Policy paper

UK–Montserrat development partnership summary, July 2023

Published 17 July 2023

This was published under the 2022 to 2024 Sunak Conservative government

Introduction

The Strategy for International Development (IDS) places development at the heart of the UK’s foreign policy. It sets out a new approach to development, anchored in patient, long-term partnerships tailored to the needs of the countries we work with, built on mutual accountability and transparency. This approach goes beyond aid and brings the combined power of the UK’s global economic, scientific, security and diplomatic strengths to our development partnerships. Our 4 priorities are to deliver honest, reliable investment, provide women and girls with the freedom they need to succeed, step up our life-saving humanitarian work, and take forward our work on climate change, nature and global health. The Integrated Review Refresh (IR23) reiterates that sustainable development is central to UK foreign policy and sets out how the UK will go further and faster on development to reduce poverty and reinvigorate progress towards the SDGs. This Country Development Partnership Summary details how the IDS and IR23 will be put into practice with Montserrat.

Country context

Montserrat is a British Overseas Territory located in the Lesser Antilles (Eastern Caribbean), between Antigua to the Northeast and the French island of Guadeloupe to the Southeast. With a population of around 4,500 ^{[footnote 1]} on a land area of 39 square miles, Montserrat is one of the smallest countries in the Americas and the smallest state in the Organisation of Eastern Caribbean States (OECS).

The island faces similar challenges as other Small Island Developing States (SIDS), including its vulnerability to climate change and extreme weather events ^{[footnote 2]}, a narrow economy, import dependency and lack of human and financial resources needed to invest in economic diversification. Access/transport challenges result in high import and export costs for goods and irregular international traffic volumes.

In Montserrat these challenges are exacerbated by the social and economic legacy of natural disasters, starting with the disruption caused by hurricane Hugo (1989), followed by the devastating eruptions of the Soufriere Hills volcano in the late 1990s ^{[footnote 3]}. Relatively quiet since early 2010, the volcano continues to be closely monitored by the Montserrat Volcano Observatory (MVO), but 2-thirds of the island are still designated as an exclusion zone.

Montserrat’s economy has not recovered. The lost infrastructure is yet to be fully replaced, economic activity is primarily concentrated in the construction industry (driven by FCDO infrastructural investments) and unregulated sand mining. There is very limited private sector investment, agricultural and fishing production, resulting in a high import ratio and dependence on imports for food security.

More recently, the COVID-19 lockdowns and travel restriction established by the Government of Montserrat (GoM) negatively affected economic growth. High levels of vaccination hesitancy have led to low (50%) vaccine uptake. For travellers seeking to be reassured, these low level vaccination rates may still impact.

Montserrat is currently experiencing a cost-of-living crisis, with high inflation hitting incomes, especially the poorest. This crisis, combined with low wages and underemployment, creates barriers for households to meet their basic needs. Migrants from neighbouring countries are particularly vulnerable, especially those from Spanish-speaking countries. Most people living in Montserrat are British nationals and there is a substantial diaspora in the UK and US.

Access to the island continues to be challenging, with direct air connection to Antigua only on an 8-seater plane and no passenger ferry service, suspended in 2020 to 2021 in response to the impacts of COVID-19.  It is difficult and costly to try and reintroduce. Improved safe access is critical for Montserrat, both economically and socially.

Since the volcanic crisis, the UK government has been providing ODA support to the island. This includes capital investment projects to rebuild part of Montserrat’s lost infrastructure, and budget transfers to the Government of Montserrat to help the island bridge the gap between the domestic revenues collected and the costs of delivering essential public services.

The UK Government reaffirmed its responsibilities to the Overseas Territories in its June 2012 White Paper. It is committed to providing reasonable assistance to them and to supporting developments which will reduce aid dependency. The International Development Strategy (2022) identifies reducing aid dependency and supporting SIDS to sustainably transition out of financial aid as a key priority.

The FCDO centrally managed programmes are about ensuring the island’s basic needs are met and that the UK’s legal obligations are fulfilled. While there has been substantial progress with the delivery of projects, there is a need to define what Montserrat’s reasonable needs are and have a clear programme and strategy on how to support the island become more self-sufficient in the medium to long term (ICAI, 2013).

The Government of Montserrat is currently working on renewing its medium to long term plan (Outcome Framework). The FCDO will ensure alignment of development offer in partnership with GoM.

Why and how: the UK’s development offer with Montserrat

Montserrat has struggled to bounce back economically since the devastating volcanic eruption of the 1990s. Much of the lost infrastructure still needs replacing and the public sector continues to be the main employer on island, with limited private sector investments.

The White Paper sets out ‘Priorities for Action’ for the Overseas Territories, which include ‘building economic resilience, help territories in receipt of budgetary aid achieve sustainable and inclusive growth and achieve financial independence from the UK’.

The Governor’s Office has a specific goal on sustainable economic development, supporting Montserrat to develop a stronger, more resilient economy, including through diversification, better access, and tourism.

To make progress against the above objectives, the UK government’s development offer consists of infrastructural support (via the FCDO Capital Programme and the UKCIF Port Development project) and budgetary transfers (Budget Support Programme).

Montserrat benefits from the Conflict, Stability and Security Fund (CSSF) in the areas of law enforcement, prisons, child safeguarding, health, climate and maritime governance capacity building. It receives parliamentary and auditing capacity support through the UK Commonwealth Parliamentary Association and UK auditing agencies. Montserrat has access to support on climate resilience and biodiversity through the Darwin Plus scheme (UK Department for Environment, Food and Rural Affairs (Defra).

Infrastructure priority projects were identified in partnership with the GoM, including the Port project, a New National Hospital, the subsea fibre optic project, a new airport tower, renovation of 2 school blocks of Montserrat’s only Secondary School, social housing design studies, an asphalt plant and sewage plants.

GoM’s goal is to become 100% renewable by 2030 ^{[footnote 4]}. The FCDO has supported the island on geothermal, with the construction of geothermal production wells (dug at a cost of £15.5 million). A live tender exercise is underway to seek bids for the surface plant development from the private sector to help Montserrat become fully renewable.

To build local capacity and fill in key positions where the expertise is not available on island, the UK government has been funding the Technical Cooperation (TC) programme as part of UK government’s budget support to the island.

The UK Health Security Agency (UKHSA) works closely with the Ministry of Health in Montserrat. Support provided include training packages, fellowships, lab and mental health support. To support the local response to COVID-19, Monserrat received vaccines, personal and medical protective equipment and COVID-19 testing facilities, amongst others.

The UK Overseas Territories are global biodiversity hotspots. Defra is working closely with the Montserrat Government to develop a new shared UK Overseas Territory Biodiversity Strategy. The new strategy is being designed to be of benefit to all 14 Overseas Territories, providing a tool to guide and attract future, long-term investment in Overseas Territory biodiversity.

Delivering on Defra’s behalf, the Joint Nature Conservation Committee co-hosted a workshop in Montserrat in August 2022 to understand the local needs, inform His Majesty’s Government’s biodiversity funding priorities and to set out our shared and increasing ambition for biodiversity in the Overseas Territories. Ministers in Montserrat, and indeed all Overseas Territories, will have sight of the draft strategy and opportunity to comment before it is published in 2024.

In terms of previous achievements, there has been progress in delivering infrastructure projects under the CIPREG programme, including the signing of the contract for the new national hospital and the completion of the fibre optic cable project, which positions Montserrat as one of the most fibre-connected islands in the region. The UK government agreed to fund a new Legislative Assembly for Montserrat (up to £2 million).

In 2022, a new £3 million project was agreed to support the island purchase lifesaving equipment, including a mammogram and CT scanner, which will enable residents to get these tests on island. A £4.72 million support was secured in 2022 to mitigate the currency exchange impacts and enable the country to continue to deliver public services for the people of Montserrat.

In line with the 2012 White Paper and the new UK government International Development Strategy (2022), the objective is to support Overseas Territories and SIDS transition out of financial aid and move towards graduation from ODA. To achieve this, we will need to continue to work together to ensure Montserrat has sound and evidence-based growth and sectoral strategies and that these are budgeted for, sufficiently supported and implemented.

Who we work with

Montserrat has enjoyed a positive development partnership with the EU since the early 1990s and received funding through the European Development Fund (EDF). The most recent round consisted for East Caribbean (EC) $57 million, including for solar photovoltaic energy and fibre optic internet rollout projects, following UK funding of a subsea fibre connection. Following Brexit, the bulk of EU support will cease by 2023.

The UK government is the only source of significant grant funding and the only source of direct grant funding for recurrent expenditure.

Montserrat is part of the OECS and a full member of CARICOM. As a British Overseas Territory, Montserrat cannot access some of the regional funding. GoM have expressed a desire for the Paris Agreement to be extended to them. They are currently working with the Department for Energy Security and Net Zero on this. If they proceed with the extension, Montserrat will come in scope of the UK’s NDC. This will lead to improved reporting and transparency, which were key outcomes of COP26. This is an exciting opportunity for Montserrat to become part of the Paris Agreement family and formalise their climate commitments to a global audience.

Key programmes

The Governor’s Office does not, unlike previous years, have any budget for development support. His Majesty’s Government’s programmes in Montserrat include:

• FCDO-funded Capital Investment for Resilience Economic Growth (CIPREG). This is a £40 million programme funded by the FCDO (OTPD), supporting infrastructure development on island. The aim is to enable economic growth and encourage private sector development. Projects include the new National Hospital, Parliament Building and the subsea fibre project, which was completed in 2021

• Montserrat Port Development Project. Over £28 million in UK Grant funding through the UK Caribbean Infrastructure Fund (UKCIF) to develop new port facilities in Little Bay, providing a safe, climate-resilient harbour, which will improve accessibility, trade and economic opportunities to the island. The infrastructure works include the construction of an offshore jetty, new access road, dredging works, and slope stabilisation. Construction is due to be completed in April 2024

• in 2023 to 2024, the UK will provide up to £30.32 million in financial assistance to the Government of Montserrat through the Montserrat Budget Support Programme (MBSP). This assistance supports GoM in its delivery of essential public services including health, social services and education as well as 2 ring-fenced budget lines: the Technical Cooperation (TC) programme, offering technical assistance and capacity-building support and ring-fenced funding to maintain access to the island (air and sea)

• since 2012, Montserrat has benefitted from the Darwin Plus Scheme, which provides funding for environmental projects to support biodiversity conservation. Montserrat has received over £4.24 million in funding for 24 Darwin Plus projects ^{[footnote 5]}. Examples of projects  include: Climate change adaptation in the fisheries of Anguilla and Montserrat (ended 2020), Restoring and safeguarding wetlands of the Caribbean UK Overseas Territories (ended 2022), a Marine Turtle Action Plan for Montserrat (ending 2023) and a fully funded Darwin Plus Fellowship. Montserrat secured funding for 6 projects starting in April 2023 (Darwin Plus Local)

• in 2020 to 2023 CSSF programmes in the Overseas Territories totalled £23 million of which approximately £4.5 million was ODA and is split between Montserrat (approx. £2.5 million) and St Helena. These include the Justice Programme (prisons, law enforcement, safeguarding support), the Governance Programme (maritime obligations, health resilience, parliamentary and audit support), Border Security Programme (customs and immigration, maritime), Environmental Sustainability and Climate Change and the COVID-19 programme.

For the FCDO-funded programmes, the monitoring is done at Post via the Governor’s Office (Development Attaché and Project Officer) who also support, as needed, on other His Majesty’s Government programmes. A Policy Officer supports on security and justice.

Supporting information sources

• Governor’s Office Brades
• Development Tracker
• D-portal
• FCDO Evaluation Repository

1. Mid-year population estimates for 2022 record a total population of 4,275. For more information please see: https://statistics.gov.ms/subjects/social-and-demographic-statistics/population-and-demography/mid-year-population-estimates-2022/ ↩

2. SIDS often experience acceleration or intensification of climate change impacts due to their small land area, susceptibility to natural disasters and geographical isolation, amongst others. This is exacerbated by the fact that many SIDS struggle with fragile economies, emigration, high import costs and heavy dependence on external aid, limiting their resource base to combat climate change impacts on their own, whilst further degradation of natural resources and ecosystems increases poverty, hunger and economic and social inequalities. For more information, please see: United Nations Development Programme (2019). Local solutions: Adapting to Climate Change in Small Island Developing States ↩

3. Prior to this, the island had a population of 12,000 and an export economy based on agriculture, clothing, electronic parts and plants as well as an international reputation as a tourist getaway. Sand mining is currently the primary export industry in Montserrat, but the island is significantly dependent on imports (primarily from the USA. ↩

4. Montserrat’s energy needs continue to be met primarily by diesel generation. Due to challenges in generation and distribution, Montserrat experiences regular power outages. ↩

5. Of the £4.24 million in funding, £2.39 million in funding has been awarded to projects that took place in Montserrat without collaboration with other Overseas Territories. ↩