Monthly Archives: September 2017

Blockchain in Papua New Guinea, Myth or Messiah

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Even if you aren’t in the technology field, you would have had to be living under a rock to have not heard anything about Blockchain. Blockchain is the “ledger” that enables cryptocurrencies like Bitcoin to be bought and sold, and is increasingly being investigated for use in other financial types of transactions and in the case of Papua New Guinea being looked at as a method to bank the unbanked. 80% of Papua New Guinean’s do not use banking facilities, some by choice, some by virtue that they don’t need it, and some just because they have no way of even getting to a bank. There is also the requirement for Banks and Financial Institutions to perform significant due diligence on it’s customers with the primary starting point being KYC (Know Your Customer). When you open a bank account you must have some form of approved identification, and that’s just the first hurdle. What happens when you have regionalisation of registries (eg: Births), but you have moved locations? (You need to plane ride to get anywhere out of Moresby) What if you happen to have more than one name? Or have been married in accordance with tribal or religious beliefs, but never registered that marriage – but taken another name?

Now imagine that the 80% unbanked, pretty much equals the 80% of the population without a mobile phone, 90% of population without internet access, and then 80% of people living a subsidence life with only 20% of the population in formal sector employment.

So, 80% of people in PNG may not have access to any clear form of identification, making the governing principles of simply opening a bank account extremely difficult for the majority of Papua New Guineans. Yes – there are other forms of obtaining identification, one being the “vouch for” system (highly dubious at best), “statutory declarations” again, just because a Commission of Oaths has signed and stamped it, doesn’t make it true. The Superannuation Funds could provide a single source of ID, however they too are only capturing the formal sector and only companies that are registered with the Funds. Some smaller companies don’t have to be contributing to Super, and as we well know – SME’s are generally the backbone of any nation and PNG is numbered amongst them.

So any Financial Inclusion program to get the unbanked banked, is going to have to address how to correctly identify Papua New Guineans. And at the moment, Employer ID (which is easily faked), drivers license, birth certificate and passport are the main ID’s. However, lets not forget the National ID program setup to resolve some of these issues, but ultimately is a siloed system where you do still have to vouch for a person (I know – I have done this). And still, it doesn’t gamechange the PNG identity system, it doesn’t make it easy for Banks, it doesn’t make it easy for anyone.

So how does Blockchain come into the picture?

At the moment – I think Blockchain could be a lost opportunity for PNG. The focus is certainly around Financial Inclusion, and the Bank of Papua New Guinea is driving a program to investigate monetary transfers via Blockchain. But that isn’t the problem, we already have lots of methods to transfer monies, some have failed and some are succeeding – already the Bank of Papua New Guinea led National Payment Gateway is going to create more and more choice. Adding another may create more confusion for people, and unless we look seriously at Internet/Computer Literacy we could be opening ourselves to plenty of other issues (read my previous article). At least with the formal Banks and Microfinancing units, people have a place to point the finger if things go wrong.

Where should we use Blockchain technology?

At it’s heart, Blockchain is a record and customer management tool. If we were building a new National ID system today, we should be gamebreaking and using Blockchain principles. Imagine a Niugini ID System, that the following agencies and sectors could use to validate, add, and update:

  1. Birth’s, Death’s & Marriages
  2. Customs
  3. Inland Revenue Commssion
  4. Immigration
  5. Passport Control and Issuing
  6. Drivers Licensing
  7. Superannuation Member ID
  8. Credit Bureau
  9. Finance
  10. Banking
  11. Telecommunication Companies
  12. Companies Office
  13. Elections
  14. Health

Therefore not only creating a single source of truth, but a vehicle to now allow realtime verified payments integrating Banks to Customers. An integrated KYC system. Be able to now apply for a passport online, as you are NID verified. Be able to vote in national elections on your NID authorised mobile app. Be able to pay your taxes automatically; apply for Finance without needing to actually see someone; connect a mobile phone number to your NID; and of course be able to open a Bank Account via a mobile phone.

People keep talking about Blockchain being a “game changer” but there is just a lot of fluff and hot air about Blockchain, not only in PNG, but also Australia, NZ and the rest of the world. And the reason is simple, no-one wants to reinvent the wheel, maybe they have already spent millions on API’s that allow integration, and the R&D for Blockchain is just too costly and heaven forbid, something else comes along that is better – or Blockchain gets hacked or, or, or… you get the picture.

Geez – we still have companies operating systems that are 20+ years old, that think IT is where you find nerds to help you fix your shaky mouse problem. How do we make those companies see IT investment especially in technology like Blockchain isn’t a cost, it’s a priority to ensure their business is going to be around in the future. How many BCP’s state investment in technology is critical to the continuity of our business? How many company strategies identify time working on gamebreaking strategies will account for increase in revenue? Is it because they don’t trust it? Do you, reading this blog, ever wonder how Uber came to be so dominating in just a few years, or why some of the most valuable companies in the world are tech companies… The gamebreakers (not gamechangers), disrupters and innovators.

Papua New Guinea is in a unique situation (having jumped the PC generation) being a nation built on mobility, it can take advantage of technologies such as Blockchain to create an integrated Government/Commercial record system that would be the envy of the world. The rest of us are playing catchup, PNG has an opportunity to take the lead.

Why Internet Connectivity and Cost Reduction should be a top priority for this Papua New Guinean Government.

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In 2011, there were just 70,000 people using Facebook in PNG. A mere 1% of population. Elsewhere around the world, Facebook had effectively become the mainstream communication forum and sudo news outlet. In PNG it was being used by a few savvy Papua New Guineans, but in general it was used as a the primary form of external communication for the many Fly-In Fly-Out and Residential Expatriate contractors. Much of whom were in PNG as a result of the economic growth created by the ExxonMobil PNG LNG project.

Internet Services were provided adhocly, and were both expensive for equipment and installation as well as ongoing monthly costs. A gig of data on a slow, somewhat sporadic connection was costing around USD$100 per month. All internet services were connected via either the poor performing and oversubscribed Tiare Gateway, or via Satelite. Costs to business were astronomical, and in fact still are.

At this time, mobile infrastructure was expanding via Digicel’s ever increasing network, and the days of carrying both a bemobile phone and a Digicel phone were slowly reducing. Dual-SIM phones are still an attractive proposition in PNG though, and that is purely driven by consumer’s managing costs – not consumers trying to get coverage.

The big play in that time was Digicel’s move to provide not just 3G on the mobile, but also start strategically selling low cost Andriod Smartphones. Asian stores were already in this market, but Digicel did seem to lower the price tag across PNG. Digicel could see that possibly taking a loss on hardware opened up the market and drove the data adoption which at that stage had been confined primarily to business and wealthy residents/expatriates.

The Internet opened up, albeit slowly – and the place where Papua New Guinean’s started first was Social Media. Digicel fuelled this by utilising the 03B Satelite and new Madang/Guam fibre in conjunction with good marketing for data services. The trend for Facebook users in PNG was immediately going up, and Digicel followed this up with a period of “Free Facebook” across it’s network.

During this time, Digicel really started to focus on diversification, mobile ads, then TV, then online news. But meanwhile it’s subscriber base was increasing alongside the emerging middle class of PNG, but not everyone was happy with the neglect that Digicel’s diversification had caused it’s mobile network. The implementation of LTE came with it huge billing issues, and the re-emergence of bemobile as bemobile/vodafone gave consumers more choice. Data prices were decreasing, but consumers were feeling ripped off through a lack of transparency on smartphone updates etc, and Digicel playing around too much with it’s billing.

The unfortunate aspect of Mobile Broadband was that is was still expensive, and as people had no other forms of internet access they had opened up Pandora’s box with viruses, ransomware, malware and lots of other nasties just because it was too expensive for all those updates to download to their devices.

Companies too, struggling with a lack of experienced IT personnel created nooses around their necks by opening up mobility to their staff without any management, cost control nor training and education.

By 2016, a new wave of threats was starting to make inroads into Papua New Guinea. Companies finally figured out that even though they might be in a place no one wants to target, cyber criminals were finding their way easy and open. Companies in PNG were having websites hacked, ransomware infections, and rampant viruses traversing their orgainisations.

I recall ringing a friend of mine who was an Executive in a very large enterprise letting him know his companies website had been hacked – he had no idea. It stayed that way for some time… At about the same time, I had a call from an expat in another company advising me that another companies website had a backdoor straight to their database, and did I know who to talk to… A month later, a local Club of which I was a member had their website hacked and defaced. After talking to the General Manager, they had no idea what to do – and their local website host couldn’t help – interestingly enough, it’s still unavailable at the time of me writing this.

I had interesting calls and emails from IT Managers in other organisations wanting to know how they could get rid of the Ransomware on their network, or wanting advice on AntiVirus to use (it had expired across their network some years ago – but they weren’t getting any viruses, so it was all good, right?). Or the other company with it’s many Windows XP machines, or the IT Manager wanting help on how to patch his PC’s across his network, as they hadn’t done it and every time they tried it crashed their Wide Area Network – they couldn’t afford any more capacity

And these are organisations with IT teams and IT Managers in place…

I shudder to think what the country is now exposed to across the it’s fast expanding internet presence.

A year ago, local news reported something that I thought was really telling. Papua New Guinea was ranked #1 in Google for searching for “Porn”. Not Gangbangs, or MILF’s, Interracial, Beastiality, Hardcore, Softcore or any other of the many search terms you could use, just “Porn”. And there was national upcry! Seriously… PNG is NOT and I repeat NOT the worst in the world for searching for pornography – they are just the one ranked using the search term “Porn”. And why is this important?

Because PNG is a late bloomer with having some sort of widespread internet, Papua New Guineans haven’t figured out the nuances of searching for something. This goes hand in hand with the viruses, the malware and everything else out there that is causing issues. If you go onto a Facebook Page like “Voice of PNG” you will note the appalling language, lack of etiquette, bullshit artists, con men, and keyboard warriors.

I read an article on LinkedIn a few weeks ago, then in the comments a young lady from a major company in PNG basically called the company she worked for all sorts of names, and that then fuelled other people having their say, and in fact co-workers jumping in and having a blast. How idiotic can you get? I just don’t think they realise that anything they dump on the web is there for everyone to see – forever. Bagging out your employer is just a big no no, and I don’t think they expected anyone to notice..

Education is the most important thing for Papua New Guineans right now. PNG needs to learn how to use the internet, but of course they can’t, because it is too expensive and too unreliable. They needed to be guided on Cyber Safety, companies and ISP’s need to ensure that employees and consumers know it’s their responsibility to look after themselves not just at work, but at home as well.

I believe the PNG Government has an obligation to both open the internet up to the wider populace, but also setup an Internet and Cyber Task Group like the brilliant www.Netsafe.org.nz here in New Zealand. This fundamentally starts the education process in schools, and then carries this through to business and the community.

I also believe that mandating a lowering of cost to a level the same as it’s neighbours within the next 12 months would create a huge amount of opportunities leading into APEC in 2018.

Some time ago, there was articles in the papers that explained how the new IXP was going to lower costs drastically by the end of 2016, Business Advantage did a little piece on it: Business Advantage – IXP Many Lower Costs

But the reality is – nothing much has happened, and neither will it. The issue with the IXP is that most services were being hosted outside PNG anyway, so routing local traffic to local websites etc that didn’t actually exist was just trying to pull the wool over everyone’s eyes. And companies like Digicel and Speedcast are all popping their traffic out via 03B so commercially it wouldn’t make sense. And aside from Mobile, local loop costs are still going to hit consumers and businesses in the back pocket.

I remember in NZ having to pay for International traffic and then free National traffic, and it still didn’t really make a huge impact as we weren’t hosting a lot in NZ back then (although times have certainly changed in NZ)

Yes – this might put some businesses out of business, but quite frankly, they all need to get a lot more competitive.

With increased access and lowered cost of Data and Access, Businesses and Consumers would be able to actually update PC’s and Phones, reduce Cyber Risk, get more outward Education, start an online business, promote PNG, develop opportunities, raise tourism profiles, create external investment opportunities.

So.much.opportunity