Tourism and related industry and sevices Systemic Change Pathways
Septmeber 2015 MDF Fiji Version-1
Summary MDF Fiji Country Strategy Poverty Fiji is a middle-income country. Nevertheless, 35 per cent of Fiji’s population is classified as poor and/or vulnerable to income shocks. Poverty is caused by and/or concentrated in: Traditional crops for export such as sugarcane and copra have become less profitable. The domestic market for food crops is mostly saturated; farmers grow a variety of crops in small quantities and are not very specialized; yields are low. There is a need for new markets for agricultural produce. There is rural-urban drift, which results in urban unemployment (and, in places, a rural labour shortage). Urban services have been expanding, but not enough to absorb all available labour. Employment in manufacturing and processing has been shrinking and only recently started to grow again. There is a need for employment opportunities outside agriculture, especially for lesser-skilled workers. Cyclones and droughts can jeopardize rural livelihoods; regular sources of income and means to save income help households deal with shocks.
Economy With a decline in traditional export crops, in which the state has a strong presence, new growth needs to come from new entrepreneurs and/or new markets. Growth is constraint by: Domestic markets are small; growth needs to be export-led. The local entrepreneurial base is small; indigenous-Fijian businesses are underrepresented. Small, often first-generation businesses have limited access to bank finance and other specialized support services (the Fijian market is too small to support them); entrepreneurs need to perform many business functions in house, while their financial and managerial capacity may be limited. Skilled labour is in short supply. Fiji ranks poorly (160 out of a possible 189) on the World Bank Doing Business index for starting up a new business.
MDF Focus in Fiji Encouraging (mostly export-led, but also tourism-led) diversification and commercialization in agriculture (‘turning farming into a business’). Creating off-farm employment for those who have left the land (in tourism, in processing).
Support local entrepreneurship in niche markets (mostly tourism-led, but also export-led). Develop better business services; improve aspects of the Business Enabling Environment. For example Biosecurity Authority of Fiji which is the regulatory body responsible for monitoring export of horticulture produce and issuing import permits for agro-inputs. Ensure geographic and ethnic inclusion. This will be achieved by working in the following ‘growth engines’ of the Fijian economy – Horticulture and Agro-Exports, Tourism and Related Support Services and Industries, and Export Processing.
Women’s Economic Empowerment (WEE) All sectors are relevant for WEE, integrated in the systemic change pathways (see below).
Alignment with Government of Fiji Over the last few years the government has pursued a mildly expansionary macroeconomic policy to strengthen investor confidence. In the last five years, the economy has grown steadily; to sustain it the government is emphasizing broad based growth focusing on infrastructure, agriculture, export and tourism. Generating jobs and creating more private sector investment are also key priorities. Such outlook aligns well with MDF works in its three sectors. Within these sectors, MDF is interacting with relevant government agencies, as in Fiji Revenue and Customs Authority (FIRCA), Ministry of Industry & Trade and Tourism, Ministry of Agriculture, Biosecurity Authority of Fiji (BAF) by engaging directly or indirectly through private sector partners. As opportunities, other government agencies would be identified also.
Geographic and Ethnic Inclusivity Fiji is a country where majority of economic activity happens in Viti Levu and in business ownership and managements, indigenous Fijians are underrepresented. Addressing them, within the ambits of the systemic changes being fostered, ensure a greater quality of inclusive impact. Within the three sectors, MDF will have a special focus to support and nurture business growth in Vanua Levu, Kadavu, Taveuni, Levuka among other islands. With indigenous Fijians, MDF will explore innovative partnerships methods (NGO, CSO, Community bodies), where opportunities allow, to promote more representation.
Note on Systemic Change Areas
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In general, beyond certain traditional sectors like Sugarcane, Copra which show signs of stagnation, Fiji, being a small island economy, has thin, emerging market systems. All three sectors, Horitculture and Agro Export, Tourism and related Services and Support Industries and Export Processing show good potential but at the same are broadly defined. This is done so to ensure that MDF reaches a certain scale of meaningful impact while having commonalities across market dyanamics in each respective sector. The implications therefore are that the systemic changes being envisoned and captured in his document also are necessarily broad and and represent the first tier of change. As a broad rule, it is expected that achieveing a high degree of systemic change is a process that takes around 8 to 10 years from inception. For MDF Fiji, which began its sector work in June 2012, as it goes about implementing partnerships in all three sectors, in line with these envisioned changes, new areas, with more defined needs are beginning to emerge. Cross sector services like finance, transport, packaging information (media, agriculture and non-agriculture) are picking up with new market entrants but they need to be made more relevant (eg. product development, capacity improvement, promotion) to have a wider inclusive impact. In a similar vein, areas under enabling environment (eg. customs reform, agriculture policy, export rules and policies, business support and registration) are also emerging where there is potential for large scale inclusive impact. Last but not least, infrastructure development (ports, airport strips, jettys, drainage), which could be viewed as embedded elements within each sectors or as a separate area, also has significant potential for inclusive impact. MDF sees it portfolio growing to include these cross sector services as a sector by itself in the coming year (post 2017). Beyond that there are opportunities for MDF Fiji to leverage on its learning in working in Fiji and broaden (if other Pacific DFAT posts are willings) to include other Pacific countries like Solomons and Vanuatu from its Fiji operation.
The MDF Framework for Defining and Populating Pathways to Systemic Change The systemic change pathway explained Competitiveness and change in sectors do not depend only on the actions of MDF. Sectors are complex and are influenced by a wide variety of factors such as global markets, changes in the policy and regulatory environment, the availability and quality of infrastructure, the cultural context and the environment. Some changes introduced by MDF will catch on quickly; others have faced barriers and moved slowly or not at all. MDF must be able to define which change areas it needs to focus on to make growth more robust and inclusive and then monitor progress towards achieving the quality of change that can be called ‘systemic’. For this purpose, MDF developed its Systemic Change Framework as outlined in the figure below. This framework is applied separately to each key strategic change that MDF aims to foster within a sector or market system. The annexes to this Strategic Guidance Note provide a detailed example of how the framework is applied in Fiji.
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MDF Systemic Change Pathway
Application of MDF’s Systemic Change Framework requires a deep understanding of a sector as well as experience working with market players to address constraints to pro-poor growth. The first step in applying the Framework is to develop an inclusive, pro-poor growth strategy for each sector. This sector strategy is typically based in on an Inclusive Analysis of Growth, Poverty and Gender at the sector level combined with a Household Level Analysis of Poverty and Gender Dynamics and defines a vision for inclusive growth as well key constraint areas to inclusive growth. MDF will then proceed to launch partnerships aimed at reducing the constraints identified and unlocking inclusive growth. At the same time, MDF uses the framework outlined above to further define its ‘strategic intent’ for a sector, as accurately as possible given that it will learn more from implementation about what is really needed and realistically feasible. Please refer to MDF’s Strategic Guidance Note on Systemic Change which shows how an inclusive sector growth strategy (for the Horticulture sector in Fiji) feeds into the country strategy, and how systemic change areas support the inclusive sector growth strategy. As mentioned, for each systemic change area, MDF applies the systemic change framework; the introductory section justifies the rationale for identifying the systemic change. Importantly, in time, based on the experience gained from implementing the first partnerships within a sector, it becomes clearer which systemic changes the programme should focus on. As the programme discovers more through implementing its partnerships within the sectors, it becomes clear that some constraint areas appear to be dimensions of, or seem to coalesce around more deepseated problems. MDF then develops a better idea of which changes the market is ready for, and which changes requires more innovative approaches address the problems. Through the interplay between traction gained through partnerships and strategic intent, emerges firmer systemic change areas, which then become the ‘compass’ for programme implementation in the sector. This typically happens around two years into implementation as the first batch of partnerships start to yield results. To help define (and manage, monitor and communicate) the dimensions of change that deserve to be labelled ‘systemic’, MDF asks two fundamental questions: 1) are there appropriate incentives for market players to interact with poor people and to continue, expand and adapt the new business model; and 2) is the adoption and adaptation of the new business model continuing to serve the interests of poor men and women? For each question it has defined three key parameters. The table below reiterates these questions and briefly defines the parameters related to this. It should be noted that the first three parameters refer to the strength of the business case underpinning the change, and other three parameters refer to the beneficiaries of the change. Together they define the quality of change as well as the scale of change, making it truly ‘systemic’.
Parameters with Systemic Change Framework
Questions
Parameters
Definitions
Are there appropriate
Autonomy
Independent action by businesses or other
incentives for the market
market players to adopt and/or improve a
players that interact with poor
business model promoted by the programme.
people to continue, expand and adapt the new business model?
Sustainability
The extent to which the business model promoted by the programme is sustainable and/or profitable.
Resilience
The extent to which the market system supporting the business model can adapt to stay competitive, take advantage of new opportunities and recover from adverse shocks.
Is the adoption and adaptation
Inclusiveness
The extent and depth to which the business
of the new business model
model as practiced by market players includes
continuing to serve the
and benefits the target group
interests of poor people?
Scale
The proportion of the potential target group that gets the goods, services and/or jobs promoted by the programme.
Women’s
The extent to which the business model
Economic
includes and benefits women with respect to
Empowerment
income, access to opportunities, access to assets, life chances, jobs, manageable workloads and decision making power.
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Then, by asking these two questions using these six parameters, the framework seeks the programme to define a ‘beginning state’ for each parameter. This is the state of the sector or market system at the start of the implementation process (‘at the beginning of the pathway to systemic change’). Once the programme is being implemented it defines the key market or regulatory gaps it seeks to address to make the market system work better. This is followed by a description of the ‘end state’ for the same parameter. It outlines how the programme wants to see the market system work. If this state is achieved, the work is done. The end state should be defined as per market needs to work well. Therefore, it may occur that the programme defines an end state that it cannot achieve given its current resources and implementation window (contract duration). This makes the Systemic Change Framework a management tool not only for the programme, but also for its investors. It starts to define the ‘total potential’, the ‘total need’ and the ‘total time and resourcing’ required to meet those needs. As mentioned, the space between the beginning state and end state is the gap in the market system that needs to be filled, the pathway to systemic change that needs to be populated. MDF identifies four stages of progression along this pathway, captured for each parameter. These stages are ‘initial’, intermediate, ‘advanced’ and ‘matured’. In time, MDF will make progress against these parameters, but not at an equal pace (there may be very inclusive partnerships that lack scale and to some extent resilience, and partnerships that are strong on autonomy and scale, but less on WEE). Each partnership design needs to be strong and sustainable enough to be considered for co-investment by MDF, but no partnership is perfect. By managing its portfolio MDF will ensure quality of change at scale in a systemic manner. Nevertheless, MDF does not expect that all changes will reach the same level of institutionalisation in the market system within the life of the programme. Some changes may only reach an initial or intermediate level of systemic change, while others may reach an advanced or matured level of change. Using the knowledge and understanding gained from several years of experience, MDF can project the level of systemic change it expects to catalyse two years beyond the life of the programme.1 MDF assesses the progress of systemic change against these projections and analyses why change is happening faster or slower than expected. This helps the programme to better understand market dynamics and adjust its strategies appropriately. Finally, for each parameter, MDF will describe the beginning state and end state of where it is situated in moving forward along the pathway to achieve systemic change. This helps the reader
1
The processes of change that MDF catalyses during the programme will continue beyond the end of the programme. MDF uses the DCED recommended two years post programme timescale for its projections.
understand how far MDF has progressed in terms of achieving its strategy objective, with whom (which partners), and why. As implementation and insight progresses, MDF periodically updates these stories (as well as, if needed, the desired ‘end state’).
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Tourism and related industry and service sector Scale, constraints and opportunities Tourism directly contributes around 14% to the GDP employing over 40,000 people, a large share being women. Each year over 600,000 people visit Fiji and in total there are about 10,000 rooms available, but 70% of it, is in a small region in the western part of the country (Denarau, Coral Coasts). Occupancy levels are seasonal but in general they average, annually, just under 50%. Majority of the hotels are part of international chains and as estimated by the Fiji Central Bank for every $1 this industry bring only 40% is retained in the country. Part of other reasons why this happens is that there is a lack of proper information and products available for the wider parts of Fiji and that there is limited availability of required quality and quantity of local produce and supplies (food and non-food). Further constraints and opportunities are discussed below, Growth prospects for tourism look very promising. According to World Travel and Tourism Council, GDP contribution is expected to increase and reach 18.7% by 2024; similarly, visitor arrivals are also expected to increase and reach 900,000 by 2024. Within the sector, the “brick and mortar” investment is working well but there is more room to make it more inclusive. The cruise ship tourist is also set to expand with over 50 dockings expected annually (currently 30), averaging over 2,000 tourists per arrivals. With over 400 hotels and resorts in the country, it is estimated that around 80% of the fruits and vegetables consumed by the sector is imported (Around $35 Million). When it comes to souvenir items, a similar scenario emerges. Majority of tourist sales are based on imported items. For both these areas (food supply and handicraft sales), there are scopes to enhance the local sourcing by the tourist industry through improving the volumes, product variety, addressing compliance and quality issues and supporting the growth of the intermediaries. Beyond souvenir items, there is very narrow band of Fijian-based goods and services available which cater to tourists. Lack of entrepreneurial insights, inadequate product development, poor promotion, are hampering the growth of such products or services. Lack of proper connectivity across and within different islands (flights, roads, shipping/cruise), poor information relating to a wider traveling options across Fiji in terms of resorts, activities, sites limits more tourists to visit such areas.
 There are several key private sector associations (Tourism Fiji, Fiji Hotels and Tourism Association and SKAL2 ) but in general they are more focused towards the western part of the country .i.e. the traditional tourist hotspots. The government ministries (aviation, tourism, industry) have now clear priorities to promote wider tourism potential but this is only an emerging area. Additionally the government has invested heavily in creating and promoting a “Fijian Madeâ€? brand to encourage more local sourcing but clear incentive for private sector to buy into this brand are lacking.
The position of the poor in the sector The tourism sector has significant potential to have inclusive impact on women and men; the poor participate either as workers (entry levels, as in front office, security, gardeners, cleaners, housekeepers, restaurant attendants) or as supplier of local produce (farm and labourers). During the MDF household analysis of poverty, less than a third of the tourism households were observed to be poor but many were just above the poverty line, indicating vulnerability. Indigenous Fijians work more as front line staffs of these hotels/resorts whereas Indo-Fijians work more at the back office. Other than international hotels and resorts, the smaller resorts rarely invest in upskilling their workers. Additionally for these smaller hotels and resorts, their employments tend to be part-time, varying based on occupancy levels at these places. For the poor farmers and labourer see systemic change on Horticulture and Agro Exports.
The position of women in the sector Among the poorer workers, Indigenous Fijians women are much more strongly represented in entrylevel hotel positions than Indo-Fijian women, due to cultural norms, traditional land ownership and networks with current staff. However, for females in general because their work is more connected to occupancy levels (housekeeping, restaurant workers), they tend to be more affected by guest numbers than their male counterparts who are employed as security and/or garden workers.
Systemic changes in Tourism Tourism is one of the economic drivers of the Fijin economy. Ensuring that its impact is inclusive and support industries to tourism also grow is in the best interst of economy and in general, broad based
2
An international travel and tourism professional association.
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growth. The change areas listed below are the first steps that are being envisioned and they lay the foundation for more defined changes to be addressed later: 1. Mainstream tourism-related providers (operators and activity organisers) develop and promote their services encouraging more tourist visits to less visited sites and places in Fiji 2. Fijian-based goods manufacturers and providers develop, improve and promote their offers to tourists to increase local spending 3. Vendors, suppliers and processors improve and increase their local sourcing of agricultural produce to supply more to the hotels and resorts of Fiji Post 2021~3, as such changes mature and have established themselves, new areas that could be evolving but not limited to, are as follows:
Wholescale connectivity of activity providers, resorts, transport providers under tourist friendly accessible platforms (web, mobile, tablets) for information, reservation/booking and reviews, In partnerships with key stakeholders (private and public), improved infrastructure (roads, ports, jetties, airstrips) that promote more inclusive tourist and travel experience to Fiji Growth and deepening of new segments of tourism and spreading across Fiji: sport tourisms, eco-tourism, accessible tourism, agro-tourism. A more unified voice representing the whole of Fiji tourism complemented by well formulated relevent public policies that support the growth of inclusive tourism
These areas are just some examples where MDF sees the market evolving to and areas where more support could be channeled. However, owing to the timeline, these are very broad indications and should be taken as such.
Pathway 1: Mainstream tourism-related providers (operators and activity organisers) develop and promote their services encouraging more tourist visits to less visited sites and places in Fiji. Background (‘before picture’) As mentioned earlier, about 70% of the hotels and resorts are located in the tourist hotspots of the country located in the west. The remaining 30% comprised of around 120 hotels/resorts are scattered across other parts of Viti Levu, Vanua Levu, Taveuni, Levuka and Kadavu. There is a Fiji Hotels and Tourism Association (FHTA) but that too has predominated focus on the west. The remaining hotels are very scattered and not organized; hence issues faced by these players are not being properly raised or heard. There are around 3 to 4 large inbound operators having strong
linkages with travel wholesalers located in Australia, New Zealand and US; again the emphasis is on tourists aimed at the western side of the country. There are very few, small travel operators (less than 10) emerging with a view to provide a wider tourist experience (they see that as their niche) but it is still very early days. Bulk of the tourists that travel to Fiji are in family category which come in complete package tours. Beyond them are those that fall in “romance” (honeymoon, weddings) adventure (diving) and backpacker categories that tend to operate on more flexible packages. To entice tourists to visits other parts of Fiji, there are significant scope to focus on niche segments (Trekking, motor-biking, cultural/village experience etc) but at the moment, lack of promotion, product development and logitics impede such possibilities. In order to support these destinations, there is a need for support functions such as as finance, information markets, public sector support, transportation, the supply market (food) and the souvenir/shopping markets aimed at tourists. Connectivity to islands beyond Vanua Levu is inadequate and expensive; infrastructure and roads also need to be built/repaired. Availability of information is also limited (few websites), with little exposure for those tourist areas that are outside the hotspots. While the Government is clearly backing a wider tourism offering, (giving tax holidays to investors for certain ‘less promoted’regions of the country), private sector buyin, into such opportunities is low. Within these outer based hotels and resorts sourcing for food is driven by local markets while there are small retailers retailing souvenir products made in Fiji; however, owing to limited presence of tourists, these support markets have only limited income opportunities for these market actors. Women who are large part of the tourism workforce are employed in these outer hotels and resorts but owing to varied occupancy levels are only engaged part time. Women are also part of the souvenir industry as producers and retailers but report poor sales owing to reasons mentioned above.
Anticipated ‘end picture’ (when markets work well) Tourism in Fiji is not only driven by the west but by a more balanced portfolio covering all the major islands and regions of the country. While majority of family oriented tourists still travel on prepackaged traditional tourist’s hotspots, more than 30% of tourists visiting Fiji travel to other parts of the country owing to a mixture of emerging niche segments (biking, trekking, etc) and more active organised promotion campaign from the other parts of Fiji. Destination promotions within regions of Fiji (Rakiraki, Kadavu, Pacific Harbour, Savusavu) have resulted in increased tourism traffic and them becoming acknowledged as tourism spots. In support market, there is more active information available in different medium (booking sites, broadcast media) providing a host of service relating to booking, activities, review etc. As a result of tourists visiting other parts of the country, there is also increased income for those connected to tourism in those areas: retail/souvenir sales (including
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women as producers/retailers), supply (food), activity providers (diving, rides etc). Occupancy levels are now averaging 60% and as such there is more employment for women and men. Financial institutions now aggressively target small business and hence enterpreneurs (indigenous Fijians and indo-Fijians) and emerging business now have better access to finance. With the government backed schemed (tax holidays, Fijian brands) there is now more consultation and buy in from private sector. The government has also taken steps to invest in upgrading certain key infrastructures (docks at Lautoka, Pacific Harbour, better landing strip at Tavenui), some with private sector support but more opportunities and scopes still remain to do more; bilaterals amd multi-laterals have stepped forward to show interest in co-investments with the Government
Expected Pathway to Systemic Change (likely number, types and focus of partnerships)
Support and promote the establishment of Destination Marketing organisations (DMO) focusing on key regions. DMO have the ability to act as scale agents for crowding-in more innovative service providers. Expected partnerships: 2~4; 2~3 crowding expected Support development and promotion of niche based tourism offerings in other regions of Fiji. This would attract a new base of tourists that had earlier not considered Fiji as a travel destination. Since it is very likely that these would be driven by small emerging companies these efforts would require considerable enterprise development support and a strategy focused on replication before a certain critical mass is reached. For instance, trekking, biking, camping, yoga retreats, golf, sports tourism and bird watching. Expected partnerships: 6~8; 2~3 crowding expected Work with travel operators (airlines, cruise ships) to enable tourists to go to less visited sites of Fiji. Expected partnership 2~3. 2~3 crowding in. Work with media (print), mobile companies and IT reservation companies to improve information availability and booking and related services aimed at tourists, covering wider parts of Fiji. Expected partnership 2~4. Crowding in 1-2 Facilitate industry wide consultations with government agencies to address issues faced by tourism players operating in other parts of the country. Expected partnerships with tourism associations (1~2): the work with DMO is likely to have an impact on this area as well. Expected partnership 1~2; no crowding in expected On access to finance see the systemic change pathway 2 in Export Processing
Women’s Economic Empowerment A growing tourism sector will increase income and employment for women as workers, service providers and suppliers. More jobs would be as a result of more occupancy levels at hotels/resorts in
wider parts of Fiji; also as more tourists travel to such areas, they are likely to induce more sales on souvenir items (where women are engaged as retailers and producers). Lastly the hotels and resorts in these areas are also likely to procure more food (fruits and vegetables) leading to more sales for the rural households.3 The impact on women is likely to multi-dimensional. With increased employability and job facilties, their income vulnerability would reduce leading to more savings, and controls over their income. Shared decision making within the households implies increased economic advancement of the household will lead to both women and men deciding on how and where to spend; in other word, economic advancement is well connected with empowerment. In souvenir and handicrafts, acesss to new skills and knowledge for women would also contribute to opening up new markets, income albiet when the skill programmes are designed based on market demand.
Results in time Over a 10 year period (starting 2012), this change will have both a direct and induced impact on the poor. As direct impact, because of more tourists’ visitations, resorts, activity providers, community sites experiencing these visits are likely to earn and employ more. In induced impact, transport providers, souvenir producers/retailers and rural households supplying produces for these resorts will have more income. Based on such outlooks, around 5,000 women and men are expected to benefit in terms of increased income. There will be some job creation owing to increasing occupany levels which is expected to be around 200 FTE jobs (majority female)
Feasibility, efficiency and risks Tourism is very much the dominant sector in Fiji connected with other sectors of the economy including agriculture. Owing to MDF’s presence in both these sector, there are certain efficiencies and synergies to be gained. Furthermore because of the growth prospects of tourism, there is strong case of more businesses emerging in this sector which fits well with MDF’s strategy of getting more buy-in and more inclusive impact. There are certain risks that are present:
The tourism industry is very much linked with national and global economy and events. However as past events has shown (military rules, global financial crisis), the impact of these events tend to be slightly transient.
3
MDF studies have shown that in rural household both woman and men benefit from increased income and shared in the decision making process.
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The current focus is on traditional hotspots. MDF’s strategy of getting tourists to other parts of Fiji needs to be accomplished without jeopardizing the existing segments. Since the tourism industry is experiencing a healthy growth and MDF is focusing on new niche segments, this risk element is likely to be minimal.
Pathway 2: Fijian-based goods manufacturers and providers develop, improve and promote their offers to tourists to increase local spending Background (‘before picture’) Tourists spend on an average FJD 1,311 during their trip. Out of this 5% is spent on souvenir and other shopping items. A bulk of these sales comes from the large retailers (5) that operate and have branches in key locations of Fiji. Their product base, with the exception of certain wood base items, is imported. In both Suva and Nadi, there is a cluster of small handicraft retailers (around 100 combined) who have larger base of local products but their sales are very limited because of perceived quarantine issues, poor promotions and quality. Across the country, generally all resorts and hotels have a retail front that retails such locally produced souvenir items. In between these large retailers and the handicraft retailers there is a middle base of emerging number of retailers operating (less than 10) in Nadi, Sigatoka and Suva. These retailers provide a range of products and services and see Fijian-made goods as a way to differentiate their product offers. With the Fijian Made, (and its sub brand-Fijian crafted), the government is keen on seeing more sales of locally made products aimed at tourists. However, there is lack of effective private sector buy in into this brand; beyond carrying the logo on their products (around 103 companies do that but there is no fee for such participation), there is no clarity of what benefits private sector receive from such campaigns and hence the lack of involvement. Relevant support markets are finance and promotion; many of the companies that are ideally positioned to drive the sales of Fijian origin products and services (small and medium) struggle to access the right financial and promotional support. Media/Website presence of these companies’ product is also very minimal. Women are involved as retailers of souvenir products as well as producers of woven handicraft items. Lotion and spa products are also emerging as an increasing tourist shopping products; these are usually made from virgin coconut oil, sea-based products (algae and weeds) and these are usually sourced and processed by women in the village communities. Typically, regions include Yasawas, Vanua Levu and Taveuni.
Anticipated ‘end picture’ (when markets work well) The tourist expenditure on local products has increased to 10% of the total average tourist spend. The retail space is no longer dominated by imported products. Both the larger and medium sized retailers have a portfolio of products that has at least 30% that are Fijian made. (the proportion is likely to be higher with the medium sized retailers than the large ones). Some extent of government involvement is seen crucial (such as offering marketing and tax rebates to private sector retailers). Most of these sales still originate from Nadi and Suva. For the handicraft producers, they also have reorganised themselves resulting in more effective promotion, quality and quarantine issues being addressed. The Fijian made brand has been restructured, resulting in increased buy in from private sector who have clear benefits from such participation (premium pricing, access to markets, skills etc). MDF works on access to finance (See Export Market Strategy Systemic Change 2) has allowed businesses to tap into finance and helped them grow. Media (TV and News) provide regular coverage of such offers and there are Fiji portals that also carry information/retail (online) of such products. Additionally, as sales for such Fijian based products increase, women involved as retailers and producers of such goods also experience increased income. Companies that retail such products also invest in regularly training their producer groups. Overall producer groups based in the Lau group, Yasawas, Vanua Levu, Taveuni and selected regions of Viti Levu experience increased income.
Expected Pathway to Systemic Change (likely number, types and focus of partnerships)
Support and promote the establishment of unique Fijian-based products (chocolate, coffee, lotion, woven-based products) that relies on communities supplying raw materials. Expected partnerships: 6~8; 2~3 crowding expected. Support promotion and supply chain strengthening of retailers carrying more Fijian-based products Expected partnerships: 2~4; 2~3 crowding expected Work with Ministry to restructure ownership and promotion of the “Fijian Made” brand. Expected partnerships: 2~3; no crowding in expected Work with media (print and radio) and web portals to include more coverage of Fijian based products. This is unlikely to be any dedicated partnership but rather embedded in partnerships that are pursued with media and portal-based companies in other systemic change areas. On access to finance see the systemic change pathway 2 in Export Processing
Women’s Economic Empowerment With increasing sales on souvenir and retail products that are Fijian made, women producers and suppliers will get access to more income. With companies investing in their supply chain, women
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producers will have better access to training and skill upgradation; these will help these women diversify their product portfolio or improve on their existing products; either way, more sales and income is anticipated. Furthermore, with MDF demonstrating the benefits of introducing new technology for production and harvesting raw materials (for eg. Masi for making woven items) women producers are also likely to get access to new tools (as investment in supply chains by the companies) which will improve productivity but taking into consideration work load issues for women.
Results in time Over a 10 year period (starting 2012), it is expected that this change will impact 2,000 women and men as producer of the Fijian goods and services. 50 to 75 jobs are likely to be created, more at the retail front. Around 60% of these jobs are expected to be women. Overall with the Fijian brand become more effective job creation will also be experienced in other sectors as well; since other sectors would also be involved beyond tourism, the number of jobs created will be estimated at a later point in time when more information would be available.
Feasibility, efficiency and risks Since there are adequate numbers of enterprise present in this area, the work would be on transitioning these players rather than on focusing on creating new enterprises (although as a result of MDF work, it might encourage such practices). Similarly, the work on getting tourists to other parts of Fiji would complement the impact created by achieving changes in this systemic change area. The risks associated with this area: 

The increased tourists that visit Fiji are coming on pre-package tours leaving little room to increase the shopping basket for Fijian goods. Hence by working on niche segments (in other systemic change areas under tourism) and innovative products/packaging/promotion ensures adequate sales. Also by linking these emerging companies with the retail presences already operating in tourist hotspots help ensure increased sales. MDF will engage with the Ministry of Industry, Trade and Tourism, to work towards restructuring and creating better awareness of the Fijian brand campaign. Currently the large retailers are not willingly to engage with the communities to produce more Fijian-made handicrafts, alternatively this may require MDF to look at other market actors in development background, social enterprise or even non-governmental organisations.
Pathway 3: Vendors, suppliers and processors improve and increase their local sourcing of agricultural produce to supply more to the hotels and resorts of Fiji.
Background (‘before picture’) As mentioned earlier, it is estimated over 80% of the fruits and vegetables consumed by this sector are imported. Hotels and resorts have a high benchmark in terms of quality, quantity, portion size (packaging) and consistency of delivery which constrains local vendors from supplying more. Fruits and vegetable vendors on the other hand (less than 10) do not have any proper supply chain and therefore struggle to meet requirements. In niche segments such as coffee, chocolates, pacific cuisines, hydroponics there are scopes to enhance local companies but only few companies (less than 5) are engaged in this space but owing to lack of support (technical, infrastructure and finance) struggle to provide such products. Fish supply has prospect but again there are very few providers (less than 10) that cater to providing this to hotels. Support functions relate to storage, processing, packaging and transport but in all these areas, they are critically under-developed resulting in poor volumes and high wastage. Efforts by the government in promoting better agro-produce for the tourism sector is nascent and the work of Ministry of Agriculture is more geared towards increasing production and on the sugarcane sector. Ministry of Fisheries through its extension services provides links to these suppliers but also at times acts as ‘buying agents’ to increase market access for farmers. In the areas of pacific cuisine, there are interest from the Ministry of Tourism to promote this at hotels but nothing specific has developed. As this area relates well with agro-produce, the role of women is the same as portrayed in the horticulture sector.
Anticipated ‘end picture’ (when markets work well) 35% of the industry demand for fruits and vegetables come from local sourcing, as a result of improved quality, compliance and consistency of supply. There are now more suppliers/vendors operating in the market (around 50), with the large ones having a basic supply chain up to farmers and/or coastal communities; they follow international compliance standards and have access to adequate storage, processing, packaging and transport facilities. Specialty Fijian items (coffee, chocolates, prawns, crabs, clams, sea urchins and octopus) sourcing from Fijian farms/communities have steady, increasing sales to hotels as institutional clients. The Ministry of Tourism has developed a specific brand on pacific cuisine as part of its Fijian Made campaign and this has strong buy in from leading hotels and resorts in Fiji. Sourcing still happens largely from Viti Levu but in areas such as pacific cuisine (root crops), fishing, other island sources (Kadavu, Vanua Levu, Taveuni) are also utilised. New product varieties (cherry tomatoes, avocado, zucchini, herbs, etc) are now available owing to adoption of new technology/inputs (hydroponics, irrigation, seeds) and as such hotels have now options to source locally.
x | Market Development Facility
Expected Pathway to Systemic Change (likely number, types and focus of partnerships)
Support and promote the establishment of specialty Fijian-based products (coffee, chocolates, prawns, crabs, clams, sea urchins octopus and meat) that relies on communities supplying raw materials and target hotels as institutional clients. A potential game changer could be to influence a large company in Fiji to establish its presence in supplying agro-produce to hotels by facilitating access to technical expertise or forming joint ventures with interested international companies. On this note, some large companies in Fiji (Vinod Patel, Fiji Holdings) have expressed an interest but nothing specific has come out as yet. Expected partnerships: 4~6; 2~3 crowding expected. Support enhancing capacity, technology (hydroponics) and supply chain strengthening of vendors supplying fruits/vegetables to hotels. Expected partnerships: 3~5; 2~3 crowding expected. Work with the Ministry of Industry, Trade and Tourism to restructure ownership and promotion of the “Fijian Made” brand. Expected partnerships: 1~2; no crowding in expected Work with media (print and radio) and web portals to include more coverage of Fijian-based products. This is unlikely to be any dedicated partnership but rather embedded in partnerships that are pursued with media and portal based companies in other systemic change areas.
Women’s Economic Empowerment Women will primarly participate as household members supplying food produce to the agriculture sectors. In that light the impact is likely to be similar as the systemic change on Horticulate. See horticulture System Change 1 for further details. On top of that, women in communities are more pronouncedly involved in souring and retailing of sea-food items (oysters, crabs). With these markets opening, these women are likely to source and retail more which will lead to to more income.
Results in time The poor are the farmers, labourers and the members of village communities that will be supplying to the vendors/processors selling to hotels and resorts. Increased demand, better access to information, inputs, will help increase productivity and income. More labourers will be employed in the process. Over a 10 year period (starting 2012) through this change a total of around 2,000 women and men will be benefitted, creating an additional 100 FTE jobs. There will be certain degree of overlaps with impact from MDF work on Horticulture.
Feasibility, efficiency and risks Given the current demand and interest from the market actors, conditions are conducive to work in this systemic change areas. Furthermore, as mentioned above, MDF’s work in Horticulture would also provide additional leverage for the work in this area. Risks associated in these areas:
New crop diseases get introduced or natural disasters that wipes out or significantly reduces volumes of production. The mitigation strategy does not necessarily fall in the work on tourism but more with horticulture. Working with crop care companies and bio-security of Fiji would help reduce the likelihood of this risk materialising. Owing to increasing compliance requirements and the unfavourable economies of scales for Fijian farms, hotels and resorts will find it more cost effective to import a certain segment of fruits/vegetables. MDF’s support on supply chain strengthening, increasing product varieties, increasing access to technology (hydroponics, irrigation) will help suppliers reduce this import volume.
xii | Market Development Facility