Extracting Industry Revenue in Papua New Guinea

The United Nations has drawn attention to a November 2014 report which states that many ordinary Papua New Guineans are not benefiting from the revenues generated by the country’s extractive industries.

UN figures indicate that since gaining independence from Australia in 1975, more than US$6 billion have been generated by extractive industries, with very little impact on a vast majority of the country’s eight million people.

For 30 years, extractive industries have become a foundation for the revenue that goes to the government. But while the figures are relatively large, the United Nations Development Program (UNDP) has raised concerns that the key indicators have not shown strong improvement.

“Since 1975, 18 billion kina have been generated by extractive industries and when we look around we don’t see that money translated into increased levels of human development….”

Quoting from 2014, Jorg Schimell, the UNDP’s representative in Port Moresby says there is a mixed bag of developments. For instance, the average income per person has risen since the 1980s by 40 per cent.

Also, since 2012, Papua New Guinea has seen dramatic changes in the amount of revenue inflows driven primarily by the extractive industries.

While that has translated into record spending in the areas of health, education and infrastructure, not many analysts are sure of the long term impacts.

“Economic growth is almost at world record levels. That wealth is not translating into wellbeing for all Papua New Guineans…”

Papua New Guinea’s challenges stem from various sources including the wastages and corruption within government departments and state agencies. Also, anecdotal evidence indicates that district government mechanisms for financial governance remain weak despite renewed efforts to contain theft and misappropriation.

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