Thinking

PNG & the Resource Curse; is it already here? (written in September 2010)

I finally got a full copy of the Vision 2050 document. While I understand it’s a vision statement, it does not bring me any hope because it seems to based on wild estimation on the revenue figures projected for the PNG LNG project.

It also argues that land reform is one of the key bases from which economic development will take place. While land development is indeed important, I think more importantly is stopping corruption and inefficient government politicizing of service delivery mechanisms.

I think land reform is another way of sayings…lets use the law to take their land.

We all agree that the youth issue is a massive problem and both vision 2050 and DSP 10 – 50 both mention this, It is in my personal opinion that answering great question of what to do with our youths must be answered today. Unfortunately it hasn’t been answered at all. What we are now seeing with the riots all over PNG, the youth problem is already manifesting itself. By 2050, we will have a massive problem. Will LNG solve it? Here lies a real paradox and yiu can get the latest figures of the central bank to verify.

Papua New Guinea is experiencing strong economic performance driven by extractive industries etc, but at the same time employment growth nationally is stagnant. While growth is concentrated in the urban areas, locked up in real estate with the political- bureaucratic – business – landowner elite, as Paul Barker puts it in last weeks letter to the editor, in the rural areas and the towns and districts there is hardly any growth at all. There is no employment out there, nothing to absorb the mass of unemployed youths in these areas. What do you think happens? We have ant- asian riots, politicians getting stoned, increasing crime and lawlessness, more and more and more. Anjo isn’t the real villain here, as portrayed by the media and the police, he is not the one stirring up the masses all over PNG…its the lack of economic opportunity.

If you understand what the resource curse is and what the enclave effect is or will have on an economy, i believe we are in the middle of the experience and we cant see it. Business, economic growth, employment, its all locked up with the elite class and the big projects.

At the same time, the industries that could counter the resource curse are being hurt by the ineffective delivery of services by a culture of political deal making and political enriching.

Recently, a goroko businessman coffee buyer Leslie Hoffman said the governments unwillingness to open up roads in the rural areas is hurting the small people who must walk for days to bring their coffee to the markets to sell. This is just an example of what we mean by the enclave effect. Roads will be built for the LNG project, predominantly in Port Moresby, but not for the rural PNG, not for many years.

After a while, we will have a serious problem. What we are seeing right now is the ulcer that comes before the cancer.