Ignoring the informal economy - The absurdity of our urbanization planning

By Busa Jeremiah Wenogo

City or town planning is now a matter of national importance as increased population puts pressure on the existing public infrastructure and amenities. Not able to penetrate into the formal economy most cities like Port Moresby and Lae are seeing an exponential rise in the number of squatter settlements and informal economic activities. Competing for limited space in big cities and centers have resulted in conflicts between informal economy participants and urban authorities that at times have become deadly. The NCDC Buai Ban is a classic example where Buai vendors and city rangers have confronted each other on numerous occasions in the city. This trend is expected to continue into the foreseeable future if nothing urgent is done to curb it.

Ensuring that the formal sector and the large informal economy gel in order to address crucial development challenges of a fast growing Papua New Guinea is a major policy challenge for the government of Papua New Guinea. At present most government or municipal authorities’ urban development plans are bias towards the formal sector. Very little consideration is given to the informal economy. Although the intention could be to promote formal sector growth; the reality is that this strategy has not yield any tangible results. Contrary to the conventional wisdom informal economy has been found to be stubborn and at times poses a significant threat to the wellbeing of the formal sector. This is further aided by the government’s heavy focus on the highly capitalized extractive industry or non renewable sectors in the country. The result is a large segment of the population who have been left behind to fend for their survival in the informal economy. Therefore, bringing the informal economy into the planning process and subsequently the governance framework could be the “missing piece” when planning the development and expansion of towns and cities in PNG.

It’s an absurd strategy when the informal economy being the elephant in the room is ignored in urban development plans. Ignoring it has seen the tax payers and the authorities spend money and resources without any real progress in combating its problems. Informal economy like the formal sector contribute to waste and litter as well as tax through GST. Subsequently municipal and urban authorities’ waste management and littering policies and laws should promote innovative ideas to get the informal economy actively engaged in beautifying the city. Furthermore, it should recognize its contribution interms of tax (GST) rather than preferring to act as if this is not the case. It should move away from this “hardline” approach that is clearly not working to their expectations.

While theoretically possible there is no illusion whatsoever that its practical application will be a very difficult task. The process will require the urban planners to drastically modify their planning model ensuring that the needs of those operating in the informal economy is captured in the urban development plans. Political will is a key driver in fueling these reforms. Without it there is very little hope to get this done. For their part the informal economy participants will have to operate their business in a more coordinated manner according to set rules and guidelines.

 Such ideas like the one proposed by Consultative Implementation & Monitoring Council (CIMC) to look into giving “voice” to the informal economy participants could facilitate dialogue between the informal economy and relevant authorities for the purpose of drawing up urban development plans. In this way informal economy representation is acknowledged in the planning process. This can lead to a win-win situation for all parties concern. The government should be willing to "embrace" and listen to the "voice" of the informal economy. In a democratic country like PNG the governed should have equal rights exercised in a way that they are seen as equal partners in development. Already through the review of the INFORMAL SECTOR DEVELOPMENT & CONTROL ACT 2004 provisions have already been made to ensure informal economic activities are carried out in compliance (through minimum standards) with such legislations as the Physical Planning Act and Buildings Act. The catch of course is that the “minimum standards” to be imposed should be agreed amicably by all parties concern. These "minimum standards" under these various legislations should be fair and equitable otherwise we will kill the informal economy. Bringing the informal economy more and more into the planning process will hopefully prevent this from happening.