Brenda Andrias discusses the role of the informal economy and its links to women’s economic empowerment in PNG.

Betelnut Seller in Port Moresby, Photo: Flickr

Papua New Guinea is the largest country in the Pacific region with over 800 different languages, cultures, and an ever growing population of over 7 million people. Development in PNG has always been challenging, and development partners play an important role. In 2015, UNDP produced a report outlining PNG’s progress against the Millennium Development Goals (MDGs). The report revealed some progress in eradicating extreme poverty and hunger, achieving universal primary education, improving maternal mortality, combating HIV/AIDS, Malaria and other diseases and steady reduction of carbon emissions and strengthening of global partnerships for development. However, there were barriers reported in achieving MDG goal three on promoting gender equality and the empowerment of women, showing that women were disproportionately affected by all of the development challenges that PNG faces.

In 2008, an Australian Government aid program scoping study on women in business in PNG revealed that while PNG recorded high rates of economic growth, much of this was in the resource sector and women shared in very little of the benefits. The study also showed that women were underrepresented in formal paying jobs and were often overly dependent on the informal economy. This was linked to women’s lower levels of education and the broader gender inequalities in the male dominated landscape of PNG. Where women ventured into the formal economy, they often faced additional difficulties in accessing financial support from financial institutions and were less likely to formalise their businesses. This had a direct impact on women’s productivity and ability to contribute to, and benefit from, development. Fast track to 2015 and much of these challenges remain.

Investing in the informal economy is smart development and more likely to benefit women. Women are concentrated in the informal economy because they are mostly entrepreneurs out of necessity, fulfilling a household need rather than being concerned with growing their businesses. Even women and men income wage earners rely on the informal economy to supplement their household expenditures. Women who are economically independent are more likely to improve all other aspects of their life, including pursuing education opportunities, having better health, which in turn allows them to support their families and communities better. The informal sector is especially important for women with limited formal education and accredited skills for formal paid employment.

The benefits for investing in the informal economy is obvious. In South-East Asia, the informal sector is dominated by women who own small and medium-sized enterprises (SMEs) that often show growth trajectories well above enterprises owned by men. Regardless of their motivations for going into private sector activities, SMEs give women greater access to finance and, for some women, increased authority within the household. This not only empowers women economically but also has a positive impact on their households, their children’s lives and their communities. These positive outcomes can be a reality for PNG with the adequate support and financial backing from relevant public and private stakeholders.

In recognition of the role of the informal economy in PNG’s development, the PNG Government launched the National Informal Economy Policy in 2011. The policy is aimed at the economic empowerment of women and men taking into consideration the existing social and cultural structures. It plans to enhance financial inclusion and support the transition of the rural economy from subsistence agriculture to high value market activities utilising household farming models and strategies. The policy acknowledges and intends to utilise PNG’s unique cultural context to promote development and more importantly allow women to advance within the supportive network of their families and communities. It sets the vision and the framework to achieving key objectives, it also outlines the key agencies responsible for implementation.

More work is needed to implement the policy as it requires a concerted effort by all stakeholders. Part of the challenge is in creating the environment necessary for women entrepreneurs in the informal sector to grow their business and be able to expand into the formal economy. The economic empowerment of women has multiplicative impacts on other development issues and therefore have broader implications for the country. It is positive to note that more is happening in PNG to promote women in business, yet much of these work is driven by development partners and non-government organisations. A sustainable approach requires the government to drive this work and invest in the growth of the informal economy.

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About the Author

Brenda Andrias - Monitoring and Evaluation Officer, Pacific Women - Lowy Institute

Brenda Andrias

Monitoring and Evaluation Officer, Pacific Women

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Pacific Women is an Australian government funded program that works across the 14 Pacific Island countries to advance gender equality in the region. In her role, Brenda supports the Papua New Guinea Pacific Women Support Unit to conduct high quality monitoring and evaluation and learning (MEL) of projects and provide capacity building to partners funded through Pacific Women throughout Papua New Guinea. They currently provide technical support to the Australian Department of Foreign Affairs post in PNG to manage 31 planned and ongoing projects in the country.

Prior to joining Pacific Women, Brenda undertook her Masters of Public Policy, at the RMIT University in Melbourne, where she received training in project planning and M&E as part of her coursework. Her final research project involved action research as she was asked to work with Cardno Emerging Markets to undertake research in an area that they could utilise. She conducted my research on impact investing in women owned small and medium enterprises in South East Asia. Brenda's research was provided to Cardno for their project planning and design purposes.