Unemployment and poverty remain high even with recent increase of the minimum wage. While indigence was seen as significantly lower than previously, at 2.4% in 2008, the poverty rate was at an extreme 37.7%, the highest incidence of extreme poverty in the Eastern Caribbean. Unemployment is estimated to have risen to 24.9% in 2008, with the unemployment rate of the poor being 10 % above average.
In terms of living conditions, it was found that the majority of households used pit latrines (66%), and approximately 59 % of households had water in their taps 7 days per week.
School enrolment was almost universal, with 93.8% of 5-9 year olds and 97.2 % of 10-14 year olds enrolled in school respectively. However, 77 % of heads of households had only primary level education. Residents in certain communities have lower levels of education, and illiteracy is said to be high. While the government increased spending on education from 5.3% of GDP in 2000 to 6.3% in 2002, low teacher qualification remains endemic. Of the 48 countries that are members of the Small States Forum, Grenada has the second highest Emigration rate of tertiary educated students - 85.1% (second only to Guyana at 89%) Urban migration, urban squatting and increased demand for a safety net for the poor has made a streamlined poverty reduction crucial for Grenada. Access to the school feeding programme appears to have been higher for those in the poorest quintile: 47.9 % of students in the poorest quintile reported receiving a meal or snack from the programme.
Grenada has a 1% prevalence rate of HIV. Providing cost-effective primary healthcare continues to be one of the main challenges for government. The MDG report accounts for an increase in the number of HIV/AIDS orphans in Grenada. The Primary Health Care System has universal reach but behavioral problems in the society, such as abuse of girls, transactional unprotected sex, drug abuse and maiming among youth pose serious challenges.
Economic Situation Analysis
Grenada relies on tourism as its main source of foreign exchange, especially since the construction of an international airport in 1985. The Grenadian economy has gone up and down like a see-saw over the past 7 years, up one year and down the next. In 2009 the economy contracted by 7.7 %, compared to real growth of 2.2 % in 2008. The decline reflects especially declines in construction (52.4 %), mining and quarrying (29.9 %), hotels and restaurants (20.8 %), wholesale and retail trade (17.9 %). Some positives were seen: agriculture (nutmeg and cocoa in particular) increased by 9.3 %; the banking and insurance sector by 8.6 %.
Grenada was been removed from the list as an uncooperative tax haven (OECD) in 2002 as well as the list for deficiency in management of offshore sector activities (FATF) 2003. Sector performance in agriculture has been uneven because approximately 90% of the total farms are small farms of less than 2 hectares. Agriculture remains important to economic activity in Grenada with potential in modernization of farms. In response to cocoa and banana production being down, the Cocoa Revitalization Programme has been implemented to facilitate the commercialization of cocoa production. The goal of the program is to revitalize over 1,000 acres of neglected or unproductive cocoa farms. As part of Grenada's overall economic diversification plan, the banana industry has developed an organic banana project that will export to a promising market in the UK.
The Government received Balance of Payment support of $10.8 million from the IMF under its Emergency Assistance Programme. Grenada commenced implementation of two capital development projects began in 2003: a Bridges and Roads Investment Project and a World Bank-financed Emergency Recovery Project and Disaster Management Project.
The Caribbean Development Bank and the International Fund for Agricultural Development have co-financed the Grenada Rural Enterprise Project which aims to reduce rural poverty through rural development.
The EU also provides the following significant support to the Government of Grenada through the 10th EDF (2008-2013). This support is as follows:
• EU - A-allocation ' 6 million
This allocation is destined to cover the long-term development activities. For the 10th EDF, 84% of the A allocation is given to support Grenada’s Human Settlement Policy aiming at ‘building back better’. 8 % will be allocated to the Technical Cooperation notably to Support Non-State Actors (NSAs) and possibly to provide Trade-Related Technical Assistance (TRTA). The remaining 8% will be allocated to providing Technical Assistance to the NAO Office.
• B-allocation ' 3.2 million
This allocation is to be used for unforeseen needs such as emergency assistance and support to mitigate adverse affects of instability in export earnings.
STABEX transfers to Grenada for loss of export earnings from bananas, cocoa, nutmeg and mace are being used to support a major reform of the banana industry in parallel with efforts to diversify both agriculture and the economy as a whole. In particular efforts are underway to strengthen the national economy, improve the balance of payments, enhance the quality of life of the population in rural areas and reduce the rate of rural-urban drift.
• Special Facility of Assistance (SFA)
Funds available to Grenada under this facility are being used to develop a more competitive agricultural sector, including the maintenance of the banana industry whilst also emphasising the need to diversify rural income generation and the provision of social recovery for displaced farmers and their families.
Challenges and Policy Issues
- Delivery of education
- Financial management and public indebtedness
- Energy: the fuel bill alone in 2008 was $205.3million, two and a half times the export earnings
- The dependance on tourism, remittances, foreign direct investment and agriculture, all of which are susceptible to external shocks such as the recession in the US and UK.
- Poverty reduction, in particular:
- Gang violence and drug peddling. There has been a recent surge in growth linked to the growth of the Grenada underground economy.
- Abuse (especially sexual abuse) of girls, and teenage pregnancy
- Urban renewal
- Adult and continuing education