PAPUA NEW GUINEA Country Engagement Strategy October 2016
Quick Facts
Terrain
1975
Tropical climate, mostly mountains with coastal lowlands and rolling foothills
Gained Independence
South eastern part was former Bri�sh colony un�l 1906, the Eastern part was a former German colony un�l 1914. In 1945 became The Territory of Papua and New Guinea under the Government of Australia. Full independence in 1975. Current Prime Minister: Peter O’Neill
PAPUA NEW GUINEA
Population
7.6 million 87% in rural areas
Currency PNG Kina (PGK)
Papua New Guinea
Language English, Tok Pisin, Motu
Poverty
39.9%
Kavieng
Vanimo
(% of popula�on under the na�onal poverty line)*
Wewak Rabaul
Sepik
Kokopo Madang
Mt. Hagen
Kieta
Goroka
Main Cities Port Moresby (capital), Lae, Madang (Momase), Mt. Hagen (Highlands), Kokopo (New Guinea Islands)
Lae
GDP
Kerema
Daru
$20 billion GDP Growth
Port Moresby Samarai
Human Development Index
Ease of Doing Business Index
158 out of 188 (2015)
145 out of 189 (2016)
MDF Strategic Focus Areas Rural Inputs Services
Local Value Addi�on
ICT and Logis�cs
Hospitality and Tourism Services
8.25%
(based on year on year growth 2010-2015)
Major Industries Agriculture & Fisheries, Mining, Oil and Gas, Manufacturing, Tourism, Services
MDF’s focus in Papua New Guinea MDF is focusing in PNG on four emerging industries and services that help improve access, reduce the costs involved in connecting demand and supply, preserve quality, and in particular cases, increase the safety and mobility of women. MDF will also focus on industries and services that will benefit and reinforce better connections all of which generates local employment and income earning opportunities.
* World Bank online databank – poverty headcount ratio at National Poverty Line, 2009 data
Papua New Guinea Country Strategy
The Market Development Facility (MDF) is Australia’s flagship private sector development programme in the Indo-Pacific region. MDF began in 2011 in Fiji and has expanded to TimorINTRODUCTION Leste in 2012, Pakistan in 2013 and Sri Lanka and Papua New Guinea (PNG) in 2015. MDF stimulates business innovation, investment and regulatory reform with the aim to create additional jobs and income for poor women and men in rural and urban areas through sustainable and broad-based, inclusive pro-poor economic growth. MDF focuses in PNG on four thematic areas: ICT and logistics, local value addition, rural input supply, and tourism and hospitality services. These have the potential to connect farmers and local businesses to markets, give consumers access to affordable services and create local employment. In PNG, MDF will create approximately 315 jobs and increase incomes of over 4,000 households, reaching more than 25,000 poor women, men and children, based on a two-year implementation (20152017) at the end of MDF Phase 1. Results will increase in MDF Phase 2. MDF works in partnership with the private and public sector to identify and develop new products and services, test new, innovative ways of doing business or initiate regulatory reform. These partnerships open up markets and provide increased income and employment opportunities for poorer women and men, or benefit them as consumers.
Despite decade-long rapid economic growth, an estimated 39.9% of PNG’s population lives below the national poverty line (World Bank online Databank- Poverty headcount ratio at National Poverty Line - 2009 data). There has been no recorded decline in poverty since 1996 suggesting that economic growth has not been inclusive.
Poverty
Poverty is concentrated in the Highlands region and the incidence of poverty is highest in remote provinces with poor agricultural soils and few economic alternatives. Incidence of poverty is the lowest in the National Capital District, but accelerating ruralurban drift by young people in search of a job is growing. Population growth is strong and local job creation is insufficient to absorb the over 10,000 people joining the workforce each year. Remoteness is a leading cause of poverty in PNG. Communities who live at least 60 minutes away from major roads are almost twice as likely to be poor and bad connections restrict access to services, inputs and (agricultural) markets. The other leading cause is a lack of income earning opportunities outside of agriculture. Leading industries (i.e. mining and construction) are capital intensive and account for only a very small part of the domestic labour force. Although women are active economic agents, safety concerns are an impediment for greater participation and mobility. Overall, the population, and women in particular, suffer from low literacy rates and a low life expectancy.
PNG is one of the fastest growing economies in the world with an annual GDP growth of 9.9% year on year between 2010 and 2015. This growth, however, is driven by the export of commodities and is vulnerable to fluctuations in world prices.
Growth
Strong economic growth is matched with strong population growth at 2-3% per year for the last five decades. Cities are growing rapidly and are home to a growing local middle class (projected to be up to 18% of the total population by 2030), as well as a growing expatriate community. These drivers of change represent sources of domestic demand. The extractive industries require services and supplies (including fresh and processed food); a growing population means that more mouths need to be fed and there is growing demand for affordable basic goods and services (provided they reach the rural consumers); an increasingly urban population and a growing middle class signify a growing demand for fresh and processed foodstuffs and a growing demand for new products and services (due to changes in diet and lifestyle patterns); lastly, widely available local raw materials such as cocoa, coffee, and copra can be processed further to capture more value in PNG. However, a strong local currency, poor local connections and high local operation costs means that much of this demand is currently met through imports.
• Diversifying an extractives industry dependent economy to stabilise growth.
Development Challenges
PNG’s national revenue (up to 33% of total) and the bulk of PNG’s exports (76% of total exports) are driven by the extractives industries (minerals, oil and gas). However, while the extractive sector is a key revenue generator, it is not a key employment generator.1 Also, the resource boom has led to imbalances in the economy (commonly referred to as the ‘Dutch Disease’), and an undiversified economy that is reliant on strong, albeit fluctuating factors that are vulnerable to external factors. PNG needs investments in industries and services that initially can benefit from the resource boom, but also offer a longer-term outline on a less imbalanced, less commodities-driven and import-dependent economy.
• Promoting regional connections to facilitate access to services, inputs and markets. PNG has a large landmass of 459,854 sq. km, which is vastly under-served by roads and/or waterways, contributing to continued disconnect amongst a historically dispersed population. A lack of connectivity means that farmers cannot supply markets and/or invest in inputs to cultivate in a more productive and commercial manner. It means raw materials cannot reach factories in a cost-effective manner and that consumers cannot access affordable products and services, and it limits tourists travelling to these areas. PNG needs investments in physical and digital connectivity to drive the expansion of local markets.
• Creating alternate sources of income outside of agriculture. In rural PNG income earning opportunities outside agriculture are scarce. Jobs and markets are mostly in big cities such as Lae or regional hubs such as Mt. Hagen. Jobs and access to other forms of income besides agriculture would help households stabilise their incomes and move out of poverty. PNG needs investments in local business (e.g. in logistics, distribution, processing, service delivery) that can support connectivity, create local jobs and help reduce rural-urban drift.
• Investment in local value addition. PNG is a major exporter of commodities – agricultural products as well as forestry products and fish exported in their primary form, with little or no value addition. There are significant opportunities to substitute selected imports through local processing. More local value addition would create much-needed local employment, particularly for women, and again helps to establish better connections between production centres and consumers by turning produce into storable and transportable products.
• Improving perceptions of PNG as an investment and tourism destination. The general perception of PNG to the outside world is dominated by concerns over security. A lack of information about the country particularly around investment opportunities and tourism activities contribute to this negative perception. PNG has the potential to earn more foreign currency (through tourists) which flow into remote locations translating to more jobs and income for people, particularly women.
Extractive industries do lead to creation of employment in support markets such as construction which accounts for 11% of waged employment for PNG. Jones and McGavin, 2015 1
CAPTURING OPPORTUNITIES FOR GROWTH AND POVERTY REDUCTION Poverty
Growth
•• 39.9% of the population lives below the poverty line of PGK 9.6 or USD 3 a day. •• Economic growth is not inclusive. There has been no decline in poverty since 1996. •• Poverty concentrated in remote locations with poor soils and few economic alternatives. Highlands region is the most poor. •• Incidence of poverty is lowest in the National Capital District but increasing rural-urban drift has seen the capital grow by 40% changing the poverty dynamic. •• Very few jobs those joining the workforce – contributing to security problems and crime. •• Misleading unemployment rate of 2.3% – counting subsistence agriculture. •• Lack of skilled workers means better jobs are going to expatriates. •• Remote communities (60 minutes frommajor roads) are almost twice as likely to be poor. •• Women are under-represented and underserved at all levels of development (human and economic). •• Majority of women are involved in agriculture and informal jobs and make up very small part of frmal employment. •• Physical and sexual violence within and outside the household is an overwhelming concern when considering increased participation of women in the economy.
•• GDP growth averaged 8.25% between 2010 and 2015 driven by booming extractive industry. •• Extractive industries are a key revenue generator but contribute minimally to jobs and not inclusive. •• Population in PNG is growing rapidly at 2 to 3% per year. Cities are seeing a large presence of expatriate workers and a rapidly expanding middle class with higher purchasing power. •• Growing population and demand for goods and services by the extractive industries represent the major drivers of growth. •• Strong local currency, poor local connections, and high cost of operations means much growth and demand is satisfied by imports. •• Agriculture largest employer – over 80% of workforce. Retail and logistics, informal mining, and fisheries make up the bulk of the rest. •• Negative perception of PNG as an investment destination is a deterrent to FDI outside of the extractive sectors. •• Safety and security is an overwhelming concern particularly for women.
Challenges •• Diversifying an extractives industry dependent economy to stabilise growth. •• Promoting regional connectivity to enhance transactions and communications between isolated locations. •• Creating alternate sources of income outside of agriculture. •• Investments in local value addition. •• Improving perceptions of PNG as an investment and tourism destination.
Market Development Facility •• •• •• •• •• ••
Focus on economic growth that is driven more by increasing domestic demand of products and services. Support growth through products, services, and technology that makes transport of goods and people and communication between markets and people easier and cheaper. Work on capturing more value through processing local raw materials and creating jobs and alternate sources of income for the poor. Focus on expanding distribution networks to promote agricultural inputs to farmers that can cut production costs, cut use and waste of resources like water and labour, and prepare farms better to supply to higher value domestic markets. Promote a positive image of PNG as a growing tourism and investment destination. Work to enhance safety and security of women to improve participation of women in work or business.
Expected Results will be •• •• •• •• ••
MDF partnerships stimulate economic growth, creating approximately 315 new FTE jobs and increasing incomes for over 4,000 households, reaching more than 25,000 poor women, men and children. Poor producers and consumers are better connected to affordable services, inputs and urban demand. Workers, particularly women, find more employment in the country through more formal job opportunities. Women are able to use technology and services that safeguard their (and their livelihood’s) safety and security promoting greater participation by them in the economy. PNG’s economy (and growth) becomes more inclusive, resilient, and sustainable in the medium to long term.
ICT/ Logistics
SIZE AND RELEVANCE
LONG TERM GROWTH PROSPECTS
RELEVANCE TO POVERTY REDUCTION
• Majority of the population of PNG are dispersed across the country and disconnected from each other and markets.
• Growth in logistics on the back of increasing need for domestic demand for goods and services to be serviced by local products from local production areas.
• Only 22,000 kms of roads and 10,000 kms of waterways serve over 450,000 Km2 of land mass.
• Increasing demand for basic services such as education, health, and information driving growth of technology based connectivity services.
• Cellular networks cover 90% of the country but are used by only 41% of the population.
• There exists spare capacity within the current logistics system in country (i.e. empty back shipments of ships and airplanes) that can connect production centres to rising demand. • Opportunities exist around introducing products, services, and technology allowing more local products to satisfy more local demand .
• Lack of connectivity a major cause of poverty in PNG. • Improvements in connectivity would mean poor farms and households can reach newer markets effectively. • Increased use of technology would support easier, cheaper communication between markets and people, and would support better, more affordably delivery of services.
• Increasing demand for connectivity solutions that allow women to communicate, travel, and do business safely and securely.
Local Value Addition
SIZE AND RELEVANCE • Represents only 2.7% of the GDP but has the potential to grow much more. • 40% of all formal jobs are contributed from this sector (with 60% of the workforce being women) • Huge scope for adding value to local raw materials (from local producers/ suppliers) to cater to rapidly rising domestic demand.
LONG TERM GROWTH PROSPECTS
RELEVANCE TO POVERTY REDUCTION
• Potential for growth driven by strong domestic demand for processed/ manufactured products.
• Increase in local value addition crucial in increasing job opportunities for the poor.
• Scope to incorporate widely available local raw materials into the value addition process.
• Increase in the number of formal jobs (in local value addition) benefits women.
• Opportunity to manufacture more products with local raw materials that cater to local tastes or have high freight costs. • Opportunity to add value to current export crops which are shipped out in their primary forms.
• Increased value addition of local raw materials provides access to new and higher value markets for local producers/ suppliers.
Rural Input Supply
SIZE AND RELEVANCE •• Agriculture accounts for 18% of exports (but 90% of value derived from a few cash crops). •• Over 80% farmers are subsistenceoriented with only 5% farmers considered to be commercial. •• Agriculture is the largest ‘employer’ in PNG with 85% of the workforce engaged in subsistence agriculture. •• Women play a prominent role in agriculture, both as farmers and as labourers.
LONG TERM GROWTH PROSPECTS
RELEVANCE TO POVERTY REDUCTION
•• Potential for supplying large volumes and varieties of horticultural products to large mining operations, a growing middle class, and expatriates.
•• Availability of inputs that cut costs and reduce waste of production will help poor farming households earn more/retain more cash from farming.
•• Increasing awareness and demand for cost and labour saving inputs, and inputs that allow better post-harvest handling and storage.
•• Inputs that can improve yields and varieties can help farmers access higher value markets in the country.
•• Gaps exist in provision of information on inputs usage and cultivation techniques.
•• Inputs that make farming ‘easier’ would allow women to balance their workloads better while engaging in higher value farming.
Tourism and Hospitality
SIZE AND RELEVANCE • Although contributing only 1% to GDP, the industry is growing at 5.3% per year, mostly in the form of an increase in business visitor numbers travelling to POM and Lae. • The industry employs up to 22,000 people. • The industry is important for earning foreign currency and contributing to growth in remote locations. • Opportunities for urban employment due to increase in demand for services from growing middle class in country.
LONG TERM GROWTH PROSPECTS • Growth in tourism industry through capitalising on growing numbers of business visitors in specific locations. • Target growth in the number of cruise ships coming into particular locations within the country and entice more tourists off the ships. • Drive growth in hospitality services through supplying against rising demand from a growing middle class in urban centres. • Maximise growth through working on high growth segments like adventure and historical tourism.
RELEVANCE TO POVERTY REDUCTION • Growth in this area is critical to create job opportunities for women. • Tourism can create job and income earning opportunities for the poor in urban areas and remote locations. • Increase in tourism can bring precious cash to remote locations and increase transactions of goods and services by local providers.
Strategic Engagement Area 1:
ICT/ Logistics
This thematic area covers both physical (transportation and infrastructure) and non-physical (telecommunications and technology driven) connections. Physical connections focuses on all aspects of transportation, storage (including cold chains), packaging and logistics that make the movement of goods and people easier and more costeffective. Non-physical connections involves the use of telecommunications and ICT solutions to connect people to people, people to services, and people to markets. Special attention will be given to connectivity solutions that reduce risks for women in public places or work places, when traveling, or doing business in general.
Relevance Papua New Guinea is a country blessed with strong economic growth drivers resulting from strong domestic demand for products and services. Many more products and services could be ‘made in PNG’, but are imported instead as local businesses struggle to respond to this domestic demand. Gaps in connectivity, both physical and technological, have a large part to play in short-circuiting this virtuous loop. Road networks are discontinuous and cover a fraction of the country’s land mass. Air and water connections are prohibitively expensive for cargo and travel. Only 41% of the country’s population subscribes to cellular services. Greater connectivity would mean a variety of raw materials can reach processors in country, more support can reach farms to make them more productive, more locally manufactured products can reach local customers, and more tourists can visit PNG as well as the myriad of tourism sites and potential places.
Growth Potential Growth potential lies in increasing need for populations to be connected to each other as buyers, sellers, or consumers. Production centres in PNG are currently isolated physically and otherwise, from major demand centres of Port Moresby and Lae. By promoting safe, effective and affordable connectivity services there is potential help to compete with imported products now servicing the growing demand. There is a need for an easy and affordable suite of products, services, and ICT solutions that can help buyers and sellers get around problems of weak infrastructure, expensive travel and transport, and inability to exchange information easily. Opportunities lie around investing in affordable storage allowing product aggregation and bulk buying, improving packaging that extends shelf life and preserves quality of produce, and maximising usage of existing logistics facilities like charter flights, airstrips, or inland waterway jetties to connect select production centres to cities. Use of technology to share information faster (i.e. customised trading software development that use mobile technology) and make transactions easier is untapped but can potnetially change the entire connectivity scenario in PNG. Lastly, there is a gap in the market for introducing products and services that can impact safety and security in PNG, particularly for women such as mobile technology that can reduce the need for risky travel, or specialised transportation that prioritise physical safety of women. Any improvement in this area would unlock obstacles to women using existing connectivity services better and participating more effectively in the economy.
Constraints to further growth in ICT/ Logistics
MDF’s strategy to unlock growth in ICT/ Logistics
Sparse, weak and deteriorating infrastructure keeping most geographic locations and populations in isolation from each other.
To work with private and public sector partners to stimulate investments in the building and maintenance of physical infrastructure such as roads and jetties across the country.
Lack of investment and effort in developing and introducing connectivity products.
To promote and support investments in innovative and improved services that make transportation and information exchange easier, safer, and cheaper.
Limited investments in business models which specialise in providing logistics solutions.
To stimulate investments in logistics such as storage and packaging solutions for greater shelf life or specialised transportation targeting agriculture, that circumvent poor infrastructure.
Safety and security, particularly for women, at farms, markets, and workplaces inflate risk, and restrict mobility.
Work with transportation companies and ICT/ telecommunications service providers in introducing solutions that enhance safety and security of producers, suppliers, and consumers while participating in economic transactions.
Results Chain – ICT and Logistics
CHANGES
Greater investments in building new small scale infrastructure and maintain exis�ng infrastructure
Greater availability of logis�cs solu�ons that help users go around poor physical infrastructure
Increased availability of innova�ve and improved services that use technology to bridge the gap between people, services and markets
Improved access to and availability of solu�ons that enhance safety and security of women and men
BENEFITS TO WORKERS AND PRODUCERS
Buyers have access to local products in an easier and cost effec�ve manner
Buyers and sellers improve communica�on and transac�ons through greater use of technology
Buyers and sellers use specialised services and technology to transact with each other safely and securely
RESULTING PRO-POOR GROWTH
Producers, suppliers, and consumers have access to more types of markets for their products
Producers, suppliers, and consumers are able to engage in trade cheaply and easily
Producers, suppliers, and consumers (par�cularly women) are able to par�cipate in economic transac�ons safely and securely
More jobs for women and men
More income for women and men
Increased domes�c trade
Strategic Engagement Area 2:
Local Value Addition
Local value addition includes all activities involving processing and manufacturing that seeks to source and add value to locally available raw materials. Raw materials include agriculture and forestry products, and fisheries and livestock products. MDF will focus on all aspects of adding value to local products and targeting the domestic and export markets.
Relevance The manufacturing and value addition sector in PNG (outside of the extractive industries) contribute only 2.7% to total GDP but employs up to 40% of the formal workforce (60% women). Growth in the sector is critical to diversifying the overall economy, capturing ‘lost value’ through more processing of raw materials – creating more value for producers and suppliers of raw materials, and reducing ‘unnecessary’ imports. Also, value addition can be important for connecting production with demand centres, by turning produce into more storable and transportable products. Lastly, growth in the sector is critical for creation of formal jobs which is an important avenue for women to earn steady incomes.
Growth Potential The sector might be nascent but the rapid growth in domestic demand for products and services suggest a large opportunity for the sector to grow and fill this gap. Currently up to 85% of local manufacturers target the domestic market, but they struggle to keep up with demand due to difficulties around sourcing raw materials. Introducing locally available raw materials can effectively address this short fall in supply of raw materials. A majority of these manufacturers also use large quantities of imported raw materials where local substitutes could be made available with more investments in supply chains and processing. There is a huge opportunity for local value addition for the domestic and the export markets across a variety of products using agricultural, forestry, and fisheries raw materials which currently get exported in their primary, less lucrative, forms. Finally, there is scope to compete directly with imports through local manufacturing of products (using locally available raw materials) that are sensitive to local tastes, have high freight costs, are time sensitive, or are bulky to transport.
Constraints to further growth in Local Value Addition
MDF’s strategy to unlock growth in Local Value Addition
Disconnect between processors and suppliers of raw materials.
Work with processors, manufacturers, and traders to develop stronger trade and sourcing linkages to local suppliers of raw materials.
Raw material suppliers lack the knowledge of new markets or the market requirements.
Work with processors, manufacturers, information providers and telecommunication companies to promote use of technology to improve information flow and planning between processors and suppliers.
High cost of doing business constrains investment and inflates risk.
Work with processors, manufacturers, and ICT solution providers to stimulate adoption of new technology and practices for efficiency.
Very limited investment in adding value to local products and services.
Work with private and public sector partners to encourage investments in Improved and new product development and processing that use more local materials and target the domestic market.
Limited investments in Business Advisory Services constraining growth of value adding industries.
Promote adoption of improved marketing and distribution techniques through working with existing business advisory services, business member organisations and public sector agencies.
Results Chain – Local Value Addition CHANGES
BENEFITS TO FARMERS AND PRODUCERS
RESULTING PRO-POOR GROWTH
Processors, manufacturers, and traders demand more and buy more from local suppliers and producers
More suppliers/ Producers earn addi�onal incomes
Processors, manufacturers and traders invest in new product development and diversify produc�on
Processors, manufacturers and traders invest in their supply chain to improve be�er linkages with producers and suppliers
Businesses are able to use more local raw materials and expand produc�on and diversify product lines
Businesses adopt more efficient and cost effec�ve ways of doing business
Businesses have greater access to business advisory services to help with expansion or diversifica�on
Raw material suppliers and producers have be�er access to informa�on related to new markets and new buyers
Increased employment opportuni�es
Businesses more profitable through increased efficiencies and lowered cost
Raw material suppliers and producers have greater access to new and consistent markets
Raw material suppliers and producers sell more of their produce to new and exis�ng markets
Increased propor�on of locally manufactured goods sa�sfying domes�c demand
Strategic Engagement Area 3:
Rural Input Services
This thematic area refers to agricultural inputs (seeds, fertilisers, pesticides, herbicides, and micro-nutrients), technology (agricultural tools and equipment), and information (information on modern cultivation practices and inputs usage). MDF will look to work in all areas of agricultural inputs with a particular focus on inputs and technology that help with cutting production costs, reduce waste, reduce usage of scarce resources like water and labour, and increase ease of cultivation. MDF will focus on working with national input importers and smaller regional retail businesses in order to establish a sustainable and viable chain of input supply that reaches farmers at the right time and the right price. Special attention will be given to research organisations and other agricultural information generators within PNG to distil useful agricultural information for dissemination to farmers.
Relevance Over 85% of PNG’s population can be found in rural areas and the vast majority are involved in agriculture. However, 80% of all farming households are considered subsistence farmers, planting a variety of crops on plot sizes of less than 1 hectare. Only 5% of farmers can be considered truly commercial. Men and women are equally prominent in agriculture with women focusing on crops such as horticulture and men working more on cash crops. The majority of agriculture in PNG can be qualified as ‘low input – low output’. This is as much a function of lack of access to markets as it is a function of the basic nature of farming in the country. Only 25% of the land can be qualified as arable, with only 7% of the land considered to be high quality land. Difficult land types, the application of only basic cultivation practices, lack of access to markets, and shortage of critical resources like water and labour makes farming expensive. High costs of production coupled with low productivity makes farming commercially unattractive. For women, difficulties around agriculture impacts negatively on their already heavy workloads. An input supply system that understands the customer farmers in PNG, caters to rural populations with the right tools and inputs, can make farms more productive, farming more effective, and transportation to distant markets more likely.
Growth Potential The main driver of demand and growth in the agriculture inputs market is the growing demand for foodstuffs in the country. A rapidly growing population, shifting consumer preferences and the emergence of an more affluent middle class and expatriate community all contribute to the increase in demand for more, and a wider variety, of food items. In particular there is a demand for more vegetables and more protein. In order for farmers to respond to changes in consumption patterns and demand, more inputs (products and services) need to be made more widely available to grow the right foods at the right quantities and qualities. In addition, to make farming more commercially attractive again, farmers need to have access to tools (and information on how to use them) that makes existing practices more cost effective by using less time and saving costs and labour. Because market access is a prominent issue in PNG, expansion in the rural input supply needs to take this into account and first focus on making farming cost effective, before moving into inputs and services that focus on yield increases. Establishing distribution channels that get these inputs to the right places at the right times is also equally important. Opportunity lies in connecting existing large, and national, importers to smaller regional distributors and retailers to expand coverage of inputs, reduce cost of business through working with local partners, and reduce risk of doing business through working with regional distributors and retailers who are embedded within producer communities. Leveraging existing distribution networks used by fast moving consumer goods is also an attractive option to improve coverage of rural inputs.
Constraints to improving Rural Input Services
MDF’s strategy to unlock growth in Rural Input Services
Input supply businesses do not invest in distribution infrastructure.
Work with national input companies and regional retailers to promote and establish agricultural input distribution systems reaching all major agricultural zones.
Farmers do not have the resources to invest in their farms.
Promote usage of cost saving or cost cutting inputs and machinery that makes farming more productive through working with national and regional input importers/ retailers as well as agricultural machinery importers.
Farmers do not have access to good quality inputs for their farms.
Promote usage of high quality yield increasing inputs and machinery through working with exporters, processors, and national/regional agricultural importers.
Farmers are do not have access to information about modern inputs and cultivation practices.
Work with public sector research institutes and private sector information providers to consolidate and disseminate information on inputs usage and modern cultivation practices.
Businesses do not invest in local production of inputs which can reduce cost for end users.
Stimulate investments in local input production through working with large agribusinesses, input importers, and regional investors.
Results Chain – Rural Input Services CHANGES
BENEFITS TO PRODUCERS
Greater investment in developing and dissemina�ng informa�on on modern cul�va�on prac�ces and appropriate usage of inputs
More farmers across PNG are able to access a greater variety of inputs, machineries and informa�on to help with cul�va�on
Greater investments in establishing wider distribu�on channels for agricultural inputs
Businesses able to improve coverage of sales to reach more farmers in more loca�ons
Increased investment in introducing cost and waste reducing, and cost saving agricultural inputs
Increased investment in introduc�on of high quality yield increasing agricultural inputs
Greater investments in the local produc�on of inputs
Farmers are able to improve profitability by using inputs that help in saving cost
Farmers are able to improve profitability by using inputs that help in increasing yield Businesses are able to expand their por�olio of input products to include cost and labour saving and yield increasing inputs and machineries
Businesses are able to gather and provide informa�on to consumers on modern cul�va�on prac�ces and appropriate usage of inputs
RESULTING PRO-POOR GROWTH
Addi�onal income for women and men
Addi�onal jobs for women and men
Farmers are able to increase produc�vity by using modern cul�va�on methods
Increased commercialisa�on of small holder agriculture
Strategic Engagement Area 4:
Tourism and Hospitality
This thematic area refers to all work related to the nascent tourism and hospitality industry in PNG. MDF will seek to work across all prominent types of tourism available particularly adventure, cultural, and cruise tourism. Special attention is given to working with tourism service providers in capturing the large and dominant business traveller market in PNG. MDF will aim to work on promoting PNG as a tourism destination, focus on particular destinations within the country, and work with the public sector on improving the business enabling environment around tourism. MDF will also focus on all areas of the tourism service industry, such as beauty and spa products, online services, delivery services etc. that seeks to cater to the growing middle class in the country including expatriate residents in Port Moresby and Lae.
Relevance Tourism and Hospitality Services is a nascent sector in the PNG economy and contributes minimally to GDP. However, despite its small size, it is one of the largest employers of poor women, in particular. It currently employs up to 22,000 people across the country in various capacities. The industry in PNG is placed strategically to provide both urban and rural employment opportunities, particularly for women. The benefits are not only limited to employment. The industry also creates more demand for local products such as handicrafts and also for the service sector such as transportation, tour operators and retailers. Due to its nature, the industry also attracts people, and spending, to remote locations where opportunities to earn incomes are very limited. Lastly, tourism can become a crucial source of much needed foreign currency for the country.
Growth Potential PNG is considered one of the last frontiers for tourism in the world and is a hotspot for the rapidly growing segment of adventure tourism. The tourism and hospitality industry is growing at 5.3% per year from two major sources: tourists (including cruise ship tourists) and business travellers. The contribution of the industry to total GDP is set to go up to PGK 600 million per year by 2024. Although visitor numbers are increasing, most visitors fall in the business traveller category. A significantly smaller proportion of visitors can be considered ‘real’ tourists. A small, yet rapidly growing segment are cruise ship tourists. Overall, growth can be achieved through ensuring more business travellers visit tourism sites during their time in country, and more cruise ship tourists get off the ships and visit the sites on land. Lastly, addressing the very negative perception of PNG to the rest of the world and promoting information about the variety of places to visit and things to do will also help unlock further growth.
Constraints to further growth in Tourism And Hospitality
MDF’s strategy to unlock growth in Tourism And Hospitality
Poor perception of the country as a tourism destination compounded by a lack of information related to tourism.
Working with tour operators, hotels, business member organisations, and public sector bodies to increase awareness amongst tourists about the destinations and products available in PNG.
Lack of investment in development of destinations, products, and packages.
Work with public and private sector stakeholders to stimulate greater investments in developing new destinations, products, and packages for tourists.
Limited availability of skilled professionals in the industry.
Increase the number of skilled professionals to work in the industry by working with government agencies, training institutes and hospitality businesses.
Results Chain – Tourism and Hospitality
CHANGES
BENEFITS TO PRODUCERS
Posi�ve marke�ng of PNG as a viable tourism and investment des�na�on
More tourists are aware of places and products in PNG
Greater investments realised in development of new des�na�ons, products and packages
More businesses are established in tourism to cater to an increasing number of tourists
Greater availability of skilled individuals for work in the industry
More individuals are trained and become employable in new and exis�ng tourism enterprises
More tourists visit PNG and spend more �me and money in country
RESULTING PRO-POOR GROWTH
Addi�onal employment created, par�cularly for women
Addi�onal income for poor women and men Farmers, Producers and individuals have increased markets to sell their produce and labour
More tourist presence in remote loca�ons in PNG
Market Development Facility, Papua New Guinea
Level 6, PwC Haus, Harbour City, Port Moresby, Papua New Guinea PO Box 1939, The Waterfront, Port Moresby, Papua New Guinea info@cardnomdf.org
www.marketdevelopmentfacility.org