Today, Papua New Guinea’s economy is nothing to write home about. With a GDP rank of position 115 (nominal), Papua New Guinea (PNG) is the poorest country in the Asia-Pacific region. Aside from poverty, inequality has also spread like wildfire across the country, making PNG an ironic loss for most investors. However, radical solutions to PNG’s economic backwardness can still be offered. This is the main objective of this document. However, in offering these radical solutions, this document will be divided into three segments.
A- Implementation of 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 a high level of priority on the partnership with PNG. Organized by the African Union (formerly called the Organization for African Unity), in March 2016, PNG and Australia signed the “PNG-Australia Aid Partnership Agreement 2016-2017”. This agreement was signed in order to provide effective and efficient assistance. In other words, the Australian government fully realized that reducing poverty and pursuing sustainable growth in PNG is mutually beneficial. In light of this, a special committee assigned to investigate the issue came up with several recommendations:
1- “The committee recommends that the Australian government reverse funding cuts made to PNG’s aid budget as part of a broader commitment to gradually increase Australia’s official development assistance to 0.5 percent of national income Gross (GNI) by 2025”.
2- “The committee recommends that the Australian government reassess aid program priorities in the context of recent PNG government budget cuts in education, health and infrastructure.”
3- “The committee recommends that the objectives of the Australian aid program to PNG explicitly include inclusive and equitable results 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 objectives.”
5- “The committee recommends that the Australian aid program to PNG include greater support for non-governmental organizations, civil societies and churches that provide 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- Take advantage of the green economy to eradicate poverty-
It is quite unfortunate that PNG’s economy is highly dependent on imports. PNG’s economy is largely dominated by two sectors: the agricultural sector and the extractive industrial sector. However, to fully understand PNG’s economy, it is worth considering its economic statistics:
GDP ranks 115 (nominal), 130 (PPP)
GDP growth – 8.5%
GDP by sector- Agriculture: 29.9%, Industry: 37.6%, Services: 32.4%
Population below the poverty line – 39.9%
Public debt – $5.296 billion (2011)
Revenue – $4.168 billion (2011)
Unemployment rate – 1.9% (2008)
Upon a concise and careful look at these statistics, it is clearly obvious that PNG’s economy is not sufficiently buoyant, despite its rich natural resources. Poverty has become a way of life for poor Guineans. Despite 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 above statistics, we can see that PNG’s economy is more about importing than exporting. Hence the country’s economic crisis. Given this fact, if PNG’s economy is to become buoyant again, the country must improve its export rate by promoting agriculture, the green economy.
C- Design effective policies and institutions to reduce inequality-
On June 8, 2016, 8 students were shot by police and injured 23 during a violent protest at the University of Papua New Guinea (UPNG) in the capital city of Port Moresby. Protesters chanted for the resignation of PNG Prime Minister Peter O’Neil over corruption allegations. The incessant protests were sparked by a number of issues including the police’s anti-corruption unit and the Prime Minister’s refusal to be investigated.
Another problem is the influx of foreign investment and resource development, which has only benefited the wealthy class of Papua Guinea. Thus creating inequality in the country. To reduce this problem of inequality in the country, several measures must be implemented. First, the government must effectively ensure that foreign-owned companies sell shares to indigenous Guineans. Second, the government should also set up empowerment schemes, aimed at sensitizing young people to the prospects and gains of the green economy. Once these policies and institutional arrangements are in place, a shred of dynamism will become evident in the PNG economy.
