Landfall in Japan: My first trip to Asia
Ben’s PNG Diary – Day 5: Moresby is people, not places

Wantoks and business – seeking a good compromise


THE WANTOK SYSTEM emerges from the idea of a clan sharing its resources. However sharing is not a good business model.

In western business, individuals seek to maximise profit with little regard for those upon whom losses are inflicted.  This approach is anathema to many Papua New Guineans.

However, like many traditional customs in Papua New Guinea, the wantok system has been subverted and corrupted for non-traditional purposes.

This is particularly so with people whose parents or grandparents migrated to towns and who no longer have any tangible connection to their original village and clan.

While it is a useful system in a subsistence economy, wantokism does not work well in the commercial environment.  Among other things it imposes considerable strains on working people. 

This may involve having to share their wages with unemployed wantoks to giving preference to unqualified and unsuitable wantoks when job opportunities arise.  Some workers borrow money from loan sharks just to keep their relatives happy. 

This is particularly so in the public service and is a major contributor to inefficiency and mismanagement.

Many wage earners in both public and private spheres eventually decide that the effort is not worth it and abandon their jobs.

One of the other negative spin-offs of the wantok system is that it is extremely difficult for individual entrepreneurs to successfully run small businesses.  Many attempts fall prey to the unreasonable demands of relatives and clan members.

Some wealthier Papua New Guinean businessmen have solved this problem by employing expatriate managers.  Others operate as silent partners in business; witness the vast Somare empire. But for the average entrepreneur trying to establish a business this is not an option.

But the wantok system can also work in a positive way for people wishing to start a business.  Small business loans are extremely difficult to obtain for Papua New Guineans because the banks and other lenders require collateral, such as land, as security.

With land largely communally owned, this is next to impossible.  The only source of unsecured loans is through less creditable sources, such as loan sharks, who charge exorbitant interest rates.

Wantoks often contribute collectively to get a business off the ground.  They seldom charge interest or set time limits for loan repayments and only expect to be repaid when the business starts to make money.

This system has a domino effect where successful businessmen then help other wantoks, to whom they are obligated, to set up businesses of their own.  Through this system, highlanders have virtually monopolised bus and taxi services in the two largest cities of Port Moresby and Lae.

The nature of small-scale passenger services in Papua New Guinea is such that it is not attractive to expatriate businessmen.  Passenger Motor Vehicles (PMVs) venture out to isolated villages and taxis often ply their trade in squatter settlements which are considered unsafe.

Such businesses also do not need large amounts of seed capital.  In many cases they can begin with one truck or one car and build up from there.

Larger amounts of capital are required when setting up businesses like tradestores.  But, with their arrays of tempting stock, they tend to be targets of wantoks.  Tradestores run by Papua New Guineans seldom seem to prosper for long.  This void has been filled to a large extent by Asians.

The Chinese have been in Papua New Guinea for a long time and many of the families are highly respected but with the burgeoning resource developments there are many newcomers, some of whom are illegal immigrants who have bribed their way into the country.

Small business is supposedly set aside by statute for the sole benefit of citizens but, with the willingness of public servants at all levels to accept bribes, there is no effective policing of the law.

These Asian newcomers who run the trade stores, fast food outlets, gambling, building services and minor engineering works are deeply resented by the average Papua New Guinean.  Occasionally violence erupts and Asian stores and premises have been torched and looted.

The recent practice of some resource developers to bring in Asian labour because it is perceived as more reliable and compliant has added to resentment and it is probably only a matter of time before it poses a security threat.

To make matters worse, some of these workers brought in by the resource developers do not have appropriate visas and are, in effect, illegal immigrants.  Rumour has it that some Chinese companies are bringing in prisoners from their jails to work in PNG.  Some of them will invariably manage to stay and get involved in business, both legal and illegal.

One of the original intentions of registering indigenous land groups was that clans could use their land to get bank loans to set up businesses.  The legislation governing ILGs was enacted in 1974 following a commission of enquiry into land matters in 1972.  At the time no real notice was taken of the wantok system. 

Recent amendments to the legislation have been directed towards tightening up the rules to avoid situations like the multiple and overlapping registrations dogging developments like the LNG Project.

Under the old system someone in Port Moresby who had got wind of a mineral strike on the land owned by their clan could rush into the Registrar of Incorporated Land Groups and register an ILG even if they had lived in Port Moresby all their life and had never actually been on the land in question.

As word got around, so these sorts of registrations multiplied.  The landholders living on the land often woke up to find that people they’d never heard of were talking to mining companies in Port Moresby about the royalties from the development.

This can’t happen with the new ILGs, while those existing prior to the new amendments will have to re-register their ILG and comply with the one-area-one-ILG law after 20 February 2017.

While this has changed for the better the way landholders negotiate with resource developers it hasn’t fixed the problem of wantoks and running a business.

As far as I can see that is a problem without a solution.


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Colleen Ambrose

The wantok system is a tradition and custom of PNG. People share and meet not only the needs and wants of their children and spouse but, also their brothers, sisters, nieces, nephews and other extended family members.

It is true that while it is a good practice in rural villages, it is not so in towns and cities.

However due to the developement taking place, changes in living standards and the rising cost of living, those in the rural areas cannot now share their money with others.

Nowadays it is really difficult to help an extended member of your family with money and with other modern stuff.

You can only do this if you have more than enough to cater for your own necessities.

In my nuclear family, my dad is in the workforce and he also owns a big cocoa block. Due to the rising cost of living, dad decided to let his brothers harvest his cocoa as my uncles' blocks are small and they are not regularly in the work force.

Moreover they have more children than dad has (only me and my two siblings). Their small blocks cannot provide enough for them all while we have more than enough with our cocoa.

Therefore many times we don't buy all the things we want and do the things we need to do as our asset is mostly benefiting our close relatives.

Michael Dom

A very lucid article, Phil, and thanks Tony Flynn for your relevant comments.

I really wish this was a central agenda to those in government.

It's my firm belief that if we don't sort this out issue PNG will continue to go around in circles.

Melanesian identity must be made brought up to date with today's life if we expect to be viable in tomorrows world.

An example is Sir Mekere's comments on revisiting the Pacific Plan. But there are more fundamental actions that PNG must also take as a nation. A cripple cannot support another cripple, they will both collapse.

An inspirational Melanesian leader would find a way out of this situation in PNG, and drive change at the local level.

It's not impossible, but for the lack of imagination, shear guts and tenacity and real concern for the good of the grassroots people of Papua New Guinea.

If only I was a pessimist, things would be a whole lot easier on me and I could just give up on the whole mess.

Tony Flynn

The wantok system was very popular in the West; Benjamin Franklin was quite keen on nepotism as were many other leaders of the time. Keep it in the family!

Reserved enterprises have been watered down to cottage industries by our dislocated leaders.

Our aspiring entrepreneurs need to be protected from efficient foreigners; their wantoks are in Asia and every spare kina is sent away and lost to the economy of PNG.

A point not considered in these matters is the money spent on wantoks is not lost to the economy; it goes to increase the multiplier effect.

Asian cash repatriations are a drain on the economy. Bring back and enforce the reserved activities. There are aspiring small operators who need the protection that the government can and should give to its citizens.

The ability to handle the wantok problem can be developed and should be taught at school.

As a PNG entrepreneur who's father or grandfather speaks tokples or pisin, how do you compete with an Foreigner who has thousands of years of mercantile history and has contact with a network of like minded people? You have to be well above just being capable.

Generations ago we had a need for Asians and Westerners to run trade stores and small businesses. PNG citizens were villagers or laborers, hardly a skilled person to be seen. Scarcely a drivers license was issued in the name of a PNG national.

Admit it; we cannot compete with foreigners at many levels for various reasons. Where we compete successfully we have to be better than they are.

When we get to the bottom of the economy, the hundreds of trade stores and haus kais, we need help from our leaders. We get hot air, our leaders collapsed years ago.

Foreigners are operating PMVs, tuckerboxes, selling buai, running various small building firms, living as village people, married locally and farming in various communities.

There are about six in and around Bulolo trying to settle, some are looking for stores to operate in the settlements. Our leaders in business, government and politics have little or no interest in the above,

That the grass roots have an interest is shown by them smashing and burning Asian stores as the opportunity arises.

The new ILGs will probably still be issued without boundary mediation or agreed boundary marks. The group marking the area first can quite easily take in land belonging to other groups.

A requirement was that the application was shown on the District noticeboard, possibly not seen by other landowners. Another government decision subject to the Law of Unintended Consequences.

Albert Schram

A hard-nosed assessment. Would formalising or organising the informal business (e.g. PMVs) be part of the solution, following Hernando de Soto's thinking?

Mrs Barbara Short

Very interesting, Phil.
The Factors of Production, PNG style!
You should have taught Economics!

Paul Oates

The reality of the issue is that this dilemma is not new. It happened elsewhere many hundreds of years ago. The nub of the problem is that it is happening in PNG today.

The issue is essentially one of a time warp that directly contrasts the traditional values of clan and villages life with the structure and discipline of commercial undertakings.

Perhaps the solution to the problem is there. Its just our of sync with the problem?

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