A proposal to establish Informal Economy Vendors Associations in Papua New Guinea: PART 1

Note: Discussions are extracted from a research paper written by the author as a partial fulfillment of the requirements of the NRI Diploma in Economic Policy Analysis Course of 2016

Introduction: 

It’s time PNG embrace informal economy and “leave no one behind”.

By Busa Jeremiah Wenogo

The new Sustainable Development Goal’s theme of “Leave no one behind” aptly describes the much needed attention and effort that governments around the world urgently need to make to ensure humanity as a whole progresses towards prosperity. The future of mankind now hangs in balance and there is enough evidence to indicate that if urgent measures are not put in place by both the developed and the developing countries; we could be heading for the worst. Most countries including PNG have failed in achieving the Millennium Development Goals. In the 2015 summary report on PNG’s progress with the MDGs, the Prime Minister Peter O’Neill acknowledged that PNG “has not completely fulfill most of the MDGs” while Mr. Roy Trivedy, UNDP Resident Coordinator, acknowledged that “more needs to be done to protect the most vulnerable group”. With this in mind our progress towards achieving the new SDGs is critical to our development. 

Already PNG is seen to be playing a leading role in promoting the new SDGs with the development of its National Strategy on Responsible Sustainable Development (StARs). These principles have now been translated into the second Medium Term Development Plan (MTDP) of 2016-2017. Of greater importance and relevance to the informal economy is the fact that the MTDP 2 highlighted the “operation of the informal economy and streamlining the transition process for SMEs from the informal economy to the formal economy” as a priority. This is further supported by the SME Masterplan of 2016-2030 which identifies the development of a “plan” informed by research as critical to “non-formal sector transition into the formal sector”. However, compared to the first MTDP there is no clear indicators for the informal economy transition into the SME Sector. Even the proposed Service Delivery Framework has fallen short of identifying and embracing informal economy indicators. Furthermore, apart from the UNWOMEN/NCDC Safe Cities Market Project not much interms of programs and activities have been done to substantiate these high policy goals and plans. It makes one wonder how the government will ever increase the number of SMEs in the country.

The National Informal Economy Policy of 2011-2015 and its accompanying legislation (Informal Sector Development & Control Act of 2004) since its inception have not received the support it requires to help address problems affecting the informal economy. The lead implementing government agency (Department of Community Development & Religion) tasked to coordinate the implementation of the policy until recently has not taken carriage of the policy. As a result these important and “ground breaking” policies were at the brink of becoming “absolete”. It was only kept alive by the persistency and unremitting resolved of the Informal Economy Sectoral Committee of the Consultative Implementation & Monitoring Council. Now with under a new management the Department of Community Development & Religion is expected to play a more dominant and positive role.

The Consultative Implementation and Monitoring Council (CIMC) Informal Economy Sectoral Committee (IEC) was concerned that there was insufficient information available to substantiate policy actions on the part of the Government to support this important part of the economy. The result of a 1999 study looking at constraints affecting the development of the informal economy formed the basis for the development of the Informal Sector Development and Control Act 2004. In that study it was found that the informal economy or informal sector has been neglected. 95% of the participants in the survey claimed to have received no form of assistance at all. Not one of the survey respondents was a member of any informal economy organization (e.g vendor association, second dealer association) though they are members of church, women’s groups etc. (Eugenio, 2001).

In this paper, I will discuss the vendors associations concept and provide arguments to support its establishment. This paper is structured into six (6) sections. It begins with the purpose and justification for the proposed policy. The literature review specifically highlights the UN Women/NCDC Safe Cities Market Project and how lessons learnt from this project will assist in setting up the proposed Informal Economy Vendors Association. It will also draw from other studies looking at street vending and unionisation particularly around the South East Asian Countries. This is followed by a description of the research methodology. The fourth section elaborates on the concept of Informal Economy Vendors Association. The research findings from secondary data and their analysis are discussed in the fifth section followed by a concluding discussion and proposed policy recommendations.

Informal Economy Vendors Association – A proposal to give “Voice” to the informal economy Participants

Justification and aims of the proposed Informal Economy Vendors Association

The paper proposes lack of informal economy representation at the governance level as a major contributing factor to the poor state of the informal economy in Papua New Guinea. The lack of informal economy representation is attributed to the lack of institutional set-up to group the informal economy participants into “blocks” or “associations” to project a unified “voice” inorder to protect their interest. This has left the informal economy vulnerable to heavy handed tactics subsequently cases of violence, abuse and harassment are widespread in PNG. Case in point is the current betelnut ban being enforced by the National Capital District Commission (NCDC) in Port Moresby. Therefore, it argues the point that not providing “space” for informal economy participants’ representation at all levels of government to “voice” their concerns is against the PNG Constitution. It is simply bad governance for the government not to recognise the plight of the majority of its citizens who are engaged in the sector for income generation and survival. With no recognition and support from the government the informal economy in PNG has suffered immensely. 

This policy paper aims to contribute to the implementation of the National Informal Economy Policy 2011-2015 and the administration of the Informal Sector Development & Control Act 2004 (and its subsequent amended version) from the perspective of organising informal economy participants into associations and giving them “voice” in decision making process at all levels of government. It addresses questions such as;

    1)   Is the current environment suitable to stimulate growth in the informal economy?

    2)   Does the current governance set-up or structure at the national and sub-national level provide space for informal economy representation?

    3)   Does giving voice to informal economy participants lead to empowering informal economy participants?

    4)   Why is the idea of giving voice to the informal economy participants crucial to  PNG’s socio-economic development agenda?

   (PART 2: We will look at the literature review on the concept of vendors associations that have already been undertaken in other countries and establish its relevance to PNG)