City's Wish List

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.