To support our qualitative research with some more data, we are also conducting a survey among the poor in Hanoi. We aim to collect responses from about 350 respondents, the same sample size we had reached in Jakarta and Manila. You are already curious about the results? Read more about our survey results in recent blog posts about saving’s strategies,access to credit, and Jakarta’s water supply. Also check out this video about street fights in Jakarta’s slums.

Moreover, in about a week or so we will release our next ATM Bulletin on Jakarta’s poor with detailed information about our field trip to Jakarta. So stay tuned for the release.

In the meanwhile, we will try to post regular updates about our experiences in Hanoi, so make sure you check the blog for updates throughout the next week or simply Like us on facebook to automatically see our updates in your newsfeed.

Photo by Bruno

]]> http://www.asiantrendsmonitoring.com/2012/05/17/research-on-urban-poverty-atm-team-in-hanoi/feed/ 0 http://www.asiantrendsmonitoring.com/2012/05/14/underdeveloped-financial-services-for-jakartas-poorest/ http://www.asiantrendsmonitoring.com/2012/05/14/underdeveloped-financial-services-for-jakartas-poorest/#comments Mon, 14 May 2012 10:06:24 +0000 Johannes Loh http://www.asiantrendsmonitoring.com/?p=3606 The Asian Trends Monitoring team conducted a survey among Jakarta’s slum dwellers between February 24 and March 2nd 2012. We collected a total of 348 responses from seven different neighbourhoods in Jakarta with the help of 15 research assistants from the University of Indonesia.

Picture by andiona

One of the items required respondents to rate their difficulty of “Saving Money”. More than a third of respondents answered that they were unable to save, while another third said that it was very difficult for them (see previous blog post). Seeing those results we assumed that a majority of them would then turn to different sources to borrow money for consumption smoothing. Among our expectations were a high percentage of Microcredit users, followed by the usage of informal money lenders, always a thriving business in poor areas.

However, the actual results were a little bit surprising. Only about 28% of respondents indicated that they actually borrow money.

It turned out that the primary source for borrowing money is among friends and relatives (52%), followed by cooperatives (22%), and informal money lenders (16%). Commercial bank loans, pawn shops, and MFIs were the least popular credit sources.

We can only speculate why microcredit does not reach these slum dwellers. One reason might be the dispersed nature of dwellings in Jakarta’s West, South and East Districts, which makes a profitable operation of microcredit more challenging. But even in Tanah Tinggi, a poor, densely populated area with more than 100.000 inhabitants, the dominant form of lending was from relatives and friends. Another potential barrier to providing microfinance services in these settlements is lack of transparency and accountability since many slum dwellers live in temporary or semi-permanent housing. But those are not insurmountable entry barriers.
Safesave, an innovative approach to lend to the poorest of the poor in Bangladesh, has illustrated that offering microfinance products in urban slums is feasible. Bringing financial services including saving/lending options into Jakarta’s deprived areas would substantially improve the people’s opportunity to scale their businesses. All it takes is a daring entrepreneur willing to take a risk to serve Jakarta’s under- and unbanked population.

We’ll just let the video speak for itself. Without further ado (click on the photo to play the video on Youtube):

One of the items required respondents to rate their difficulty of “Saving Money”. More than a third of respondents answered that they were unable to save, while another third said that it was very difficult for them (see below). Together with finding work opportunities and having enough living space, saving money was the most difficult aspect of the respondents in our sample.

The ability to save money is highly correlated to other important aspects of surviving in the city. We found a significant difference in perceived life difficulty between those who save and those who don’t save regularly. The first group had an average score of 21.6 on the life difficulty index (10 Points indicates Ease, while 50 points indicates inability in all 10 items) compared to 31.3 points for the respondents unable to make weekly savings (see t-test below).

We were also interested to find out where the urban poor typically keep their money. Surprisingly, 63.5 % keep their savings at home, only 22 % keep it in a bank account, and a small minority of 5 % use MFIs, savings groups and cooperatives to deposit their money. The remainder converts cash into other commodities or entrusts it with relatives.

Among those without bank account, 89 % indicated that they are not able to save regularly. However, even those who do save only manage to put aside an average of US$ 5.80 per week. At that rate you can imagine how long it will take them until they would have enough money saved to make a significant investment into scaling their business (as most them are self-employed micro-entrepreneurs).

Any small emergency such as unexpected medical expenditures, foregone income due to sickness or unemployment would wipe out all of their savings and probably force them to borrow from moneylenders forcing them further into a cycle of poverty.

Why aren’t there more innovative tools for Jakarta’s slum dwellers to help them save?
Is it the unattractive urban environment which makes it difficult to track people and build a reliable client base for MFIs?
More on the lucrative business of money lenders in Asia’s slums in a later blog post…

The upcoming bulletins will focus on two of Asia’s most dynamic urban centres: Jakarta and Manila. In each city we conducted a survey with 350 respondents to find out more about their daily struggles. We have posted a first preview of the results on access to water here.

In addition to our bulletin we are producing video content ranging from on-site interviews with people living in urban slums to an outsiders perspective. Have a look what you have missed so far and let us know what you think on those issues:

Stories from Jakarta – interview with a warung owner:

Jakarta’s Slums – A Surveyor’s Perspective:

How would you define poverty?

A flooded Kampung in Depok, South Jakarta

In our recent visit to Jakarta, we conducted a survey in the slums of the city that sought to confirm this data. We wanted to see whether the water coverage in Jakarta is really as poor as the secondary data suggest. More importantly, we wanted to see whether the lack of piped water connections were a serious impediment to clean water access for Jakarta’s poor.

(The survey itself was administered to 345 poor households across seven different slums in Jakarta.)

The results of the survey were interesting, to say the least. Almost half of our respondents reported private water vendors as their primary source of clean water. As written in Bulletin 15 on water governance, obtaining water from private water vendors can cost up to 15 times more than having a piped water connection. As for the piped connections themselves, a large number of people still rely on communal connections, which can cause difficulties in terms of cost-sharing, queuing, as well as rationing in times of shortage.

In addition, respondents whose primary water source was not from the private vendors reported having to boil their water before consumption. This is a non-zero cost in terms of time, risk, and actual money spent. Thus, even from these two measures of water service quality, accessing clean water is costly for Jakarta’s poor.

Yet, the majority of these respondents reported that clean water is easy to obtain. All respondents with private water connections perceived clean water as “easy” or “fairly easy” to access, despite needing to boil it before consumption. Even some of those who use unfiltered water sources still perceived clean water as being easy to access.

Is this an indication of acceptance and complacency on the part of the respondents? Having lived under those conditions for several years, these families may have already adapted to their circumstances and accepted that less-than-clean water is as good as it gets. If true, this would represent a very dangerous shift in mindset. Rather than demanding for improved services, people are instead lowering their expectations. Amartya Sen and Martha Nussbaum call this the “adaptive preference” phenomenon.

Or perhaps, this is just an indication of relative ease. Among the ten categories that we surveyed to create our “life difficulty index”, the people of Jakarta perceived water as being one of the least difficult to access. However, if this is true, it also represents a worrying conclusion. If getting unfiltered (perhaps even contaminated) water from a communal well and having to boil it represents “easy” access to clean water,  just how bad is the rest of their lives?

Note: more information on the “life difficulty index” will be available in Bulletin 16 on Jakarta’s poor, coming out next month.

How do Asia's poor get water?

While Asia is home to some of the most vibrant economies in the world, it is also the global epicentre for some of the worst human development indicators. Around 700 million people live without access to safe drinking water in Asia, and a staggering two billion people do not have access to basic sanitation, exposing them to disease and often deadly infections. Poor water and sanitation governance continues to plague Asia, casting a dark shadow over the future with the United Nations expecting 3.5 billion people to be living in water-scarce and water-stress areas in the coming decade.

Access to water has important implications for health, education, poverty and the environment. Children around the world are missing an incredible 440 million school-days per year due to diseases related to water, sanitation and hygiene. In adults, these diseases lead to productivity and income losses equivalent to millions of dollars per year, mostly among the poor. Moreover, contaminated water is one of the leading causes of diarrhoea, responsible for one-fifth of child mortality under the age of five. Lack of clean water and sanitation could result in losses of billions of dollars and stunted economic progress, leaving Asia’s poorest further behind.

Global megatrends such as climate change, rapid urbanisation and surging water demand will force Asia to change the way it addresses water governance over the next 20 years To make matters worse, Asian countries have actually witnessed their water quality drop in recent years, perhaps signifying a lack of concern by governments and society as a whole. Clearly, a change of course is required.

There are several aspects of water governance that currently demand attention. This bulletin has selected four important aspects that are especially relevant to the plight of the poor:

• What are the best ways to cope with the rapid urbanisation of the poor in water utilisation?
• How does pricing water for affordability affect investment and water conservation?
• Is privatisation of water treatment and supply a bane or a boon for the poor?
• What is the best way to deal with water pollution by the poor: a carrot or stick approach?

Bulletin 15: PDF format | MS Word 2007 format

Infographic: How do Asia’s poor get water?: JPEG format

This bag was designed and produced in the Philippines and is made entirely from recycled products. In fact it was produced by women from a trashpicker community from the former Smokey Mountain site in Tondo, Metro Manila (see further below for a picture of their livelihood). It is made from 1,000+ can lids in intricate craftsmanship and the proceeds directly benefit poor families (they earn a regular income for the production) as well as the work of the responsible charity, the Philippine Christian Foundation (PCF). In Paradise Heights (former Smokey Mountain) PCF runs a school for the trashpickers’ children.

What started as an experiment during an art lesson in PCF’s school, has become an income-generating activity for the children’s mothers. Their jewelry and other fashion products, cleverly made 100% from recycled materials from the nearby dumpsite, has become famous enough to attract the attention of national retailers. Very soon SM Supermarkets will sell a jewelry product line in stores all over the country. The increasing demand will require PCF to keep innovating and develop many more original designs. They are looking for aspiring designers willing to volunteer their creativity and time for a few weeks to develop new designs.

The raw material next to the final products

Do you want to make a name for yourself and contribute to a good cause with your creativity? Contact us and we will connect you to PCF for further details.

Watch out for further updates from our field visit in Manila in the coming weeks.

These are the settlements where the nanays who produce the jewelry live.