Clear, long-term policy on poverty urgently needed

Clear, long-term policy on poverty urgently needed

Sri Pamoedjo Rahardjo, Former Executive Director, Community
Recovery Program, Jakarta

The first 100 days of the new government ushered in greater
uncertainties on how the country might recover. The number of the
real poor who need urgent assistance hence continues to grow.
Hence, conflicts over meager resources in impoverished
communities are even more magnified.

Despite fairly strong public support for the government in the
beginning, the cabinet has not responded with a solid concept in
dealing with the poor. Only recently, the economic team announced
the formation of a committee on poverty, which seems to repeat
the then inactive coordinating body on poverty developed by
former president Abdurrahman Wahid.

The government should without delay put forward a clear policy
on poverty. It should reconsider the predecessor's plan to
terminate the social safety net (SSN) program. Despite its
deficiencies, the SSN has been recognized by the international
community as Indonesia's unique development model during the
crisis.

The scheme, however, has been so distorted by many that SSN
has come to be known as another source of corruption. It aims to
stimulate the affected poor to meet their basic necessities,
including the need for food, education, health services, job
opportunities, and income.

Much of the SSN funds were used to subsidize consumable
activities. Too little was used for income generation, or for
start-up capital to carry on with the revolving micro
capitalization scheme.

The revolving fund program has been in operation for over
three years, involving donors, government, non-governmental
organizations (NGOs) with trillions of rupiah disbursed to the
targeted community.

With additional capital funds almost nowhere to be found now,
it is a huge waste to condemn the already revolved funds in the
community to oblivion. Government planners have not considered
what to do with the funds, much less to identify and monitor the
current status of the funds.

Activists have claimed that the funds should always be
entrusted to and revolved within the community. This ideal view
will remain a dream unless specific guidelines, sanctions and
delegation of authority are carefully planned and enforced. The
revolved funds would vaporize without a trace.

Donor fatigue in this area is fast becoming evident and unless
innovative ideas are quickly developed, the central and local
government will be short of funds for the poor. The government
should develop a workable concept of community funds.

Small amounts of capital for the community can be derived from
the available funds from previous SSN and other community-based
program activities. The government could introduce a social
protection program with long-term anti-poverty program
intervention.

Currently revolved SSN funds can be redesigned to become
social protection funds. This can help the government to avoid
digging deep into its budget with complicated arrangements of
cash transfer for the poor. There would be no need to seek huge
financial aid from international institutions as start up funds
for social protection programs. Instead, the government can
convert the existing revolving funds into community funds.

Who and how will the funds be managed? The fund should not be
in the hands of any recipient community member, local government
organization, or a specific NGO. Their respective involvement
could lead to conflicts of interest at the grassroots level. In
order for the funds to stay viable, stakeholders must entrust the
funds to professional institutions for management.

The community funds require that stakeholders ensure that the
funds do not fall into only a few hands. The community, which is
supposed to be the "owner" of the funds, should initiate
independent micro credit institutions (MCIs). They are expected
to play the roles of partners in fund administration and monitor
the fund disbursement.

The funds are expected to help improve community productivity
as a means of social protection. Increased productivity implies
increased community earnings. This will, in turn, be the source
of earnings for local government institutions, as it will
increase the community's income and local taxes, local
retributions, and other earnings. Earnings of the local NGOs can
be derived from their professional services to local government,

When the fund is literally entrusted to the community, the
strategy may not become viable due to a lack of professional
capacities among the people concerned. If the fund is
administered by the local government, corruption could be
repeated at the lower levels.

Worse, when funds are entrusted to a particular local NGO it
may create frictions among locals due to the relative dominance
of the NGO by the other NGOs. All this leads, again, to a waste
of funds.

To meet the requirements of good fund management, strong
partnerships among the community, NGOs and local government is a
must. The by-product of this partnership would be local financial
institutions that can professionally administer the funds.

The new institutions would have to enroll community members
who need affordable working capital. The funds should reach the
dispersed poor population through an affordable micro credit
scheme.

The local NGOs can help both local government and the target
community in securing and facilitating access to micro financing.
They can also help prepare local development plans and monitor
local government programs that are responsive to local needs.

The local government can set development targets, play
leadership roles and coordinate development activities. The MCI,
as a financial institution, can ask NGOs' help such as in
technical assistance and capacity building for the community
members.

Thus, the government of Megawati Soekarnoputri should rethink
the recent plan to cancel SSN for being "ineffective". With lack
of funds for the poor, continued commitment in preserving the
revolved funds is the basis to ensure community funds for the
poor. Speedy action in securing the funds will help the
government increase its image as being sensitive to the poor and
reduce possible borrowings from international institutions.

The above scheme should operate within the corridor of rights
and responsibilities of each stakeholder. This approach can help
improve the government's image and the NGOs with accountable pro-
poor programs.

With trillions of rupiah already circulated in the community,
available revolved funds can be converted into community funds.
Through genuine partnerships, the emergence of dependable and
accountable institutions is needed -- particularly when
decentralization is finally applied in full.