St Helena : St Helena Air Access
Submitted by Saint Helena Herald (Public Relations Information Office) 13.08.2010 (Article Archived on 27.08.2010)

Following the recent air access announcement, work has commenced to ensure that SHG is able to meet the condition laid down by the Secretary of State for International Development which states that “the St Helena Government undertakes to implement the reforms needed to open the island’s economy to inward investment and tourism”.

St Helena Air Access

Following the recent air access announcement, work has commenced to ensure that SHG is able to meet the condition laid down by the Secretary of State for International Development which states that “the St Helena Government undertakes to implement the reforms needed to open the island’s economy to inward investment and tourism”.

At yesterday’s meeting of Executive Council, members endorsed the appended document which outlines the objectives, principles and policy intentions which will be included in a Memorandum of Understanding (MOU) to be agreed jointly between SHG and the UK Government on how St Helena will meet this condition. 

Putting in place a Memorandum of Understanding (MoU) on actions needed to realise benefits from the development of air access.

Background

On 22 July, the Secretary of State for International Development, Andrew Mitchell, announced the UK Government’s intention to finance an airport on St Helena subject to a number of conditions. The first three conditions are solely within the orbit of DFID. However the fourth outlines the part that the St Helena Government (SHG) will play and states that “SHG undertakes to implement the reforms needed to open the island’s economy to inward investment and increased tourism”.

Objectives and principles of a MoU

The two partners in this venture, DFID and SHG, believe that they should jointly agree to a binding Memorandum of Understanding (MoU) that details the agreed reforms and makes a commitment to being ready for air access.

The MoU would set out a joint vision and pathway to economic development on St Helena through the catalyst of increased tourism.

Some of the reforms may take several years to complete and implement.  Delaying the development of air access until they are all completed would put at risk many of the benefits that we hope to gain.  Neither partner believes that such a delay is desirable.  Both are agreed that when the airport comes, the island needs to be ready for it. It is agreed that the MoU should be accompanied by a time-bound action plan.  Some activities should be completed in the next few months; some could well be pre-conditions to the signing of a contract, while others can be implemented, as pre-agreed in the MoU and Action Plan while the airport is under construction.

This paper, which cannot be all inclusive at this stage, sets out the overall picture of change required. It outlines SHG’s policy intentions and the implementation process necessary to meet the fourth condition of air access approval

Context

In reality St Helena is a much less attractive investment destination than its potential competitors due to small size of market, low purchasing power, high transport and energy costs, relatively low skilled workforce, limited telecommunications, etc. Most of the investment capital will have to come from overseas. As such we need to attract inward investment to make the most of the opportunity for St Helena from building the airport. This means making it not just easy, but desirable to do business here and not just accepting the need for inward investment and investors but encouraging them. St Helena must aspire to become MORE ATTRACTIVE than competitors if it is to attract the appropriate volume and type of inward investment. 

Against this background, reform of the business environment through business friendly tax regime, good labour mobility, minimal Government red tape, and strong investment in good public services (schooling, health, utilities, law and order) is vital.

 Policy Intentions

1.      An Enabling Environment for Growth through Private Sector Development

·         To have an investment regime that is attractive and globally competitive, while ensuring that the benefits of economic growth are retained on St Helena

·         To have in place land, tax, investment and immigration policies, including that covering the status of non-Saints, that ensure the above

·         To have in place a tourism policy that includes;

o   preparing for and attracting the significantly greater numbers of tourists that the airport will bring

o   attracting appropriate investment in tourism facilities,

o   improvements in tourism infrastructure and in conservation,

o   improved sea access for cruise and yacht based tourists

o   the establishment of new institutional arrangements to manage and co-ordinate tourism development[1]

·         To have in place changes necessary to loosen up the labour market to support private sector development and help SHG retain and replace people.

·         To have necessary legislation in place to prevent investment activity which is considered illegal by international standards, and discourage unproductive speculation

·         To have in place necessary legislation to promote a fair and competitive business environment

·         To protect the built and natural heritage

·         To have planning laws which are clear, fair and transparently implemented

·         To have in place training, development and support programmes (both at an individual and enterprise level) to make the most of opportunities arising from tourism and economic development

·         To use available resources as efficiently as possible in order to create the best possible basis for economic growth through airport related change, including significantly reducing untargeted subsidies

2.      Finance Welfare Reform 

·         To change the benefits culture and target social security in a way that is fairer, focuses on real need,  and does not disincentivise economic activity

·         To provide a basic pension system with direct links to the St Helena labour market, and a universal poverty gap benefit directly linked to income and assets.

3.      Social Protection

·         Employment Rights Bill - to guarantee basic terms, conditions and wages to everyone  in St Helena

4.      Public Sector Modernisation

·         A streamlined and modernized public service reducing Government red tape, providing efficient and effective core public services and facilitating the further development of St Helena [4]

·         To reform Public Finance Management to ensure budgets are fully aligned to priorities and effectively managed.

·         To have public sector resources focused on core services, thereby creating space for private sector growth

Implementation Process and Next Steps

Although obviously in partnership with DFID, SHG will be driving the change. We will need to demonstrate our commitment to reform and to meeting the conditions of the MOU not just between now and December but thereafter. To facilitate this, careful planning and monitoring will be important.

The MoU will need to be signed by 10 December and in order to allow sufficient time for iteration before this deadline; SHG undertakes to have a draft MoU for consideration by DFID by 24^th September. This means that before this date, we will need to have clarity on the extent of the policy reforms outlined in this document. The table below identifies the key actions and timeframe necessary to meet the first key deadline

[1]  Tourism Development Plan Concept Note, 2010

[4]  PSMP Project Memorandum 2008

Public Relations/Information Office

Office of the Chief Secretary

11 August 2010

[1] Tourism Development Plan Concept Note, 2010.

[4] PSMP Project Memorandum 2008.

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