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.