Can PNG become the richest black nation in the world in ten years?

PNG's new Prime Minister James Marape (Credit: PNG Prime Minister's Office)
Written by Maholopa Laveil

Papua New Guinea (PNG) recently underwent a change in leadership, which saw the incumbent Prime Minister resign prior to a prime ministerial election on the floor of parliament. James Marape was elected PNG’s eighth Prime Minister on 30 May 2019, with an overwhelming majority (101 parliamentary members voted for Mr Marape, with seven voting for the other nominee, Sir Mekere Morauta). That same evening Mr Marape addressed the country on one of its free-to-air television stations, EMTV, and later on social media. Amid thanking the former government and assuring the country it was in safe hands, Mr Marape announced that he aspired to make PNG the “richest black Christian nation on planet earth” within ten years.

To assess the realism of such an aspiration, I put together a list of the top ten richest, black, Christian nations. Christian nations are identified as those where most of the population identify as Christian (of whatever denomination). The richest were those with the highest real GDP in 2011 US dollars (‘real’ means adjusted for inflation) per person, using purchasing power parity (PPP) which adjusts for different costs of living across countries. Real GDP per capita is a good indicator of wealth, as it measures the amount of income available to each person in a country. Black countries are those from sub-Saharan Africa, the Caribbean and the Pacific.

The richest black nation is Bermuda, with a GDP per capita of US$50,669. Bermuda is also predominantly Christian. Four nations that make the top-ten list are African, the remaining six are Caribbean nations. None of the predominantly black Christian nations in the Pacific region were wealthy enough to make the list (the richest being Fiji with a real GDP per capita of US$8,703).

Table 1: Richest black, Christian countries based on real GDP per capita

Indicators available from: https://en.wikipedia.org/wiki/Christianity_by_country, https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?view=chart, https://data.worldbank.org/indicator/SP.POP.TOTL?view=chart

It is of interest that none of the countries that make the top ten are as populous as PNG. However, there are also larger black nations with a much higher GDP per capita than PNG. For example, South Africa, with a population of 57 million, has a GDP per capita of US$12,294 – more than three times PNG’s GDP per capita.

All top-ten nations have a GDP per capita of above US$13,000, making them relatively wealthy, compared to PNG’s GDP per capita of US$3,825. If a simple compound growth rate is applied, for PNG to reach Bermuda’s current GDP per capita within ten years, it would have to sustain growth at 30 per cent yearly.

PNG has never experienced 30 per cent growth in the past; nor has any other country for that matter, at least not for any sustained period of time. PNG has experienced two notable high GDP per capita growth rates in the past (according to World Bank data). In 1993, PNG enjoyed 15.3 per cent growth. However, PNG’s growth rate plummeted to negative 5.8 per cent growth in 1995 during a period of excessive government spending, increased domestic interest payments, and unbudgeted advances on government price support scheme, decreasing public confidence and leading to capital flight and depletion of the Central Bank’s foreign reserves. PNG’s second-highest real GDP per capita growth period was in 2014, when PNG experienced a 13 per cent growth rate resulting from the first shipments of the PNG LNG project. This was also followed by a sharp decrease in 2016 to negative 0.5 per cent growth. This sharp decrease was due to the fall in world oil prices in 2015, which affected government budget revenues and resulted in a reduction in real GDP growth in subsequent years.

Policy changes proposed by the new government centre on increased local content in renegotiated mining and petroleum agreements, coupled with improved mechanisms for corruption detection and prosecution, and better accountability of government ministers. Regardless of the merits of these policies, PNG’s history has shown it has not been able to sustain high growth rates. There are no quick and easy solutions to issues around lack of infrastructure, remoteness, and volatility in resource prices that make economic growth in PNG difficult.

While it is good to aspire to higher income, aiming to become a high-income country within a decade is unrealistic. It may be more realistic to settle for goals such as catching up with Fiji’s per capita GDP of US$8,703, and aiming to be the richest Pacific nation, outside Australia and New Zealand. Even this would require a growth rate of 8.6 per cent for the next ten years (assuming Fiji doesn’t grow at all). Catching up with Fiji alone will require not only very good policies, it will require longer than a decade.

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Maholopa Laveil

Maholopa Laveil is a Lecturer in economics at the School of Business and Public Policy at the University of PNG.

14 Comments

  • I think critics and comment will never eventuate maybe he has a version for this nation, let us abide by his government to see the next event. Every prime minister has their own policies for the nation. We can only spectate and see where the wind blows. Our voice will never make any impact changes unless you are politically mandated by people’s choice.

  • I do not want to appear pessimistic but PNG’s biggest issue is still endemic and systematic corruption at the political and bureaucratic level. We are one of the most corrupt countries in the world, our public service is essentially dysfunctional or dead. To me, those that coin such phrases as “PNG becoming the richest black nation in the world” have an agenda to distract the general population from rising up against corrupt politicians and public servants. James Marape is Peter O’Neill with another name and face whether we like it or not. Democracy has not really worked for us in the last 44 years. Those that frame our national policies are some of the most corrupt themselves. Communism may be an alternative to solving the corruption problem in our politics and public service. Death by firing squad or life sentence to any corrupt leader in politics or the public service will pave the way for us to become a better country. Like cancer, corruption must be surgically cut out and removed. Corruption must die for us to become what we envision. Communism may be an alternative to solving the persistent corruption problem in our politics and public service. And maybe, just maybe we can achieve this foolish pipe dream our politicians have thrown at us.

  • Well, I actually think that while setting the high political direction as espoused in James Marape’s address to the Nation about “becoming the richest Christian black nation on earth” seems feasible.

    I also think that to get there there is a range of social, economic, democratic good governance and infrastructural issues that need to be addressed or rectified. There are large gaps at every tier of PNG society and as echoed in many other comments preceding mine.

    Clearly, the Prime Minister needs to get a good team of advisers around him with a balanced mix to bring a wealth of experience, youth, qualifications, knowledge and wisdom to bear in ensuring that we strive for dynamic equilibrium in development of our country rather than static equilibrium.

  • Raising GDP alone won’t necessarily benefit most PNG citizens. Equatorial Guinea, number 5 on your list has a per capita GDP almost 6 times that of PNG but it is not much better than PNG on the UN’s Human Development Index (141 compared to PNG’s 153). Fiji, with barely a third of Equatorial Guinea’s per capita GDP, fares much better on the more broadly based HDI ranking at 91. As you rightly point out, PNG catching up to Fiji’s GDP would take more than a decade of unprecedented growth. Catching up with Fiji on the HDI would be more challenging still. Its not just about money, its about how you get it and what you do with it.

  • Can PNG become richest black nation within 10 years?

    Nation, sure.

    People, no.

    Given huge Papua “New Guinea” resources, almost as vast as “West” Papua, tax haven status will no doubt be used, misused and abused exactly the same as other tax havens – to enable massive corruption.

    https://www.theguardian.com/australia-news/2019/jun/21/manus-island-to-become-corporate-tax-free-zone-says-png-prime-minister

    Amazing how quickly a tax law came up with the new government, after years of criticising the old government for endless corruption.

    Astonishing that DevPolicy published this article, referring to top tax-havens in its list, without actually spelling that out.

    Disappointing.

  • The macro economic analysis is simple and make more sense to indicate what PM said is not achievable within a decade.

    Past governments have a problem and that is there is no diefinite economic policy to trigger change. Every important economic decisions were being politicised and in the event make them more ambigious. Since the comparison above shows that the less the population of a black nation the richer they become with respect to GDP per capita..What is required as a PNG context to trigger change for improving affluency a policy or policies need to be tailored to ensure gains from extractive industry is directed to Agriculture sector..Government’s SME policy to give more focus to small enterprise involving in Agriculture. The country needs active people to engage in formal employment activities of which Agriculture seems to be very fitting. The country will be more poor should the bulk of population is idle or rather engage in domestic activities which are not captured in macroeconomic analysis.

  • @Maholopa. Your article is spot on and well researched. I truly hope that people at the top also do their homework and research before advising our leaders what to say and what not to say.

    Also attitude from grassroots to the top level is also very important. Everytime I take a ride around the city, the amount of graffiti I see on the walls, fences and on road signs, billboards, buildings and just about anything that has a surface is simply shocking and worrying.

    Adding to that, the amount of littering that is taking place is unbelievable. Betelnut spittle is another thing. Chewing itself is fine but spitting every where and thinking that it is fine and normal simply shows that our sense of attitude has gone out the window and beyond reach.

    I hope that we can return to good old days of personal hygiene, clean towns, clean buses, buildings without graffiti and chewing bettelnut without spitting every where.

    Once we reach that state again, then perhaps we can start thinking about becoming the richest black nation in the world.

  • This is somewhat a more simplistic and realistic approach to analysing somewhat a more complex economic situation in PNG.

    What the new government needs now is a new team of economic experts to do a situational analysis of where we are now in the national, regional and international stage and chart a way forward.
    Another main area would be to strengthen the public service and the criminal justice sector to curb law and order situation and make way for criminal justice of crimes committed by public office holders at the political and executive levels.
    One more thing that needs to boost our economy is to put our people back to work in primary production and industry and develop local resources. Once we have a bulk of our population working, we can truly become truly independent by relying more on local produce.

    Increased export of agricultural produce in raw materials as well as processed items are a sustainable means for economic boost.
    PNG needs good governance and prudent management of its limited resources and one such resources is it’s human population.

    It is a sad fact that since PNG relied more on Mineral and oil and gas export revenue, the revenue generated from export of primary production dropped drastically. This tells us that PNG has gone way out of its safe zone in its economic management in terms of revenue generation.

    Unwise spending and systematic corruption are two major issues that need to be screened and checked in order to close the leaking taps in our national pool of Treasury.

  • I compare medical doctors imported from overseas to work in our medical establishments here. Our own breed of local doctors are the best in the business. They know very well the diseases that affect us and immediately know how to treat it. Same applies to our local experts in other fields. Is about time the govt engage them fully. Make use of them. They have far more to lose because this is their own turf. When given the call up, they will commit from their heart. The remuneration package will be secondary. The foreign consultants and advisers are here only for the package. They pick up the package leave when their time is up. It is time we use and empower our very own to implement govt policies and take us to the next possible level.

  • I am confused. Is PNG considered a melanesian or black nation. If black then can everyone with a little extra melanin call themselves black? We can have black India, Solomons and Indonesia…..

  • A welcome note of realism. Setting realistic targets within a 5 or 10 year time frame seems the way forward.

    Elsewhere, I have argued that Vision 2050 is possible to achieve, but this is quickly becoming ever more unlikely (https://albertschram.blogspot.com/2018/09/a-trojan-horse-as-birthday-gift-for.html#more). Regrettably, disastrous economic policies followed in the past, and persistent high levels of grand corruption make achieving this goal ever more unlikely.

    What the new PM James Marape needs more than anything else now is a strong economic team. PNG has lots of excellent economists, which have left the country or been sidelined by Peter O’Neill and his cronies. Get them back, and listen to them!

    • Dear sir,
      I totally agree with your article and let me make few comments.
      The Prime Minister has taken a bold step in making such a comment amongst many comments. This one comment: Papua New Guinea to be a “Richest Black Nation” it requires collective efforts and total transformation attitudes from all citizens of this nation.
      A lot of things must happen first to allow to create a environment conducive to say and enjoy this phrase “Richest Black Nation”. You correctly describe the nature precisely. In order for economic growth and development to take predominant cause, behavior and attitudes of the citizens must first be transformed and that requires every bonifide contribution. We have a real attitude problem in PNG and that in itself is already a hindrance to development. For example: Law and order issues must be reduced to zero levels; corruption deals must be eliminated completely, every citizens starting from the top to the bottom take responsibility and ownership of services and properties; etc etc.. The social aspect of peoples lives must transform and stronger and penalties for those who break laws. It must start at the top and come down. When we talk about corruption, it must be addressed at the top and draw down to the bottom. It’s not happening in this country. When leaders are found guilty in some of their leadership or jobs they quickly use the legal system available to protect their interests and can not humbly accept that they are guilty.
      I totally believe that those nation which you listed as rich black nations have high GDP growth, could be rated less behavior and attitudes issues from the citizens.
      We claim to be a rich nation, which I personally agree, but it’s this attitude problem that is the hindrance to prosperity.

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