Papua New Guinea: Banks eye rural areas for growth

Asia | 24 Apr 2013

The rapid evolution of mobile technology across Papua New Guinea (PNG) is proving to be a key driver for banks as they step up their efforts to seek out growth in rural areas. Banks’ moves to shift their focus from urban centres to rural areas sits well with the government’s financial inclusion policies, although lenders are likely to face a number of challenges as they look to expand in what remains a predominantly cash-based economy.
The banking sector has struggled to weather a series of crises over the past three decades. By 1996, commercial lenders found themselves compelled to reduce their combined number of branches, which dropped from 485 to 195 and, since then, the number of banks operating in the country has dwindled from seven to four.
Findings from the Asian Development Bank (ADB) suggest around 85% of PNG’s population remained unbanked in 2012, while the Bank of PNG (BPNG) estimated in the same year that just 22% of the PGK900m ($417m) thought to be in rural circulation was held by commercial banks.
The latest IMF Financial Access Survey of 2009 found there were just 1.71 branches and 0.47 ATMs per 1000 sq km in PNG, while the number of bank accounts stood at around 1.6m amongst a rapidly expanding population of 7.2m. “There are two trends in PNG’s banking system,” Ian Clyne, group CEO of Bank South Pacific (BSP), told OBG. “The first is an aggressive drive to provide financial services through electronic solutions to the majority of Papua New Guineans; the second is to grow the premium services offered to high-net individuals and corporates.”
BSP remains PNG’s market leader, holding about 1.2m bank accounts in 2013, up from 550,000 in 2011. Australia and New Zealand Banking Group (ANZ) and Westpac Banking Corporation, meanwhile, place second and third, respectively, with a combined total of 250,000 accounts, although both have traditionally targeted the high-revenue corporate and more affluent retail segments. Malaysia’s Maybank (Malayan Banking) was granted a licence in 1994 and remains the sector’s smallest player.
Since merging with PNG Banking Corporation (PNGBC) in 2002, BSP has faced little competition in the retail market, despite the central bank favouring the introduction of a new entrant. Currently, more than 80% of BSP’s accounts are retail based, and the bank is in a strong position to lead the advance into rural markets. BSP’s rural banking strategy includes plans to open 75 branches in remote areas and see a 10-20% growth in number of accounts.
The drive is being spearheaded through the bank’s subsidiary, BSP Rural, over the course of the year. The financial institution currently operates 270 ATMs and aims to open around 35 scaled-down rural branches per year. Westpac operates 16 branches and over 30 ATMs which are mostly located in urban centres, while ANZ has 66 ATMs and is adding to its 14 outlets at a rate of about one per year.
However, despite BSP’s plans to accelerate into rural areas, some experts question whether serving the mass market will prove profitable. In a survey carried out by International Finance Corporation (IFC) and UNDP’s Pacific Financial Inclusion Programme (PFIP) in 2008, almost three quarters of PNG respondents put the weekly amount they could afford to save at under PGK100 ($46).
In the 2012 budget, BPNG extended tax incentives for banks opening rural branches through to 2017. However, lenders are still seeking out low-cost channels in a bid to achieve the economies of scale they need to break even. “Rural branches will unlikely ever be profitable in PNG,” Clyne told OBG. “It is a social service BSP is providing as part of our ‘Financial Inclusion’ initiatives. A rural branch needs approximately 2000 customers to break even in terms of direct costs involved in installation and operation.”
He continued, “BSP has over 1m retail accounts in PNG, of which roughly 98% are transactional banking services only - customers are purely cash in, cash out service focused - partly because the formal economy is so small. We estimate some 40% of clients who conduct transactions through our branches would be better served through alternative channels, such as rural branches, mobile banking or by using EFTPoS (electronic funds transfer at point of sale).”
A drive to push into rural areas last year helped boost customer numbers for PNG’s banks, with ANZ and Westpac both almost doubling their accounts tally. Each of the two banks opened around 55,000 new basic accounts during 2012.
BSP launched its flat-fee basic Kundu account in 2011 on the back of PNG’s mobile revolution, following in the footsteps of mobile telecommunications provider Digicel which set up its EasiPAY (Easipawa) service in 2009 and PNG Post, which operates a Salim Moni Kwik (“Send Money Kwik”, SMK) facility. Around 275,000 Kundu accounts were opened in 2012, helping to earn BSP the Connected World Forum Award for the world’s “Best Bank-led Mobile Money Programme”. The award marked a first for both the bank and PNG.
While PNG’s formally banked economy remains small, international recognition is likely to galvanise activity within the financial services sector. Forthcoming revenues from the liquefied natural gas project, coupled with rising formal employment, which is estimated to be growing at around 7%, should boost demand and help strengthen the banking sector’s expansion efforts.

http://www.oxfordbusinessgroup.com/economic_updates/papua-new-guinea-banks-eye-rural-areas-growth

Policing in PNG is failing the interests of citizens

PNG police have been subject to recent criticism for not dealing forcefully with heinous crimes against citizens. PAUL OATES looks at relevant historical, cultural and political factors….

THE CONCEPT OF A POLICE FORCE (or ‘service’ as many are now known), is foreign to Papua New Guinea. But it’s fair to add that, until around 200 years ago, the idea was unknown in most parts of the world.

In Britain and Australia, law and order was the responsibility of local armed militia units theoretically answerable to local magistrates and government.
In practice, this allowed local militia ‘colonels’, who may well also have been the local landowner and magistrate, a good deal of leeway in how law and order was maintained.
Sir Robert Peel, a British prime minister is generally credited with the inception of the concept of a modern police force.

In 1822 Peel set up a committee to reorganise what was a group of watchmen and local constables known as the ‘Bow Street Runners’ and create a centralised organisation that became the London Metropolitan Police Force.
By 1829, the Metropolitan Police Bill saw the establishment of a force of 895 constables, 88 sergeants, 20 inspectors and eight superintendents who were responsible for six police districts in London.
The members of this force eventually became colloquially known as ‘Peelers’ or ‘Bobbies’ after Sir Robert. The name ‘Bobby’ stuck, and is still in use in Britain today.
In the USA (where the New York Police Department was founded in the 1840s), the police had shiny copper badges on their uniforms which gave rise to the slang word ‘Copper’ and derivatives such as ‘Cop’.
To understand the current Royal Papua New Guinea Constabulary one must first go back to before its origins.
Until colonial times, traditional PNG village culture did not have anything like a role for a designated official whose duty it was to physically enforce the rules of society. 
The traditional sanctions often centred on shaming and alienating those who didn’t conform. Laws and codes of conduct varied between societies and were maintained by village councils of mostly senior males.
Constant reminders about the omnipresent spiritual world and retribution for those who breached custom also helped ensure clan members conformed to social and cultural expectations.
With the arrival of the Australian administration, previous controls within each clan and village had to cope with yet another level of control and sanction that had to be learned, adjusted to and actively followed, albeit possibly only when the need arose, e.g. when the Kiap arrived in the village on patrol.
An important aspect of traditional controls in PNG was that they were essentially proactive. If you followed clan law and appeased the spirit world, you had every expectation of not falling ill or of contracting disease.
A problem only arose if you might not be aware of something or someone who might be antagonistic towards you. If however something unexpected then happened to you, then you had every right to be personally reactive and try to extract what you saw as effective and justifiable retribution.
With the gradual enforcement of Pax Australiana, the rule of so called western law was imposed over PNG through the role of the Kiap and a loyal and trained police force. PNG people then perceived they had a dual set of laws to follow.
However, unless a major crime occurred, often people in rural areas might only see the Kiap every now and again. The day to day customary laws still had to be followed. Perhaps that situation started to give rise to the notion that Kiap and police law was only reactive and punitive in nature.
Originally, the RPNGC officer corps was staffed with expatriates who could be perceived at village level as being impartial due to their non PNG origins. Additionally, these officers were constantly moved between various outstations.
As independence approached, senior officer levels were gradually localised. As localisation continued, a potentially complicating factor arose, given regional loyalties and recognised ethnicity.
Papua New Guinean police officers could be perceived as being a member of an enemy clan. There have been reported instances where local police tried to use their position and authority to intimidate those from other regions.
Post PNG Independence, the interaction with the newly emerging political elite has often led to a confused state of senior command of the RPNGC. Political leaders, long expected to be good examples to be emulated, became subject to many claims of corruption and malfeance in office.
When police investigations resulted in charges being laid, political interference often led to acquittals or a lack of will to carry through with prosecution and conviction.
Over the last few years, PNG Police Commissioners seemed to come and go, often depending on whether they supported or were acceptable to the political leadership of the time.
Recently, there occurred a political impasse in which two politicians each claiming to be prime minister appointed different police commissioners. This led to conflict between police who tried to remain loyal to one PM and those supporting the other claimant.
Tense situations occurred when Special Response Team members flew to Port Moresby to push their champion’s claims only to be outnumbered when the majority government flew in more loyal police to support their government and their appointed Commissioner.
The gradual demise of police resources, manpower and especially prestige must have played heavily upon the minds of those police who saw their own careers and public standing being drastically eroded.
In addition, some officers and members of the RPNGC who dealt with people other than from their own clans may have felt they had to maintain control by the use of reactive and punitive measures.
The PNG Defence Force was historically part of the Australian Army and, as such, received a much greater resources than the police force. This aspect clearly rankled many police and has led in the past to direct conflict between the two armed services.
Proactive versus reactive policing
Sir Robert Peel’s views on policing included that ‘the police are the people and the people are the police’. He established a number of principles just as relevant today as they were 200 years ago. His first principle was the ‘basic mission for which police exist is to prevent crime and disorder.’
Police foot patrols or ‘beats’ were considered essential to combat crime. Peel maintained that in order for police to effectively perform their duties, they must have the willing cooperation of the public. To achieve this cooperation, police must have the respect of the public.
In a telling observation, Peel claimed: ‘The degree of co-operation of the public that can be secured diminishes proportionately to the necessity of the use of physical force to the extent necessary to secure observance of the law or to restore order only when the exercise of persuasion, advice and warning is found to be insufficient’.
One of the most important and basic changes in the life of the majority (85%) of Papua New Guineans who live in rural areas is the dearth of active patrolling and physical contact by police at the village level.
In addition, due to PNG having the lowest reported ratio of police to population in the Pacific area after a long period of under-resourcing, RPNGC activities have been gradually reduced to mostly reactive policing.
The often heard claim ‘nogat petrol’ (no petrol to drive to a crime scene), seems to sum up the situation to which that even reactive policing has descended to over the last few decades.
PNG’s prime minister Peter O’Neill and the current police minister Nixon Duban have recently announced a K267 million increase in funding of the Constabulary over the next five years.
While this is good news, it will take a considerable effort at all levels of the force to improve what has been years of under-resourcing, reduced and ageing personnel and low priority for the maintenance of facilities.
In addition, the attitude of some of today’s Constabulary may well need to be readjusted from what has become almost a hand to mouth existence. Illegal road blocks and other punitive activities do not endear police to the public, in whose name they are essentially supposed  to help.
The road maps identified by Sir Robert Peel are still as relevant as they were 200 years when the foundations of today’s modern police forces were created.
Current claims that PNG is one of the most dangerous countries to visit could well be a thing of the past. It will however take a concerted effort by all levels of the Constabulary to bring the future changes everyone is now hoping for. - Source Keith Jackson.

http://asopa.typepad.com/asopa_people/2013/04/why-policing-in-png-is-betraying-the-interests-of-citizens.html

American recounts horrific gang rape at the hands ...

Malum Nalu: American recounts horrific gang rape at the hands ...: The woman, her husband and a guide were ambushed and left alone on Karkar Island, hours away from the nearest village. By Sasha Gol...

Barney's Beat : POLICE POWERLESS, MINISTER SILENT

Barney's Beat : POLICE POWERLESS, MINISTER SILENT: TIM PALMER: The powerlessness or unwillingness of police in Papua New Guinea in the face of violence against people accused of black magi...

POLICE POWERLESS, MINISTER SILENT

TIM PALMER: The powerlessness or unwillingness of police in Papua New Guinea in the face of violence against people accused of black magic has been demonstrated again in yet another brutal killing.

A women accused of sorcery has been beheaded on the island of Bougainville.

Her murderers are also detaining three other people but local police say they don't have the manpower or the firepower to do anything about it.

The human rights group Amnesty International says that's not good enough and is demanding the police do their jobs.

PNG correspondent Liam Fox reports.

LIAM FOX: It's hard to imagine that police would respond to the kidnapping of four people and the subsequent murder of one of them, by throwing their hands up in defeat. But that is exactly what's happening in the south of Bougainville.

Paul Kamuai is the acting assistant police commissioner for the region.

PAUL KAMUAI: In this situation it was a very extraordinary situation that men and women were there and it was at night and then we found out that there were arms around and we couldn't use the arms, so there would be a lot of killings from the police and then from the civilians as well.

LIAM FOX: Last Tuesday two women, Helen Rumbali and her sister Nikono and the Nikonos' two teenage daughters were kidnapped by an armed mob and taken to Lopele village in the Bana district.

The women were accused of using sorcery or black magic to kill someone and they were tortured for several days. Then on Friday the mob murdered Helen Rumbali by cutting her head off.

After negotiations with community leaders the mob allowed Nikono and her daughters to go to a local health clinic but they've set up a roadblock preventing them from leaving the area.

Nikono Rumbali is believed to be in a critical condition after the mob tried unsuccessfully to decapitate her.

Assistant commissioner Kamuai says police have no immediate plans to try and rescue the trio or arrest the murderers. He says they're outnumbered and outgunned.

PAUL KAMUAI: Police on Bougainville are not armed. Even if we are armed there is more arms still out there. I have eight regular police. They do not have a proper police station. They live in the villages so we can't very quickly get them in to act in a group.

LIAM FOX: It's a common problem. Across PNG police lack the resources and manpower to keep the peace.

But on Bougainville they face an added problem. The island is awash with guns, a hangover of the bitter civil war fought there during the 1990s.

The fighting ended with a peace agreement in 2001 but disarmament efforts have stalled and there are plenty of factory and home-made weapons in the hands of ex-combatants and others.

Despite those difficulties, Amnesty International says the police response, or lack thereof, is not good enough.

KATE SCHUETZE: If all the police can do is stand by and watch while women are executed that's a very sad situation for the country indeed.

LIAM FOX: Kate Schuetze is Amnesty International's Pacific researcher and she says the PNG government must provide police with the resources they need to do their jobs.

KATE SCHUETZE: I understand that there are limitations with resources but it's not an adequate excuse for government to say that they can't protect someone's life and meet their responsibilities that they've signed up to, just because they don't have the capacity.

LIAM FOX: Sadly, sorcery killings are not uncommon in PNG.

In February a woman who was burnt alive on a street in Mt Hagen, the biggest town in PNG's highlands, made headlines around the world.

But Bougainvilleans say the murder of Helen Rumbali is the first sorcery killing on their island.

Helen Hakena from the North Bougainville Human Rights Committee believes the murderers have used sorcery as a cover for other motives.

HELEN HAKENA: It's pure jealousy of a family who is well known, that they've got positions in government and this woman is a woman leader and they've got good homes.

LIAM FOX: Ms Hakena says Bougainvillean women are horrified at what has happened and they too want the police to take action.

HELEN HAKENA: If this one woman is not respected then all of us will face the same consequences too in the hands of our sons here.

LIAM FOX: But it's not only the police that are standing by doing nothing.

When the ABC contacted Steven Kamma, the Minister for Bougainville Affairs, he declined to comment, saying he didn't want to get involved.

This is Liam Fox in Port Moresby reporting for PM. - ABC

Barney's Beat : Magical Sunset Milne Bay

Barney's Beat : Magical Sunset Milne Bay: Sunset in Alotau 2011. By Barney Pondros Majestic sunset in Alotau, Milne Bay. Milne Bay is an exceptionally beautiful province, lo...

Magical Sunset Milne Bay

Sunset in Alotau 2011. By Barney Pondros

Majestic sunset in Alotau, Milne Bay. Milne Bay is an exceptionally beautiful province, located on the most Eastern tip of mainland Papua New Guinea. The province is rich in culture and tradition, particularly known for its exotic dances. Alotau plays host to the Kanu and Kundu Festival, among others.  

The Festival is a rare opportunity to witness the amazing diversity of cultures and canoes unique to the Milne Bay region and other parts of the country.

It is interesting to note that closely linked to the canoes are the traditional songs, rituals, customs and dancing for each region that are showcased.

The mix of canoes, ceremonies and dancing makes a spectacular visual experience, but at the end of the festival it is paramount that participants, visitors and the community leave with a commitment to preserving the unique cultures and traditions.

Vacation in Paradise

Papua New Guinea is an awesome and magnificently beautiful country. In December, my family and I spent our vacation in Vanimo, Sandaun Province. Sandaun is renowned for its sand and surf. I will post some photos and an article in due course. The photograph I attach is my last son Caleb, playing in the sand on a beautiful sunny day. This is what PNG can offer.