ADB's Work in Nauru

As a single island measuring only 21 square kilometers, Nauru faces the challenge of developing new drivers of growth amid significant resource constraints. The Government of Nauru’s income derives mainly from a regional processing center for asylum seekers and revenues from selling fishing licenses.

The coronavirus disease (COVID-19) and associated trade and travel disruptions have affected Nauru’s supply chains—compounding the challenges that the country already faced because of its small size, distance from markets, and dependence on imports.

The Asian Development Bank (ADB) has been supporting Nauru since 1991 with focus on improving fiscal sustainability, critical infrastructure, and service delivery. To date, ADB has committed 23 public sector loans, grants, and technical assistance totaling $93.4 million to Nauru. Cumulative loan and grant disbursements to Nauru amount to $33.7 million. These were financed by regular ordinary capital resources, the Asian Development Fund, and other special funds. ADB’s ongoing sovereign portfolio in Nauru includes 5 grants worth $64 million.

ADB’s recent assistance to Nauru has helped address the country’s considerable infrastructure needs, improve service delivery, strengthen fiscal sustainability, and enhance the performance of state-owned enterprises.

In 2021, ADB approved a $5 million project readiness facility to finance the assessments, planning, and capacity building for the proposed Nauru Sustainable Urban Development Project. The ensuing project will improve household water supply, sanitation, and solid waste management.

A connectivity project is transforming the largely inoperable Aiwo boat harbor into Nauru’s first fully functioning international climate-resilient port. The project is cofinanced by the Green Climate Fund and the Government of Australia, with the Government of Nauru providing counterpart resources. Complementary technical assistance is supporting institutional reforms to strengthen the capacity of the Nauru Maritime and Port Authority.

A solar power project is supporting Nauru’s transition to sustainable energy by financing a solar power plant and battery storage system and strengthening the Nauru Utility Corporation’s institutional capacity. It builds on ADB’s earlier support through the Electricity Supply Security and Sustainability Project, which installed two fuel-efficient generators for the Nauru Utilities Corporation—reducing the frequency of power outages by 91% from baseline levels in 2015 to 2018.

The Electricity Supply Security and Sustainability Project intends to increase the reliability and sustainability of power generation in Nauru. Photo: Eric Sales/ADB

Operational challenges. Nauru is a small and geographically remote country. This has historically led to a small and narrow economy, and associated challenges in implementing development assistance. Small economies of scale, logistical challenges in accessing goods and services, and capacity constraints all affect project implementation.

Accordingly, ADB’s approach to programming in Nauru is flexible and responsive to its changing needs and emphasizes both capacity building and long-term engagement with domestic counterparts to ensure the sustainability of the results. In addition to infrastructure lending, ADB delivers technical assistance to support capacity building and the efficiency of project implementation, in close coordination with other development partners in the region.

Knowledge Work

ADB has supported the Nauru Bureau of Statistics to strengthen governance and enhance their capacity to produce economic information. This support will help Nauru in the preparation of its Household and Income and Expenditure Survey, which is expected to be made public in 2022. The ADB-supported Pacific Region Infrastructure Facility is helping the government develop national building codes that will specify minimum standards for the construction of buildings, including climate resilience.

  ADB Projects in Nauru Project data sheets for loans, grants, TAs

Future Directions

ADB assistance in Nauru will support ongoing investments to improve transport connectivity and urban development. Additional financing is required for the Sustainable and Climate-Resilient Connectivity Project because of higher costs due to the COVID-19 pandemic.

ADB intends to support better water supply, sanitation, and solid waste management through the Nauru Sustainable Urban Development Project. A follow-on policy-based grant is planned to strengthen fiscal sustainability, state-owned enterprise governance, and social protection. New technical assistance will support the implementation of state-owned enterprise and social protection policy reforms and improve financial literacy among households and local communities.

ADB’s country and regional programs will continue to provide flexible and responsive assistance to meet Nauru’s development goals in support of a more sustainable growth trajectory.