The information and communications technology (ICT) sector in Papua New Guinea (PNG) is fast expanding, with new funding paving the way for industry players to meet rising demand from businesses while moving towards connecting rural communities.
A European Union (EU) funding initiative, which aims to support start-ups by establishing business clusters across PNG, is set to play a key part in galvanising ICT growth. However, challenges weighing on the sector, such as the price of broadband internet connections and infrastructure costs in rural areas, will need addressing.
Clustering Concept
PNG’s bid to create its own version of Silicon Valley was the focus of a conference held in Port Moresby in June, which brought together around 80 software professionals from 25 local start-up companies. The event marked the end of a 10-week project, funded by the EU, which is aimed at putting in place a framework for developing ICT businesses. Douveri Henao, executive director of the Business Council of PNG and conference participant, said the project heralded the beginning of a new era for enterprises relying on ICT for growth.
“It’s connecting the diverse, and also the exciting dots of start-up entrepreneurs, telco companies and even accounting and legal firms and financing firms that have any interest in growing the information communications technology sector. The cluster is how to actually provide a business environment for that action to occur,” Henao told Australian broadcaster ABC.
Earlier this year, the EU chose ICT from several areas of business for a one-million-euro funding package, which it awarded to the South Pacific countries of PNG, Samoa, Tonga and Vanuatu. The award came through the Pilot Cluster Project under the BizClim Private Sector funding group.
The project’s leader, Ifor Ffowcs-Williams, said that the clustering approach is an established practical route to supporting business growth and export development. “This EU support enables a welcome first testing of the clustering concept to the small economies in the South Pacific,” he said.
Quick-win projects
The EU took a number of factors into account when deciding how funds should be awarded, including the contribution that the sector could make to broad-based economic growth and the availability of business champions to lead and manage future cluster development.
Strong demand for ICT was cited as one of the reasons that PNG was chosen, alongside its rapidly growing services sector and the high number of institutions there, particularly education providers, which have shown themselves keen to use ITC in their development.
Efforts are now being made to identify a number of “quick win” projects, which will enable the project to move forward at speed.
The initiative has already caught the eye of high-profile industry players, including Raula Kula, assistant professor in software engineering at the University of Osaka in Japan, who co-created PNG’s popular Yu Tok messaging application, which uses the regional Motu language.
Market Dominance
However many, including those in the business community remain sceptical given the significant challenges the ICT sector faces. Broadband internet connections are expensive while connectivity is low. Figures for 2012 indicate that PNG had just 0.13 fixed broadband subscriptions per 100 inhabitants with an estimate 2% of the country with internet altogether.
The announcement in July of a new partnership agreement between Vodafone and Bemobile may herald some changes.
Until now, the telecommunications market has been dominated by Digicel, which has seen its market share grow to more than 50% since 2007, leaving it free to price aggressively. Its nearest rival, Bemobile, had struggled to find a partner, with consumers and business customers paying the price in the form of high communications costs.
While Digicel blames high costs on the prices set for bandwidth by government-owned PNG Telikom, its market dominance cannot be ignored. However, the recent entry into the market of a third mobile operator, Dubai-based Awal Telecommunications Corporation Ltd, could bring changes.
With 90% of PNG’s population living outside major cities, ICT represents the best hope for improving health and education service provision. Major donors, including the World Bank, are supporting a number of development projects in both the ICT and education sectors. An entrepreneurial spirit among smart, keen PNG start-ups could prove to be an additional, essential ingredient.
Follow Oxford Business Group on Facebook, Google+ and Twitter for all the latest Economic News Updates. Or register to receive updates via email.
