A Position Paper Addressing Issues In Papua New Guinea’s Economy

January 20, 2021 Stan

Today, Papua New Guinea’s economy is nothing to write home about. With a GDP rank of 115th position(nominal), Papua new guinea(PNG) is the poorest country in the Asia-pacific region. Apart from poverty, inequality has also spread like wildfire across the country, making PNG an ironical write-off for most investors. However, radical solutions can still be proffered to the economy backwardness in PNG. This forms the main thrust of this paper. Nevertheless,in proffering these radical solutions, this paper will be divided into three segments.

A- Implementing the Addis Ababa action-

After colonizing PNG for several decades, the Australian government announced its high priority for the country. Australia’s aid program in PNG, is Australia’s largest single aid investment globally. In other words, the Australian government places high level of priority in partnering with PNG. Orchestrated by the African Union,(formerly called Organization of African unity), in March 2016, PNG and Australia signed the “PNG-Australia aid partnership arrangement 2016-2017.” This arrangement was signed in view of delivering effective and efficient aid. In other words, the Australian government became fully aware that reducing poverty and pursuing sustainable growth in PNG, is beneficial to both countries. In the light of this, a special committee assigned to look into the issue, came out with several recommendations:

1-“The committee recommends that the Australian government reverse funding cuts made to the PNG aid budget as part of a broader commitment to progressively increase Australia’s official development assistance to 0.5 per cent of gross national income(GNI) by 2025.”

2- “The committee recommends that the australian government reassess the priorities of the aid program in the context of the PNG government’s recent budgetary cuts to education, health and infrastructure.”

3- “The committee recommends that the objectives of the Australian aid program to PNG, explicitly include inclusive and equitable outcomes in development.”

4- “The committee recommends that the key policy documents of the Australian aid program to PNG articulate how development objectives align with sustainable development goals.”

5- “The committee recommends that the Australian aid program to PNG include increased support for non-government organisations, civil societies and churches delivering assistance to rural and remote communities.”

6- “The committee recommends that the Australian government conduct an assessment of the impact of the closure of the Manus island regional processing center on development activities.”

B- Harnessing the green economy to eradicate poverty-

It is quite unfortunate that the PNG’s economy is highly dependent on imports. PNG’s economy is largely dominated by two sectors: The agricultural sector and the industrial extraction sector. However, to fully understand the economy of PNG, it is expedient to consider her economic statistics:

GDP ranks-115th (nominal), 130th (PPP)

GDP growth- 8.5%

GDP by sector- Agriculture: 29.9%, Industry: 37.6%, Services: 32.4%

Population below poverty line- 39.9%

Public debt- $5.296 billion (2011)

Revenues- $4.168 billion (2011)

Unemployment rate- 1.9%(2008)

Having a concise and careful look at this statistics, it is plainly obvious that PNG economy is not buoyant enough, in spite of her rich natural resources. Poverty has become a way of life for Pauper Guineans. In spite of the country’s rich agricultural and natural resources(palm oil,crude oil, copper, gold, cocoa), the poverty rate of 39.9%, is quite alarming. However from the statistics above, we can see that PNG economy is more of importing than exporting. Hence the economy crisis in the country. Given this fact, if PNG economy must become buoyant again, the country must improve on her exporting rate by promoting agriculture, the green economy.

C- Designing effective policies and institutions to reduce inequality-

On June 8 2016, 8 students were shot by the police and 23 students were injured during a violent protest at the University of Papua New Guinea(UPNG) in the capital city of Port Moresby. The protesters were clamouring for the resignation of PNG’s Prime Minister, Peter O’Neil, over corruption allegations. The incessant protests were triggered by a number of issues like the Police anti-corruption unit and the Prime Minister’s refusal to be investigated.

Another issue is the influx of foreign investment and resource development, that has only benefited the wealthy class of Papua Guineans. Thus creating inequality in the country. To reduce this issue of inequality in the country, several measures must be put in place. First, the government must effectively make sure that foreign-owned companies, sell shares to indigenous Guineans. Second, the government should also establish empowerment schemes, bent on sensitizing youths on the prospects and gains of the green economy. When these policies and institutional schemes have been established, an iota of buoyancy will become evident in PNG economy.