Sirojudin Abbas

Sirojudin Abbas
Jakarta

According to the National Development Planning Board
(Bappenas), President Susilo Bambang Yudhoyono will issue in June
a presidential decree on poverty reduction.

It is hoped the decree will enhance the effectiveness of
poverty-alleviation policies and programs, and provide a stronger
basis for more assets-based pro-poor social policy initiatives.

Such policies would accommodate different approaches in
poverty alleviation. "Assets building" is among the viable
poverty alleviation approaches to be included in future
Indonesian social policy. Assets building is substantially
different from, but would complement, the current predominant
poverty alleviation approaches, which put a lot of emphasis on
"income" and "consumption".

The "income" and "consumption" approaches identify poverty
merely as a problem of lack of income, which decreases the
ability of a person to fulfill their basic consumption needs. One
way of alleviating poverty is to employ the poor in paid jobs.

Yet, assets-building promoters argue that insufficient income
and lack of consumption are not the only causes of poverty,
citing lack of assets as a contributing factor.

Over-emphasis on the income and consumption approaches could
be blamed for the poor performance of some poverty alleviation
programs, such as the "micro-cooperative" program developed by
the Ministry of Social Services.

Under this program, 10 to 15 people who are involved in
similar economic activities -- based on farming production,
micro-industry and so on -- become the beneficiaries of a rolling
fund and have access to loans.

Another government initiative has been to pour resources into
small and medium enterprises as they are considered the most
promising vehicles to strengthen the economy and create jobs.

Unfortunately, the prevailing policies and programs have paid
limited attention to saving and assets accumulation. These types
of programs focus on income generation and income maintenance.
Rather than breaking the cycle of poverty, such programs only
serve to make the poor dependent on external assistance.

The assets-building approach aims to break the cycle of
poverty and the dependency of the poor.

However, assets building can only be achieved alongside
sustainable income-generating activities.

It is important to acknowledge that government programs to
alleviate poverty already have a saving mechanism.

However, they place saving on the periphery, merely as a
contingency plan to support cooperative members who are sick, or
die, and to cover debt reinstallments -- just in case they cannot
pay the debt on time. Conversely, the assets-building approach
makes saving and assets accumulation its main objectives.

In some countries, such as the USA, Canada, England, Taiwan
and Singapore, assets building has already become part of social
policy. The USA, for instance, has developed Individual
Development Accounts (IDAs) as a way of breaking the cycle of
poverty. The policy assists the poor in accumulating assets,
business capital, savings for further education, and purchasing
vehicles through providing incentives through a grant that
matches every dollar the poor save.

The Center for Social Development (CSD) at the Washington
University in St. Louis, USA, has consistently developed the
model and researched the welfare impacts of assets building. The
IDAs demonstration project run by the center has proved that
appropriate incentives and support can help the poor to save.
Michael Sherraden, the primary promoter of assets building and
founder and director of CSD, claims that assets accumulation
generates greater welfare impacts and produces prospective
improvement for social protection and economic development.

Sherraden summarizes, at least, nine welfare impacts of assets
building. They are improving household stability; creating
orientation toward future; stimulating the enhancement of assets;
enabling focus and specialization; providing a foundation for
risk taking; increasing personal efficacy; increasing social
connectedness and influence; increasing civic participation and
enhancing the well-being of offspring.

The current social and economic policies are not sufficiently
pro-poor. While social policy seems to be half-hearted, the
national economic policies give too many opportunities and
incentives -- such as in the form of tax breaks and long-term
loans -- to rich people. The coming presidential decree will
hopefully provide a strong basis for an inclusive assets-based
social policy innovation directed toward poverty alleviation.

The policy should break social, political and economic
barriers for the poor to accumulate assets. It is time for the
government to provide greater opportunities, incentives and
support for the poor to save and accumulate assets so that they
will be able to break the cycle of poverty.

The writer is a lecturer at the State Islamic University's
School of Social Welfare, Jakarta. He can be reached at
sirojudina@yahoo.com.