Revive, sustain Stret Pasin Stoa

BUSINESS

THE formal PNG economy is largely run by foreigners. In fact, about 95 per cent of the local economy would be in tatters if outside business interests were to shut down tomorrow.
That is how dependent we are on foreign business owners and operators.
So any government intervention especially in the small to medium enterprise sector is always seen with great hope and enthusiasm, and rightly so. For big businesses worldwide have a had small beginning somewhere.
In Papua New Guinea, government intervention by politicians and well-meaning professionals like trade and commerce officers, accountants, economists, agronomists and bankers have ended up with mixed successes.
To grow a sustainable businesses requires not just any academic education but business class education and business class thinking. That is from someone who has seen the rise and fall of one too many a business person in the country. Samuel Tam’s advice is golden because he has been businessman; he has tasted both bankruptcy and profitability. He is now a business mentor and educator who is ever willing to help anyone who would listen, even the Prime Minister himself.
How can we live the vision and dream of the forefathers enshrined in the National Goals and Directive Principles of the Constitution and Vision 2050?
Can the Government listen to the wisdom of Samuel Tam or Papa Sam and take on his idea of running a business – Personal Viability Business Scheme (BVBS)? Can the Government engage Papa Sam and hisHuman Development Institute (HDI) to take a leading role in driving the SME sector through a revived Stret Pasin Stoa scheme?

Early link to NDB
Back in the 1970s Tam was an avid squash player, a passion which was to earn him, a few years later, captaincy of the gold medal-winning PNG squash team to the 1983 South Pacific Games in Apia.
The squash courts was where he initially met Australians Graham Stapleton and later Tony Reid who both were working with the technical division of the then PNG Development Bank. Through their acquaintance Tam was engaged by the bank to devise a training programme and business plan to assist Papua New Guineans buy off foreign-owned retail outlets and manage them successfully.
Independence was approaching and naturally foreigners doing business here, apprehensive about what would happen at that time or immediately afterwards, were packing up and leaving. A lot of mostly retail business were therefore on sale and a few Papua New Guineans who were able to, bought some with the help of the National Development Bank in some cases.
Here Samuel Tam or Papa Sam speaks to The National Weekender about the start of the successful business idea which is once again in discussions, especially by the national think tank, National Research Institute.

Weekender: Let’s get back to the beginning where it all started.
Papa Sam: I was running a business here at 6-Mile which I started with U$300. There was a retail shop and a wholesale outlet operating under the company name Ocean Trading. Sometime in 1970 I met Mairi Mairi from Rigo, Central and Ethel Arek from Popondetta who were running trade stories in June Valley. They borrowed $6,000 each from the PNG Development Bank to buy their businesses. When I assisted them with running their stores, doing things like costing and shop displays, they were able to repay their loans within nine months. This feat was unusual because at that time the failure rate for national trade store operators was around 96 per cent.

Weekender: Which led to your meeting the bank staff?
Papa Sam: Yes, the bank was impressed with Mairi and Arek’s ability to repay the loan and asked them how they were able to do it. They told the bank about my assistance. Graham Stapleton, who was the bank’s technical division manager was interested and introduced me toTony Reid. They offered to buy off my business and let me run it but I refused. They met me again and offered me a job through which I could assist more local business men and women. I told them that I wasn’t a banker but a businessman.

Weekender: What happened then?
Papa Sam: They told me, “We’ll buy your business, you come to help us.” At that time the bank had invested in a lot of farm businesses – in coffee, poultry and other ventures. One such venture was the now successful Niugini Table Birds in Lae. When I joined the bank I started designing a training course and a business system for potential business owners. That was how we got the Stret Pasin Business programme started in 1974.

Weekender: How successful was Stret Pasin Stoa then?
Papa Sam: In numbers, the scheme was very successful. We started off with only four shops in Port Moresby initially and at the peak of the scheme we had 150 shops all over PNG. The shop owners were all able to repay their loans.

Weekender: How were the business owners selected?
Papa Sam: They applied and were interviewed and selected. The required level of education was Form 4 (Grade 10 these days). They had to pass an English and mathematics test that I set. I had to interview husband and wife teams to see if they would be able to sustainably run the businesses.

Weekender: Why aren’t there Stret Pasin Stoa businesses still in operation today?
Papa Sam: Many of the store owners under the scheme became millionaires and invested their money in other business interests such as real estate while others were not able to sustain their operations so they simply ran down the businesses. A lot of these businesses were sold off to foreigners again after Independence.
…
Papa Sam continues his story :
In 1974, when I designed, developed and established the Stret Pasin Stoa scheme, I was only 26 years old and did not have the experience to teach people how to become rich physically, mentally, spiritually, emotionally and financially. As far as the PNG Development Bank is concerned the Stret Pasin Stoa scheme was very successful because many Papua New Guineans became actively involved in retailing and it recovered all the money invested into the scheme.

Samuel Tam appeals for the use of his PVBS training to realise better returns on public investment in the SME sector

However, many of the store managers are walking the streets today as poor as when they first joined the scheme, if not pooper. Moreover, nearly all Stret Pasin retail shops have since been taken over by foreigners. Clearly, I failed to develop viable people who can sustain their own growth to become rich and stay wealthy, without supervision.
For example, I taught managers how to manage retail shops but I did not teach them business class knowledge, business class mindset and business class thinking, which means that they were not equipped to compete against foreigners on a level playing field. By and large, people are being educated for employment (working class) and not to become rich (business class).
People know how to earn money but have never been taught how to use and grow money. It is no wonder people find it very difficult to repay loans.
Unfortunately, most people enter the business world with working-class knowledge, mindset and thinking, which is a very big handicap. In my opinion, this is the main reason why 90 per cent of all new businesses fail within the first five years, worldwide.
Clearly, contrary to conventional wisdom, the answer is not access to credit, management, business development of possession of resources. The answer, in my opinion, is personal viability which is a special way of thinking, doing or performing. Money and resources do not sustain projects. Sustainable development is highly unlikely with unviable people because it takes a viable person to sustain business.

K100 million in bad debts
I was on the board of the PNG Development Bank from 1982 to 1988. During those six years, the bank wrote off K100 million in bad debts. It was during that time that I began to ask myself, why can’t borrowers repay loans? What is the root cause of delinquent loans?
After many years of deliberation, I came to the conclusion that most borrowers were not viable because the business plans submitted for loan applications, in my opinion, were not viable either.
However, I did not have the opportunity to pursue this concept of personal viability until 1995.
Without business class thinking there is a real danger that any well-intended funding to the SME sector through the commercial banks could be wasted just like in the past.
…
Papa Sam has commended the NRI for the recent survey and resultant discussion paper on the Stret Pasin Stoa scheme. He has planned a meeting with the researchers to further the discussions and hopefully get the Government to fund the revival of the scheme.
It would be a good start to for Papua New Guineans to participate meaningfully in the economy.

• Next week: Second Generation Stret Pasin Stoa – why and how PVBS can sustain the scheme.