Posts tagged under Pro-poor issues
Among the cities that the ATM team researched this year, Vientiane stood out for its small population and its close integration to the surrounding rural communities. Vientiane, the capital of Lao People’s Democratic Republic, is the second smallest ASEAN capital after Bandar Seri Begawan of Brunei Darussalam. It has a population of 700,000 people, which is tiny compared to 23 million in the Greater Jakarta Area, Manila (16.3 million), or Hanoi (6.5 million).
Despite being small and relatively underdeveloped, Vientiane has grown rapidly in the last few years. The economy is booming with a growth of 8% per year, and the country is set to join the World Trade Organisation in 2013. However, the growth is not distributed equitably with mining, forestry, hydro and tourism as the major drivers of the economy.
The poor are often left on the side lines, suffering from a lack of infrastructure and inaccessible services. The field interviews and case studies in this bulletin illustrate the tremendous challenges Vientiane’s administrators are faced with. In this bulletin we look into the following issues:
- wide service gaps for the poor, specifically in the areas of health and education;
Jakarta, Indonesia: capital of Southeast Asia’s largest democracy and the fourth most populous country in the world at 238 million (2011 data). Home to over 23 million people, the Greater Jakarta Area (Jabodetabek) is the largest megacity in Asia and the third largest in the world.
To outsiders, Jakarta is a shining example of Indonesia’s development. To businesses, it is a thriving market with a skilled labour force and skyrocketing consumption rates. To its middle class, it is a city that is still able to provide everything they need, despite stressful levels of congestion. But to its poor, Jakarta presents a very different picture.
Jakarta’s poor live in the scattered pockets of urban slums and witness a very different side of the city. To the poor, Jakarta is a city where basic services are out of reach and decent job opportunities are scarce. Despite their best efforts, they struggle even for minimum subsistence. How can a city growing so fast leave so many behind?
One of the more striking statistics associated with BRAC is that in Bangladesh alone they run over 24,000 primary schools and over 13,000 pre-primary schools. Five million children have graduated from these schools at a cost of only US$32 per child annually.
One of the main reasons that BRAC has been able to set and run more schools than many countries have, stems from their focus on keeping things simple. Faced with the realization that millions of children across Bangladesh were not receiving any formal education at all, BRAC has worked to provide a basic education to as many as possible.
BRAC primary schools only run from grades one to five. After graduating from BRAC schools fortunate students are able to shift into government-run schools and continue their education. Those who are not so fortunate have still learned valuable basic skills in reading, writing, and math. In many cases even this education is much more than anyone else in their family has received previously.
The ATM team has written about several simple innovations that have the potential to help many of the world’s poor. These innovations, such as water rollers and water bottle lamps, required only an imaginative mind and knowledge of engineering or design.
With that in mind, I headed out to visit Singapore Polytechnic’s “SP Engineering Show 2012” in hopes of finding some projects that showed potential for widespread use. At the show, I saw several projects that looked exciting and decided to highlight two of them here.
1. Gen-Electro Bike: cheap power is a bike ride away
The Gen-Electro Bike was the first project that caught my attention. It came in the shape of a dynamo and battery attached to the rear wheel of a normal bicycle. The way it works is that as people pedal and travel using their bicycles, the kinetic energy moving the rear wheel will be converted into electrical energy using the dynamo and stored into the battery.
Zhang Jun Kai, one of the team members, talked to me about the project. His team saw that access to electricity was very problematic for areas such as rural Indonesia. Also, they noticed that several of these people used bicycles as the main method of transportation. The team was able to put these bits of information together and solve the former by utilizing the latter.
It is innovative, and Vortex, the company that builds the solar powered ATMs, has managed to overcome tremendous technical challenges to realize the reliable operation of ATMs at up to 50 degrees Celsius in areas with power cuts lasting up to 10 hours.
However, as a stand-alone initiative it will do little for the poor.
An enthusiastic article titled ‘Solar ATMs fuel rural revolution in India‘ by the Economic Times praised the new innovation as the solution to bringing financial services to more remote (mostly poor) rural populations with unreliable electricity supply. Thereby, it overlooked the fact that most poor do not have bank accounts for reasons of profitability. It is simply not cost effective for traditional banks to service accounts with very low balances. A UNDP press release even claims that “More than 30 million rural poor in India and South Africa to benefit from banking services”. I have my doubts.
In the same article, Vortex CEO, Vijay Babu, states that
“In partnership with banks and other stakeholders such as the Business Call to Action, Vortex can make financial inclusion a reality for millions of people.”
The ATM team presents our newest video, simply entitled “What is poverty?”
The team interviewed students and staff from the Lee Kuan Yew School of Public Policy to asked them how they would define poverty. Their varied responses showed that poverty is difficult to define. This is important to keep in mind when evaluating a country or city’s poverty alleviation efforts, because the policy is undoubtedly colored by the policy maker’s perception of poverty.
As usual, tell us your thoughts on the comment section!
Although the issues in the article aren’t exactly new (the anti-REDD movement has been around for a while), the article does a good job of re-raising quite a number of questions, especially about how governments should deal with indigenous people.
Here’s a supplementary reading courtesy of the Indigenous Peoples Alliance of the Archipelago (AMAN), the NGO mentioned in the article, as well as another one by NO REDD. Although the pieces are clearly skewed in support of the rights of indigenous people, it still provides a good overview of the problem.
It’s quite difficult to figure out how to feel about this recent development. On one hand, one cannot help but sympathize with the plight of indigenous people, having been marginalized and exploited throughout history. It would probably only be fair that their voice be heard in the REDD negotiations, as well as in the implementation of individual REDD projects. Their lives are sure to be affected by REDD projects, so involving them in the design and implementation is likely to improve the outcomes for everyone involved.
Our upcoming issue on water governance (look out for this one at the end of the year) includes an interview with the head of an environmental NGO based in Jakarta. In the interview, she argues that one of the reasons for the slow uptake of environmental awareness in cities such as Jakarta is poverty.
Poverty, she stipulates, means that people’s priorities are set on sustenance, survival and cost-minimization, which in turn means that they are unwilling to partake in environmentally responsible actions (often quite costly). Whether it is living in makeshift housing on the riverbank (which compromises the state of the river), or haphazard disposal of household waste, these actions are chosen instead of their environmentally responsible alternatives because they are cheaper.
If this is true, it explains this failure in Ho Chi Minh City’s waste collection program. HCM City administrators have found that waste collection fee targets are not being met, signifying a resistance to the program. Although delinquent companies are partly to blame for being unwilling to pay the required amounts, there are also many problems in collecting fees from the general public.
The per capita GDP figure can be very misleading in that regard. According to the Inland Revenue Authority of Singapore only about one third of the labour force pays income tax which kicks in above $20,000; Thus more than 2/3 of the labour force fall below the $30,000 limit and thus qualify for the MCBS scheme.
The interest rate will range between 8% and 12% annual interest, while loan repayments are supposed to be made biweekly to instill budgeting discipline and avoid overwhelming the borrower with the monthly repayment amount. The scheme will also provide complimentary business training after successful loan applications.
The intial seed funding will suffice for a maximum of 1000 borrowers and will serve to evaluate the success of what could be called “a banking innovation for the poor in Singapore”. Given that entrepreneurship does not come automatically just because there are loans available, it remains to be seen whether this initiative will be succesful.
‘We expect this scheme to help Singaporeans become self-reliant by starting up or even expanding their existing micro-businesses,’ said Mr Koh Kar Siong, managing director and head of POSB when the scheme was announced.