Posts Tagged ‘informal economy’

By Catherine Wilson

Part Two

Painting by PNG artist Jeffrey Feeger (photo by Claire Kouro)


In 2011 the National Informal Economy Policy was launched to promote “the informal economy as the ‘grassroots expression’ of the private sector and a partner in the formal economic system of Papua New Guinea.”

The policy advocates growth of, and greater civil participation in, the informal economy, regardless of gender, urban or rural location, and ultimately socio-economic inclusion for all involved.

Strategies to empower workers include an enabling regulatory environment, financial inclusion through microfinance and provision of improved infrastructure, facilities, education and training, social protection and political representation. Thus, it is hoped to link “the economies of rural and urban areas and to reduce inter-regional, as well as inter-personal, income inequalities.”

At Gordons Market, where there is currently no power, public water supply, inadequate sanitation and refuse management, vendors would like to see changes.

“I would like to see improvements, especially more benches for vendors and power supply,” said Miriam, from Babiko village, who works at the market with her mother and two sisters.

“We would also like to see good services for road transport, as sometimes when public transport is not available, we are not able to get to market in time to sell enough.”

The size and resilience of the our agricultural economy is testament to the initiative and creativity of people and communities at the grassroots, but putting in place promised state reforms is vital to its development and long term future.

“The informal economy in the agricultural sector is a booming industry,” Maria Linibi, president of PNG Women in Agriculture Development Foundation, claims.

“Women in PNG are entrepreneurs and make do with what resources they have, such as markets, transport, even if it means walking long distances with heavy loads on their backs to the nearest available means to earn some cash,” Linibi said.

“But there is,” she added, “no proper marketing infrastructure and other facilities in place to facilitate and support the informal sector to boost and sustain its effectiveness.”

Market vendor, Nikil, took pride in saying: “We do everything ourselves.”

NRI’s Nalau Bingeding said that substantial PNG-based agricultural research and its effective application, addressing restricted and expensive transport options and developing appropriate technology to prolong the life of perishables, would bring prosperity to smallholders and food gardeners.

By Catherine Wilson

Part One

Although Papua New Guinea is known as a resource-rich country, 85 per cent of the population depends on the informal economy for a living.

Photo: Women at Gordons market (Catherine Wilson/IPS)

The need for a grassroots-led economic enterprise to create equitable and sustainable development is nationally recognised, but awaits better governance, infrastructure and facilities.

Meanwhile, the majority of PNG’s population of 7 million people practice subsistence agriculture in rural communities, many in locations remote from road and transport networks and public service delivery.

More than half of all income sources, including fresh food production, are part of the ‘informal’ economy. It is therefore the People’s Economy – OUR economy.

Agriculture-based entrepreneurship is not confined to the rural provinces. In the capital, Port Moresby, fresh produce markets are growing, supplied by an expanding network of small farms and food gardens in the city’s outer suburbs and villages within commuting distance.

Bire Nikil moved to Port Moresby from Chimbu Province in the highlands to start a food garden several years ago. At Gordons Market, he is surrounded by five of his relatives who assist him with growing and selling kaukau (sweet potato), bananas, aibika (Pacific cabbage), pineapples, peanuts, watermelon, mangoes and coconuts, all transported in by public minibus.

Nikil’s weekly income of K300 supports 20-25 people, including relatives in Chimbu province.

For many market vendors, who are also growers, this is their only source of income and open markets their main outlets.

Ruth Williepore supports herself and her four-month-old daughter by selling freshly grown food at the market every day. She lives on the city’s northern outskirts, where cultivation of fresh produce is collectively organised with families given specific crops to grow and produce taken to market by public transport.

“If we sell 100 bags (of food) per day,” Williepore said, “we earn K2000-3000 which pays for food, water, household items, school fees, clothes and power bills.”

“More people are buying and more people are selling,” Williepore added, surrounded by several hundred fellow traders and an abundance of fruit and vegetables piled on wooden benches, in plastic tubs and on every spare bit of ground.

The ‘2008 Feeding Port Moresby’ study, by PNG’s Fresh Produce Development Agency, revealed that the total supply of fresh food to the city each year is around 57,780 tonnes, with an overwhelming 50,350 tonnes sourced from local urban production and 7,430 tonnes from other provinces and international imports.

Agriculture accounts for 32.2% of PNG’s gross domestic product (GDP), while industry contributes 35.7%. But revenue from the minerals and resources industry, which has contributed to rising national growth over the last half decade, has failed to generate economic benefits or public services for most people.

Nalau Bingeding, Research Fellow at the National Research Institute, claims that the biggest obstacles to the resource boom transforming the pace of development are “corruption in politics and the public service, and a weak public service mechanism”. While their economy is crippled by corruption, our economy has expanded.

Globally, the ‘people’s economy’ accounts for 60% of employment in so-called developing countries. These self-employed traders possess business acumen, creativity and innovation that can be further tapped for further economic growth if conditions of vulnerability and marginalisation are removed.

*Part Two to follow on Monday, July 2.

Yat Paol is a farmer on Madang’s North Coast. He runs a grassroots NGO aimed at linking up rural PNG communities who are using their land to build small businesses. We interviewed Mr Paol about what basic government services would enable smallholders to transform PNG’s fortunes.


What do you think Government’s role in supporting the so-called ‘informal’ economy should be?

There are two levels that come to mind. Number one, extension services. Meaning that after PNG’s colonial era, Independence and immediately after that, for some 10 years or so we used to have extension offices. Technical offices like agriculture, other technical assistance that people would need back home, like for small business, marketing and all that. That is non-existent today, particularly in the countryside, in the rural areas where for technical support like that people are cut off from road links and access to even to the districts and provincial centres. They’re left out. So that’s one area if government really does what government is for, they should be looking into. That’s number one.

And the second area is facilitating trade for produce that people are already doing: the business part of it. Like infrastructure, the road, bridges and ports that will enable farmers, producers to have access to markets. And if government does what governments are for, again, making that happen so market access can be there for the people out in the areas, the producers.

And maybe a third one that comes to mind is policies. They should be people-friendly, producer-friendly. Making it possible for people to get through with this kind of business, because there’s a lot of bureaucracy and procedures to be followed for businesses. And if something is done along that line for people who are, particularly people out in the rural areas, isolated areas, that will help them also.

With regards to extension services, you said they stopped around 20 years ago, roughly in the 1990s. What’s your opinion about why that was stopped?

Maybe the government took it for granted structures like with the provincial and local level government, the law on local and provincial government being passed in parliament and being implemented, the government may have taken for granted that with that structure in place such services will be catered for. Which is not the case. The structure is in place but it’s not working. Not serving. In policy, more power’s given to the district and local level governments; but for implementation, for the working of it, the machinery’s not working out there. Like, say for example Josephstaal. There’s no government presence there. The only outside presence there is the Catholic priest there. And that’s the only leadership from the outside and there is no government presence whatsoever there.

Josephstaal is just one case and you can multiply that. And even in Madang, you have just maybe one or two, maybe three out of all the LLGs that is working above average. It creates dsillusionment, and frustration. That also builds up that law and order problem. People out of frustration just … they just get out of control, because of frustration.

To me, it seems like these days the government’s focus is all about mining, commercial fishing, commercial logging – big industry. Is that part of the reason why they’ve turned their attention away from local-level, small rural extension services like that?

 I think that’s a big part of it because of the government’s national focus on big business, export focussed business, extractive industry – big industry, big business. I think that’s very much part of the reason. They see that as they way to go, that model of development. As opposed to, what the people can do and in fact what they’re already doing. It’s happening there. But just a little bit of facilitation there is needed : infrastructure, extension services, that’s it.  But with that system not working in many, maybe most LLGs, that’s frustrating. It’s not helping people.

Is there also a lack of training and skills development available to people?

In the local areas, there is no such availability of technical assistance or skills transfer. There are some NGOs, certain agencies, certain groups that are doing that, but it’s not from the government, and it’s not organised. Like in the past when there were extension services, it was structured, it was organised. Now it’s ad hoc: whoever succeeds in linking up with some agency, some NGO or outside group that can be able to provide some training, they’re lucky.

Those services are very important. One thing is, cash is something new. It’s not part of our culture. We were trading before, our ancestors used to trade. Cash as such is something new, and management, the handling of money, this is something new. There’s a lot of that training needs to be, for management of that cash, for business in this cash economy. In certain areas, some of our areas, cash-flow is good, but the management of the cash is a big, big problem, still. Small cash is alright, it’s manageable, as it grows we need management skills on how to manage the cash.  So one area where the government can support is technical, it’s more capacity building.

What about basic things like road access?

That’s a big one, infrastructure to facilitate business. There’s a lot of produce, marketing opportunities out there but there is no market access because of infrastructure situation, that’s not helping.

I thought that is the government’s job. I find it hard to imagine why people stand up, run for political office – I thought they are the policy makers, the decision makers to make sure the common fund there, the country’s budget , caters for its people, six plus million people in the country. And that is not happening. So that is also my question, why is not happening? So now, my tendency now, with VICo, is people do what they can do. Rather than working with outside agencies which gets into bureaucracy and all that. When you initiate it yourself you know how it works – you make it work, actually. So, to make do with what’s at their disposal, because government is not working. Not doing what government is for.

Samap village in  Papua New Guinea’s  East Sepik province is like many other places in in the Country – isolated  and without  road access.  It lies  in a  tiny secluded bay facing the Bismarck sea.  The village houses stand on ancient rickety  posts  bearing  withering sago thatch roofs.

Four of the nine boats bought with buai money

A group of women and children stand  on the shore  as a fleet of  nine   fiberglass dinghies  each powered by relatively new 40 horse power Yamaha engines come into the bay.   Apart from a few men on each of the boats,   all  are void of any large cargo.

The community’s isolation  masks a transformation that has been  happening over the last   three years.  A transformation driven by a small  group of businessmen on a path to becoming self-made millionaires.

The men are returning from Madang. It’s  a trip that has just  earned the community  more than  12 thousand dollars from the sale of buai or betelnut – the fruit of the areca palm used traditionally chewed during  social gatherings.

Each month, they earn an average of   40 thousand dollars  which translates to a gross annual income of more than 400  thousand dollars which is shared amongst  the members of the community depending on how  much work they contributed.

“There are local buyers  who buy buai  from people in the village,” says Robert Mandu, the ward councilor who made  about 6 thousand  dollars today.   “We pack them in bags and sell it to Seti a businessmen  who comes from the Highlands.”

Those actively  involved in the  buai trade say it’s not just about business and making money.  They’re building on extended family relationships and supporting their clansmen and women in improving their standard of living. Robert from the Sepik and Seti  from the Highlands aren’t  related by blood but they  drew  on the  strengths inherent in both their cultures  and

reached out to others.

Brothers Henry and Robert Mandu

Every decision is  made collectively with  their elders.  Robert consults with other members of  his family.  Seti is always accompanied by an older uncle who helps him buy the buai.  The trading happens  at the  small village of  Kosakosa on the Madang – East Sepik border where Robert’s  sister lives with her husband.

Over three years, Seti and  Robert’s families developed  this  once tiny local trade confined  to  village consumers into an  industry  which will be worth over a million dollars  over the next 5 years.  The trade spans  six provinces and links  coastal buai growers in Samap  to the vast market of  more than a  million consumers in the highlands of Papua New Guinea.

The venture began with  Henry – Robert’s older brother – who started off by selling Buai using  small 25 horsepower Yamaha engine.  Henry is a man of few words and doesn’t readily take credit for the  success of  Samap’s growing band of  young entrepreneurs. But everyone knows his actions speak  volumes.  For many in Samap, Henry is a visionary.

These days,  there is very little haggling over prices.  The buyers and sellers  agree on a price that is beneficial to both families.   Seti then makes direct  deposits of up to 15 thousand  dollars  for every order  into the bank accounts managed by Robert.  Each seller knows how much he or she will get per bag and how much is being  deposited.  The boat  owners are  also paid for the hire of their boats upfront.  Nobody is cheated.

Theirs is  a relationship based  on trust and constant communication.  No lawyers. No overseas consultants. No written agreements.  It’s an arrangement that  is working with little trouble.

“We’ve bought 10 boats  from our buai sales,”  says Robert.   “We are working to get a few more.

“We are in control of our own economic development. We are deciding what we want to do and how much money we want to make”

The Buai trade isn’t their only income source.  Every week,  a boat  goes to  the East Sepik Provincial capital of Wewak  loaded with bags of dried cocoa beans.  This is  another community effort that brings in a collective income of  up to 1500 dollars a week.

“We used to sell unprocessed cocoa beans to  buyers from other villages,” Robert says.   “Many of us aren’t well educated and we knew very little about cocoa prices and we used to get cheated a lot.”

Led by Henry, the people of Samap,  sought the  expertise of a relative who built them a cocoa fermentery.  This reduced the weight they had to carry into town and increased the value of their product.

What the people of Samap are doing is in vast contrast to those in the nearby villages  of Kaup and Tiring  where Malaysian  loggers are clear-felling   large areas of rainforest. They’ve been promised oil palm development as well as benefits  under a special agriculture business lease (SABL) which is currently the focus of an investigation.  So far, there’s  no hint of progress and they’re still waiting for that “development.

“We kicked  those loggers off our land. They drove their bulldozers into a wildlife management area that our fathers established,” Robert says.  “But the people of Kaup and Tiring have  taken what we rejected.  We told them but they haven’t  listened.”

After more than  three decades  since the Australian colonial administration left, Samap is still without a road link to the provincial capital of Wewak.   The road ends at the nearest mission station of Turubu which is a day’s walk from Samap.  Malaysian loggers are  pressuring leaders  of  Samap to sign logging agreements that come with the promise of  a road link.

“Those Malaysians  haven’t learned and still think we’re dumb!” says an amused  Samap elder. “How can you build a road with 500 thousand kina? We know they  only want the trees.

“Besides, what would we need a road for?  We already have what we need.”

As the Local Level Government Councilor,  Robert is the man responsible for the implementation of government policy.  But he gets no support from the provincial or national governments and he doesn’t get paid.  Yet it doesn’t bother him.

“We don’t need government handouts. We don’t need employment provided by a logging company. We’re making more money on our own.”

The important thing for them is that  they are in control and they can choose what they want.  Next month, Robert and his brothers will buy a sawmill.  This will help his community build new houses for themselves from timber harvested from their  land.

“The next time you come, these houses will be gone. We will have  posts made of sawn timber and houses that have corrugated iron roofs. People deserve to live in good houses.”