Mentoring Pacific Islands businesses


Mentoring Pacific Islands businesses

By Dev Nadkarni

A successful Kiwi entrepreneur of Pacific Islands origin wants to share his knowledge and rich experience with other New Zealand-based Pacific Islands businesspeople to help them run their enterprises better and find newer opportunities to grow their businesses.

Uluomatootua Saulaulu Aiono... wanting the chamber to be relevant Photo: Dev Nadkarni

Uluomatootua Saulaulu Aiono, better known as Ulu, is the founder of the Manukau-headquartered high technology enterprise resource planning (ERP) software company, Cogita.

Starting out about 25 years ago, Ulu and his colleagues have grown Cogita into a specialist, international ERP software technologies company operating from offices in New Zealand and most Australian states.

Cogita sells and supports ERP software systems on a long-term basis to blue chip companies in New Zealand, Australia and parts of Asia.

Last month, Ulu and his dedicated team of businesspersons and professionals launched the newly formed Pacific Chamber of Commerce at an event attended by top national and local politicians and businesspeople in Manukau city. The concept for the chamber was developed from ideas that were discussed at the Pacific Prosperity Conference two years ago, said Ulu.

Challenges faced in business by New Zealand’s Pacific Islands community was the highlight of that conference and Ulu noticed that there was no mechanism to address this very special need. The challenges are many and Ulu hopes the chamber will address them over the coming years.

The chamber will have four missions built around specific needs of Pasifika businesses: raising skill levels, engendering better business practices, helping develop entrepreneurial success and encouraging increased savings, he says.

There are two other organisations in New Zealand that are centered around Pacific Islands businesses. One is the Pacific Business Trust (PBT) that has been in existence since 1985.

Asked how the chamber would differ from the PBT, Ulu says the PBT was oriented more towards start-up businesses. The Pacific Chamber of Commerce, on the other hand, would be a resource centre for already established businesses that are seeking to grow.

New Zealand Pacific Business Council, the other Manukau-based organisation, concerns itself with trade between the Pacific Islands and New Zealand and clearly has a different set of objectives, Ulu says. But he adds the new Chamber was keen to establish a working relationship with both organisations to avoid duplication of tasks and  actually help complement one another.

The chamber’s executive committee is made up mostly of self-employed businesspeople from Pacific communities. “They have given a lot of their time, all unpaid,” says Ulu. “It’s really based on the Good Samaritan ethic. The chamber has a strong foundation with this group of committed people determined to make it work despite the lack of resources.”

But it is Ulu’s own story that will likely inspire budding Pacific Islands businesspeople the most. Born in Apia, Samoa, Ulu is the eldest of five children. The family migrated with the first three children to Auckland on a banana boat in 1960. After matriculating from Auckland Grammar School in 1971, Ulu worked as a freezing worker, a cleaner, a pump assembly plant operator and taxi driver.

In 1979, he began university studies in Otago and graduated in 1981, followed by an MBA degree in 1986. Shortly afterwards, he started Cogita.

While building Cogita into the multi-national enterprise it is today, Ulu also developed a keen interest in the social sector. He has been a long-time supporter of the Otahuhu Salvation Army, has sponsored the Auckland Philharmonia and helped develop an entrepreneurial tourism venture to build New Zealand’s first Village Polynesia in Manukau City with embedded information technologies.

He has been a council member of the Auckland University of Technology since 2003 and a member of its ethics committee for the past three years. Since 2006, Ulu has been a member of the key infrastructure development group known as the Auckland Regional Economic Development Strategy Forum (AREDS Forum). A resident of Manukau since 1986, he is also a member of the Manukau City Tourism Forum.

Over a hundred companies have taken up membership of the new Pacific Chamber of Commerce, within days after its launch.

“We want the chamber to be relevant in a practical way, we’d like to provide cheap and targeted assistance; make available a place to find all  information and advice for businesses,” says Ulu.

The chamber proposes to employ technology for its advisory services.

“We hope to provide advice required by businesses on such topics as strategy, operations, cash flows, funding and working capital but not specialist advice like that given by lawyers and accountants,” he  adds. The chamber’s advisory services will be subscribed with members paying cheaper rates than non-members. —By 

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Remittances to grow to US$356bn in 18 years

By Dev Nadkarni

Estimates indicate that nearly 200 million migrant workers send remittances in excess of US$276 billion to their home countries-a number that is expected to grow to US$356 billion in the next 18 years.

If taken as a single corporate entity, that volume of turnover would rank remittances at number three on the Fortune Five Hundred Companies Index.

At US$425 million, Pacific Islanders outside the islands region remit only a fraction of that total global volume back to their home countries.

But the volumes have tripled in just the past 10 years and are set to grow even faster especially with more islanders finding employment both in the highly lucrative albeit risky security industry and increased seasonal migration in the agriculture and horticulture sectors.

The World Bank's Manjula Luthria. Photo: Dev Nadkarni

For some Pacific Islands countries, like many small developing countries around the world, remittances form a vital part of their economies.

Over 40 percent of Tonga’s GDP, a quarter of Samoa’s and nearly seven percent of Fiji’s come from this single channel.

Runaway rate of growth in remittance volumes has made the money transfer business one of the fastest growing segments in the financial sector.

While investments in technology and better regulatory practices have seen costs and fees of money transfer decline in many parts of the world, they remain almost forbiddingly high in islands region.

Counter to accepted international best practice for fee levels of between one and five percent of the amount transferred, money transfer companies and financial institutions engaged in the business charge anything between 15 and a whoppingly unrealistic 50 percent in the Pacific region including New Zealand and Australia.

After a study of work-related migration in the Pacific Islands region over the past few years, the World Bank published a report in 2006 titled “At Home and Away: Expanding Job Opportunities for Pacific Islanders Through Labour Mobility”.

It highlighted the high transfer fees that put an almost unsustainable financial strain on the small economies of the islands.

Sydney based senior World Bank economist for the Pacific Islands, Dr Manjula Luthria, told ISLANDS BUSINESS the high transaction fees were eroding the income support that remittances vitally provide to the islands.

Elsewhere in the world these costs have plummeted. For example, fees for transfers between the United States and Mexico have fallen by as much as 60 percent, thanks to changes in regulatory practices, product innovation and stronger competition.

Several other countries too have worked to reduce high fees.

This interaction has revealed that Pacific Islanders are struggling to meet the high fees and costs of sending money to their home countries, said Luthria.

The study and consultations were discussed at a top-level meeting with representatives from top New Zealand and Australian banks, credit card service providers, money transfer companies as well as Australian aid agency AusAID, the central banks of Tonga, Samoa and Fiji and the Reserve Banks of New Zealand and Australia a couple of months ago.

There are several issues to be addressed before money transfer from New Zealand and Australia to the Pacific Islands can become easier and cheaper: the financial sector needs to consider a range of alternative products that have worked well in similar environments in other parts of the world.

The islands’ apex banks need to strengthen reporting and disclosure requirements in the interests of better transparency to both customers and other stakeholders.

Over the coming months, the World Bank will continue working with the private sector, the central banks and the islands governments’ finance ministries and regulatory bodies to make money transfers more efficient and cost effective.

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Future bright for Koniambo

The future of the Northern Province of New Caledonia looks promising after Xstrata and Societe Miniere du Sud Pacifique (SMSP) announced last month they were spending US$3.8 billion to develop the Greenfield Koniambo nickel project.

Switzerland-based Xstrata is expected to be the major funder in return for a proportionate share of the project’s cashflows in the first 25 years of operation.

A media statement from Xstrata said funding would come from their internal cash reserves and ongoing strong cashflows from the group’s operations.

Koniambo will be among the world’s lowest cost producers of nickel with initial production of 60,000 tonnes of nickel in ferronickel per annum.

“Koniambo is the most attractive undeveloped nickel resource in the world and will be a cornerstone asset for the future growth of our nickel business,” Xstrata Nickel chief executive, Ian Pierce said.

“The project will leverage Xstrata Nickel’s strong project development and metallurgical skills, using proven, low-cost nickel smelting technology and benefitting from the thorough analysis undertaken during the project renewal phase.

“The decision to proceed with this project underlines our confidence in the outlook for nickel.

“Koniambo enjoys strong support from the New Caledonian and French authorities and from the local communities.

“Together with our partners, we are excited about the project’s potential to deliver value to stakeholders in New Caledonia and to Xstrata’s shareholders over very many years.”

Xstrata owns a 49 percent stake in Koniambo Nickel SAS (KNS) and the remaining 51 percent is held by SMSP. First ore is expected to be processed in the first half of 2011, ramping up to a steady state production in 2013.

Xstrata says Koniambo benefits from a world-class resource base, providing a mine life in excess of 25 years from 62.5 million tonnes of saprolite reserves—grading 2.40 percent nickel at a 2.0 percent cut-off grade. 

This major resource also has the potential to extend the mine’s life to well in excess of 50 years of economic production.

Mick Davis, Xstrata Chief Executive, said, “Koniambo represents the opportunity to develop an outstanding nickel operation with cash costs in the lowest quartile and exciting, low-cost growth potential from its vast resource base. 

“Our decision to develop the Koniambo resource marks an important milestone in the ongoing transformation of our portfolio and in developing our exceptional growth pipeline, which will deliver compound annual growth of 12 percent over the next five years.”