Poverty Alleviation

KOMPAS/TOTOK WIJAYANTO

A resident collects water at a densely populated area in Muara Angke, Penjaringan, North Jakarta, on Thursday (16/1/2020). Statistics Indonesia (BPS) data shows that 9.22 percent of Indonesia’s population live in poverty as of September 2019, or a total of 24.79 million people. The poverty rate is 0.19 percentage points lower than the figure in March 2019.

We need to understand both the poor and poverty itself to accelerate poverty alleviation and overcome the prosperity gap.

According to Statistics Indonesia (BPS) last week, as of September 2019, the poverty rate in rural and urban areas had decreased to 9.22 percent or 24.79 million people from 9.66 percent in September 2018 – down 0.88 million people. The aspect that needs attention is the relatively high poverty rate in rural areas, which is 12.60 percent. The rate in urban areas is 6.56 percent.

Even though when we compare it to the 2014 Gini ratio of 0.414, current inequality has fallen considerably, the Gini ratio, which indicates inequality, decreased only slightly from 0.384 in September 2018 to 0.380 in September 2019. This decline happened in rural areas, which moved from 0.319 to 0.315. In urban areas it remained 0.391.

Nationally, BPS uses a poverty line figure of Rp 440,538 per capita as a basis for calculating the ability to meet basic food and non-food needs. This means that a person is considered poor if he or she has expenditures of less than Rp 15,000 per day.

What needs particular attention is the high contribution of food spending, particularly rice, to poverty. In rural areas it accounted for 25.82 percent of spending and in urban areas 20.35 percent. The second highest spending was on cigarettes at 10.37 percent and 11.17 percent respectively.

KOMPAS/TOTOK WIJAYANTO

Semi-permanent houses are seen along the east side of the Pluit Water Reservoir in Penjaringan, North Jakarta, on Thursday (16/1/2020). Statistics Indonesia (BPS) data shows that 9.22 percent of Indonesia’s population live in poverty as of September 2019, or a total of 24.79 million people. The poverty rate is 0.19 percentage points lower than the figure in March 2019.

High spending on rice and cigarettes illustrates the very limited ability of poor families to meet other basic and non-food needs, such as health and education. We need to review the fund-assistance policy even though it is non-cash. We also need to examine the relationship between aid programs and the fact that there is still a high stunting rate due to malnutrition, as well as low literacy and high rates of maternal and infant mortality.

The government has paid great attention to education, basic health and infrastructure. It also continues to look for ways to help the poor. However, the slowing decline in the number of poor people and the Gini ratio show that it is increasingly difficult to reduce the number of poor people despite an improvement in national income per capita.

Both found that microcredit assistance was very helpful in overcoming poverty even though it was not a magic recipe.

In order for government policies to be able to precisely help the poor, it is better to understand the poor as suggested by Nobel laureate economists, Abhijit V. Banerjee and Esther Duflo in Poor Economics. Both found that microcredit assistance was very helpful in overcoming poverty even though it was not a magic recipe.

Poor people in developing countries often have to take care of themselves when the economy slows. Indonesia is expected to experience an economic slowdown this year. May the government pay special attention to ensure the economic slowdown does not make poor people’s lives more difficult or push the near-poor into poverty.