Illegitimising informal economy is a wasteful endeavour

By Busa Jeremiah Wenogo

While most Papua New Guineans earn their living through myriad of informal economic activities the condition under which they operate their micro-enterprises is normally unfriendly and not conducive to spur growth. Most government regulations and policy are not in favour of the informal economy. Even the Informal Sector Development & Control Act 2004; a legislation put in place by the Somare led Government to impose minimum standards to promote informal economy; has fallen by the wayside. Subsequently in the absence of an enabling environment, informal market vendors, peddlers and mobile traders often fall victim to harassment and abuse. These cases of abuse and harassments often lead to unfavourable outcomes for the informal economy participants. For those who depend on it as their main source of survival, punitive measures against informal economy have had a serious repercussion on their livelihood. The situation is much worse when it involves women (most of whom are active informal economy participants in PNG) whose vulnerability means they become easy prey for aggressive law enforcers. In places like Gordon Market mothers are constantly falling victim to the tough tactics of both the police and the NCDC Buai Rangers. All over the city this is a common sight. In their illuminating vests moving around in the comfort of their ten seater Toyota Land cruiser Buai Rangers swoop at the sight of buai vendors. In this coordinated yet misguided haste they usually misfire when they mistaken an innocent member of the public for a buai vendor. The ensuing scene often turns out to be both comical and outrageous. Unlike the formal sector workers, informal economy workers’ rights are not protected by law in PNG although the constitution does provide a broader rights framework especially when it comes to the “Principle of Natural Justice”. Furthermore, the ill-capacity of the Public Solicitor’s Office means that affected informal economy vendors are not able to sought affordable legal advice and assistance. Subsequently, complaints of abuse and harassment go unnoticed even when they are been reported to the Police.    

It is fair to say that apart from trading alcohol in the black market, soliciting the sale of illicit drugs (marijuana) and counterfeit products; most informal economic activities are legitimate forms of micro-enterprise activities. This implies that most of the people are actually making their living honestly in the informal economy. These activities are the lifeline of 80-85% of the PNG’s unemployed and under-employed population who make up a large portion of the unskilled and semi-skilled labourforce in the country. Therefore, outlawing informal economic activities will only encourage the emergence of black markets accompanied by criminal activities such as smuggling, prostitution, break-ins, hold ups and other law and order problems. There are also a growing number of skilled labourforce (especially in the urban centres) who are venturing into the informal economy as a way of supplementing their formal income to stay above the rising cost of living. So when a government decides to impose a blanket ban on the conduct of all informal economic activities, it goes against commonsense and logic. The imposition of the Buai Ban by the National Capital District Commission is one very good example.

Prior to the ban the trading of betelnut did not yield any unlawful activities like smuggling nor the unnecessary destruction of other non-buai products. With the ban now in full force cook food and beverages vendors apart from the buai vendors are the most affected. Normally for Central and NCDC the prices of betelnut  are relatively competitive with players along its supply chain earning a fair return. The imposition of the ban however has paved the way for the middlemen to thrive in their business at the expense of the producers. Infact the cost of bypassing the middlemen is so exorbitant nowadays. Most producers travel on PMVs and then onto dinghies to get their betelnut bags into Port Moresby. The overall costs involve transport costs back to the village. Meaning they pay double or triple the cost they could have incurred in a normal situation. Once in Port Moresby they then had to spend money on lodging and food. Often they go back with zero profit. With betelnut being the only viable cash crops to sustain their family’s livelihood the implications are enormous. The transport sector more specifically the owners of PMVs are another lot also feeling the pinch of the ban. With middlemen and wholesalers driving up to markets like Roburogo and Toutu to buy bags of betelnut these highway PMV drivers are unable to generate adequate income interms of PMV fares. Subsequently, most PMV owners are not able to meet their loan obligation with financial institutions. This is a blatant slap on the face to the government’s push to grow the SME sector in the country as well as address the huge financial exclusion gap. In Port Moresby the story is a total contrast to this situation. Unlike the producers and the PMV operators the wholesalers and retailers are making a killing with huge mark-up on the prices of betelnut. The prices are expected to further go up with the announcement by NCDC to impose a hefty fine of K500 for chewing and spitting in public places. The business is so lucrative that sellers are thanking the Governor and his team for imposing the ban. Even enforcers of the Buai Ban are getting in on the act with reports of betelnut being openly sold in police barracks and police colluding with buai vendors to smuggle betelnuts into the city. How could an endeavour to rid betelnut off the streets of Port Moresby open up a floodgate of problems to the point that it is becoming clear that the ban is a failed policy?

While the intention of the ban was to illegalise the consumption of betelnut to make Port Moresby litter free and less prone to communicable diseases like TB, its enforcement has been problematic with reports of widespread harassment, abuse and deaths. Such punitive measures should carefully consider the cost and benefits associated with its imposition before its implementation takes effect. In any case the imposition of the ban should be a measure of last resort given lessons learnt from other countries.

Tackling PNG’s informal economy is not an easy task. Yet it becomes even more daunting when the government unnecessarily imposes tougher laws or measures in an endeavour to outlaw highly demanded or addictive substance such as the betelnut. The Hobessian problem should be avoided at all costs to ensure that there is willingness from the governed to conform to any laws including the Buai Ban. Otherwise it will only lead to a cat and mouse game that will only be at the cost of the implementing agency and the tax payers. The Buai Ban is demonstrating that if not properly planned what started out as a quick fix solution will overtime end up creating more problems than anticipated.