Fish, finance and the question of inclusion

Fish, finance and the question of inclusion 

By Samuel Wills, Board Observer at Good Return and Country Economist for Kiribati and Nauru at the World Bank

The Pacific is a constellation of rich cultures shaped by island life. Finance in the region must adapt to these cultures, and charities like Good Return are leading the way.

Samuel Wills in Kiribati, Micronesia

Flying over the Pacific it can be difficult to imagine how these isolated islands were settled. Atolls appear like a strange script, of Os and Cs, Us and Ds, jotted across a great blue page. The story they tell goes back hundreds of years.

The first settlers of the Pacific came east from Asia. On twin-hulled wooden boats, the precursor to the modern catamaran, they linked those strange letters into sentences stretching from Papua New Guinea to Easter Island, and Hawaii to New Zealand. The latest evidence suggests that each island wasn’t found by random, but rather using masterful skills that magnified their target. Seabirds, ocean swell refractions, and clouds reflecting the turquoise hue of a lagoon all suggested land just over the horizon*.

Nestled in the twin hulls were typically a cache of friends and food. Dogs, pigs, chickens and rats; taro, yam, breadfruit, bananas and coconuts. Mostly though, the travellers’ needs were met by the sea.

It’s difficult to exaggerate how much fishing shaped Pacific societies. Like all pre-industrial economies, food production set the rhythm of the entire society. 

Agricultural societies grew large and complex, but at the cost of long days and backbreaking work for many. Surplus harvests, particularly of grains, were stored to last through harsh winters. This helped open new lands for settlement. Surpluses could also be taxed, giving rise to hierarchies and vast inequalities**.

In contrast, fish in the Pacific were often plentiful, but difficult to store. This was perfectly suited to small island societies. Their populations were limited by land and fresh water, which help them avoid the Malthusian trap. Limited mouths and limitless food led many islands to a state of “subsistence affluence”. This meant that everyone in society could instead spend some of their time on developing rich cultures, tight community bonds, and famously kind hospitality***.

Time itself needed to adapt. In agricultural societies time is an unforgiving warden. Untilled fields today mean unplanted seeds tomorrow, and empty bellies come harvest season. Each day was different, and an eye was always on the future. From this came saving, to carry stores forward to harvest, and borrowing, to bring profits from the harvest forward to today****. There lies the foundations of modern finance, and all the futures, options, derivatives and insurances that comprise it.

In fishing societies time is different. If bellies are empty then people fish. If they are full, then they don’t. There are few things that really must be done today, because tomorrow will look much the same – particularly by the equator. This ‘Island Time’ is so seductive that whole tourism industries are now built on resetting agricultural clocks to its rhythms. 

Food also shaped how people thought about risk. For farmers the greatest risks were a long winter or a poor harvest. These risks were managed by saving or, later, insurance. Both spread risk inter-temporally, from one day to another. This gave rise to attitudes that persist to this day. After a windfall many grandparents will tell you to “save it for a rainy day”, a relic of an agricultural past.

In the Pacific, though, windfalls are shared. In Kiribati there is the tradition of bubuti, where it is shameful to refuse a request to share. Nauruans, after earning a promotion or a scholarship, open their door to family and friends who can take what they please – TV and sofa included.

How could attitudes to something as simple as saving be so different? One hypothesis is that it again comes down to fishing. 

Fishing societies face different risks to their agricultural cousins. The biggest concern was a bad day at sea. No fish today meant no dinner. The sensible advice after a big catch was to share it, because those you feed today will share with you on your next bad day. Sharing spreads risk intra-temporally, within the same day.

These deep-rooted cultural norms manage risk, and they also bind communities together. But, they can be difficult to fit into modern economies built on individualism and long-term trade-offs. It isn’t right to ask Pacific Islanders to simply abandon their time-honoured traditions for western economic approaches. The history of colonialism has taught us that western approaches are not always a better way. While they may have been adapted to the modern economy, they  shouldn’t be necessary.

Instead, those working to reduce poverty and promote growth in the Pacific must adapt to local cultures. Thankfully, modern economies are flexible. Rather than relying on individual founders, new businesses can be set up as cooperatives, that benefit the whole community. 

To reduce poverty and promote growth, the Pacific also needs better access to finance. That means financial education on the benefits of saving and how to manage borrowing.

This is where Good Return comes in. Over the past 21 years their financial education programs have helped over 60,000 people in 9 countries. In the Solomon Islands, Good Return is working with the Central Bank to build financial inclusion through savings groups and financial capability training. And in Fiji they are working with the local financial institution, Merchant Finance, to provide responsible loans to women in agriculture, particularly those working to build resilient businesses in the face of climate change.

Sam Wills is a Board Observer at Good Return and writes in a personal capacity. Dr. Wills also serves as the World Bank’s Country Economist for Kiribati and Nauru.

Financial inclusion in the Pacific is more important now than ever. It will help build the barricades that hold back rising seas, and fund the studies that will make Islanders competitive in global economies. 

Finance will also help the Pacific make the most of the opportunities now on offer. New ports and airports are shrinking distances. Renewable energy is decentralising energy, and reducing exposure to global diesel prices. Internet access is spreading, allowing new businesses to exploit the Pacific’s literacy, widespread English, and enviable timezone between Asia and the Americas.

While the global economy is now dominated by China and the US, most maps of the world still consign the Pacific Islands to somewhere on the fringes. With proper support and access to finance they can take their rightful place squarely in the middle.

Find out more about building access to finance in our region and why we need to ‘bring them in’.

References:

* Thompson, C. 2020. Sea People: the Puzzle of Polynesia. Harper Collins

** Mayshar, J., Moav, O., & Pascali, L. (2022). The origin of the state: Land productivity or appropriability? Journal of Political Economy, 130(4), 1091-1144

*** R Dutta, DK Levine, NW Papageorge, L Wu, (2018). Entertaining Malthus: Bread, circuses, and economic growth. Economic Inquiry 56 (1), 358-380

 **** Galor, O., & Özak, Ö. (2016). The agricultural origins of time preference. American Economic Review, 106(10), 3064-3103