TAKING STOCK OF INFORMAL ECONOMY IS THE KEY TO SME GROWTH IN PNG By Busa Jeremiah Wenogo In the 2013 budget the government of Peter O’Neil declared that it would focus on SME to drive the growth of PNG’s economy. This announcement was a “breath of fresh air” after many years of negligence by previous governments. The extent of that level of negligence and the results that followed can be visibly seen today in PNG where much of our population are still based in the subsistence agriculture sector, merely surviving on less than $2 per day and the majority of our people are said be “unemployed”. Therefore, one can understand the level of excitement exhibited by many Papua New Guineans that accompanied this announcement. The events that followed this historic declaration can be described as no more than euphoric in nature. The declaration was quickly accompanied by a list of strategies/proposals which range from coming up with a National Content Legislation, the review of the dormant “Business Reserve List” to a set of directives aimed at ensuring that credit was made available at an affordable interest rate. To most Papua New Guineans who considered themselves “forgotten, down trodden and outcasts”, this was simply a “light at the end of the tunnel”. The numbers are staggering when one considers the fact that at the heart of this policy, lies ordinary Papua New Guineans who toil through the day hoping to atleast gather what can be found to keep a “dream for a better tomorrow” alive. Statistics have it at 80-90% of the population and while there is room for debate, one thing is beyond the shadow of doubt, this announcement had hit the very core of every Papua New Guinean who by birth and right, are the rightful owners of this great nation’s wealth who nevertheless, somewhat felt marginalized in partaking in some form of business/economic activity for many years. Whether it was bad government policy or merely a case of lacking understanding on the part of many Papua New Guineans in becoming economically “empowered” that led to this stagnation, there are already signs that people are reaching breaking point. The Asian riots that were reported in the media gave us a glimpse of what was fast developing into a “pressure valve” waiting to explode and in the midst of great excitement surrounding the prospect of our country’s economic future, spurred on by the massive LNG Project, the pressure level may well be fast racing towards its boiling point. Only the future will unravel the true extent of these so-called “economic miracles” however, early frustrations being demonstrated by landowners and Papua New Guineans alike over benefits sharing and the high cost of living, are warning signs of what awaits us if we do not turn the right corner quickly. The government must understand that this is not just about addressing the plight of a group of people who are said to be SMEs, but it essentially touches the “heart beat” of a nation. Somewhere out there is a mother who braves the heat of the sun daily with her baby cradled under her arm selling her goods at some street corner, or a father who stands on the roadside selling firewood, or a youth who stands at the bus stops selling smoke and betel nuts daily, or a mother who runs serious financial risks by lending her limited savings to borrowers merely on trust basis, and the list goes on. These are business minded Papua New Guineans and it is just pure logic that they must be shown the necessary steps they must take to reach the next level. The constitution of this country recognizes this when it calls for, “equality and participation” and “for development to take place primarily through the use of Papua New Guinean forms of social and political organization”. Therefore, the framers of our constitution who by their gift of foresight and God given wisdom, envisage a Papua New Guinea that realizes the “Papua New Guinean” dream based on our national goals and directive principles. Thus, with this announcement, people saw the government as the government of the people, for the people and by the people simply because it has “listened to the agony” of many, who had and are still suffering in silence. The challenge now is how do we make the SME strategy work for these people? They need to be provided with the opportunity that will see them rise up from their shambles to get into the SME sector and prosper in life. So far to date, the government seemed to be genuine in its approach with a set of 21 recommendations etched from the recently concluded SME Summit in Madang. The Madang Summit was preceded by an earlier summit which almost mirrored the recent summit in terms of the message behind the theme and the vibes that surrounded the summit. The indigenous Business Summit that took place in Kokopo in 2011, resulted in a 10 point recommendation along with the creation of an Indigenous Business Council, whose role was to advocate for the needs of indigenous business people. The recent SME Summit, almost 2 years after the Kokopo Summit, expounded on those key recommendations from the Indigenous Business Summit and called for further interventions as reflected with the 21 recommendations. While such deliberations and interactions are good for exchanging vital information and ideas, it is the actual implementation of these recommendations that the majority of Papua New Guineans will be very much interested in. However, even after the staging of these two summit one thing is clear, the recommendations were made in the absence of a clear definition of SME in PNG context and subsequently, a lack of appreciation of the role and importance of informal economy, where bulk of the population are said to be engaged in some form of economic activity. As a result, what hangs in the balance now is a government’s determination; a nation’s dream and our forefather’s vision that as it is now, remains elusive and may not eventually materialized. The argument to clearly define SME in PNG is important because apart from its link to the informal economy, within the SME sector there is no uniformity in terms of the scale and scope of business. There are those who are at the apex of the structure, those in the middle and those at the bottom (start-ups who just graduated from the informal economy). At the base of it all, lies the informal economy which in itself is complex and mundane yet, has a massive potential to provide the fuel needed to ignite the SME sector. The government has given itself a target that could be easily described as “ambitious” but certainly not a fantasy, a task that on the outset seems monumental but not all impossible. By 2025, it plans to create 500,000 SMEs which it hopes would generate 2 million jobs. It looks set that the 21 recommendations will provide a broader framework that will hopefully resuscitate the SME Sector and start to work its way towards accomplishing these goals and targets. However, it is disappointing to say the least of the fact that informal economy, whether the policy or the legislation, let alone its existence and role was not at all explicitly mentioned in the 21 recommendations. If informal economy is considered irrelevant for policy consideration or government support, I am asking myself how the government plans to achieve these goals that it came up with. In my view, taking stock of the informal economy is necessary for the growth of the SME sector in PNG. Sir Nagora Bogan, who is the current president of the Indigenous Business Council of PNG in an interview with Business Advantage Megazine summed the whole situation well when he said the following words; “Over the years, many pioneering Papua New Guineans have successfully moved from a life of subsistence farming to business entrepreneurship in mid-sized businesses, and then to large scale businesses, rendering both services and goods. These are exceptions, but we need to make it a norm that people can graduate from betel nut selling through to micro or cottage business and then to medium-to-large scale businesses. I already know first-hand stories of men and women who have ascended from betel nut selling to running PMVs and truck and hire car businesses, and one who has gone from bottle selling to being a millionaire who owns several properties and businesses in Port Moresby and Lae.
Posted on: Mon, 12 Aug 2013 06:53:17 +0000
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