Anguilla - Introduction
The country outline for Anguilla is aimed to offer a general overview of Anguilla's social and economic situation. It was prepared using inputs from the Caribbean Development Bank Annual Economic Report for the year 2003-2004, the CIA fact-book and World Bank Discussion Papers available online. The complete list of references is available in the sections named Bibliography and Sources on-line.
I. Social Data
The Country Poverty Assessment 2002 highlights a strong relationship between unemployment, low educational attainment, low wages and poverty. During the aftermath of 9/11, unemployment in Anguilla increased to 7.8% in 2002 from 6.7% in 2001, indicating the nation's dependence on tourism for employment.[1] Unemployment is over twice this average for poor households who represent 20% of Anguilla's population.[2] Poor households also tend to have more dependents and educational attainment tends to be lower within the poor population. According to 2001 Census data, 40% of Anguilla's labor force had no educational qualification (did not graduate from high school).[3] For this reason, Anguilla's specialist labor market relies heavily on imported labor to meet increasing demand at managerial and professional levels. Yet, the island's tourism industry relies on the island's skill-deficient labor force, which is more likely to be employed in lower paid and less secure occupations. In response, the Government of Anguilla has put forth a five-year Education Development Plan. The government's implementation of this plan is directly linked to meeting Anguilla's labor demands in the near to medium term.
The Country Poverty Assessment has also noted a problem with water allowances for the indigent, who represent 2% of the Anguillan population.[4] The government of Anguilla also plans to tackle the islands water supply leakage and discoloration problem. It is estimated that 50% of the water supply leaks as a result of old pipes.[5] The government of Anguilla will need to address the negative environmental impact of tourism on the island.
In terms of the Millenium Development Goals, gender issues are a significant area that needs to be addressed in Anguilla. There are substantial wage differentials across all occupation categories. There is also a significant problem with domestic violence on the island. These gender issues play a significant role in educational attainment and poverty levels across the country. Gender is a strong area of opportunity for the UNDP to explore on the island. While there are no specific statistics on HIV/AIDS prevention, Anguilla will need assistance in developing a strong prevention strategy. Many of the island's current development issues suggest that HIV/AIDS can become a significant development problem in the near future.
II. Economic Situation analysis
a. Overview of the recent economic performance
As an island with few natural resources, Anguilla relies heavily on tourism, offshore banking, and remittances from emigrants. A recent boost in the island's tourism industry has stimulated economic growth. The island of Anguilla's real GDP grew by 4% in 2003.[6] This growth represents a strong recovery in the tourism industry from previous years. A study of Anguilla's tourism sector revealed that the industry contributes approximately 50% to 60%[7] of the island's GDP and the island experienced record levels of visitor expenditure in 2003, which rose by 11.5% from the previous year.[8]
Anguilla's reliance on the tourism sector increases its dependence on income growth in the industrialized nations as well as on favorable weather conditions. In 2002, Anguilla's 3.2% economic decline was directly influenced by the economic downturn in the United States, the island's main tourist market.[9] Anguilla's 2003 real GDP growth rate remains below the 7% growth per year the island persistently achieved during the latter part of the 1990s.[10] Poor growth performance began in 2000 when the island was hit by a hurricane, which caused Anguilla's economy to decline by 0.3% during that year.[11] In the medium term, prospects for the economy will depend largely on the tourism sector. Anguillan officials have also put substantial effort into developing the offshore financial sector, which is small, but growing. Anguilla will need to address long-term social development concerns in the areas of fiscal stability, pro-poor policies, and environmental degradation due to increased tourism.
b. Development Cooperation
In terms of development cooperation, the UK plans to halt all technical assistance grants. As an overseas territory of the UK, Anguilla has relied heavily on the UK for financial assistance. The Government of Anguilla has severely limited public financing and plans to upgrade the physical and economic infrastructure through deficit financing. Because Anguilla will struggle to meet the financial demands of expanding the airport and roads for tourism, Anguilla will struggle to meet social development demands. The government will need to work toward sustainable public financing by strengthening tax collection and possibly implementing a new tax.
Regional projects of direct interest to Anguilla include: the Caribbean Export Development Agency (CEDA) which provides technical assistance and training for export manufacturers in the OECS countries and in Anguilla; under the ASYCUDA project, designed to improve customs collection, computer equipment was installed at the customs offices in Anguilla; the Caribbean Regional Tourism Development Programmes aim to assist ACP States and OCTs to achieve sustainable growth in their tourism operations. The programme, to which EUR 9 million has been allocated, falls into two main areas of activity, market development in Europe and product development in the Caribbean. Anguilla has particularly benefited from technical assistance measures for the development of a marketing plan.
Under the 9th EDF, an allocation of EUR 7.9 million has been agreed. Programming for this amount is currently underway. Social, environmental and financial aspects are to be accorded increased emphasis under this programming period.
III. Key Challenges
a. Overview
The major policy issues for the Government at this juncture are:
- Restructuring Public Debt
- Poverty Reduction
Anguilla is heavily dependent on external factors. The Government of Anguilla will need to sustain a high rate of growth and maintain a high standard of living for its citizens. The Government will need to increase public sector savings levels. The Government of Anguilla will also have to brace itself for possible postponement of projects for which financing may not be available in the near to medium term.
[1] Caribbean Development Bank Annual Economic Review 2003 p.8
[2] Halcrow Group Limited, Anguilla Country Poverty Assessment, Final Report, Executive Summary December 2002, iii
[3] Caribbean Development Bank Annual Economic Review 2003 p.13
[4] Halcrow Group Limited, Anguilla Country Poverty Assessment, Final Report, Executive Summary December 2002, iii
[5] Caribbean Development Bank Annual Economic Review 2003 p.12
[6] Caribbean Development Bank Annual Economic Review 2003 p.7
[7] Study of Tourism in Anguilla, Tourism and Transport Consult, 2001
[8] Caribbean Development Bank Annual Economic Review 2003 p.7
[9] Caribbean Development Bank Annual Economic Review 2003 p.7
[10] Caribbean Development Bank Annual Economic Review 2003 p.7
[11] Caribbean Development Bank Annual Economic Review 2003 p.7
