Australian High Commission
Papua New Guinea

Speech 070928 ECF

 

Launch of the Enterprise Challenge Fund

28 September 2007; Crowne Plaza, Port Moresby, PNG

Australian High Commissioner to PNG, HE Mr Chris Moraitis

 

Secretary Kambori, other heads of departments, members of the diplomatic community, distinguished guests, ladies and gentlemen.

I am very pleased to have the opportunity to be here today to address you on a subject which is often seen as the foundation for development and poverty reduction and that is private sector-led, broad-based economic growth.

We are here to launch an initiative which will directly tackle the challenge of broad-based economic growth, the type of growth which lifts people out of poverty.
The Australian Government’s Enterprise Challenge Fund in Papua New Guinea is part of a new approach being piloted in the Pacific and South-East Asia to increase the private sector’s contribution to poverty reduction.

The role of the private sector in poverty reduction should never be undersold. The private sector is a key driver of growth in all countries. It generates wealth through profit, creates jobs and pays taxes which pay for the provision of public services.

The private sector can also reduce the burden on governments by providing much needed investment in infrastructure. A strong and profitable private sector underpins the development of a vibrant economy and a stable society.

In PNG, the challenge is to create the kind of growth which involves and provides benefits for the majority of the population.

We all know that the mining and petroleum sectors are vital to the PNG economy but these sectors cannot provide jobs or income earning opportunities for most Papua New Guineans.

The Enterprise Challenge Fund seeks to address this challenge by providing incentives for the private sector to invest in commercially viable projects which provide opportunities for a broader cross-section of Papua New Guineans.

Internationally businesses are becoming increasingly aware of commercial opportunities in low income markets.

Yet, in PNG many potentially innovative private sector projects fail to attract financial backing - not because of low returns - but for a range of reasons including of a lack of information or the high costs of establishing new markets and market linkages.

Australia would like to see the PNG private sector taking advantage of new and emerging opportunities – which can create lasting jobs, improve incomes, increase access to vital goods and services and stimulate the local economy.

And for this reason Australia has established the Enterprise Challenge Fund.

For most people in PNG the way forward is in agriculture, forestry and fisheries or in the service sector.

In this context the challenge for PNG is to grow successful micro, small and medium scale enterprises.

To give you an example of the potential of this Fund, a grant from Britain’s Enterprise Challenge Fund allowed a fruit operation in South Africa to establish an export label for local fruit growers.

This is a great story of a group of disadvantaged people who turned the odds against them into an international business success story.

Capespan, the largest fruit exporter in South Africa, applied for a grant from Britain’s Enterprise Challenge Fund to establish a “fair-trade” export brand.

This empowered smallholders to better access the export market and negotiate rebates from suppliers and service providers along the supply chain.
The grant supported improvements in infrastructure and training and capacity building which significantly raised the productivity of over 500 farmers.

These smallholders now see their products being exported to markets in the UK, Europe, Far East, Middle East and the USA – I imagine if they were here today these people would say that only a few years previously they would have never dreamed that this sort of outcome might be possible.

This example has particular resonance in PNG – where most of the population comprises small-holder farmers.

I believe there are numerous opportunities for the private sector to work with smallholder farmers in this country to realise their potential.

Importantly the example demonstrates that Fund projects should seek to bring about systemic changes to markets and the way businesses work, thus benefiting much larger numbers of poor people than is possible through individual investments.

In the pilot phase, Australia will provide over 50 million kina over the next six years to projects in PNG, Fiji, Indonesia, the Philippines and other countries in the Asia-Pacific region.

Funds will be allocated across the region on a competitive basis, according to the merits of the specific proposals.

Through open competition, grants in the range of 245,000 Kina to over 3.6 million Kina will be awarded to business projects with pro-poor outcomes which cannot obtain financing from commercial sources.

But as with any partnership there will need to be commitment from all parties. At least 50 per cent of the project costs must be met by the partner business, and all projects must be commercially self-sustaining within three years.

I note that there are many people in the room today from the PNG private sector and others who believe strongly in the important role the private sector has to play in PNG’s development prospects.

I hope you are excited about the launch of the Enterprise Challenge Fund and the opportunities it provides.

I understand that advertisements have run today in the Post Courier and The National calling for funding submissions.

I challenge you to get your thinking caps on and your heads together to come up with innovative and progressive ways to access this Fund.

Proposals from PNG will compete with those from other Asia-Pacific developing countries so you will need to be creative and professional in your submissions.

Good luck to you and thank you for your time this morning.

End