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