SMEs: PNG’s sleeping giant

Australia’s Fusion’s communications Director CRAIG BROWN shares Fusion’s stories with The National about issues that SMEs and investors face in PNG.

There is no glamour in being a small-to-medium enterprise (SME) in Papua New Guinea.
Superior Enterprises is located a few kilometres out of Port Moresby’s CBD and operates in a warehouse pungent with the smell of roasting coffee beans and a tropical heat that you can almost reach out and touch.
On the floor there are a handful of workers, sorting and roasting beans, and stacking full bags to go out to restaurants in Port Moresby and elsewhere.
A large industrial fan behind the woman sorting the beans succeeds in shifting hot air from one side of the warehouse to the other.
Chief executive Romias Waki, outlines how the business began.
“I needed a job, I was just doing odd jobs,” he says, voicing the reality that many in PNG face when working in the economy’s informal sector.
“This warehouse was lying idle, and the roasting machine was in good order.”
So, he and his brother took the opportunity and leased the facility, adding a second floor for administration, a shower facility for the workers and improved plumbing.
Then the situation got complicated: “We found that we were in something more complex than we thought – we needed graphic designers for our logo, and there were no coffee packet suppliers in PNG.
“We had to import them from China.
“Then the kina plummeted and bank regulations were brought in that limited how much money we could send overseas.
“It took us three months to get the container in to port that had the coffee packets.”
When asked to reflect on what would have helped his SME when starting up, Waki says: “Facilities to help with cash flow challenges.
“Governance structures to help SMEs operate better.
“There are also many compliance requirements that SMEs are not equipped to handle.”
Waki’s story is not unique, and exemplifies the challenges facing SMEs in PNG.
The lack of training for start-up SMEs, the complexity of regulations and compliance, and the need to have investment in machinery, office space and infrastructure before the SME can “break even” – which Superior Enterprises is now doing.
Waki sees that PNG’s future is linked to SMEs.
“SMEs have a contribution to make in the economic development of this country.
“If we have sufficient support, SMEs are the sleeping giants.”
He is not alone in this view.
Akae Beach, the founder of Beach Accounting Advisory (BAA), has come a long way from the atolls east of Bougainville where she grew up.
BAA has grown in two years from a start-up company with three employees to employing 45 people, assisting SMEs across PNG with accounting and financial advice as they navigate their way through tax and business regulations.
Beach knows this is crucial to building the capacity of SMEs: “The biggest need for SMEs is basic business training.
“Not just bookkeeping, but how to start up their businesses and manage their businesses.
“A lot of SMEs have an idea, but they don’t know how to make money off that idea.”
Beach is focused on making SMEs profitable, but also on them contributing to the broader community: “I want to help as many Papua New Guineans to be successful, because they will lift other people up. It’s not just about helping a business, it’s about helping a community.”
Priscilla Kevin, co-founder of the Digital ICT Cluster, also believes that SME growth helps the broader community lift its living standards.
Her dream for PNG “is to create here the Silicon Valley of the South Pacific, building a culture of creative and innovative thinking, creating a rich environment in which we can thrive and improve ourselves”.
There are obstacles, even for successful women such as Beach and Kevin.
“One of the biggest challenges is the cost of doing business – just to rent office space is very expensive.
“The cost of the internet is also a challenge, and there is limited access to funding.”
If the ‘sleeping giant’ of SMEs is to awaken in PNG, there need to be focused strategies aimed at building capacity, accessing funds and training. This is the space that Fusion’s co-founder, Bessi Graham, wants to fill.
She says that Fusion has been set up to “support SMEs here in PNG by giving them access to capacity building and funding”.
Fusion will “build a local team with local support to walk the long journey with SMEs in PNG”.
Fusion aims to increase the capacity of SMEs, support them in their governance and compliance requirements, and help them
become more attractive to investors.
Graham’s business skills and experience internationally have taught her that SMEs are important.
Her frequent visits to PNG, and her engagement with its SME sector, means that Fusion recognises that “PNG is unique in the Pacific”.
“We have investors saying ‘Where can we invest here in PNG?’
“With a mix of capital to invest and a big enough population able to sustain SMEs, this is the perfect moment to focus on and strengthen SMEs.”
Like Kevin and Beach, Graham knows that a strong SME sector is good for PNG.
“We already know internationally the incredible role that SMEs play. In PNG, we see the desire of SMEs to contribute to their community.
“Their teachability is the critical step to unlocking the changes that need to happen in PNG.”
SMEs, such as Superior Enterprises, have incredible potential despite the challenges they face.
With Fusion willing to get alongside them and other SMEs, Graham believes that PNG is on the threshold of an exciting future.
“The dreams and hopes of SMEs are absolutely possible.
“That’s why Fusion is here – to help them get there.”