Potential impact of the Coronavirus pandemic on Small and Medium-Sized Enterprises in Papua New Guinea

Written by Wendy Morona, Cadet Research Officer, Economic Policy Research Program, PNG NRI Wendy Morona, Cadet Research Officer, Economic Policy Research Program, PNG NRI

Published: 25 May 2020 25 May 2020

The outbreak of the Coronavirus (COVID-19) has the potential to slow down business activities of Small and Medium-Sized Enterprises (SMEs). COVID-19 was first reported on 31 December 2019 in Wuhan, the capital city of Hubei Province of China. The spread of the virus was epidemic within China and later became a global pandemic. As it spreads rapidly across the world, the World Health Organization (WHO) declared a Public Health Emergency of International concern. Upon this, governments of most countries with confirmed cases imposed strict measures such as lockdowns, stay-at home orders, quarantines and curfews. While these measures help to contain the spread of the virus, it however affected businesses including SMEs across the world.

Just like other countries, since the outbreak of COVID-19 SMEs in Papua New Guinea (PNG) have been faced with challenges. For PNG, the first case of COVID-19 was announced on the 20 March 2020. Following the first confirmed case, the Government through the National Executive Council (NEC) declared a 14-day State of Emergency (SOE) starting on 24 March 2020. The preventative measures under the SOE includes: closing of the border with Indonesia, a lockdown across the country, prohibition of domestic and international flights, restriction of movement of people from one province to another, limited public gatherings, ban on public transport (this has been lifted). The Government extended the lockdown as the number of confirmed cases increased after the first case. At the time of writing this article, there were eight confirmed cases.

Preventative measures imposed to contain the COVID-19 in PNG significantly affected the operation of SMEs and consequently their revenues. SMEs play significant roles in PNG economic development through employment creation, wealth creation, income generation and poverty alleviation.

Impacts of COVID-19 on SMEs in PNG

SMEs are the most vulnerable businesses during this global health crisis. Most SMEs were forcefully shut down as a result of the lockdown and curfew imposed by the government. Others closed down due to the high operating costs incurred during this time. The capability and capacity of SMEs to survive during this health crisis is very limited since, they are small compared to other large businesses. The impacts of COVID-19 on SMEs in PNG include:

• Disruption of supply chain
  The preventive measures severely disrupted the supply chain of SMEs. It prevented SMEs’ access to markets to purchase and sell their products. That affects production and supply of the products to customers. The SME farmers also found it difficult to transport their products to other provinces due to the restriction on domestic flights and public transport. Though the restrictions have been lifted it will take some time for SME operators to bounce back. The restriction on sea ports and airports also hindered SMEs to export and import products.

• Reduction of customers demand
  PNG SMEs faced demand plunged due to the lockdown and social distancing. For wholesalers, trade stores and other services in the SME sector, the social distancing measures had a toll on the number of customers. Most SMEs also had to close early due to curfews after hours. In addition, some customers find it difficult to travel to the markets to buy goods and access services because of the unavailability of public transport. The reduction in demand imposes critical consequences on profitability of SMEs.

• Operation cost increased
  Employees who use public transport to travel to work found it difficult to travel due to the restriction imposed on public transport by the government. Some SMEs incurred additional costs to arrange for pick-up and drop-offs for their employees. Another added expense for SMEs is the procuring of Personal Protective Equipment (PPE) – face masks and sanitizers for their employees.

• Tax compliance burden increased
  During the lockdown period, some SMEs shut down operations, with others forced to close due to the high operation costs. But their tax liabilities were due on the specified dates by Internal Revenue Commission (IRC). Their revenue or income were affected but they still carry the tax burden when their taxes are due. Therefore, most SMEs find it difficult to pay their taxes to IRC when it is due.

Potential policy recommendations

SMEs are the backbone of the PNG economy. It is very important for the Government of PNG (GoPNG) to put in place policy measures to protect SMEs during such pandemic.

• As much as possible, GoPNG should consider focusing on key logistics bottlenecks to keep the SMEs supply chain going.

• Sustainable cost reduction is essential for the SMEs during this pandemic. While focusing on the health of their employees, they should consider removing business activities that do not add much value to business growth and performance. SME managers should consider the use of telecommunication and technology for employers and employees where necessary.

• There should be measures put in place by the government to reduce tax compliance burden on SMEs. Though GoPNG, through the IRC, has provided the opportunity for SME operators to extend their tax lodgements to June 2020, the period appears to be too short. Most importantly, SMEs should be supported by GST tax refund.

Conclusion

COVID-19 pandemic is certainly affecting SMEs all around the world. The impact of COVID-19 in PNG has slowed down business activities of SMEs in several ways: disruption of supply chain, reduction of customers demand, increase in operation costs, tax compliance burden on SMEs. Since, SMEs are the backbone of PNG economy, it is of great importance to protect SMEs through proper policy measures and interventions. SMEs should also be more innovative and be vigilant during such crisis. Practising sustainable cost reduction and use of technology will help SMEs in PNG survive.

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COVID-19 pandemic: A test for PNG education security

Written by Hafford Norea, Research Cadet, Universal Basic Education Research Program, PNG National Research Institute Hafford Norea, Research Cadet, Universal Basic Education Research Program, PNG National Research Institute

Published: 18 May 2020 18 May 2020

Countries over the world including Papua New Guinea (PNG) are facing challenges associated with coronavirus (COVID-19) pandemic. The virus is a health security issue linked to economic, food, education, and political security issues. In the course of planning to tackle the pandemic, the government should consider connecting all the human security issues together.

While the Government of PNG (GoPNG) focuses on minimising the spread of the virus through restrictions on movement of people, its impact is taking a toll on different areas. Students’ education is one of these areas which this blog will focus on. Education security embraces all measures taken to combat threats to students’ learning and its continuousness in times of such crisis.

Our education security concerns

1. National Department of Education (NDoE) and schools seem not to have an effective Crisis Response Plan.
2. It would be difficult for GoPNG to prepare secondary and primary schools to move to online learning as majority of these schools are in remote areas where technology literacy is low and access to internet is limited.
3. Higher education needs an electronic Learning Management System such as moodle to ensure continual learning and to drive inclusive learning for vulnerable students such as those with disabilities.
4. Number of students per classroom (class size) in primary and secondary schools in public schools are often high. It is a challenge for the NDoE and schools’ administration to increase the number of classrooms and seats to achieve the World Health Organisation recommended social distancing of 1.5 meters.
5. Parents were skeptical on whether to allow their children to go back to school
   when the National Department of Education (NDoE) announced the re-open of schools.

NDoE and all schools need to have in place an effective and efficient Crises Response Plan to address the COVID-19 pandemic. There are several steps that schools can take to provide continual learning and a safe environment, and that is to: work collaboratively and effectively with the government, controllers, and the Department of Health to stop the spread of COVID-19.

School Crises Response Plan

Every school in PNG should have a Crisis Response Plan (CRP) to respond to outbreaks such as the COVID-19 pandemic. The CRP should outline a number of specific action plans schools can use in response to the pandemic. These include:

• Communication Action Plan
• Health Action Plan
• Continuity Action Plan
• Recovery Action Plan

Communication Action Plan

The aim of the communication action plan is to make sure that accurate information is delivered to students, parents, staff, and the general public on time.

Schools should consider drafting several communications and social media posts such as:

• When there are confirmed cases of COVID-19 in the country;
• When significant number of students are found ill; and,
• When schools need to close due to the illness.

Health Action Plan

The aim of the health action plan is to encourage daily precautionary measures for all staff, students, and families.

• Maintaining personal hygiene as reported by the Australian Government Department of Health here;
• Update information from the NDoH about the symptoms associated with COVID-19 and make it available for the students and staff;
• Conduct active surveillance to identify COVID-19 symptoms such as the review of temperature logs, find out if student or staff are absent, check out who is in the hospital, and investigate unexplained deaths;
• Make sure that school administrators control access to the campus and buildings. Close certain entrances and exits and identify a main entrance and monitor it. This is to ensure that students and staff are screened before moving to classrooms or other areas of the school;
• School administration and staff should provide parents, guardians, and students with information regarding how to address the stress and anxiety that might be generated by COVID-19.

Continuity Action Plan

The aim of a Continuity Action Plan (CAP) is to ensure:

1. Continuity of students learning during and after the occurrence of COVID-19 and other crisis that may come. CAP will enable the school administration to continue with learning activities if there are school closures or extended absences. This includes the following:

• Online learning activities;
• Web-based teacher tutorials or check-ins;
• Live classes; and,
• Guidance on providing services to students with disabilities.

2. Guidelines for staff members who need to continue working even during school closures.
3. How to maintain essential school operations like maintaining teachers' and staff's payroll during closures.

Recovery Action Plan

The reason for the Recovery action plan is to ensure the normal functioning of the school once COVID-19 is contained. This includes the following:

• Re-establish classroom learning and daily schedules;
• Maintain surveillance on COVID-19;
• Maintain communication with the health authority, parents, and guardians;
• Continuous monitoring and assessment of the students and staff health needs; and,
• Evaluate and assess infection-control measures.

Conclusion

COVID-19 has created a crisis that has put all human security elements at risk. This makes the current situation more volatile and challenging for governments and those who are at the frontline fighting against the pandemic. Department of Education and other sectors should always be prepared for a pandemic such as the COVID-19. This can be done by having in place emergency response or operation plans. This will assist in providing guidance to address the pandemic and protect learning activity and continuity of the school concurrently.

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COVID-19 and street vending in urban Papua New Guinea

Written by Robin Bopeni, Cadet Researcher, Informal Economy Research Program, PNG National Research Institute Robin Bopeni, Cadet Researcher, Informal Economy Research Program, PNG National Research Institute

Published: 11 May 2020 11 May 2020

The coronavirus (COVID-19) has caused havoc in almost all sectors in every economy of the world. This has notably put a strain on countries around the world to adjust and tighten up existing policies and strategies to help combat this pandemic in every possible way to restore normalcy. Countries around the world are struggling to mitigate the impacts of COVID-19. Papua New Guinea (PNG) is no exception and has had to take drastic actions to prevent the spread of the virus.

Given our limited access to vital information especially the vast majority of our rural population, inadequate medical facilities and health care professionals and not to mention our struggling economy, if hits hard we are doomed for disaster. We applaud the government’s effort in doing its best in this time of crisis in containing the pandemic at the national level. We should remember the extent of social and economic burden placed upon the vast majority of vulnerable population relying heavily on the informal sector for a living in PNG. Unlike in rural areas where people have access to land for growing their own food, low income and unemployed households in urban areas depend entirely on informal jobs and street vending for their livelihoods.

Impact of COVID-19 on street vendors

It is important to note that street vending forms an integral part of the workforce in PNG and employs majority of our urban population in the country. Though it is not often acknowledged and accepted, street vending is virtually here to stay and will continue to be the source of income for most of our urban population over time. Merely, due to incursion of urban migration, lack of formal education and low level of employment opportunities available in the country.

As noticed after the first case of COVID-19 was confirmed in PNG, the national government took a decisive step to declare a 14-day national State of Emergency (SoE) to lock down the country; the first of its kind in the country’s history. This resulted in limiting the movement of people, public transport and operations of various small to medium businesses.

The SoE allows for essential services like shops, healthcare, fuel stations and banking services to operate with strict observation of social distancing and other COVID-19 preventive measures. However, it is really a difficult time for those who rely on the informal sector to sustain their living. The further extension of the State of Emergency for another two months to detect and prevent the spread of COVID-19 in the country has left a hollow and bitter feeling for most urban dwellers that rely heavily on street vending and other informal economic activities for survival in the towns and cities of PNG.

We have now seen closure of roadside markets, sale of cooked food near office buildings and common spontaneous market sites in the suburbs that provide fresh produce to the working class in the urban areas. This has now placed an economic burden on many of the street vendors’ household income and their livelihood. If this is not adequately addressed with appropriate policies and mechanisms in place, it is more likely to lead to undesirable social unrest, vandalism and increase in criminal conducts.

For instance, as reported in The National newspaper by Clifford Faiparik indicated that a street vendor who normally makes around K700 daily by selling cooked food around Gordons industrial area in Port Moresby is now making K100 a day since the lock down was imposed. Another case was also reported in The National newspaper of a resident in Port Moresby who has been selling firewood for living since 2007 also expressed disappointment as the lock down has dramatically affected his daily earnings from K150 to K70 and he is unable to adequately cater for his family’s needs. More so, another case also reported in the National in Lae was of a dinghy carrying 70 bags of betelnuts worth K17, 000 was seized by the Police and the contents disposed into the sea. Social media reports also affirm police brutality and displacement of many unfortunate street vendors who are trying to make their living during this time of crisis.

The mounting pressure has now left a huge financially burden for many vendors to meet the needs of their family and it is also affecting their psychological wellbeing in this time of crisis. As highlighted by Aaron Hayes reported in the National newspaper that mental health of low-income families is at risk. If the SoE continues to prolong with limited foresight and appropriate mechanisms in place to mitigate the impact on the welfare and wellbeing of the vast majority of our people surviving in the informal economy can result in an unprecedented social and public upheaval in the country.

The way forward

In adhering to the recent announcement of the National Government’s call to relax the SoE measures, it is important that the following measures are taken to ease the burden placed on the urban population relying on street vending for their livelihoods:

• Provide designated locations for street vendors to sell their products or services.

• Install portable water basin or supply appropriate kits to maintain hygiene in designated street markets.

• Impose strong measures on maintaining social distancing at popular street vending locations.

• Impose strong penalties for breaching of any COVID-19 preventive measures established in urban areas.

• The above interventions will allow everyone to work together in this time of crisis so that no one is left behind in this fight against the pandemic.

Conclusion

The actions taken to prevent the spread of COVID-19 has already affected the vast majority of people who depend on street vending for their livelihoods. Appropriate and realistic measures are needed to ensure that the welfare and wellbeing of these people is protected.

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