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More thought needed: Education fund can go beyond student loans

Patrick Kaiku


PORT MORESBY - The recent announcement by prime minister James Marape of the PNG government’s consideration of an endowment fund is a significant development initiative.

Presumably this fund operating through the Sovereign Wealth Fund will function like a loan scheme, a pool of resources available for Papua New Guineans to access to meet costs of their education.

This is not a new proposal. Former prime minister, Peter O’Neill in a 2015 speech at the 60th graduation at the University of Papua New Guinea made a similar commitment when he proposed the establishment of a K200 million fund for disbursing loans to tertiary students.

But simply using an endowment fund for tuition misses the point. It is a piecemeal approach that will fail to fix systemic problems confronting the state of tertiary level education in PNG.

So much of the debate on human resource development has a tuition fee bias. The quality of tertiary level education, teaching and learning facilities, and the updating of knowledge content in tertiary level education, also matter.

The proposed endowment fund should be comprehensive in dealing with tertiary level education for the production of the human capital of this country.

The development of academics must be part of discussion on the fund. Two documents that can serve as a guide are PNG Vision 2050 and the 2010 PNG Universities Review (the so-called ‘Namaliu Report’).

In Vision 2050 and the Namaliu Report there are specific recommendations for the establishment of education endowment funds for the purposes of maintaining institutions of higher learning, scholarships and research.

Vision 2050 is explicit about the intended purposes of an education endowment fund. Such a fund will be established to park all funds that are appropriated by parliament. This fund will provide Papua New Guineans with sponsorship and funding for national and overseas scholarships.

The Namaliu Report on the other hand is very practical about the governance mechanisms for Universities Endowment Trusts. Boards of Trustees are tasked in the Namaliu Report to manage the trust funds.

The Namaliu Report is less specific about the use of the trust funds should they be established as part of the funding mechanisms of universities in PNG. But the important contribution by the Namaliu Report is its sound accountability and reporting mechanisms in the administration of such funds.

Through the Sovereign Wealth Fund, endowment funds can be used to support scholarship, research and the development of globally competitive higher learning institutions in PNG.

An endowment is a viable mechanism to provide consistent funding for scholarships and exchange programs, and other path-breaking research and development initiatives by PNG researchers or scientists or the upkeep of higher learning institutions in the country.

In other words, investments in the academics, and researchers. A critical mass of Papua New Guineans, credentialed with post-graduate level teaching qualifications from world class institutions is needed to jump-start the quality outcomes of PNG’s tertiary level education.

To illustrate the problem, consider the UPNG. There are departments in the University with an aging staff. The exodus of highly qualified academics to proverbial greener pastures or academics dying on the job attests to the need to focus on retaining staff in the University.

Incentivising the academic profession, and providing the pathways to guide  younger generations of Papua New Guineans to take up interests in research and the academia is an investment that will regenerate returns for knowledge creation.

Universities are hubs where knowledge and ideas are created for the benefit of society. That is the whole crux of the PNG Vision 2050, a visionary document that sees PNG as a knowledge-based economy in the year 2050.

In its present form, the Sovereign Wealth Fund prioritises infrastructure development and infrastructure maintenance in PNG. There are short-term economic imperatives in investing in the economic infrastructure of the country.

The danger however is the long-term capacity, technical know-how, and cutting-edge technology to maintain such infrastructures are very much dependent on the all-important investments in the human capital.

As Asian economies such as Japan, Korea and Singapore have demonstrated, human ingenuity and adequate technical know-how (soft infrastructure) sustains physical infrastructure needs in any modernizing society. There are examples of such funds in other parts of the world.

Azerbaijan, through its State Oil Funds used proceeds from its oil resources to provide scholarships for its young people enrolled in prestigious overseas universities at estimated cost of $US78 million over a period of eight years (2007-2015).

Alberta, a province in Canada, provides useful lessons as well. In the exploitation of its vast natural gas resources, Alberta province created a trust fund that deposits proceeds from its non-renewable resources towards separate endowment funds.

These endowment funds include Alberta Heritage Science and Engineering Research Endowment Fund, the Alberta Heritage Foundation for Medical Research Endowment Fund and the Alberta Heritage Scholarship Fund. These funds are specifically earmarked for the scientific, medical and social science and humanities training of citizens of Alberta.

PNG can tap into exchange programs, scholarships, technical and vocational training in established institutions around the world. This will naturally have a beneficial trickle-down effect as well into our national institutions of higher learning as our citizens build networks with their overseas counterparts and institutions or creation of knowledge hubs in-country.

The resources that are currently generated from the LNG project and other non-renewable resources in PNG should be deployed towards preparing a society that is increasingly industrialised, and more importantly a global economy that is becoming more knowledge-driven.

Ultimately PNG should become a knowledge-based economy and its human resource base will become the key to that transformation. PNG will not remain a perpetual exporter of primary commodities forever.

Countries such as Norway and Botswana are realising that diversification of their economy needs investing in the human capital towards preparing for a knowledge-based economy. A holistic approach should therefore be the basis of an endowment fund.

Patrick Kaiku teaches in the Political Science Strand at the University of Papua New Guinea


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Simon Davidson

An excellent article on the need to create a mechanism to train the nation's intellectual capital.

Israel's investment in human resources to produce the best technocrats has propelled Israel to become start up nation and the hub of major technical innovation.

More of the inflows from the resource boom should be used in human resources development and create research centers to create new innovation.

We must advance and run with the development trends in modernity or forever live in the lowlands of mediocrity.

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