Startups and Bitcoins in Papua New Guinea
Papua New Guinea (PNG) with few good roads, covered by dense rain-forests and more than 750 distinct languages is one of the most inaccessible countries in the World. PNG had been colonized by UK, Germany and Australia and gained its independent only in 1975. Today PNG is part of the Commonwealth but, unlike most other Commonwealth countries, Papua New Guinea elects its own Governors.
The instances, when one branch of the government is sabotaged by the other one (including, 111-members, unicameral National Parliament, governor and prime minister), are not unusual in PNG. Additionally, there are large secessionist movements in some PNG regions. For example, Bougainville Island revolt had lasted almost a decade (1988–1997) and resulted in massive casualties.
New Guinea’s economy depends on its rich mineral deposits for its recent record growth. However, most of this growth is attributed to ExxonMobil’s giants liquefied gas fields’ exploratory project. PNG population remains predominantly rural and relies on the agriculture for survival. Palm oil and cocoa beansconstitute more than 10% of PNG export. Australia is the main trading partner of PNG.
Papua New Guinea’s resources extraction orientated economy doesn’t meet high-tech businesses’ expansion requirements. On top of that, the great majority of Guinean population is employed in the subsistence agriculture, telecommunication infrastructure is underdeveloped, administrative and legal barriers to SME are high, seed capital and qualified personnel are largely inaccessible. At the same time, there are still a number of niche market opportunities available for startups founders, specifically in serving the needs of younger users of the rapidly expanding mobile Internet.
The Bank of Papua New Guinea (BPNG) says there is no policy to regulate cryptocurrencies in the country. At the same time, BPNG is following Australian financial authorities in developing blockchain technology solutions to bank the country’s 85% unbanked population. It’s, also, likely that BPNG will partner Australian regulators in their general stance on Bitcoin and on ICOs, which means that cryptocurrencies will be heavily regulated but still stay legal in Papua New Guinea in a future.
Business Notes for Startups Founders:
- political climate: not friendly;
- economic climate: not friendly;
- regions to focus: locally;
- industries to focus: FinTech, e-services;
- major limitations: poor population (85% employed in subsistence agriculture), heavy dependence on natural resources extraction (60% of GDP), slowing economy (GDP growth rate has fallen from 14% in 2014 to under 3% in 2016), high level of inequality (Gini exceeds 50), underdeveloped telecommunication infrastructure (fixed Internet penetration rate around 10%), high administrative and legal barriers to SME, unavailability of seed and VC financing, shortage of qualified personnel;
- stimulus: low costs, low competition, growing mobile Internet penetration, closeness to the Australian market;
- opportunities: to create an e-business aimed at the growing number of young users of the mobile Internet;
- Cryptocurrencies and ICOs (outlook): legal (positive).