Every country has an origin story for its wealth. Some have oil. Some have empire. Some have a well-placed harbour and a few hundred years of quietly getting on with it.

Nauru, now renamed as Naoero, the tiny Pacific republic, has one of the strangest and most instructive origin stories of them all.

It got rich, spectacularly and briefly, on bird droppings.

This is one of the most remarkable economic tales of the twentieth century. And also one that no one has ever heard. 

So settle in. This is the story of how Nauru got rich. How one of the smallest of specks in the Central Pacific became, for one dizzying stretch, one of the richest places on the face of the earth.

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Nauru Before the Money

Start at the beginning, on an island of about 21 square kilometres, settled roughly 3,000 years ago by Micronesian voyagers. This, combined with a likely dash of Polynesian influence somewhere along the way. 

Society in Nauru organised itself into 12 clans. This is a structure so central to local identity that it survives today as the 12-pointed star on the national flag.

For most of its history, this was a self-sufficient place. People fished the reefs, tended pandanus and coconut, and raised fish in a brackish inland lagoon using a genuinely clever traditional aquaculture system. 

When the first Europeans passed by in the late 1700s, they described a fit, active, well-fed population living an enviable outdoor life. 

The navigator who spotted it in 1798 was so taken that he named it Pleasant Island. 

By the standards of the day, and arguably ours, it was.

Nobody had the faintest idea what they were sitting on. (Physically, metaphorically).

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Nauru’s Luck & Unluck

What the people of Nauru were sitting on was phosphate. 

Millions of years of seabirds roosting on a coral outcrop had left behind vast deposits of guano, which over immense stretches of time compressed and chemically transformed into some of the purest, richest phosphate rock anywhere on the planet.

Phosphate, as any farmer will tell you, is the backbone of agricultural fertiliser. Without it, crops struggle. With it, thin soils bloom. And Australia and New Zealand, whose own soils were crying out for exactly this, sat conveniently to the south.

The deposit was identified at the very start of the twentieth century, and from that moment the island's fate was sealed. 

First came the Pacific Phosphate Company, then a body called the British Phosphate Commissioners, run jointly by Britain, Australia, and New Zealand. 

For decades, the phosphate was dug out and shipped abroad, and the profits flowed almost entirely to the administering powers rather than to the people whose land was being carted away by the boatload.

(Never heard of that before..!)

For the first half of the century, Nauru had the resource. But it didn’t have the control. 

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Nauru’s Gains Independence (and Riches)

In 1968, Nauru gained independence. It became the world's smallest republic. 

2 years later, in 1970, it bought out the phosphate operation and took ownership of the whole enterprise, running it through a locally owned corporation. 

For the first time in living memory, the money from the island's one extraordinary resource stayed on the island.

And what money it was.

Through the 1970s and into the 1980s, phosphate prices climbed and the profits became almost comical for a country of fewer than 10,000 people.

By 1975, estimates put GDP per person at around 50,000 US dollars. To put that in context, that figure made this microscopic nation the second-richest country per capita on earth, trailing only Saudi Arabia. 

It literally went from one of the poorest countries in the world to the second-richest. In the grand scheme of things, pretty much overnight. 

A place most people had never heard of, most atlases struggle to mark was technically wealthier per head than the United States, Japan, or anywhere in Europe.

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What did Nauru do With the Money?

This is the part everyone wants to hear about, and it does not disappoint.

The government abolished taxes. Healthcare was free. Education was free, to the point where promising students were sent abroad on the public purse. 

Public transport ran at no cost. 

Housing was heavily subsidised. 

Many people simply lived off royalties paid on the phosphate extracted from their family land, and paid employment became, for a good number, entirely optional.

Residents bought sports cars and luxury vehicles, then drove them around a single ring road only a handful of kilometres long, on an island where you could never get very far or go very fast.

Imported goods poured in. 

The traditional diet of fish, coconut, and island produce gave way to shipped-in tinned meat, white rice, sugar, and fizzy drinks. Partly through choice and partly because the mining had chewed up so much of the land that growing food locally became difficult. 

Fishing and physical work faded from daily life. 

Television and imported convenience took their place.

Honestly, would you have done any different if the sky suddenly started raining money on a scale nobody had prepared you for..?

The islanders hardly knew any better. 

But, as you might have guessed, all of this enjoyment came with a price. The dietary shift of those boom years helped give the country some of the highest rates of obesity and type 2 diabetes in the world. 

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Nauru’s Grand Fall

The people in charge understood one thing very clearly - phosphate does not last forever. 

There is only so much rock on a small island, and every shipload that left was a shipload that would never be replaced. 

So they did the responsible thing. Or, at least, tried to. 

They set up a sovereign wealth fund, a trust designed to invest the phosphate windfall and generate income for the day the deposits ran dry. 

At its height it was reportedly worth on the order of a billion Australian dollars. On paper, this was a nation planning sensibly for its own future.

The trouble was in the execution. The trust poured money into overseas property and ventures, and a striking number of them went badly. 

It built a 52-storey skyscraper in Melbourne. At the time, this was the tallest building in the city. It also bought hotels and real estate scattered across Australia and the Pacific. 

The national airline Nauru Airlines, which still exists today, expanded to a fleet far larger than a country of 10,000 could ever justify, with planes reportedly flying near-empty on prestige routes.

And then there is the single most gloriously improbable investment in the entire saga. In the early 1990s, the trust helped bankroll a West End musical in London. It was called "Leonardo the Musical: A Portrait of Love," a stage production about the life of Leonardo da Vinci. It was a financial disaster. 

A Pacific island nation, sitting on the profits of a hundred million years of accumulated bird droppings, lost a fortune on a flop musical about a Renaissance painter. 

Honestly, you really can’t make this stuff up. 

So was it the flop Da Vinci musical, the poor property investments or poor management of bird poop that led to Nauru’s downfall? 

Probably a mix of all three (and more). 

Between the poor investments, the running costs of a very generous state, some spectacularly unwise decisions, and the simple fact that the phosphate was genuinely running out, the money drained away. 

By the early 2000s the reserves were largely exhausted, the trust had shrunk dramatically, and the country that had recently been second only to Saudi Arabia was staring at bankruptcy.

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The Phosphate Runs Out & Leaves Nothing Behind

Phosphate mining does not tap neatly into a well. It strips the surface away, layer by layer, leaving behind a jagged field of grey coral pinnacles where the topsoil used to be.

Roughly the entire interior of the island, the part locals call Topside, was reduced to exactly this. A barren, otherworldly landscape often described as a moonscape, unusable for farming and inhospitable to almost everything. 

The population was squeezed onto a thin ring of coastal land, the only part still habitable.

So the story could very reasonably have ended here. Enough has gone on already, let’s be honest. 

But surprisingly, it doesn’t end here and Nauru’s about to get famous for one more thing. 

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Nauru Today

In the years since, the island of Nauru has clawed its way back to a degree that genuinely surprised people. 

Income has come from a mix of sources. Licensing fees paid by foreign fleets for access to some of the richest tuna waters in the Pacific, a resumption of mining of the deeper secondary phosphate deposits, and, most significantly and most controversially…

…hosting an offshore immigration processing centre on behalf of Australia. 

(What was commonly referred to as a detention facility, with less-than-ideal living conditions). 

That last arrangement, whatever one makes of it, and there is a great deal of hard debate to be had, became a major pillar of the national budget.

This is also one of the reasons why, historically, Nauru has been incredibly hard to visit and get the visa for. It was often worried about journalists coming and reporting on this facility. Of course, it was never seen in too positive a light. 

In the end, the turnaround in the numbers was real enough that the World Bank readmitted the country to its high-income category around 2019, after years of strong growth.

The place that had gone from rags to riches and then straight back to rags had, improbably, hauled itself back toward riches a second time.

So, the story of Nauru is not a simple tale of  "rags to riches" at all. It is rags to riches to rags to riches, a whole load of crazy stories in-between, and it probably hasn’t ended here..There are grandparents on that island who were born into a subsistence economy, grew up as some of the wealthiest people on earth, watched it all evaporate, and lived to see the recovery. 

And the good news? Nauru is easier to visit now than ever before. So, if you don’t mind visiting one of the smallest and most remote countries in the world, consider a trip to Nauru. 

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Koryo Tours
Experts in Travel to Unusual Destinations