Human cost of the Pacific’s COVID-19 recession

by PNG Business News - October 18, 2021

Women selling coconut and bottle gourd in Intoap, PNG (P. Mathur/Bioversity International/Flickr)

by Dane Moores, Jonathon Gurry

The socio-economic impacts of COVID-19 are devastating communities in the Pacific and Timor-Leste as much as the virus itself, and sometimes to an even greater extent.

World Vision surveyed 752 households (with an average of six people per household) in Papua New Guinea, Solomon Islands, Timor-Leste and Vanuatu in late 2020 to better understand the secondary impacts of the pandemic at the community level. The sample size was relatively small (because the survey was done in an emergency context under government restrictions), but still the results provide a valuable insight into the deep and sometimes unexpected knock-on effects of COVID-19 in the region.

Unsurprisingly, loss of livelihoods was the number one concern for the households surveyed. Almost 60% of respondents had either lost their job, lost income, or resorted to alternative sources of income due to the economic impacts of the pandemic. The top five reasons cited by households for this loss of income were reduced demand for goods/services (29%), closed markets (20%), lack of access to livelihood inputs such as seeds and materials (18%), movement restrictions (15%), and transport limitations (10%).

These disruptions are crippling the same industries that are the traditional drivers of Pacific economies – tourism, agriculture, small- and medium-sized business and money sent home by seasonal workers. Street vendors and farmers have been the hardest hit, with 56% of vendors and 55% of agriculture and livestock workers saying their work was fully or severely affected by the pandemic in the two weeks before the survey.

Extent of COVID-19 impacts on livelihoods in the past fortnight (2020)

Source: World Vision Report Pacific Aftershocks

This data is consistent with concerns raised by the Lowy Institute that the Pacific has been particularly battered by the economic fallout of COVID-19 and that it could face a potential ‘lost decade’ of economic progress as a result. On current projections, average income per person in the Pacific will not recover to 2019 levels until 2028 unless a multi-year recovery package is urgently adopted.

Loss of livelihoods isn’t just affecting consumer activity; it is having significant ripple effects across Pacific societies. The ‘Pacific Aftershocks’ survey revealed the cruel choices families are forced to make as their incomes collapse, with households resorting to selling assets and even skipping meals to cope:

  • Only half of households surveyed were able to fully meet their food expenses, with one in four (24%) skipping meals or eating cheaper meals since COVID-19
  • More than half (51.7%) of households have drawn down on savings to cope with loss of income
  • 5% of households had sold productive assets such as livestock or equipment
  • 14% of households have sent their children to work to help make up for lost income
  • 14% have engaged family members in begging or high-risk jobs

With tourism expected to be one of the last sectors to recover from the pandemic, there is a real risk that the Pacific could face its own version of ‘long COVID’ – a protracted, slow climb back to economic normality over the next decade, during which the socio-economic impacts above could become a type of ‘new normal.’ But this doesn’t have to be the case.

In the short-term (during the next six months), work is needed to urgently scale up social protection measures (such as cash and voucher assistance and, where this is not possible, food assistance) to help poor families with disrupted incomes meet their immediate needs. In many contexts across the Pacific region, assistance in the form of cash and vouchers minimises the distortion to markets while ensuring families do not resort to negative coping mechanisms such as eating less or forcing their children to work.

To build back better in the medium and longer-term (the next one to five years), a suite of initiatives should be deployed to stimulate the Pacific economy and rebuild livelihoods. This could include improving access to finance for small businesses, strengthening market systems so they work better for the poor, investing in women’s economic empowerment, and restoring environments through low-cost regenerative agriculture. As a mechanism to coordinate and drive this work, it is recommended all national and donor governments in the Pacific region, including Australia, work together to develop an Economic Recovery Compact – a roadmap to rebuild the regional economy in a way that leaves no one behind. By rebuilding livelihoods, starting at the bottom of the economic pyramid, donor and national governments can increase productive capacity, broaden the consumer base, and build resilience across the market system, all while supporting those who need it most.

Just as regional governments worked together to establish the Pacific Humanitarian Pathway on COVID-19, the region should again coalesce around the longer-term recovery effort – because a regional crisis like this requires a regional response.

For more information, see World Vision’s report Pacific Aftershocks: Unmasking the impact of COVID-19 on lives and livelihoods in the Pacific and Timor-Leste.

 

This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University. Jonathon Gurry is World Vision Australia’s senior policy advisor, leading policy development on livelihoods, food security and climate change. He is a former lawyer with many years of international experience in the aid and development sector. Dane Moores is the Policy Manager at World Vision Australia where he oversees policy analysis and influencing on child rights, livelihoods and food security, conflict and fragility, and First Nations policy.



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PNG Business News - October 18, 2021

Transformation of a Port Moresby settlement

Photo: Joyce Bay settlement (Desmond Narongou) by Desmond Narongou Joyce Bay settlement, formerly known as Horse Camp, is a notorious settlement in Port Moresby, Papua New Guinea (PNG). It has been known for criminal activity, and as a place where many criminals live. The settlement is located in the Port Moresby South Electorate of the National Capital District, and is one of the oldest settlements in the city. The community includes people from Gulf Province and at least 11 other ethnic groups from throughout PNG. The population was estimated at more than 10,000 in 2013, and is believed to be around 13,000 now. The rapid increase in the population (from about 7,000 in the year 2000) reflects an influx of migrants from rural to urban areas, seeking employment opportunities and access to improved health and education services. Over the last few years, some major changes have taken place within the community, which have brought radical shifts to people’s mindset and behaviour. New infrastructure development, and projects providing opportunities for youths and business development, have contributed to a transformation for the Joyce Bay settlement. According to a report by the Asian Development Bank, the Joyce Bay community had limited livelihood options in 2013. The most common jobs were security guard for males and shop assistant for females. Some women worked as market vendors, selling fresh food brought in by producers from the outskirts of Port Moresby. There were a handful of skilled people such as carpenters, plumbers and painters, who were engaged in ad hoc contracts. Wages were low, with no system to enforce minimum wages for casual or part-time workers. These workers also had limited access to credit. Starting in 2013, the Ginigoada Foundation, with City Pharmacy Ltd and the National Capital District Commission (NCDC), has opened up opportunities for youths, and others, to attend financial literacy training and small business training. This has empowered them to venture into new business activities to improve their lifestyle and sustain themselves. In that same year, Joyce Bay underwent major road works, providing much needed access to transport within the settlement after decades without. This was funded by Moresby South District Development Authority and the NCDC. This has paved the way for other infrastructural developments to take place, including a sewerage system and water supply. In 2016, a local community hall was constructed. The community hall has a conference room, store room, kitchen and toilet. It also has a multipurpose sports court that can be used for community events. In 2019, water company Eda Ranu (now merged with Water PNG) and Kumul Consolidated Holdings commissioned a multimillion kina Joyce Bay Sewage Treatment Facility, which was funded by the PNG government and the Japanese aid agency JICA. A number of local churches were also established, during the early 2000s, including my church. Taken together, this is a big impact project situated in the heart of the community. It has been championed by the local MP, Justin Tkatchenko, who is keen on rapidly transforming his electorate. Alongside these positive developments, I’ve observed changes in people’s behaviour and attitudes. Youths have been kept busy with sports, which reduces thoughts of engaging in illegal activities. The church has also attracted a lot of youths to its programs and activities, which has contributed to the big improvement in the community. When I came to Port Moresby in 2018, I met up with some of the boys from my church. Joe Alfred, Paul Kore and Sasae Ray are some of my best friends, and have been living in the area since the 1980s when their families migrated from Gulf Province. I asked them about the stories I heard about the community, and they said it was far worse before than it was now. Joyce Bay was a no-go zone, and I was so afraid to go there myself for our church fellowship. After my first visit, I was more nervous and afraid and had to ask my friends to escort me to and from the bus stop and the church. Fast forward to today, and I’ve spent three years moving around the Joyce Bay community every weekend. I’ve witnessed the improvements as well as heard about them. In Joyce Bay, there are a lot of challenges which are yet to be overcome, for example, in terms of good water supply and other sanitary solutions to improve the health and hygiene of the community, and improved drainage as the Joyce Bay area is subjected to flooding during the rainy season. Unemployment remains a challenge in the community. But the future looks much brighter for Joyce Bay inhabitants. by Desmond Narongou Joyce Bay settlement, formerly known as Horse Camp, is a notorious settlement in Port Moresby, Papua New Guinea (PNG). It has been known for criminal activity, and as a place where many criminals live. The settlement is located in the Port Moresby South Electorate of the National Capital District, and is one of the oldest settlements in the city. The community includes people from Gulf Province and at least 11 other ethnic groups from throughout PNG. The population was estimated at more than 10,000 in 2013, and is believed to be around 13,000 now. The rapid increase in the population (from about 7,000 in the year 2000) reflects an influx of migrants from rural to urban areas, seeking employment opportunities and access to improved health and education services. Over the last few years, some major changes have taken place within the community, which have brought radical shifts to people’s mindset and behaviour. New infrastructure development, and projects providing opportunities for youths and business development, have contributed to a transformation for the Joyce Bay settlement. According to a report by the Asian Development Bank, the Joyce Bay community had limited livelihood options in 2013. The most common jobs were security guard for males and shop assistant for females. Some women worked as market vendors, selling fresh food brought in by producers from the outskirts of Port Moresby. There were a handful of skilled people such as carpenters, plumbers and painters, who were engaged in ad hoc contracts. Wages were low, with no system to enforce minimum wages for casual or part-time workers. These workers also had limited access to credit. Starting in 2013, the Ginigoada Foundation, with City Pharmacy Ltd and the National Capital District Commission (NCDC), has opened up opportunities for youths, and others, to attend financial literacy training and small business training. This has empowered them to venture into new business activities to improve their lifestyle and sustain themselves. In that same year, Joyce Bay underwent major road works, providing much needed access to transport within the settlement after decades without. This was funded by Moresby South District Development Authority and the NCDC. This has paved the way for other infrastructural developments to take place, including a sewerage system and water supply. In 2016, a local community hall was constructed. The community hall has a conference room, store room, kitchen and toilet. It also has a multipurpose sports court that can be used for community events. In 2019, water company Eda Ranu (now merged with Water PNG) and Kumul Consolidated Holdings commissioned a multimillion kina Joyce Bay Sewage Treatment Facility, which was funded by the PNG government and the Japanese aid agency JICA. A number of local churches were also established, during the early 2000s, including my church. Taken together, this is a big impact project situated in the heart of the community. It has been championed by the local MP, Justin Tkatchenko, who is keen on rapidly transforming his electorate. Alongside these positive developments, I’ve observed changes in people’s behaviour and attitudes. Youths have been kept busy with sports, which reduces thoughts of engaging in illegal activities. The church has also attracted a lot of youths to its programs and activities, which has contributed to the big improvement in the community. When I came to Port Moresby in 2018, I met up with some of the boys from my church. Joe Alfred, Paul Kore and Sasae Ray are some of my best friends, and have been living in the area since the 1980s when their families migrated from Gulf Province. I asked them about the stories I heard about the community, and they said it was far worse before than it was now. Joyce Bay was a no-go zone, and I was so afraid to go there myself for our church fellowship. After my first visit, I was more nervous and afraid and had to ask my friends to escort me to and from the bus stop and the church. Fast forward to today, and I’ve spent three years moving around the Joyce Bay community every weekend. I’ve witnessed the improvements as well as heard about them. In Joyce Bay, there are a lot of challenges which are yet to be overcome, for example, in terms of good water supply and other sanitary solutions to improve the health and hygiene of the community, and improved drainage as the Joyce Bay area is subjected to flooding during the rainy season. Unemployment remains a challenge in the community. But the future looks much brighter for Joyce Bay inhabitants.   This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University. Desmond Narongou is a freelance researcher and writer. He graduated with a Bachelors Degree of Commerce in Information Technology from PNG University of Technology in 2017.

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PNG Business News - October 26, 2021

Australia buys Digicel, PNG’s mobile monopoly

Photo credit: Devpolicy by Stephen Howes Yesterday, Telstra announced that it was buying Digicel Pacific. Telstra itself is only paying $270 million, and the Australian government $1.33 billion. Yet, Telstra is obtaining 100% ownership. The deal is certainly an attractive one for Telstra. But does it make sense for Australia, and for the Pacific? Digicel has had a transformational impact in the Pacific, but now has too much market power. As the Telstra release explains, it holds the dominant position in all the Pacific countries in which it operates, except for Fiji, where it is in second place. In Papua New Guinea, which I know best, and which is by far Digicel's biggest market, the company  has a 92% share of the mobile phone market. That makes Digicel effectively a monopoly in PNG. And that is why it is so profitable: like any monopolist, it exploits its market power. Australian and PNG researchers have been tracking mobile internet prices in PNG since Australia gifted it a new underwater cable . Their conclusion is that since the completion of that cable in December 2019 to today there has been no decrease in mobile internet prices. The reason is simple: the lack of retail competition. Michelle Nayahamui Rooney, Martin Davies and I last year exposed Digicel PNG’s predatory loan scheme. Digicel lends phone credit to its customers. They pay it back when they next top up. Our estimate is that Digicel made a 17% return from such loans every week, which is equivalent to an unbelievable 351200% a year. Is this really the way in which Australia want to engages in the Pacific – owning an enterprise that keeps prices high for consumers, and rips them off when they are desperate to make a call? Any monopolist is necessarily engaged in a battle between the consumer and their profits. At some point, Telstra will end up going toe-to-toe with the PNG telecom regulator, NICTA, as Digicel has done several times. It’s going to be awkward for both Telstra and the Australian government. Many will welcome the investment as a sign of Australian commitment to the Pacific. However, if we want to invest in the telecom sector in the Pacific, we should be backing alternatives to Digicel, to push prices down and improve services, not buying out the dominant player. Amalgamated Telecom Holdings based in Fiji is the Pacific’s second biggest telecom provider. It is currently planning to enter the PNG mobile market with support from the Asian Development Bank. This is the sort of investment we should be financing. That Australia has bought Digicel shows the extent to which the Pacific is now viewed through a China lens. That’s unfortunate. China is a massive economic power. Its companies will have increasing stakes in economies around the world. That is a fact we have to accept. The Australian government also needs to decide if its only goal is to counter China or if it is still seeks to promote Pacific development. When I was AusAID's Chief Economist, Digicel was the new kid on the block in the Pacific, and it was successfully challenging state-owned telcos that until then had been dominant. In 2006, in Foreign Minister Alexander Downer's flagship Pacific 2020 report, we wrote glowingly about the competition that various Pacific countries had recently started allowing in the mobile phone sector. Our analysis was right then, and remains relevant today. Yet here we are, in 2021, doing the opposite: rather than supporting greater competition in the telecom sector, subsidising the purchase of the incumbent monopolist. The decision to buy Digicel Pacific should be reversed. If it is too late for that, the Australian government should at least – in return for all its cheap and risk-reducing finance – oblige Telstra to operate Digicel for the benefit of the people of the Pacific rather than solely for its shareholders through an agreement that makes it clear that the Australian company is not only expected to return the cheap loan it has been given, but also reduce prices, and end rip-offs.   This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University. Stephen Howes is the Director of the Development Policy Centre and a Professor of Economics at the Crawford School.


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PNG Business News - November 28, 2022

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PNG Business News - November 27, 2022

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PNG Business News - November 27, 2022

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