Posts tagged under Highlights
New infographic! As usual, click on the picture to see it in full size.
Click on the picture to see the full size infographic! And stay tuned for the next issue of the Asian Trends Monitoring Bulletin, coming soon!
Ekpatthana Microfinance Institution (EMI) was the first provider of microloans in Laos. It was founded in 2005 with the goal to reduce poverty in Laos through the provision of financial services to people excluded from formal banking services. Their clients are mainly small entrepreneurs, such as market vendors, shopkeepers, some micro-enterprises and small scale farmers.
Rapid growth – no need for a marketing budget
The organisation is experiencing a phase of rapid growth, despite spending little to no money on marketing their products. In the last two years, staff numbers have doubled to 75 employees, assets have grown from US$ 1 million to US$ 2.9 million, and the number of active borrowers now exceeds 4,000. The average loan size is around US$ 350 with a loan repayment rate higher than 98%.
EMI’s loan portfolio includes a forced-savings component in order to ensure that clients learn the importance of building up reserves for either business expansion or personal emergencies. Founder and Executive Director of Laos’ first licensed MFI EMI, Somphone Sisenglath, adds that “savings is part of our mission…[...] Access to credit is one thing, but if there is nothing left [at the end of repayment], they are still poor.” EMI makes it a requirement for all their clients to save 10% of their initial loan. The company’s more than 10,000 deposit account holders enjoy interest rates for their savings of up to 16% per annum.
The Asian Trends team conducted a survey among urban poor residents in Jakarta, Manila, Hanoi and Vientiane. The questions covered basic services such as water, sanitation, health care, education as well as access to financial services. Here is a short preview of the survey results in the area of financial inclusion.
Four out of five respondents did not have a bank account. More than half of respondents still keep their savings in cash hidden at home. The majority of respondents are employed in the informal economy, struggling to make enough money to feed their families every day. Thus, even a single emergency, such as urgent medical treatment for a family member, can wipe out a family’s entire savings. The survey also showed that 53% of respondents have severe difficulties to save at all.
Despite the fact that at least a handful of Microfinance institutions (MFI) currently offer their services in each of the cities included in our survey, the vast majority of the urban poor in Southeast Asia fly below their radar. With incomes below US$2/day, they are a difficult and often not very profitable client group. Several MFIs confirmed that they prefer to lend to the “upper poor”: households that have some existing working capital, a certain level of business acumen, and more reliable revenue streams.
The following is an excerpt from the upcoming ATM Bulletin on education. Stay tuned for the release of the new issue!
One of the more important elements of designing a pro-poor intervention in the education sector is content, i.e. deciding what to teach the children. The debate on content revolves around whether poor students should be given the same chance to excel academically as other students, or whether they should be taught lessons and skills that would allow them to improve their lives without requiring further investment in schooling.
However, not all curriculum interventions are subject to heated debate. There are cases where additional lessons are given in the form of life skills that would be generally useful for all students, but are especially important for disadvantaged groups. For example, in the field of microfinance, one of the biggest challenges that microfinance providers face is the unreliable behavior of their clients. Households in poor communities are unlikely to be financially literate, let alone financially responsible. Thus, one microfinance organization in Vientiane decided to nip the problem in the bud and teach financial literacy to children.
During our field visit to Jakarta in 2012, one of the interventions that caught our attention was the Urban Poor Consortium’s “alternative” schools for the poor in Penjaringan, North Jakarta. Below is an excerpt from the upcoming ATM Bulletin #20: Educating the Urban Poor, that discusses these schools. Enjoy!
Penjaringan district in North Jakarta is home to one of the largest and poorest slums in Jakarta. In this otherwise service-deprived slum, there are over ten small schools where poor children can experience an education for free. These schools were founded by the Urban Poor Consortium (UPC), a Jakarta-based pro-poor NGO that specializes in advocacy but also dabbles in service provision.
According to UPC, public facilities in Penjaringan, including public schools, are very rare because it is not a formal residential area. Most of the dwellings in the area are built on top of reclaimed marshland, making it extremely flood-prone and unsafe for habitation. The services that do exist are poorly maintained, as there is not much funding allocated to improving conditions in informal slums.
The following is the second in a series of posts by guest writers María del Mar Garza and Rafael Barreto Souza. Their writings are based on an Anticipatory Policy Development Report done with Gautam Wahi and Saqib Manam as part of the Foresight and Public Policy Course at Lee Kuan Yew Shool of Public Policy under the supervision of Dr. Jose Ramos and with the support of the Asian Trends Monitoring.
An extensive analysis of datasets, testimonies, news stories and academic literature allowed us to identity five main drivers of the slums phenomenon in Metro Manila in the current policy state of affairs by using a systems mapping methodology: (1) government policy implementation; (2) political will; (3) employment; (4) real estate; and (5) poverty alleviation.
1. Government Policy Implementation
So far the Filipino government has faced difficulties in carrying out housing-related budget allocation in coordination with the LGUs (Asian Trends Monitoring 2012). Past policies towards slums in Manila have focused on relocating slum dwellers to newly built brickwork housing flats in peripheral areas. These policies have been ineffective and the limited housing units developed were incompatible with demand (Takahashi 2006).
If this trend continues over time the results will be ‘too-little-too-gradual’ to have any significant impact.
In Depok, one of Jakarta’s many suburbs, the team met and spoke to Eva P., the 26 year old owner of a warung (small shop) located just outside a traditional market. She is one of approximately 2.5 billion people without access to formal financial services.
In Eva’s hometown of Bengkulu, there were not many employment options after graduating from school. As with most of rural Indonesia, the only jobs available for her were agricultural. This prompted Eva to migrate to Jakarta in 2004, in search of better options.
Upon arrival, she immediately set up her own shop by building a stall next to the traditional market by Depok Baru Train Station. Her shop has remained in the same location for almost 8 years, surviving several police crackdowns on informal businesses in public spaces. She now sells a wide variety of food, drinks, and cigarettes to a clientele comprised mostly of jitney drivers, street musicians and motorcycle cabbies.
Cities occupy only 2% of the earth’s surface, but 53% of the world’s population lives in urban areas. Rural-urban migration is a global megatrend with millions of people leaving their original livelihoods behind by seeking new opportunities in the world’s cities. When looking at growth by the hour Delhi, Kinshasa, Dhaka, Mumbai and Karachi stand out with population growth rates between 43 and 49 people per hour.
That’s more than 400,000 people in a single year. The infographic reveals that wealthier countries still account for much higher rates of pollution and consumption per capita, but the numbers are shifting. Rapid urbanisation in developing countries has severe consequences for the environment as well as the people. Providing access to services and building adequate infrastructure to cope with the steady stream of urban migrants has already become a huge challenge. Often, the migrants have less (work) opportunities and little access to services compared to the cities’ inhabitants. The ATM urban poverty series has highlighted many of these challenges throughout 2012.
Mr. Karlan is a 54 year old native Jakarta resident who has spent the last six years of his life working as a tukang ojek, or motorcycle taxi driver. He chose his current profession after deciding that his aging body was no longer suited to handle the physical strains of working in construction. His decision was also made easier by the fact that he owns a motorcycle, a luxury that not all motorcycle cabbies have.
Karlan makes an average of IDR 100,000 (US$ 11) per day, while spending about IDR 25,000 per day on the road for meals, cigarettes, and fuel expenses. Thus, he earns IDR 2,250,000 per month to spend on his family, provided that he is able to work every day. This puts his family of four barely above the US$ 2 per day mark that some are currently using as the new poverty line. Unfortunately, this is only possible because he owns his own motorcycle. Other motorcycle cabbies would have to pay rental fees ranging between IDR 25,000 – 40,000 per day, which would slash that household income in half.