Introduction

This Factsheet outlines the current progress in advancing Sustainable Public Procurement (SusPP) in Nauru based on a desk review. The review applies an analytical framework of six Pillars (or "building blocks") of SusPP systems.

The Framework is designed to make clear that countries do not need to follow a linear step-by-step path to build effective GPP systems. Rather it is important to examine local contexts and prioritize the Pillars with the most potential in the country. No matter where a country starts, a balanced approach to implementation calls for progress on all Pillars to some degree.

This Factsheet is organized as follows:

• "Country Overview" section with executive summary, indicative maturity rating, key achievements, potential pathways forward and timeline of key events related to advancing sustainable public procurement.
• "State of Play & Forward Looking Analysis" section that summarizes the research findings from the desk review for each Pillar theme.
• "Key Stakeholders Driving the Agenda" explores opportunities for ADB teams to open discussions with country counterparts and add value to the work of partners.

The Factsheet is intended to be a living document to promote knowledge sharing and support training activities at ADB. It will be revised and improved as new information is uncovered and advances are made. If you have new information, please contact ychu@adb.org.

Public procurement in Nauru is not recognized as a tool to achieve its environmental and social goals. In fact, Nauru currently lacks a comprehensive procurement regulation and relies on a system of “procurement agents” as a stop-gap measure. Procurement reform has been highlighted as an area for technical assistance, and the ADB is active in strengthening the Government of Nauru’s public institutions and governance.

Despite this, public procurement can be a powerful tool to achieve the country’s ambitious sustainable goals. Public spending accounts for the majority of the Island’s economy and economic diversification that creates local employment and strengthens the local private sector is a key development priority. The Government of Nauru is fully committed to the 2030 Agenda for Sustainable Development, having aligned its latest national development strategy to the Sustainable Development Goals. In the face of climate change, a move inland is considered of critical importance under the country’s Higher Ground Initiative. The Initiative envisions a new urbanism concept of “Smart Villages” where the Island’s residents are resettled into urban centers that are green, resilient and livable.

Infrastructure development is a major source of job creation, with several large-scale projects underway including the Port Development Project; Submarine Cable Connection; and Sports Complex Construction. These projects have the potential to create significant flow-on effects to the economy and make Nauru a new hub of climate-resilient and sustainable economic opportunity for the Pacific region. As one of the smallest and most geographically isolated countries in the world, sustainable procurement can transform the nation’s economy to move away from dependence on high-cost imports to an economy driven by local, green businesses.

>> Visual snapshot of Sustainable Procurement Maturity Level

Official Procurement Portal:

https://naurufinance.info/treasury-division/procurement/

Key Achievements

• High-level political commitment to the SDGs and climate change
  
• Commitment to “Smart Village” concept in the Higher Ground Initiative
  
• Focus on improving energy efficiency in government facilities under the NDC
  
• Promotion of low-carbon fuels and electric vehicles
  
• Promotion of local and sustainable food
  

Ongoing work

• Development of energy efficiency and vehicle emission standards
  
• Pilot demonstrations of energy efficient technologies
  

Potential pathways forward

• Procurement reform to align Nauru’s framework to modern procurement standards including sustainable procurement
  
• Enhance skills and capacity of private sector, especially SMEs, women and youth to engage in government contracts and adopt green business models
  
• Raise awareness and capacity of procuring entities to understand the benefits of sustainable procurements
  
• Adopt a monitoring system to track and show benefits of sustainable procurements
  

>> Timeline of Implementation of Sustainable Procurement Activities

1997

2013

2018

2019

2020

2021

2022

2023

Public Finance Act 1997 defines “obtaining value” as a key procurement principle

Public Finance Regulation 2013 adopted

Energy Roadmap prioritizes energy efficiency measures in government facilities

GEF financed project aims to achieve the country’s Energy Roadmap

National Sustainable Development Strategy aligns with the SDGs

Sustainable Land Transport Strategy promotes low-emissions transport

Waste Audit Report conducted

Climate Smart Agriculture Plan aims to increase market opportunities for local foods

2nd Nationally Determined Contribution commits to net zero by 2050

Smart Village concept for Higher Ground Initiative receives sustainable urbanism award

Pillar 1: Government Vision & Awareness of SusPP

Governments that establish a clear policy vision on SusPP can accelerate the shift from procurement as an adminstrative to strategic function, making clear how SusPP can deliver on important national social and environmental goals.

Sustainable procurement is not explicitly recognized as a policy priority in Nauru. However, the Government of Nauru has set several environmental and social policy goals that sustainable procurement can contribute towards achieving.

SDG and Climate Change

The Government of Nauru has linked its national development vision with the United Nations 2030 Agenda for Sustainable Development in its National Sustainable Development Strategy 2019-2030 (NSDS). Nauru was one of the first countries to ratify the Paris climate agreement and closely participated in the development of the SIDS Accelerated Modalities of Action Pathway which promotes the “sustainable development of Small Island Developing States through genuine and durable partnerships.”

The NSDS aims to bring about transformative change, changing “production and consumption patterns to support economic changes in an environmentally sustainable manner.” The NSDS highlights action in key sectors of sustainable agriculture and resilient food systems, sustainable energy and ecotourism.

Government spending drives the Nauruan economy, as the main producer of goods and services in the economy since the country’s independence in 1968. The public sector and state-owned enterprises dominate the national economy, with the private sector contributing a small share of the country’s GDP. Going forward, diversification of employment and sustainable income generating activities are key issues - especially as phosphate mining and Regional Processing Centre (RPC) activities are winding down. New economic alternatives are urgently needed.

Climate change

The NSDS recognizes climate change as the single greatest threat to the livelihoods, security and wellbeing of Nauruan people. Nauru’s Nationally Determined Contribution (NDC), released in June 2022, sets a “2050 Aspiration Goal” to achieve net zero greenhouse gas emissions by 2050. The country plans to develop new legislation and policies on climate change, including an Environmental Management and Climate Change Bill and Climate Change Policy (NDC, p. 10). The country can consider integrating sustainable procurement into these documents, as a policy tool to achieve the nation’s climate change ambitions.

Smart Village Concept

The relocation of residents to the mined out interior of the island, known as the “Topside” is an urgent political priority for the Government of Nauru under its “Higher Ground Initiative.” The Initiative promotes a sustainable approach to urbanism in its Pacific “Smart Village” concept (NDC, p. 16). The Smart Villages will be energy efficient, through passive design that harnesses prevailing winds for cooling and high efficiency appliances to significantly reduce energy demand. Other proposed design features include rainwater harvesting to support urban agriculture and recharge groundwater aquifers and mixed-use development, to reduce the need for personal car use and

promote alternative mobility options. The Villages will incorporate traditional architectural designs and building materials, so that both the built and natural environment strengthens Central Pacific cultural heritage. The design won a Merit Award in 2023 for its sustainable urbanism concepts from the Congress for the New Urbanism.

Sustainable Infrastructure

The Nauru Integrated Infrastructure Strategy Plan (2019) highlights the need to minimize risk of adverse environmental impacts and reduce asset life-cycle costs of infrastructure in the country. The Plan highlights that the country’s dependence on foreign private contractors has led to infrastructure with designs and construction materials that have not considered the local environmental conditions in Nauru. It emphasizes the importance of building local knowledge on sustainable asset maintenance to prolong the life of existing infrastructure. The Plan contains a prioritized listing of upcoming infrastructure projects, which can be analyzed to identify projects with good potential to integrate sustainability criteria.

Energy Efficiency

The NSDS notes that high-level political support exists for improving energy sustainability to decrease the country’s reliance on imported fossil fuels. Much focus to date has been on expansion of renewable energy. However, the NDC anticipates a greater focus on energy efficiency in the coming years. A target to achieve 30% energy savings by 2030 has been set in the NDC. This target was first set out in the Nauru Energy Roadmap 2018-2020 but not achieved. The NDC calls attention to the “undisciplined usage of energy by the general public and government employees”. Indicative actions to achieve this 30% target include:

• Promote energy efficient air conditioners and other appliances through an expansion of the Low Carbon Fund;
  
• Conduct technical assessments to identify effective energy efficiency options for Nauru;
  
• Undertake energy audits of government facilities, high-energy usage properties, residential sector to establish baseline data;
  
• Rewire government buildings to maximize energy savings and encourage changes in usage behavior among government staff;
  
• Adopt an Appliance Labeling and Energy Standard Programme to encourage the import and uptake of low energy usage products; and
  
• Induce behavioral change to encourage energy efficient behavior via education campaigns for the general public and within the government.
  

The Government of Nauru is promoting energy efficiency purchases by government agencies and across society. The Low Carbon Fund (LCF) offers a 30% capital subsidy for buying energy-efficient appliances (washing machines, fridges, and freezers) offered by businesses and households (GEF 2018). Under a GEF-financed project, the Government of Nauru is exploring additional financial support schemes for energy efficiency technologies.

Sustainable Transport

In 2020, the Government of Nauru commissioned a study, the Sustainable Land Transport Strategy for Nauru that set a vision for the land transport sector in line with the Sustainable Development Goals. The country’s vision is proposed as ““Nauruans will enjoy sustainable and low-emissions transport with cleaner fuels and vehicles and maximizing the use of renewable energy for electric mobility, and with a reliable, affordable, and user-friendly public bus system integrated with walking and cycling facilities by 2030.” The

Strategy that SUV and pick-up trucks are growing in popularity in Nauru despite the fact that such vehicles are not needed to get around the Island. The Strategy recommends the promotion of electric vehicles and more efficient fuels and vehicles. Policy and fiscal incentives are planned, including vehicle emission standards, import limitations and registration/excise taxes. This policy environment opens the door for public procurement of low-emission and electric vehicles.

Renewable Energy

As part of its renewed NDC (2022), Nauru aims to achieve 50% of renewable energy in power generation. The ADB-funded Nauru Solar Power Development Project is core to achieving this goal, as it will put in place a 6MW grid-connected solar power plant and 2.5MWh/5MW battery energy storage system (BESS) to be commissioned by Q1 of 2024. The country also plans to conduct a technical assessment of non-solar sources of renewable energy such as ocean thermal energy conversion and waste-to-energy.

Food Systems

The NSDS prioritizes the promotion of domestic agricultural production to improve food security and healthy livelihoods (Key Outcome 2). The Nauru Climate Smart Agriculture Plan 2021-2025 aims to increase marketing and consumption of local foods, including by providing new market opportunities especially for value added products and for women and youth. Public procurement of local, sustainable food and catering can contribute to these goals.

Waste Management

Waste management is a key issue for the people of Nauru, raised during community consultations for the NSDS. Under the NDC, the country plans to improve existing dumpsites and build new waste recovery facilities for inorganic waste, as well as composting capabilities. A 2020 Waste Audit was undertaken to understand the waste profile in Nauru, key to informing future waste management and recovery strategies. Public procurement has the potential to create new market opportunities for goods and services linked to recovered and repurposed waste, contributing to these goals.

Equal Opportunity & Social Consideration

The NSDS sets a Key Outcome 5 under its Economic Pillar to promote development of small and micro-enterprises. While the document does not mention procurement specifically, it calls for the introduction of a SME development plan, establishment of a Small Business Incubator and strengthening of Nauru Island Private Business Sector Organization. The NSDS also sets a target to increase the “proportion of women in paid employment” and lower the youth unemployment rate as priority policy objectives in Priority Area 2: Social and Community Sector.

Pillar 2: Legal & Regulatory Framework

Procurement law reform can be key to clear obstacles to implementation by establishing "value for money", not "lowest price", as a core procurement objective, and authorizing procurement approaches suited to SusPP.

Public procurement is regulated by the Public Finance (Control and Management) Act 1997 - Part 3A Procurement and Public Finance Regulations 2013 - Procurement. The Government of Nauru has drafted a procurement manual that is available for internal use but not publicly available.

The Public Finance (Control and Management) Act 1997 defines one of the key principles of procurement as “obtaining value in the expenditure of public money”. All procurements with a value exceeding $3,000 must be conducted by a procurement agent. Procuring entities are encouraged to describe requirements in terms of performance or outcome rather than by prescription of detailed characteristics, as a means to invite market innovation. This approach can be useful when starting out in designing tenders with sustainability criteria.

In general, the procurement framework in Nauru remains limited and contains few provisions in support of sustainable procurement. Procurement law reform has the potential to significantly advance SusPP.

Pillar 3: Institutions & Capacity

Procurement Institutions

Procurement in Nauru is overseen by the Ministry of Finance and Sustainable Development. Procuring entities must appoint a procurement agent to conduct any procurements of a value exceeding $3,000 (Public Finance (Amendment) Act 2019) . This approach is understood to be a “stop-gap” measure in the absence of comprehensive procurement regulations.

Interministerial bodies

No interministerial body on sustainable procurement exists. However, a National Planning and Development Committee (NPDC) was established as a mechanism to improve coordination and consultation for monitoring and evaluating policy, and program implementation of the NSDS. The committee is chaired by the Minister for Finance and comprises key heads of departments. It offers a potential forum for discussions on sustainable procurement.

Environment and Climate Change

The Nauru Department of Commerce, Industry and Environment has oversight and responsibility over issues concerning the environment, climate change, and commerce. The Nauru Climate Change Policy contains a visual that outlines the key internal and external institutions involved in the country’s climate change actions. This visual can provide an indication of potential public bodies to involve in activities related to sustainable procurement.

Capacity Building

The 2019 NSDS sets a target to improve VfM achieved by reforming the spending on government administration, including the development of improved procurement and contracting capacity within the government and sourcing non-core functions from the private sector. (Key Outcome 20. Public Administration: Strengthen and develop the institutional capacity of the Nauru Public Service) It is unknown if progress has been made on this target.

Pillar 4: Market Practices

Market dialogue throughout the procurement process helps procuring entities to choose realistic sustainability criteria and ensure suppliers succeed in delivering on sustainability commitments over the contract duration.

The Sustainable Land Transport Strategy for Nauru sets out a market analysis on the feasibility of introducing electric vehicles in Nauru, based on the experience of neighboring countries. Under a GEF-financed project, Supporting Mainstreamed Achievement of Roadmap Targets on Energy in Nauru (SMARTEN), a comprehensive evaluation of energy efficiency technologies that can be feasibly applied/implemented for sustainable energy utilization in the energy and end-use sectors in Nauru in planned.

The Nauru Entrepreneurship Development Programme was designed to build and strengthen the entrepreneurial capacity of Nauruans. The goal was to enable them to confidently engage in individual enterprises that will provide a sustainable livelihood for those who are currently unemployed or underemployed. The programme placed a particular emphasis on empowering women and young people to engage in work and self-employment. This program led to the opening of the Naura Entreprise Resource Centre which helped with capacity building, financing and other services for entrepreneurs on the island.

Pillar 5: Procurement Operations

Various tools and procurement approaches can be employed to help procurers more easily identify environmentally friendly goods and services and attract a competitive market response.

Pilot Procurements

Under the ADB-funded Nauru Solar Power Development Project, a goal has been set to hire at least 10% of women contractors for the solar power plant and battery storage system. The Project recognizes that significantly less women are employed by the Government of Nauru compared to men. The Project therefore sets gender targets for employment of NUC staff and contractors.

Green Building Standards

The ADB-supported Pacific Regional Infrastructure Facility is also helping the government to develop national building codes that will incorporate climate resilience considerations. The Smart Village concept developed for the Higher Ground Initiative set out a toolkit of “culturally appropriate building types, spaces, and techniques that leverages local building knowledge and materials.” This toolkit offers a source of inspiration for the design of sustainable procurements in infrastructure and building projects in Nauru.

Energy Efficiency Standards

The Nauru Energy Roadmap 2018-2020 prioritized the introduction of energy labelling and Minimum Energy Performance Standards of high electricity consumption appliances such as air conditioners, freezers and refrigerators. This initiative was to be coordinated with The Pacific Community’s Pacific

Appliance Labelling and Standards (PALS) project (2012-2019). The development of energy efficiency standards is envisioned under a GEF-financed project, Supporting Mainstreamed Achievement of Roadmap Targets on Energy in Nauru (SMARTEN), launched in 2018. The Project aims to support installation and operation of energy efficiency technologies in pilot districts/communities, with plans to monitor and scale up.

Vehicle Emission Standards

The Sustainable Land Transport Strategy for Nauru proposes to establish Euro 2 vehicle emissions standards as a minimum for imported second hand vehicles. In addition, a roadmap to stricter vehicle emission standards (e.g. Euro 4/VI and 6/VI is planned by 2022 and 2024, respectively. The 2022-2023 Budget Paper sets aside funding to introduce an ‘environmentally friendly and sustainable vehicle disposable method.’

Needs Assessment/Prioritization

The 2022-2023 Budget Paper No. 1 provides a detailed breakdown of government spending across various public agencies in Nauru and overseas. This data can be useful to conduct a prioritization exercise to identify the key areas of procurement spend with high potential for shifting to more sustainable procurements.

Pillar 6: Monitoring & Impact Measurement

Monitoring systems are essential to gather the information needed to keep SusPP implementation on course and communicate on the benefits achieved for the country.

A 2022 PEFA Assessment of Nauru’s procurement system found that monitoring actions are limited. The assessment found that no procurement data or statistics are maintained – procurement is undertaken through designated agents, and it is not clear that goods are procured on a wholly competitive and economic basis.

The National Sustainable Development Strategy 2019-2020 proposes the creation of a Nauru Indicator Monitoring Database (NIMD) under the Nauru Strategies for Development of Statistics (Nauru-SDS). The goal of the NIMD would be to monitor progress in achieving the country’s national sustainable development strategies (NSDS). Potentially, KPIs on sustainable procurement could be integrated. However, it is unknown if this database has been created to date.

Projects Supported by ADB

The Asian Development Bank (ADB) has been supporting Nauru since 1991, and cooperation has focused on improving fiscal sustainability, critical infrastructure, and service delivery. ADB’s recent development efforts in Nauru have helped the government address the country’s considerable infrastructure needs, improve the delivery of essential services, strengthen fiscal sustainability, and improve the performance of stateowned enterprises.

• The Sustainable and Climate-Resilient Connectivity Project is transforming the largely inoperable Aiwo boat harbor into Nauru’s first fully functioning international, climate-resilient port.
  
• The Sustainable Urban Development Project aims to strengthen water supply, sanitation, and solid waste management, and to establish improved urban planning capacity in the country. ADB approved the project readiness financing of $5 million in 2021.
  
• To support Nauru’s transition toward sustainable energy, the $22-million Solar Power Development Project is financing a solar power plant and battery storage system, and is strengthening the capacity of the Nauru Utility Corporation.
  
• Through the planned Improving Fiscal Sustainability Program, ADB will help the Government of Nauru strengthen genderresponsive fiscal sustainability by implementing policy and institutional reforms to enhance fiscal and debt management, the governance of state-owned enterprises, social protection systems, and gender equality.
  
• The ADB-supported Pacific Regional Infrastructure Facility is also helping the government to develop national building codes that will incorporate climate resilience considerations
  

ADB will continue to support Nauru with investments that improve transport and renewable energy infrastructure and services. ADB is also preparing an urban development project, and will continue to support policy reforms to strengthen state-owned enterprise governance and fiscal sustainability. Technical support through ADB’s country and regional programs will continue to provide flexible and responsive assistance to meet Nauru’s development goals to support a more sustainable growth trajectory.

Other Initiatives supported by National/International Agencies

Vision & Feasibility Master Plan in support of the Higher Ground Initiative, September 2021 - June 2023, Land Equity International. This project will develop the master planning and related design and delivery services needed to support the priorities of the Higher Ground Initiative (HGI)

GEF-6 Project Identification Form “Supporting Mainstreamed Achievement of Roadmap Targets on Energy in Nauru (SMARTEN)” submitted 28 March 2018. The project aims to enable increased applications of feasible renewable energy and energy efficiency technologies for supporting socio-economic development in Nauru in accord with the country’s energy roadmap targets.

References

Pacific Region Infrastructure Facility, 2022. Enhancing Procurement Practice and Local Content in Pacific Infrastructure.

PEFA Secretariat, 2022. Public Expenditure and Financial Accountability Assessment Report.

Secretariat of the Pacific Regional Environment Programme (SPREP), 2020. Waste Audit Report NAURU.

UNEP, Government of the Republic of Nauru - Ministry of Commerce, Industry and Environment, 2020. The Sustainable Land Transport Strategy for Nauru

ADB, 2023. Asian Development Bank and Nauru: Fact Sheet.

GEF-6 Project Identification Form “Supporting Mainstreamed Achievement of Roadmap Targets on Energy in Nauru (SMARTEN)” submitted 28 March 2018.

Government of the Republic of Nauru, 2018. Nauru Energy Road Map 2018 to 2020: A Pwiyeiy bwio light up my land.

Government of the Republic of Nauru, 2022. 2022-23 Budget Paper No. 1 circulated by the Minister for Finance of the Republic of Nauru on the Occasion of the Budget 2022-23.

Government of the Republic of Nauru - Department of Climate Change & National Resilience, 2022. Higher Ground Initiative.

Government of the Republic of Nauru - Department of Commerce, Industry and Environment, 2021. Sustainable Land Management National Action Plan Final Draft.

Government of the Republic of Nauru - Ministry of Infrastructure and Ministry of Finance, 2019. Nauru Integrated Infrastructure Strategy Plan (2019)

Government of the Republic of Nauru, Pacific Community 2021. Nauru Climate Smart Agriculture Plan 2021-2025

Government of the Republic of Nauru, 2019. Public Finance (Amendment) Act 2019)

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