The rioting in Port Moresby on 10 January this year severely affected businesses in Papua New Guinea’s capital. CPL Group’s Sir Mahesh Patel reveals the impact on the major retailer, its people, and the many businesses that support it, and considers the root causes of the unrest.

The chaos and destruction of 10 January has had a profound impact on business and the wider community which continues to be felt today.

City Pharmacy Group Limited (CPL) alone lost four supermarkets, one hardware store and one apparel outlet. As a result, we have lost up to K140 million in revenues and K90 million in stock, assets and business continuity.

But the impact to our bottom line is just the tip of the iceberg compared to the impact on our community.

One of the biggest silent and unmeasurable costs has been our people’s mental trauma and stress. Despite us setting up counselling services straight away, we still have members of our team who have been so traumatised that they break down even now, just talking about it.

“A system collapse of this scale spells doom for many.”

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Three hundred employees (and up to 200 additional support staff) could have been stood down, equating to up to 500 households – or 5,000 mouths – needing to be fed.

City Pharmacy Limited’s Sir Mahesh Patel. Credit: BAI

The small government support which came three months later provided meagre wage support for six months only. This was despite the fact that rebuilding our completely destroyed buildings could take two to three years!

The impacts of the event have also affected the farmers and SMEs that we support.

To maintain consistency in supply, our farming network of almost 500 farmers across the country (built up over 15 years) had planted, in advance, up to 60 tonnes of fresh produce to be supplied monthly. Many tonnes of fresh produce are now perishing away every day without our support.

Add to that our support in terms of market access to SMEs for their artisan products, oils, nuts, cosmetics, spices and so on. These budding entrepreneurs lost a reliable retail partner overnight.

The reduction in the amount that we can purchase for our remaining shops will ultimately impact the lives of these small business owners, their families, the people they employ and the farmers they source from.

Affected service providers include transport companies, taxis (Odesh, an SME start up which we assist, usually does an average of 400 rides per month of CPL staff drop offs in the evenings), security companies, logistics and domestic shipping companies.

Root causes

A system collapse of this scale spells doom for many. So, we ask ourselves: why did this happen? Let me just go through some hard facts:

• Youth – PNG’s population is overwhelmingly young, with more than 60 per cent being under 25 years old.
• Education – 58 per cent of people aged 20-24 have only received education to a primary level or less.
• Urban diaspora – our people are increasingly moving to urban areas, but without a rise in available jobs.
• Wage stagnation – the minimum wage has stood at K3.60 per hour since 2016
• Inflation – 4 to 5 per cent annual inflation is having a dramatic impact on households.
• Limited public infrastructure – despite having a population well above one million people, Port Moresby only has one major hospital.

Billions of kina have been spent to improve conditions in PNG since independence, but there is not much to show for it.

“Our group Chairman, Stan Joyce, likes to remind us of an old saying: ‘never waste a crisis’.”

Turning crisis into opportunity

Our group Chairman, Stan Joyce, likes to remind us of an old saying: ‘never waste a crisis’.

Our trading on PNGX had to be halted due to the events of 10 January. This allowed us to go back to the drawing board and look at our business model, re-assess the changing demographics and review our operating model and cost structures.

I am happy to say that these are all in motion as we speak. We also have plans to expand our healthcare network to places where there is none.

We have bounced back so many times from terrible events – and not only because of our resilience, business models and strategies.

The support from the communities across the entire nation brought tears to our eyes and gave us strength to keep moving forward. Because we know what the real Papua New Guinea is, and the events of 10 January are not the PNG we know.

I have a 40-year view of Papua New Guinea. It certainly has its challenges, but when you weigh up the positives against the negatives, the positives win out.

We at CPL are here to stay and grow!

Sir Mahesh Patel is founder and a non-executive director of City Pharmacy Limited.