Micro, Small and Medium-Sized Enterprises for Inclusive Growth in PNG
Long promoted as a vehicle for inclusive growth in other developing economies, micro, small and medium enterprises (MSMEs) have been placed at the centre of Papua New Guinea’s (PNG) medium-term development strategy. SMEs face a broad and diverse range of challenges when starting or growing a business in PNG, resulting in widespread informality and a lack of upwards mobility, or the “missing middle”.
In 2016, through the draft Small and Medium Enterprise Policy, the Government of Papua New Guinea positioned SMEs as a vehicle for inclusive growth, job creation and poverty reduction. Like other countries that have introduced policy instruments to promote SMEs, PNG’s SME Policy is seeking to redress market asymmetries in the way in which SMEs, compared to larger businesses, are impacted by PNG’s challenging business environment. The PNG SME Policy also positions itself as a social policy tool to promote inclusive economic growth and greater ownership of the formal economy and job creation for PNG citizens.
This report draws together regional and global experiences of SME sector development to identify lessons learned that may be applicable to the PNG context. By situating key aspects of PNG’s SME Policy and Master Plan in global and regional settings—including the SME definition, growth targets, policy objectives and key development strategies—the report highlights practical insights and directions for consideration by PNG Government and business community stakeholders.
The SME policy and master plan has the potential to significantly impact the business and investment climate for enterprises operating in PNG–small and large, local and foreign.
If an SME growth story is to fuel the human development programme in PNG, a careful balance must be struck between macro policies that improve the enabling environment for all enterprises and micro policies that support indigenous SMEs.
There is significant room for growth in the contribution that SMEs make to the PNG economy. However, the time horizon by which SME objectives are to be achieved is, by global standards, extremely challenging.
The establishment of an incubator service through SME Corporation could connect high-potential PNG entrepreneurs such as the ‘KumulGame-Changers’ to angel investors and venture capital, mentoring services, and local and global markets.