Empower poor to trust and use gov't bodies

Empower poor to trust and use gov't bodies

Mark Baird, Country Director, World Bank, Jakarta Office

For over 30 years Indonesia produced the fastest rate of
poverty reduction the world has ever seen. But, with weak
governance and rising corruption, the story didn't have a happy
ending. Of all countries of the Association of Southeast Asians,
Indonesia suffered the most from the East Asia crisis: The
economy contracted sharply, unemployment doubled, poverty rates
soared, and Indonesia's incipient middle class was devastated.

Today the country is settling down again. But the problem of
poverty remains. Today there are at least 30 million people in
Indonesia who live below the poverty line, and many more who are
only slightly better off. Indeed, the majority of Indonesians are
poor or vulnerable to becoming poor if they lose their job,
suffer a family illness, or have to pay more for basic goods. So
how can we best think about tackling this widespread and
multidimensional problem?

One strategy, the conservative strategy, yearns for the good
old days of strong central government and big development
programs. But even if this were a desirable strategy -- and very
few Indonesians think that it is -- it's not a realistic one.
Democracy, regional autonomy and press freedom are hopefully here
to stay. And any return to the old patterns of growth -- based
narrowly on conglomerates rather than broadly on small and medium
enterprises -- is unlikely to succeed.

So what alternative strategies are on offer? We know, or at
least think we know, the main ingredients of a comprehensive
poverty strategy for Indonesia.

First, growth must accelerate again. Indonesia adds 2 million
people to the labor force every single year. Ask a poor person
here what they want most, and nine times out of ten they will
tell you that they want a job. But jobs require investment in
firms and farms -- which will only happen if the policy
environment is welcoming for investors. Indonesia has done well
in maintaining macroeconomic stability, which is essential to
attract investment. But investors are also looking for more
fundamental reforms to strengthen the rule of law, protect
property rights, provide an effective judicial system, and reduce
corruption.

Second, the poor need access to a broad range of public
services: Clean water, education, and health services. The
challenges here are to provide adequate resources for these
essential services, and then to ensure they are used wisely and
efficiently. In Indonesia, where the state budget has been under
considerable stress as a result of the crisis, the government has
made serious efforts to protect expenditures on basic services
for the poor.

Even so, per capita funding for basic education and primary
health care remains below pre-crisis levels -- and, in many
areas, the quality of public services is low. Furthermore, the
responsibility for implementing social programs is being
transferred to local governments. It remains to be seen whether
they will have the motivation or capacity to giver priority to
the poor in their spending decisions.

Third, the poor need to be empowered to trust and use
government institutions, rather than avoid them. This is perhaps
the area where social development has the most to offer. In
Indonesia, we could eliminate most of the corruption that weakens
development here if people could use the police and courts to put
an end to it. Giving poor people the power to make decisions lies
at the heart of successful poverty reduction.

Plus, we know that demand-driven services are more efficient
and effective. Here in Indonesia, we are finding that
infrastructure which communities choose and build costs as much
as 30 percent less than the usual way of having contractors build
it. Empowered people have a stake in national development -- it
matters to them whether the country succeeds or fails.

Indonesia is making some important steps forward to regain
momentum on poverty. The government has recently formed a high-
level committee whose sole purpose is to formulate a national
poverty strategy that promotes dialogue over the poverty
implications of national economic policy decisions and also
promotes pro-poor public investments.

In this process, it's essential that the recent progress on
providing more space for local government, civil society groups,
the media and communities to influence public policies and
programs in sustained. It's also important that the policy agenda
is extended over time to include a more thorough reform of
Indonesia's institutions of public administration and justice.

Social development has much to offer both the community of
development practitioners and to developing countries such as
Indonesia that are trying to articulate strategies that will let
them help their poorest members without sacrificing growth.
Social scientists have a lot to contribute to the substance of
the development agenda -- and the "how" of good policy work.

As an economist, I've come to respect your attachment to solid
fieldwork, your understanding of why different groups respond
differently to economic incentives, and your appreciation of the
importance of local institutions. These perspectives are vital to
ensuring that policies and programs really benefit the poor.

The above is based on the writer's address at the ASEAN-World
Bank High Level Conference on Social Development held in Jakarta,
Jan. 16.