STA proposes $202.83 million STRAP Facility


In line with the Samoa Government’s push for a stronger, more sustainable and resilient tourism economy and in view of the strong commitment made to the agriculture sector, the government is encouraged to consider the establishment the STRAP Facility, in the amount of $202 million tala. 

This is outlined in the Samoa Tourism Plan for the next several years that was recently launched. 

The tourism opportunities are centred around ‘anchor investments’ modelled on the provision of sustainable and green interventions.

This initiative is earmarked for support under Programme Area 4 of the Plan with detailed costing outlined in separate feasibility report outlined the STA’s sector plan up to 2027.  

A feasibility study was commissioned by the Authority and funded through UNESCAP for the establishment of STRAP in 2021. On May 3, 2022 a validation workshop with key government agencies, industries associations, financial and non-financial institutions was conducted by the Authority in collaboration with the UNESCAP (via KVA Consult Ltd) to finalize the parameters and the delivery mechanisms for the Facility. 

Samoa’s international commitments also require Samoa hosting a number of regional and international conferences in the near future.

The bid for the hosting of the Commonwealth Heads of Government Meeting requires that the start of preparations need to be this year so that Samoa is able to be ready to host this planned conference in 2023/24. Such a large prestigious event can be a powerful platform to kick start the reopening of our tourism industry.

Therefore, a core revitalization package for the tourism industry must have a combination of grants from the Government budget and development assistance. Based on the identified interventions under the STRAP Facility the total funding requirement for the STRAP Facility is SAT 202.83 million. 

Ongoing budget support will be required with an increase in the annual budget ceiling of up to SAT 20-30 million for the tourism sector via STA budget is warranted to support the proposed phased reopening of the sector over the next 12 months.

In particular, key mechanisms including the TSG and PSG grant subsidies will be required to support the rehabilitation of identified rooms needed as well as the restocking of tourism-related businesses to meet both the health and tourism-related standards for quality services. 

An additional funding source for the proposed interest subsidy and capital injection to identified financial institutions could be from issuance of “Resilient Green Bonds” by MOF through CBS with the proceeds to be targeted towards a special credit line for key sectors including Tourism via the relevant financial institutions with similar criteria to what has been implemented by Fiji for its Sovereign Green Bond3. 

The main development partner for the tourism sector has been NZ MFAT which remains committed to supporting the sector over the next 3 years.

The Samoa Tourism Recovery and Resilience Activity is a three-year, NZD 5 million investment that will support Samoa’s tourism sector to rebuild from COVID-19 and transition to a more sustainable and resilient tourism model. 

The new grant funding arrangement will deliver up to NZD 5 million worth of support to Samoa’s tourism sector for FY2022/23 to FY2024/25. Support delivered through this grant will concentrate on the core components of product development, training, marketing, sustainability and resilience, and capacity building and relates directly to interventions proposed for the STRAP Facility. 

Multilateral Funding 

The Government may also seek additional budget support from key multilateral partners including the World Bank through Samoa’s current IDA allocation or the Asian Development Bank’s ADF-13 resources earmarked for Samoa for the current period 2021-2024 to finance the special credit line at concessional terms mirroring those proposed for the Resilient Green Bonds.

The reallocation of these grants and restructuring of government priorities are warranted given the unprecedented nature of the pandemic-induced financial crisis. The inclusion of the tourism sector with specific targets through the Joint Policy Action Matrix (JPAM) can help make the case for accessing the budget support funding from these development partners including DFAT. 

The Facility may also seek support with the World Bank’s IFC for technical assistance (TA) with its set-up and hopefully build on to this support with potential pioneering equity financing and loan proceeds from the IFC, or a potential financing partner to kick start the mandates of the proposed facility. Another avenue based on discussions with ADB Country Office in Samoa, is the proposed Tourism Frontier Facility which is currently being designed with the aim of offering targeted TA and capital support towards tourism sectors in their member countries including the Pacific. 

Diaspora Direct Investment 

Another possible source of investment is through Samoa’s widespread diaspora. These types of investments are called Diaspora Direct Investment (DDI) and refers to direct investments from companies connected to diasporas in productive activities in the home country of such diasporas.

The diaspora members can foster these investments in two ways:

  • (i) those who are top executives of firms abroad and use their managerial experience and technical know-how to persuade their respective companies to invest in their countries of origin;
  • (ii) those who are managers or owners of firms whose parent companies are in their countries of destination work with start-ups in their countries of origin to help them develop and finance commercially viable projects.

A special closed fund mechanism through existing modalities like the Unit Trust of Samoa could be utilized for this type of funding source.