Barry Whiteside: "Financing Day" in Fiji
Opening address by Mr Barry Whiteside, Governor of the Reserve Bank of Fiji, at the Official
Opening of the Financing Day, Lautoka, 9 August 2012.
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Welcome
Mr Ropate Ligairi - The Permanent Secretary for Agriculture,
Distinguished Guests
Students, Teachers
Ladies and Gentlemen
Cola
Vina, Namaste and thank you very much for joining us here at the inaugural "Financing
Day" organised in conjunction with the Crest Agriculture Show. It is a pleasure and an honor
for me to be here today. I grew up as a primary school student in Lautoka in the sixties,
attended Drasa Avenue Primary School and have many fond memories of this place.
I thank the organisers, the Department of Agriculture, for the excellent arrangements. I also
thank all our fellow stakeholders from the Ministry of Education, Ministry of Health, Lautoka
City Council, Association of Banks in Fiji, other financial institutions, Department of Energy
and renewable energy companies for their participation and warm hospitality.
We are proud to be part of the Crest Agriculture Show. This year, the Reserve Bank
significantly increased its financial sponsorship for this event in what we see as our wider
role in helping develop Fiji's economy.
Recently the RBF Board and Executive Management visited some industries and projects in
Vanua Levu as part of our on-going efforts to get down to the "grassroots" level, or "coalface"
as some might say. We were able to see first-hand the challenges faced by rural
communities in the North. But we also witnessed a lot of optimism about what was evolving
on our second largest island. Our team met with the business community and saw the
exciting new developments that are in progress to improve roads, create more jobs and
support income generating opportunities. This general positiveness, I feel, is not just
restricted to the North, but is seeping through the whole economy. We at the Reserve Bank
have witnessed it from our recent face to face discussions with people from both the private
and public sectors.
Ladies and Gentlemen, boys and girls, apart from issuing the currency notes and coins that
you have in your pockets today, let me explain a little about the other important things we do
at the Reserve Bank. One of our major roles, like many other central banks, is to ensure that
the economy is on a stable growth path. We do this by ensuring that inflation is under control;
that we have sufficient foreign reserves (or foreign currency) to meet Fiji's external payment
obligations; and that our financial system is sound.
You may ask how do we do this? The Reserve Bank independently sets monetary policy by
managing the nation's money supply to achieve a set policy interest rate. In doing so, we
indirectly influence the interest rates of commercial banks, that is, the deposit and lending
rates. These in turn will lead to changes in the amount of money that is circulating in the
financial system and the availability of credit in the economy.
Our presence here at the Crest Agriculture Show is a testament of our commitment and
support to grow what we see as critical sectors of our economy. We are trying our best to
raise awareness and bring about unity and support, from all stakeholders, to work together to
improve the conditions and living standards of all our fellow citizens in Fiji.
The main focus of today's Financing Day is to raise awareness and understanding of the
different products and facilities that are available from our various financing institutions that
have been targeted to assist the agriculture and the renewable and sustainable energy
sectors.
You might be asking, why are we facilitating finance to these sectors?
As a resource-based economy, our greatest competitive advantage lies in the development
of our resource-based sectors. This means that we need to continue to work together as a
nation to grow Fiji and increase the production and utilisation of our own natural resources
for both domestic consumption, as well as exports.
As such, the agriculture, fisheries and forestry sectors will continue to play an integral role in
Fiji's overall development.
The agriculture sector, which includes sugar cane, other cash crops, livestock and
subsistence farming, is vital to Fiji's economy, contributing notably to Fiji's Gross Domestic
Product (GDP). The sector provides food and livelihood security, promotes community
development in rural areas, generates income for approximately 65 percent of our
population, and earns foreign exchange for the country.
Unfortunately, Ladies and Gentlemen, boys and girls, the sector has been performing well
below par in recent years. As an illustration, for 2010, total agriculture exports were around
$581 million with sugar earnings accounting for 12 percent or $70 million. Back in 2008,
agricultural exports were much higher at $670 million and sugar earnings accounted for
37 percent or $248 million.
Over the past decade, the contribution of the agricultural sector to Fiji's GDP has also
declined from 12.3 percent in 2001 to 9.2 percent in 2011. The decline in performance in our
agricultural sector is the result of a combination of factors, including the vulnerability it has to
natural disasters, minimal private sector investment, inadequate infrastructure, marketing
deficiencies, soaring production costs and the limited access to finance.
Apart from agriculture, the Reserve Bank is also committed to help grow the renewable
energy sector. At the national level, we are aware that any increase in economic activity
means higher energy demand; a substantial portion of which comes from fossil fuels. Fiji
imports all its mineral fuels and this dependence on imports has huge implications for our
current account.
Over the five years from 2006 to 2010, the current account deficit averaged around
13.4 percent of GDP. Over the same period, domestic mineral fuel imports accounted for
around 25 percent of total retained imports, on average per year. Given the hikes and
volatility in international crude oil prices, the need to lessen our dependence on mineral fuels
is critical. Policy development, macro monitoring as well as creating greater public
awareness and support for projects involving renewable energy, are thus essential to rein in
Fiji's high fossil fuel usage and import bill.
The associated environmental cost also has a direct impact on the economic well-being of
our country. In this regard, investment in renewable and sustainable energy is important to
mitigate all the allied risks.
Ladies and Gentlemen, the Reserve Bank and the Government are also promoting local
value adding, which basically means using our own local resources where-ever and
whenever we can. This also means that we work towards conserving energy and developing and
supporting greater use of renewable energy sources such as hydro, solar, biomass,
biodiesel and wind farms, where feasible. The Reserve Bank has been working with various
stakeholders in exploring opportunities to incorporate more local value-added content into
food and beverages, renewable energy and handicraft to name just a few. The Fiji National
University (FNU) is one of these stakeholders, given its critical role in training a skilled
workforce for both the domestic and international markets.
In 2010, the Reserve Bank sponsored a local chef from the FNU for training in Malaysia to
support and develop innovative new ways of using local foods and produce in our hotel
industry, and on resort menus. Additionally, in March this year, we sponsored three local
chefs to attend the inaugural South Pacific Food and Wine Festival in Denarau. In the past,
this was an area of concern to the Bank as a lot of the food used in the tourism industry was
imported. At this point, I must commend the Department of Agriculture which has been at the
forefront in working with various players in the industry. As a result, most of the hotels and
resorts now use a lot more local produce. In fact a number of hotels have developed their
own backyard gardens and are now linked with local suppliers to ensure a steady supply of
quality and fresh produce. Complementing this is the growing trend and awareness amongst
chefs and travellers on the diversity and the richness of our local cuisine and diet.
Ladies and Gentlemen, all too often access to affordable finance has been cited as a major
challenge to growth in the sectors I have highlighted this morning. The Reserve Bank, as the
financial sector regulator, is taking a more proactive approach to this issue. Our most recent
efforts include the streamlining of our Export Finance Facility and Import Substitution Facility
into a single entity called the Import Substitution and Export Finance Facility (or ISEFF). The
Facility will continue to focus on improving Fiji's balance of payments position by assisting
exporters, large scale commercial agricultural farmers and renewable energy businesses to
obtain credit at concessional rates of interest. In addition, the Bank has further reduced the
administrative requirements and streamlined the approval process for funding under the
scheme.
In February this year the RBF issued a policy to commercial banks' which required them to
lend at least four percent of their deposits to businesses in the agriculture sector and a
further two percent to the renewable energy sector.
In addition, the Reserve Bank recently required all banks to establish Local Advisory Boards
to guide senior expatriate management to better understand, and align their strategies to
Fiji's regulatory and supervisory environment, as well as national development objectives,
which will include the provision of financial services to the wider community.
Ladies and Gentlemen, the RBF will continue to play a proactive role in ensuring accessible
finance is provided to these key sectors with a view of creating opportunities for farmers and
families to improve their livelihood and contribute to economic growth.
We hope that you will also make the most of the opportunities that the Crest Agriculture
Show has to offer and take the time to visit the finance providers and find out about their
available services and products.
This morning I would also like to introduce and launch a new recipe book that was compiled
by a local chef - Mr Simione Toanikeve, whom the Reserve Bank sponsored in 2010 for
training in Malaysia. This scholarship came about through the support of the Intercontinental
Hotel Group here in Fiji and the Crowne Plaza Mutiara Hotel in Kuala Lumpar, Malaysia.
This recipe book is a product of lessons from Simi's Malaysian experience, as well as his
many years of work experience in the tourism industry both in Fiji, and abroad. The book has
been written for every chef, whether you work in a large commercial kitchen, small restaurant
or home kitchen. It has been designed to promote the innovative use of locally grown foods
and produce. The book titled "Kana Mada - Fiji Style" was produced through the
collaboration of the Fiji National University and the Reserve Bank. We hope that you will buy
a copy today and continue to support our farmers, market vendors and manufacturers in Fiji
by buying their produce.
Finally, I do urge you all to visit the booths and stalls set up by the various financial
institutions, and indeed by the Reserve Bank and other stakeholders. This is your golden
opportunity to learn more about the facilities and various products that are available. I am
sure our staff and colleagues will be more than willing to assist you and perhaps do some
business!
Ladies and Gentlemen with these words, I have much pleasure in officially opening our
inaugural "Financing Day" at this year's Crest Agriculture Show, and in Launching the "Kana
Mada Fiji Style" Recipe Book.
Vinaka.