Archive for January 2010
Grass Root Amplifying ICT
Leap of ICT (information and communication technology) advancement means new arena for any development intervention . The massive expansion of ICT, particularly the one that foster social network, is basically giving a real test to the government. The technology is questioning whether local government devoted enough to pave the way of communication channel with community .
Recent ICT development has provided spacious room for government to engage, build meaningful dialogue, even undertake participatory approach with its community. Powerful, yet affordable ICT tool is currently available for the local government in building proximity to its own community. Ranging from the complicated media, notably interactive TV, inclusive website, to the simple one, say, talk back radio facebook, mailing list and so on.
The opportunity is there, and so is the urgency, unfortunately what is still missing is government’s willingness. If the government really interested to start making dialogue with community, it literally takes no longer than one hour to build the system. Say, local government can throw a crucial issue into facebook community. Frankly, it will immediately get first response from the internet user community. There you go, first contact in less than 15 minutes.
In this era of IT supremacy, indeed there are so many ways to reach the community, and ironically government has all the reason on earth to not to do it. Jakarta local government is just to ignorant to execute the job. We hope that it’s not because government is afraid to its own people. Government may have realized that community based powerful tool is now highly accessible. It is ready to stands at the side of the community, voicing their interest , amplifying their voice. It doesn’t take long before the technology transform them and they are no longer become silent majority.
Time is of the essence
Something rang my bell, when I visited an area located at the crossing administrative line between North and Central Jakarta. Sunter, it is actually a place where I had spent some years of my childhood.
Time flies, and 20 years span makes all the different. It convinced me that a place can also be lame and blind, it is about the absence of either right action nor vision. We cannot say that the community is pro status quo. At present, their condition is different than the old times. It does get worse. They have been in a point of a curve, when the trend is all about going down. It seems that, there is a bunch of people in there, so called decision maker, who master the skill of walking backward. And, unfortunately, local inhabitants find their comfort in accepting ‘as it is’ condition.
The river – Kali Sunter- not only remained the biggest dump site in the area, it is even dirtier than 20 years ago. The air and water pollution exacerbated, affecting infant more badly. Traffic jam duplicated in much more city areas. The flood in many years was not as frequent and as high as current level. Reckless driver is more common now, a sign that law enforcement neglected at its lowest point. Not to mention the worsened social conflict.
Other side of a story, sure, something had been built for the last two decades. It is the concrete hardened river embankment. That’s it.Oh, there is also new sign installed, pointing kelurahan office.
We’ve reckoned that in the case where the trail of local government measures is almost invisible, it is the common action of community that matter most. However, here is an idea: point number one should be about how the local community value time. We need to ensure that the right mindset about time is put in place. 20 years should mean anything but fall back. Since we agree that today should be better than yesterday, and tomorrow should be better than today. Community should be aware that every action they do, every resource they allocated-even the smallest scale-will bluntly shape their future condition. It is worth bearing in community’s mind that time is their best asset and on going progress is within their reach. These come first, and the rest follows.: the question about where they want to go, collectively, should then be widely discussed so that they can move forward. And people should get together, cementing their social bond, seek solution of their common problem thus walk the talk in improving their quality of life.
Delivering Livelihood Opportunities In Low Income Settlement Area
Poverty remained major problem across Indonesian cities. As a matter of fact, a great proportion of poor city inhabitants reside in informal settlement or other low income settlement areas. Consequently, poverty reduction approach undertaken should emphasize on such particular city areas.
This paper is relevant to the urgent need in improving livelihood and delivering income opportunities in low income or informal settlement area.
Why Improving Livelihood?
It is believed that access of livelihood is so highly important as it is the opportunity for the community to earn income. And income means opportunity for better education and ability to pay basic services. It also means access to skill development, health care and social amenities.
‘De Facto’ Rule of The Game
Inhabitants that reside in low income settlement area or so called ‘slum’ normally face major problem of lack of access to basic service (Helmsing 2003) and sub-standard settlements condition that is normally highly over-crowded. It is also revealed that the poor faces problem of isolation, in term of physical, economic and institutional. These poor housing conditions are basically not suitable for income generating activities (Helmsing 2003)
Development actors not only have to deal with different social layer and community groups, but also have to highly take into account specific circumstances in slum area or other low income settlements. The situation surely very much differs than those in ‘formal city’. This referred to the slum environment’s fluid character and high degree of uncertainties. The poor often has to pay additional cost and deals with greater risk of “physical insecurity and health risk”, particularly in terms of disease, theft and violence (Helmsing 2003). The area is also prone to conflict due to scarce resource and economic hardship. In effect, development actors have to understand ‘de facto rule of the game’. This means, the situation where informal sphere is the dominant needs to be carefully tackled. Other example, development actors to some extent might also need to wisely deal with drug-lord.
Delivering Livelihood Opportunities
The basic idea is to deliver viable livelihood in order to enhance economic prospect for the poor which reside in low income areas. This demands effective measures to extend the economic activity, improve productivity and competitiveness of economic activity in such a particular area, namely home-based entrepreneur, micro enterprises or even informal sector operator. Livelihood strategy is basically a set of process to overcome economic constraints. And the decision regarding option of livelihood strategy depends on the prevailing development, poverty and livelihood. Considering the fact that development is a highly complex process, the decision also depends on the power relation and political struggle in a particular socio-economic and institutional realm (Bebbington 1999).
Improving economic assets : Securing inhabitant’s access to livelihood
The idea of livelihood viability corresponds with access to resources, there are number of measures could be undertaken in this respect : (i) address the problem faced by household which has lacked access to resource (ii) increase the return of such resource over which the household still has control and (iii) develop institutional capacity framework to ensure that such resource is equally accessible (Bebbington 1999)
This also in accordance with ‘improving productive economic assets’, which can be explained in terms of ownership and access to economic assets. This notion should also be linked with poverty indicator, thus be able to benefit the poor in creating their own path in addressing the problem of poverty (WorldBank 2000 cited in Ellis, Kutengule et al 2003). The role of supportive institutional environment is significant, and it needs to be able to convert those productive asset into ‘ready to use assets’, hence improving the livability of the poor (Moser 1998)
It is argued that assets underpinning viable livelihood, so they need to be transformed into a (Bebbington 1999):
• Consumption level, which is also a key indicator of poverty reduction
• Improved living condition
• Better collective capacity of the community, this involves social capital in terms of social and kin network
• Adequate capacity of the key participant to maintain their assets base
Consequently, an effective public action is required to undertake this ‘asset transformation’ (Sen 1999)
The notion of creating local safety nets is thus highly relevant. This is crucial in addressing vulnerability of the poor inhabitants in dealing with any kind of economic shocks. It helps them overcoming financial insecurity for creating better livelihood foundation. For instance: developing ‘formation of saving and credit groups to meet income emergencies’ (Helmsing 2003)
The significance of ‘in-depth approach’
Many argued that the most preferred approach in undertaking development intervention in such a low income settlement is so called ‘in depth approach’. It deals with a particular and well defined area, namely slum, informal settlement and other low income areas. As a result the development intervention delivered could be more comprehensive and emphasizing on local institutional process. Following are some other advantages of implementing ‘in depth approach’ of livelihood strategy in low income area:
o the political will to help to poor could be more focusely delivered
o projects delivered could emphasize on using local resource: workers and materials
o to ensure including poorest of the poor in the approach initiated
o underpins the notion of ‘administrative arrangement of the community, by the community and for the community’
o could more deeply involved local informal leader, as the process need to go underneath the formal structure
o be able to go beyond merely based on statistical figures, get into the real circumstances on the ground
Genuine Dialogue and Healthier Partnership with the Poor Inhabitants
Not only need to be provided with basic need, poor inhabitants that reside in many low income settlements also need to be heard. Their voice has to be proactively responded. On the other hand, development practitioners need to understand the situation from community’s point of view. In effect, the skill to effectively communicate with them became urgent. The importance of genuine dialogue between local institution and the low income communities thus emerged. By doing so, the development practitioner be able to know what really happen in the ground, learn what the issue are. They then could understand how the community do things and deal with their survival strategy. So, they could reveal how the community functions.
Community should not work alone in improving their livelihood. Addressing the problem of economic and institutional isolation that normally faced by the poor is crucial, however, it is not adequate. Rather community should play major role in developing healthier partnership with broader institutions. This in line with the idea that ‘success is critically dependent on the simultaneous complementary investments by other economic agents’ (Helmsing 2003). Get support from capable NGO and CBO or even private sector thus is an obvious advantage in this sense. It is about strengthening social capital with the poor: ability to work together and developing network. So that they could collectively addressing crucial problems faced by the community. Decent pattern of partnership allow them to be able to withdraw resource from different source. This notion should be in line with improvement of self reliance, meaning , in the long term breaking the dependency and strengthening local control.
Improving home-based enterprises and supporting informal economic activity
The primary idea is to generate further economic activity through strengthening the local based entrepreneur. Provide them with windows of opportunity through connection with formal external market. This notion is a key foundation for a more self reliance local economy and in line with the concept of ‘improving productive economic assets’, as mentioned before.
In this light, the importance of so called ‘home-based enterprises’ thus emerged, as it plays a central role in addressing poverty in many localities. It is attributed to the fact that “per-capita incomes in households with home based enterprises were 22% higher than those of household without home based enterprises.” (Moser 1998). This affirms that the improvement home-based enterprises is strongly interrelated with the development of self employment economic activities by the poor.
It is noted that the capacity of formal institutions in creating jobs for the poor is considerably weak (BPS 1993 cited in Noer Effendi 1997). Consequently, the importance of self employed informal economic activity has emerge (Ellis and Mdoe 2003). Informal sectors of the economy should no longer be seen as marginal as they are reckoned as the primary source of income for most of low income city inhabitants. They are, in fact, the dominant. Due to its significant role, current institutional arrangement needs to support such informal sector. Their economic prospect should be enhanced. For example, provide them with decent space, improving access to their supplier or provide them with practical knowledge.
Such home-based enterprises, micro enterprises, and informal sectors of the economy however also need to deal with market forces and focus on profit seeking. This inline with the notion that economic development approach has shifted away from public sector to market led growth. The benefit of market forces should be equally distributed. In this sense, such home-based enterprises and informal economic activity need to improve their access to external market. Rather than merely, for instance, being street vendor, selling their goods in the street and waiting for the people passes by. Some measures that relevant with this idea: the provision of market information and improving their information access. So that such small scale enterprises could also have information about supply and demand and how is the implication of prices. Concerning street vendor selling food, there should be simple and affordable system to ensure its cleanliness.
The significance of developing association of micro enterprises and informal sector operator thus emerged. This notion is in accordance with the value of and networking and collaboration. The idea is, if they work together as a group, the process will be more effective and their productivity will increase. This surely much better, rather than do it individually and competing each other for scarce resource. Such a pattern of collaboration very much helps in organizing the organization, building vertical and horizontal linkage, so that they could helping each other, for instance collectively dealing with financial problem. The value of collective efficiency, where resource could be obtained from many sources should also be taken into account. Concerning the need to improve productivity and efficiency, partnership with private sector is also crucial. By doing so, such home-based and micro enterprises could have better production outcome, they then can fix the quality product as well as achieved product standard required.
Additionally, business development service plays a central role for the development of micro enterprises, namely in undertaking training activities, functions as pool of activity, pool of information, centre for knowledge management and so on. Such supporting services may be provided by local institutions that capable of providing technical guidance (Helmsing 2001 cited in Helmsing 2003)
The process of capacity building, namely human capital development and knowledge dissemination, obviously play a central role. This notion is discussed later on, in the following paragraphs
Delivering basic service and physical infrastructure
It is believed that decent physical infrastructure is one of a key ingredients in delivering viable livelihood for low income inhabitants. The key thing is to overcome the implication of lack of access to basic service and physical facilities. Delivering construction projects of basic service provision is fundamental, and this has to emphasize the use of local workers and local materials. Construction of basic service would also generate further multiplier effects.
In addition of clean water, electricity and decent road network, an effective livelihood approach surely needs supporting buildings. One may need to construct new ones, or due to budget constraints, home spaces, which normally illegal, will do. A multi purpose community building could also be used. Moreover, access to appropriate tools and equipment as well as to affordable source of energy are also crucial, for instance electricity supply. The use of pre-paid card system may needed in this case.
Improving transport service, particularly in terms of high quality public transport, is also fundamental. It increases productivity of small scale enterprises. The key rationale is to strengthening access between poor community and market or other income opportunities, as well as to their place of work. Transportation system that is within their reach, and surely affordable, means opportunity of prospect in selling goods. It is needed to help them obtain goods from and to the market.
Applying appropriate technology is, however, important. Many problems could be solved by technology. The key thing is to ensure that technology applied is the most suitable for them, thus value added needed could be delivered. Affordability is also a key issue in this respect.
Micro credit provision : Climbing the first ladder of development
Many scholars argued that the provision of micro credit is a crucial component for a more viable livelihood of the low income inhabitants. Such a micro credit scheme that specifically targeting the poor and micro enterprises is a reflection of political commitment to serve the poor. The relevant financial institution thus should shift its approach, so they are not only focus on the middle and upper income of the community groups.
The basic idea is to tackle market imperfection and give them opportunities in climbing the first ladder of development (Sach 2005). This micro credit provision can take form of either an individual or group lending system and should avoid ‘loan sharks’. Therefore, the scheme should apply reasonable interest rate. It would be much better if ‘profit sharing principle’ could be applied . This notion is in accordance with syari’ah principle, of which demands mutual trust, commitment for working together and transparency. The borrower has to be encouraged to spend money on productive activity, rather than simply by new TV, DVD player or fridge. By doing so, the money borrowed is valued as their micro investment that in turn may deliver economic return for their household.
Given the fact that such micro credit provision should focus on the need of the poor, it thus has to serve a particular target groups, namely home-based enterprises, informal sector, street vendors, warung, even ojek, pedicab driver and so on . Opening wider economic access for them is surely a ‘no easy task’. Organization has to consider the fact that they normally do not have steady income, instead, they deal with day to day survival strategies. Yet most of them do not have any formal administrative documents, for instance KK nor KTP. Consequently, a more innovative approach that differed from the conventional bank is highly needed. The significance of strategic framework thus also emerged, meaning the approach of such a formal micro credit provision needs to be tailored and flexible, to account for changing socio-economic situation or even institutional aspects. Accordingly, the problem of the absence of collateral among poor family also need to be tackled . A simpler procedure is a must, so it would be much easier for the poor and other common citizen to deal with it. This may demands innovative documentation system, a more pro-poor administrative arrangement.
Last but not least is the gender issue. The micro credit provision should focus on women as they are normally alienated. It is revealed that women normally have to deal with triple burden. Meaning, in addition of their reproductive role and responsibility to look after their children, women also bear responsibilities to generate income for their household and they are also required to take care of social networking and surrounding community’s activity (Helmsing 2003). In this sense, delivering micro credit to women headed household is a significant measure for the household’s better economic prospect. This situation would be very much different if such credit given to man. As man are normally involved in local politics. It is also often the case, once they get credit, they just washed away the money, as they get drunk and are gambling.
Grameen Bank’s experience in micro credit provision
One has to learn from Grameen Bank’s experience, it is actually the best practice in the realm of micro credit provision. The bank’s achievement in delivering economic base for the poor and strengthening the poor’s foundation of productive assets are indeed outstanding. Its distinctive and creative approach lied in the fact that Grameen Bank does not require any collaterals, or credit check for loan approval (Bhatt 1997). Rather the approach highly valued network of trust and reciprocity, of which actually the nature of ‘social capital.’ The bank’s borrowers are organized in a small group, consisted of 5-8 persons, the process of working together and strengthening each other on such small group is thus nurtured. Collective responsibility is thus developed and, in turn, the value of “collective insurance mechanism” emerged. Meaning there is a guarantee within the group, the wealthier of the group supports the poorer. This process enables them to survive and improve their circumstances, thus largely contributes to the sustainability of the system.
Role of knowledge and human capital development
Knowledge dissemination and human capital development are surely key ingredients in ensuring a more sustainable livelihood strategy. This notion, which referred to life skill and practical knowledge, is also inline with the need in improving their ‘absorptive capacity” of above-mentioned micro credit provision (Van Horen 2002)
Capacity Building surely has to be undertaken on a continue basis. The key idea in this respect is an economically useful skill that could underpin their day to day economic activity. Kind of formal training may not suitable in this sense, as it has to involve a great deal of informal sphere. Some argued that vocational training is more appropriate. To what extent the current approach of BLK (Balai Latihan Kerja) could address this need remained a question.
Such a knowledge development may refer to development of practical business management skill, financial management – merely to support their cashflow knowledge - as well as technical skill, for instance in applying up to date technology. In many cases it even requires negotiation skill, especially for those informal leader and informal sector operator. This skill is particularly useful in countering eviction measures initiated by government.
Knowledge development should also focus on delivering the benefit of IT, of which a key instrument in knowledge dissemination. The benefit of IT should be equally distributed, for instance in the case of Hyderabad in India where slum areas are connected each other with internet
Security of tenure
Given the fact that the poor heavily depends on their house or shanty in living their day to day survival. Yet, its sub-standard housing condition as well as the status of such a land makes them vulnerable. It is clear that the notion of security of tenure directly interrelated with their home-based income earning activities. It corresponds with their willing to invest in their own property, in order to underpinning their productive assets.
Adequate measure is obviously needed in addressing security of tenure for the poorer inhabitants. Integration with informal realm is obviously important. This may be a complicated process, may also not. The provision of security of tenure doesn’t have to be a freehold title. It could also take form of guarantee from the government that they won’t be evicted, or basic service provision. The key thing is that local government agencies have to deliver certain degree of ‘sense of security’ for inhabitants in such low income areas.
Institutional Aspect
As the performance of local government is weak, one unfortunately cannot expect major role of local government in delivering income for inhabitants in low income settlements. The need for institutional and governance reform is obvious, and gradual change has to be emphasized in order to avoid political resistance.
Having said supporting the informal sector is fundamental, ‘anti informal sector’ policies thus have to be removed. Yet what the government normally do is to turn them to formal, which not only squeeze them but also inhibited their income opportunities. Even worse, numerous measures have been undertaken to ‘eliminate’ them. Informal sector operators are in many cases beaten and put in jail. This may also referred to eviction, that normally ends up with violence incidents. A waste of energy, as it is clear that eviction is very much far from effective. We never going to rid them anyway and they will always exists.
In dealing with rapid changing socio-economic circumstances as well as tackling the fluidity of informality, regulatory framework should be made adaptive. Accordingly, institutional arrangement also need to be flexible and use different approach in dealing with various issues. The key idea is to tailor the working framework to the specific problem
This paper is relevant to the urgent need in improving livelihood and delivering income opportunities in low income or informal settlement area.
Why Improving Livelihood?
It is believed that access of livelihood is so highly important as it is the opportunity for the community to earn income. And income means opportunity for better education and ability to pay basic services. It also means access to skill development, health care and social amenities.
‘De Facto’ Rule of The Game
Inhabitants that reside in low income settlement area or so called ‘slum’ normally face major problem of lack of access to basic service (Helmsing 2003) and sub-standard settlements condition that is normally highly over-crowded. It is also revealed that the poor faces problem of isolation, in term of physical, economic and institutional. These poor housing conditions are basically not suitable for income generating activities (Helmsing 2003)
Development actors not only have to deal with different social layer and community groups, but also have to highly take into account specific circumstances in slum area or other low income settlements. The situation surely very much differs than those in ‘formal city’. This referred to the slum environment’s fluid character and high degree of uncertainties. The poor often has to pay additional cost and deals with greater risk of “physical insecurity and health risk”, particularly in terms of disease, theft and violence (Helmsing 2003). The area is also prone to conflict due to scarce resource and economic hardship. In effect, development actors have to understand ‘de facto rule of the game’. This means, the situation where informal sphere is the dominant needs to be carefully tackled. Other example, development actors to some extent might also need to wisely deal with drug-lord.
Delivering Livelihood Opportunities
The basic idea is to deliver viable livelihood in order to enhance economic prospect for the poor which reside in low income areas. This demands effective measures to extend the economic activity, improve productivity and competitiveness of economic activity in such a particular area, namely home-based entrepreneur, micro enterprises or even informal sector operator. Livelihood strategy is basically a set of process to overcome economic constraints. And the decision regarding option of livelihood strategy depends on the prevailing development, poverty and livelihood. Considering the fact that development is a highly complex process, the decision also depends on the power relation and political struggle in a particular socio-economic and institutional realm (Bebbington 1999).
Improving economic assets : Securing inhabitant’s access to livelihood
The idea of livelihood viability corresponds with access to resources, there are number of measures could be undertaken in this respect : (i) address the problem faced by household which has lacked access to resource (ii) increase the return of such resource over which the household still has control and (iii) develop institutional capacity framework to ensure that such resource is equally accessible (Bebbington 1999)
This also in accordance with ‘improving productive economic assets’, which can be explained in terms of ownership and access to economic assets. This notion should also be linked with poverty indicator, thus be able to benefit the poor in creating their own path in addressing the problem of poverty (WorldBank 2000 cited in Ellis, Kutengule et al 2003). The role of supportive institutional environment is significant, and it needs to be able to convert those productive asset into ‘ready to use assets’, hence improving the livability of the poor (Moser 1998)
It is argued that assets underpinning viable livelihood, so they need to be transformed into a (Bebbington 1999):
• Consumption level, which is also a key indicator of poverty reduction
• Improved living condition
• Better collective capacity of the community, this involves social capital in terms of social and kin network
• Adequate capacity of the key participant to maintain their assets base
Consequently, an effective public action is required to undertake this ‘asset transformation’ (Sen 1999)
The notion of creating local safety nets is thus highly relevant. This is crucial in addressing vulnerability of the poor inhabitants in dealing with any kind of economic shocks. It helps them overcoming financial insecurity for creating better livelihood foundation. For instance: developing ‘formation of saving and credit groups to meet income emergencies’ (Helmsing 2003)
The significance of ‘in-depth approach’
Many argued that the most preferred approach in undertaking development intervention in such a low income settlement is so called ‘in depth approach’. It deals with a particular and well defined area, namely slum, informal settlement and other low income areas. As a result the development intervention delivered could be more comprehensive and emphasizing on local institutional process. Following are some other advantages of implementing ‘in depth approach’ of livelihood strategy in low income area:
o the political will to help to poor could be more focusely delivered
o projects delivered could emphasize on using local resource: workers and materials
o to ensure including poorest of the poor in the approach initiated
o underpins the notion of ‘administrative arrangement of the community, by the community and for the community’
o could more deeply involved local informal leader, as the process need to go underneath the formal structure
o be able to go beyond merely based on statistical figures, get into the real circumstances on the ground
Genuine Dialogue and Healthier Partnership with the Poor Inhabitants
"Into the heart of the local people"
Many believe that the poor is in fact hard-worker. Street vendors get up really early in the morning to sell food and vegetables. Scavengers dealing with rubbish until late at night. Many of the poor actually work round the clock. They are indeed survivors. They deal with economic hardship and day to day survival strategies, face the risk being chasen even beaten by the ‘Satpol PP’. The benefit of genuine dialogue is thus obvious. Hence, the poor community and the government officials be able to share different perspective, exchanging positive values and learn form each other’s experience.Not only need to be provided with basic need, poor inhabitants that reside in many low income settlements also need to be heard. Their voice has to be proactively responded. On the other hand, development practitioners need to understand the situation from community’s point of view. In effect, the skill to effectively communicate with them became urgent. The importance of genuine dialogue between local institution and the low income communities thus emerged. By doing so, the development practitioner be able to know what really happen in the ground, learn what the issue are. They then could understand how the community do things and deal with their survival strategy. So, they could reveal how the community functions.
Community should not work alone in improving their livelihood. Addressing the problem of economic and institutional isolation that normally faced by the poor is crucial, however, it is not adequate. Rather community should play major role in developing healthier partnership with broader institutions. This in line with the idea that ‘success is critically dependent on the simultaneous complementary investments by other economic agents’ (Helmsing 2003). Get support from capable NGO and CBO or even private sector thus is an obvious advantage in this sense. It is about strengthening social capital with the poor: ability to work together and developing network. So that they could collectively addressing crucial problems faced by the community. Decent pattern of partnership allow them to be able to withdraw resource from different source. This notion should be in line with improvement of self reliance, meaning , in the long term breaking the dependency and strengthening local control.
Improving home-based enterprises and supporting informal economic activity
The primary idea is to generate further economic activity through strengthening the local based entrepreneur. Provide them with windows of opportunity through connection with formal external market. This notion is a key foundation for a more self reliance local economy and in line with the concept of ‘improving productive economic assets’, as mentioned before.
In this light, the importance of so called ‘home-based enterprises’ thus emerged, as it plays a central role in addressing poverty in many localities. It is attributed to the fact that “per-capita incomes in households with home based enterprises were 22% higher than those of household without home based enterprises.” (Moser 1998). This affirms that the improvement home-based enterprises is strongly interrelated with the development of self employment economic activities by the poor.
It is noted that the capacity of formal institutions in creating jobs for the poor is considerably weak (BPS 1993 cited in Noer Effendi 1997). Consequently, the importance of self employed informal economic activity has emerge (Ellis and Mdoe 2003). Informal sectors of the economy should no longer be seen as marginal as they are reckoned as the primary source of income for most of low income city inhabitants. They are, in fact, the dominant. Due to its significant role, current institutional arrangement needs to support such informal sector. Their economic prospect should be enhanced. For example, provide them with decent space, improving access to their supplier or provide them with practical knowledge.
Such home-based enterprises, micro enterprises, and informal sectors of the economy however also need to deal with market forces and focus on profit seeking. This inline with the notion that economic development approach has shifted away from public sector to market led growth. The benefit of market forces should be equally distributed. In this sense, such home-based enterprises and informal economic activity need to improve their access to external market. Rather than merely, for instance, being street vendor, selling their goods in the street and waiting for the people passes by. Some measures that relevant with this idea: the provision of market information and improving their information access. So that such small scale enterprises could also have information about supply and demand and how is the implication of prices. Concerning street vendor selling food, there should be simple and affordable system to ensure its cleanliness.
The significance of developing association of micro enterprises and informal sector operator thus emerged. This notion is in accordance with the value of and networking and collaboration. The idea is, if they work together as a group, the process will be more effective and their productivity will increase. This surely much better, rather than do it individually and competing each other for scarce resource. Such a pattern of collaboration very much helps in organizing the organization, building vertical and horizontal linkage, so that they could helping each other, for instance collectively dealing with financial problem. The value of collective efficiency, where resource could be obtained from many sources should also be taken into account. Concerning the need to improve productivity and efficiency, partnership with private sector is also crucial. By doing so, such home-based and micro enterprises could have better production outcome, they then can fix the quality product as well as achieved product standard required.
Additionally, business development service plays a central role for the development of micro enterprises, namely in undertaking training activities, functions as pool of activity, pool of information, centre for knowledge management and so on. Such supporting services may be provided by local institutions that capable of providing technical guidance (Helmsing 2001 cited in Helmsing 2003)
The process of capacity building, namely human capital development and knowledge dissemination, obviously play a central role. This notion is discussed later on, in the following paragraphs
Delivering basic service and physical infrastructure
It is believed that decent physical infrastructure is one of a key ingredients in delivering viable livelihood for low income inhabitants. The key thing is to overcome the implication of lack of access to basic service and physical facilities. Delivering construction projects of basic service provision is fundamental, and this has to emphasize the use of local workers and local materials. Construction of basic service would also generate further multiplier effects.
In addition of clean water, electricity and decent road network, an effective livelihood approach surely needs supporting buildings. One may need to construct new ones, or due to budget constraints, home spaces, which normally illegal, will do. A multi purpose community building could also be used. Moreover, access to appropriate tools and equipment as well as to affordable source of energy are also crucial, for instance electricity supply. The use of pre-paid card system may needed in this case.
Improving transport service, particularly in terms of high quality public transport, is also fundamental. It increases productivity of small scale enterprises. The key rationale is to strengthening access between poor community and market or other income opportunities, as well as to their place of work. Transportation system that is within their reach, and surely affordable, means opportunity of prospect in selling goods. It is needed to help them obtain goods from and to the market.
Applying appropriate technology is, however, important. Many problems could be solved by technology. The key thing is to ensure that technology applied is the most suitable for them, thus value added needed could be delivered. Affordability is also a key issue in this respect.
Micro credit provision : Climbing the first ladder of development
Many scholars argued that the provision of micro credit is a crucial component for a more viable livelihood of the low income inhabitants. Such a micro credit scheme that specifically targeting the poor and micro enterprises is a reflection of political commitment to serve the poor. The relevant financial institution thus should shift its approach, so they are not only focus on the middle and upper income of the community groups.
The basic idea is to tackle market imperfection and give them opportunities in climbing the first ladder of development (Sach 2005). This micro credit provision can take form of either an individual or group lending system and should avoid ‘loan sharks’. Therefore, the scheme should apply reasonable interest rate. It would be much better if ‘profit sharing principle’ could be applied . This notion is in accordance with syari’ah principle, of which demands mutual trust, commitment for working together and transparency. The borrower has to be encouraged to spend money on productive activity, rather than simply by new TV, DVD player or fridge. By doing so, the money borrowed is valued as their micro investment that in turn may deliver economic return for their household.
Given the fact that such micro credit provision should focus on the need of the poor, it thus has to serve a particular target groups, namely home-based enterprises, informal sector, street vendors, warung, even ojek, pedicab driver and so on . Opening wider economic access for them is surely a ‘no easy task’. Organization has to consider the fact that they normally do not have steady income, instead, they deal with day to day survival strategies. Yet most of them do not have any formal administrative documents, for instance KK nor KTP. Consequently, a more innovative approach that differed from the conventional bank is highly needed. The significance of strategic framework thus also emerged, meaning the approach of such a formal micro credit provision needs to be tailored and flexible, to account for changing socio-economic situation or even institutional aspects. Accordingly, the problem of the absence of collateral among poor family also need to be tackled . A simpler procedure is a must, so it would be much easier for the poor and other common citizen to deal with it. This may demands innovative documentation system, a more pro-poor administrative arrangement.
Last but not least is the gender issue. The micro credit provision should focus on women as they are normally alienated. It is revealed that women normally have to deal with triple burden. Meaning, in addition of their reproductive role and responsibility to look after their children, women also bear responsibilities to generate income for their household and they are also required to take care of social networking and surrounding community’s activity (Helmsing 2003). In this sense, delivering micro credit to women headed household is a significant measure for the household’s better economic prospect. This situation would be very much different if such credit given to man. As man are normally involved in local politics. It is also often the case, once they get credit, they just washed away the money, as they get drunk and are gambling.
Grameen Bank’s experience in micro credit provision
One has to learn from Grameen Bank’s experience, it is actually the best practice in the realm of micro credit provision. The bank’s achievement in delivering economic base for the poor and strengthening the poor’s foundation of productive assets are indeed outstanding. Its distinctive and creative approach lied in the fact that Grameen Bank does not require any collaterals, or credit check for loan approval (Bhatt 1997). Rather the approach highly valued network of trust and reciprocity, of which actually the nature of ‘social capital.’ The bank’s borrowers are organized in a small group, consisted of 5-8 persons, the process of working together and strengthening each other on such small group is thus nurtured. Collective responsibility is thus developed and, in turn, the value of “collective insurance mechanism” emerged. Meaning there is a guarantee within the group, the wealthier of the group supports the poorer. This process enables them to survive and improve their circumstances, thus largely contributes to the sustainability of the system.
Role of knowledge and human capital development
Knowledge dissemination and human capital development are surely key ingredients in ensuring a more sustainable livelihood strategy. This notion, which referred to life skill and practical knowledge, is also inline with the need in improving their ‘absorptive capacity” of above-mentioned micro credit provision (Van Horen 2002)
Capacity Building surely has to be undertaken on a continue basis. The key idea in this respect is an economically useful skill that could underpin their day to day economic activity. Kind of formal training may not suitable in this sense, as it has to involve a great deal of informal sphere. Some argued that vocational training is more appropriate. To what extent the current approach of BLK (Balai Latihan Kerja) could address this need remained a question.
Such a knowledge development may refer to development of practical business management skill, financial management – merely to support their cashflow knowledge - as well as technical skill, for instance in applying up to date technology. In many cases it even requires negotiation skill, especially for those informal leader and informal sector operator. This skill is particularly useful in countering eviction measures initiated by government.
Knowledge development should also focus on delivering the benefit of IT, of which a key instrument in knowledge dissemination. The benefit of IT should be equally distributed, for instance in the case of Hyderabad in India where slum areas are connected each other with internet
Security of tenure
Given the fact that the poor heavily depends on their house or shanty in living their day to day survival. Yet, its sub-standard housing condition as well as the status of such a land makes them vulnerable. It is clear that the notion of security of tenure directly interrelated with their home-based income earning activities. It corresponds with their willing to invest in their own property, in order to underpinning their productive assets.
Adequate measure is obviously needed in addressing security of tenure for the poorer inhabitants. Integration with informal realm is obviously important. This may be a complicated process, may also not. The provision of security of tenure doesn’t have to be a freehold title. It could also take form of guarantee from the government that they won’t be evicted, or basic service provision. The key thing is that local government agencies have to deliver certain degree of ‘sense of security’ for inhabitants in such low income areas.
Institutional Aspect
As the performance of local government is weak, one unfortunately cannot expect major role of local government in delivering income for inhabitants in low income settlements. The need for institutional and governance reform is obvious, and gradual change has to be emphasized in order to avoid political resistance.
Having said supporting the informal sector is fundamental, ‘anti informal sector’ policies thus have to be removed. Yet what the government normally do is to turn them to formal, which not only squeeze them but also inhibited their income opportunities. Even worse, numerous measures have been undertaken to ‘eliminate’ them. Informal sector operators are in many cases beaten and put in jail. This may also referred to eviction, that normally ends up with violence incidents. A waste of energy, as it is clear that eviction is very much far from effective. We never going to rid them anyway and they will always exists.
In dealing with rapid changing socio-economic circumstances as well as tackling the fluidity of informality, regulatory framework should be made adaptive. Accordingly, institutional arrangement also need to be flexible and use different approach in dealing with various issues. The key idea is to tailor the working framework to the specific problem
Jakarta, February 2, 2008
References
Bebbington, A (1999).” Capitals and capabilities: A framework for analyzing peasant viability, rural livelihood and poverty.” World Development 27(12): 2021-2044
Bhatt,N. (1997).”Microenterprise development and the entrepreneurial poor: including the excluded.” Public Administration and Development 17: 371-386
Ellis, F.,M.Kutengule, et al (2003).”Livelihood and rural poverty reduction in Malawi. “ World Development 31 (9): 1495-1510
Helmsing (2003).”Local economic development: New generations of actors;policies and instruments for Africa.” Public Administration and Development (23): 67-76
Moser, C.O.N (1998).” The asset vulnerability framework: Reassessing urban poverty reduction strategies.” World Development 26(1) : 1-19
Noer Effendi, T (1992). Urban growth, informal sector and poverty.” The Indonesian Journal of Geography 29(73) : 1-15
Sach ,Jeffrey (2005)."The end of poverty: How we can make it happen in our lifetime." London. Penguin Group
Sen,Amartya (1999). "Development as Freedom". New York, Anchor Books.
Van Horen (2002).”Planning for institutional capacity building in war-torn areas: The case of Jaffna, Sri Lanka.” Habitat International 26(1): 113-128
Wednesday, January 13, 2010
Posted by Unknown
Lets Surprise the Plan
What is the point of making rigid planning, if the element of uncertainties is very much larger than the certain one. When we realised that it is the ‘unknown unknowns’ that does change our life. We need to rethink the basic idea of planning. Normally, we consider the context where the planning took place, it's history as well. We identified the surrounding factors that could affect our planning, however, friends of friends of such factors count. What normally happened is the environment is so fluid, its just so hard to measure. Three minutes before the black Tuesday 9-11 took place, we surely still stick to our plan. The following minute was a totally different direction. Smaller scale uncertainties scattered all over the place. In our daily life, lets just face it, the element of surprise is everywhere.
Equity Cluster, the accelerator of poverty reduction
By Mohammad Romadhoni
Constraints Upon Poverty Reduction
The fact that poor inhabitants reside in low income settlements and also slum areas which scattered accross the city, however has brought additional burden to any poverty reduction measures. This situation has made needed action to overcome poverty become much more expensive. Not to mention, the on going classic problems, notably lack of infrastructure, insufficient funding from the government agencies, combined with immense corruption, unfortunately, have deteriorated the performance of poverty reduction intervention.
Unfortunately, many perceived that low income settlement and slum areas are the place to avoid as these are places of crime. The image that they are different, dangerous and even perhaps dirty (Lichter and Parisi, 2008) is a serious disadvantage for any poverty reduction measures.
The problem of fragmented institution within the formal structure of bureaucracy is also the case. Lack of coordination among key stakeholders is eminent, resulting in far from effective poverty related public policy. In addition, the totally scattered area of low income settlements have made syncronizing public sector policy targeting the poor has become much more daunting task.
In addressing the mounting problem of poverty, for sure fresh ideas are always welcome. On the other hand, one should also consider the fact that globalization has largely shifted our social and economic environment. Role of government has decreased, while role of local community became more critical, borderless society become more relevant. In this sense, the ability of policy maker and other development actors to think out of the box and at the same time be able to provide on the ground solution has become even more decisive. And after all, we also believe that there is light at the end of the tunnel.
A new species of ‘pole’
We already familiar with the term growth centre or growth pole, and acknowledge its role as the moving force of economic growth. Similarly, we also believe in the role of industrial cluster in accelerating regional economic productivity by creating concentration of firms. In the context of developed nations, the role of industrial cluster as a country’s pool of competitiveness is evident.
On the other side, given the immense problem of poverty, the question then is ‘why don’t we built a kind of ‘equity center’ or ‘equity cluster’? A cluster that functions as the primary force in eradicating poverty. A cluster that significantly delivers better quality of life for larger number of poor households reside within the area
What is this really?
In this light, derived from industrial cluster terminology (Schmitz ,1997) writer proposed the definition of ‘equity cluster’ : A geographic concentrations of low income settlement. This referred to a well defined area where large scale poverty reduction intervention delivered.
Why Bother?
Concentrating a large number , perhaps even thousands, of poor household into a specific area surely required massive energy. It is then urgent to ensure that this approach deliver significant advantage. That this measures is away from creating new problem, instead this should be seen as a breakthrough in tackling escalating problem of poverty.
Having said that the idea of equity cluster principally replicated the success story of industrial cluster. Obviously, some features have to be adjusted to fit the realm of poverty. It is argued that the advantage of equity cluster underpins poverty reduction measures, and having said problems above-mentioned, equity cluster largely contributes in addressing such problems.
By implementing ‘equity cluster’, the energy of poverty reduction generated by key stakeholders could then be ‘poured’ into a more specific areas. This makes a larger scale measures not only possible but also more effective. Following the notion of economies of scale, by applying equity cluster, the fuel of poverty reduction measures could be more effectively and efficiently allocated. The intervention can be more focus to its target, which is people who lives with less than $2 per day and poorest of the poor . Take for instance, it would be much cheaper to put needed key infrastructure in a concentrated settlement area, rather than in a highly dispersed one.
Applying this equity cluster approach makes a decent combination between ‘in depth’ approach and ‘in width’ approach. This means a great number of poor household could be affected, covering relatively vast area, while the complexity of the community could be better understood, hence a more comprehensive approach could be undertaken.
More over, the objectives of equity cluster is in accordance with far-reaching objectives of poverty reduction. The mid term and long term goal of such a cluster development is to generate new economic opportunities (Harvie, 2007) in a more sustainable manner as well as to rising standard of living (Singh, 2001) of low income inhabitants reside in the particular area.
Key Advantages of Equity Cluster
The advantages of equity cluster is divided into two definitions. Firstly, ‘given advantage’, which means the advantage is embedded to the nature of cluster it self, no further intervention required from the local community in the area. Secondly, is so called ‘active advantage’ (Hartarto 2004), this notion required a certain degree of efforts , either undertaken by the community or external agencies, which have to be put in place in order to achieve these advantages
Given Advantages
The advantages fell into this category, firstly, advantages corresponded with geographic proximity. As the poor live closer to one another, less transportation cost applied. They then could easily meet their friends and relative. They can share experiences and hopefully a joint activity could be initiated. Even better if bicycle track is built , thus can give them direct access to nearby market. This would encourage them not only to get contact and manage collective action but also potentially help them support their income earning activities.
Secondly, larger local market. The good thing of more people inhabited a particular a area is an additional advantage for those local economy actors, namely home based enterprises, micro enterprises and also informal sector operators. As there more demands for goods and services, they simply could have higher chances dealing with buyers in the area.
Thirdly, once the poor inhabitants have a common place to live, it would allow them to create their own distinctive local identity. So they can have some sense of belonging of a place where they live in. This means a lot for them. If managed properly, say put in place social event, relevant sport even, social gathering and so on, this surely would positively affected their community bonding, and simultaneously removed the unhealthy image associated with their environment.
Active Advantages
The characteristic of proximity also leads to other advantage, namely ‘active advantage’ (Hartarto, 2004). Its proximity is the initial stepping stone in developing social network and linkage accross different layer of the community. In this sense, cluster development is in line with the importance of developing trust, not only among community member but also between inhabitants and the local government as well as with other key stakeholders. This pattern shoud be aimed toward development of healthier partnership and strengtens alliances among its key stakeholders.
The capacity of local government in orchestrating poverty reduction intervention is clearly critical. Equity cluster could also function as a place where local government practised and improved its capability in undertaking supportive approach and strategy, of which need to be tailored to the need of the poor. Such a cluster would also means opportunities for local government in managing a genuine participatory approach as well as implementing a more efficient procurement and resource allocation.
Understanding the importance of local initiative, this cluster should also be recognized as fertile land in flourising local entrepreneurship. The cluster works on its own logic in nurturing collective innovation. The fact that the poor already had seed of creativity is a good start, as most of them normally faced pressure. Take for example, the poors frequently deal with eviction or chased, even beaten, by ‘Satpol PP’ due to their informal status. This circumstances fortunately forced them to think creatively. Find solutions using whatever things they have
The ability to deliver external value added should also be taken into account. Many developed clusters are clearly prominent contributing factor of surrounding city and region area. Its development should also aim to support its regional economic development as well as play a role as a stabilizing force (Singh, 2001). The notion of generating more economic activities and integration with surrounding economic fabric thus should be emphasized.
As the local market expanded, there is a chance to invite private sector doing business targeting low income household. Supported by the development of healthy partnership with local economy actor, this encourages economic integration. Which also means wider income opportunities for the poor live in the area. Of course , the poor may not have large buying power, but still their great amount of household counts. Take for instance the selling of economic package of pre-paid cell phone voucher is massively wide spreading. Not to mention the trends of banking institution providing micro credit to smaller scale economic actor. And clearly conducive environment still the the key issue, particularly in terms of security .
Given the fact that poverty is a complex issue and required collaborative work among its different development actors, In addition of a place of collaboration, cluster should also function as magnets for attracting external development intervention and assistance, to be working hand in hand, melting with local capacity, including the capacity to effectively absorb such assistances.
Combined all together, given the significant contribution of equity cluster, notably pooled resource and concentrated infrastructure. This would allows one to internalize function within that particular geographic area. Take for instance, it is worthed to internalize the activity of basic education, health provision, community gathering, as well as income generating activity. It is about efficiency, it also means cheaper for the community to use such services. In turn, such a mechanism placed the community to be at the right track toward greater self-sufficient.
The Key pillars- Operationally Speaking
The positive nature of cluster should be nurtured, as cluster are basically concentrators, synergy enhancers and equity measures accelerators (Singh, 2001). Several critical components then need to be put in place. By doing so, this equity cluster can deliver pro-poor value added, particularly in terms of better quality of life for the poor resided in the area. To avoid of being merely pocket of poverty. In order to be able play a role as income opportunities generator instead of place of financial deficit, as an area of synergy rather than social conflict, as a locus for empowerment rather than marginalization.
In order to place a large number of people in a well defined area, not necessarily have to ‘pick and drop’ them. The key thing is to prevent the poors are uprooted from their livelihood, as well as to tackle the problem of social disruption. Subsequently, the decision maker, local government in particular, could provide ‘sugar’ in order for the ‘ants’ to come. Local government should committed to put adequate physical infrastructure to support the poor’s basic need. Take for instance, the provision of affordable housing. Whether through approach of public housing or slum up-grading, the key ingredients is to deliver housing intervention which managed properly, addressed the poor’s basic needs, improve their health condition and at the same time supports their income earning opportunities. Even the lighest intervention such as guarantee not to be evicted, would means a lot for the poor.
One single most important element in improving the quality of life of the poor is perhaps political will. Once the decision maker linked with a well defined area, there is vast opportunities for them to delivering adequate political resource. This should start the engine of bureaucracy so that they could put more emphasis on the interest of the poor, to find effective solution and break down the vicious circle of deterioration in that particular area.
As equity cluster is basically an approach of geographical targeting (Simler and Nhate 2003) in the realm of poverty. It is thus important to tackle the problem of social and physical isolation, by doing so the inhabitants would not be “trapped in place—in poor place” (Lichter and Parisi, 2008). Instead, the integration with surrounding city’s economic and social fabric should also be the key priority. The notion of ‘place based solution’ (Lichter and Parisi, 2008) in addressing poverty is then relevant, and the cluster supports the preference of people to live closer to their income earning opportunities. This clearly a significant advantage for the poor, as they are normally ‘forced’ to live further, outside the city boundaries, away from their income opportunities.
In developing the cluster, it is necessary to extend the economic activity, instead of further spreading poverty. This required a strong foundation of viable economic base, which plays a large role in reinforcing upward mobility of the community (Lichter and Parisi 2008). The development of the cluster should also create pool of elaboration of local resources, including local workers. It is about establishing income generating activities, creating employment, and providing access so that the poor could benefit from. Integration with SMEs and other form of home based enterprises development, establishment of pro- poor financial institution as well as the provision of trust based micro finance are important components in this regards.
Human capital development is noted as the anchor of equity cluster development, and this should be undertaken on an ongoing basis. In this light, the creation of pool of training and skill development is important. It is because producing greater amout of skilled labour surely means more value added to the local economy. Whereas for the rest of the inhabitants, the provision of knowledge about life skill and day to day practical skill are also highly useful, especially if it is targeting poor women. In addition, human capital development not only very much helps in accessing ‘shared know how’ but also fosters better access to sources of technology.
A supportive institutional arrangements is also central in cluster development. This reffered to a set of institutional resource spesifically served that particular ‘cluster’ area. In this light , equity cluster should be aimed as a place of integration between formal and informal sphere of the local economy , thus be able to play a large role in supporting the activity of informal sector. Consequently, supportive regulatory framework should be delivered and the ones that impede the activity of informal sector should then be amended.
The equity cluster should also be seen as an opportunity of cementing social bond among community members. The notion of ‘the pattern which connect’ should be enhanced. Cluster needs to focus on strengtening social linkage, so they can work together toward common goals. In turn, at the more advanced stage, the key actors in that particular area could not only create pool of resource but also withdraw each other’s resources. The advantage of reducing social conflict and lowering crime rate also appears to be relevan. In addition, in the longer term this strengtened social network ia also highly useful in developing a more inclusive society
Conclusion
To put all together, equity cluster is basically a geographical targeting approach and play significant role as concentrator and primary force in eradicating poverty. By implementing equity cluster, the key resources of poverty reduction could be allocated, in a focused and concentrated manner. This cluster delivers value added, which is intertwinned with the objectives of poverty reduction intervention, particularly in terms of generating new economic opportunities and rising standard of living.
Equity cluster functions as fertile land to nurture local initiatives, as a place of income generating in order to extend the economic activities, as well as pool of skilled labour. In this regards, several key ingredients need to put in place, notably political resource, integration to place of income generator, viable economic foundation, human capital, ‘informal sector friendly’ regulatory framework and supportive institutional arrangement, as well as strengtened social linkage.
Constraints Upon Poverty Reduction
The fact that poor inhabitants reside in low income settlements and also slum areas which scattered accross the city, however has brought additional burden to any poverty reduction measures. This situation has made needed action to overcome poverty become much more expensive. Not to mention, the on going classic problems, notably lack of infrastructure, insufficient funding from the government agencies, combined with immense corruption, unfortunately, have deteriorated the performance of poverty reduction intervention.
Unfortunately, many perceived that low income settlement and slum areas are the place to avoid as these are places of crime. The image that they are different, dangerous and even perhaps dirty (Lichter and Parisi, 2008) is a serious disadvantage for any poverty reduction measures.
The problem of fragmented institution within the formal structure of bureaucracy is also the case. Lack of coordination among key stakeholders is eminent, resulting in far from effective poverty related public policy. In addition, the totally scattered area of low income settlements have made syncronizing public sector policy targeting the poor has become much more daunting task.
In addressing the mounting problem of poverty, for sure fresh ideas are always welcome. On the other hand, one should also consider the fact that globalization has largely shifted our social and economic environment. Role of government has decreased, while role of local community became more critical, borderless society become more relevant. In this sense, the ability of policy maker and other development actors to think out of the box and at the same time be able to provide on the ground solution has become even more decisive. And after all, we also believe that there is light at the end of the tunnel.
A new species of ‘pole’
We already familiar with the term growth centre or growth pole, and acknowledge its role as the moving force of economic growth. Similarly, we also believe in the role of industrial cluster in accelerating regional economic productivity by creating concentration of firms. In the context of developed nations, the role of industrial cluster as a country’s pool of competitiveness is evident.
On the other side, given the immense problem of poverty, the question then is ‘why don’t we built a kind of ‘equity center’ or ‘equity cluster’? A cluster that functions as the primary force in eradicating poverty. A cluster that significantly delivers better quality of life for larger number of poor households reside within the area
What is this really?
In this light, derived from industrial cluster terminology (Schmitz ,1997) writer proposed the definition of ‘equity cluster’ : A geographic concentrations of low income settlement. This referred to a well defined area where large scale poverty reduction intervention delivered.
Why Bother?
Concentrating a large number , perhaps even thousands, of poor household into a specific area surely required massive energy. It is then urgent to ensure that this approach deliver significant advantage. That this measures is away from creating new problem, instead this should be seen as a breakthrough in tackling escalating problem of poverty.
Having said that the idea of equity cluster principally replicated the success story of industrial cluster. Obviously, some features have to be adjusted to fit the realm of poverty. It is argued that the advantage of equity cluster underpins poverty reduction measures, and having said problems above-mentioned, equity cluster largely contributes in addressing such problems.
By implementing ‘equity cluster’, the energy of poverty reduction generated by key stakeholders could then be ‘poured’ into a more specific areas. This makes a larger scale measures not only possible but also more effective. Following the notion of economies of scale, by applying equity cluster, the fuel of poverty reduction measures could be more effectively and efficiently allocated. The intervention can be more focus to its target, which is people who lives with less than $2 per day and poorest of the poor . Take for instance, it would be much cheaper to put needed key infrastructure in a concentrated settlement area, rather than in a highly dispersed one.
Applying this equity cluster approach makes a decent combination between ‘in depth’ approach and ‘in width’ approach. This means a great number of poor household could be affected, covering relatively vast area, while the complexity of the community could be better understood, hence a more comprehensive approach could be undertaken.
More over, the objectives of equity cluster is in accordance with far-reaching objectives of poverty reduction. The mid term and long term goal of such a cluster development is to generate new economic opportunities (Harvie, 2007) in a more sustainable manner as well as to rising standard of living (Singh, 2001) of low income inhabitants reside in the particular area.
Key Advantages of Equity Cluster
The advantages of equity cluster is divided into two definitions. Firstly, ‘given advantage’, which means the advantage is embedded to the nature of cluster it self, no further intervention required from the local community in the area. Secondly, is so called ‘active advantage’ (Hartarto 2004), this notion required a certain degree of efforts , either undertaken by the community or external agencies, which have to be put in place in order to achieve these advantages
Given Advantages
The advantages fell into this category, firstly, advantages corresponded with geographic proximity. As the poor live closer to one another, less transportation cost applied. They then could easily meet their friends and relative. They can share experiences and hopefully a joint activity could be initiated. Even better if bicycle track is built , thus can give them direct access to nearby market. This would encourage them not only to get contact and manage collective action but also potentially help them support their income earning activities.
Secondly, larger local market. The good thing of more people inhabited a particular a area is an additional advantage for those local economy actors, namely home based enterprises, micro enterprises and also informal sector operators. As there more demands for goods and services, they simply could have higher chances dealing with buyers in the area.
Thirdly, once the poor inhabitants have a common place to live, it would allow them to create their own distinctive local identity. So they can have some sense of belonging of a place where they live in. This means a lot for them. If managed properly, say put in place social event, relevant sport even, social gathering and so on, this surely would positively affected their community bonding, and simultaneously removed the unhealthy image associated with their environment.
Active Advantages
The characteristic of proximity also leads to other advantage, namely ‘active advantage’ (Hartarto, 2004). Its proximity is the initial stepping stone in developing social network and linkage accross different layer of the community. In this sense, cluster development is in line with the importance of developing trust, not only among community member but also between inhabitants and the local government as well as with other key stakeholders. This pattern shoud be aimed toward development of healthier partnership and strengtens alliances among its key stakeholders.
The capacity of local government in orchestrating poverty reduction intervention is clearly critical. Equity cluster could also function as a place where local government practised and improved its capability in undertaking supportive approach and strategy, of which need to be tailored to the need of the poor. Such a cluster would also means opportunities for local government in managing a genuine participatory approach as well as implementing a more efficient procurement and resource allocation.
Understanding the importance of local initiative, this cluster should also be recognized as fertile land in flourising local entrepreneurship. The cluster works on its own logic in nurturing collective innovation. The fact that the poor already had seed of creativity is a good start, as most of them normally faced pressure. Take for example, the poors frequently deal with eviction or chased, even beaten, by ‘Satpol PP’ due to their informal status. This circumstances fortunately forced them to think creatively. Find solutions using whatever things they have
The ability to deliver external value added should also be taken into account. Many developed clusters are clearly prominent contributing factor of surrounding city and region area. Its development should also aim to support its regional economic development as well as play a role as a stabilizing force (Singh, 2001). The notion of generating more economic activities and integration with surrounding economic fabric thus should be emphasized.
As the local market expanded, there is a chance to invite private sector doing business targeting low income household. Supported by the development of healthy partnership with local economy actor, this encourages economic integration. Which also means wider income opportunities for the poor live in the area. Of course , the poor may not have large buying power, but still their great amount of household counts. Take for instance the selling of economic package of pre-paid cell phone voucher is massively wide spreading. Not to mention the trends of banking institution providing micro credit to smaller scale economic actor. And clearly conducive environment still the the key issue, particularly in terms of security .
Given the fact that poverty is a complex issue and required collaborative work among its different development actors, In addition of a place of collaboration, cluster should also function as magnets for attracting external development intervention and assistance, to be working hand in hand, melting with local capacity, including the capacity to effectively absorb such assistances.
Combined all together, given the significant contribution of equity cluster, notably pooled resource and concentrated infrastructure. This would allows one to internalize function within that particular geographic area. Take for instance, it is worthed to internalize the activity of basic education, health provision, community gathering, as well as income generating activity. It is about efficiency, it also means cheaper for the community to use such services. In turn, such a mechanism placed the community to be at the right track toward greater self-sufficient.
The Key pillars- Operationally Speaking
The positive nature of cluster should be nurtured, as cluster are basically concentrators, synergy enhancers and equity measures accelerators (Singh, 2001). Several critical components then need to be put in place. By doing so, this equity cluster can deliver pro-poor value added, particularly in terms of better quality of life for the poor resided in the area. To avoid of being merely pocket of poverty. In order to be able play a role as income opportunities generator instead of place of financial deficit, as an area of synergy rather than social conflict, as a locus for empowerment rather than marginalization.
In order to place a large number of people in a well defined area, not necessarily have to ‘pick and drop’ them. The key thing is to prevent the poors are uprooted from their livelihood, as well as to tackle the problem of social disruption. Subsequently, the decision maker, local government in particular, could provide ‘sugar’ in order for the ‘ants’ to come. Local government should committed to put adequate physical infrastructure to support the poor’s basic need. Take for instance, the provision of affordable housing. Whether through approach of public housing or slum up-grading, the key ingredients is to deliver housing intervention which managed properly, addressed the poor’s basic needs, improve their health condition and at the same time supports their income earning opportunities. Even the lighest intervention such as guarantee not to be evicted, would means a lot for the poor.
One single most important element in improving the quality of life of the poor is perhaps political will. Once the decision maker linked with a well defined area, there is vast opportunities for them to delivering adequate political resource. This should start the engine of bureaucracy so that they could put more emphasis on the interest of the poor, to find effective solution and break down the vicious circle of deterioration in that particular area.
As equity cluster is basically an approach of geographical targeting (Simler and Nhate 2003) in the realm of poverty. It is thus important to tackle the problem of social and physical isolation, by doing so the inhabitants would not be “trapped in place—in poor place” (Lichter and Parisi, 2008). Instead, the integration with surrounding city’s economic and social fabric should also be the key priority. The notion of ‘place based solution’ (Lichter and Parisi, 2008) in addressing poverty is then relevant, and the cluster supports the preference of people to live closer to their income earning opportunities. This clearly a significant advantage for the poor, as they are normally ‘forced’ to live further, outside the city boundaries, away from their income opportunities.
In developing the cluster, it is necessary to extend the economic activity, instead of further spreading poverty. This required a strong foundation of viable economic base, which plays a large role in reinforcing upward mobility of the community (Lichter and Parisi 2008). The development of the cluster should also create pool of elaboration of local resources, including local workers. It is about establishing income generating activities, creating employment, and providing access so that the poor could benefit from. Integration with SMEs and other form of home based enterprises development, establishment of pro- poor financial institution as well as the provision of trust based micro finance are important components in this regards.
Human capital development is noted as the anchor of equity cluster development, and this should be undertaken on an ongoing basis. In this light, the creation of pool of training and skill development is important. It is because producing greater amout of skilled labour surely means more value added to the local economy. Whereas for the rest of the inhabitants, the provision of knowledge about life skill and day to day practical skill are also highly useful, especially if it is targeting poor women. In addition, human capital development not only very much helps in accessing ‘shared know how’ but also fosters better access to sources of technology.
A supportive institutional arrangements is also central in cluster development. This reffered to a set of institutional resource spesifically served that particular ‘cluster’ area. In this light , equity cluster should be aimed as a place of integration between formal and informal sphere of the local economy , thus be able to play a large role in supporting the activity of informal sector. Consequently, supportive regulatory framework should be delivered and the ones that impede the activity of informal sector should then be amended.
The equity cluster should also be seen as an opportunity of cementing social bond among community members. The notion of ‘the pattern which connect’ should be enhanced. Cluster needs to focus on strengtening social linkage, so they can work together toward common goals. In turn, at the more advanced stage, the key actors in that particular area could not only create pool of resource but also withdraw each other’s resources. The advantage of reducing social conflict and lowering crime rate also appears to be relevan. In addition, in the longer term this strengtened social network ia also highly useful in developing a more inclusive society
Conclusion
To put all together, equity cluster is basically a geographical targeting approach and play significant role as concentrator and primary force in eradicating poverty. By implementing equity cluster, the key resources of poverty reduction could be allocated, in a focused and concentrated manner. This cluster delivers value added, which is intertwinned with the objectives of poverty reduction intervention, particularly in terms of generating new economic opportunities and rising standard of living.
Equity cluster functions as fertile land to nurture local initiatives, as a place of income generating in order to extend the economic activities, as well as pool of skilled labour. In this regards, several key ingredients need to put in place, notably political resource, integration to place of income generator, viable economic foundation, human capital, ‘informal sector friendly’ regulatory framework and supportive institutional arrangement, as well as strengtened social linkage.
