Indonesia Consultative Group Meeting

Indonesia Consultative Group Meeting Tokyo, October 17-18, 2000

STATEMENT BY THE UNITED KINDGDOM DELEGATION POVERTY AND VULNERABILITY: THE STRATEGIC AGENDA

DFID has been invited to lead, with colleagues from ADB and the Japanese government, a discussion on strategic approaches to addressing poverty and vulnerability. Our remarks focus on five issues:     

Policy Environment: Post-Crisis Shifts in Thinking about Poverty Reduction Developing a Strategy: Comments and Discussions with Government Consultation Initiating Pro-Poor Policy and Budgeting Clarifying a Way Forward

Post-Crisis Policy Environment for Poverty Reduction in Indonesia The economic crisis reversed in a matter of months the steady decline in poverty that took decades to achieve. This jarred confidence in former, apparently spectacularly successful, approaches to poverty reduction. Before the crisis, few had questioned the poverty reduction formula that combined the trickle down effects of substantial economic growth with considerable investment in physical and service infrastructure, and application of various welfare programmes. Now the poverty rate seems slowly to be settling back nearer to pre-crisis levels, and Indonesians and the international community are struggling to understand why the seemingly robust economic miracle and the social and economic gains it brought were in fact so tenuous and fragile. This has prompted -- indeed necessitated -- evaluation of past efforts to reduce poverty. The Asian economic crisis combined with and contributed to a rethinking of conventional assumptions about poverty reduction. Internationally these had been dominated by the premise that market-led economic growth is the undisputed primary driver of poverty reduction. Impressive declines in consumption/expenditure poverty fostered complacency concerning noneconomic fundamentals, and – in hindsight - too much faith was placed in technical solutions. Development agencies and Governments did not give high priority to addressing corruption and faulty governance practices (although these were preventing quality education and health services from reaching the poor), nor rights and equity (although poverty is created and perpetuated when people are denied rights to livelihood and women are discriminated against), nor environmental degradation (although peoples' access to livelihoods was severely limited, and poverty created, by it). Internationally, the failure of prevailing models to prevent increases in world poverty in the midst of global affluence demanded a new look an old problem. The call has emerged in the last few

years that poverty reduction efforts place equal emphasis on peoples' empowerment and security as on their access to economic opportunities. (Here it is important to acknowledge that while these ideas may be new to development agencies, they are old hat to community based organizations, who have been making these points for years.) These notions are influencing both donor and government approaches in Indonesia, and converge with reformist sentiment. A growing emphasis on good governance, local accountability, justice, equity and an enhanced role for civil society is transforming the various arenas for policy making. Developing a Strategy: Comments and Discussions with Government Comments Government of Indonesia is struggling to govern while redefining its role in the turbulent environment of fundamental economic, political and social transformation. As Minister Witoelar puts it "We are building the ship while we are sailing". Despite setbacks, some severe enough to shake international confidence, we believe the Government is committed to a course of reform. Government has stated its intent to substantially address poverty and vulnerability, and to introduce new approaches that take into account multiple stakeholders in a decentralized Indonesia. The Government has tabled a document "Poverty Reduction Strategy in Indonesia". This needs to be considered in the context of other Indonesian policy statements related to poverty reduction, such as the Propenas, the Government's ten-point plan for economic recovery, civil society analyses of poverty emerging from community dialogues, studies which amplify and present voices of the poor, and various statements and analyses of poverty too numerous to mention. First we note that the three organizing themes for this document -- opportunity, empowerment and social security -- mirror those in the World Bank World Development Report 2000/2001. Adoption of these is an indication of Government's willingness to redefine its policy framework. But the assertion in the World Bank report that these three themes have a non-hierarchical relationship is still a controversial shift in thinking. Consensus on this position is not easily won. We could expect this new paradigm to have a similarly difficult birth within the Government of Indonesia. Perhaps the real debate has yet to take place. The Government has for some time been ambivalent in its definitions of poverty (although expenditure/consumption measures have dominated public discussions), and this may be a good thing. It may be a factor in a willingness (reflected in the document) to acknowledge that poverty and vulnerability are multidimensional, and have dynamic relationships with rights, access and empowerment. One might question whether reorganization of ongoing approaches and programmes into a newly imported thematic framework constitutes a paradigm shift. But to question, at this early stage, whether such a transformation has occurred in Government thinking would beg the question of where multilateral and bilateral development organizations stand on these matters. Perhaps we need to challenge ourselves as well in this respect. Discussion Points In the days leading up to this meeting we have had opportunities to confer briefly with colleagues in Government on the approach outlined. Below are main points from these discussions:

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It is our understanding that Government views this document as a beginning. We see it that way too. It is admittedly indicative and incomplete. It raises, and does not necessarily answer, a number of questions. It could serve as an excellent starting point for wider and more inclusive analysis, discussion and debates.

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Government colleagues are aware the document presents a central government perspective. They acknowledge that the puzzle of local responsibilities in poverty reduction has yet to be worked out. And certainly that cannot be done by central Government. Regional autonomy legislation and the 2001 budget significantly shift responsibility and financial resources to the regions. Central Government is no longer the predominant policy maker, nor determiner of local budgets. The implications of these realities have not been resolved in this centrally drafted document. Nor should they be. But in a national strategy they would have to be. In our conversations we emphasised that a national strategy should be built with the help of regional stakeholders: it has to be their collective effort if it is to be relevant as a strategic framework. This raises an interesting question: should there in fact be a detailed national strategy, or does the decentralising environment instead call for a consensus on general principles to guide and frame both central and regional strategies?

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The Government's new mechanism for coordinating poverty reduction programming, linking it with economic policy, is significant shift in emphasis and organization. This shift is also reflected in the decidedly pro-poor 10-point plan for economic recovery. And we have been told that some line ministries are beginning to review general polices and programmes in terms of their impact on poverty. These are indicators that parts of Government are moving spontaneously, although perhaps not systematically, toward a mainstream approach to poverty reduction. Such institutional disposition towards applying pro-poor analysis to general programmes is at the core of a mainstreaming approach. Note: The version of the document distributed 17 October contains strong statements of intent to adopt a pro-poor approach, for example: "…the government considers that all programs must be consistent with our anti-poverty strategy. Indeed, the government is considering the requirement that all programmes include a poverty reduction impact assessment."

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The Government document is very new. It was drafted within one central government agency in preparation for this meeting. There has not yet been time for it to be inspected, debated and vetted widely by various levels of government, nor by the various representative assemblies. Although the document identifies the Vice President's office as being the coordinator of "decision-making" on poverty reduction for the central government, we understand they have not had significant involvement in drafting this "strategy". And the configurations of Task Force, secretariat and inclusive forum have not been worked out with those who are being asked to participate. It is our sense that civil society groups are asking to be co-designers of approaches in which they are expected to be partners. The approach has yet to be comprehensively discussed with - and developed with participation by - representatives of civil society. Learnings from dialogues on poverty conducted by civil society, and from the voices of poor people themselves, have not yet

been incorporated. These issues of consensus and participation could become stumbling blocks if they are not worked out early in the process of setting up mechanisms. In our view, these limitations constitute caveats concerning whether this document can be termed a "strategy". 

An inclusive process for developing a strategy takes time and effort. We have acknowledged the possibility that pressure to produce a "strategy" for the CGI has forced this labelling on a document that cannot be so viewed, and which may be unimplementable because those who will be responsible for carrying them out did not contribute its basic features. It is our understanding that Government of Indonesia would be comfortable if donors were prepared to accept this document as an opening for dialogues to take place over the next several months to develop a strategic framework. We welcome this first step, and have offered support for processes of further development, including broad consultation.

Unpacking "Consultation" The term "consultation with civil society" invites unpacking. This concept is becoming so value laden that few will risk decoding it. Considerable effort is being devoted to activities so named, but we are hearing from both Government and civil society that the productiveness being sought from engagement by both parties is not always there. True, some larger national groups have developed platforms and undertaken useful engagement with Government. And some parts of Government have developed productive ways of working with civil society. At the regional level some good dialogue is taking place as well. But there are signs that this aspect of the reform agenda may be approaching a stalling point, at least in the area of poverty reduction policy and measures. We have heard from some civil society groups that they are fatigued by poorly constructed "consultation" events that do not recognise principles of partnership, or which they feel are episodes of tokenism or co-option. In the pre-CGI meeting for this agenda item, we heard Coordinating Minister for the Economy avow his commitment to consultation and partnership. But he also suggested a need to be more selective in seeking dialogue and working relationships so that these improve and advance, rather than encumber, the progress of work. He also reminded us that Government's fairly intense engagement with parliament is an important form of accountability to civil society. These are signals that notions of civil society participation need sharpening. Surely poorly conducted engagement can be minimized if partners can negotiate agreement on, for example: what constitutes quality engagement and how to share responsibilities for carrying it out; what are the expected outcomes of particular engagements; and when, how and with whom governmentcivil society dialogues and working partnerships can be most productive. Initiating Pro-Poor Policy and Budgeting: Mainstreaming We believe a poverty reduction strategy is fundamentally flawed if it does not address the impact on poverty by the mainstream of government polices and expenditures.