Tiri Kuimbakul

Servant Leadership: The Greatest Need Of The Hour!

2011-12-04T07:00:00.000+10:00

Students from the University of Technology will be travelling to different parts of the country to educate the people to make good choices during the 2012 General Elections. What follows is an abbreviated version of a speech I gave at a corporate dinner they organized at the Holiday Inn hotel recently.

Millions of people in this country have been crying out in pain, hopelessness and despair. They have heard a lot about all the natural resources which the Government has been bringing overseas investors to develop. They have heard a lot about the economic growth the country has been experiencing. They have heard that there is a lot of money in the country. They have heard of the many supplementary budgets the Government has had to bring down because of excess revenue. They have also heard that the banks are flush with cash.

But hearing is all they have done. They have not seen any difference in their lives. So they have been praying and crying out to God in heaven, since their cries to fellow human beings in responsible positions have fallen on deaf ears.

If we look at Biblical history, one lesson we learn is that God always responded to His people every time they cried out to Him when they were oppressed by their enemies. And God’s answer was a simple one: He just gave the people a leader and worked through that person. When the people of Israel cried to God under slavery in Egypt, God gave them Moses. When they cried out to Him during the period of the judges, He gave them leaders like Othniel, Ehud, Deborah, Gideon, Jephtah and Samson. Later He gave the people the prophet Samuel, and Saul, David, Solomon and other kings.

The Bible says that God is the same yesterday, today and forever. What does that mean in the context of the prayers and cries that have been sent heavenward over the years by the common people of PNG? The answer is this: He will do what He did for the people of Israel. He will give the people leaders who will bring them out of slavery and poverty, and into prosperity and abundance.

But there is a major difference between the time of the Israelites and our time. Back then, God simply chose, anointed and presented leaders to the people. He didn’t ask anybody’s permission, not even the people He had chosen! (Remember Moses, and the excuses he gave to God, as to how unprepared and unqualified he was!). God didn’t call for a meeting with the elders or even conduct an election. He just chose one person.

In those days the nation of Israel operated under a theocratic system of government, which means that God was their ruler and He chose the human leaders.

The system we operate under is different and opposite. It is a democratic system, which means that men choose leaders among themselves through the voting process. God has therefore got to work within that system through the people to bring out the men and women He has appointed to lead at such a time as this. This means that the people play a big part in realising the answers to their prayers for leadership.

Our people need to be educated as to what constitutes good leadership, because today the majority of them equate good leadership to people who hand out the most cash and goodies such as rice and tinned fish, beer, lamb flaps, etc. Others define good leaders as people who shout the loudest (people who are very vocal but don’t necessarily talk sense) or those who help them make false claims against the Government, or even people who lead them in fighting with their enemies.

But these are not proper definitions of what constitutes good leadership. I would like to use this column to share with you my thoughts on what our people should be advised to look for in people aspiring to lead them.

The first thing they need to do is to pray and wait for God to show them the men and women He has appointed. I say pray and wait, because I have observed that many church leaders and their people do pray, but then they go around with lists of their members to various candidates seeking support for all kinds of needs and projects. In the process they end up voting the wrong people into power, and they suffer the consequences.

Apart from praying, here are three things to look for in candidates:

1. Character
Character refers to the kind of person a candidate is. Some relevant questions to ask are:
• Is the person someone that is honest?
• Is he or she someone people can trust?
• Does he or she fear God?
• What is their marriage life like? Broken marriages, polygamous relationships or promiscuous lifestyles are a warning signs. (If people are unfaithful to their spouses, how can they be faithful to other people?)
• How are the lives of the candidate’s children? (Leadership starts at home. If candidates’ homes are in shambles, how can they lead other people?)
• Is the person generous and compassionate during normal times?
• Does the person get drunk or gamble? (People who engage in such activities will do so on a magnified level when they get into power).
• Is the candidate humble and teachable, or is he or she proud, arrogant and a know-it-all?

These are just some of the character indicators voters need to look for in people aspiring to be their leaders.

2. Qualification and experience
This refers to what the candidate knows. This is an important quality because we live in a knowledge-based and knowledge-driven world. It is especially important that leaders are highly educated and are conversant with issues affecting the world and the country. We need leaders who can think critically and independently; leaders who can think for themselves and not rely on so-called consultants and mainly foreign advisors to do the thinking for them. We need people who can analyse information and debate issues intelligently before making decisions.

Importantly, our people need educated people who have a heart for them. I am making this point because many times educated people live in the towns and cities and go home only during the elections. They don’t really feel the pulse of the people because they don’t live among them. When they win, they forget the people.

Another important point I must point out is that educated people who aspire to lead the people must have proven track records of using their knowledge and contacts to bring services to the people. Many such people may be high-flyers at the national level, but they may not have the ability to bring services to the small people. They may point people to their knowledge and contacts and make promises, but if they haven’t done anything for the people using their knowledge and contacts as ordinary citizens, what guarantee is there that they will do so when they become Members of Parliament?

3. Vision
Election time is a time when all kinds of promises are usually made to voters. Vision is what the candidate says he will do if voted into office.

If you care to listen to what candidates say, the first thing they will tell people is what others have done or not done. Candidates usually criticize their opponents more than focusing on what they intend to do. This is one sign that those people do not know what they want to do. They take their cue from the failures of their fellow candidates. They don’t have their own dreams and plans.

Our people need to be told to look for candidates who have a vision and a comprehensive plan as to how they will make the dream become a reality. And the people must see themselves in the visions and plans as well. The voters must see where they fit in.

Finally, when judging candidates, visions and plans must be related to educational qualification and experience. And the visions and plans and qualifications must be undergirded or supported by the character of the person.

PNG’s greatest need of the hour is leadership. Money is not a problem; leadership is the problem. Let me make it clear that I am not saying we need politicians. I am saying we need leaders, because not all politicians are leaders. We have many politicians, but not many leaders who are willing to become servants of the people. That is the problem. And that is why the 2012 National Elections are vital. The Election provides a once-in-five-years opportunity to have a say in who leads us. It is really a choice between progress and prosperity versus poverty and suffering.

The people of PNG are at a cross road. The country may have progressed, but the people have been stagnant as far as their quality of life is concerned. All in all, we can say that the country and the people have been going around in circles, in a similar manner to the wandering of the children of Israel in the wilderness. We have been wandering in the wilderness for 36 years now.

Our prayer and expectation is that the 2012 Elections will give us the Joshuas that will lead us into our Promised Land come 2016 and beyond, after the country reaches its 40th birthday on 16 September 2015. The fact that the export of LNG will start at the end of 2014 is no coincidence! The timetable is divinely set. God has a plan for this nation. He has a plan for each one of us, particularly the young people of this generation.

His plan is for prosperity and not disaster. His plan is for PNG to rise up and be counted among the great nations of the world, as we have been proclaiming every time we have sung our National Anthem in the last 36 years. That is the reason He has blessed the country with so many resources.

The prayers offered to God during the 1997 ‘Operation Brukim Skru’ prayer movement and others since then will be answered in 2012. God hears all prayers but answers in His own timing. I believe 2012 is when He will unleash the answers that have been piling up over the years.

But we the voters must be ready to become answers to our own prayers. We must pray and wait on God to reveal to us the men and women He has appointed as the Joshuas for PNG who will lead us to ‘the land flowing with milk and honey’.

If you are looking for someone who is part of a crowd, you cannot locate him or her easily by walking among the crowd. But you can easily spot him or her by isolating yourself from the crowd. In the same way, we will not spot God’s men and women by joining in the singing, the dancing, the long convoys, the giving of handouts and the euphoria that has come to be part of the election tradition in PNG. Our people need to stand apart and prayerfully judge aspiring leaders on the basis of their character, qualifications and visions before casting their votes.

Only then can we get God’s appointed people into Parliament in 2012. Only then will they make good decisions. And only then will our peoples’ years of wandering come to an end, and they will enter into their rightful inheritance.

Send your comments to secos@global.net.pg or text me on 7688 0033 or 7280 4588.

2011-11-19T20:25:00.002+10:00

Empowering Ordinary Papua New Guineans To Create Wealth Through Business And Financial Management Training
I was privileged to be invited to participate in the joint Certified Practising Accountants PNG and Australia Conference this week. The theme of the conference was “Wealth Creation, Management and Sustainability – The Accountant’s Role." What follows is an abbreviated version of my speech.

The topic I have chosen to speak on – Empowering Ordinary Papua New Guineans To Create Wealth Through Business And Financial Management Training - is very important because I am convinced that Papua New Guinea is at the social cross-road! The development journey we took as an independent country 36 years ago has not led anywhere for the majority of our people. Most of the ideals our founding fathers aspired to and wrote into the preamble of our Constitution have yet to become a reality. We basically started off well but lost track along the way.

Our development experience thus far can be summarized as follows: The country has been advancing economically, but the lives of the majority of the people have not improved. By majority, I am referring to 85% of the 7 million people that are not educated like all of us in this room are. We are indeed a privileged lot, and I have come here to remind us to spare a thought for our fellow Papua New Guineans who are struggling to make a living on a daily basis.

I will be making reference to various social indicators to lend support to my assertion that the lives of the majority of our people have stagnated in the face of economic growth. Let me refer you firstly to the United Nation’s Human Development Index (HDI), which is usually used to determine the level of progress made by the people in different countries of the world.

The UN uses four indicators to determine the level of human development in its HDI. They are:

1) Life expectancy at birth;
2) Mean years of schooling;
3) Expected years of schooling; and
4) Gross national income per capita.

These indicators are further divided into three dimensions of human development:

1. Health;
2. Education; and
3. Living standards.

This year PNG has been ranked as a country where human development is low on the UN HDI. The UN gives scores between 0 to 1 to determine where countries rank on its HDI. For 2011, this is what the UN has stated about PNG: “Papua New Guinea's HDI is 0.466, which gives the country a rank of 153 out of 187 countries with comparable data. The HDI of East Asia and the Pacific as a region increased from 0.428 in 1980 to 0.671 today, placing Papua New Guinea below the regional average.”

If we consider this ranking from the least developed to the most developed country, Papua New Guinea comes out number 35, which is near the bottom of the pile.

The Vision 2050 document states that Papua New Guinea aspires to be among the top 50 countries on the UN HDI in 2050. If we are currently ranked as 35th least developed after 36 years of nationhood, can we be counted among first 50 countries in 2050? We shall know in 40 years’ time.

In comparison, Samoa and Fiji, which are much smaller and less endowed countries, are categorized as medium development countries on the HDI. These countries are ranked 99 and 100 respectively.

Referring to Fiji, the UN report states as follows: “Fiji's HDI is 0.688, which gives the country a rank of 100 out of 187 countries with comparable data. The HDI of East Asia and the Pacific as a region increased from 0.428 in 1980 to 0.671 today, placing Fiji above the regional average.”

The Fijian people have done better than Papua New Guineans over the past 21 years, despite the political problems they have been through, and despite not being endowed like we are.

Let me present to you some more social indicators. All of us are no doubt familiar with them, but I would like to remind us in order to build up my case for the topic I have chosen to speak on at this conference.

• The proportion of people living under the international poverty line of US$1/day (US$365 = K870/year) has increased from 25% in 1996 to 40% today. This means that around 2.8 million people in PNG don’t see K900 in a year. PNG is a resource-rich country filled with cash-poor people.

• The number of school drop-outs is very high – over 80%.

• 90% of school-leavers cannot find jobs upon graduation.

• The army of educated but unemployed young people is filling the streets at a rate of approximately 40,000 per year.

• Only 500,000 people out of a workforce of 4.8 million in the country hold paid jobs. The unemployment / under-employment rate is 87%.

• Frustration and disillusionment among the youth is mounting…the “time-bomb” is ticking!

• While the elites find security behind barbed-wire fences (prisons), the under-privileged are taking control of the streets and the highways.

• After 36 years of independence, only 10% of businesses are nationally-owned while 90% is foreign-owned. The wealth of the nation is in the hands of foreign entities! The majority of Papua New Guineans are passive spectators on the “economic playing field”.

• Prostitution is on the rise. An increasing number of women are selling their bodies for a living.

• Prostitution and promiscuity stand as major impediments to the fight against the spread of HIV/AIDS.

• The rise in the number of so-called “single mothers” indicates that the family – the basic unit of society – is falling apart.

• The rise in the number of “street kids” shows that many parents are not able to look after their children. They are either poor or negligent.

• The increasing rate of drunkenness and drug addiction indicates peoples’ desire to escape the realities of life in 21st century Papua New Guinea.

I am involved with a growing number of former marijuana smokers in the Western Highlands Province. When I ask them why they decided to take the drug, the common reply I get is, “Laif em hard.” In other words, taking drugs helps them to forget their hardships. They find comfort in living in an imaginary world because the real world has nothing good to offer them. I guess the same goes for young people (both males and females) who are drinking ‘steam’ and other alcoholic beverages on a habitual basis.

Ladies and gentlemen, the acid test of development is peoples’ living standards. Development is not about constructing nice buildings like hotels, office complexes, cities, roads, etc. These are only means to an end. Development is really about raising peoples’ living standards. That is the bottom line. Sadly, the majority of Papua New Guineans are getting left behind.

Economic growth hasn’t trickled down to the micro or people level. The past 9 years of consistent growth have not been translated to raising the peoples’ quality of life. Growth has actually improved the lot of a very small minority while the vast majority has heard about it but not seen it impact their lives.

The picture on the human front is depressing.

Is all hope lost? Can something be done? Whose responsibility is it? Can I do something?

These are probably the kinds of questions going through your minds right now as concerned Papua New Guineans or friends of the people of Papua New Guinea as the case may be.

Let me suggest to you what you as an accountant can do to address some of the social problems the Papua New Guinean people are facing right now. This, I guess, is the gist of my message at this conference.

Let me start by making this statement: Financial problems lie at the root of social problems and law & order problems in PNG. I have been either directly involved in or interacted with several NGOs, churches and charity organizations who work with disadvantaged and under-privileged people in different parts of the country. What they have told me invariably is that most of the social problems they have encountered in their work are related to people’s need for money. People steal, kill, rape, hold up others, get involved in prostitution, etc because of lack of economic opportunities.

But I have established that what our people really need is not money (handouts), but empowerment through information and ideas with which they can sustain their lives. Yesterday somebody raised the issue of information-sharing in the workplace. I am saying that we also need to share our knowledge and ideas with the common people as well.

We all know the Chinese saying which goes: “Give a man fish and you feed him for a day; teach him how to catch fish and you feed him for life.”

My version of that philosophy for the purpose of this conference is this: If we the educated elites give ordinary people money, we feed them for a while; but if we give them information and ideas, we will empower them to feed themselves for life.

This includes both other people and our ‘wantoks’ – yes especially our ‘wantoks’! A lot of our people have land, their physical strength, skills, time etc with which they can make money. When we give money to them, we help them become lazy and dependent. They go away for a while but return again when they have financial problems. So we don’t really help them; we actually destroy them.

Coming back to the topic of empowering ordinary Papua New Guineans to create wealth, my proposal to all of us that are gathered here is this: The accounting fraternity needs to design and deliver simple training programs aimed at enabling ordinary people to make money as well as to manage and multiply it.

School drop-outs and other under-privileged people (youths) need training to start their own small businesses. And they need training to manage as well as grow their businesses.

As some of you may know, I have been publishing articles in the news papers. In the Sunday Chronicle I encourage readers to start their own businesses, while in the Post-Courier I discuss financial management and investing. I also go around conducting motivational seminars with students, unemployed youth, working class people etc. A lot of the work I have been doing has been free of charge too. Why have I been doing this when I could be busy minding my own family’s interests as most of you in this room have been doing?

Here is what I believe: As long as people don’t have enough money to look after themselves, they will cause problems for everyone else. They will stop scratching for a living, and start scratching and pinching us! I trust you know what I mean.

I would actually go as far as making this statement, which I hope you take home with you for this conference: As long as there is a wide gap between the “haves” and the “have-nots” in PNG, the “have-nots” will ensure that the “haves” do not enjoy what they have.

We may have our businesses, money, nice houses and cars, jobs etc, but we will not enjoy what we possess as long as the majority of the people are mere spectators. We will always live under a sense of fear and insecurity.

You only have to look at what has been happening in Lae recently to appreciate what I am saying. The situation there started with Morobeans aiming at driving off unemployed youth from the Highlands who were harassing other people on the bus stops and streets of Lae City, but ended up with business people from that region becoming the target of peoples’ anger and frustration.

My prediction is that it is not going to be long before riots and civil disturbances go from ethnic clashes to clashes based on social status, basically the “have-nots” fighting the “haves”. In other words, it is going to be the “have-nots” fighting the “haves” to have what the “haves” have.

The greater the gap between elites and ordinary people, life will become risky for the elites, such that many will migrate out in search of peace and prosperity.

It is in therefore in the personal interest of educated elites to empower the ordinary people to live sustainable lives. Empowering people is not just a role for the Government, NGOs, donor agencies etc. We the educated people need to do our part. In fact we are better-placed to teach, train and motivate our people to improve their own lives.

Ordinary Papua New Guineans must be transformed from being passive spectators and beneficiaries of handouts to becoming active players on the economic playing field. The people in this room have a very important role in this regard.

The Prime Minister stated in his address that accountants used to be number crunchers but are more becoming strategic business advisors. I am saying that accountants need to take their skills and knowledge to the ordinary people of this country, not just limit their activities to the walls of their corporate organizations.

Papua New Guineans need to shift from a poverty-alleviation (scarcity) mindset to a wealth-creation (abundance) mindset. Once again, the accounting fraternity can facilitate this transition.

Ladies and gentlemen! When I was asked by the organizers to participate in this conference as one of the speakers, I knew exactly what I wanted to accomplish. Instead of just providing some information to add to what you already know, I wanted action from members of CPA to rise up and contribute to addressing the social problems we face in our country.

I came to an assignment to this conference. My assignment was this: To motivate elites to leave your high offices and go down to the level of ordinary people and empower them to rise up from poverty, create wealth, and live sustainable lives.

I hope I have succeeded in getting some of you to think about and see things that are happening in the lives of our ordinary people a little differently. Instead of just blaming them or the Government for the problems, I have brought part of the responsibility for solving those problems straight to your door step. I hope that you will rise to the challenge.

I trust that some of you will start talking to your relatives and sharing ideas with them this coming holiday period instead of just handing them money.

I hope some of you will gather a group of unemployed people and talk to them about starting their own businesses.

I hope that some of you will use your holidays and free time to offer free financial advice to struggling local business people.

Thank you ladies and gentlemen for your attention!

I really hope that the accountants took something back from my presentation. I also hope that elites in other professions take this message to heart. Send your comments to secos@global.net.pg or text me on 7688 0033 or 7280 4588.

“How Do Sell My Shares?”

2011-11-03T12:18:00.000+10:00

Last week’s article was on to buying shares on the Port Moresby Stock Exchange (PomSox). This article sets out the basic steps people who hold shares and want to offload or sell their shares have to go through. The steps are basically the opposite to those of buying shares.

Here the basic steps to selling shares:

Step # 1: Contact your broker by phone or email and advise them that you want to sell shares. Confirm with them the number of shares you currently hold in the particular company whose shares you want to sell.

Step # 2: Place a “sell” order with stock broker. The order is either “at market” or “at limit”. Once again, a “at market” order tells the broker that the transaction is to be completed at or near the prevailing market price. For example, if the closing price on the last trading day was K1.20, that is the price the broker will attempt to sell at. Failing that, a “at market” sell order gives him the freedom to sell at K1.15 toea if he cannot attract any buyers at K1.20/share. If you say that your sell order is “at limit”, you will also need to state the exact price or price the range within which the broker will sell your shares.

Once again, your instructions to the broker must be very clear, and verbal orders must also be confirmed in writing (fax or email). Good brokers should repeat the order back to you to verify what you have asked them to do.

Step # 4: The sell order is then placed on the market through the electronic trading system. The matches your “sell” order with “buy” orders. A trade occurs when “sell” and “buy” orders are matched by the electronic system. Please note that the matching process takes place immediately as information is entered into the system, but that does not necessarily mean that a transaction takes place. Sometimes (and this is especially so in an illiquid market such as PomSox) orders will takes days, weeks and months to be completed, simply because there aren’t any “buy” orders in the system that match your “sell” order.

Step # 5: Once a transaction is successfully executed, the broker should send you a note specifying relevant particulars of the transaction, especially the number of shares he has sold on your behalf. The note should also show the broker’s charges associated with the transaction.

Payment of the shares sold and the brokerage charges are required to be settled within 3 days of transaction being completed. The broker should credit your account with the proceeds of the sale, minus his charges. He will then send you a cheque or deposit the money into your bank account and advise you accordingly.

Step # 6: Once settlement is made, the broker arranges with the company’s share registry for the shares to be registered in the buyer’s name and your name to be struck off the list of shareholders.

The steps to buying and selling shares are straight forward, but the secret to making money on the share market is timing. In other words, when to buy or sell is very important. Your reason or motive for wanting to buy or sell shares is also important. If you just want to feel the pride of owing shares, I guess timing isn’t important. You can buy shares in any company at any time and at any price. But if your objective is to make money, your entry and exit times are vital.

I have referred to the PomSox as being an illiquid share market. This means that the number or participants is very small, such that you cannot buy or sell shares as easily as when there are many buyers and sellers. If you look at the list of shareholders of the companies that are listed on PomSox (you can obtain the information from individual companies’ annual reports which are published on the PomSox website), you will realize that the bulk of shares are owned by corporate entities such as the super funds rather than individuals.

There may be many reasons for this, but I suspect that one reason is lack of information and understanding on the part of Papua New Guineans of how the share market works. Because people don’t understand, they don’t participate. I hope that this column will shed some light.

Send your comments to secos@global.net.pg or text me on 7688 0033 or 7280 4588.

Should I Invest In The Share Market?

2011-11-03T12:17:00.001+10:00

Many readers have been asking the question, “Should I invest in shares as a way of making money work for me?” My answer has been both “Yes” and “No”. Yes, it is a way of making money work for you; no, because most readers are probably not ready yet.

Before I explain why I think most readers of this column may not be ready to invest in shares, let me briefly explain what the share or stock market is. Shares are basically parts of a company which the owners of the company make available to members of the public as a way of raising funds to either start or expand the operations of the company. When you buy shares, you become a shareholder, or part-owner of the company. A stock market is where such shares are bought and sold.

You can buy shares when a company first sells them. This is called an Initial Public Offer (IPO). can also buy shares when those who bought during the IPO decide to sell their shares for whatever reason.

Another point that needs to be made is that you can buy and sell only through stock brokers. There are two such companies in PNG. They are BSP Capital Ltd and Kina Securities Ltd.

You can make money in two ways. Firstly, by buying and holding shares. When the company makes money (a profit) and the directors decide to pay the shareholders, you get your portion depending on the declared dividend rate and number of shares you hold in the company. Dividends are paid periodically (quarterly, half-yearly or yearly). When you buy and hold for dividends, you are an investor.

The second way is by buying and selling. You buy shares when prices are low, and sell when they are high. For instance, you may decide to buy a certain number of shares of a particular company when the price is K1.00 per share, and sell when the price rises to K2.00 per share. Your profit (also called a capital gain) is K1.00 per share minus transaction costs. When you buy and sell, you are a share trader. You may also be regarded as a speculator if you buy shares with the expectation and intention of selling them when prices will rise.

So, yes, you can make money by buying and holding shares or by buying and selling.

Now, why do I think most readers of this column are not ready? Two reasons are as follows:

1. The share market is risky. You can make money, but you can also lose money if the company does not make money or the share price falls. You don’t have any control over what happens to your shares, because share prices are driven by the market forces of supply and demand. A large portion of the risk is also associated with ignorance of the market and how it works. My assessment is that most people in PNG have little if any knowledge of the stock market.

2. To really make money, you must hold a significant number of shares. You can make small amounts by investing small amounts, but we are talking about making money work. The majority of readers of this column would not have the kind of money that is required to make real money.

My advice to readers is usually that they need to learn about the share market first. In other words, people need to invest in themselves first before they consider investing their money in the share market. They can get educated by reading books, attending seminars, and even asking people who know about the subject.

Secondly, I advice is to start a business first. A business presents you the opportunity to make the most money. A business is essentially a money printing system. The business may fail, but it can also succeed. When it fails, you lose their investment. This is always possible. But it is also possible that the business really takes off and makes a lot of money for you.

When the business makes money, my advice is for you to invest in rental properties. When you have a firm asset base of several properties which are generating income, you can start investing in the share market. Hopefully by now you would have educated yourself as well, so you can make real money investing or trading shares.

Send your comments to secos@global.net.pg or text me on 7688 0033 or 7280 4588.

“How Do Buy Shares?”

2011-11-03T12:14:00.000+10:00

In last week’s article I discussed whether you can invest in the share market now. My advice was basically that in order to really make money in the share market, you need to educate yourself first; and secondly, that you should start a business and invest in real estate as necessary steps towards investing in shares.

However, from the feedback I have received from readers, it seems like share market investing holds a lot of fascination for Papua New Guineans. As this column is about empowering readers with information to help them become financially literate and thereby make wise financial decisions, I have decided to provide the basic steps people go through in buying shares. This is for those who really want to buy shares. My advice on starting a business and buying rental property still stands.

Here they are the basic steps you will have to go through to buy shares in the Port Moresby Stock Exchange (PomSox):

Step # 1: Make contact with one of the stock brokers. Establish what type of services they provide, and the fees they charge per transaction.

Step # 2: Sign a client agreement and establish an account with the broker. The agreement states basically that you have authorized the broker to act on your behalf. The account opens the way for you to deposit funds which the broker will hold in trust for you and pay for the shares.

Step # 3: You place a “buy” order with stock broker. The order is either “at market” or “at limit”. A “at market” order tells the broker that the transaction is to be completed at or near the prevailing price of the particular share you are interested. A “at limit” order tells the broker that the transaction is to be completed at or within a specific price limit. Brokers usually charge different commissions for “at market” and “at limit” orders. Usually “market” orders are easier and cheaper to execute than “limit” orders.

There are also other (more exotic) types of orders. Examples include “stop orders” (which remain dormant until a certain price level is reached, when it becomes a market order.); “all or none” (the broker has to buy/sell the entire quantity of stock, or none at all; and “good till cancelled” (the order remains active until you decide to cancel it).

It is usually a requirement that the order is repeated so that there is no ambiguity as to what the broker is expected to do. Verbal orders must also be confirmed in writing (fax or email).

Step # 4: The order is placed on the market through a computerized (electronic) trading system. All participants in the market are connected to the exchange, so every time an order is placed; it appears on their computer screens. This makes the market transparent, and enables all the participants to see what is happening in the market. The system operates to match “buy” orders with “sell” orders. A trade occurs when “buy” and “sell” orders are matched by the electronic system.

Step # 5: Once a transaction is successfully executed, the broker sends the buyer a contract note specifying relevant particulars of the transaction, especially the number of shares bought and the price. The note also shows the broker’s charges.

Payment of the shares purchased and the brokerage charges are required to be settled within 3 days of transaction being completed. The broker draws on the buyer’s account to pay for the shares as well as receive his charges.

Step # 6: Once settlement is made, the broker arranges with the company’s share registry for the shares to be registered in buyer’s name. The registry is usually an independent organization which maintains the details of all the shareholders of companies whose shares are traded on the stock exchange. Previously share certificates were posted to owners. Today shares are usually kept on the registry.

The buyer is now a proud shareholder!

There may be some additional processes you are required to go through to buy shares, but the above 6 are the basic steps. You need to ask your chosen broker if there is anything else you need to do to buy shares.

The following are some of the privileges of being a shareholder:

1. You receive company updates including annual reports.
2. You attend annual general meetings and participate in decision-making.
3. You receive dividends if declared by directors.
4. You participate in dividend-reinvestment plans.
5. You receive other benefits such as discounts on company products or preference on new share issues.

Next week’s article will be on how to sell shares.

Send your comments to secos@global.net.pg or text me on 7688 0033 or 7280 4588.

Is A CPI Adjustment What It Looks Like?

2011-10-16T22:10:00.000+10:00

Last week’s article (Savers Are Losers) generated the most number of queries and comments from readers so far on this column. For the sake of people who may not have read the article, the four main reasons people who save money end up losing instead of making money are:

1. Banks charge account keeping fees;
2. Interest rates on deposits are very low;
3. The government charges interest withholding tax at 15%; and
4. Inflation wipes out most if not all of what savers may earn from interest after taking account of the above three reasons.

One thing about the effect of inflation is that it cannot be seen. Savers can see from their monthly statements the fees that are charges by banks; they can easily see the interest rates that are offered by banks for various types of saving accounts; and they can easily see the amounts the government collects in taxes on interest earned. But they cannot see how inflation works to wipe out the ‘purchasing power’ of both their savings and the interest they earn on deposits.

Savers with the super funds, for instance, may get excited that their so-called retirement savings been growing in recent times. They may have received double-digit returns, but what they may not realize is that high inflation means reduced real returns.

Let me now look at upwards adjustments in salaries working people see in their salaries on account of increases in the Consumer Price Index or CPI.

I have met many people in my personal financial management and investing seminars who have admitted that they have raised expenses or borrowed money when they have received CPI adjustments in their salaries. They have been misled into thinking that their salaries have been increased (so they can now afford to spend more or borrow), whereas the truth is that they have merely been compensated for the reduction in their real incomes on account of rising costs of living.

Such CPI adjustments used to be by the full rate of inflation as announced by the National Statistical Office. In recent times adjustments have gone only part of the way, and that only after employees have raised the issue with their employers. Rising costs also affect employers so they are not so keen to talk about CPI adjustments. My prediction is that CPI will be a thing of the past in PNG as inflation goes into double-digits in the coming years. I also predict that there will be more calls for pay increases as workers find their salaries buying less and less. It will come to a point where workers have to decide between fighting for higher salaries and losing their jobs, or keeping their jobs and being content with stagnating nominal (cash) incomes and falling real incomes, and hence living standards.

The other thing about CPI adjustments is that it has the potential to push workers into higher income brackets, with the result that they end up paying more income tax. Effectively the government gets a raise in income tax every time workers get compensated for rising costs of living. The twin effects of inflation and income tax usually pushes workers back in terms of their standards of living.

So in answer to the question “Is a CPI adjustment really what it looks like?”, the answer is “No”. You simply cannot take things at face value. You have to look deeper at the inflation rate as well as the income tax implications before getting excited whenever the employer announces that you will receive a CPI adjustment in your salaries.

He Who Produces Food Shall Rule And Reign!

2011-10-06T10:48:00.000+10:00

In several past articles I have discussed the food shortage situation in the country. The articles were based on what was presented at the recent National Food Security Policy conference at the National Research Institute.

In this article I would like to look at a story in the Bible. It is about Egypt’s food security program under Joseph’s stewardship.

The story starts with King Pharaoh having two consecutive dreams. In the first, the king saw seven fat cows coming out of the Nile River. While they were grazing by the river, seven ugly and bony cows also came out of the river, and ate up the fat cows. Pharaoh woke up, and when he slept again, he saw seven heads of grain on one stalk that were plump and good looking. Then he saw another seven heads which were blighted by the wind. While he watched, the seven blighted heads of grain ate up the seven good ones.

Pharaoh woke up and immediately called all the wise men and magicians of Egypt together and told them his dreams, but none of the men could interpret it for him. Finally Joseph was called out of the dungeons of Egypt, and he told Pharaoh that the dreams meant the same thing. There were going to be seven years of abundance in Egypt, followed by seven years of famine. The famine would be such that the good years would be obliterated from peoples’ memories.

Joseph therefore advised the king as what he should do to ensure the country’s food security during the famine years. His advice was basically that the king should establish warehouses in every city in the country where the excess food from the good years would be collected and stored under the stewardship of a wise and prudent man. This food would be available to the people during the seven years of famine.

The king accepted the advice and appointed Joseph to take charge of the program. In fact Pharaoh appointed Joseph as his second-in-charge, or Prime Minister of the country. Joseph therefore went throughout the country, built large warehouses, and collected the excess food and stored them. There was so much food that Joseph’s officials gave up trying to keep records!
The story gets interesting as the famine begins. It goes that the people came to Joseph to buy the food which they had initially given away to be stored during the years of plenty. Joseph gathered up all the gold and silver in the land of Egypt by selling food. When all the money was transferred from the people to Pharaoh, the people came and offered their livestock in exchange for food. So Joseph gathered up all the animals in the country for Pharaoh. In the following year, the people came and told Joseph: “All our money and livestock is gone from us. There is nothing left but our bodies and our land.”

Joseph told the people to trade their land for food, which the people were more than willing to do (when survival is at stake, people can get desperate). So Joseph bought up every piece of real estate in Egypt for Pharaoh, and he moved the people off the land into the cities. The foot note in one of the translations of the Bible says that Joseph ‘made the people virtual slaves.’ The only people who were given free food and whose land Joseph didn’t buy were the priests.

By the time the good times returned again, the people had been displaced from their land. They were all at Pharaoh’s mercy. They were then given seed to sow – on Pharaoh’s land – and told to return 20% of the harvest to the landlord while they kept 80% for themselves. So the people of Egypt went from being land owners to peasants with a 20% tax on the produce of the land. Pharaoh’s rule over them therefore became more entrenched.

If you are not familiar with the Bible, the story is found in the book of Genesis chapters 41 and 47. To summarise the story, we can say that the people of Egypt traded their money for food, then they traded their livestock for food, followed by exchanging their land for food, and finally their lives for food. In short, it was:

• Gold and silver (money) for food;
• Livestock for food;
• Land for food; and
• Lives for food.

One important lesson we can deduce from this story which took place thousands of years ago is that one can never go wrong producing or trading in food. If you have food, you get sell it for money. In a situation where the demand for food exceeds its supply, you can sell at very high prices. And if you are the only one selling food, you can sell at monopoly prices.

With the money you can buy and own livestock, which is another form of wealth. This is especially so in the Highlands region, where pigs in particular are in very high demand such as to cause prices to triple in the past few years.

You can also use the money to buy land anywhere in the country. Can food empower you to become a real estate owner? According to this Biblical story, the answer is ‘Yes’. You start by producing food on your own land in the village, and slowly make you way into the urban areas.

And you can use the money from your farm to buy slaves (also known as employees). It doesn’t matter whether you have been to school or not. If you use your knowledge of gardening which you have received from your primitive ancestors, you can eventually make very highly-educated people work for you.

The ultimate result? You rule and reign over the land and other people. You become a Pharaoh in your own way.

If you are a landowner reading this, I hope you get the lesson from this ancient story. I hope you start producing food tomorrow. If you are unemployed and looking for a job in town or just hanging around in your community, I am telling you that there is hope and money – and it is in your land in the village. There is more than enough money in the land for you to build a high-covenant house or buy the latest model Toyota Land Cruiser with cash!

If you have a job, you will realize that the bulk of the money you earn goes to buying food and keeping yourself alive. You are working, buying food, and working – without getting anywhere financially. It is probably time for you to cast aside your educational qualifications and your job, and return to the village to till the land. You can start from scratch as a farmer, then work your way back into town as a real estate investor and an employer.

I have said this several times on different occasions, and I will say it again: In the kind of economy we are living in today, the people who are going to make the most money are business people and farmers. Working class people are the ones who will become poor while farmers and those in business become rich.

Savers Are Losers

2011-10-06T10:46:00.000+10:00

In a previous article I described money as a faithful servant but a terrible master. In another, I stated that rich people don’t work for money. In other words, they have learnt how to make money become their servant. While money works for them, they live the life of their dreams.

I have received a lot of feedback on the articles. One question readers have asked is whether saving money in the bank is a way to make money work for you. I would like to respond to this query in this article.

You can save for different reasons. Most people save for a ‘rainy day’, meaning that they put money aside to meet unexpected expenses. Others save for school fees, to buy household items, meet customary obligations, etc. In other words, they save for consumption. They save to spend.

Other people save for their retirement. In PNG, the majority of working people save with one of the superannuation funds or savings and loans societies. Currently the law says that workers are to contribute 6% of their gross salaries towards their super fund savings while employers contribute 8.4%, for a total of 14.4% every fortnight. Some employees save more than 6% of their salaries in their super fund accounts.

A third group, and I would say a very small minority at that, save for the purpose of investment. That is to say, they save money to start businesses, purchase investment property, shares etc.

For whatever reason you save, what you need to realize is that you could be losing money by just saving it, for several reasons.

Firstly, banks charge account keeping fees. You essentially pay them for maintaining an account with them. The result is that the balance in your account drops even though you have not made any withdrawals. Your bankers will tell you how much it charges if you care to ask them.

Secondly, interest rates are so low that you could in fact not be making any money from your savings account. Current interest rates for deposits with the country’s leading bank range from 0% to 3% per year for amounts ranging from K9,999 to K100,000 respectively. Interest rates for deposits are at an historical low because of very high liquidity in the banking system.

Thirdly, the Government charges an interest withholding tax of 15% per year. This means that for every Kina you earn in interest, 15 toea goes to the Government and you receive 85 toea. It makes no sense to penalize people for saving, but that is as the law stands today.

Finally, in times of high prices for goods and services, such as we are faced with currently, the purchasing power of both the principal and interest earned on savings is reduced by inflation. The Bank of PNG has reported that inflation for the June quarter of 2011 was 9.6%, and it is forecast that inflation will exceed 10% by the end of the year and beyond.

Let us see what this means for savers. The interest being paid by the leading bank for term deposits for 12 months is 3%. If you had earned this kind if interest, and with inflation at 9.6%, your real income would be minus or negative 6.6%. You would have lost money instead of making it. It would have been like taking one step forward and three steps backwards. In the meantime, the bank would have made money using your money by lending at interest in excess of 14%.

This article is titled ‘savers are losers’ because people who save money, even in super funds, do not realize that they actually lose money by doing so – unless the interest rates they earn on their money are higher than the rate of inflation. In today’s economy, interest on deposits are actually very low, rendering it difficult for savers to really make money work for them.

Most people would say that saving money is good because of compound interest, which works as follows: You save some money which earns interest, then the interest earns interest. So it goes that money grows over time without any effort from savers. But for the reasons given above, compound interest does not work as it used to in the past. Even if the cash or nominal amount increases, the real interest income would be either very low or negative.

Given that this is the case, you would be wise to save whatever you can, then invest your savings in a business. A business is a vehicle that can empower you to either ride on or beat inflation. More on this later.

Papua New Guinea’s Development Scorecard: 1975-2011

2011-09-29T06:06:00.001+10:00

Papua New Guinea is now 36 years old as an independent nation. This article looks at the country’s development record to see how well we have done. The figures quoted below are taken from official documents such as the PNG Vision 2050 and the PNG Development Strategy 2010-2030. Reference has also been made to a report published by the National Research Institute titled “Papua New Guinea Development Performance 1975-2008”, as well as reports published by various donor agencies and international organizations such as the World Bank, the United Nations and Transparency International.

Eight basic development indicators taken from the above sources are quoted along with brief commentaries so as to show how PNG has fared since 1975. Please be forewarned that some of the data are a few years old.

1. The infant mortality rate, which shows the number of infants who die before the first birthday out of every 1,000 babies born in the country in a year, is 57. Infant mortality in Fiji is 18 per 1,000 births, and the whole of East Asia and the Pacific is 31. More babies die than anywhere else in this art of the world.

2. The maternal mortality rate is 733 per 100,000. This means 733 women die out of every 100,000 woman during child birth in PNG. This is four times higher than countries in the Pacific.

3. PNG’s current life expectancy at birth is 62 years. This compares with an average of 67 years for all developing countries and 72 years for East Asia and the Pacific. People in neighbouring countries live longer than Papua New Guineans.

4. Only 57% of adults in PNG are literate. This compares with 93% in the East Asia and Pacific region and 82% in the world. More people cannot read and write in PNG than elsewhere in the world.

5. Unemployment is very high. Only 500,000 people (13%) hold paid jobs out of a working-age population of some 3.8 million. The implicit level of unemployment is 87%.

6. School drop-out rates at Grades 8, 10 and 12 are 50%, 80% and 70% respectively. This means only half of Grade 8 students go on to Grade 9; 20% of Grade 10s go to Grade 11; and 30% of Grade 12s get accepted into tertiary institutions. The main reason for the very high dropout rates is lack of facilities and spaces in educational institutions.

7. The Human Development Index (HDI) is a measure used by the United Nations to assess countries in three areas of human development — life expectancy, adult literacy, and school enrolment. It also takes into account peoples’ standard of living as measured by the gross national product per capita. In 2010 PNG was ranked 137 out of 169 countries, making it the 33rd least developed country in the world.

8. The proportion of the population living below the international poverty line of US$1.00 per day (or approximately K1,000 per year) was 40% in 2010. Estimates in 1996 and 2006 respectively were 25% and 37%, meaning that an increasing proportion of the population has been progressively becoming poorer. PNG is a rich country full of poor people.

There are many other indicators of development but the above show that PNG has not done well in terms of its people experiencing improvements in their living standards. Commentators state that the country experienced many positive developments between the 1960s and the 15 years following independence in 1975, but indicators have either stagnated or worsened since the 1990s. Smaller and less-endowed countries like Fiji, Solomon Islands and Vanuatu have done much better than PNG.

Some of the reasons advanced for this not so impressive record are the two international oil crises of the 1970s, the Bougainville crisis which started in 1989 and ensued over the next 15 years, political instability which resulted in changes of government every 2.5 years up until 2002, natural disasters like the volcanic eruption in East New Britain, the tsunami which hit Aitape, the cyclone which affected parts of Milne Bay and Oro Provinces, several structural adjustment programs imposed by the World Bank as a result of a high level of public debt due mainly to uncontrolled government expenditure, and the El Nino-induced prolonged drought.

One glaring issue which has had a direct negative impact on development and ultimately on the peoples’ living standards is corruption, which emerged in a more pronounced manner in the 1990s. Corruption has become entrenched and endemic, such as to cause former Prime Minister Sir. Mekere Morauta to describe it as ‘systemic and systematic’.

Transparency International, which issues a Corruption Perceptions Index (CPI) every year, has been tracking the extent of perceived corruption in nearly all countries in the world for many years. It scores countries from 1 to 10, with 1 being the most corrupt and 10 being clean. In 2010 PNG was given a score of 2.1, together with countries such as Russia, Laos, Kenya and the Central African Republic. PNG’s ranking was 165 out of 178 countries, making it the 25th most corrupt country on the planet!

The burning question is, “Can our people realize better and improved livelihoods in the 37th year of independence and onwards?” This question can best be answered by our leaders and bureaucrats.

The country has experienced consistent economic growth in the past 6 or so years but this growth at the macro level has not trickled down to make a real difference where it matters the most: at the micro or people level. In fact, the years of positive growth seem to have coincided with an increase in poverty among a large proportion of the population, unemployment, lawlessness, breakdown of infrastructure, etc. The situation can be summarized as follows: ‘The richer the country, the poorer the people’.

This, again, can be attributed in large part to corruption. As we have seen above, PNG is listed among the least developed and the most corrupt countries. There is a direct relationship between corruption and development.

The new O’Neil-Namah Government has made several very popular decisions since coming into office on 2nd August which are as a breath of fresh air to the people. In addition to free and subsidized education from next year onwards, the decision to fight corruption is the most significant in light of the development experience as highlighted above. We hope that the current investigations into corruption at the Department of National Planning are followed through with prosecution of those found guilty. We also look forward to the establishment of the Independent Commission Against Corruption.

Unless we take drastic action against corruption, our social indicators will continue to worsen despite the country being flush with cash from the proceeds of the LNG and other resource projects emerging all over the country.

Hungry People Are Angry People

2011-09-18T19:43:00.000+10:00

Last week’s National Food Security Policy conference organized by the National Research Institute was one of the best meetings I have attended. If my memory serves me right, it was probably the first meeting I have attended where participants filled the room and actively participated right up to the last hour of the three-day conference. It was a demonstration of how important food is to everyone, and how threatening rising food prices are, considering that everyone eats.

In my article last week, I explained why I think rising food prices is an opportunity to encourage people in rural areas, and particularly unemployed young people in urban areas, to go back to cultivating the land. If the Government can address the major impediments facing farmers in the country, such as transport infrastructure, lawlessness, the absence of an efficient marketing system, lack of credit etc, our people can rise up to the occasion and produce food so that all of us are fed and kept healthy. I asserted that politicians and policy-makers now have no choice but to be serious about addressing farmers’ problems, because they are the ones being hit by rising food prices. If we can make rural life attractive, thousands of unemployed youth will return to the villages as they realize that they can sustain their lives as well as make money producing fresh food, raising livestock, etc.

In addition to the above, I would like to raise an important issue in today’s article, and that is that much of the break down in law and order can be linked to people engaging in unlawful activities just to keep food on the table. As one of the speakers at the food conference put it, some people live to eat but many in PNG eat to live. Those who eat to live are the ones who wake up each morning not knowing where the next meal is coming from, while the ones who live to eat overdo it, become obese and unhealthy.

I once took several leaders of a reformed gang in Goroka to lunch, and spent the whole afternoon listening to their life stories. One thing they told me which I will never forget is that each morning they would get up and promise their wives and children that they would bring food home for the night. They said that once they made the promise, they had to get whatever they promised, no matter what. They related how they would carry out robberies or risk their lives in other ways just to feed their families. I was reminded of this conversation when the gentleman at the conference made reference to people who eat just to live each day.

Sir Henry Chow, owner of Paradise Foods and Chairman of the NRI Council, made this very pertinent statement: “Empires fall on empty stomachs.” What he meant was that when people are hungry, they can do anything, even to the point of revolting against rulers. Look at what has been happening in Israel lately. And consider what happened in Germany which culminated in the rise of Adolf Hitler!

Hunger is a very strong motivating force. When people are hungry, they don’t care about laws, rules and regulations. They will do everything and anything to satisfy their hunger. This is actually an age-old issue. There are many Biblical incidences too. Consider why Esau sold his birthright to Jacob, and why the people of Israel thought slavery was better than freedom. Or consider why people gave their money, their livestock, their land and even their lives to Joseph and King Pharaoh of Egypt. It was all for food!

One group of people who are fighting for survival on a daily basis in PNG is squatter settlers who live on the fringes of the urban centres. While working people have money to buy food (low income earners may not be among those who can afford it) and village people grow their own food, settlers don’t have any regular income or food gardens. It is also generally accepted that settlements are breeding grounds for people who engage in unlawful activities as a way of living. These people have been struggling to feed themselves when prices have been low. Now that prices are escalating, we can imagine these people really feeling the impact harder than workers and rural dwellers. When these people become hungry, they become very angry, and they can make life difficult for everyone else.

PNG is not like other countries where food is so short as to cause a famine. There may be small pockets of the country where the possibility for extreme hunger exists, but generally, there is a lot of food grown in the country. The problem therefore is not one of availability, but of accessibility. There may be a lot of food available in the country, but having access to it is a problem. That, I believe, is what is giving rise to escalating food prices. And that is why our leaders need to allocate resources towards fixing the country’s transport infrastructure and law and order as matters of national importance.

It is actually on indictment on our leadership over the years that in a country which the rest of the world refers to as Paradise, a large proportion of the population lives in poverty after 36 years of independence. I have heard several commentators refer to PNG as a country of paradoxes, one of which is that it is a very rich country full of many poor people. Let it not be said of PNG that it is a food-abundant country full of hungry people. Poverty is out of place in Paradise; so is hunger.

In conclusion, the increasing price of imported food provides an opportunity for our farmers to cash-in by increasing the production of locally-grown food. It is an opportunity for PNG to replace imported food with more healthy and locally-grown food. But as well as being an opportunity, it is a major problem for the increasing number of low income and settlement dwellers in the country. When these people become frustrated and angry because they cannot afford to get access to food, they can get violent.

We hope our leaders remember that hungry people are angry people. We also hope they remember that empires fall on empty stomachs.

The Financial Treadmill

2011-09-11T15:52:00.001+10:00

Last week I discussed the lifestyle of people who run the ‘financial rat race’. I described it as one of working hard, getting paid, meeting expenses, and going back to work again – basically running around in circles, akin to rats running around in a maze.

I hope the article made some readers of this column mad at themselves and the lives they have been living – mad enough not only to vow but actually do what it takes to get out of the rat race at all cost.

Somebody sent me a text message to announce that he was going to leave his current job and look for a better one. This is not what I mean by getting out of the rat race. Getting a high-paying job will not get you out of the rat race. If you compete with others in the workplace, beat them and win in this race (get promoted, higher pay etc), it doesn’t mean you have come out. You may be highly educated, highly qualified, and highly paid, but you are still a rat!

Today’s article is on the ‘financial treadmill’. As many of us would know, a treadmill is a machine you find in many gyms. It is basically has a moving belt which people run or jog on, and it has instruments which indicate the time someone has run on it. It also indicates the distance the person would have covered had he or she actually run on the road. Some treadmills also show the speed at which the belt has run.

When someone runs on a treadmill, he or she feels several effects on the body. After a few minutes breathing intensifies and sweat begins to pour out on the forehead and other parts of the body. The person will also feel tired after some time. The ultimate effect would be a loss in weight and hence a lightness in the body. Continuous running will lead to a firming of the muscles and better health.

A financial treadmill is once again a lifestyle which people live, and it is determined by the way they conduct their financial affairs. It may involve all or many of the following (not necessarily in sequence):

• Going to school and getting a job;
• Getting married and having children;
• Receiving further training;
• Getting promotion and climbing the corporate ladder;
• Receiving pay rises and other perks and privileges;
• Increasing expenses to meet income;
• Living beyond means and getting into habitual debt;
• Ageing (graying for both sexes or bald for males); and
• Nothing to retire on during old age.

In essence, the financial treadmill records the time and effort put in over a life-time, but whereas running on a normal treadmill leads to better health, running the financial treadmill leads to little or no wealth. It is jogging on the same spot for years and thinking that you are making progress, but actually not getting anywhere.

I read a short statement made by John C. Maxwell, American leadership guru, which has stuck with me for some time now. He said, “Activity does not equal progress.” He was referring to companies and organizations such as churches engaging in a lot of activities, spending money etc, but not necessarily making money or achieving results.

I believe that the statement applies as much to the majority of working people. There may be a lot of getting up in the morning, taking a quick shower and breakfast (if at all), rushing off to the office, working whole day, coming home tired and worn out, taking a shower, having dinner, watching TV, and sleeping, and repeating the same routine the following days – for years! A lot of commotion and activity, but not necessarily getting anywhere.

If you this has been how you have been living your life up to this point in time, I propose to you that it is time you made drastic changes in your life. You just cannot go on living like this and expect to succeed financially. As Albert Einstein has said, “Insanity is doing the same thing and over and over and expecting a different result.”

The ‘Financial Rat Race’

2011-09-11T15:51:00.001+10:00

In a previous article I mentioned the ‘financial rat race’. I wish to elaborate on this term in this article. I hope that you will see whether you have been running that race. I also hope that you will make a commitment to get yourself out of the lifestyle I will be describing if it speaks of you.

Rats are favourite animals for scientists when it comes to experimentation. Over the years they have conducted many experiments on rats and the results have contributed to their understanding of the behaviour of human beings.

To understand the behavior of rats, and hence people, scientists usually place the animals in a maze, which is a box with many hallways and doors inside it, and they set the rats loose. The scientists look down upon a box, but to the small minds of the rats inside the box, it is a huge place with many passages and doors. So the rats run around in the box, thinking that they have taken a long journey, whereas the truth is that they have been running around inside a box. And the first rat that comes out at the other end of the maze gets a cheese as a reward. This is a literal ‘rat race’.

A ‘financial rat race’ is a term used to describe a lifestyle that basically involves working at a job, getting paid, paying off debt, taxes and bills, and going back to work again, without any savings, no investments and a lot of debt. It is being an active part of a system that was designed to get people to work hard without making progress in their lives.

People that have been working for a long time, progressed professionally, received higher pay over the years, but have nothing to show for it, have been running the financial rat race. They don’t have any savings or investments. Instead, they live from payday to payday. When unexpected events take place, they take payday loans, usually from informal lenders who charge very high interest rates. Borrowing is the way they solve their financial problems.

I have conducted personal financial management and investing seminars for the employees of corporate organizations for several years now. What I have found is that the majority of working people in PNG spend almost all of what they earn within a few days of the money landing in their accounts. Many have in fact borrowed against future income, so they have effectively spent the money before they have received it! Such people don’t have any savings. What they leave in their accounts is the minimum balance required by their banks to keep the accounts current. Many have surrendered their bank cards to lenders, who keep the cards until the loans are repaid in full.

Another interesting thing is that the people with the most financial problems are those that are relatively highly educated and occupy higher-paying positions. It seems that the higher the pay, the higher the level of indebtedness. In other words, the more they earn, the more they misuse, and the more they borrow. On the other hand, low paid employees (especially cleaners and tea boys) tend to save a lot of money, and they tend to lend to their highly-paid colleagues.

If what I have briefly described is the kind of lifestyle you have been living, it is time for you to take a really hard look on your financial life and make the changes you know are necessary for you to get out of the rat race. You may think that it is hard to save money in this high and rising cost economy, but the truth is that you can. You just need to be determined to analyse your costs and cut out all unnecessary items, do a budget and stick with it no matter what. You just cannot go on working, earning and spending like you have been doing up to now, especially now that you know what a ‘financial rat race’ is.

High Food Prices: Problem Or Opportunity?

2011-09-11T15:45:00.001+10:00

An important conference took place this week at the National Research Institute which brought together policy makers, farmers, food manufacturers, scientists, academics, researchers and interested members of the public. It was the Food Security Policy Conference on High Food Prices In Papua New Guinea.

The major concerns addressed by conference participants were:

1) What are the drivers of unprecedented food prices?
2) What are the impacts of escalating food prices on consumers? and
3) What can be done to reduce food prices for the benefit of the population?

Presentations were made under several sub-themes. These were:

1. Global and regional perspectives: trends in food prices and volatility, trade and international relations;
2. Food production and processing: industry and farmer perspectives, challenges, costing and pricing issues;
3. Food provision: food imports, packaging, marketing, transport and distribution;
4. Food consumption: impacts, affordability and coping mechanisms; and
5. Stakeholder interventions, strategy and options: the way forward.

The major lesson that has emerged from the conference is that food prices have been rising both internationally and domestically, and they are likely to escalate further. The concern in Papua New Guinea is not only that food prices are expected to rise, but the general price level for all goods and services (i.e. inflation) is expected to go into double-digits (meaning in excess of 10%) for the first time since 2003. The sum total of these developments is that people in the country will have to fork out more money from their pockets for food and others goods and services.

My presentation was on the major impediments or constraints, problems and challenges faced by food producers in the Highlands. High food prices indicate that there is a lot of demand for all kinds of food, but supply is low. In other words, high prices are supply-related.

There are many challenges faced by all farmers in producing and supplying food in the country, and the ones I highlighted are in fact common throughout the country. These are:

1. Market access. High prices of food indicate that there is a huge market for locally produced food, but access to those markets is a major impediment faced by farmers, due to reasons such as very bad road conditions, unavailability of transport and high fuel costs.

2. Increasing lawlessness discourages farmers from producing food. Many food gardens are destroyed during tribal conflicts. Food gardens, small-scale piggeries and poultries are also the subject of theft, and most farmers are subject to harassment by unemployed youth roaming in towns, drug addicts, and criminals.

3. Food producers are faced with high costs of imported production inputs such as fertilizers, weedicides, insecticides, seeds, feed, etc. Import duties contribute to high prices of these inputs.

4. In many parts of the Highlands arable land is becoming scarce with the increase in population. This is particularly so in areas which are near the main centres where access to markets is relatively easier. Land shortage is not yet a problem in more remote areas, but farmers in such areas have to carry farm produce on their backs for long distances in order to get to the main roads.

5. Generally, people who have been producing food and keeping the rest of the country fed have grown old over the years. Dwindling physical strength reflects itself in smaller quantities produced. Young people would rather look for jobs in the major centres than go back and work on the land. This may be a result of plain laziness or the mental programming they are subjected to while in school which conditions them to seek employment.

6. Efficient marketing systems are absent. Most farmers waste time and money transporting their produce to markets in Lae, Madang and Port Moresby. In the process they not only pay high costs of transport but also experience losses due to improper packing and handling, break down of trucks, bad market timing, etc. For instance, it costs about K70 to transport a bag of kaukau from a village in Mount Hagen to Port Moresby. When farmers lose money in the process, they get discouraged and stop producing altogether. It’s a case of ‘once bitten, twice shy’.

7. Food producers and farmers in general lack business skills such as farm planning, budgeting, costing, pricing, financial management, investing, etc. Highlands farmers tend to make huge gardens, plant and harvest them in one go, and when they make money, they tend more to spend the income than to save it. When they have money, they take long holidays. Farming is therefore ad hoc and unsustainable.

8. Commercial banks view farming as very risky and unbankable, so farmers don’t have access to credit.

I concluded by stating that food security equals national security. Papua New Guinea cannot go on importing food from other countries in the face of wars, terrorism, bio-terrorism, pollution, diseases, contamination, unfavourable weather due to climate change etc. The country lives a hand-to-mouth lifestyle; what it produces or imports, it consumes, hoping that food will keep on coming. There are not many food manufactures in the country, and no warehouses with strategic stocks. This is a very risky lifestyle.

Policy makers and other relevant authorities must create an environment that is conducive for food producers in the country, because everybody from the Prime Minister downwards eats on a daily basis. This becomes more imperative in light of an ever growing population. The farmers have land, time, labour and capital to produce, and they are willing to work because they too live in a world where they need money. If the major impediments are effectively addressed, our farmers can rise to the occasion and keep us all fed and healthy.

The title of this article is a question I posed at the conference: Is high prices a problem or an opportunity? The answer depends on which side of the market you are on. If you are a consumer, high prices of food is a major problem, because now you have to spend more money for the same quantity or basket of food you normally purchase for your household. Either that or you go for cheaper, lower-quality food, thereby placing your health and general welfare at peril.

But if you are a producer, high food prices is a great opportunity to take advantage of. I have been going around the country encouraging people, particularly young people, to till the land. To me, now is an opportune time for farmers in the country to make money. It is their time to become fully engaged in the cash economy, because now they have what the whole country needs: food. They have the opportunity to share in the wealth of the nation by working on their land, not receiving hand-outs.

High prices of food also provides an opportunity for the hundreds of thousands of unemployed young people to return to their villages and work the land. My assessment of the whole situation in the country is that people who will be handling most of the money coming out of the LNG and other resource projects are those who are self-employed: business people and farmers. Working class people will miss out, because they will be spending more, seeing the average family in PNG spends between 50 and 60% of their income on food.

I see rising food prices as an opportunity for PNG to experience a shift from rural-urban migration to urban-rural drift. I foresee unemployed young people as well as working people returning to their village as they realize that there is more money to be made there than in the towns. At least the land is rent-free, and the income is tax-free also.

The way I see it, politicians and policy-makers have no choice but to be more serious and committed in addressing the impediments faced by food producers in the country, whether they are farmers or manufacturers. It is in the personal interest of decision-makers to do it, because high food prices are hitting them in their hip pockets and just above their belts! It is now going to be a case of “address the problems of food producers and eat” or “neglect them and starve”!

My encouragement to unemployed young people and students reading this article is that they must seriously consider farming as a means of living. In fact I should extend it to working class people as well. Imagine a farm as your private pipeline into the economy. It is definitely not like sitting in an office for ten days and receiving a pay cheque, but you will never go wrong producing food. High and rising prices of food present a great opportunity to make a sustainable, comfortable, healthy and wealthy living. At least that is the way I see.

Finally, if you are already into producing food crops and livestock, you are doing the right thing at the right time. I encourage you to keep on keeping on. Do more of what you have been doing. The country needs you now more than ever. Shortage of food is the country’s problem; your problem may be money. Solve the country’s problem, and your problem will be solved. How about that?

Free Education Plus Unemployment Equals Disaster

2011-09-11T15:43:00.000+10:00

Last week I had the privilege of participating at the National Development Forum on the theme ‘Creating Employment And Broad-Based Economic Opportunities And Government Actions For Implementation’. My paper was titled ‘Self-Employment: The Answer To Unemployment.’

The essence of my presentation was that Papua New Guinea’s workforce of some 3.8 million people has three options.

The first is to look for and secure paid employment. This is a nightmare for the majority of people today, particularly school leavers, because there just aren’t enough jobs for everyone. My estimate is that only 500,000 people of the total workforce are on salaries and wages employment (In fact the total number of people is probably around 400,000, but I am being generous here). If these estimates are correct, currently only 13% of the working-age population holds a paid job. The unemployment rate is very high - around 87%.

The situation is getting worse by the year, considering that the education system produces some 53,000 school leavers (or job seekers) while the economy generates around 10,000 new jobs in a year. The result is that over 40,000 young people cannot find the jobs that were promised them by the system.

Large resource development projects cannot generate enough jobs, because they are very capital-intensive. A classical example is the much-acclaimed LNG project. This multi-billion Kina project is expected to generate only 15,000 jobs during the construction phase (of which 5,000 will be nationals). When the project is operational, it will employ less than 1,000 jobs. The spin-off activities might actually provide more employment opportunities than the project itself. The same can be said of all the other projects.

The Government’s Medium Term Development Plan (MTDP) 2011-2015 aims to create 202,835 jobs by 2015 and 2,000,000 by 2030. But at an average growth rate of 2.3% per year, the country’s population will be around 11 million by 2030. It is clear that there will always be more job-seekers than the number of jobs available.
The conclusion that can be drawn from this analysis is that a paid job will not be a dream-come-true for the majority of school leavers. This leads to the second option available to people, which is to roam the streets in search of jobs. The situation is already explosive, with thousands of young people wandering around the streets of the major centres every day, looking for opportunities to make ends meet. I have stated in previous articles, and other people have said so too, that educated but unemployed young people in Papua New Guinea can be likened to a ‘time-bomb’. You can feel the bomb ticking as you go through the towns, markets, highways etc. The rise in social problems such as crime, prostitution, drug addiction etc are symptoms of the very high unemployment level in the country.

Given that this is the situation as it is, just imagine what it will be like when we push a lot of young people through the education system as a result of the proposed free education policy! We will have hundreds of thousands of educated people who cannot get jobs in the country. I say that is a recipe for disaster.

To avoid this inevitability, our young people must be a given a third option, which is self-employment. As regular readers of this column will have gathered by now, I am a preacher as it were of the gospel of self-employment. I am convinced that the logical and most viable alternative to paid jobs is for people to start small businesses and become self-employed.

We need to realize that our unemployed young people are not good-for-nothing failures and drop-outs. They are human beings with a lot of potential just like the few of us that are well-to-do. They possess intelligent minds (which may need to be reprogrammed to think of starting their own businesses rather than looking for jobs), skills and knowledge, time, strength and energy, natural talents and abilities, dreams and aspirations. Many have land in their villages. These are assets the nation can mobilize for development.

Most if not all young people do not realize that they have all the above. They have been so indoctrinated into expecting paid jobs at the end of the education process that they lose their self-belief once they get labeled as drop-outs or become unemployed. They need help to look within themselves to appreciate the greatness that lies within them. Somebody once said that what lies is above or around us pales into insignificance when compared to what lies within us. This is so true so far as our young people are concerned. They possess so much but don’t know that they do so, so they park at the minimum of their potential.

The following are the recommendations I made at the forum to tackle the high level of unemployment but also to provide real hope to the majority of the country’s workforce:

1. The Government to provide a business-friendly environment by introducing appropriate legislation and policies. A conducive environment for business includes better transport infrastructure, readily-available and low-cost utilities, law, good order and justice. Some laws and policies have to discriminate in favour of national businesses.

2. The National Government to introduce a National Entrepreneurship Training Program aimed at equipping school leavers and unemployed people with basic business skills. Ideally the program should be conducted by people that are already in business, not classroom teachers or academics, under a public-private partnership arrangement. The program should enable participants to gain a working knowledge of all business-related subjects (economics, accounting, law, management, investing, etc) as well as personal viability, ethics, leadership, etc.

3. The National Government to establish a Business Incubator Grant which people that have undergone the entrepreneurship training can access to start their own small businesses. The Independent Fellowship Scheme operates along these lines, but what I am proposing is a bigger program which gives most of the unemployed people an opportunity to be involved and engaged.

4. Provincial Governments to build up the capacities of their Divisions of Commerce and Primary Industry in order to provide advice and technical support to small business people in the provinces. Most of the businesses envisaged under the program will be agriculture-related.

5. The program to include on-going coaching and mentoring in order to minimizing the number of failed enterprises.

Papua New Guinea desperately needs more local businesses. It is business people that generate cash flow, multiply wealth and create jobs. The country needs thousands of them who can provide employment and hope to the thousands more that are living in hopelessness and poverty.

Even if the above proposal is not acceptable, something has to be done seriously to address the very high and increasing level of unemployment in the country. Otherwise, pushing more young people through school will be counter-productive in the long-run. The country will be filled with educated people without jobs who engage in unlawful activities to put food on the table. Lawlessness will repel both foreign and local investment, leading to more unemployment and lawlessness, and the vicious circle will continue.

In concluding, free education is a good policy. However, if it is for paid jobs that people go to school for, I have argued that there will never be enough for everyone. The best alternative is to empower the majority who are not likely to get jobs to start their own small businesses. The recommended training, funding and mentoring program should be introduced immediately, starting with the large number of unemployed people we already have in the country. The only other alternative is to allow unemployed people to continue to roam the streets, which will be bad for all of us.

Inflation And Its Effect On Real Income

2011-08-31T00:07:00.000+10:00

Inflation is having a huge impact on everybody’s income. Inflation refers to a rise in the prices of goods and services over a period of time. In PNG it is measured by the Consumers’ Price Index, or CPI.

Inflation occurs for two main reasons. Firstly, when there is an increase in the cost of inputs which are used to produce goods and services. This is referred to as cost-push inflation. Secondly, when there is an increase in the demand for the goods and services (demand-pull). In this instance it is also referred to as “too much money chasing too few goods”.

When an economy grows, there is usually an increase of cash flow and liquidity, meaning that many people and entities such as private companies and the government have money to spend. This generates a demand for goods and services which are usually limited in supply. Excess demand forces prices upwards, leading to an increase in inflation.

This is our situation in PNG currently. It has been reported that inflation during the June quarter of this year was 9.6%. What this means is that prices have risen by that much over the March quarter of 2011.

Inflation affects different people in different ways and to different extents. But what it means for everyone is that real incomes fall when prices rise. This is so for the country as well as for individuals. Inflation reduces the Kina’s ‘purchasing power’, meaning that people need more money to buy the same basket of goods and services they had purchased prior to the rise in prices. So when the Bank of PNG reports that inflation was 9.6%, it is actually saying that incomes have fallen by 9.6% in real terms.

We have been hearing calls for employers to raise salaries and wages. We have also been hearing calls for a reduction in personal income taxes. These are all said to be measures which need to be taken to combat the effect of inflation on personal incomes, and hence the livelihoods of workers. But is raising wages or reducing income tax a solution to dealing with the impact of inflation?

The answer is no. While such measures may offer temporary relief, they cannot be long-term solutions, because there is a limit to how much salaries and wages can be raised, and how much taxes can be lowered.

What people can do to combat inflation is to start by cutting down on all unnecessary items of expense that they waste money on. Now when I say this, you may be thinking that you don’t waste money and that there are no unnecessary expenses. The truth is that most people waste a lot of money on unnecessary items. Four items which a lot of Papua New Guineans waste money on are cigarettes, betel nuts, alcohol and gambling. These are what I call expenses that add neither to your wealth nor your health. People spend thousands of Kina on these items without realizing it. Others may include mobile phone credits as a result of uncontrolled phone calls, giving to wantoks, customary obligations, etc.

The second way to combat inflation and maintain your lifestyle is to start a business. A business may not take off as you anticipate, and you may lose your investment, but it does give you the opportunity to realize returns which are higher than the rate of inflation. It also allows you to raise your prices as the prices of your inputs rise, such that some if not all of the rise in costs is passed on to consumers.

The way things are shaping up in PNG, inflation is going to be big headache for the majority of us. While the government and Central Bank use their different policy instruments to minimize inflation, we need to realize that rising prices is a necessary consequence of economic growth. As the economy grows, both the private sector and the government will spend money. This will generate a lot of demand for limited goods and services in the country, with the result that prices rise significantly, with a resultant negative impact on incomes.

My advice to readers is therefore that the time for throwing money around on unnecessary expense items is over. It is now time to tighten our belts, so to speak, and become more prudent in managing money.

YOUR ‘ACRE OF DIAMONDS’ MAY BE IN YOU OR UNDER YOUR FEET

2011-08-23T19:31:00.000+10:00

I use many stories to teach valuable life principles in my books and seminars. One of my favourites is taken from a book titled “Acres of Diamonds”, which contains several speeches given by a gentleman by the name of Russel H. Cornwell.

In this book the author relates the story of an Iraqi farmer called Al Hafed. Al Hafed was a very rich man. He owned a large farm, a large number of servants, and of course, had a lot of money. He was content because he was rich, and rich because he was content.

One day an old Buddhist priest came to Al Hafed’s house. The two men talked well into the night, until the old man started talking to Al Hafed about diamonds. He told the host how diamonds were formed, and how priceless they are. He even told Al Hafed that if he had a diamond, he could buy a whole country. The story goes that that night, as the two parted to rest, Al Hafed went to bed a poor man – poor because he was discontented, and discontented because he thought he was poor. When he compared a diamond to his possessions, in his mind, he saw that he was poor. That night he made a very important decision. He was going to sell his farm and go out to the world searching for diamonds.

Very early in the morning Al Hafed asked the old man how he could find diamonds, to which the priest replied, “Diamonds are everywhere. If you look hard enough, you can find them anywhere.” With that, he was off on his journey. But before he departed, Al Hafed announced that he was going to sell his farm, leave his family with his relatives, and go out searching for diamonds.

The story goes that he searched all over the Middle East, then parts of Asia and Europe, until he came to Barcelona (Spain), a very tired and wretched man. He spent all his money, and by the time he landed in Barcelona, he was destitute. He stood over a cliff looking down at the sea crashing against the walls of the cliff, and couldn’t resist the temptation of jumping down and ending his life. After a few minutes of visualising his family and ex-farm and regretting the decision he had made, Al Hafed quietly jumped down the cliff end ended his miserable life.

The story continues that one day as the man who bought the farm off Al Hafed was walking by the creek that ran through the farm, he noticed something glistening in the water. He reached down and picked up a stone. Not knowing what kind of stone it was, he took it and placed on the window seal of his living room. Every time the sun came up in the morning, the stone would give off all kinds of colours.

One year later the same old priest came around on his annual rounds. He lodged with the new owner of the farm. Early the next morning he got up, and upon reaching the living room, he saw the stone on the window seal. He asked the host, “Has Al Hafed returned?” The man of the house responded, “We haven’t heard from Al Hafed for a year now. Maybe he died along the way.”

The priest replied, “If Al Hafed has not returned, how come I see a diamond in this house?” His host asked, “Where is the diamond?” The priest pointed to the stone on the window seal. The man told him it was just a good-looking stone, not a diamond, to which the priest replied, “I know a diamond when I see one. Where did you get it?” The man replied, “I picked it from the creek at the back of the house. There are many there.” So the excited priest and host went to the creek, and sure enough, they found so many nuggets. In fact the whole farm and the neighbouring area was an acre of diamonds! So the man who bought the farm from Al Hafed went on to becoming the richest man of his country.

The moral of the story is this: Many times the things which would provide us a decent living and even make us rich are around us, under us, or in us, but we overlook them because we think they are elsewhere. So we search far and wide in the places we think those things exist, and most of us die en route. If only we could search within us, we would find that we already possess what we need for our livelihood.

I don’t know about you, but ten years ago I was in the same position as our friend Al Hafed. I left my last job at the beginning of 2001. For the next 7 months I was unemployed. I wrote many letters to potential employers, only to be told that there weren’t any jobs for my set of qualifications and experience. Around August of that year, our church pastor came to encourage us. In the process, he made a mind-opening statement. He said, “Farmers use spades and knives to make their living; mechanics use spanners and screwdrivers; carpenters use hammers and saws.” Pointing to my desktop computer, he continued, “You can use that computer to make a living.”

That statement switched a light on in my mind. Suddenly I realised that I could combine the computer and my knowledge to make some money. I quickly wrote a short course on coffee exporting, which was then my area of speciality. I used the computer on my desk, and the knowledge I had inside my head. It took me one week to write the course, and another week to promote it among coffee exporters. I spent around K500 to print the course materials and hire the venue.

Within three weeks I made K12,000 from a five-day course. The net salary in my last job was K6,000 per month (or K1,500/week). By running the course, I made 8 times what I was paid, and it was tax-free too. My return on the K500 investment was 2,400%!

That experience changed my beliefs about myself, and the course of my life. It dawned on me that I was worth more than what people had been paying me. I have been self-employed since. When people have offered me jobs, I have refused, because I know that I can make more than they will ever pay me. I would simply be overworked and underpaid. Being on my own has given me the freedom to create several ways of making a living. I work as a freelance consultant. I have written five books so far, and am writing more. I have designed motivational seminars on academic excellence, personal finance, business, investing, book publishing etc. My “Seven Steps To Financial Freedom” motivational seminar has been well-received by several corporate organisations. I wouldn’t be living this kind of life if I was employed. Being unemployed has been the most positive thing that has happened in my life.

I have related Al Hafed’s story and my own experience to impress upon you that you already have what you need to succeed in life. In last week’s article I mentioned 6 things you have which if you appreciate and use, can set you for life. They are your mind, basic common sense, time, physical strength, natural talents, and land. If you combine these, money will come to you. If you think that you don’t have what you need to succeed, you will become discontented. You will become mentally blind to what you have in your hands, within you, or around you. Your mind will shut down. You will set your mind on far off things, and wish that you possessed those things, and therefore be filled with hopelessness.

Let me conclude by saying this: Your ‘acre of diamonds’ may be right where you are. What you need to start your own business or live a successful life may be in your head, under you feet, in your house, in your backyard, or in your hand. So look within before you look without.

One final thought: In the Biblical story of Moses at the burning bush, God asked Moses what he had in his hand. Moses told God it was just a shepherd’s rod, but God told Moses that it was a mighty instrument of deliverance from bondage for a nation. What have you in your hand? What have you in your head? What have you got in your house or backyard? What have you got under you feet?

SELF-EMPLOYMENT: THE SOLUTION TO UNEMPLOYMENT IN PNG

2011-08-23T19:27:00.000+10:00

Paid jobs are scarce in Papua New Guinea. Of the tens of thousands of students coming out of our educational institutions, only a small proportion can get jobs after graduating with certificates, diplomas and degrees. Estimates I have seen are around 50,000 school leavers compared to around 10,000 new jobs, which means around 40,000 educated young people cannot find paid jobs, leading to an estimate 80% unemployment in urban areas. This is a cause of much frustration, both on the side of students and parents or sponsors. I believe that the inability to find paid jobs is one of the root causes of lawlessness in the country.

One of the major failures of the education system is that it prepares and mentally conditions students to expect paid jobs after leaving school. Those managing the system do not actually tell people that young people should be sent to school so they can get jobs, but the understanding and expectation exists. This is despite the fact that there aren’t enough jobs for everyone. The result is that every year parents pay a lot of money in school fees, hoping that their children make it as high up the educational ladder as possible, and ultimately end up with a degree in a particular field and a well-paying job. This dream actually turns out to be a nightmare for the majority of students and their parents.

When we look into history, we see that schools were introduced to train workers, either for the government or for private businesses, particularly following the Industrial Revolution. Prior to that, people basically lived off the land, like 85% of our people do today. In most countries, kings owned all the land. Everyone else was a peasant who worked the land belonging to the royal families. They handed over much of the harvest from the land to the landlords and lived off the rest. In Papua New Guinea, it was different. There were chiefs in most societies, but the land belonged to the tribes, clans and families. So basically, everybody worked on their own land. They were self-employed. Not many worked for others for payment.

Schools were introduced into Papua New Guinea by European missionaries and colonisers, to train mission and government workers. They came to Papua New Guinea from a background of making their living from paid jobs. The missionaries actually preached about going to heaven. That is how the missions were able to secure a lot of prime land in the country. They promised the people a better life in heaven, and stole their land in the process. The colonists introduced the idea of working for a regular pay, which was a completely new concept too. They even imposed taxes – and jailed those who didn’t pay up – so as to force people to go school to work for others.

The introduction of schools was done with good intentions, but one of the negative consequences was that school disengaged children from their land. By promising jobs with pay, school caused people to look away from their land which had provided their ancestors with a sustainable livelihood for generations. The education curriculum made English, Maths, Science and Social Science as the core subjects, and relegated Agriculture to being an optional or non-core subject. Even then, students were taught the science of agriculture, but not the business aspects of the subject.

That is why today, not many educated young people think about going back to work on their land after they drop out of the system or successfully graduate with various educational qualifications. All students look for jobs immediately upon graduating. Most that end up back home waste their time and lives doing nothing (and feeling really hopeless and good-for-nothing), while others flock into urban areas in search of paid jobs. This is all the result of the mental conditioning and programming they went through while at school. The brainwashing has been so perfectly accomplished that I would say not one student ever thinks about going back home and using their knowledge to work on their land.

These people do not believe that they can live comfortably by working their land. Even though they can see with their physical eyes how their relatives who have never been to school live in relative abundance, mentally, they become blind to the opportunities that surround them. All they think and dream about is paid jobs, and they are satisfied when they get very low paid jobs like security guards or shop assistants. They don’t earn much cash from these jobs, but they are content as long as they are employed. Being able to get a job inflates their ego so much that they become blind to the fact that uneducated people earn more from working on the land in a day than they earn from their jobs in a fortnight. This again is part of the mental programming they have received.

One of the messages I have been promoting through my books, seminars and talks at educational institutions, youth groups, associations and church gatherings is self-employment as a viable option to employment. Seeing that there aren’t enough opportunities to work for other people, young people need to seriously consider working for themselves. I am glad to report that a growing number of young people have taken the message to heart and have started going back to the land. I will publish actual life-stories of some of these young people in later articles. But it has not been an easy job demolishing the mental strongholds people have built up over the years in favour of paid jobs as a source of livelihood. Reprogramming peoples’ minds to think different is a difficult task.

I am convinced that the answer to unemployment in the country is not employment (i.e. paid jobs) but self-employment (i.e. informal business). Why do I say that? Because there will always be an excess of job seekers over the number of jobs available in the country. The education system will continue to produce workers far in excess of the number of new jobs being created by the public and private sectors on an annual basis. Even the large development projects cannot provide the jobs people need. The conclusion therefore is that only the agriculture and informal sectors possess the capacity to accommodate the large number of job seekers. These sectors provide the greatest opportunity for small business activities. That is why I say that self-employment is the way to go.

If the Government plays its role right (by building or maintaining roads, maintaining law and order, introducing subjects such as agriculture business and financial management etc into the education curriculum, providing training and credit), the rural areas can accommodate the majority of educated young people, leading to a substantial drop in the unemployment rate. When this happens, many other problems associated with unemployment can be effectively (and indirectly) addressed, with the result that PNG becomes a peaceful and prosperous country where everybody who is willing to work can live comfortably.

If you are unemployed, let me encourage you not to look down on yourself. Do not allow the fact that you don’t have a job rob you of your self-esteem. Don’t feel like you are useless or good-for-nothing. Don’t allow other people to make you feel that way. You have to break away from that kind of mindset. You have to look upon being unemployed as an opportunity, not a problem. It is an opportunity to create your own job and become your own boss.

The system has programmed you to believe that you need to be educated and have a job to become a success in life. The truth is that a university degree is not a necessity for success, and a paid job is certainly not necessary for one to live a good life. You can succeed just as you are, and you can start with what you have, right where you are. I will discuss more on this in future articles.

Think about working for yourself instead of working for somebody else and making them rich at your expense. When you get a job, you surrender your time, strength and skills to your employer for a salary. He pays you only a small proportion of what you make for him. He benefits more than you. When you work for yourself, everything you make is yours. You benefit fully from your time, knowledge, strength and skills.

So think about becoming your own boss. Stop thinking about becoming employed and start thinking about becoming self-employed. Think about starting and minding your own business.

The Rich Don’t Work For Money

2011-08-22T10:19:00.000+10:00

The title of last week’s article was “Money: A Faithful Servant But A Terrible Master”. I stated that when money is servant, it works for you, but when it is master, it works against you.

I also stated that this is a secret rich people keep to themselves. They have designed the legal, economic, financial and education systems to keep the majority of people working for money while they themselves live in freedom. They use the media a lot to emphasise spending over saving and investing, so much so that people go to school, work for money, spend it on debt and expenses, and go back to work again. This is called the ‘financial rat race’. Sadly, the majority of the world’s population lives this lifestyle.

There are three classes of people all over the world: the rich, the poor, and the working or middle class. If you study the lives of rich people, you will notice that their lifestyles are different from the working class and the poor. One of the major differences you will see is what these three classes of people do. You will basically see that while the working class and the poor work their guts out for a living, the rich take life easy. For example, while the other two groups are working, the rich play golf all day or go to the gym and run on the treadmill. They are working on the next business deal, taking a trip somewhere, or just sleeping and reading while the others are running the ‘financial treadmill’.

Why are the lifestyles of these people different? It is basically because rich people have been able to capture money, tame it, and put it to work for them. They have been able to make money become their slave. Some rich people inherited their money, but many are self-made, meaning that they started by working, saving money, and investing in businesses and other assets. Once the money invested in the assets has started working, they (the people) have had to work less and less, until they have come to a point where they don’t need to work any longer. The harder and faster their money has worked to meet all their living expenses, the more relaxed their lives have become, until they have had to stop working for good.

This has been a process, and it has not been easy. In fact self-made rich people have worked very hard – even harder than the working class – during the initial stages. But unlike the working class and the poor who have spent all or most of what they have earned, those who have chosen to be rich have disciplined themselves. They have set financial goals, budgeted the money they have made, saved it, and invested it. They have taken a different route, which is why have ended up with a different result and destiny in life.

Notice I have stated that self-made rich people have chosen to be rich. It has been a definite decision they have made. You see, you decide whether you will become rich, poor or working class. The moment money falls into your hands is the time you decide what lifestyle you are going to live. In other words, when you have money in your palms, you are staring at your financial destiny right there. If you spend it, you will become poor; but if you save and invest it, you are destined to be rich.

Here is a statement Bill Gates, the founder of Microsoft Corporation and richest man on the planet has made: “If you are born poor, it’s not your fault; if you die poor, it’s your fault.” You may have been born poor, but that does not mean you have to die poor. It depends on how you handle the money you make from your job, farm, or sales you make if you are a street seller. If you spend it all, you will die poor, and you cannot blame anybody for that. But if you make money work for you by investing it, you can become and die rich.

Money: A Faithful Servant But A Terrible Master

2011-08-22T10:17:00.000+10:00

A large proportion of the population of the country is struggling financially. Most of our folks in the rural areas think that people who hold jobs and work for money have a lot of money. This may have been true in the past but today the majority of working people are up to their necks with financial problems, especially debt. In fact, I would say that they are up to their noses in debt, barely breathing.

My conclusion from observing both farmers and the working class is that the great majority of them earn enough. Their problem is not making money; it is managing it, and multiplying it.

Financial literacy is a big need in this country. People need to learn how to make money work for them. I guess I wouldn’t be wrong if I said that people like accountants and economists are financially illiterate. You know why I say this? My answer is that if they were literate, they would be the most financially successful people around. The fact is, the majority of accountants and economists – people who have received financial training in school – are living hand-to-mouth lifestyles. They earn a lot, but they also spend a lot (in fact over spend), live beyond their means, and borrow a lot. They are academically bright and professionally successful, but financially unsuccessful.

One thing we all need to know is that money is a very faithful servant, but a very terrible master. Money is neutral the moment it lands in our hands. When we have it in our hands, we decide whether it will become our servant or our master. When we manage it well, save it and invest it, we turn it into our servant. We make it work for us. And it works on a 24/7/365 basis, which is to say, 24 hours a day, 7 days a week, and 365 days a year. It does not get tired, rest, sleep, observe public holidays etc. The faster it works (depending on where you have invested it), the more it produces more of its own kind. This, I believe, is the secret of the rich, which most of us have not been taught.

What the majority of us know is money as a master. We work our guts out for it, but when we get it into our hands, we don’t know how to harness its power for our benefit. The more we earn, the more we spend. This why coffee growers in the Highlands don’t have anything to show for the good international prices of the past two coffee seasons. And this is why the majority of salaried people have nothing to show for their educational qualifications, experience and the long years they have held paid jobs.

When money is servant, it works for us; when it is master, it works against us. When we work for money, it escapes us. It acts as if to say, “Catch me if you can.” But when money works for us, it reproduces itself. The more it does that, the less you need to work for it.

I hope you take stock of your financial affairs and the way you have been handling money up to now, and start giving it work to do instead of spending it all and going back to work for it yourself. I hope that you start making money your servant and not your master.

FREE MOTIVATIONAL BUSINESS SEMINARS FOR UNIVERSITY STUDENTS

2011-08-22T10:13:00.001+10:00

The education system programs the minds of both students and parents to look forward to paid jobs after graduating from school. Unfortunately the majority of young people cannot get jobs because there aren’t enough jobs for everyone.

I have talked with many young people who roam the streets of centres like Goroka, Hagen, Lae and Moresby, and I have discovered that all of them had been to school at some stage. Many had dropped out, while a good number had completed their education, meaning they had attained certificates and diplomas. I have found degree holders on the streets too! The problem facing all of them is that they have not been able to find the jobs they had expected (or rather been led to expect).

I have reflected on the plight of these people, who I believe now number in the hundreds of thousands and are everywhere in the country. These are human beings, full of raw energy and potential, but that potential is being utilized for destructive purposes and not building up this nation due to hopelessness and despair. Most of them have admitted to stealing for a living. Some of them have even expressed how unfairly they are viewed and treated by other members of society. While they steal to survive each day, others who are already well-to-do steal millions and are allowed to get away with it. This adds to their frustration.

I have also had the privilege of providing advice to a large number of former drug addicts in the Western Highlands Province who are members of an organization called Operation Rausim Drugs Inc. The majority of members of this group (including females!) are school leavers who sought solace in drugs after job searching proved unfruitful.

The few of us who are privileged to hold jobs or own businesses, live in good houses behind razor-wire fences, drive around in air-conditioned vehicles, dine in hotels and restaurants etc, can feel the anger of the under-privileged in the air. You may be a highly-paid and well-respected high-flyer in your office, but you don’t feel safe on the streets which are increasingly under the control of the have-nots. Today you cannot move around without constantly looking over your back, or expecting a road block at every corner of our highways.

The situation is getting worse by the year, as the education system continues to produce over 50,000 school leavers while the public and private sectors can cater for only 10,000 people in terms of providing them with jobs. Education in this country for the majority of those coming out of school is a dead-end road. It is like a river over-shooting its banks when it floods. Educated but unemployed young people are filling both the rural and urban areas, and are literally spilling onto the streets.

I have been conducting motivational seminars for students and youth groups for a few years now. One thing I have come to appreciate is that most of our young people already know what they need to do. What they lack is encouragement to believe in themselves and to actually do what they already know is good for them. They need to be lifted on the inside, given a little push from the back, and provided some indication as to where they need to go. In other words, they need inspiration, motivation and direction.

Every young person needs to be told that not getting a job (or getting sacked from a job) is not the end of the world, and that the closing of one door means the opening of another. They need assurance that becoming a drop-out or not being able to get a paid job is an opportunity, not a problem. It is really a blessing in disguise. It is an opportunity life is offering them to combine the little knowledge they have gained from school with their physical strength, time and natural talents to start their own businesses and become their own bosses. As I tell church people, man’s disappointments are God’s appointments.

This is my message to you if you are a school drop-out or unemployed youth reading this article. You’ve got to be positive about your prospects in life. You’ve got to believe in yourself that you can carve out a living for yourself in the midst of all the seemingly insurmountable problems that surround you. You have been positively engineered and wired to succeed, so don’t be negatively geared in your mind. You’ve got to think a little different from the crowd you hang out with. You’ve got to think a bit deeper than you have been thinking up to now. You have a future ahead of you. Don’t short-circuit it with negative and shallow thinking.

If you care to look around you, you will realize that most self-made successful people started out with little education and little money. In fact, adversities like being drop-outs or getting terminated unexpectedly pushed them into business. I myself started out as a freelance consultant with less than K500 after my employer forced me to resign. I am living much better as my own boss than I would have as an employee. If I and such people have been able to make it, so can you. You just have to believe that you can do it too.

If you are a student attending the University of Goroka, University of Technology, University of PNG and Divine Word University, I encourage you to come to a free motivational seminar I will be conducting. The tentative dates are:

9th August – UoG
13th August – Unitech
27th August - UPNG
To be advised - DWU

The topic is ‘Becoming Your Own Boss’. I will be discussing why students need to think about starting their own businesses, followed by seven basic steps to business start-up. My objective is to present business as a viable option to a paid job, knowing that the majority of the participants will not be able to get jobs immediately upon graduation. I know from experience that the seminar will be a destiny-making experience for some students.

The seminar is my small contribution to addressing unemployment and the associated social and law and order problems in the country. When our young people are busy running their own businesses, they will have no time to create problems for the rest of us. And the more young people get into business, the brighter our corporate future.

It is my contribution to encouraging more national business people in light of the present situation where 90% of businesses in the country are in the hands of foreign entities after 36 years of independence. PNG may be a rich country, but if the wealth is controlled by foreigners, we will end up poor in the future.

Finally, it is my contribution to wealth creation under Vision 2050.

YOU'VE GOT WHAT IT TAKES TO SUCCEED IN LIFE

2010-12-16T09:54:00.003+10:00

Below is a speech I gave at the combined Grade 10 and 12 Graduation of Kitip Secondary School in the Western Highlands Province on Friday 12th November 2010.

I am very thankful to the Graduation Committee for giving me the opportunity to address the 28th Grade 10 and 6th 12 Graduation Ceremony of Kitip Lutheran Secondary School. The last time I came here for the same purpose was in 2008.

My speech today, which is from my heart, is titled “YOU’VE GOT WHAT IT TAKES TO SUCCEED IN LIFE.” It is aimed at both graduating and continuing students, as well as other young people who are in the crowd. I must warn that some things I say today may not go down well with your way of thinking.

Have you ever wondered what the basic ingredients which you need to become a successful person are? Many people think that to be successful, you must be educated to university level and hold a high-paying job. Others think you must be born into a rich family, or get married to someone rich. Some think people who gamble live good lives, so they spend their money in all forms of gambling, hoping to hit the jackpot one day. Some even think that they can live good lives if they sell drugs, or steal and rob, or ask for bribery before they perform services they are already paid to carry out.

What I want to tell you today is that every one of you, regardless of whether you are a student, a drop out or someone who has never been to school, already possesses the six basic ingredients necessary for success. Every one of you can become successful, regardless of how relatively uneducated you are, or how poor your backgrounds are, or how young or old you are. And there is no distinction between male and female here.

Let me share with you the six ingredients of success.

Firstly, you have SOUND MINDS. Your mind is the greatest asset which is totally misused and underutilised. Scientists say that the average person uses only 10% of their brain capacity between the cradle and the grave, or birth and death. 90% goes to the grave unused. Most of us don’t really think hard enough. Our thinking is very shallow. I normally say, “We think that we think, but we don’t really think”.

The main difference between people who are successful and those that fail lies in how efficiently and effectively they use their minds. Education only opens our minds to the options that are out there, but success comes from the way we think. That is why you will see that many uneducated people are successful, while many educated people are failures. Some of the most successful people in the world such as inventors have been school drop outs or people that have never been to school. But they are people who have used their minds more.

Related to our minds (and this is the second ingredient) is COMMON SENSE. All of us basically know what is right and what is wrong; what is good for us and what is bad. Common sense is what we are born with. You certainly don’t need to go to school to learn it! Today, common sense is uncommon. Most young people make decisions without thinking about the likely consequences on themselves or the rest of society. Most of the problems we face today can be traced to misuse of our minds. If you utilise your common sense (meaning that you do what is right and good for you), you will succeed in life.

The third ingredient for success is TIME. Time is an asset. There are two things about time: Firstly, God has allocated each one of us an equal amount of time. All of us have 24 hours in a day – 12 hours of daylight and 12 of night, or 8 hours for sleeping, 8 for working and 8 hours of free time. Secondly, time is something we cannot conserve for later use. It comes and goes. We either use it to our benefit, or lose it for good.

The world operates on the principle that “time is money”. However, in PNG, we waste a lot of time, and as a result, we waste many opportunities on all sorts of unfruitful endeavour, and we live in self-imposed poverty in a very rich country. Just imagine what our country would be like if everyone of us did an honest day’s work, for ourselves or for others.

Time, like the mind, is a resource which is most misused, especially by young people. For instance, a lot of young people go into town and waste the whole day just walking up and down the streets. If you sit in a particular spot for a certain length of time, you will see the same group of young men and women several times, going from town to the market, back to town and the market again. That is a complete waste of time and life.

If you desire to succeed, either as a student or as a young person, use your mind and your time wisely.

Fourthly, you have HEALTH and STRENGTH. Many of you young people take your strength for granted and apply it wrongly. For instance, many young men engage in unlawful activities. You need to realise that every night you go to bed very tired and worn out, but each morning you wake up with new strength to face the day’s challenges and take advantage of the opportunities each day presents to you. Do not take your health and strength for granted. Recognise them as your assets and use them for your benefit.

Fifthly, each one of you has NATURAL TALENTS which lie dormant in your lives. Talents are skills which you are born with. I am sorry to say this, but one thing about the education system is that it does not focus on helping students to develop their natural talents. If you look within yourself, you will be surprised at some of the things you can do are things which nobody has taught you. They are in-built, a part of your make-up. If you focus on developing these, you can become successful. Some of the most highly paid people today are movie, music and sports stars. These are people who have developed their talents to such levels that other people pay to see them in action. In my village is a grade 6 drop out who can build round houses so beautifully that today he builds houses for people on contract basis and earns at least K1,000 per house. That is an example of someone who uses his natural talents to make a living.

On top of these five – SOUND MINDS, COMMON SENSE, TIME, STRENGTH and TALENTS – in PNG we are very fortunate to own LAND. We are among a few countries in the world where nearly 100% of land is owned by the people. In most other countries land is owned by the State. And when we consider that land is the basis of wealth, we can say that Papua New Guineans are born rich and wealthy! Unfortunately, because we do not realise the value of land, we are becoming poor. People in some countries are born poor and become rich, but we in Papua New Guinea are born rich and become poor.

Papua New Guinea is a very rich country. Ours is the only country that has been described as “a mountain of gold floating on a sea of oil, and powered by gas.” The country is literally a gold field. Unfortunately, there isn’t much gold, copper, oil or gas in Western Highlands Province. But we have very fertile land on which we can produce food. In fact Western Highlands Province can become the “food basket” of the country, if only our leaders provide the people with the right incentives, and the people are willing to work. If you young people humble yourselves and work the land, you will become rich.

Students (and young people in the audience), I am telling you that if you combine your MIND, COMMON SENSE, TIME, PHYSICAL STRENGTH, GOD-GIVEN TALENTS and LAND, you can become successful in life. What you need to realise is that you have all these ingredients available to you RIGHT NOW!

Notice that I have not included EDUCATION, a high-paying JOB or MONEY as ingredients for success. Let me explain why. Taking education first, let me say this: YOU DON’T NEED A UNIVERSITY DEGREE TO SUCCEED IN LIFE. How do I know this? By observing that the majority of university graduates are failing financially and in other areas of life, while the relatively uneducated are succeeding. That tells me that being highly educated does not automatically equate to being successful.

You see, the purpose of education is not to enable you to get a paying job. So many of us make an automatic connection between school and jobs. This is wrong. And this is why we have so many young people becoming frustrated all over the country because they cannot get jobs. No. The purpose of education is to provide you with information and knowledge. When you possess knowledge, your mind becomes open to the many options that are out there, so that you can see several ways of making a living for yourself.

GETTING A PAID JOB IS JUST ONE OPTION IN LIFE, NOT THE ONLY OPTION. In fact, IF YOU WANT TO MAKE A LOT OF MONEY, A PAID JOB IS THE LAST OPTION YOU WOULD CONSIDER, NOT THE FIRST. Why do I say this? Well, if you look around, the people making the most money are not people who work for others; those who make the most money are those who work for themselves. And many such people are uneducated.

Now let’s look at money. In my list of assets you have to possess to succeed, I did not include money. THIS IS BECAUSE MONEY IS JUST A BY-PRODUCT OF APPLYING YOUR MIND, TIME, STRENGTH, TALENTS and LAND. Many people think they need money to succeed, but this is incorrect. If you combine what you have, money will come. YOU DON’T NEED MONEY TO MAKE MONEY; YOU CAN MAKE MONEY WITHOUT MONEY – PARTICULARLY IN PAPUA NEW GUINEA.

As some of you may know, I am an advocate of SELF-EMPLOYMENT. I have written a book on the subject called Be Your Own Boss and I have been sharing my ideas in the newspapers. I am glad to report today that many Papua New Guineans are catching the idea and are starting their own businesses. I believe that is the way to go. The country needs many small business people who create jobs. We have too many job-seekers. We need to take our economy back from large multinational corporations and foreign businesses that are mushrooming all over the country.

With the LNG project and other resource developments taking place all over the country, the environment is right for us local people to start small businesses. Let us not leave the playing field wide open for Asians to play the game. We must not complain when they succeed under our noses. We must get in, play the game, and beat them.

So my friends – students, parents and teachers - I am sorry if I have messed up your minds by what I have said today, but before you dismiss it and stick to the old way you have been looking at life, I urge to you think deeply about what I have said today.

I would even go so far as to suggest to you that if you do not make it to Grade 11 or a tertiary institution next year, BE VERY GLAD, NOT VERY SAD. Take it as an opportunity to do something with your time, mind, strength, talents and land. Don’t rush to upgrade your marks or look for other options to further your education. Consider the option of starting a small business instead. Be committed to it, and I can assure you that in 2-6 years time when your colleagues who have continued up the educational ladder start looking for jobs, you will be a few years ahead of them financially . When you have the money, you can always go back to school if you feel you need it.

Let me end with a Bible story. In the book of Exodus Chapters 3 and 4, we read about the encounter Moses had with Jehovah God, where God calls Moses to go to Egypt and rescue the people of Israel from bondage. Moses tries to make God change His mind by giving excuses as to why he is not the right person to carry out the assignment. But God insists that Moses is the right person for the job. He tells Moses, “I will be with you.” Then He asks Moses what he has in his hand. Moses replies that he has a shepherd’s rod. God tells Moses to throw the stick onto the ground, and when Moses does so, the stick turns into a serpent and Moses jumps away from it. God instructs Moses to pick the snake up by its tail, and when Moses does so, it turns back into a stick. God tells Moses, “I am going to perform many miracles, signs and wonders with this rod, and deliver the Israelites from slavery.”

Notice that to Moses, the rod was just a rod; to God, it was mighty instrument of signs, wonders, miracles and deliverance. God already saw what Moses had in his hand, but yet He asked Moses what it was. Why did God ask Moses? So that Moses could realise that what he had was more than a shepherd’s rod. It was something greater than Moses thought.

One thing we can learn from this story, which is relevant to my message today, is that sometimes the things which we think are insignificant are the very things that can help us succeed in life. We tend to overlook them, because we think our success ingredients are in some other place or in some other people.

So students, in closing, let me reiterate: YOU’VE GOT WHAT IT TAKES TO SUCCEED IN LIFE! You possessed the ingredients before you came to school. Now that you are educated, you have increased your chances for success, because now you possess not only a sound mind and common sense, but an educated mind. You should succeed regardless of whether you continue on to further education or the system pushes you out. If you find out next year that your name has been dropped from those who will be entering a tertiary institution or Grade 11, don’t worry about that. You may not be able to obtain a tertiary qualification, but you can still succeed, because you have what it takes to succeed.

To graduating students, CONGRATULATIONS! To everyone, an early MERRY CHRISTMAS AND A HAPPY NEW YEAR!

God bless you all!

BOOK PUBLISHING: AN IDEAL BUSINESS

2010-08-24T13:25:00.001+10:00

I have been discussing business ideas in the last few of articles. As regular readers will know by now, my definition of a business is a system which is established to provide goods or services which satisfy the needs or solve the problems of society. Going by this definition, I have said that the best way to develop business ideas is to look for needs or problems and come up with ways to satisfy them. The more efficiently you are able to solve problems or meet needs, the more successful your business will be. I have made the definition of a business as wide as possible to impress upon you that the only limit to the kinds of businesses you can engage in is your imagination.

In this and the next several articles, I would like to discuss a number of business ideas which readers can think about getting into.

We just had the National Book Week in PNG, which concentrated on encouraging people to read. This is good. But one problem (or business opportunity) I see that most of what people are encouraged to read is material written and published by foreign authors. I believe that we need more Papua New Guinean writers. I also believe that PNG is becoming a more literate nation. The number of readers in the country has been increasing and will continue to do so. Just look at how many people are reading newspapers now compared to the past. That is why I believe that it is now time for people to start writing for a living.

I would like to share my personal experience in writing and publishing as a business. I have met many people who are interested in writing, so this article may be a source of inspiration to them.

Book writing and publishing is an ideal business, for the following reasons:

• We live in the information age where the thirst for knowledge and information is unquenchable. I believe that everyone has at least one book in them, which if they wrote and published, would help other people. I don’t believe people who say that there is no market for books in PNG. From my experience, there is a big market for books in the country. The challenge is to find it and meet its demands.

• Considering that we live in a world without borders or a global village, when you write books, the whole world is your potential market. The challenge is to find the market for your particular kinds of books. There are 6 billion people in the world today. Stretch your mind and imagine if you could sell your book to a million people or just 0.02% of the population. Multiply that by the average price of your book and see how much you could make. There may not be many readers in the country, but there are hundreds of millions of readers in the world. You can sell your books on the world market through the Internet, both in hard copy and electronic book form. The book market is valued in the trillions. You have a better chance of making millions in such a market. That is why successful authors are multi-millionaires. Some of them are so successful that they get paid millions even before they start writing their books!

• Book publishing is a mobile business. If you have a laptop computer, you can literally take your business everywhere you go. I live in Goroka but I have written my books in Port Moresby, Lae, Hagen, Tabubil, and even in the village using a generator as the power source for my laptop. I have written parts of my books at airports lounges while waiting for the plane. There aren’t many other businesses that are as portable.

• And with today’s information technology, you can be in touch with buyers anytime. I get book enquiries and orders through email or my mobile phone anywhere and anytime I am able to get access to the Internet or phone access. You can take your books and sell them everywhere you go. When people get to know that you are in that business, they will always ask you if you have copies with you. You show one person a copy and may end up selling several because others may be interested as well.

• When you get into book publishing, it can be a one-man show, at least until you need to get other people to help out. You can write books and get them edited by other people. You then engage a printing company to print the books, after which you get a distributor to sell your books if they have a good network. Otherwise you can market and sell the books yourself. You can sell single copies or in bulk. Your operational costs can be very minimal.

• Your mark-ups can be substantial. For instance, you may spend K15,000 to print 1,000 copies of a 200-page book. The more books you print, the lower the unit cost. In this case your unit cost is K15/copy. Your freight and marketing costs may add up to K3/copy. So your total cost is K18/copy. When it comes to pricing, you have monopoly power. (There may be other books that are similar to yours, but they aren’t exactly like your book, so your book is literally the only one of its kind on the market). So you can set any price you want. Say you decide to set K45/copy as your retail price. Your profit margin would be 150%. Every time you sell one copy, you make K27. If you print more than 1,000 copies, your unit cost would fall; consequently, your profit margin would be higher. Imagine if you sold 10,000 copies. What if you sold a million copies on the world market?

• When you publish a book, you position yourself to earn what is known as ‘residual’ income. What this means is that your hard work in writing and publishing the book gets rewarded over and over and over. When you work at a paid job, your labour does not have residual value. When you work, you get paid; when you stop working, your salary stops coming in. So the only way to keep money coming in is by going back to work every day. It is different when it comes to book writing. You may expend several months or a year writing a book. So you do all the hard work over that period of time. When it comes to selling your book, there is no time limit. If you run short, you don’t rewrite the book again. You simply instruct your printer to print more copies, and you just keep on selling. The time and effort you put into writing the book has residual value, that is why the money you earn can be labeled as ‘residual’ income. The beauty of it is that copy right laws cover you for the next 70 or so years! So you can write a book over a period of one year and get paid for the next 70 years.

• When you write books, you make money but at the same time you become prominent in the community. Many people will recognize and respect you, and some will even consider you as an expert or authority in the subject you have written your book on. Such recognition will open many other doors into your life. You will definitely meet a lot of people of all walks of life. You may get interviewed on radio or TV. Newspaper journalists may follow you around for stories. You may get invited and paid to speak. You may even create a secondary source of income by converting the main ideas in your book into a seminar or training material. This has been my experience since I started writing in 2006. I have been interviewed twice by Radio Australia; I have spoken on NBC and local radio many times; I have been featured on newspapers; now I am writing for this paper; I have been invited to speak at school graduations; I have met prominent people like our Governor-General and many MPs; and I have been doing seminars for corporate organisations. Seminars is another business of its own, which I will discuss in the next article. People who have known me for long know that I have always been a quiet and obscure person. Writing books has completely transformed my life. It was difficult initially but my persistence is now beginning to pay off. It is now much easier to sell my books than it was when I first started. My readers are always asking when the next book will be published.

There are many other benefits you can realize from writing books as a business. But I believe that I have given you enough in this article to get you thinking seriously about writing your first book. If you are a teacher or ex-teacher, I encourage you to put your experience into a book. The education system is short of teaching materials. You can meet that need by writing a book on the subject you have been teaching. Schools need all kinds of books. If you are an economist, accountant, lawyer, mechanic, technician, food technologist, engineer, journalist, etc, there is a market for your expertise. You may not believe what I am saying but it is true.

You need to transfer your knowledge and experience to the next generation through at least one book, otherwise all the knowledge you possess will become food for the maggots in your grave.

DEVELOP BUSINESS IDEAS BY ASKING QUESTIONS

2010-08-24T13:10:00.002+10:00

I have discussed how to develop business ideas in the last two articles. I emphasized the importance of identifying needs or problems and coming up with products or services to meet those needs or solve the problems people face. The more effectively you can help people satisfy their needs or solve their problems, the more you get paid. The emphasis once again is not on money, but on people. If you help people and make their lives a bit more comfortable, they will give you their money. So remember this: A business does not exist for the purpose of making money; it exists to make solve peoples’ problems.

I also discussed the importance of meeting needs and solving problems using your unique set of talents, hobbies and skills. What I would like to add here is that every one of us is multi-talented, meaning that you can do several things well. You may also be multi-skilled, and you may have more than one thing you do as a hobby. What I encourage you to do is therefore to look out for more than one problem or need that people have, and how you can address them using your different talents and skills.

Let me say here that the majority of business people took their ideas from existing businesses. In other words, not many businesses are novel or completely new. While many businesses are exact copies of existing businesses, many are variants of existing businesses. I would like to see more Papua New Guinean businesses that are completely novel, meaning that they are addressing needs and problems in a completely new way. That, I believe, is true innovativeness and entrepreneurship. But such businesses emerge from a lot of conceptualizing and meditation. People look at the needs they see around them, and they think up solutions without any visual reference. It all takes place in the mind.

But I also realize that most of us see more with our eyes than we think (or see with our minds), and we tend to believe what we see more than what we hear. Therefore, when it comes to business, we normally tend to look around to see what other people are doing, and most of us think about doing exactly the same things. The result is that competition increases, and we end up driving prices down. This is obviously good for the buyers of our products and services, but as business people, competition works against our "bottom line".

That is why I have been advising in the past two articles that you either do something completely new, or do what other people are doing but in a different way. Do what others are doing, but set yourself apart from them by the way you do it. It is called differentiation.

Questions You Should Ask
How do you set yourself apart from others? How do you do what existing businesses are doing but differentiate yourself from them? Here are some questions you can ask yourself. Each question forces you to think deep and look for hidden opportunities which others have overlooked (because they were not obvious). As you consider each question, think of real examples of businesses that have differentiated themselves from others doing the same things or selling the same products.

1. Is there a better way for meeting a need or solving a problem? This question indicates that you are thinking of doing what other are already doing, but you are looking for ways to improve on what they are doing. Let your imagination run wild. Look at needs that are being met, but think of ways you can do it better or more efficiently. You will be surprised at the kind of business ideas you come up with.

2. Can I make it bigger? Sometimes size and price makes a big difference. Remember the days when Bmobile was the only company in the market providing mobile phone services? Services were very unreliable, and limited to the major centres. Unreliable services provided the opportunity for another operator to enter the market. When Digicel entered the market, it concentrated on developing its network. It built an extensive network of towers, even into rural areas where Bmobile didn’t think of going into. It can therefore now boast of having “The Bigger, Better Network”, and it is still expanding. The result is that Bmobile has become a follower, even though it was the first to be in the market.

3. Can I make it cheaper? Price is probably the most important factor that determines peoples’ purchasing decisions. Generally, the cheaper the product, the more people will buy it (assuming that minimum quality standards are maintained). If you can introduce a good quality product or service at a lower price, you will have no problems attracting buyers.

When Bmobile was the only mobile phone service provider, their prices for handsets were very high, and they forced customers to buy K200 worth of credits at the same time as they bought the handsets. It was expensive for most people to own mobile phones. When Digicel came, it made mobile communication much more affordable by introducing cheaper phones. Today you can buy a phone for as low as K29. As well as that, Digicel introduced the K3 prepaid phone card. This brought mobile phone services to the level of grassroots people.

Bmobile had no choice but to follow suit, because K3 was more affordable than K20 or even K10 cards. You will notice that Digicel did something Bmobile was already doing, but in a much better way. If Bmobile had made mobile communication affordable by building a network covering the country and sold cheap phones and cards, Digicel may have found the PNG market unviable.

4. Can I introduce a product or service that solves problems faster? In today’s fast-paced world, people are always looking for ways cut down on the time it takes to do things. The search for faster ways of communication led to the invention of the telex machine, followed by the fax machine. Today most people communicate by email and text messaging. Fast-food outlets help people satisfy their hunger much faster than if they were to cook themselves. Taxis ferry people to their destinations faster than buses that are required to follow established routes. Think of products such as instant coffee and two-minute noodles and you will get what I am talking about here.

5. Can I add something or subtract something? This question can help you to fine tune your business ideas until you get the unique business idea that you are willing to execute. For instance, Jasmine rice is basic long-grain rice. But producers knew that consumers add colours or flavours when they cook rice at home. So they added the jasmine flavour to make it easy for housewives. They are therefore able to charge higher prices than normal long-grain rice.

6. Can I make people’s lives more convenient? Generally people want convenience, meaning that they want to have their needs met as and when those needs arise. If you think about it, the bulk of goods and services available exist to make life more convenient living. Think of a convenience store. It sells most items people like, and it opens very early and closes very late. The owners know the basic items people need on a daily basis, and they know that the opening and closing times of the major shops are inconvenient for most people. So they make those items available for as long as they can in a day.

If you think of the food sellers around the government offices in Waigani, they are making life convenient for the workers. If government workers were to go to fast-food shops or the markets to buy lunch, it would be both costly and time-consuming. So to solve the government workers’ need for food and shorten the time looking for it, they bring food to where the workers are.

7. Can I complement an existing business? Look at an existing business and ask yourself how you can complement what that business does. For instance, I have a friend who runs a vehicle repairs workshop. On the same property is another person who sells car parts and accessories. He is a major supplier to the repair shop owner. I have also seen people with hire cars operating out of hotel rooms. Their aim is to get the hotels’ clients to rent their vehicles. So look around and think about what you could do to meet that business’s needs, or the needs of its clients.

As I stated in last week’s article, I now sell many of my books during seminars. When I first started doing the “Seven Steps To Financial Freedom” seminar, I brought copies of only one of my books from which the seminar was based. It soon turned out that the seminar was an opportunity to sell my other books as well, because people starting asking for them. Today I carry a case full of all my books. And I usually sell several copies of all the books. So the books complement the seminars, and the other way around.

8. What else can people use this for? This line of questioning would enable you to take an existing product and sell it to people to meet needs which they are not aware of. Maybe people are not buying enough because they do not know of certain qualities of the product that they could benefit from by consuming it.

Several years ago an elderly man from my village had a blocked prostate which made it very hard for him to relieve himself. I took him to the hospital and was advised that he needed to have a major operation to free the blockage. Unfortunately the hospital ran out of supplies for its operation theatre due to a major blockage on the Highlands Highway. We were told to wait, but the longer we did, the old man’s situation worsened to a point where he just couldn’t sleep. At our point of desperation, somebody suggested to me that I should try giving the old man aloe juice. I bought a container, but the patient was very reluctant. He asked, "I can drink it, but where will it go out”? I pointed out to him that he had no choice, so he took it. That night he slept very well for the first time in many weeks. He was also able to pass some urine. I bought several more containers and he drank until he was completely free of the affliction without the operation. He is still alive today. Based on this experience, I introduced the juice to two other men with similar problems, and both experienced the same results.

Nutritionists say that aloe juice provides many benefits to the body. For instance, it is said to delay the ageing process. But from my experience, it is very effective for men with prostate problems. I could easily start a business by identifying men with prostate problems and selling them the juice. I don’t have to manufacture it. The product is availabe already. All I need to do is to sell its benefits to men who suffer prostate problems.

There must be products you can start a business on by presenting their benefits in a different way to a specific group of customers.

9. How can I make this more marketable? Study an existing business to find out if you can introduce better packaging or a better delivery system. Once again, you don’t have to produce the product. You take it and deliver it more efficiently than it is being supplied to buyers.

10. What if I do something that is the opposite? Some businesses that are thriving now were started with business ideas that people considered crazy!

I could go on listing so many other possible questions you could ask when developing business ideas, but I shouldn’t give you all the answers. My aim in this article was to provoke you to start asking questions. As an aspiring entrepreneur, you must come up with your own questions and answers.

DEVELOPING BUSINESS IDEAS - PART 2

2010-07-24T10:58:00.001+10:00

For those who have been following this column, you will recall that last week’s topic was “Developing Business Ideas”. In a previous article I defined a business as “A system through which a product or service is produced or provided to meet needs or solve problems.” Then I stated that if you want to develop business ideas, there are two things you need to do. Firstly, you need to observe and identify the needs and problems of society. What is one need or problem many people in your community, city or country face? If you think of a business as a problem-solving or need-meeting system, the playing field gets so wide that there is definitely one thing you can do. You will not run out of ideas. In fact, the only limitation will be your imagination. Or as people say, the sky will be the limit.

I have stated that after you have identified a need or a problem, the second thing you have to do is to assess yourself to see how you can provide a solution to that problem or meet that need with who you are and what you have. And I have discussed the importance of meetings needs using your natural talents, your hobbies and your special skills.

I informed readers at the end of last week’s article that this week’s discussion will be on conducting market research, but I feel I should dwell a bit more on business ideas because I believe that this area needs further elaboration. I would also like to share with readers my own personal experiences in relation to business ideas. Let me state right from the outset that the purpose I am sharing my experience is not to boast to you but to get you to think about what you can do for yourself.

Failed Attempts At Business
I have attempted several businesses. The first was a second-hand clothing shop. The second was operating a PMV bus. The third a piggery in the village. The fourth a fast-food outlet in the town I live. One thing that is common about these attempts at business is that they all ended up failing. There are several reasons why each of these businesses failed, which I will not get into here. But one thing I realize now is that I started all these businesses without any preparation and research. I started them mainly because I saw other people doing these things and seemingly making money from them. In other words, I was a copycat instead of being an original. Just because other people were making money, I thought I could make money too. I learnt the costly lesson that this was a wrong premise altogether.

Consulting
In 2001 I tried doing consulting work and conducting training on coffee factory management, quality control and international trading (exporting). I based this business on my knowledge of the coffee industry, which I had worked in for some years. It worked for a short while but soon I realized that the market for my services was too small. Even though the industry is big, the number of players who would need the kind of services I was selling was small.

Book Publishing
So I went back to the drawing board and started thinking about what I should do next. That was when I started examining what needs are out there, and my own talents, hobbies and skills. And that is how I ended up going into book publishing followed by motivational seminars. I realised that writing is one of the many talents I am gifted with. So I wrote Success After Graduation, my first book, and had it published in 2006. The book discusses issues which students do not learn about while in school, such as what the job market is like, how to write a job application and perform at an interview, how to develop work habits that will help you rise up the corporate ladder, what you do when you are fired by the boss, how to plan for retirement, marriage, and self-employment when job hunting becomes unfruitful. The book was self-published, and it sold out in the first lot within 6 six months. After reprinting a second time, I have expanded the book and am now in the process of publishing a second edition under a different title.

Young Money, my second book, was published in 2007. I wrote this book to help working class people manage their salaries in a way that can help them become financially independent and free. The need for such a book became clear to me when I saw that the bulk of working people were living in habitual debt due mainly to financial mismanagement. That book sold out within the first 3 months and I have had it reprinted twice already.

In 2009 I published Be Your Own Boss, my third book. This book has impacted most people that have read it. I am hearing that many people have started their own businesses after reading the book, which is exactly why I wrote it in the first place. Many of the articles in this column have been based on this book.

Steven Winduo, an academic from the University of PNG, stated in an article in The National of 16th July 2010 that as far as he is aware, nobody in PNG writes for a living. He was wrong, because I have been writing for a living for the past 4 years now. I am not saying that I am rich from this profession (hopefully one day I will), but I am making a living writing full-time.

Mr. Winduo was probably correct as he was discussing book writing for a living from the perspective of an academic. There isn’t a lot of money instance from writing poems, novels, biographies or technical papers. But I believe that if you write a text book and market it well, you can make big money because locally-written textbooks are a need in this country. You can in fact retire on one well-written and marketed secondary or high school text book that is in line with the new education curriculum. Most teachers have been complaining that the out-come based (OBE) curriculum requires teaching materials (text books and student workbooks) which are not available. Well, there is a need right there. If you meet it with your writing skills and teaching experience, you can literally set yourself up for life. Something for teachers and lecturers to think about.

Going back to my publishing business, I have identified so many needs in the country that I have a plan to write at least 10 different books to meet those needs. I will shortly be publishing 2 of my latest books, one of which is aimed at addressing the needs of students and the other the financial problems faced by church-going people. From the responses I have been getting from readers of this column, I have identified the need for a book on how to start a business, so I have started writing it. I have also been asked by many people how they can write books as well. I take that as a definite need, so I am writing a book on how to write a book. Two other books are on real estate and stock market investing.

Books are products I am developing to meet needs and address problems faced by many people in this country. Making money is secondary to me. If I can help people solve their problems or make their lives worthwhile, I know that money will come. That is the attitude you need to have. Don’t go for money first. Don’t start a business to make a lot of money. Do something that helps people, and money will find you.

Motivational Seminars
When I published my second book, somehow Radio Australia’s Pacific Service got wind of it and did a live interview by telephone. Among the listeners was an Australian manager of Hasting Deerings (PNG) Limited based in Port Moresby. After the radio interview ended, he contacted me by email and asked if I could come talk to his employees. He also attended the launching of the book by Grand Chief Sir Paulias Matane.

In our discussions, he told me how much the company paid its employees, and how that the majority of employees were constantly running out of money and asking for company advances. He also stated how surprised he was to learn that many of his employees had been borrowing from more than one lender. He stated further that indebtedness was impacting on peoples’ performance, such that some people were not turning up for work on paydays because their debtors were waiting outside the office to collect their money. Some were even having problems in their families because of financial difficulties.

That discussion helped me realize that this was a nation-wide problem. It also brought back memories of observations I had made of the people I had worked with before. I also recalled how I used to run out of money too and borrowed several times when I was on salaried jobs. It further reminded me of a recent attempt by then Chief Secretary Isaac Lupari to stop public servants from borrowing money from finance companies, and how the borrowers colluded with the lenders to take court action against him because people felt that he was trying to cut off their sustenance.

I therefore designed a motivational training program called “Seven Steps To Financial Freedom” to address the problem. Financial freedom is the point in life where you do not need to work, either for yourself or someone else, and yet you are able to meet all your living expenses. You live the life of your dreams because your money works for you. This contrasts with what school has taught us to do, which is to work for money.

I am thankful to Hastings Deering for helping me launch the seminar part of my publishing business. The company took me to Lae, Port Moresby, Tabubil, Lihir and Kokopo to teach employees how to manage their fortnightly pay with a view to becoming financially free through budgeting, saving, starting businesses and investing. I have also presented this training to employees of the Coffee Industry Corporation, the Investment Promotion Authority and Barrick PNG’s Kainantu gold mine. This week I conducted pre-retirement financial management and investing training for PNG Power employees aged 47 years and over at the Yonki township. Next week will be in Hagen. I am in discussions with Air Niugini, PNG Forest Authority and Barrick Porgera as well.

Other seminars I have developed cover academic excellence for students, book publishing, real estate and share market investing. I have also been in discussions with several MPs about the possibility of conducting business training for unemployed young people in their electorates.

I am not telling you all this to boast about what I am doing. My purpose is to help open your eyes to look around and see needs and start meeting them with your unique set of talents and skills. After having tried several businesses which were based on what other people were doing, I think I am now in a business that is unique, because it is based on my own uniqueness. I am probably the only one writing and speaking for a living in PNG today. That places me as the first in the writing and motivational speaking market. I have two income streams which are complementary. I write books and design seminars based on the books. I get paid to speak, and I also sell my books.

I am enjoying every bit of it because what I am doing is inspiring other people to believe in themselves and realize their potential. People are using my ideas to start their own businesses, invest in properties and shares, etc. For example, I know of two recent university graduates who started their businesses after hearing me speak at a church. One of them has reported that he is now running a million-kina operation after only 2 years of starting the business! Many people have given up on betel nuts, alcohol, smoking and gambling, while others have come out of debt and have started to save money for the first time. And yes, I am making money from these seminars, which as I have stated, is secondary. I help people become successful, and I make a living in the process. That, I reckon, is the real purpose of a business.

If you do what others are doing, you will face competition right from day one. But if you do something completely different, you will be first in the market. That will give you a head start. My challenge therefore is that if you are really interested in starting a business, think of doing something unique. Think of needs which nobody else is addressing. In other words, think of carving out a niche for yourself.

However, if you run out of ideas and resort to doing what people are already doing, do it a little bit differently from the rest. Add your personal touch to it. Do something that will differentiate you from the others. This is the second best option available to you. The best, and more challenging option however, is to start a completely novel or new business.

Developing Business Ideas

2010-07-15T22:26:00.000+10:00

In the last article I discussed natural talents, hobbies and skills as the basis for a thriving business. The crux of the discussion was that if you are to go into business, make sure that business is aligned to your talents and hobbies, because only then will you enjoy running the business. If the business is based on your skills or on what other people have been doing (meaning you just copied their ideas), you may make money but you may not be satisfied because it goes against your nature. If you ask seemingly successful business people, they will tell you that they still feel there is something missing in their lives. Their real interests (talents and hobbies which give them real satisfaction) lie elsewhere.

Let me give you an example. PNG has recently witnessed a boom in motels, lodges and guest houses, both in rural areas and in the main centres. This has been a response to the shortage of reasonably-priced accommodation in the hospitality industry. All the hotels have priced their rooms out of the reach of the majority of clients, so small lodges and guest houses have sprung up to meet the needs particularly of ordinary Papua New Guinean travelers, small business people, public servants etc. Many families in urban centres have converted their houses or parts of them into guest rooms which they charge on a nightly basis instead of renting the houses out for monthly income. A four-bedroom house can be rented at between K500 and K1,000 per week depending on location, but it can also make between K80 and K150 per room per night. In this instance, the owner has the potential to make between K9,600 and K18,000 per month (assuming 100% occupancy) instead of just K2,000 and K4,000 per month by renting the house.

I have been doing a bit of travelling lately. As a small business person, I cannot afford staying in a hotel, so I have been staying in lodges and guest houses, most of which are run by families. What I have noticed in many instances is that even though the location of the place and the rooms are okay, the atmosphere is not inviting. Sometimes people do not greet you; some are rude. You can feel that the people who run the business are only interested in money, not you as another human being. If you look into the lives of such people, you will invariably find that they are not naturally generous and hospitable people. They are running the place just to make money.

A family friend recently established a lodge. The man and his wife are very compassionate and generous people. They have looked after a lot of other peoples’ kids over the years. You can sense love in their hearts when you talk with them or visit them at home. Their lodge is always full of guests, so they are making a lot of money. But for them, the lodge is not merely a money-making venture. It really exists as an extension of their hearts of hospitality and generosity. It is an avenue for them to meet people and show them acts of kindness. You can sense generosity when they give you a free complimentary breakfast. Their meals are also very generous. You get more in terms of quality and quantity than you can get from a hotel. For me, this family is in the right business. They are doing something that aligns well with their nature and the kind of people they are.

What Business Should You Start?
As you may recall, I have defined a business as a system established to solve problems or meets needs of society. When we see a business in operation, our minds immediately go to the money that is made. But money is only a reward. The main purpose of the business is solving problems and meeting needs.

If you think of a business in this way, you will realise that the sky is the limit when you start thinking of what business to start. This is because whichever way you look, you will see problems to be solved or needs begging to be satisfied. Most people see these problems and needs as just that: problems and needs. But people with entrepreneurial minds see problems as business opportunities. They believe that problems and opportunities are opposite sides of the same coin.

So if you have been reading the articles in this column and have been wondering what is the best business to get into, I encourage you firstly to open your eyes and see the needs that are out there, and secondly, to see how best you can marry or match those needs to your special set of talents, hobbies and skills. That is if you want to do something that is novel or completely new and unique, something different from what everybody is doing.

I have been emphasizing this because I believe that your chances of success are greatest if you are the first to spot an opportunity and establish a system to take advantage of it. When you do something new and start making money from it, other people will definitely copy what you do. But being first in the market gives you the advantage of establishing contacts and developing a client base which newcomers may have a difficult time winning over.

The next best thing you can do is to look at what other people are already doing, and introduce a product or service that is somewhat differentiated from what is on the market. Or if you live in a centre where nobody is doing what you have seen people do in another place, you might introduce exactly the same product or service if you have the means to do it. This is in fact one of the main ways the majority of businesses have been started. That is why the majority of businesses are similar, with only a few differences in the way the businesses are conducted or the products or services are packaged and delivered.

Let me give you a simple example in the PNG context. Consider the market for live chickens. In Goroka where I live, 8-week old chickens used to be sold for K20. Today, demand is such that chickens are sold for between K25 and K30 at ages ranging from 6 to 8 weeks. You can easily sell 6 week old chickens for K25. Most farmers buy day-old chicks in lots of 50 at a time. They then feed the chicks for 6 weeks before selling. After sales they buy another 50 chicks for fattening. So their sales regime is 50 chickens every 6 weeks. Assuming that all the chickens live and get sold, their gross income is K1,250 every 6 weeks. Half of that income would cover costs, with the other half being profit.

If you wanted to get into the live chicken business, you could do it a bit differently as follows. Instead of buying 50 day-old chicks, you would buy only 20. After 2 weeks you could buy another 20, and another 20 the following fortnight. In this way you would have a constant supply of 20 chickens to sell every second week.

Let us consider your income potential under these two regimes. If you sell 50 chickens every 6 weeks, you would work with 9 batches in a year. Your gross income would be K25 x 50 chickens x 9 batches = K11,250. With 20 chickens every week, your potential annual gross income would be K25 x 20 chickens x 26 batches = K13,000.

The advantage of selling 20 chickens every second week is not so much the money you make. Of course you are in the business to make money so money is important. But what I want you to see beyond money is the need for live chickens that you would be meeting. No matter where you are, there is a big need for live chickens. There are always different kinds of parties, celebrations and ‘mumus’ going on. In PNG society traditional ceremonies take place almost every weekend, even in urban centres. And people prefer live over frozen chicken.

What I have noticed is that many farmers do not have chickens to sell on a consistent basis. Most of them tell clients that they have run out of chickens or that the chickens are not ready for sale. Not many have chickens to sell every week. So their incomes are sporadic, not constant.

If you came up with a plan to sell batches of live chickens on a fortnightly or even weekly basis, you would have a beaten path to your house, because buyers would know that no matter what day or time they come looking for chickens, you would not turn them down. You enable them to meet their needs, and they happily pay you. The word would also get around that you are a serious farmer who has chickens to sell every day.

You could start with 20 chickens a fortnight, then to 20 a week and maybe increase to 50 or 100 a week after you gain experience and establish an efficient management system. At that level it would be a business turning over thousands of kina in a year.

I am sure that you can think of several other businesses people already run which you could improve on and make a comfortable living from.

Brainstorm Several Ideas
It is better to consider between 3 and 5 ideas instead of locking yourself into just one idea. The more ideas you consider, the more likely you are to zero in one that works. Don’t limit yourself. Be open-minded, and don’t be afraid to even consider ideas which seem crazy.

I have discovered in my own life that ideas in my mind come to me in a different way when I speak them out and hear myself express them. I therefore like discussing with people, not to get their opinions but primarily to use them as my sounding boards. All I need for them to do is to just listen and allow my words to bounce back from them. The more I speak, the more new ideas come to me in ways I never thought of initially. It is based on this experience that I also like listening to people talk about their dreams and aspirations. They need me as their sounding board. They need to get their ideas bounce of me and return to them in a new ways.

It is for this reason that I normally advise young people and students to establish what I call ‘success councils’ made up of like-minded people where they can generate and share ideas. Some people call them ‘master mind’ groups. Most young people get into groups to talk about their boyfriends and girlfriends, or sports, politics, religious beliefs, etc. While these may be important subjects, I propose that it is even more important to talk about business ideas in such groups.

Many large corporations which are progressive have such groups where they encourage employees to talk about ideas to take their organizations forward. They are already successful but they don’t rest on their laurels, because the business world is becoming increasingly competitive. In order to survive as well as to make progress, they generate new ideas through the ‘master mind’ groups.

I have read that an increasing number of educational institutions in America and elsewhere have been encouraging students to form such groups and start businesses even while studying, in recognition of that fact that paid jobs are scarce. Many universities now boast student entrepreneurs as a result of these business brainstorming programs. This is something for our institutions of higher learning to consider.

The subject of today’s discussion is obviously extensive and I know I have only scratched the surface. The two possible ways to develop ideas which I have highlighted are firstly to consider starting a business which is completely new by tapping into your talents or hobbies and matching them to the problems and needs around you. Secondly, to take ideas which are already working and make improvements to them so as to make your business stand apart from the rest.

I hope you have gained some insight into how you can develop a business idea.