Getting PNG’s informal economy right

By Busa Jeremiah Wenogo

On 19 October 2015 the Constitutional Law Reform Commission launched the draft report on the Review of the Informal Sector Development and Control (ISDC) Act of 2004 at the University of Papua New Guinea (PNG). The report contains a set of recommendations and a proposed bill to replace ISDC Act to be presented to the government for its consideration later in 2015. If passed, the proposed bill could transform PNG’s socio-economic landscape.

The report called for wide-ranging reforms in the areas of financial inclusion, research, policy and government’s functions, as well as budget reforms to better equip local level governments (LLGs) to administer the Act. If, as the report recommends, the informal economy is recognised as a ‘wealth distributive mechanism’ it could allow money generated in big impact projects, such as the PNG liquefied natural gas (LNG) project, to be transferred to the majority of the populous. And, if provided with the right environment, it could promote entrepreneurism and innovation.

Yet will the government ensure that the bright intentions of the law are realised? The sad reality is that implementation and enforcement have always been achallenge for the PNG government. Most LLGs in PNG are struggling to function effectively due to a lack of resources as well as a limited understanding of their functions and responsibilities. Since the reduction of the Service Improvement Grants for LLGs from K500,000 (about US$168,750) in the 2013–2014 budget to only K100,000 (about US$33,750) in 2015 budget, the ability of LLGs to deliver services has been severely handicapped. The situation is likely to remain the same or further deteriorate for the near future. To make matters worse, as referenced in the report, most LLGs that were consulted had no idea about the existence of the 2004 Act even though it was a national law.

The report also found that at the national level there was a lack of oversight, which enabled local administering authorities to make laws that did not align with the Informal Sector Development and Control Act 2004. This has led to some local laws beings contested in the courts.

To address this, the Department of Community Development and Religion has indicated it will dedicate a new section to coordinating the implementation of the policy and the law. Yet this may not yield any tangible results. The department itself is still reeling from a leadership tussle two years ago that has seen the department fragment into factions. In the aftermath of this battle most offices are still half-empty. And the Department has not shown any enthusiasm towards implementing the National Informal Economy Policy. In this environment there is no guarantee that the law will be implemented once it is passed.

Given that, within the informal economy, there are diverse sets of activities (some of which pose serious health and safety risks) the revised law must adequately control the growth of the informal economy to minimise its harmful effects. The informal economy law in its current form is consistent with this sentiment but has insufficient controls. The report recommends reinforcing this idea by raising penalties for informal economic businesses that negatively impact the environment, hygiene, health and safety as well as for those that sell addictive substances.

But the report fell short of proposing a mechanism to protect the rights of informal economy participants. There is no mention of the need to ‘properly organise’ informal economy participants, and their activities, to assist dialogue and consultation. Section 3(1) of the Informal Sector Development and Control Act 2004 allows the administering authority to consult with relevant ward committees, police and government agencies when declaring areas in which informal economy businesses could be conducted.

But there has been little consultation so far. This has been compounded by the fact that informal economy operators and vendors are disorganised. Given the complexity of the informal economy, provinces need to develop informal economy committees comprised of key stakeholders to deal with these issues.

The report also did not highlight the need for a proper restorative justice mechanism to be in place to deal with cases of harassment and abuse inflicted by enforcers on informal economy participants. The current Informal Sector Law is silent on this matter.

For most informal economy operators the Village Court is the most affordable, reliable and dependable arm of the justice system since it addresses individual and community legal concerns. As most vendors lack basic literacy skills and resources it can be difficult for them to navigate the formal legal system. Developing an informal economy market vendor association that represents their common interests could greatly assist such individuals. Such a grouping should also include those who are operating outside of formally recognised markets such as street vendors, peddlers and mobile traders. An interest group like this could better appeal to administering authorities and policymakers.

The report could also pose some problems for participants in the informal economy. Increasing penalty fees and repealing section 18 of the current Act — which excluded informal economy participants from certain regulations — will force participants to comply with standards that maybe regarded as too high. This is especially true for the many participants that have very poor literacy skills and lack formal employment to supplement their inconsistent, meagre incomes. While the intention of the report is to put forth a progressive vision for PNG’s urban centres, this should not come at the expense of people’s livelihoods.

About 80–85 per cent of PNG’s population engages in the informal economy in some form. Therefore it is vital that the government gets the law right. If it does, it may well be a game changer for PNG.

Busa Jeremiah Wenogo is an economist working with the Consultative Implementation and Monitoring Council (CIMC) in Port Moresby.

Via The East Asia Forum http://www.eastasiaforum.org/2015/12/05/getting-pngs-informal-economy-right/?utm_campaign=shareaholic&utm_medium=facebook&utm_source=socialnetwork

New law on the informal economy could be a game changer for PNG (Part two)

By Busa Jeremiah Wenogo - Pacific Institute of Public Policy 

On October 19, 2015 the Constitutional Law Reform Commission launched the draft report on the Review of the Informal Sector Development & Control Act 2004 at the University of Papua New Guinea. The report contains a set of recommendations and the proposed bill that would be presented to the government for its consideration and endorsement sometime around November. If passed the bill may well be the game changer to transform PNG’s socio-economic landscape. Particularly if the informal economy is seen as a wealth distributive mechanism, it could allow money generated in big impact projects such as the PNG LNG, to be transferred to the majority of the population who are its beneficiaries.

The first part of this blog was published last week. The following is part two:

However, the report fell short of proposing a mechanism to protect the rights of the informal economy participants. Subsequently, there is no mention of the need to properly organize informal economy participants and their activities into groups for the purpose of dialogue and consultation. Section 3(1) of the Informal Sector Development & Control Act 2004 provides for the administering authority to consult (if they wish to) with relevant ward committees, the police force and relevant government agencies responsible for health, physical planning and building, when declaring areas on which informal economy businesses could be conducted. However, experiences thus far have indicated that this has not been the case.

Even if this exists in some provinces there is little evidence to suggest that the administering authorities sought views from informal economy operators or vendors because informal economy, both its activities and operators, are disorganised. Furthermore, given the complexity and cross-cutting nature of the informal economy, provinces need to have special informal economy committees comprising of key stakeholders to deal with these issues. For instance, border provinces such as Vanimo see massive influx of cheap Indonesian goods into Vanimo town and the villages along the highway leading to Batas. These imported goods (with questionable content and quality) make up a large portion of the informal economy in Vanimo and the neighbouring villages. To protect consumers and ensure fair play, the provincial government or the Vanimo Town Authority will have to work with the Border Development Authority, customs, police, NAQIA and others. Therefore, the absence of such a mechanism will do little to change the status quo of the situation.

while the intention is to put forth a progressive and rosy image of the city and urban areas, this should not come at the expense of people’s livelihoods

The report also did not highlight the need for a proper restorative justice mechanism to be in place to deal with cases of harassment and abuse inflicted by enforcers on informal economy participants. The Informal Sector law in its current form is silent on this matter. Section 3(6) of the law only goes as far as saying that “an operator (informal economy vendor/participant) aggrieved by the decision of the Administering Authority under section (4) and (5) may appeal to the District Court”. Yet for most informal economy operators or vendors the Village Court is the most affordable, reliable, reachable and dependable arm of the justice system since it addresses individual and community’s legal concerns through a typically PNG way. The District Courts can be utilized by an interest group or an entity representing the interest of informal economy vendors/operators. Therefore, the report fails to recognize that the infringements done by the informal economy participants (apart from the sale of drugs, counterfeit products and homebrew) are ‘economic crimes’ and not criminal offences that would require the ‘heavy arm of the law’. Thus section 4(2) of the Informal Sector law should be reworded or amended to ensure that the members of the police force are excluded from being appointed as inspectors to police the informal economy.

The NCDC buai ban law demonstrated that administering authorities armed with additional powers can abuse it and in the absence of a voice and an appropriate restorative justice mechanism for the informal economy participants, the informal economy will be suppressed to a point where lives could be lost. Deaths relating to the buai ban have been well-documented in the media. Such actions would thereby defeat the whole purpose of the law. In saying that the law does provide sufficient space as captured under section 3, where the administering authority is required to “adequately notify and welcome feedback from the informal economy operators of its attempt to make changes/determination to the law”. The operator(s) on their part should respond within a set time frame or take the matter to the district court if not satisfied with the authority’s feedback. In addition, inspectors appointed by the administering authority as per section 5(2) should properly notify the informal economy operator/vendor of its decision or actions. However as alluded to earlier, with most of the operators/vendors lacking basic literacy skills and resources (funds) they would need someone to do this for them, or better still an entity like an informal economy market vendor association to represent their common interests and amplify their concerns in order to get the attention of the authorities or policy makers.

Increasing penalty fees and repealing section 18 of the Act, which has a list of laws and their clauses that were excluded, means that informal economy participants will be forced to comply with standards that may be too high for them, especially when most of these participants have very poor literacy skills and lack formal employment to supplement their meager incomes. While the intention is to put forth a progressive and rosy image of the city and urban areas, this should not come at the expense of people’s livelihoods. PNG is now a country that is already experiencing a widening gap between the rich and the poor amidst its most prosperous period in its 40 years of nationhood. Early indications are that the PNG LNG will not be as transformative as it was predicted to be. On the contrary, the emergence of the PNG LNG project has created more problems than solutions for this nation. The cost of basic household goods and services have dramatically increased while the government is being forced to make deals that could possibly cost this country a great deal. At a difficult time when this nation is heading into uncharted waters, the wisest thing to do for the PNG government is to lean on its strengths. The informal economy with almost 80-85% of its population engaged in myriad of activities is its strength. Through the good and bad times, it has helped this nation to ride out crisis after crisis. Giving it its long overdue consideration in the national agenda may well be a game changer for PNG.

Via http://pacificpolicy.org/2015/11/new-law-on-the-informal-economy-could-be-a-game-changer-for-png-part-two/

New law on the informal economy could be a game changer for PNG

By Busa Jeremiah Wenogo - Pacific Institute of Public Policy 

In the first of a two-part blog, Busa Jeremiah Wenogo analyses the review of the Informal Sector Development & Control Act 2004, providing insight into how PNG is undertaking reform of its informal economy. Documenting PNG’s case will hopefully provide policy makers in other parts of the Pacific with ideas on how to best grow their informal sectors.

On October 19, 2015 the Constitutional Law Reform Commission launched the draft report on the Review of the Informal Sector Development & Control Act 2004 at the University of Papua New Guinea. The report contains a set of recommendations and the proposed bill that would be presented to the government for its consideration and endorsement sometime around November. If passed the bill may well be the game changer to transform PNG’s socio-economic landscape. Particularly if the informal economy is seen as a wealth distributive mechanism, it could allow money generated in big impact projects such as the PNG LNG, to be transferred to the majority of the population who are its beneficiaries.

Furthermore, if provided with the right environment, it could unleash entrepreneurialism and innovation that is abundant among many Papua New Guineans but lethargic due to lack of support. One should only take a bus ride to the infamous Gordon Market or travel up into the Kakaruk (chicken) Market in Goroka or elsewhere to witness the vibe of energy and salesmanship at play. This is what the law aims to nurture but in compliance with appropriate minimum standards to protect consumer welfare and generally minimize its negativity.

Yet the challenge will once again fall on the shoulders of the government to ensure that the intention of the law is realized. Already the government is urged in the report to step up and provide leadership in administering the law as well as providing essential public goods and services to encourage the development of the informal economy in PNG. So far the government has failed miserably in this area although it has introduced a policy and a law to address issues affecting the informal economy. This reinforces the sad reality that implementation and enforcement have always been a challenge for the PNG Government. Most Local Level Governments are struggling to function effectively in most areas of the country due to lack of support both in terms of resources and limited understanding of their functions and responsibilities. The report alluded to the fact that most LLGs that were consulted had no idea about the existence of the law although it is a national law.

By allowing provinces to have the freedom to make necessary amendments to the modal law to suit their unique situation, it is hoped that they will effectively control negative aspects and promote the positive side of their informal economy.

At the national agency level the report found that no oversight was provided making way for administering authorities to make laws without alignment to the Informal Sector Development & Control Act 2004. In most cases administering authorities simply turned a blind eye on the law. For instance, in 2012 the courts making reference to theInformal Sector Development & Control Act 2004 restrained the Lae City Council from implementing its decision to close down informal markets in the city. In the case of National Capital District Commission (NCDC), buai producers and political leaders in Central Province issued threats challenging the legality of the buai ban law although this has not come to pass. If the ban was contested in the courts with reference made to the Informal Sector Development & Control Act 2004, the outcome could have changed the dynamics of the informal economy in PNG.

This is where the Constitutional Law Reform Commission’s (CLRC) foresight in introducing a ‘modal law’ is important as it bypasses the difficulties that could have eventuated if a national law superimposes itself with no regard to the administrative set up of certain provinces like NCDC. By allowing provinces to have the freedom to make necessary amendments to the modal law to suit their unique situation, it is hoped that they will effectively control negative aspects and promote the positive side of their informal economy. By having the Department of Community Development & Religion as the lead agency providing oversight on the law, it is envisaged that the amendments will be made with due respect to the spirit/intention of the national law as well as in alignment with the national informal economy policy.

The department to its credit has already embarked on a restructure (with no progress as yet) that will see a new section dedicated to coordinating the implementation of the policy and the law. Yet questions are being asked if this arrangement will yield any tangible results. The department itself is still reeling from the leadership tussle which transpired two years ago which has seen the department fragmented into factions as staff took sides. The aftermath of this battle can still be seen today with most of its offices half empty and manned by only few dedicated officers. In this environment there is no guarantee that the law will hit the ground running once it is passed by the government. This is where the department with the aid of CLRC should explore options that will lead to the effective implementation and administration of the policy and the law. One option would be for the department to quickly work towards establishing a stand alone mechanism, like an office within its structure. Such a set up, apart from speeding things up, would allow the department to effectively reach out (going beyond its traditional role as a social welfare department) to other stakeholders whose mandate or policies are related to aspects of the informal economy policy and Act.

On the other hand the informal economy participants for their part, misunderstood the law the first time it was passed by parliament, subsequently giving rise to the proliferation of diverse sets of informal economic activities, some of which posed serious health and safety risks. This meant that balance needed to be found in the law to ensure that the growth of the informal economy is controlled to minimize its harmful effects. The informal sector law in its current form in fact advocates for this. This is contrary to the views that it ‘gave fire’ to the widespread chaos that is unfortunately the hallmark of PNG’s informal economy. The draft report to the credit of the CLRC, has reinforced this idea with penalties raised depending on the severity of the offence, which is determined by taking into consideration an informal economic business activity’s impact on the environment, hygiene, health, safety and the nature of the items sold such as whether it is addictive and other factors. Furthermore, it has inserted a provision to deal with betelnut-related issues which now imposes a much tougher penalty for irresponsible chewers.

Via http://pacificpolicy.org/2015/11/new-law-on-the-informal-economy-could-be-a-game-changer-for-png/

Settlement upgrading should include people of different ethnicity

BUSA JEREMIAH WENOGO

THE recent spate of ethnic tensions and fights that have swept certain parts of Port Moresby’s settlements, most notably Hohola, 8 Mile and 6 Mile, have brought to light the need to police the movement of people in and out of towns and cities.

This is important to maintain law and order and protect human lives and public property.

In Papua New Guinea, discussion on rural-urban drift often raises the issue of the Vagrancy Act. While there is a definite and serious need for the government and city and town authorities to look into ways of controlling the movement of people, the Vagrancy Act will have to be a measure of last resort.

This is due to the fact that most urban dwellers are second or third generation migrants (especially from Gulf and Central provinces in the case of Port Moresby) who live, work and do business in towns and cities.

Such an exercise would have a devastating social and economic impact on our towns and cities. Furthermore, the implementation of such a law would not be in the interests of national unity as it would only lead to bigotry and animosity among Papua New Guineans and add fuel to any lingering feelings of regionalism.

The National Capital District, under the leadership of Governor Powes Parkop, seems to have moved away from the vagrancy idea preferring instead to upgrade squatter settlements.

In the corner of Erima settlement where I live, a section of the road leading to my house has been expanded and sealed. This project, which I presume is part of an NCD settlement upgrading exercise, has changed the image of the place by portraying to the public a more progressive outlook.

In addition, a couple of months ago, the electorate’s MP reconnected water into the settlement after several years of struggle. And earlier this month, Labi Amaiu MP commissioned the Erima water project, making it known to the community that he plans to issue formal land titles to settlers and build a proper sewage system into the settlement.

Erima is like the pocket of Port Moresby, hidden away from traffic jams and the hustle and bustle of the city.

While its isolation has provided refuge to its more than 1,000 residents, to those living outside Erima is seen as a hotbed of criminal activity. Furthermore, like other settlements, it has suffered from years of ethnic tensions and fighting.

Other settlements at Morata, 8 Mile and 9 Mile are reported to be undergoing a similar transformation to that we are witnessing in Erima. Yet most of these settlers lack formal employment and resort to the informal economy, mainly plying betel nut to sustain their needs.

The betel nut trade is worth millions of kina and is the most successful agricultural commodity with a huge domestic market.

The lucrative nature of the trade has seen the city commission’s betel nut ban constantly face stiff opposition from producers, distributors, sellers and consumers alike.

Even enforcers of the ban have been reported to have smuggled bags of betel nut into the city to take advantage of the price hike.

With the commission recently doubling its effort to enforce the betel nut ban and with no proper betel nut market in the city, vendors are becoming ever more territorial, fighting for space in an already crowded environment.

From this perspective it is easy to see how a petty issue involving vendors tussling over betel nut (buai), lime (kambang) or mustard (daka) can quickly escalate into an ethnic fight. 

People tell me that the Hohola and 8 Mile ethnic fights were a direct result of disagreements between vendors of betel nut and mustard.

A couple of weeks prior to this, the temporary Erima betel nut market at the old Hugo Sawmill reported an incident involving men from the Eastern Highlands and Tari.

It does look as if betel nut related fights are on the rise.

Unfortunately most of them fights have proven fatal, with participants either critically wounded or killed.

The situation has been made worse by the commission’s decision to clamp down on all informal economic activities in the city, which has made it almost impossible for vendors to switch to non-buaiactivities.

I have seen the devastation of these actions on families who literally survive on them for their daily needs.

Where I live, families are going without food for days. As a result most are now opting to sell betel nuts as a means to sustain themselves. Subsequently, the number of betel nut vendors in Port Moresby is steadily increasing.

Youths from these households have no choice but are forced to go onto the streets doing whatever they can to survive. This has led to an increase in petty crime such as pickpocketing, harassment, hold ups and carjacking.

This indicates the dire need for the government to quickly come up with measures to ease the pressure before it gets out of hand.

Settlement upgrading is one strategy that may address some of these issues, however it will not do much if it advocates creating settlements for each ethnic group.

Settlement upgrading must entail the integration of different ethnicities. Settlements in cities like Port Moresby, Lae, Mt Hagen, Goroka, Kokopo and elsewhere should have a mixture of people from all over Papua New Guinea living together.

An integrated and diversified community ensures that transparency and accountability is maintained when it comes to community policing with leaders chosen on merit and decisions based on law rather than ethnicity.

Secondly, such a multi-ethnical community ensures that flare-ups or fights are quickly neutralised unlike a settlement comprising people of homogenous ethnicity where disputes quickly snowball into an all-out ethnic fighting.

I have seen in my community how suspicions of sorcery and jealousy have held back a lot of the folks from venturing into small business for fear of losing their own or their families’ lives.

Highly educated people do all they can to appease whoever they suspect may be capable of taking their lives (sometimes their own family members) through black magic.

In a big city like Port Moresby and Lae people must learn to live in peace and harmony with their fellow citizens because these are fundamental for nation building and development.

Squatter settlements which house the bulk of urban dwellers should take the lead in this endeavor.

This means that any attempt by relevant authorities to upgrade squatter settlements should focus on creating an integrated and diversified community rather than a homogenous community of a single ethnicity.

Via: http://asopa.typepad.com/asopa_people/2015/10/settlement-upgrading-should-include-people-of-different-ethnicity.html 

Truth is not enough; there is a need for conviction

BUSA JEREMIAH WENOGO

“THE truth will set you free.” Since the day I first saw those words some 20 years ago, I have often pondered them.

Lately I’ve come to the conclusion that the truth can only set us free through conviction. Knowing the truth may be just the first step to freeing oneself and not the end result.

From this perspective, truth is not the end but the means through which we are empowered to be free. Knowing something is wrong is not enough. If, by conviction, one is forced to go against wrongful actions then it can be said that we have freed ourselves from those wrongs.

In Papua New Guinea we have been a victim of this fallacy. There are times when we see violence played out before us or injustice visited upon the marginalised and poor of the society, yet we ignore these things opting instead to find comfort in the thought that it is none of my business. We tend to want to shove it off to someone else (most notably government) to deal with.

When we read in the papers about our leaders at all levels indulging in corrupt practices we remain content assuming that it’s all politics and it’s not our problem. We prefer to react when corruption directly affects us.

However, by the time one tries to react, the problem has multiplied to an extent where it requires collective action to remedy it. It is this kind of behaviour that causes some outsiders to ask if modern PNG society conforms to any kind of logic.

This is because, logically, whenever something is wrong, people tend to rise up and protest, yet in PNG we have rarely done that.

Historically, we do have a record of student-led nationwide strikes over various national issues but always marred by unruly behaviour of “opportunists”. These people do not care about the truth and they certainly lack any conviction to fight for a cause that is for the common good.

Worker-led demonstrations in PNG are a rarity and when they do occur they tend to be confined to a particular industry or subsector driven by agendas that aim to address conditions of workers. In general PNG workers do not step beyond the boundary to voice concerns that affects the nation as a whole.

It is a mystery that baffles the local educated elite and foreigners. How could Papua New Guineans accept corruption knowing full well its consequences on their wellbeing?

If Papua New Guineans in general were asked this question, almost everyone would express dissatisfaction about corruption. However, only a few would commit to take any concrete steps to address the issue.

The cultural aspects of life influence very much the way we perceive leaders and leadership in PNG. Our “bigman” mentality, where we revere and respect our clan leaders, has unfortunately created an atmosphere conducive to bigman-led corruption to flourish to a point where it is “systematic and systemic” as succinctly described by Sir Mekere Morauta.

Corruption in this case is a pyramid system with the bigmen at the helm maintaining their grip on power through wantokism and bribery. An so corruption in PNG has woven its way into and planted itself in the basic fibre of our nationhood making it almost impossible to root out.

In such an environment, most Papua New Guineans may know the truth but that does not necessarily mean they have the conviction to stand up and fight for a better and fairer outcome for all.

For those who decide to persevere, fighting corruption may come at a huge cost. Yet their constructive actions are the key to reining in corruption. Truth to them is a tool to set the oppressed free.

Knowing that something is corrupt does not rid a situation or an individual from corruption. What will generate change is a conviction to do something that leads to a series of actions to change the mindsets and attitudes of people to take a collective stand against corruption.

Truth without conviction is meaningless, like a genius with ideas but no inventions. 

Via http://asopa.typepad.com/asopa_people/2015/10/truth-is-not-enough-there-is-a-need-for-conviction.html#more

Food and water shortages challenge us; planning is the answer

BUSA JEREMIAH WENOGO

NEWS about the water level at the Sirinumu Dam dropping to an all-time low got me thinking about what would happen if we ran out of water.

One of my good friends whom I bumped into few days ago probably summed up the situation well. He said if the dam runs out of water, the people in the Port Moresby settlements will go on a rampage.

Water pipes will be ripped apart or dug up to free the remaining water while shops will be looted as people go in search of bottled water. This conjured in my mind images of the Mad Max movies.

I wonder what would happen if food shortages due to drought strike Moresby at the same time we experience a drop in the city’s main dam?

Stories of drought-related deaths in the highlands already indicate the severity of the situation.  Experts say this is the worst drought since 1997 and speculation is that it will continue into 2016. If it does we can only pray that it does not hit a highly populated area.

The current state of the economy is not helping. PNG, which is already said to be reaching crisis point. If things get worse it may affect our ability to import food whichwould be catastrophic for PNG.

Food and water, two of human’s necessities for survival, are what keep us sane. Without them, pandemonium reigns – 6,000 years of civilisation brought to chaos as war and destruction of property become rampant.

Peace and harmony replaced by fear, anxiety and desperation.

Since moving with my family to Erima settlement three years ago, I have seen how desperate people become when water is not accessible. They walk for hours just to get to the nearest tap.

I often hear women arguing over water. Sometimes they argue the shortage is due to someone not paying a water bill while at other times they argue over petty matters relating to taps.

We don’t want to see things reach a crisis because surely fights will erupt and even lives will be lost.

Yet we have no excuse for bringing this situation upon ourselves given that mostly we have an abundance of fresh water and food to sustain our needs. We have been described as the food bowl of the world because of our large agricultural base.

Historically PNG is said to be the home of the first subsistence farming. But right now the reality is that food security is a global concern and PNG is no different.

When we get back to normality, we must ensure that PNG agriculture does not lag behind the extractive industries in terms of government priorities. Farmers need to be prepared well in advance for drought and frost.

Foods able to withstand harsh conditions need to be identified and embraced. Such an approach will ensure that we maintain a consistent supply of food to feed our growing population in bad times as well as good.

With water we need to take a similar approach. Our fresh water reserve is such that at one point the Southern Highlands Government was looking at piping fresh water to Queensland. It’s about time the government explored options to support the Sirinumu Dam.

We cannot go on being reactive to crises because that can be fatal. Droughts, frost and economic crisis are things that PNG is familiar with and it’s about time we had contingency plans to withstand their adverse effects. 

Is PNG headed for a bust? And another rebuild, regain, restore?

BUSA JEREMIAH WENOGO

THE last time Papua New Guinea experienced a major economic crisis and a devastating drought was in 1997 when the late Sir Bill Skate was prime minister.

Skate was the leader of the People’s National Congress (PNC), now the lead coalition political party under the leadership of Peter O’Neill.

After failing to resuscitate the economy and with a kina in free fall, Skate and the PNC were voted out of power in a vote of no confidence by the People’s Democratic Party led by Sir Mekere Morauta.

It so happens that the present PNC-led government is in the middle of its own turmoil with the nation said to be experiencing a cash flow crisis made worse by one of the worst droughts in history.

It is interesting that these two events have occurred in the lifetime of a PNC-led government. Not to say that PNC is a political party destined to bring doom but the coincidence is too good to be ignored.

Recently I bumped into a friend who, like every concerned Papua New Guinean, is worried sick about what is to become of PNG in the next year or so as we face the inevitable truth that we are already deep into a crisis, the extent of which we do not know.

Having been bombarded with news about recent developments in the economy and the water crisis at Sirinumu dam, Port Moresby’s main water supply, he could not help but contemplate the consequences that could arise if the economy crashed and water supplies hit rock bottom.

He feared that it will not be long before water to most settlements will be cut and more people will be made jobless giving way to pandemonium, lawlessness and social disorder in Port Moresby and other PNG towns.

Using the analogy of water in a tank he told what would happen in PNG as the economic and water situation got worse.

In a tank filled to the brim with water it is hard to notice the debris and fungus at the bottom. However, as the water level drops, the bottom of the tank becomes visible and the debris and the fungus are exposed.

At the same time, the water gets smelly and the only logical thing to do is to empty the tank and refill it with clean water.

This, my friend forecast, is what will happen with corruption in PNG.
Sooner or later the whole rotten mess of corruption in PNG will be exposed and gotten rid of. The problem is when it will happen and who will do it.

I realised from the conversation that the question of when corruption will be 
brought under control is something that rings loud in the hearts and minds of most Papua New Guineans.

Corruption in this country has seen widespread inequality and a yawning gap develop between rich and poor.

Ordinary Papua New Guineans like my friend are asking if the price of basic goods and services will ever come down. By now every Papua New Guinean knows that cost of living will always go up regardless of what happens in the economy.

In a developed, well-functioning economy that should not be the case, as prices should readily adjust to market conditions. In PNG unfortunately there is much unseen market intervention that seemed to work in the favour of the wealthy ruling class.

The sad truth in all this is that a large portion of Papua New Guineans - including blue, brown and green collar workers plus a large population of the middle income class who are the engine of growth - will always be playing catch-up.

In rural areas, after 40 years of independence, most of the folks are still living in a pre-modern state with little knowledge of what is happening in cities like Port Moresby and Lae let alone in the world. The state of most public utilities and services are deplorable. This is where it gets really unfair.

As I look back on our country’s history, I notice that what happened after 1997 was a period of rebuilding, regaining and restoring of the PNG economy.

Sweeping reforms initiated by the Morauta government brought back stability and confidence in all sectors of the economy. This provided a platform for the subsequent Somare government to roll-out plans to further boost PNG’s economy.

The LNG development, PNG’s largest project ever, is a result of those years of sustained stability and visionary reforms. What this country needs now – if it is not too late - is a government that will use the gains to lift the entire nation to another level. We should not go back and start all over again.

The world is moving and Papua New Guineans are striving for better lifestyles and improved living standards. It is totally unacceptable that, since we have opened our doors for our natural resources to be exploited for the purpose of prosperity, we still have some of the worst social indicators anywhere in the world.

Again a reflection of the crippling nature of corruption that has pushed this nation to its knees and sucked the life out of it.

The period after the Bougainville crisis until 1997 were painful years for PNG. My father who was a National provident Fund (now NASFUND) contributor, along with several thousand blue collar workers, lost a large chunk of his contribution due to corruption.

However, being uneducated, he and most of the blue collar workers felt it was beyond their reach to demand compensation from the government. Justice still needs to be served to those criminals who were responsible for the nation’s biggest white collar heist in history.

Those were lost years that some of us, including my friend, grew up in and wish never to experience again in our lifetime. Yet here we are with all signs pointing to a repeat.

If that part of PNG’s history does repeat itself, history has shown that the next crop of leaders will have to rebuild, regain and restore this nation and set its future to rights once again.

The miserable part about all of this is that most Papua New Guineans, like my father, my friend and I, will have to experience the whole dreadful cycle within the same generation. All we can do now is brace ourselves for what is to come.

Via http://asopa.typepad.com/asopa_people/2015/10/is-png-headed-for-a-bust-and-another-rebuild-regain-restore.html

The wolves are devouring us in broad daylight

BUSA JEREMIAH WENOGO

THE phrase “Papua New Guinea has gone to the dogs” is no longer relevant in describing the extent of corruption in our country. It does not go nearly far enough.

We all stand astonished at the magnitude and pace at which corruption has accelerated in PNG in the last decade or so.

The state of service delivery in most parts of PNG is at a pitiful state even when we are in the middle of a “boom” - the boom was supposed to usher in a new era in our nation’s history where we could look forward to a more equitable and fairer society.

Yet in the 40 years of its nationhood, PNG has gone from a progressive nation to one of the most backward developing nations on earth.

The irony is that, all this time, we have been rated as one of the most resource rich nations. Thanks largely to PNG LNG we have witnessed unprecedented growth in our economy in the last decade yet I can’t help wondering what we were raving about when the reality is that this project was not as “transformational” as it was predicted to be.

The landowners of Hides and Moran are constantly threatening the government with closure of the project sites if their demands are not met while the State has not been honest in accounting for the revenue inflows that should be arriving as the shipment of gas takes effect.

In fact, one would assume that the revenue from LNG would rescue PNG’s economy from its dire situation. Yet this does not seem to be the case and questions are now being raised of the whereabouts of this money.

I have come to the conclusion that this nation is been fed to a pack of wolves who are indulging in devouring it in broad daylight.

Service delivery has been turned on its head to facilitate massive fraud with huge ‘variation costs’ and ‘off the book’ contract fees.

Let’s not kid ourselves, the ferocity associated with corruption in PNG has left this nation licking its wounds big time. While the wolves howl for more, the majority is forced to stop the bleeding that is the hallmark of the savagery against this country.

This nation is heading for a very bad place if we don’t stem the leakages that are allowing corruption to thrive under our noses. Somewhere, somehow, something has to give.

We can be sure the wolves are not contemplating an end to their grand scheme anytime soon. They constantly prowl the corridors of our public institutions hoping to identify loopholes and weaknesses they can pounce on.

They are cunning and menacing and ungrateful, giving no consideration to the consequences of their actions nor offering respect to our Constitution.

The very laws and public institutions that are supposed to work for the public good are being infiltrated and plundered for the gain of a few.

My belief is that this “steal from the majority and feed the minority” approach will not last long. They cannot suppress the truth and Melanesian culture is unlikely to enable the establishment of a “ruling class” which will exist in contradiction to the wishes of the people.

What we are witnessing is the creation of an environment for the emergence of “people power” as a legitimate means to end this chaos of theft and deceit. People will not be too long isolated from the benefits that they as a nation are supposed to be enjoying.

We have been our own worst enemy, deliberately turning a blind eye to corruption that is staring us in our faces.

We hope that it is just a bad dream and that all will be well when we awake from our bed. When something is wrong we tend to take a bystander approach. All of us are good at that. Hypocrisy is what we are good at.

The truth (and I hate to admit it) is that we are living in a country that is being designed to feed the wolves. When we become concerned and seek the truth, the wolves’ growl at Mother Corruption, the very mother that feeds them so well, as if they do not know her.

They duck for cover, jump in circles and bend the rules to preserve the power of their greed. They have done it so well so far, with no real opposition from citizens, that they are now chronic thieves living in a system of thievery.

Papua New Guinea belongs to the nearly eight million Papua New Guineans who are scattered from highlands to coast to islands but its riches are plundered to satisfy the greed of a minority few.

When they get caught in the act they scurry to preserve their “integrity” using for themselves the power that has been bestowed on them for the public good.

In a nation run by wolves, private interest is paramount to public interest. The wolves run the country for themselves.

Via PNG Attitude http://asopa.typepad.com/asopa_people/2015/10/the-wolves-are-devouring-us-in-broad-daylight.html

All signs lead to a need to rebuild, regain and restore

By Busa Jeremiah Wenogo

The last time PNG experienced a major economic crisis and a devastating drought was in 1997 when the late Sir Bill Skate was the Prime Minister. Late Skate was the leader of the People’s National Congress (PNC) a political party that is now heading the coalition government with Peter O’Neill as the leader and Prime Minister. Failing to resuscitate the economy and the sliding Kina Sir Skate and his PNC were voted out of power in a vote of no confidence by the People’s Democratic Party headed by Sir Mekere Morauta. It so happened that at present a PNC led government is now in the middle of a turmoil with the nation already said to be experiencing cash flow crisis made worse by one of its worst drought in history. What is profoundly interesting is that these two events have occurred in the lifetime of a PNC led government. This is not to say that PNC is a political party destined to bring doom but the coincidences are too “good to be ignored”.

Yesterday I bumped into a friend of mine who like every concerned Papua New Guineans was worried sick about what is to become of PNG in the next year or so as we face the inevitable truth that we are already deep into a crisis albeit the extent of that crisis is still yet to be known. Having been bombarded with news about the recent developments concerning the economy and the water crisis facing Sirinumu dam in Sogeri, he could not help contemplate the consequences that could arise once the economy “crash” and the water level “hits rock bottom”. He feared that not long water to most settlements will be cut and more people will be made “jobless” giving way for pandemonium and with it, lawlessness and social disorder to flourish in Port Moresby and other centers of PNG. Almost like a scene out of the movie “Armageddon”.

Using the situation of water in a tank he told me an analogy of what would happen in PNG as the economic and water situation gets worse.  In a tank filled to the brim with water it is hard to notice the debris including the fungus he said. However as the water level drop the bottom of the tank becomes visible until the debris and the fungus are exposed. At the same time the water starts to get smelly and the only logically thing to do would be to empty the tank and refill it with clean water. This he said is what is going to happen with corruption in PNG. Sooner or later the whole rot and mess that is the fabric of corruption in PNG is going to be exposed and gotten rid off.  The only problem he told me is “when” that is going to happen and who is going to do it.

I realize from that conversation with my friend that the question of “when” all these rot that is corruption will be brought under control is something that rings aloud in the hearts and minds of most Papua New Guineans. Corruption in this country has seen widespread inequalities and a gaping gap between the rich and the poor. Everyday ordinary Papua New Guineans like my friend are asking if the prices of basic goods and services is ever going to come down. By now every Papua New Guineans have this general idea that cost of living is always going to go up regardless of what happens in the economy. In a developed well functioning economy that should not be the case as prices should readily adjust to conditions on the market. In PNG unfortunately there is so much “unforeseen” market interventions that seemed to work in the favour of the wealthy ruling class. The saddest truth from all this is that a large portion of Papua New Guineans which includes the “blue, brown and green collar” workers plus a large population of the middle income class who are the engine of growth, will always be playing catch-up as a “minority” rich drive up the cost of living in this country. In the rural areas after 40 years of independence most of the folks are still living in pre-modern state with very little knowledge of what is happening in the world let alone in cities like Port Moresby and Lae. The state of most of the public utilities and services there are deplorable. This is where it gets really unfair.  

As I look back to PNG’s history I noticed that what happened after 1997 was a period of rebuilding, regaining and restoring” of the PNG’s Economy. Sweeping reforms initiated by the Morauta led government in all sectors began to bring back stability and confidence. This provided the platform for the Somare led government to roll-out plans to boost the PNG’s economy. The PNG LNG arguably PNG’s largest project to date is a result of those years of sustain stability and visionary reforms. What this country needs now is a government that should use those windfall gains to lift this entire nation from where it is now to another level. We should not go back and start all over again. The world is moving and Papua New Guineans are striving for a better lifestyle and improved living standards. It is totally unacceptable that since we have open our doors for our natural resources to be exploited for the purpose of prosperity, we still have some of the worst social indicators anywhere else in the world. Again a reflection of the crippling nature of “corruption” that has gripped this nation to its knees and sucked the life out of it.

The years after the Bougainville crisis up until 1997 were some of the most ‘painful years” for PNG. My father who was a NPF (now NASFUND) contributor along with several thousand “blue collar” workers lost a large chunk of their contribution due to “corruption”. However, being uneducated he and most of the “blue collar” workers “felt it was beyond their reach” to demand some form of compensation from the government. Justice needs to be served to those who were responsible for the nation’s biggest “white collar” heist in recent history. Those were the lost years that some of us including my friend grew up in and wished never to experience in our lifetime. Yet here we are with all signs pointing to a repeat of that history. If that part of PNG’s history does repeat itself history has shown us that the next crop of leadership will have to “rebuild, regain and restore” this nation’s economy and set its future right once again. The really miserable part about all of this is that most Papua New Guineans like my father and myself will have to experience the whole “ups and downs” within the same generation. That means that we will have to start all over again. While destiny and history decide the fate of this nation all we can do now is brace ourselves for what is to come. 

        

PNG hits economic bumps as Chinese economy corrects

BUSA JEREMIAH WENOGO

RECENT news about the devaluation of Chinese the yuan against the United States dollar should seriously concern the Papua New Guinea government given that China is one of our largest trading partners.

Since the Chinese economy began to cool off, the People’s Bank of China has devalued the Chinese currency in a bid to make Chinese exports cheaper.

The yuan is expected to continue depreciating unless Chinese authorities are satisfied the sliding economy has bottomed out.

The implication for PNG is that the kina will have to be devalued against the yuan to keep our exports competitive in Chinese markets.

The Chinese economy, which was projected to grow at 10% this year, is now forecast to top out at 7%. This means commodity prices will continue to tumble as Chinese demand takes a breather.

For PNG this means a further fall in commodity prices and a revision of our economic growth rate, currently projected to be around 10% mark but likely to be around 7%.

Despite forecast budget problems, the PNG government last week reassured the country that the economy is sound – but there are increasing signs of budgetary stress. For example, yesterday PNG Attitude reported that universities are having their government funding cut by a massive 40%.

This flew in the face of a government commitment to maintain funding to key priority areas such as health and education.

The government has also argued that its debt level is under the “lawful” ceiling of 35% of GDP. However, in the event that public debt eclipses the ceiling captured in the Fiscal Responsibility Act, the government could argue this has come about due to expansion in GDP. Lies, damn lies and statistics.

The main concern is that the government, by default, may underestimate or deliberately neglect the GDP level in pursuit of an expansionary budget and give rise to much higher public debt.

Right now, the government estimates that the debt level at 34.2% of the GDP, however there are suspicions that the actual figure is worse than this.

So far the government has not looked at raising revenue through tax, instead it has opted to undertake cost cutting measures by taking funding from what it terms as “non-priority” areas in its budget to support its key policies on health and education.

Or so the government says. As I described above, behind the scenes it seems that even these ‘protected’ sectors are being hit hard.

It is worth noting that most of the borrowed funds were used to finance projects predominantly in Port Moresby and Lae. The impact of borrowing on the wider economy will only be felt once loans are used to rehabilitate the highlands highway or similar projects that will allow rural people access to markets.

Concentrating most of the spending in urban areas, biases PNG’s economic growth and helps explain the continuing drift as rural people flock to urban areas to take advantage of what they see is a buoyant economy.

For the sake of rural folks, the last thing we need is for the government not to honour its commitment to the range of decentralised improvement programs as it come under increasing pressure to keep the economy afloat.

PNG’s economic situation could become desperate if commodity prices don’t pick up quickly given that the government needs to meet its debt obligations. Thus far PNG has an impeccable record as it has never defaulted on a debt repayment.

Yet this could change if the government’s revenue sources dry up. According to the government there is no need for panic given that about 60% of its total debt is domestically financed due to high liquidity in the banking sector.

It also argues that the 30% of its foreign loans are low interest. That said, it will be interesting to see if the Exxim Bank loan and other loans sourced from China will have their interest rates adjusted as the Chinese economy continues to slide.

The PNG government is also adamant that its import cover of nine months means that foreign reserves are adequate to sustain imports until such a time when both the Chinese and PNG economies rebound.

I’ve argued in the PNG Attitude blogsite on a couple of occasions that the Chinese system of government will be forced to change as its citizens demand the same level of freedom and privileges enjoyed by the citizens of the democratic countries.

The phenomenal growth of the Chinese economy over the last 30 years has acted as a pressure valve as improvements in material well-being have minimised dissent that could lead to civil unrest.

What is happening in China’s economy now is a challenge to the Communist regime as it nuances its way to economic and political reform.

I guess here in PNG we’ll just have to strap ourselves in for a bumpy ride. As it is now, most of the world’s economies including ours are being dragged into a fast developing hole and the end is not yet in sight.

Pride more than anything else is killing PNG's Economy

By Busa Jeremiah Wenogo

While commentators and Economists alike in recent times have been ringing the warning bells over the reports of the Mid Year Fiscal Economic Fiscal Outlook being recently released, very little has been said in describing the government's spending behaviour. The government in its part has also tried its best to save face by trying to settle the nerves of the public. Its Finance Minister has been adamant ever since the red lights came on. The Opposition has been on the attack ever since the government undertook a decision to take out a massive loan with the EXXIM Bank of China and then the infamous UBS Loan. The fact that the government will introduce a supplementary budget this year indicates that the economy is well and truly "under stress" and some "belt tightening will have to take place". Within the government circles Departments and agencies have been asked to slash back funding from their "development budget" as a "savings measure".

The problem with PNG's Economy right now is that it is in danger of "sinking" because of "pride".

The increase in expenditure (which I suspect has already push the "GDP-debt ratio" beyond the required ceiling in the Fiscal Responsibility Act contrary to media reports and statements from Treasury) has now surpassed historical spending figures since independence.

This has all come about because we have decided to play "big men" politics nationally, regionally and globally.

A downturn in commodity prices and other factors are now being blamed for this huge gap between expenditure (actual) and revenue (projected) however, we must never forget the fact that we have spent well beyond what we could have.

Is it mismanagement of the economy? Yes I think so because any right thinking government knows that we are mortgaging our assets (SOEs and other assets) as collateral for the loans against future earnings that are bound to fluctuate.

While the argument will be that PNG unlike in the past has the capacity to spend to that level because of large projects like LNG and other extractive projects, the government must be mindful that much of these large investments are primarily driven by loans.

Somewhere down the line the government (today and future) will have to pay for it regardless whether we are earning income from our exports or not.

The current situation of our economy has a very real possibility of pushing our government to ramp up its effort to get the 2nd and possible 3rd LNG into production mode as soon as possible. It will also mean more exploration and development licenses will be issued for potential investors to make "its books" look good.

The danger in all of this is that it will lead to unsustainable outcomes where no proper "social mapping" and "environmental impact assessment" will be done.

Because of our reckless management of the economy to satisfy our "pride" we will be putting the lives of our people now and the future generation at risks.

In economics it is known that whenever a government plans to undertake a "fiscal expansionary budget"/deficit budget it will be very difficult to reign in the expenditures when the popularity of the government sours as a result of increase economic activities and general improvement in the well-being of the population in terms of employment and income generation.

The current government has basically done that in its commitment to host regional and global events while churning out large chunk of money to Port Moresby at the expense of the rest of PNG.

In order to get our economy back on track the government will have to "humble" itself. Furthermore, it needs to grasp the reality facing most of our Papua New Guineans rather than working on a "default" mode assuming that all be OK.

No it will not so long as we "beat our chest" in "pride". Too much of our "pride" has already brought our economy to its knees. What is happening to Ok Tedi could be an indication that we have done so much harm than good to our own economy and people that it is now time to change our approach.

Inorder to get our economy back on the track the government will have to "humble" itself. Furthermore, it needs to grasps the reality facing most of our Papua New Guineans rather than working on a "default" mode assuming that all be ok. No it will not so long as we "beat our chest" in "pride". Too much of our "pride" has already brought our economy to its knees. What is happening to OK TEDI could be an indication that we have done so much harm than good to our own economy and people that it is now time to change our approach.