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Poverty alleviation through self employment
By Manel Abhayaratna.
Poverty has been variously defined .These definitions range from lack of access to basic needs to an inability to satisfy minimum needs and the failure to meet human entitlement. Essentially of course poverty could be considered as a condition in a society where some of the members of the society are unable to attain levels of material wellbeing considered as an acceptable minimum by the standard of the society.
The number of those living below the poverty line as calculated by the department of Census and Statistics continues to rise and as the cost of living escalates and employment facilities continue to be limited more and more people find it extremely difficult to reach any level of material wellbeing. Furthermore rural areas account for 80% of the population and about 88% of the poor.
According to the World Bank report nearly 58 percent of the rural population depend on agriculture, at least partially, for their livelihood, and agricultural GDP growth has slowed from 2.8 percent during the 1980s to 1.6 percent during the 1990s and to 0.9 percent during 2002? 04, while national GDP has been growing annually by 5 percent since the 1990s..
As such households dependent on agriculture tend to be poorer. Nearly 24 percent of rural agricultural households are poor, compared with only 16 percent of nonagricultural households. In the poorest province of Uva, the poverty rate for agricultural households (34.3 percent) is double that for non agriculture households (16.9 percent) yet agriculture comprises 53 percent of GDP in Uva. Even in Western Province, where agriculture makes up only 3 percent of provincial GDP, and where market access and economic infrastructure are substantially better than elsewhere, 15 percent of households engaged in agriculture are poor compared with 9 percent of those engaged in other activities.
Alleviation of poverty has occupied the concerns of successive governments since due to the impact of the open economy the rural poor appear to be getting poorer and the gap between the haves and the have nots is widening . It is for this purpose that the
?Janasaviya? programme and ?Janasaviya Trust Fund? was started under the leadership of the late president Premadasa . The successive government thereafter adopted the names National Development Trust Fund (NDTF) and ?Samurdhi Movement?
Although the names were changed the programmes themselves remained largely the same. The previous programmes were discontinued since they were seen largely as unsuccessful. The Samurdhi Movement too has already proved that it is far from becoming a meaningful solution to the question of poverty. The major reasons for failure are not difficult to see.The earlier efforts in Janasaviya and Janasaviya Trust Fund were to give a certain limited grant to the people who are identified as poor, by their communities, based on their level of income and they were expected to develop certain income generation activities, using these grants, while a part of this grant was used to supplement their essential food and other needs. The present programme adopts the same approach while a compulsory savings scheme and some other insurance schemes to meet certain emergencies, such as funerals have been included.
However whatever income generating activities these people start, they face the same situation faced by all poor people and small producers, where the working of the present system of open / liberalized market do not allow them to enter the market effectively.
The compulsory savings system under the Samurdhi Movement, towards building a large fund is based on immediate collection of Rs 100 from each Rs 500 given to a family per month. Another Rs 25 is deducted immediately for the insurance scheme. Thus the total amount collected in considerably large. At the moment this fund is kept in a major bank as centralized capital and therefore is available as capital for big businesses.
The Samurdhi beneficiaries can borrow small amounts depending on the extent of their group savings (they are formed into small groups of 5 beneficiaries). This arrangement and the recovery rates make it difficult for the Samurdhi beneficiaries to effectively use their own savings for economic activity. The demand made by the Samurdhi group to allow them to have control over their own savings has not yet been accepted, on the premise that the present Samurdhi Banks are not yet strong and equipped enough to handle such capital.
It is in this context that various social analysts believe that self employment projects could provide the means of a meaningful livelihood to the poor. It was this same idea that was formulated during the initial stages of the Janasaviya programme when self- employment projects were mooted and we found large numbers of people engaged in livelihood projects , unfortunately merely giving assistance to start on a project is not sufficient.
Greater care must be taken to evaluate the projects and basic feasibility studies should be made. Merely regarding self employment as a panacea for solving the problem of poverty or for providing the poor with means of obtaining a livelihood is meaningless , unless other components are brought in to make the project viable.
The recipients of the self employment schemes should be made aware that other factors are needed to make their project sustainable and profitable. The first of these is to find out the market demand for the project they intend to start. It would be foolish for a recipient to imagine that starting a project to sew clothes would bring in a sizable income .Today ready made garments are easily available and their price range is competitive . Furthermore people have got used to buying garments off the peg hence it is unlikely that a great demand will be available or will continue to exist for individually turned out garments.
Another factor that should be considered is the method of packaging and the schemes envisaged for marketing the product. Today packaging has to be of a better quality, it has to be attractive and affordable.For instance a self employment project for fisher women who are engaged in drying and packeting prawns was successful because the dried prawns were packaged in packets of different weight so that the consumers could buy smaller packs at a reasonable price.
Self employment projects in dried agricultural products would be possible but in such instances the support of larger companies may be necessary as buying agents, for the project holder may find it difficult to get access to markets which have a demand for such products. Some of these agricultural products like dried bitter gourd were sought for in places as far as Canada where there was a growing interest in the efficacy of bitter gourd to control diabetes. But in the case of self employment in the production of such products the cooperation of bigger marketing institutions or perhaps our embassies abroad could be brought in to assist in finding markets for such goods.
Moreover micro finance small group movements should go and hand with these self employment programmes. For this grass root level animators are necessary both to guide the self employed beneficiary and also promote and advice them on the formation and benefits of viable micro finance groups who could assist in furthering the self employment project. Government involvement must be supportive. Politicians should not seek to control or dominate these income generating projects or create their own systems and agendas.
We have at the moment development projects under various titles. It would be of greater benefit to the people if all these projects could be planned and carried out under one central organization and in this instance the expertise of various other institutions such as the national science foundation, NGO?s and trade organizations could be opted in to advice regarding the viability of self employment projects using the resources available in their own environment, provide them with production technology, marketing opportunities and monitor their progress.
Furthermore village level animators should motivate the beneficiaries of self employment to form small groups similiar to producer co-operatives because through such organizations, they would be able to obtain greater benefits and develop the projects to increase their income. Organizations increase bargaining power and gives voice to the voiceless. Often even the poorest women who have formed organizations will realize that people will listen to them. For the self-employed, organizations will increase their bargaining power with respect to prices and conditions. Organizing themselves into societies is the only way that the weak and powerless can make their voices heard at the policy level. It is through such organizations that policies can be changed, that new laws can be brought in, and the powerless be given representation in policymaking forums. Such organized ventures would also have a larger impact on the market and would lead to greater empowerment of the poor. Isolated small production projects will benefit tremendously from such organized societies. Empowerment of the poor through self employment projects can only come through a unity of purpose and a desire not only to obtain but also to maintain a sustainable livelihood which will provide them the mobility to move upwards.
Edited By - Berty - 19 Jun 2007 01:05:38 GMT