The Papua New Guinea dilemma: Population increase VS economic growth needs

“Only 10 percent of the formal economy is actually owned by Papua New Guineans.”

Richard Maru

The National Planning Consultative Summit,   that began yesterday  in Lae has bought together departmental heads, politicians and donors in what the government hopes will be an important step to growing the economy.

Up to 400 participants were given sobering statistics which showed that showed how PNG’s population growth continues to outstrip   the economic growth rate.

“We have one of the highest population growth rates in the developing world and unless we grow the economy, we will not be able to support our people with the basic services,” said Secretary for Planning, Hakaua Harry.

“Only 10 percent of the formal economy is actually owned by Papua New Guineans.”

While the economists continue to point out that Papua New Guinea needs to control its population growth rate of some three percent per the realities continue to confront them.

Over the last decade, ‘growing the economy’ has long fallen into the realms of popular government rhetoric.

No government has really taken a decisive stand against rapid population growth for fear of infuriating Papua New Guinea’s two million Catholics and other Christian denominations who are against contraception outside of marriage.

While there has been a strong push by the PNG Government with Richard Maru at the helm to grow the SME sector. The results have been less than encouraging. Access to credit and high costs of doing business have been a significant obstacle to small Papua New Guinean owned businesses.

Over the next two days, the Summit, will draw input from the participants people including international experts.

When the Planning Minister, Richard, Maru called the meeting to order, he focused on getting the participants to realize that the current state of the economy wasn’t ideal for a comfortable standard of living going into the future.

Maru main message was import reduction, having stronger diversified economic base that can support key government policies.

As the previous Managing Director of the National Development Bank, Richard Maru,   planned an executed a recovery strategy of the government entity.   On a national scale,   this is now a recovery and growth on a grander scale.

“This country needs an economy worth 100 billion kina. For that to happen, the foundations need to be set for an economy 90 times the current size,” he said.

But the challenges remain.

Coffee and cocoa production areas throughout the country face the biggest. In Eastern Highlands, Morobe, Madang and East Sepik, farmers still have to walk long distances to take their product to market.

Both Richard Maru and Prime Minister, Peter O’Neill, were also  critical of the resource sector. Both said that the government was getting relatively little from mines all over the country apart from the government owned Ok Tedi Mining.

“…That is why we are reviewing all the resource agreements,” Prime Minister O’Neill said. “By 2020, we will stop all round log exports. There must be 100 percent downstream processing in two years.”

For Morobe,   the stage is set to continue to use Lae as a growth center both for the province and country. The Nadzab airport will be upgraded and extended with Japanese donor funding.

The Prime Minister has also urged the PNG Ports Authority and the provincial government to begin using the new Lae Port which has remained unused since it’s construction ended.

1 comment on “The Papua New Guinea dilemma: Population increase VS economic growth needs

  1. Governments, with exception of the Chinese communist party dictatorship, can not do much about the reproductive decisions of citizens, apart from assuring free contraceptives are available.

    It can, however, and must fulfill its essential functions. I can do much to improve the ease of doing business. Law and order must be maintained. Property rights must be clearly established, and contracts must be enforced through the courts. Essential infrastructure must be built properly and maintained. A healthy and educated workforce must be created by sufficiently funding the health and education systems.

    PNG not achieving a single Millenium Development Goal in 2015 shows that government policies and spending did not improve health and education outcomes despite a mining boom. Let’s hope there will not be a repeat performance with the Sustainable Development Goals in 2030. Elsewhere I have shown that a 5% growth rate of the economy is enough for PNG to achieve the goals of Vision 2050, see http://go.shr.lc/2puOqk6

    If in the past years the government had not been distracted by Pacific Games and APEC meetings, political infighting and other matters, these essential functions of government may have been fulfilled more fully. A counter cyclical, expansive monetary policy in 2015 would have done much to alleviate the recession that has been festering since then. The government should not blame the Catholic Church or provincial or local authorities for its own failures (e.g. population growth, port of Lae, Lae-NADZAB road).


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