Friday, June 03, 2005

Background of the Project

(1) Socioeconomy of Papua New Guinea

The economy of Papua New Guinea (PNG) is characterized by its dual structure. The modern or market economy sector is supported by mineral products and other export goods such as coffee, cocoa and copra. Reliance on these primary products makes the PNG economy vulnerable to changes in their international prices. The traditional or subsistence economy sector has supported the accelerating population growth since the independence in 1975 but not generated any major product. In order for Papua New Guinea to realize self-reliant economic development under the globalization, such industries or products that have comparative advantage need to be brought up. To realize this, the functions of major urban centers as points of contact between the global and the regional economies need to be strengthened along with improved infrastructure and administrative services.
The society of Papua New Guinea is still largely rural with some 85% of the people relying on agriculture for their employment and livelihood. While the urbanization has started to proceed rapidly in recent years, the urbanization ratio increased from 16.2% in 1995 to 17.9% in 2002. The National Capital District (NCD) of Port Moresby is the largest urban center with slightly over 300,000 people. The primary products that support the PNG economy are derived from agriculture and rural areas.

(2) Development policy and urbanization

The present administration, started in August 2002, has established the medium term development strategy (2003-07) to reconstruct the socioeconomy of Papua New Guinea suffering from the decline since the mid-1990s. The three components of the strategy are (1) good governance, (2) export-oriented economic growth, and (3) rural development with poverty alleviation and human resources development. The first component aims at strengthening political stability through the public sector reform and the enforcement of official discipline in government agencies. The second and the third components aim at the development of export industries and products through rural development focusing on agriculture and fishery with their linkages to mining and services as well as improved social services.
In addition to the rural and agricultural development policy, the importance of the urbanization policy has been recognized, and the policy paper on the urbanization is in preparation. The Government of Papua New Guinea considers the urbanization inevitable and desirable for the development of the Country and intends to realize sound urban growth in relation to rural hinterlands, controlling the rapid urbanization as observed in the NCD.

(3) Development administration and the NCD Council

Papua New Guinea has been pursuing the localization of development administration since 1977 when the Organic Law on Provincial Governments was enacted. The Central Government has devolved to the provincial governments seven functions related to planning and management of public works and related provincial affairs, health, primary industry, education, commerce, information, and budgetary management. The new Organic Law on Provincial Governments and Local-Level Governments was enacted in 1995 as part of the administrative reform under the initiative of IMF/World Bank structural adjustment program. This has dissolved the dual structure of the provincial government and the provincial administration of the Central Government to effect further local autonomy. Still the financial base of the provincial governments is very weak, heavily relying on the transfer in various forms from the Central Government.
In addition to 19 provinces, the National Capital District Commission (NCDC) was established in 1990 with the equivalent administrative functions to the provincial government. NCDC is managed by a committee consisting of members of the national assembly elected in the Port Moresby constituency and other local representatives.
Naturally, the leadership of the assemblymen/women as well as the mayor affects the activities of NCDC.

(4) Project justification

The development of the NCD of Port Moresby is critically important for Papua New Guinea to pursue the export-oriented economic development as mentioned above. The population of the NCD has increased rapidly since the independence, when its administrative center was transferred to the Waigani Valley. The average annual population growth was 6.4% during 1975-90. After 1990, the population increase in the NCD has occurred mainly in “settlements” on the outskirts of the urbanized area.
The settlements in the NCD have developed both by voluntary settlements of aborigines from rural areas and by resettlement projects planned by the Government. Voluntary settlements have developed along the kinships of various tribes sharing the same languages, social customs and culture and constituting so-called “wantok.” Consequently, the settlements serve as buffer areas for immigrants to the NCD, providing a sort of social safety net. Also settlers maintain strong ties with their original villages, and the “circular migration” between the urban and the rural areas is a dominant phenomenon among the settlement residents.
A settlement in the NCD represents a base of the wantok network and has important political roles as well. Politicians play the roles of traditional leaders just as village leaders and tribal chiefs. Elections are based on the wantok network. Therefore, the development of settlements also has important political implications.
The settlements hold a key position for the development of the NCD as indicated above. A major challenge for the NCD urban development is how to enhance the overall quality of urban environment while utilizing the functions of the settlements providing the social safety net. A technical cooperation project is proposed to enhance the capacity of the local residents and administration for the community development in the settlements to contribute to improved urban environment in the NCD of Port Moresby.

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