The World Bank’s first-ever Fiji Country Economic Memorandum (CEOM) has highlighted that the extensive government ownership in Fijian companies is hindering economic progress due to practices that stifle competition. The report recommends that the Fijian government clearly assess and define the scope of its ownership across various sectors to limit its involvement where private enterprises could prosper independently.
At the memorandum’s launch in Suva, World Bank senior economist Mehwish Ashraf emphasized the need to confine state ownership to critical areas where private investment is improbable. She advocated for the divestiture or liquidation of state-owned enterprises (SOEs) operating in competitive markets, particularly those burdening government finances. Such steps could potentially free up 1% of Fiji’s GDP from public budgets, redirecting these funds towards infrastructure investments to bolster economic growth.
The CEOM introduced a new methodology uncovering that Fiji’s state involvement is more extensive than once believed, including businesses under indirect government control. As of 2019, government ownership extended to 59 domestic business entities, engaging several key ministries, such as Communications, Finance, and Agriculture. The findings point to a pressing need for a comprehensive survey of state ownership to enhance efforts to minimize this footprint.
This strategic approach aligns with the government’s broader goals outlined in the National Development Plan (NDP) and Vision 2050, which encourage greater private sector involvement to fuel economic growth. Previous reports have noted the need for restructuring underperforming SOEs such as Energy Fiji Ltd and Airports Fiji Ltd to improve private sector participation. The government plans to divest some SOEs to local investors, aiming for improved efficiency and opening up new investment opportunities.
Overall, the transition aims to establish a more dynamic and efficient economic environment in Fiji by balancing public and private sector strengths. Through strategic divestments and enhanced collaboration between the public and private sectors, the initiative seeks to stimulate economic recovery while continuing to provide essential state services, ultimately benefiting Fiji’s economy and its citizens.