The future of the Informal Economy in PNG beyond the Medium Term Development Plan 2011-2015. By Busa Jeremiah Wenogo The year 2015 promises to be a year that stands to redefine PNG’s history and place within the region and the global economy. Already PNG’s growing influence in the region is attracting attention from some of the largest economies in the world. The government in its part has already lined up a series of events to showcase to the world the new PNG that it is planning to hatch in 2015. A PNG that the government is hoping will portray an image of a nation that is well and truly in the midst of an economic revolution. The biggest project in its history thus far, the PNG LNG project stands to bump up the GDP growth to 21% annually. From the outset it looks obvious the government of PNG is looking at year 2015 as a year that will uplift PNG’s reputation and image to a whole new level comparable with some of the vibrant South East Asian Economies. PNG’s rise has come at a time when much of the developed world is still reeling from the impact of the depression of 2008. Therefore, for PNG a developing country to avoid the similar fate that was experienced by most economies around the world is a great achievement. Subsequently, PNG is at a threshold of being inducted into an exclusive club of nations that have experienced phenomenal economic growth rate. A major feat for a country that has been for many years plagued with so many “lost opportunities” as a result of “mis-management” of the economy by previous governments.Hoping to trigger a domino effect to elevate PNG into this arena is the Pacific Games were the government is pumping millions of kina to build and upgrade existing facilities to international standards. The event is the premier sporting event in the Pacific region where Pacific Island countries take part in various sporting discipline. The event has been building momentum over the years and recently the status of the event has been elevated to a stage where participation in some selected sports means automatic qualification to higher global sporting events such as the Olympics. In addition, the government of PNG during the recently concluded Pacific Islands Forum Meeting in Palau was successful in its bid to have the 46th PIF meeting hosted in Port Moresby in 2015 following the successful bid to have Dame Meg Taylor elected to the post of PIF Secretary General. All of these will eventually set the stage for the hosting of the APEC Summit in 2018, a first for any pacific island country. 2015 is also a very important time for the government of PNG to reflect and chart the future of PNG through developing appropriate plans and policies. By 2015 the first five year Medium Term Development Plan (2011-2015) will come to an end and subsequently a review will be called for. This review is essential in mapping out the next five year medium term development plan. Key economic sectors will come under the microscope of the government and strategies will be identified to better improve their performance. One such area of the economy that will need urgent government support is the informal economy. In the current MTDP informal economy is rather seen as a “sector”, a subset of the urban economy that does not involve agriculture related activities. However, that definition will have to change given that National Informal Economy Policy 2011-2015 has defined informal economy as an important aspect of the entire PNG economic system. This is so as it covers all economic sectors of the economy as well as the fact that it is very much alive in the rural areas of PNG. Therefore, the policy has replaced the word “sector” with “economy” in an attempt to not only reflect the diversity and complexity of the activities within the sector but its size and magnitude in terms of the number of people that are engaged in it and the output that comes out of it. Perhaps defining the informal economy as a sector could be a strategic approach towards addressing the issues that plague the growth of the informal economy. Nevertheless, it is important to understand that every sector or sub-sector within the economy whether its agriculture, horticulture, manufacturing, construction and so forth has an informal aspect to it. Each of this sector specific aspect of the informal economy has its own issues, constraints and limitation while some of the issues such as financial inclusion and financial literacy cuts across the sectors. The government should therefore, embrace the National Informal Economy Policy and reflect its aspirations in the MTDP Review. This is important for a number of reasons one of the major ones being the SME Policy. Informal economy although is huge given the number of people that participate in it, its activities are very much fragmented with limited or no economies of scale and therefore, graduating informal economy participants into the SME sector will be a huge challenge for the government. This is the reason why the government needs to nurture and grow the informal economy to a stage where a critical mass of the population that are involved in it, can have the capacity to transit into the SME sector.Without this the economy of PNG will be much heavily dependent on the resource sector for a very long time to come. The other important reason why MTDP Review needs to accept the broader application of informal economy in PNG beyond the “sector” approach is because of the review of the Informal Sector Development & Control Act 2004. The Act is the accompanying legislation to the policy and was the sole reason why a policy had to be introduced. Its review is purposely to align it with the policy given its application in its current form is quite narrow compared to the policy. In its current form it is argued that the Act is more focused on informal economy within NCD and has very little applicability outside of NCD. Therefore, the review will also capture the rural based informal economy which is very much dominated by agriculture related activities. If it does come to pass that the government is recommended to take action to reflect the broader nature of informal economy, then it is important that the MTDP Review does cater for the “informal economy”. In addition, the government should priorities giving informal economy participants “voice” to speak out about the challenges and issues that affect them. Mainly in the urban areas it should encourage informal vendors to organize themselves into groupings or associations specific to their area of trade/specialty. Subsequently, through these groupings it is hoped that the government protect the interest of the public (health and sanitation), formal sector enterprises (cheap substitutes) and the vendors themselves through a holistic or informal economy inclusive urban planning.
Posted on: Tue, 12 Aug 2014 01:08:38 +0000
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