlined in its National Development Plan (NDP) and Vision 2050, which aim for increased private sector involvement to boost economic growth. Prior reports have identified the underperformance and restructuring needs of state-owned enterprises (SOEs), such as Energy Fiji Ltd and Airports Fiji Ltd, to facilitate better private sector participation. The government intends to divest certain SOEs to local investors, enhancing operational efficiency and opening up new investment avenues.
Overall, the proposed shift indicates a strategic move towards creating a more dynamic and efficient economic landscape in Fiji, leveraging both public and private sector strengths. Through careful divestment and private-public collaboration, the goal is to stimulate economic recovery while maintaining essential state services, ultimately benefiting the Fijian economy and its people.