Human Development Institute welcomes a proposition to revive a former business initiative but appeals for involvement in government-sponsored SME development programmes to avoid mistakes of the past.
THE institute whose founder was responsible for the erstwhile Stret Pasin Stoa scheme welcomes recommendations by the National Research Institute to revive it . But it also warns that without a holistic mindset development first any public investment in the scheme orsomething similar would be fraught with problems. The scheme helped a number of Papua New Guineans to own and operate retail shops throughout the country.
A number of them have become successful but along the way, some have failed while others sold off to mostly businessmen of Asian origin. Some of these Stret Pasin Stoa millionaires have gone back to ‘walking the streets’ again. Human Development Institute (HDI) which was established by Samuel Tam who started the Stret Pasin Stoa scheme to train locals to operate retail outlets in the country under the Development Bank then, says the scheme which had operated over three decades mixed successes. Tam has pointed out occasions the reasons why the scheme failed.
The National Research Institute (NRI) in its June discussion paper on the history of the scheme made the following recommendations:
- Ban all foreigners from expanding to restricted reserve businesses and strictly regulate and legislate the reserve business space for nationals only.
- Increase national government budget allocation annually from K200 million to over K1billion for SME sector in PNG, open up credit market and relax applications process to incentivise borrowing by nationals.
- Support the Stret Pasin Stoa scheme by introducing complementary incentives such as tax credit, freight subsidies and grants.
- Develop a new model of the Stret Pasin Stoa scheme with key features of old scheme intact (include selection and training requirements and effective monitoring and audit).
- Expand the scope of Stret Pasin Stoa scheme to include other SMEs (agriculture, tourism, cottage etc.) with 100 per cent credits and no collateral and equity.
- Expand Stret Pasin Stoa scheme to small business centres in other provinces with increase credit to nationals (especially medium- to low-income groups) consistent with the SME policy; and,
- Legislate the SME policy and make Stret Pasin Stoa programme mandatory in PNG.
According to researchers Francis Odhumo and Thomson Honga, a major constraint to the growth and development of indigenous-owned small and medium enterprises (SMEs) in Papua New Guinea (PNG) is the lack of adequate credit.
The Stret Pasin Stoa programme under the retail management services (RMS) of the Development Bank offered credit, entrepreneurship training and business management skills to the SME sector to support new business start-up and growth of existing enterprises in the 1970s, 1980s, and 1990s. The study traced and interviewed eight beneficiaries of the programme to assess whether the enterprises, households, and individual recipients benefited from the scheme and to identify challenges faced by these beneficiaries. Face-to-face interviews were conducted with six participants in the National Capital District (NCD), and telephone interviews were conducted with two participants outside of the NCD.
“The primary aim of this study was to assess the impact of PNG’s Stret Pasin Stoa programme on the performance of enterprises and the wellbeing of households and individual program participants. In this paper, we have examined whether the scheme had any effect on the growth and development of SMEs in PNG and have considered the views of recipients concerning revival of the scheme in the country. “The following key findings were revealed in interviews with programme recipients. The Stret Pasin Stoa scheme:
- To a greater extent contributed to the positive performance of enterprises with growth in sales, profit and assets;
- Had strong propensity to positively impact wellbeing of individual recipients;
- Had strong propensity to positively impact wellbeing of households;
- Had strong propensity to overall positively impact all areas of enterprises, individuals, and households;
- Had strong correlation and susceptibility to positively impact enterprise’s growth, wellbeing of individual recipients and households;
- To a greater extent contributed to the growth and development of the SME sector in PNG;
- To some extent contributed to the progress and continuity of the enterprises;
- To some extent had the capacity to influence the recipients to strongly suggest the scheme should be revived in PNG.
“The findings of this study cannot be generalised to other provinces. However, our study that traced the impacts of the Stret Pasin Stoa programme on enterprises, households and individuals across PNG offers potential for future research, covering many provinces or nation-wide. “This is necessary to better inform the government to provide support to indigenous Papua New Guineans to increase participation in the local economy as envisaged in the SME Policy 2016.
Words from a business trainer
Emmanuel Rausi, a trainer/coach who had worked with Samuel Tam for 25 years on developing and delivering the Personal Viability Business Scheme (PVBS), a couple of recommendations in the NRI discussion paper are basically what they have been doing over the past 25 years.
“I commend NRI researchers on their qualitative research and discussion paper Stori bilong Stret Pasin Stoa. Their survey of beneficiaries spoke well of the Stret Pasin Stoa Scheme. “Yes, to date this business scheme that lasted three decades is the only successful scheme introduced in PNG under the PNG Development Bank now the National Development Bank. “The success of the scheme proves two points: Papua New Guineans can succeed in business given the right assistance. Any assistance to promotion of SMES must be demand-driven as in this case. “Current programmes of SMEs by the Government will not work for the simple reason that those in charge of promoting SMEs come from a working-class education and their concept of promoting SME’s are based on supply driven mode. The success of the Stret Pasin Stoa is based on demand-driven business system. “It is a pity that researches failed to interview the brain behind the success of the scheme. He is non-other than Samuel Tam, who was born in Rabaul, lived all his life in PNG and currently he is the chairman and founder of HDI based in Port Moresby. “The Stret Pasin Stoa worked well based on a demand-driven business approach from selection, to three months training in business skills and competence to operation of the stores under RMS supervision. The whole business system was designed by Samuel Tam also known by Papa Sam as he is affectionately referred to by his praxis (students) today. “According to Papa Sam, it took four years before the designed business scheme was able to operate with minimal impact from him. It proves a point that indeed Papua New Guineans can succeed in business given the right assistance. In his recognition of his work with RMS he was awarded on MBE in 1981. “From 1994 to now (24 years) Samuel Tam MBE, CSL, OL has devoted his time developing a new version of Stret Pasin Stoa. It is an inclusive approach that can be referred to a Stret Pasin Business. It is a personal viability programme and Personal Viability Business Scheme (PVBS) for the development of micro, small, medium and large enterprises. “The new model HDI/PVBS focuses on development of character and business competence. There are seven levels of business from micro to large enterprise. “MSME students (praxis) are coached to progress at different levels based on set financial targets. Coaching is an integral part of my business scheme. “Gradation of praxis on their viability scoreboard which measures viability of the project something that was not in the Stret Pasin Stoa Scheme. The new HDI/PVBS model provides the best level playground and the most democratic system where everyone starts at the same level regardless of one’s background status and education. “It took him 24 years to develop this demand driven program. According to him PVBS is now 100 times better than the Stret Pasin Stoa. Every points stated in the recommendations of this research paper is what Papa Sam has fine-tuned and is what HDI/ PVBS does. To explain everything here will be counterproductive. “I would like to appeal to the researchers to make it a point to have a positive discussion with the founder of the Stret Pasin Stoa scheme, as part of the subsequent moves to revive the Stret Pasin Stoa business concept under the new model that he has developed and tested over the last 25 years. If we are serious about take back PNG, the answer is already here.” One of the recommendations under the Government’s Take Back PNG concept is to ban foreigners from participating in businesses reserved for nationals. Under the PVBS you don’t need to bar foreigners, you only try to beat them at their own game using the knowledge and skills provided, Rausi says. “Some Stret Pasin Stoa millionaires are now on the streets again because they had not been properly groomed to run businesses successfully. The scheme was focused only on the business (projects), not on persons. PVBS was developed to avoid such mistakes. “HDI would like a conference with government representatives to discuss how PVBS could be integrated into any government plans for the development of the SME sector.
“We are here and we can help,” Rausi says. “If we don’t go the PVBS way, we will still make the same mistakes of the past and a lot of government money meant well to boost the SME sector would only go to waste not because people are lazy or intentionally misuse the money but because they are not trained well to good business managers. “We have large amounts of unused resources that can be turned into cash to improve our lives. Our problem is we don’t know how to use our abundant resources,” says Rausi. “Rather than reinventing the wheel, invite us to be part of any training for the SME sector to ensure success and avoid mistakes of the past, especially by those who participated in the Stret Pasin Stoa scheme,” he adds.