Battling Crime By Reducing Poverty

Daniel Mullul as posted by George Siki on the FB page

In 2000, we were introduced to a new scholarship system that threw away the higher institution scholarship Natschol. The system is called Tertiary Education Students Assistance Scheme or TESAS for short. Very little was known about the scheme, all we knew was it was adopted from developed countries. Was PNG a developed country then? No, and it is still developing. Yet parents of children in a developing country were expected to adopt into a scholarship system used in developed nations.

2003 saw our largest bank, Papua New Guinea Banking Corporation sold to the Bank of South Pacific. Apparently it was decided after advice from the Word Bank and IMF that government owned enterprises were a liability to the government and the sales of such assets would result in lowering the inflation rate. But here’s the bit no one took into consideration, would the occurrence of both events, together, create a volatile mixture that might spark an exponential rise in poverty and crime?

TESAS? Seems fair enough, students who work hard are rewarded with lower fees, students who do not work hard pay extra. But poverty is a trend that has to be broken by a generation. A father who works as a minimum wage earner needs to put his child through tertiary education in order to break the trend of poverty. And what if the child doesn't do well and falls into the second or third category? Well not a problem since we had our National Bank in place, which weren't so strict on its loan requirements to citizens.

Sale of PNGBC? Government makes a huge profit from the sales and with the competition from ANZ and Westpac, interest rates where sure to drop. Not so it seems, when the Bank is a commercial bank whose only agenda is profit loss margin. And the number one law in any financing institution is money security, only give to those you can recoup from. As soon as BSP realized that after the cooperate merger, it had taken all of PNGBC’s existing customers, which was more than any of the other banks. It shot its interest rates to the roof and tightened up on its lending requirements. And don’t forget that BSP is a business, business have a set of marketing plan which they stick by. BSP marketing strategy is simple, to retain the majority of the working population in PNG by being very friendly with the employer. An employer could simply walk into a BSP branch and open as many account as he wants without the need for any special requirements. By keeping the employer, you keep his banking business which includes salary accounts of his employees.

Now that TESAS has come into play, every January, almost every working parent in PNG run to the bank to get a school fee loan. All that is required from you is a salary account. The next 11 months of the year, you are left to repay your loan. Most people have financial burdens that arise within these 11 months, but since they already have existing school fee loans with banks, they run to smaller financing firms who are not so strict on lending requirements but charge an over the roof interest rate. Without realizing, people place themselves in a trend of debts, debt is a trend that you must break free of. Because of this it leaves very little room for savings and investments. Eventually it becomes a trend that happens every year.

Crime rate is directly proportional to a society’s debt. Placing a nation in debt, creates poverty, poverty and debt create crimes. We cannot combat crime through an increase in Police force, this solves nothing. We cannot combat crime by setting harsher laws on criminals. Our effectiveness on reducing crime rate, directly depend on the reducing its source. Fight crime from its source and not make the mistake of fighting its effect. It is a common failure of all human beings to address effects of a problem and not the problem itself.

How do we achieve this? For starters, The PNC led coalition has paved the way for us in lowering the people’s burden of school fee debts. But the first step was initiated by the Sir Michael Somare NA Coalition, the upgrade of the National Development Bank to Commercial Standards. This is essential! As mentioned, commercial banks are profit orientated and would readily prefer to provide financing to a firm that has been around for ages with proven track records rather than new businesses.

Reduction of crime means creation of jobs, creation of jobs means more employers. The current commercial banks in PNG are not so ready to support new businesses or small to medium scale enterprises (SMEs). The key to a developing nation’s growth does not lie in the mining industry or in how many overseas investors we can lure in. The key lies in SME’s. SME’s are a developing nation’s future. They bring in revenue which is kept in the country and create much needed employment opportunities for the people.

An unemployed panel beater with more than ten years’ experience and does seasonal jobs to earn a living has the potential to start his own workshop without relying on employment opportunities with larger firms such as Boroko and Ela Motors. At present, there are so many around, you don’t have to go far to find a machinist, panel beater, mechanic or carpenter. But they cannot enter into the formal professional markets because most of them will never qualify for a commercial loan with any commercial banks. Empowering this people with the means to own their own workshops will create competition for the larger workshops creating a drastic reduction in prices.

To sum everything, it is in my opinion that selling of government own enterprises to increase our kina up by a point by drawing foreign investment is a mere temporary solution that looks good only on paper but creates social decay and disorder. The real solution to combating crime rates and poverty can only come about through the development of local businesses, SMEs, the reintroduction of the trade pasin scheme, education and specialize training. But that is just my opinion and I welcome feedback and views from everyone to enhance this idea.