Papua New Guinea Pushes For SME Growth

Posted by David John Ellery on June 28th, 2016

Small and Medium-sized Enterprises (SMEs) already make a major contribution to Papua New Guinea’s national output, accounting for 200,000 jobs and an estimated 10% of GDP, though these figures are likely much higher if the informal sector is taken into account.

Integrating smaller businesses into the economy is the key to reducing PNG’s reliance on mining and energy, according to Richard Maru, minister of trade, commerce and industry.

The government of Papua New Guinea has rolled out a new plan to support SMEs  by improving access to finance and training. Longer term, the government aims to increase the sector’s share of GDP to 50%.

Unveiled in February 2016, the SME Policy and Master Plan 2016-30 sets out objectives to expand the economy and create employment outside of the main population and trade hubs.

The package, slated to receive PGK200m (m) worth of funding per annum, aims to create 2m jobs over the next 14 years. To achieve this, the number of SMEs is projected to increase 10-fold to 500,000, with local ownership of businesses targeted to rise from 10% to 70%.

At present, SMEs face obstacles to financing, including a lack of collateral and guarantees, and are often perceived as high-risk by commercial lenders.

The government is flagging proposals on how to open fiscal doors to SMEs by encouraging public and private financial institutions to roll out services across all provinces.

Under such a scheme, banks licensed to operate in PNG could be obligated to direct a set percentage of their loan books to key sectors in need of support, such as agriculture, fisheries and tourism, Maru added.

For its part, the government has earmarked more than PGK65m (.1m) for SME credit in 2016, in addition to funding laid out under the SME master plan.

Plans are also under way to work with educational institutions, non-state actors and the private sector to improve financial inclusion. In addition, the government hopes to amend the school curriculum to foster a more entrepreneurial culture at an early age.

However, such programmes will likely need a wide reach to achieve the desired impact. While most economic activity is concentrated in two of the country’s 22 provinces – Port Moresby and Lae – as much as 80% of PNG’s population live in rural and remote area’s.

The above post is a summary of an article titled “Papua New Guinea pushes for SME growth” that was published in www.oxfordbusinessgroup.com . The original article can be found here - http://www.oxfordbusinessgroup.com/news/papua-new-guinea-pushes-sme-growth - if you’d like to read the article in its entirety.

About the Author:

The writer is an expert in the field of Financial Controller with focus on John Ellery and David John Ellery etc..

Source: http://articles.abilogic.com/163111/papua-new-guinea-pushes-sme.html