Papua New Guinea will have to dramatically expand its small and medium enterprise (SME) sector if it is to achieve middle-income status by 2030, according to Steven Maken, Managing Director of the Small and Medium Enterprises Corporation (SMEC) of Papua New Guinea. That will involve dealing with some key constraints.
The SMEC’s Steven Maken
There are 49,900 formal small and medium-sized enterprises in Papua New Guinea, 90 per cent of which are male-owned.
According to Maken, SMEs contribute 6 per cent to Gross Domestic Product (GDP). They are mostly concentrated in: wholesale, retail, agriculture, tourism and fisheries.
‘The aim is to reduce unemployment to 49 per cent from 84.1 per cent.’
Only 0.7 per cent of SME output is currently exported.
The SMEC, which was established in 2014 as a Commercial Statutory Organisation under the Department of Trade and Industry, will be one of the government bodies assisting with achieving these targets, according to Maken.
Targets
Maken said the government’s target is to increase the number of SMEs to 500,000 by 2030 and to create two million new jobs.
‘The aim is to reduce unemployment to 49 per cent from 84.1 per cent,’ he said.
‘The intention is to increase the GDP contribution by SMEs to 50 per cent (from 6 per cent) and reduce poverty from 40 per cent to 30 per cent.’
‘The strategic aim is to increase income per capita from US$2000 to US$9000.’
The growth of SMEs is also related to the drive to increase financial inclusion, said Maken. Another aim is to reduce the unbanked population [those who do not have a bank account] from 85.6 per cent to 40 per cent by 2030.
Maken noted that the strategic intent is to increase income per capita from US$2000 to US$9000.
Improving loan conditions is also critical:
‘Our friends in the National Development Bank have been able to reduce the interest rate down to 6.5 per cent.’
Management
Maken said another aim is for PNG citizens to own 70 per cent of the formal economy by 2030, up from the current level of 10 per cent.
He did acknowledge that a lot of SME failures are due to management, but identified seven constraints that face PNG SMEs. These are:
- Access to credit finance
- Access to business or commercial land
- Entrepreneurship training and capacity building
- Access to markets and market information
- Access to physical and business infrastructure
- Access and application to information and communications technology (ICT) and e-commerce
- Enabling policy, legal and regulatory environment.
Priorities
He said the government was looking at trade and foreign investment legislation.
‘We need to work harder to support and bring up the growth of the SME sector.’
‘We must support those that are already there and throw more into that space.’
He said the current government focus and priority has been on health and education, but ‘those parts cannot be sustained going forward’ without developing the private sector, especially SMEs.
Maken noted that the government recognises that SMEs are ‘the engine’ of the private sector.
‘To take advantage of market opportunities we must breach the digital divide and (engage in) capacity building.’
He added that his organisation will be using the APEC forum to ‘extract the best practices for SMEs’.
Wera Mori, the Minister for Commerce and Industry, said the sector offers the best prospects for growth.
‘We need to work harder to support and bring up the growth of the SME sector.
‘With a growing population, that is where we need to seriously look at.’
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I’m Keni L Ponyalou,
I’ve been trying to kick-start this business small and up for the last couple of years. I’ve personally invested in some initial equipment already on the ground. Now there’s big demand worth over K100million annually for just one buyer overseas, and I need to meet the capacity to supply their demands each year, as well others.
I gave a proposal to National Planning Office and waiting forever. I’m hoping if the SME crefit scheme to get help kick-start my business.
Need advice.
Thank you.
Can sme assist with capital in starting up a security firm?
Iam unbelievably sorry that such information does not reach the rural business where most SME’s could arise and make this country a wealthy nation. My question is there a back up plan to reach out to the illiterate in the rural areas who are keen but do not understand the basics of starting up businesses? I only see Micro banks reaching out but what about your office SMEC going direct and giving advises through media or simple broachers written in Pidgin or Motu. If its impossible than I do not see a reason as to why Government set this SMEC up. Please do not depend on banks and other financial institutions to reach out as they are more interested in profit making than wealth creation for ordinary citizens. If your office has already reached out there or is reaching out now than advise us or simply send us a copy of a broacher of your awareness.
Otherwise I appreciate what you are doing for the office.
Exactly. Spot on. SMEC needs to go rural and set up. Places like Abau District. You talk about Agriculture and Fisheries. There is huge potential out there untapped with the abundant resources awaiting training to be organised by responsible state agencies in DAL and NFA and SMEC to contribute.
As the manager of an SME, I see too much rhetoric on policy initiatives, and not enough tangible resources available for SME’s. It’s one thing to establish an SME (or 500,000 SMEs) but to actually grow a small business in PNG’s current economic climate is truly difficult. Most service industries and market segments are fully saturated by larger dominant competitors. There should be a push for corporate entities and the like to start sourcing from local SME’s who are able to meet certain standards/requirements as necessary.
well said
My concern SME is the aim to build future for png; WERA MORI have have a stargic playing to increase 49,500 to 500,000 by 2030 SME policy. It must work out we have 10 more yrs to reach Riched Maru goal so government must fund the local struggle business and companies.
Hi there,
Have you been over to Kunai St on Hohola? I didn’t realise there are entrepreneurship hubs there.
The Business Incubation Centre is there. Here is the link:
http://www.looppng.com/business/%E2%80%8Bnew-commercial-hub-micro-small-businesses-59825
Plus, further up on Kunai St is PNG Women’s Business Resource Centre.
https://www.facebook.com/pngwbrc/
I am an aspiring small business owner and I understand your questions and concerns and I don’t have the answers…but do want to share there are people out there that want to see SME in PNG succeed and there are organisations and hubs. Go along and get connected and get your business ideas into market.
Great to see Roxanne,
Yes I have been to both places. The establishment of Kunai st was by NDB, not SME Corp. My question was directed to SME Corporation which I do not think are doing enough. This article shows that the MD basically repeated what Hon Richard Maru had said 2 years ago and is also stated in the SME Policy and Guideline Documents, I want to see SME Corp play a more active role in helping SME’s like yourself. They need to talk about the initiatives they are working on and how that will impact the ambitious plan set by the government.
The heading is true. But most of the content are mere repetitions of ‘words without action’. […] In 2016, when the SME policy was launched, Richard Maru said the government will allocate K3M for qualified SMEs to have access to either venture into business or support struggling SMEs. The 2017 budget committee had allocated zero kina for this commitment.
The picture insert for the Minister incorrect. The picture is actually Hon. Rimbink Pato, the Foreign Affairs Minister.
The SMEC MD has basically reiterated everything that was written in the SME Policy and Guideline which was launched in Feb 2016. According to the numbers outlined above, there would have to be approximately 41,000 new SME’s annually t to reach 500,000 in the next 12 years. What needs to be highlighted in my opinion is what is SMEC’s role in the process and what initiatives have they established to achieve these ambitious targets?
Agree. how would you help the 90% of our population in the rural areas?