For decades the economy of Nauru was dominated by phosphate, a sought-after material used in fertilisers, after the discovery of massive reserves led to a boom – but a crash soon followed
This picturesque island in Micronesia was once one of the wealthiest nations globally per capita thanks to an unexpected discovery.
The Pacific Ocean country of Nauru is renowned for its stunning coral reef, pristine white-sand beaches and swaying palms, but it also has a dark past of foreign exploitation. For years, the island’s economy was heavily reliant on phosphate, a valuable material used in fertilisers, discovered in abundance by a British company in the early 1900s. Mining commenced in 1907, with the British, Australian and New Zealand governments exploiting the resource throughout much of the 20th century.
After gaining independence in 1968 Nauru took control of the phosphate mines, leading to an economic boom. A 1982 report from The New York Times stated that the island nation had a “per capita income surpassing that of any oil-rich Arab nation”, describing it as the smallest and wealthiest independent democracy globally.
This newfound affluence was evident when a police chief purchased a Lamborghini, despite not being able to fit into the driver’s seat. Other luxury super cars, including Ferraris, were also imported.
Despite the fact that few Nauruans were wealthy in terms of their bank balance at the time, the New York Times said the state’s wealth had turned it into “close to being the ultimate welfare state”. The government provided all essential services free of charge, including “schooling, medical and dental care, bus transportation, even the Government newspaper”.
If treatment was unavailable at its two local hospitals, residents were flown 2,500 miles to Australia on the government’s dime. Higher education expenses through Australian universities were also covered,
However, it seems others benefitted more directly from the island’s phosphate wealth, with evidence of lavish purchases still visible today. YouTuber Ruhi Çenet visited the country and detailed his experiences in a 2024 video, describing a “frenzy of consumption” at the height of its wealth.
He found various abandoned luxury cars on roadsides, including Cadillacs, Jeeps, and Land Rovers, which now serve only as rusted reminders of its former glory. Ruhi spoke to a local who confirmed a story he had heard about a police officer who bought a Lamborghini before realising he couldn’t fit inside.
The resident remembered her grandmother leaving the bank with a pillowcase filled with cash as Nauru basked in its newfound wealth. The phosphate continued to be mined and was dwindling by the 1990s, having been tapped by foreign powers for decades.
Facing economic woes Nauru turned to controversial measures, becoming an offshore tax haven and selling passports, but these strategies were eventually abandoned. The resumption of phosphate mining in 2005 was hailed on the government’s website as giving Nauru’s economy “a much-needed boost”, marking a positive shift in its financial situation.
Yet, it was Nauru’s agreement to host Australia-bound asylum-seekers at The Nauru Regional Processing Centre, in return for Australian aid, that provided a significant financial uplift. DevPolicyBlog notes that the centre became a “major source of revenue” and the island nation also gained from the lucrative fishing industry within its waters, leading to “improved economic standing”. However, this dependence leaves Nauru exposed to potential future economic shocks.
One pressing issue Nauru currently faces is the health of its citizens, with Diabetes.co.uk highlighting that over 70% of the population is classified as obese – a situation researchers suggest may be linked to the economic decline which restricted access to nutritious food. Additionally, smoking rates are alarmingly high, with MacroTrends estimating a rate of 48.50% in 2020.
