Tonga’s GDP in 2011 was estimated at USD 507 million (ADB, 2012) and its real per capita income was USD 3,580, World Bank (2012). The average GDP growth rate in the period 2000-2010 was 1.3% but recently, it increased to 4.7% in 2011. As recorded by the 2006 census, unemployment rate was 4.9%. The total population is estimated at 104,000 for 2010, World Bank (2012) but its growth is strongly affected by net out-migration (to New Zealand, Australia and USA) at an average rate of 1.7% resulting in a 0.3% net annual population increase. Consequently, remittances which constitute a significant share of Tonga’s GDP are an important source of income. Agriculture accounts for about 19%, industries and services each make about 22% and 59% respective shares of Tonga’s economic activity in 2011. Major economic activities are tourism, construction and fishing and important exports include squash, fish, vanilla beans, root crops mainly sold into Asian markets, USA New Zealand and other PICs.
Baseline Poverty Analysis
IFAD states that Tonga has low poverty rates supported by high standards of education and health. However, salaried employment opportunities are limited in most of the rural populations who depend on agriculture and fisheries for a livelihood. These communities lack alternative sources of income and are disadvantaged because of limited access, frequency and cost of transportation to reach the markets on the main island. Access to information and basic social services are also inadequate. Ha'apai is one of the poorest and least developed regions in Tonga.
Studies on poverty assessments in Tonga are not available. The recent MDG report (2012) provides some statistics. We find that baseline poverty in 2009 is estimated to be 23% which has increased from its 2001 estimate of 16%. The poverty gap ratio remains at 8% in 2009 from its earlier estimates in 2001. The calculated growth rate of basic poverty is about 0.8% and the Gini coefficient is the PIC’s lowest at 0.25. Estimates of rural poverty are available, but not updated. Abbott (2007) states that close to 25% of rural population lived below the BNPL and 5.8% were in basic food poverty in the rural areas.
Women are particularly vulnerable to poverty because their housework undermines their formal sector engagements. Their contribution of labour is essentially for subsistence. IFAD (2011) show that female adult literacy rates were 99% while there is gender parity in education both at primary and secondary education. The ratio of boys to girls was close to unity. However, enrolment rates at secondary level need improvement. Only 9% of the seats were held by women in parliament. Youths accounted for about 20% of population and lower secondary enrolment could potential pose employability problems. However, with technical training now being prioritised (for the drop-outs) and net out-migration, some of the pressure of youth employment and welfare could be abated.
Agriculture and Rural Development
Agriculture is concentrated on root crops, fruits and fishery that have supported the livelihoods of the majority of Tongan population. The agriculture system is mostly subsistence but Tonga has also explored commercial farming. Value-added in agriculture has remained unchanged since 2007, World Bank (2012) and this is due to low population growth, net out-migration, volatile export markets, diseconomies of scale, weather patterns and other farm level constraints. Tonga has a narrow and fragile export base which fails to penetrate the export market and sustain import substitution. Total exports were USD 9 million while imports were USD 170 million in 2010, World Bank (2012). Exports of food, beverage and tobacco accounted for about 47% of total exports in 2007, FAOSTAT (2012). Production of squash, coconuts and lemons increased slightly in 2009 compared with 2004. Coconut production was the highest at about 8,000 tonnes in 2009 while fish production showed a continual decline in the last 10 years since 1999. About 60% of population live in rural and remote areas but due the decline in farm productivity and rural livelihoods, significant rural-urban drift is causing output shortages and high urban food prices. Tonga has 147,000 square km in land area, of which 43% is suitable for agriculture and 12.5% are under forests, World Bank (2012). The 665,000 square km of its EEZ offers significant prospects for fisheries development. Livestock is in infancy while not much can be done in the forestry sub-sector. The land system is centrally controlled by the Government but each man is entitled to 3.34 hectares of land. Root crops including kava, fruit and vegetables and fish are important for consumption and exports. Squash and vanilla have lost most of its export markets due global over-production and competition but Tonga can better exploit its comparative advantage in the off-season markets in New Zealand and Australia. Agro-processing facilities including fumigation plant and high-temperature blast freezers and cold storage equipment have been installed to support agriculture trade. The Government continues to support rural farmers to increase to food and economic security.
Investing in the Rural Poor
Tonga: Investing in the Rural Poor, IFAD's Rural sector performance assessment (RSP). This publication may be found here.
Rural Development Indicators
Composite data about Tonga may be found here.