Rural Development and Poverty Alleviation in Peninsular Malaysia - the Emergence of an Alternative Approach: the Amanah Ikhtiar Programme
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v RURAL DEVELOPMENT AND POVERTY ALLEVIATION IN PENINSULAR MALAYSIA - THE EMERGENCE OF AN ALTERNATIVE APPROACH: THE AMANAH IKHTIAR PROGRAMME MOHAMAD ZAINI ONUR B. A (Hons) Geography, Master of Science(Planning), Universiti Sains Malaysia. A Thesis submitted to the University of Sheffield for the Degree of Doctor of Philosophy Department of Town and Regional Planning April 1995 Volume 2 244 CIIAPTER 9: THE ECONOMIC EFFECTS OF THE IKIITUR PROGRAMME 9.1 INTRODUMON The Ikhtiar Programmehas been the centerpieceof the poverty alleviation measures implementedby the Ikhtiar Organization.It seeksto provide assistanceby meansof credit to rural poor familiesfor taking up income-generatingactivities so that they can improve their economiccondition. The successof the Ikhtiar Programmethus depends on its effectivenessin raising the income of its membersand ultimately on improving the quality of life of the poor. The aim of this chapteris to assessto what extent these objectiveshave been achieved. This chapter is divided into two main parts. The first part dealswith changesin the householdincome (Section One) and secondpart dealswith changesin the quality of life (Section Two). In relation to this, the purpose of this chapter is to test the credibility of the researchhypotheses that had been formulated in the First Chapter. The discussionwill concentratemostly on (a) comparingthe programmeparticipants with non-participants (control group), (b) making comparisons between the programmeparticipants themselves based on the cycles of Ikhtiar loans and types of activities pursued with Ikhtiar loans and (c) analysis of the variables that were responsiblefor influencingIkhtiar-financed project activities income.For the purpose of the analysis, frequency tables, T-tests (namely the paired samplesT-tests and independent samples T-tests), analysis of variance (ANOVA) and the multiple regressionanalysis will be used. 9.2 SECTION ONE (A): CHANGES IN HOUSEHOLD INCOMES III This andthe following sectionsset out to test the first mainhypothesis (as statedin Chapter1) whichwill be repeatedhere as follows: 245 HYPOTHESIS ONE Credit granted to the Ikhtiar Programme participants in the study area has been effective in increasingparticipante income as well as reducing the incidenceof poverty among them. The programme participants are generally better off than they were before and compared with the control group, they are also generally better off. However, by comparing between the programme participants themselves,there is a significant difference in the level of household income based on (i) the cycles of Ikhtiar loans and (ii) typesof activities they pursuedwith Ikhtiar loans [2]. The abovehypothesis which consistsof six sub-hypotheses(as listedin i to vi below), will be testedin two stages: StageI includesthe testingof four sub-hypotheses,which compareschange between the programmeparticipants and the controlgroup and Stage2 includesthe testing of two further sub-hypotheses,which is solely betweenthe programmeparticipants themselves based on the cycIt es of loans and ypes of acti viti es pursuedwith lkhtiar loans. The six sub-hypothesesto be testedare as follows: The householdincome of the programmeparticipants has increased as a resultof utilizationof credit(loans). The householdincome of the programmeparticipants is relativelyhigher than that of the local population(control group) who has not participated. The incidence of poverty of the programmeparticipants has also been substantiallyreduced (as a resultof the increasein the householdincome). (iv) The reductionin the incidenceof poverty amongthe non-participants(control group),on the otherhand, has only beenmarginal. There are significant differencesin the household incomes between the programmeparticipants themselves whereby: (a) level the of incomeis higheramong the participantsin the secondcycle of loans thanthose in the first cycleof loans. 246 (b) the level of income is higher among the participants in non-agricultural activities than in agricultural activities. (vi) The contribution of income from Ikhtiar-financed project activity (Ikhtiar sources) towards the participants' total household income (i. e. earnings from lkhtiar andnon-lkhtiar sources) is significant. SECTION ONE (A) : BETWEEN THE PROGRAMME PARTICIPANTS AND THE CONTROL GROUP As mentionedin Chapter6, the terms"Before" and"After" situationsare referredto the periodsof "1989" and "1992" respectively.These two periodsare commonly applicableto both the 1khtiarmembers and the control group. However,the terms "Before" and"After" arewidely used throughout this study(while "1989" and "1992" will alsobe mentioned). 9.2.1 CHANGES IN THE HOUSEHOLD INCOMES : PROGRAMME PARTICIPANTS VERSUS THE NON-PARTICIPANTS (CONTROL GROUP) be In this sub-section,the first and second sub-hypothesesas stated abovewill tested. In orderto determinewhether there is an improvementin the economicconditions of the programmeparticipants, data on householdincome prior to andafter the granting andutilising the lUtiar loanswas comparedusing a pairedsamples T-test for each group.The result of thetest is shownin Table40. A similartest was also carried out onthe control group using a pairedsamples T-test and the result is shownin Table41. The results show that the householdincome for the "after" situation (as shown in Tables40 and 41) amongboth groups,i. e. the control group andthe participants,are statistically significant at the 0.0001 significancelevel, when comparedto their householdincomes for the "before" situation.These tests suggestthat both groups haveexperienced an increasein their householdincome. However, the increasein the householdincome by the two groupsdid not accountof potentialinflationary change. The changesof householdincomes, taking into considerationthe inflationaryimpact between the periodsof 1989and 1992,will be takenup later by meansof Tables 44 45. First and we needto considertwo situationshere, i. e. the "Before" and"After": 247 Table 40 : Paired Samples T-Test of the "After" Situation Household Monthly Income and Household Monthly Income for the "Before" Situation : The Programme Participants Variable Number of Mean Standard Standard Cases Income Deviation Error "Before" 254 M$165.24 54.669 3.43025 "After" 254 M$317.65 83.991 5.27006 Difference in Standard t-value Degree of PR>T. Mean Error Freedom M$152.413 5.9975G 25.41 253 0.0001 Table 41 : Paired Samples T-Test of the "After" Situation Household Monthly Income and Household Monthly Income for the "Before" Situation The Control Group. Variables Number of Mean Standard Standard Cases Income Deviation Error "Before" 265 M$158.98 21.312 1.30920 "Af ter" 265 M$181.44 21.232 1.30427 Difference in Standard t-value Degree of PR>T. Mean Error Freedom M$22.460 0.71994 31.20 264 0.0001 248 1. THE "BEFORE" SITUATION (1989) The results (Tables 40 and 41) show that average household incomes of both the sampleparticipants and control group for the "before" situation were almost similar, standing at M$165.00 (for the Ikhtiar member households)and M$158.00 (for the control group households)respectively. This shows that they were from the same group, i. e. the hard-core poverty group. However, it is interesting to know whether there is any significant difference in the householdincome for the "before" situation between these two groups under study. In order to determine this aspect, an independentsamples T-test was carried out and the result is shown in Table 42. The results as indicated in Table 42, show that the income difference between the Ikhtiar members and the control group is not statistically significant at the 0.05 significance level. This suggests that the there is no difference in the household incomesbetween the Ikhtiar memberhouseholds and the control group householdsfor the before (1989) situations.On average,both groups had householdmonthly incomes in the region of M$162.00 for the "before" situation (i. e. derived from the total householdincome of the samplepopulation divided by samplesize of the two sample households). The above analysistherefore suggests that the economicsituations of the sample households(i. e. programmeparticipants and the control group) were quite similar, prior to the emergenceof the Ikhtiar Programme.The incomelevels of thesetwo joint groupswere also quite similarto thosefound by the SERU and UKM (1990) study, involving 10,475 householdsin 146 villages in 10 districts in Peninsular it is Malaysiaranging from M$I 11 to M$219 for the periodof 1989/90131. However, the presentincome that we aremore interested in andto whichwe turn next. 2. THE "AFTER" SITUATION (1992) It has also beenthe purposeof this study to analyzethe incomesituation after loans were grantedto seeif thereis any significantdifference between the two groupsunder study.In order to determinethe differencebetween the two groups,an independent samplest-test of the presenthousehold incomes was carriedout. The resultis shownin Table 43. 249 Table 42: IndependentSamples T-Test of the Household Monthly Incomes Between the ProgrammeParticipants and Control Group : The "Before" Situation. N Mean Standard Standard Income Deviation Error 1. Participants 254 M$158.98 54.66 3.430 2. Control Group 265 M$165.24 21.31 1.309 SeparateVariance Estimate t-value Degree of Freedom P>T 1.7058 325.5 0.0890 Between Table43 : IndependentSamples T-Test of the HouseholdMonthly Incomes the ProgrammeParticipants and Control Group: The "After" Situation N Mean Standard Standard Income Deviation Error 1. Participants 254 M$317.65 83.99