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 5.270
2. ControlGroup 265 M$181.44 21.23 1.304
SeperateVariance Estimate
t-value Degreeof Freedom P>T
25.0901 283.9 0.0001 250
The result of the test showsthat the income differencebetween the participantsand the control group is statistically significant at the 0.0001 significancelevel. This suggests that the income of the participants (around M$317.00) is higher than that of the control group (around M$181.00). In the first instance,we can thus concludethat the programme participants are economically better off than they were before and also better off than the control group, having a higher income. At this juncture the above result tends to validate the first and secondsub-hypotheses that the householdincome of the programmeparticipants has increasedand was relatively higher than that of the control group. However, this analysisdid not take into considerationthe inflationary impact between the two periods of time. Although this would not affect the comparisonbetween the two groups sinceboth are affectedby this possibleinflation, it is important in making "before" and "after" comparisons.As such a further analysisis needed,based on Tables 40 and 41.
We have seen in Tables 40 (programme participants) ahd 41 (control group), that both group of householdshave experiencedan increasein their household incomes. However, this analysis, as mentioned, did not take the inflationary impact into consideration.Thus it is necessarythat all the household incomes for the "before" (1989) situation were corrected for inflation using a consumerprice index to bring it to the samemoney terms as the "after" (1992) situation (see footnote 4 for the inflation rate in Malaysia). A separatepaired sample Wests was then carried out based on Tables 40 and 41 for each group of households (with the inflated value of the household incomes) and the results of these two tests are shown in Tables 44 (programmeparticipants) and 45 (the control group).
The resultsof the West betweenthe "adjusted"1989 and 1992household incomes of the programmeparticipants as, indicated in Table 44, showthat the significancelevel remainsat 0.0001. This further confirmsthat in real terms the householdsof the programmeparticipants have increased.
The resultsfor the control group is shownin Table 45. As indicated,the significance levelis 0.0020(but not at the 0.0001significance level as obtainedearlier in Table 41) and neverthelessthe result suggeststhat the householdincome of the control group had also increased.However, in reality the incrementsin the householdincome from 1989to 1992were only marginal,i. e. by M$2.44 (1.31 percent).On the other hand, the incrementin the householdincome for the programmeparticipants was M$131.00 (70 percent)which was relatively higher than the control group. 251
Table44 : Paired SamplesT-Test of the "After" Situation Household Monthly Income and Adjusted Household Monthly Income for the "Before" Situation:The Programme Participants
N Mean Standard Standard Income Deviation Error
"Before"(Adjusted) 254 M$185.23 63.274 3.97017
"After" 254 M$317.65 88.991 5.27006
Differencein Standard t-value Degreeof P>RT. MeanIncome Error Freedom
M$132.42 6.2285 21.16 253 0.0001
Table45 : Paired SamplesT-Test of the "After" Situation HouseholdMonthly Income and Adjusted Household Mothly Income for the "Before" Situation:The ControlGroup
N Mean Standard Standard Income Deviation Error
"Before" 265 M$177.00 23.665 1.51527
"After" 265 M$181.44 21.232 1.30427
Diffierencein Standard t-value Degreeof PR;>T. MeanIncome Error Freedom
M$2.44 0.7825 3.13 264 0.0020 252
The above results therefore validate the first and second sub-hypothesesthat the income household of the programme participants has increased and was relatively higher than that of the control group, with and without inflationary impact. With these results (basedon Tables 44 and 45), we can therefore conclude with confidencethat the programmeparticipants are economicallybetter off than they were before and also better off than the control group, having a higher income. Thus the hypothesisis true andcould be accepted.
In order to substantiatethe above result, it is also necessaryto ask the respondents what they thought of their present standard of living conditions (i. e. the "after" situation) as comparedto their previous one (i. e. "before" situation). The concept of 'standardof living! here is simply used to mean the comfort of their life as they seeit which indicates a certain degree of satisfaction or dissatisfaction with their present standardof living, comparedto their previous ("before") situation. Although this is a highly subjectiveopinion by those affected, Ahmad (1983) argued that the "declared satisfaction"or "non-satisfaction"about one!s own living conditions cannot be totally ignored. The perceptionsof thesetwo groups are shown in Table 46.
Table46 : The Perceptionof the Very Poor Householdson Their "After" Situation Living Conditions:Ikhtiar Membersand Control Group.
Ikhtiar Members ControlGroup
N Percent N Percent
1. Better Off 215 84.7 33 12.5
2. No Difference 15 5.9 81 30.5
3. WorseOff 14 5.5 134 50.5
4. Donl Know 10 3.9 17 6.4
Total 254 100 265 100
Source:Field Data
Thus,when respondentswere askedabout their perceptionsof their present("after" situation) living conditions,84.7 percent of the participantsfelt that they were 253
economicallybetter off than they were before. On the other hand, only 12.5 percent of the control group thought that they are better off. An interesting observationis the fact that some respondents(mostly the control group) revealedthat despite an increasein householdincome, it was quite marginal.From the above analysisit can be concluded that the increasein income has been accompaniedby an improvementin the perceived standardof living, amongthe Ikhtiar members.
9.2.2 INCOME DISTRIBUTION AND THE ESTABLISHMENT OF POVERTY
In this sub-section, the third and fourth sub-hypotheses as stated above will be tested.
In the establishmentof the poverty groups among householdstwo poverty lines income(PLI) will be used:
PLI [51. 1. M$250.00 and Below (per month, per household)- Ikhtiar Hard-core
2. M$375.00and Below (per month,per household)- NationalPLI [6].
The per capita poverty lines are as follows:
PLI. 1. M$50.00and Below (per month,per household)- Ikhtiar Hard-core
PLI. 2. M$75.00and Below (per month,per household)- National
be defined: In relationto the abovePLIs, threecategories of povertygroups can
(A) Overall Family Income (B) Per Capita
Below Very Poor. 1. M$250 and Below = Very Poor. 1. M$50.00 and = (Ikhtiaesdefinition) (Ikhtiaesdefinition)
2. M$51 M$75 = Poor. 2. M$251 - M$$375 = Poor. -
3. M$376 and above = Not Poor 3. M$76 andabove = Not Poor. (National Definition) (NationalDefinition) 254
9.2.2.1 DISTRIBUTION OF INCOME BETWEEN THE PARTICIPANTS AND CONTROL GROUP
A deeperidea of income changesbetween the two groups can be gained by comparing the distribution of the income of the two groups at two time-points as shown in Table 47.
Table 47 : Distribution of Household Income Per Month : "Before" and "After" Situations,Programme Participants Versus the Control Group ( Percent)
Participants Control Group Income
Before After Before After (1989) (1992) (1989) (1992)
N%N%NN
99.6 250 andbelow 254 100 45 17.7 265 100 264
I o.4 251 - 375 145 59.9
376 and above 57 22.4
Total (N) 254 100 254 100 265 100 265 100
Average Income M$165.00 M$317.00 M$158.00 M$18 1.00
Source: Field Data
haddeclined from 100 The percentageof householdswith incomesof lessthan M$250 percent("before") to 17.7 percent("after"). This suggeststhat the percentageof M$250.00 has householdsamong the programmeparticipants earning more than increasedquite tremendously.On the other hand,the householdsin the control group faredless well with only 0.4 percent(I case)who managedto earnan incomeabove M$250.00. 255
Thus not only the 82.3 percent (i. 59.9% e. + 22.4%) of the programme participants have managedto earn as much M$251.00, as there is also a sizeable number of householdswho managedto earn more than M$375.00 per month. These patterns to suggest the favorable seem position of the programme participants in terms of income to the compared control group. Having seenthe above pattern, our next task is to determinethe incidenceof poverty amongthe two groups.
9.2.2.2 THE "PROGRESS" OF HOUSEHOLDS : FROM THE "VERY POOR" TO "POOR" AND "NOT POOR" (OUT OF POVERTY) CATEGORIES
As indicated in Table 47, only I case (0.4 percent) from the control group has managed to cross the M$250 Ikhtiar hard-core PLI. On the other hand., a big 59.9 proportion, or percent of the programmeparticipants have moved up from being "very poor" to the "poor" category, leaving around 17.7 percent (as mentionedabove) in "very (i. the poor" e. the Ikhtiar hard-core PLI) category, which is indeed some significantachievement.
By taking the householdpoverty line of above M$375.00 per month, 22.4 percent of the participantshave crossedthis line. However this figure drops to 16.5 percentwhen per capita householdincome is considered(See Table 48). This had arisen because, householdsizes for both the Ikhtiar and control groups are relatively big (See Table 34 in Chapter 8). For instance,68.5 percent of the programmeparticipants and 59.6 percentof the control group have a householdof more than 6 personsrespectively.
Thus by comparingthe two groupswe can concludethat the majority of the lkhtiar memberhouseholds had managedto cross the lkhtiar hard-corepoverty line of M$250.00by a significantmargin, i.e. 82.3 percent,leaving only 17.7 percentof membersin the "very poor" category.Out of 82.3 percentof the members,a further 22.4 percentof the householdshave managedto cross the national poverty line (M$375.00) or out of the poverty thresholdaltogether. On the other hand, 99.6 percentof the householdsin the controlgroup still remainin the "very poor" category andin only onecase has a householdbeen able to crossthe lkhtiar hard-corePLI. 256
Table 48 : Per Capita Household Income By Group : Participants Versus the Control Group - "Before" and "After" Situations (Percent)
Participants Control Group Income
(M$) Before After Before After (1989) (1992) (1989) (1992)
11% nn%n%
$50 and below 241 94.9 136 53.5 265 100 264 99.6
$51-$75 9 3.5 76 30.0 1 0.4
$76 and above 4 1.6 42 16.5
Total 254 100 254 100 265 100 265 100
Average (M$) 29.00 55.00 28.00 31.00
Source:Field Data
Looking back at the Ikhiar members,it hasbeen shown that (i) basedon the Ikhtiar hard-core PLI - hard-corepoverty has been reduced from 100 percentto only 17.7 percentafter utilization of loansand (ii) basedon the National PLI - povertyhas been been reducedfrom 100 percentto 77.6 percent(i. e. 100%- 22.4%).This has quite remarkableand can be regardedas a "good start" indeed.Obviously it would be unrealisticto expecta major portion of the very poor householdto rise abovethe nationalPLI in so shorta period.We canregard this achievementas quite modestbut Ikhtiaesrole in changingthe mind-setof the incurablepessimists has to be recognized. The Ikhtiar Organizationhas at leastset in motionthe processof giving somerays of hopefor the very poor in risingabove the povertythreshold.
From the above discussionwe have seenthat the incidenceof poverty has been reducedby quite a substantialmargin among the programmeparticipants and there has only been a marginal improvementwithin the control group. The above finding suggeststhat the third and fourth sub-hypothesesof HypothesisOne are therefore valid andcan be accepted. 257
SECTION ONE (B) : HOUSEHOLD INCOMES : COMPARISONS BETWEEN THE PROGRAMME PARTICIPANTS THEMSELVES
9.3 VARIATION IN HOUSEHOLD INCOMES BETWEEN THE PROGRAMME PARTICIPANTS THEMSELVES
9.3.1 HOUSEHOLD INCOMES : VARIATION AMONG TIIE PROGRAMME PARTICIPANTS
This sectionwill test the fifth sub-hypothesis as stated above and the main statistical tool employedis the independentsamples T-Test.
However, first and foremost it is interesting to observe the general patterns of the household incomes based on 4 groups of Ikhtiar participants. Recall from the discussionin Chapter 8, there were 4 groups of the Ikhtiar memberswithin the context of the cycles of loans and the types of activities pursued with Ikhtiar loans (see sub- section 8.3.1 in Chapter 8 for the breakdowns of the 4 groups).
Thusbased on the above4 groupsand for the sakeof simplicity:
1) The Ist group is referredto asFirst Agricultural Activity Gromp.
2) The 2nd group is referredto asFirst Non-Agricultural Activity Gromp.
3) The3rdgroup is referredto asSecond Agricultural Activity Group.
4) The 4th group is referredto asSecond Non-Agricultural Activity Gromp.
In discussingthe aspectof the householdincomes among the 4 groups of Ikhtiar members,we will be using the statisticaltool of the ANOVA as revealedthrough Table49 (a), (b) and(c).
In generalwhen we are comparingtwo means,we computea two-samplet-statistic its P-value and to assessthe statisticalsignificance of the differencein the sample For means, comparingseveral means, the situationis quite similar.An F statisticand its value are used.In this Analysis studythe of Varianceis a statisticalmethod that is 258
used for comparing the meansof 4 groups. In this connection, Moore and McCabe (1989) have suggestedthe following steps:
1. The ANOVA F test gives an answer to the general question: are the differences among observedgroups meanssignificant? The P value will tell us whether the group meansare different, but it does not tell us specifically which meansdiffer from each other (seeTable 49a).
2. Sincewe needto know which pairs of meansdiffer, a multiple comparisonsmethods will be used in addressingthis question and are used only after rejecting the ANOVA Ho (seeTable 49b). This will be done by meansof a Duncan test (as shown in Tables 49b and 49c) (Foster, 1993).
Basedon the abovesuggestion by Moore andMcCabe (and Foster), the resultof this studybased on the four groupsas shownin Table 49 (a), (b) and (c), is discussed next.
The result in Table 49a shows that the F value is statistically significant at the 0.0001 significancelevel, which suggeststhat there are differences between the household incomes in the four groups. Thus not all groups have equal monthly household incomes.While the Ho is rejected, through the P value, as indicated in Table 49a, it does not tell us specifically which means differ from each other. As such multiple comparison is thus being resorted to (see Table 49b) along with the (option) confidenceinterval for differences(see Table 49c). The results are discussedbelow:
1. The levels of income amongthe participantsin the Second Non-Agricultural Activity Group is significantlyhigher than that of the (i) SecondAgricultural Activity Group (ii) First Agricultural Activity Group and(iii) First Non-Agricultural Activity Group.
2. The level of incomeamong the participantsin the SecondAgricultural Activity Group is also relativelyhigher than that of the (i) First Agricultural Activity Group and (ii) First Non-Agricultural Activity Group. Howeverthe differencebetween the levelof incomein the SecondAgricultural Activity Group over that of the First Non- Agricultural Activity Group is not significant,which meansthat the differenceis marginaland in reality the differencein meanincome is only M$7.60 in favour of the Second Agricultural Activity Group. It hasalso been found that the differencein the total incomeis also significantlyhigher in the SecondAgricultural Activity Group over that of the First Agricultural Activity Group. 259
Analysis Table 49 (a) : of Variance For the Household Monthly Income of the ProgrammeParticipants, The "Afler" Situation
GeneralLinear Model Procedure
Dependent Variable : Household Monthly Income
Source DF Sum of Squares Mean Square F Value PR>F R Square C.V
Model 3 378998.98631731 126332.99543190 22.47 0.0001 0.212349 23.6065
Error 250 1405790.2144701 5623.16085788 Root MSE HouseholdIncome "after"
Corrected Total 251 1784789.20078741 74.98773805 M$317.65748031
Source DF Type I SS F Value PR>F DF Type III SS F Value PR>F
Particular 3 378998.9863173 22.47 0.0001 3 378998.9863173 22.47 0.0001
Table 49(b) * Multiple ComparisonsOutput For the HouseholdMonthly IncomesBetween the ProgrammeParticipants, The "After" Situation
GeneralLinear Model Procedure
DuncatfsMultiple RangeTest For Variable: HouseholdMonthly Income Note : This testcontrols the typeI comparisonwiseerror rate,not the experimentwiseerror rate.
Alpha = 0.05 DF = 250 MSE = 5263-16
Warning: Cell sizesarc not equal. Harmonic meansof cell sizes= 31.161.
4 Number of Means 2 3 Critical Range 37.7365 39.6822 40.9343
Means with the sameletter are not statistically different
Dundan Grouping Mean N Particular
A MS434.87 15 Sccond/Non-Agricultural.
B M$345.79 24 Sccond/Agricultural. B B M$338.15 79 First/Non-Agricultural.
C M$287.86 136 First/Agricultural. 260
Table 49(c) : Multiple ComparisonsOutput For ConfidenceLimits For Differencesin the HouseholdMonthly Income : The After Situation.
GeneralLinear Model Procedure
T-Tests (LSD) For Variable: HouseholdMonthly Income
Note : TWs Test Controls the Type I ComparisonwiseBefore Rate,
Not the ExperimentwiseError Rate
Alpha = 0.05 Confidence= 0.95 DF = 250 MSE = 5623.16 Critical Value of T=1.96950
ComparisonsSignificant at the 0.05level are Indicated By "***"
Particular Lower Difference Upper Confidence Between Confidence Limit Means Limit
2ndNon-Agric -> 2nd Agric 40.465 89.075 137.865 2ndNon-Agric 1st Non-Agric 55.119 96.715 138.311 2ndNon-Agric 1ST Agric 106.826 147.006 187.187
2nd Agric 2ndNon-Agric -137.685 -89.075 40.465 42.062 2nd Agric I st Non-Agric -26.783 7.640 2nd Agric I st Agric 25.233 57.931 90.630 55.119 I st Non-Agric -> 2ndNon-Agric -138.311 96.715 I st Non-Agric 2ndAgric 42.062 -7.640 26.783 I st Non-Agric I st Agric 29.400 50.292 71.184
I st Agric -> 2ndNon-Agric -187.187 -147.006 -106.826 1stAgric 2ndAgric -90.630 -57.931 -25.233 lst Agric istNon-Agric -71.184 -50.292 -29.400 261
Having observedthe overall pattern of the differences,our next task is to test the fifth sub-hypothesis in this section and theseare discussedas follows:
1. GROUP INVOLVED IN THE TESTING OF THE SUB- HYPOTHESIS
Thereare four groups of programmeparticipants based on the abovediscussion. In testingthe fifth sub-hypothesis,we will first considerthe followingthree points:
POINT 1: The above four groups of the programmeparticipants within the context of the cycles of Ikhtiar loans and the types of activities pursued by membersare as mentionedabove in sub-section9.3.1 (i. e. the groups as listed in sub-section 8.3.1 in Chapter 8).
POR4T 2: It needs to be mentionedhere that by further arrangingthe above mentionedfour groupsaccording to the cyclesof Ikhtiar loans andtypes of activities pursuedwith Ikhtiar loans,which will be usedin the testingof the sub-hypothesis,we finally comedown to the following two main groupsbased on the cyclesof Ikhtiar loans andtypes of activities:
A. Basedon the cyclesofIkhtiar loans,there are two majorgroups:
(1) First Cyde Loan Group consistingof both the:
(a) AgriculturalActivity Group(136 participants) and
(b) Non-AgriculturalActivity Group(79 participants).
Loan Group. The total is 215 (136 + 79) participantswhich makesup the First Cycle This arrangementwill constitutethe FIRST GROUP for the sakeof simplicity.
(2) Second Cycle Loan Group consistingof both the:
(a) AgriculturalActivity Group(24 participants)and
(b) Non-Agricultural Activity Group (15 participants).
The total is 39 (24 + 15) participantswhich makesup the SecondCycle Loan Group. This arrangementwill be referredto asthe SECOND GROUP. 262
B. Basedon the typesof activities there are two major groups:
(3) Agricultural Activity Group consistingof both the:
(a) First Cycle Loan Group of the First Agricultural Activity Group (136 participants)and
(b) Second Cycle Loan Group of the Second Agricultural Activity Group (24 participants).
The total is 160 (136 + 24) participantswhich makesup the Agricultural Activity Group.This arrangementwill be referredto asthe THIRD GROUP.
(4) Non-Agricultural Activity Group consistingof both the:
(a) First Cycle Loan Group of First Non-Agricultural Activity Group (79 participants)and
(b) SecondCycle Loan Group of the Secondnon-agricultural activity group (15 participants).
The total is 94 (79 + 15) participantswhich makesup the Non-AgriculturalActivity group.This arrangementwill be referredto asthe FOURTH GROUP.
POINT 3: In relationto thesefour groupsbased on the cyclesof Ikhtiar loansand in typesof activities,the following groupsbased on the abovedefinitions will be used the testingof fourth (a) and(b) sub-hypothesesas follows:
(i) FIRST GROUP (i.e. the First CycleLoan Group) and SECOND GROUP (i.e. the SecondCycle Loan Group) are used for testing the fourth (a) sub-hypothesis, basedon the cyclesof Ikhtiar loans.
(ii) THIRD GROUP (i. e. the Agricultural Activity Group) and FOURTH GROUP (i. e. the Non-Agricultural Activity Group) are used for testing the fourth (b) sub- hypothesis,based on the types of activities. 263
2. TESTING OF FAIFT]l(a) SUB-HYPOTHESIS ON THE CYCLES OF LOANS - FIRST GROUP (i. e. THE FIRST TIME-BORROWERS) VERSUS SECOND GROUP (i. e. THE SECOND-17IME BORROWERS)
From discussionbased on Table 49 (a), (b) and (c) above, we have seen that the Secondcycle of loan group (both the agricultural and non-agricultural activity groups) have relatively higher incomes than those of the First cycle loan group (both the agricultural and the non-agricultural activity groups). In order to test the sub- hypothesis,whether the differencein the level of incomebetween FIRST GROUP and the SECOND GROUP is significant, an independentsamples T-test was carried out andthe result is shown in Table 50.
The result from Table 50 showsthat there is a si0ficant differencein the level of incomebetween these two groupsat the 0.0005significance level, suggestingthat the very poor rural householdswho were in the secondcycle of loans(FIRST GROUP) havehigher level of income(approximately M$380.00) than those in the first cycleof loans(SECOND GROUP) (approximatelyM$306.00). This findingseems to suggest that the more times the participantsborrow from the Ikhtiar Organization,the more likely it is for the participantsto earn higher incomes.Thus this finding seemsto validatethe fifth(a) sub-hypothesisthat the level of incomeis higher amongthe The participantsin the secondcycle of loansthan thosein the first cycle of loans. hypothesiswas therefore found to be true andcould be accepted.
loans On average (as shown in Table 36 in Chapter 8) the second cycle of group loan borrowed an average of M$945.00 per loans (from the maximum second of first loan M$1000) and M$465 for first cycle of loans group (from the maximum of M$500.00).
OF 3. TESTING OF FIFTH(b) SUB-HYPOTHESIS ON THE TYPES (i. THE AGRICULTURAL ACTIVITY ACTIVITIES - THIRD GROUP e. GROUP) VERSUS FOURTH GROUP (i. e. THE NON-AGRICULTURAL ACTIVITIES GROUP)
is significant Sin-dlarlyin orderto test the sub-hypothesisconcerning whether there any differencein the level of incomebetween the agriculturaland the non-agricultural is in activities,an independentsamples T-test was carriedout and the result shown Table 51. Table 50: Independent Samples T-Test of Household Monthly Income Between First-Time the Borrowers (FIRST GROUP) and Second-Time Borrowers (SECOND GROUP) : The "After" Situation.
N Mean Standard Standard Income Deviation Error
1. First-Time Borrowers 215 M$306.33 70.852 4.8320 (FIRST GROUP)
2. Second-Time Borrowers 39 M$380.05 118.224 18.9310 (SECOND GROUP)
Seperate Variance Estimate
t-value Degree of Freedom P>T
3.7727 43.1 0.0005
Table 51 Independent Sample T-Test of Household Monthly Income Betweeen the Agricultural Activity (THIRD GROUP) and Non- Agricultural Activity (FOURTH GROUP) : The "After" Situation.
N Mean Standard Standard Income Deviation Error
1. Agricultural Activity 160 M$296.55 69.22 5.472 (TIM GROUP)
2. Non-Agricultural Activity 94 M$353.58 94.48 9.745 (FOURTHGROUP)
SeperateVariance Estimate
t-value Degreeof Freedom P>T
5.1029 152.1 0.0001
0 265
The result of the test shows that the income difference between the two groups is statisticallysignificant at the 0.0001 significancelevel. Thus we can concludethat the participants with the non-agricultural activities earned a much higher income (approximately M$353.00) than those in agricultural activities (approximately M$296.00). This finding also seemsto validate the rifth(b) sub-hypothesis that the level of income is higher among the participantswho have utilized loans for non- agricultural activity than those in agricultural activity. This sub-hypothesiswas thereforefound to be true and could be accepted.
Further support for the fifth(b) sub-hypothesis is as follows: It is interesting to note that by referring back to Table 47, which suggests that 22.4 percent (57 cases) of the participants have risen above the National poverty line income of M$375.00, a greater percentage of those who have actually crossed this PLI were those from the FOURTH GROUP (Non-agricultural activity group) rather than the THIRD GROUP (Agricultural activity group) (see Table 52). This finding lends further support to the fifth(b) sub-hypothesis that the level of household income of those pursuing the by non-agricultural activity is significantly higher than those in agricultural activity have virtue of the fact 41.4 percent of the participants in non-agricultural activities 11.3 surpassedthe national poverty line (out of poverty threshold) compared to only percent in the agricultural activities group.
Basedon the abovefindings and discussions,we can makethe following observations:
1. There seemsto be a positivecorrelation between the level of incomeand the number of loan disbursements.Thus participantsin the secondcycle of loans tend to earn a higher incomethan those in the first cycle of loans.We can thereforesuggest that the more frequentlythe participantsobtain loans,the more likely is their ability to increase their incomeand hencefind their way out of poverty. Barker and Hopkin (1969) also be arguedthat in generalthe higher the shareof loans in total capital, the higher will the growth of incomeof households.
2. Such an outcome (as mentioned above) is very encouragingand we are quite optimistic that subsequentloans from the Ikhtiar Organizationshould provide a good mechanismfor poverty alleviation.One loan is rarely enoughto lift the majority of the alreadyvery poor householdsabove the nationalpoverty line. Neverthelessthe Ikhtiar Organizationhas at leastset in motion the processof lifting the participants!household incomesand the findings show that the majority of the participantshave managedto rise abovethe Ikhtiar hard-corepoverty line. 266
Table 52 Participants Above the National Poverty Line Income: Agricultural VersusNon-Agricultural Activities
Group (Number) Percent (N)
Agricultural Activity
1. First Agricultural 10 7.4 136
2. Second Agricultural 8 33.3 24
Sub-Total 18 11.3 160
Non-Agricultural Activity
3. First Non-Agricultural 29 36.7 79
4. Second Non-Agricultural 10 66.7 15
Sub-Total 39 41.4 94
Total 57 22.4 254
Note : (N) is referred to the total of sample. (Number) is referred to only 57 (22.4%) of the Ikhtiar members (based on Table 47, discussed Poverty earlier), who had crossed the National Line and are included in this table.
Source : Field Data 267
3. PerhapsIkhtiar participants who pursued agricultural or non-agricultural activities have benefited if would more only the Ikhtiar Programme could have provided an extension service and other support. Unfortunately, this is not a part of the Ikhtiar It hasbeen package. arguedthat a credit programmewould be more effective if it was by complemented other support services such as technological packages,extension services, marketing and also training of participants (Mosley and Dahal, 1985; Padmanabhan,1988; Deveraux et al, 1990; Jazairy et al, 1992; Tilakatrana, 1991) 17].
4. There is also a positive correlation between the levels of incomes and the types of activities pursued by the participants. Non-agricultural activity tends to generate a much higher income than agricultural activity. It can therefore be concludedthat non- agricultural activity yields a higher return on capital employed when compared to agricultural activity. Thus many families can increasetheir income by shifting out of agricultural activity into non-agricultural activity. It has been argued (Jazairy et al, 1992) that non-farm employment (non-agricultural) offers a pron-dsingalternative of helping the poor, notably for those without adequate accessto land and (Lorraine, 1983) hasbeen viewed as a potential solution to rural poverty problem.
5. Infori-naldiscussions with the participantsalso revealedthe fact that petty trading activities(such as hawking of agriculturalgoods) financed by Ikhtiar loanswere found to have links with agriculturalproduction activities, notably crop cultivation and livestockrearing, of their counterpartspursuing agricultural activities. The mainitems tradedby 1khtiarpetty tradersare vegetables,fruits, slaughteredchickens and others. Agricultural activitiestherefore can still play a significantrole in the context of the abovelinkages 181, despite generating a much lower incomecompared to the non- agriculturalactivities. It hasto be acceptedthat not everyoneis capableof pursuing non-agriculturalactivity. Good marketing support, effective agricultural extension servicesand other forms of supportcould enhancethose in the agriculturalactivities 191.
9.3.2 THE TOTAL HOUSEHOLD INCOME : CONTRIBUTION OF THE 11KHTIAR-FINANCED PROJECT TOWARDS THE TOTAL HOUSEHOLD INCOME OF THE PROGRAMME PARTICIPANTS
In this sectionthe sixth (final) sub-hypothesisas stated above will be tested.
It has been indicatedfrom Table 47 (as discussedearlier), that the participants! incomeshave increased afterjoining and utilizing the Ikhtiar loans(i. e. from M$165-00 268
"before" to M$317.00 "after"). However, it is not necessarythat the Ikhtiar scheme income representsthe entire increasein the total household income. The " 1992" total householdincome (M$317.00) consists of both earningsfrom Ikhtiar and non-1khtiar sources(see Footnote 1). As such we are now in a position to test the sixth sub- hypothesis. This is to determinewhether the increasein the total household income has been the result of earning from the Ikhtiar-financed project activities (i. e. from Ikhtiar sources) or income from earning of the non-lkhtiar activities (such as those income earnednot related to Ikhtiar-financedproject activities).
To answerthis, it is necessaryto compute the actual breakdown of the total household incomes(i. e. the meanof M$317.00) earnedby the sampleIkhtiar memberhouseholds. Basedon Table 47, a chart can be constructedto show the Ikhtiar memberhouseholds monthly incomesfor the "before" and "after" situations.This chart is shown in Figure 13 below. Basedon the computation of data of the sampleIkhtiar memberhouseholds, it was found that from the total average household income of M$317.00 earned by them for the "after" situation, a certain amount (perceýtages)was actually derived from both the Ikhtiar and non-lkhtiar sources. The results of the breakdown of householdincomes are shown in Table 53 and are discussednext.
The results from Table 53 show that, on average, the contribution from Ikhtiar- 56 financed project activities towards the participants!total income is approximately from percent or M$186.00. On the other hand, the averageincome generated the non- had it Ikhtiar source stood at M$131.00 (44 percent). These trends suggestthat not have been been for the income generatedfrom Ikhtiar sources,the participants might worse off economically than they were before. However, discussion with many households respondentsrevealed an interesting result. It has been noted that the after utilizing the Ikhtiar loans could not pay the same attention to the pre-scheme occupationsthat they had been doing earlier and therefore had to forgo some of their income from the non-lkhtiar sources.The above result shows that the contribution of incomes has been the lkhtiar loan schemetowards the participants' total household be be significant. The sixth sub-hypothesis was therefore found to true and could accepted.
The findingsof this studyseem to supportother earlierstudies on the effectivenessof the credits(loans) in raisingthe incomeof the participantsboth in Malaysiaand other developing country based on similar programmes.SERU's study found that participants'income had increasedfrom M$198.00 to M$466.00 after utilization of loans.Ikhtiaes three internalimpact studies concluded as follows: first study: income rose from M$173.00to M$328.00;second study: from M$142.00to M$570.00;and 269
from M$223.00 M$540.00 (see third study: to Chapter 5) [10]. Similarly. various Grameen,Bank's income studieson the Participantsshow increasesof between 58 and loan (spe Chapter 73 percent after utilization 3) [11]. Thus it appearsfrom this study has been and other studiesthat credit effective in improving the economic conditions and reducingthe incidenceof poverty amongthe very poor rural households.
Figure 13 : Household Monthly Income of The Programme Participants, "Before* and "After" Situations
$400.00
$317.00
$300.00
$132.00
Productive gain
$200.00
$165.00 $20.00 Inflation Gain
$100.00
$165.00 Income Base
L
Before (1989) After (1992)
** : See Table 44 for the inflationary impact of household income Source : Field Data 270
Table 53 : Income EarnedFrom Ikhtiar and Non-1khtiar Sources(M$)
Without Ikhtiar's With Ikhtiar's Intervention Intervention
Before" (1989) "After" (1992)
Household Percentage Household Percentage Items Monthly Contribution Monthly Contribution Income Income
(1) Incomefrom Ikhtiar-Financed Activities N.R N.R M$186.00 56% Qkhtiar Sources)
(2) Income from Non-lkhtiar M$165.00 100% M$13 1.00 44% Sources
Total Household M$165.00 100% M$317.00 100% Incomes
Note: (i) The breakdownof AverageIncome for the "Afler" situationas in items (1) and(2) arecomputed from the samplesurvey of the participant householdincomes. (ii) A good exampleof a particularmember household average monthly incomederived from Ikhtiar andnon-1khtiar sources is highlighted in Footnote 12. (iii) N.R = Not Related(no interventionhas taken place).
Source: FieldData 271
Having seenthe positive contribution of the Ikhtiar-financed project activities towards income households, the total of participant it is equally interesting to seethese patterns discussedin basedon 4 groups the previous section. This is shown in Table 54 below.
Results from Table 54 clearly show that the contribution from the 1khtiar-financed project activities towards the total household incomes in all the 4 groups have been very positive, especially in the non-agricultural activities where the contribution has been in the region of 65 to 80 percent. This has again supported the sixth sub- hypothesis on the significant contribution of the Ikhtiar sourcesof income towards the total householdincomes.
It is also interestingto examinewhy the non-agriculturalactivities tend to generate relativelyhigher incomes than the agriculturalactivities (as shownin Table 54) in the samplehouseholds. It hasbeen found through informal discussions that:
1. Agricultural Activities: These activities tend to generate a relatively lower incomes than the non-agricultural activities. Participants! incomes in the rubber cultivation, crop cultivation (such as vegetablesgrowing), padi farming and animal husbandrywere subjectedto:
(a) marketprices which tend to fluctuates,
(b) forcesof nature(such as weather), fcýk%') diseases/death of livestock,
(d) Numberof working days(for instance,the tappingof rubberdepends on weather. is During the rainy season,the numberof working days is reducedand so the income)and
(e) Lack of storageand refrigerationfacilities (for instance,vegetable growers who haveto harvesttheir farm producesneed to marketthem immediately). This is also This associatedwith the problemof perishablegoods of the agriculturalproduces. farm producewas alsobought by local buyersor middlemenat a price lower than the marketprices. 272
Table 54 : Contribution of Ikhtiar-Financed Project Activities (From Ikhtiar Source) Towards the Total Household Income by Groups.
Group N Mean Income Percentage (M$) Contribution Towards the Total Whold Income
(1) (2) (3) (4) (5) Earning Earning Total From From From From Whold Ikhtiar Non- Ikhtiar Non-Ikhtiar Income Alvities Ikhtiar Alvities Alvities (1 + 2) as in 1 Alvities as in 2
First Agric. 136 144.90 142.98 287.86 48.4% 51.6%
First Non- 79 226.46 111.67 338.15 66.1% 33.9% Agric.
Second Agric. 24 178.21 167.58 345.79 47.1% 52.9%
Second Non-Agric. 15 370.27 69.93 434.87 80.7% 19.3%
Total(N) 254 186.72 131.25 317.66 55.7% 44.3%
Agric. Alvities 160 149.89 146.67 296.55 48.2% 51.8% (136 + 24)
Non-Agric. Activities (79 + 15) 94 249.40 105.01 353.59 65.7% 34.3%
Source : Field Data 273
2. Non-Agricultural Activities: The majority of the participants in the non- agricultural activities were mainly involved the selling of non-agricultural goods such as trading of dry foodstuffs, cloth or garments; opening of provision shops; tailoring; operating mini petrol kiosks and other related activities. The non- agricultural activities, unlike the agricultural activities, tend to generate much higher incomesthan the agricultural activities because:
(a) Price fluctuations are less severe and in general are quite stable compared to agricultural produces,
(b) Goodswere purchased in bulk from wholesalersat lower prices.These goods were thenresold for a certainprofit,
(c) Goods are also the non-perishabletypes, such as cloth or garmentsand dry foodstuffs,which canbe kept for a longerperiod of time,
(d) The typesof goodsto be sold canbe adjustedto changesin consumerstastes and preferences,and
(e) The problemof diseasesand death of "goods"are also not normallyassociated with the non-agriculturalactivities.
3. The attractivenessof the higher incomes generatedin the non-agricultural activities,however, do not meanthat participantshave madea wrong choiceof loan income generatingprojects, as discussedat the group meetingsprior to disbursements.In general,every participanttends to undertakeactivities which they personallybelieved they were capableof doing. They tried to avoid risk by doing somethingwhich they were capableof Their decisionwas also directly in influencedby the existenceof their skills and previousexperience, whether agriculturalor non-agriculturalactivities. 274
Table55 : Typesof ActivitiesWith Ikhtiar Loans: AgriculturalVersus Non-AgriculturalActivities
HouseholdIncome (M$) Contribution (Ve) From (1) (2) (3) Ikhti- Freq. Total Income Income (as in 2) (N) Hhold From FromNon Income Ikhtiar Ikhtiar
AGRICULTURAL 160 296.55 149.89 146.67 48.22
1. Animal Husbandry 43 253.21 36.14 217.12 14.37 2. Padi Cultivation 17 311.29 155.29 155.00 49.69 3. Tree Crop Cul. (rubber) 48 342.67 276.98 66.10 82.85 4. Other Crop 37 284.32 104.54 179.24 37.19 5. Mixed Agric. 15 286.67 173.93 112.73 60.03
NON-AGRIC. 94 353.59 249.40 105.01 68.43 .
6. Seag/ Distribution of food. 18 378.89 299.72 83.28 76.82 7. Selling of agricultural goods. 14 -341.93 218.86 123.07 63.22 8. Selling of Non-Agric. 50 361.72 254.22 107.58 68.13 goods. 9. Other Non- Agriculture 6 278.17 183.00 95.17 66.63 activities 10. Services 4 283.25 162.50 120.75 54.46 . 11 Mixed Non- - Agriculture 2 371.00 263.00 108.00 70.17
OVERALL TOTAL 254 (160 + 94)
Note : 'N" is referredto the total in sample, Source: Field Data 275
Sin-dlarlyit is equally interesting to see the variations in terms of the actual activities (i. e. the exact activity within the context of agricultural and non-agricultural activities, seeTable 55 above)with respectto contributions from Ikhtiar sourcesof income from amongthe agricultural and non-agricultural activities. The results from Table 55 show that:
Ci) Income from the non-agricultural activity financed by Ikhtiar loans was generally very much higher than that of the agricultural activity.
(H) Similarly, contributionsfrom non-agriculturalactivity towards the household income was also much higher. Selling and distribution of food (non agricultural activity)generated the highestincome which stoodat aroundM$299.00 and accounted for approximately77 percent of the total householdincome.
highest (iii) However in agricultural activity, the tree crop cultivation (rubber) was the for in terms of income generation which stood at around M$276.00 and accounted hand, approximately 83 percent of the total household income. On the other animal both in husbandry(notably chicken rearing), seemedto generatethe lowest incomes terms of average income and contribution towards the total income which stood at aroundM$36.00 (14.4 percent).
ANALYSIS SECTION ONE (C) - MULTIPLE REGRESSION
9.3.3 DETERMINANTS OF IKHTIAR-FINANCED PROJECT ACTIVITIES INCOMES MULTI-REGRESSION ANALYSIS
in income the Discussionin the precedingsection has shown that the increase among Ikhtiar- programmeparticipants has been significant. Similarly the contributionof the financedproject activities(Ikhtiar sourcesof income)towards the participants'total in householdincome has also been significant.In relation to thesewe are now a Ikhtiar position to analyzethe variablesthat were responsiblefor influencingthe schemes!income. In order to do this a multiple regressionanalysis is used,which, as for noted by Bryman and Cramer(1991) is currentlythe most widely used method conductingmultivariate analysis, particularly when more than three variablesare involved. 276
Beaver (1991) has that the noted objective of a multiple regressionanalysis is to relate to a responsevariable y a set of predictor variables Xi, X2,..., NX using a multi- Ultimately regressionmodel. the purpose is to estimate the mean value of y and/or predict a particular value of y for given value ofXI, X2,.., XK.
The income from the Ikhtiar schemewas taken as the dependentvariable along with a set of independentor predictor variables(see Table 56 for the variables).
Table 56: Relationships Between Variables
Pearson Correlation Coefficients Prob JR] Under HO: RHO =0 N= 254
Incmiktr Amtloan Owncap Age Educ Skill Activty
Incmiktr 1.00000 0.25204 0.194G3 0.04771 1.11044 0.01114 0.38712 0.0000 0.0001 0.0013 0.4490 0.0790 0.8598 0.0001
Amtloan 0.25204 1.00000 0.17979 0.03318 0.01598 0.04726 0.02279 0.00001 0.0000 0.0040 0.5987 0.7999 0.4534 0.7178
Owncap 0.19460 0.17979 1.00000 0.03769 0.00151 0.14502 0.10821 0.0018 0.0040 0.0000 0.5499 0.9809 0.0208 0.1021
Age 0.04771 0.03318 0.03769 1.00000 0.25172 0.09GI8 0.03596 0.4490 0.5987 0.5499 0.0000 0.0001 0.1263 0.5G84
Educ 0.11044 0.01598 0.00151 0.25172 1.00000 0.02603 0.13909 0.0790 0.7999 0.9809 0.0001 0.0000 0.6797 0.02GG
Skill 0.01114 0.04726 0.14502 0.09GI8 0.02603 1.00000 0.14924 0.8598 0.4534' 0.0208 0.12G3 O. G797 0.0000 0.0173
Activty 0.38712 0.02279 0.10281 0.0359G 0.13909 0.14924 1-00000 0.0001 0.7178 0.1021 0.5684 0.02GG 0.0173 0.0000
Variable Label
Incmiktr Income from Ikhiar activities. Amtloan Amount of loans from Ikhtiar. Owncap Amount of your own capital. Age Age. Educ Level of education. Skill Skill utilized in Ikhtiar activities. Activty Type of activities with Ikhtiar loans. 277
Table57 Multiple Regression : -OutputFor RegressionUsing SeveralIndependent VariablesTo PredictDependent Variables (Income)
Dependent Variable : Incmiktr = Income From lkhtiar-Financed Project Activities (Monthly)
Anal. ysis of Variance Source DF Suln of Mean F value Prob>F Squares Square
Model 6 914145.41 152357.57 12.551 0.0001 Error 247 2998393.75 12139.24594
Root MSE 110.1782 R Square 0.2336 Dep Mean 18G. 7205 Adjusted C. V 59.000705 R-Square 0.2150
Parameter-Estimate
Parameter Standard T for 110: Standardized Variance Variables DF Estimate P'meter=O Prob)[T) Estimate Inflation
Intercep 1 24.44822019 68.16888282 0.359 0.7202 0 0 Amtloan 1 0.15288599 0.03985412 3.836 0.0002 0.21805813 1.04141217 Owncap 1 0.48371876 0.21540390 2.246 0.0256 0.12916548 1.06630432 Age 1 -0.84882775 0.88274328 -0.962 0.3372 0.05581021 1.08573531 Educ 1 6.97589612 9.60930517 0.726 0.468G . 0.04231598 1.09511506 Skill 1 58.31659129 4G. 79G90070 1.24G 0.2139 0.07135878 1.05684595 Activity 1 96.56008644 14.69485156 6.571 0.0001 0.37564305 1.05330178
Variable DF Variable label
Intercept 1 Intercept. Amtloan I Amount of loan. Owncap 1 Amount of participant own capital. Age 1 Age. Educ I Level of education. Skill I Utilized skill in Ikhtiar activities. Activity 1 Type of activities with Ikhtiar loans.
/
I 278
9.3.3.1 RELATIONSHIPS BETWEEN VARIABLES (seeTable 56)
The Pearsoncorrelation relationshipsbetween all pairs of variablesare shown in Table 56. The results show that the correlation of income with (i) amount of Ikhtiar loans is 0.38 with a P-Value of 0.0001, (ii) types of activities pursuedis 0.25 with a P-value of 0.0001, (iii) use of borrowers' own capital is 0.19 with a P-value of 0.0018 and (iv) level of educationis 0.1104 with a P-value of 0.0790.
Thus the first two variables, i. e. amount of Ikhtiar loans and types of activities are statistically significant at the 0.0001 level of significancewhile use of own capital is significant at the 0.0002 level of significance - all indicating a strong relationship. Similarly, the amount of participants own capital used is also significant, but the level of educationand utilization of skill in the Ikhtiar activities are of marginal significance, only slightly lessthan the normal 0.05 level of significance.
In orderto explorethe relationshipbetween the exploratoryvariables and our response in variable,income, a multiple regressionequation was run and the result is shown Table 57. Fromthe tablewe reachthe following conclusions:
in 1. The value of R Squareis given as 0.23. Thus only 23 percent of the variation the The Ikhtiar scheme income is explained by variation in the independentvariables. income is important variablesthat were responsiblefor influencing the Ikhtiar schemes revealednext.
is 2. The F statistic is 12.55 with aP value of 0.0001 suggesting that the model "statistically significant" at the I in 10,000 level. We can conclude that three of the explanatoryvariables have a non-zero regressioncoefficient. Thus the examinationof the t statistics and the associatedP value for the individual regressionscoefficient Ikhtiar reveal that, three variables, (i) types of activities carried out, (ii) amount of level (or loans and (iii) amount of own capital are significant of at least the 0.05 0.0001o0.0002 and 0.0256 respectively).However, other explanatoryvariables are not factor in statistically significant. For instance, it seemsthat age is not an important explaining the income. This is becausemajority of the respondentswere in the very active age group. Similarly skill is not an important factor in explaining the income. This is becauseas noted in Chapter 8 that nearly 96 percent of the memberhouseholds had utilized their various skills (whether in agricultural or non-agricultural activities) in the 1khtiar-financedproject activities. Only 4 percent of the member householdshad ventured into a "new" area without anv nrevinim -.kilk (vind exnerienceq) (qee discussion in Chapter8). Typesof activitiesseemed to havepositive correlation with 279
income.As discussedin sub-section9.3. L, Ikhtiar memberhouseholds had utilized their Ikhtiar loans in either the agricultural or non-agriculturalrelated activities. Findingsalso suggest that both typesof activitieshad generated a significantamount of incomefor the householdmembers. However, the non-agriculturalactivities tend to generatea higher income when comparedto the agricultural activities. From this observation,we can concludethat lkhtiar loans or credit along with the types of activities carriedout by the Ikhtiar membersare a significantpredictor of income.
The aboveresult seemsto confirm, along similar lines to the Grameenexperience, that credit to small scale activity is one of the missing link in the developmentmodel. It is only through the provision of credit that participantshave been able to increasetheir total household incomes. The findings of this study, support the earlier analysisby Remenyi(1991) on credit- based income generation programmesin many developing countries(as mentionedin Chapter 3) who concludedthat "the key obstacleto poverty alleviation in the Third World is the restrictions imposed by the lack of accessto investmentfinance".
9.3.4 SOME OF THE FACTOR CONTRIBUTING TO THE GROWTH OF INCOME: A GENERAL OBSERVATION
One of the factorsbehind the growth of incomeamong the Ikhtiar memberswas the generationof self-employmentby thosewho, prior to joining the Ikhtiar Programme, wereunemployed or merelyperformed the role of housewife.The rate of employment (throughself-employment as we haveseen in Chapter8) hasincreased from 38 percent is beforejoining to 64 percentafter joining the programme.Thus, as a new member addedto the labour force, dependencyratios havebeen reduced and total household incomehas gone up by the extentof the earningsof the newmember.
being However,the maindriving force in pushingincome upward is what is referredto is in this studyas "sintilar occupationbut changingstructure". A good example the caseof a rubbertapper, representing one of the most popularoccupations among the rural householdsin Baling.As mentionedin Chapter 7 rubberalone occupies nearly 77 percent of the agriculture land use in Bating.
Since there are many rubber smallholdingsin the district, the very poor rural householdswho own no land at all or a very smallplot, usuallyearn an incomefrom sharecroppingfrom the rubberland. In generalthe tapperprovides the labour and the landlord(usually wealthy owners) provides fixed capital,rubber land. Under the above arrangement,the sharecropperdoes all the tapping and income from the sale of 280
producemust be divided on a 50 50 basis.This - sort of arrangementas noted by Gibbonsand Kasim (1991) has been a very common phenomenonin rural areas throughoutthe countryand also in Baling.
With the Ikhtiar's emergence of credit-related intervention, there was a sudden in transformation the economic position of the Participante households. The being households, participants, very poor rural have become aware of the potential of income generating additional through the lease of rubber smallholdings. Under the lease the former arrangement, sharecropper,after paying the landlord a lump-sum (from the Ikhtiar's loan) now retains all the income from the sale of rubber, for the lease agreedperiod of the until the expiry date 1121.On the other hand, householdsin the have divide control group still to the income from rubber with the landownerson basis.With bigger loans equal from the secondcycle, the size of rubber land leaseshas increased and provides an opportunity for earning a much higher income. In some cases participants also resorted to mixed-agriculture activities allocating a certain loan proportion of the towards leasing rubber smallhoidings and some for raising livestock (animal husbandry).
Another interestingcase is the participantwho borrowedM$1000.00 on a second loan, andwho togetherwith her husband,has expanded their smallsundry or provision shop.With the newlyacquired capital they have been able to stockbetter quality goods for saleand are thus ableto attractmore customers [131 who prior to this hadto go to the nearbysmall town in the district to get such goods.Through this revitalization process,their profit marginhas increased. Many other examplesof the importanceof the credit-relatedintervention, based on the findings of this study can be seenin various agicultural activities (such as selling/distributionof food and selling of agriculturaland non-agricultural goods) and non agriculturalactivities (such as renting of landfor cultivationof vegetablesand other crops).
It hasbeen noted in BankingWith The Poor (1992) that what seemsto be the main driving force is the existenceof relativelyfree enterpriseeconomics in Malaysia-This hasgiven the borrowersfreedom in searchingfor the bestuse of their loans.It hasalso beenobserved that the generaleconomic improvement of the Grameenparticipants, apart from interventionof credit, has beenactually fueled by the generaleconomic improvementin the wake of the agriculturalmodernization in Bangladesh(Streefland et al, 1993).This hasalso been the caseof Malaysiathrough various government rural developmentprogrammes in agricultureas we haveseen in Chapter4. 281
Equally importantis the very nature of the Ikhtiar Programmewhich pay out loan checkswithin a week of a decisionand also providesa high degreeof supervision, includingweekly meetings and repayments.This is to ensurethat the loan is properly utilized for productive purposes so as to generate an income. Unproductive consumptionis beingeffectively eliminated. Another contributory factor hasbeen the fact that the activitiesundertaken are familiarto members;the skills and technologies areknown and relatively simple. In generalthe kind of activitiesin which the members' householdfamilies usually engage in arethe oneswhich they had all alongbeen doing, albeit at a smallerscale and/or for subsistenceconsumption, activities such as cattle andchicken rearing, padi andvegetable fanning, shopkeeping, petty trading,tailoring andmany others.
From the abovegeneral discussions, it canbe concludedthat makingloans available to the very poor rural households,provide the capacityof channelingsuch money into productiveuses which hasresulted in increasesin incomeand therebyimproved their economicpositions.
9.3.5 CONCLUSIONS
Based on the above discussion,it can be concludedthat the Ikhtiar Programme, through its benevolentloans has been successfulin raising the income of the in participants,which is now significantlyhigher than those of the households the control group that did not participate.In relationto this, an overwhelmingproportion Ikhtiar hard- (82 percent)of the programmeparticipants have managed to rise above have to corepoverty line of M$250.00.From this figure, a further22 percent managed surpassthe nationalpoverty line of M$375.00.On the other hand,99.6 percentof line. householdsin the controlgroup still remainbelow the Ikhtiar poverty
The aboveresults tend to validatethe first andsecond sub-hypotheses of Hypothesis One, that the householdincome of the participantshas increased and that risesin the householdincome of the control group, on the other hand, has been marginal. Similarly,the third and fourth sub-hypothesesof Hypothesis One has also been found to be true and could be accepted,since the incidenceof poverty of the participantshas been reduced while improvementsamong the control group havebeen marginal.Similarly, the fifth sub-hypothesisof HypothesisOne was alsofound to be true andcan be accepted. 282
Lastly the sixth sub-hypothesis of Hypothesis One was also tested for its validity. The findings suggestthat the participants' household incomes resulting from 11chtiar- financedproject activities have been significant as they form a major proportion of the overall householdincome, about 55 percent (M$186.00). Similarly, contributions from Ikhtiar-financed project activities both in the agricultural and non-agricultural sectors form a significant proportion of this income, 48 percent and 65 percent respectively. The sixth sub-hypothesis was therefore found to be true and can be accepted.
OF LIFE 9.4 : SECTION TWO - IMPACT ON THE QUALITY
The immediatebenefits arising out of economicinterventions are not restrictedto increasesin incomes,even though these are central to improved status. Other from indicatorsthat can also providea good indicationof rangeof benefitsthat stem economicinterventions include increases in expenditureon education,health and non- (Robinson, food items,housing and amenities(sanitation, lighting, etc.) and savings 1992)and also householditems suchas bedsand other materialpossessions such as radiosand bicycles (KEDA, 198 5; B hatt, 1991).
in income In connectionwith this study,one would like to seewhether the increase as its loans(discussed a resultof Ikhtiar economicinterventions, through the utilizationof the in SectionOne), had made any wider impactor led to improvedlIvIng conditionor four indicators quality of life amongthe programmeparticipants. In this study, main life (i) were selectedin the householdsurvey for measuringthe quality of namely, (iv) housingconditions, (ii) householditems, (iii) householdexpenditures and savings.
is directly This andthe following sectionsset out to testHypothesis Two which related follows: to HypothesisOne (as stated in Chapter1) whichwill be repeatedhere as
HYPOTHESIS 2
An increasein incomeresults from the economicventures (through the utilization of Ikhtiar loans)undertaken by the programmeparticipants in the study areahas had a positiveimpact on their qualityof life and alsotheir savings.They are thereforebetter off thanthey werebefore and better off thanthe control group (non-participants).This hypothesiswill be testedby four sub-hypotheses: 283
(i) The quality of life among the programme participants has improved and this can be seenin their:
(a) housingconditions; (b) householditems; and (c) householdexpenditures.
(ii) The changesin the quality of life among the control group, on the other hand, hasbeen marginal with respectto their:
(a) housingconditions; (b) householditems; and (c) householdexpenditures.
(iii) A higher level of savingshas also been encouragedamong the programme participants.
(iv) The level of savingsamong the control group, on the other hand,has undergone only marginalchange.
The testingof the hypothesisand four sub-hypotheseswill be donethrough the four selectedindicators by meansof comparisonbetween the programmeparticipants with in that of the control groupsbased on the householdsurveys. This will be discussed Section Two (A) and (B). Section Two (A) will test the first and second sub- fourth hypothesesand Section Two (B) will test the third and sub-hypotheses.. SECTTONTWO (A)
9.4.1 HOUSING CONDITIONS : TESTING OF SUB-HYPOTHESESONE (A) AND TWO (B)
The improvementin housingcondition is the first indicator that is used to seethe impact of the rise in incomeamong the very poor rural householdsin Baling. As mentionedin Chapter5, the first stagein determiningthe eligibility of the targetgroup for joining the Ikhtiar programmeis through the crude housingindex measure.In generala particularhousehold is consideredas "passingthe first stage"if the "crude measure"of housingindex obtainedthrough Ikhtiaes "W" householdsurvey is not more than 10 points. In AIMs model, 7 main indicatorsare used to determinethe housing conditionsbased on "crudemeasures" that include7 items(i) size,(ii) number 284
(iii) of stories, structural conditions, (iv) roofing materials, (y) wall materials, (vi) electricity supply and (vii) piped water supply. For every indicator, a numerical score ranging from 0 to 4 points is given (see Appendix 9 for detail and discussion).Based on this approach,the findings of the study are discussednext.
First we will look at the differencesin the housingindex scoresfor the two groups, namelythe programmeparticipants and control group:
1. "BEFORE" (1989) AND "AFTER" (1992) SITUATIONS
In order to test the differencebetween the total housingindex scoreof the "before" and"after" situationsfor eachgroup, a pairedsamples West was carriedout separately for eachgroup. a) PROGRAMME PARTICIPANTS
The result of the test, as shown in Table 58, suggeststhat the housingconditions betweenthe two dateshas changed significantly. The "after" meanscore (9.56 points) is higher than the "before" meanscore (7.09 points). Programmeparticipants have thereforeexperienced an improvementin their housingconditions when comparedto their previoussituation. b) CONTROL GROUP [141
The result of the test, as shownin Table 59, suggeststhat the housingconditions betweenthe two datesfor the control group has also improved significantly.The "after" meanscore (7.88 points)is higherthan the "before"mean score (7.06 points). Thus, the control group has also experiencedan improvementin their housing conditionswhen comparedto their previoussituation. However, what is clear at this juncture is that the increase',in meanscore of the housingconditions for the control for groupwas only by 0.82 points(i. e. 7.88 - 7.06).On the other handthe meanscore the programmeparticipants had increased by 2.47 points(i. e. 9.56 - 7.09) andthis will be takenup later. 285
Table 58 : Paired Samples T-Test of Total Housing Index Score : Programme Participants, "Before" and "After" Situations
Variable Number of Mean Standard Deviation Cases
Housing Index (Before) 254 7.09 2.43 (After) 254 9.56 2.27
Difference Standard t-value Degree PR>T in mean Error of Freedom
2.48 0.18 14.10 253 0.0001
Index: TABLE 59 : Paired Samples T-Test of Total Housing Control Group, "Before" and "After" Situations.
Deviation Variable Number of Mean Standard Cases
Housing Index (Before) 265 7.06 2.54. (After) 265 7.88 2.43.
Difference Standard t-value Degree PR>T in mean Error of Freedom
0.82 0.09 8.76 264 0.0001 286
Table 60(a): Analysis of Variance for the Housing Index (Total Score) Between the Programme Participants and Control Group, The "Before" Situation (PART ONE)
General Linear Model Procedure
Dependent Variable : Housing Index (Total Score)
Source DF Sum of Mean F Value POP R Square C. V Squares Square
Model 1 0.11680348 0.11680348 0.02 0.8906 0.000037 35.1182
Error 517 3188.24543159 6,16681902 Root MSE Housing Index Mean Wrected "-, Total 518 3188.36223507 2.48330808 7.07129094
Source DF Type I SS P Value PR>F DF Type III SS P Value POP
Partic. 1 0.11680348 0.02 0.8906 1 0.11680348 0.02 0.8906
Table 60(b): Analysis of Variance for the Housing Index (Total Score) Between the Programme Participants and Control Group, The "Before" Situation (PART TWO)
General Linear Model Procedure
Duncan's Multiple Range Test For Variable: The "Before" Situation Total Household Income. Note: This test controls the type I comparisonwise error rate, not the experimental error rate.
Alpha = 0.005 DF = 517 MSE = 6.16682
Warning: Cell sizes are not equal. Harmonic mean of cell sizes = 259.383
Number of means 2 Critical range 0.433184
Means with the same letter are not significantly different.
Duncan Grouping Mean N Particular
A 7.0866 254 Ikhtiar members A A 7.0566 265 Control Group 287
Table 61(a): Analysis of Variance For the Housing Index Difference (Total Score) Between the Participants and Control Group, The "After" Situation (PART ONE)
General Linear Model Procedure
Dependent Variable : Housing Index (Total Score)
Source DF Sum Of Mean F Value PR>F R Square C. V Squares Square
Model 1 367.67645656 37.67645656 66.26 0.0001 0.113610 27.0651
Error 517 2868.62797504 5.54860343 Root MSE Housing Index Mean
Crected Total 518 3236.30443160 2.35554737 8.70327553
Source DF Type I SS P Value PR>F DF Type III SS P Value PR>F
Partic. 1 367.67645656 66.26 0.0001 1 367.67645656 66.26 0.0001
Table 61(b): Analysis Of Variance for the Housing Index Difference Between the Participants and Control Group, The "After" Situation (PART TWO)
General Linear Model Procedure
Duncan's Multiple Range Test For Variable: The "After" Situation Total Household Income. Note: This test controls the type I comparisonwise error rate, not the experimentwise error rate.
Alpha = 0.05 DF = 517 MSE = 5.5486
Warning: Cell sizes are not equal Harmonic mean of cell sizes = 259: 383
Number of Means 2 Critical Range 0.410897
Means with the same letter are not significantly different.
Duncan Grouping Mean N Particular
A 9.5630 254 Ikhtiar Members
B 7.8792 265 Control Group 288
c) To provethat the two groupshave a similarbackgrounds in termsof their housing conditionsfor the "before" situation,an analysisof variance(ANOVA) was carried out. The resultof the test is shownin Tables 60(a) and (b), which suggeststhat the differencein the housingindex scoresbetween the two groups is not statistically significant.This is indicatedby the calculatedvalue of 0.8096level of significant.Thus, the housingconditions for both groupswere quite similarwith meanscores of 7.09 points(programme participants) and 7.06 points (control group).
2. "AFTER" SITUATTON (1992)
However,we aremore interested to know whetherthere is any significantdifference in the housingconditions for the two groupsbased on their housingindex scorefor the "after" situation.This was analyzedby meansof analysisof variance(ANOVA). The resultof the test is shownin Tables 61(a) and (b), which suggeststhat the difference is in the housingconditions between the programmeparticipants and the controlgroup highly significantat the 0.0001 significancelevel. This suggeststhat the housing conditionsof the programmeparticipants are relativelybetter when comparedto the has control group.The improvementin the housingconditions among the participants 9.56 been shown by meansof the higher score in their housingindex of points, comparedto 7.88points for the controlgroup.
housesin We can concludethat the programmeparticipants have improved their housing relationto the improvementsin the control group. The improvementin the their conditions of the programmeparticipants has been made possiblethrough relatively higher incomes compared to their counterparts. Ikhtiar economic improvement interventionhas, therefore, made a positivecontribution towards the of be to the participanthousing conditions. (Caution is neededhere as it would unrealistic improvementin their expect the programmeparticipants to undergoinga major be later). housingcondition in a relativelyso shortperiod of time andthis will takenup
betweenthe It is alsonecessary to elaboratefurther on the overallhousing index score Table 62. two groups,which is madepossible through direct comparisonby meansof have Based on Table 62, the results show that 41.8 percent of the participants obtainedmore than 10 points in the "after" situationcompared to only 9.5 percent prior to joining the programme.At the sametime, participantsobtaining less than 10 pointshave been reduced from 90.5 percent(before) (i. e. 26.4%+ 64.1%)of the total sampleto 58.2percent (i.e. 54.7%+ 3.5%) (after). 289
Table 62: Crude Measure of Housing Index (Total Score): Between Participants and the Control Group: "Before" and "After" Situations
Participants Control Group
score/ Before After Before After Point
NNN%N
Below 5 67 26.4 9 3.5 83 31.3 46 17.3
6 10 163 64.1 139 54.7 159 60.0 182 68.7
11 15 24 9.5 104 41.0 23 8.7 37 14.0
16 20 - -20.8 Above 20
254 100 254 100 265 100 265 100
Source : Field Data
have In direct comparison,only 14 percentof the respondentsin the control group obtainedmore than 10 points(after) comparedto 8.7 percentin the "before"situation. been However, householdsin the control group obtainingless than 10 points have reducedby a smallmargin of 5.3 percent,i. e. from 91.3 percent(before) to 86 percent higher (after). On the other hand,among the Ikhtiar membersthe reductionhas been indeed (32.3percent), i. e. from 90.5percent (before) to 58.2percent (after), which is a significantreduction.
It is also interestingto note the overallhousing conditions of the participantsand the control group basedon 8 indicatorsas shownin Table 63. As mentionedearlier, it would be rather unrealisticto expectthe programmeparticipants to undergoinga majorimprovement in their overallhousing conditions with respectto everysingle item listed in Table 63, in a relativelyshort period of time. Informal discussionwith the samplehouseholds suggested the increasein householdincome has been spent only on certainimprovements of their housesnotably the installationof the basicamenities, Le. piped water supplyand electricityand also the replacementof roofing materials.By looking indicators(size, at all the stories,structural conditions, toilet, wall, roofing 290
materials, electricity, piped water supply and toilet) in Table 63, the differences in percentagesseem to be more in the favour of the programme participants rather than the control group. We will revealedsome of these indicators, notably electricity, piped water supply and roofing materials.
I Table 63 : Housing Conditions Based On 7 Indicators : Participants and Control Group, "Before" and "After" Situations (Percent)
Items Participants Control Group (Before) (After) (Before) (After) ------
1. Size: ** Big 3.2 6.9 - - Medium 48.8 56.2 45.7 50.4 Small 48.0 36.9 54.3 49.6 99.6 2. Storey: 1 99.2 98.4 99.6 2 0.8 1.6 0.4 0.4
3. Structural: ** Firm 2.3 9.9 - - 72.4 Average 80.7 80.7 72 .4 27.6 Below Average 17.0 9.4 27.6
4. Roofing Material: Asbestos 82.3 Zinc 59.1 91.3 77.2 17.7 Attap 40.9 8.7 22.8
5. Wall: 2.8 Brick 5.1 8.3 2.8 88.6 Wooden 80.3 86.2 86.2 0.8 0.8 -- Wooden/Attap 8 6 Attap 13.8 4.7 11.0 .
6. Electricity: 66.1 Available 48.4 76.8 55.1 Shared - 33.9 Not Available 51.6 23.2 44.9
7. Piped Water Supply: 35.0 Available 35.8 56.3 25.6 Shared --- 65.0 Not Available 64.2 43.7 74.4
8. Toilet: 54.3 Pour Flush 33.8 48.4 49.6 and 37.4 Pit Latrine 58.7 51.2 37.8 8.3 None 7.5 o. 4 12.6
9. House-Ownership: Own 93.7 93.7 94.1 94.1 Rent 6.3 6.3 2.4 2.4 Other --3.5 3.5
Note : AIM's Housing Index "Crude Measure", score/point is based on items 1 to 7. ** For definitions of size and structural conditions (firm, average and below average), see Appendix 9. 291
With respectto electricityand pipedwater supply,the situationsfor the "before"and "after" areas follows: i) households Member with electricity have increasedby 28 percent, i. e. from 48.4 percent (before) to 76.4 percent (after) 1151.In the case of piped water supply, the percentageincrease is 20.5 percent, i. e. from 35.8 percent (before) to 56.3 percent (after). ii) On the other hand, the control group could only managean increaseof II percent for electricity (from 55.1 "before" to 66.1 percent "after") and 9.4 percent for piped water supply (from 25.6 "before" to 35.0 percent "after"). It needsto be emphasized here that piped water supply and electricity in the presentday have becomea necessity rather than a luxury. With affluence,people can afford to install thesevery basic items. With respectto the replacementof their roofing (from attap to more long lasting zinc sheets) and wall materials (from attap to wooden or brick), the situations for the "before" and "after" are as follows: iii) Memberhouseholds who had replacedtheir roofing materials,from attap to zinc, increaseby 32.2 percent,i. e. from 59.1percent (before) to 91.3percent (after). On the other hand,the control group could only managea marginalincrease of S.3 percent, i. e. from 77 percent(before) to 82.3percent (after) on similaritem. iv) In the casewall materials,it had beenshown from Table 63 that 13.8percent of the memberhouseholds with attapwall for the "before"situation had beenreduced to 4.7 percentfor the "after" situation(a reductionof 9.1 percent).Attap wall had either beenreplaced with brick or woodenwall. On the other hand,the control group could only managea marginalreduction of 2.4 percent,i. e. from 11.0percent (before) to 8.6 percent(after) on similaritem.
From the abovegeneral observation, the programmeparticipants are relativelybetter off in terms of their housingconditions when comparedto the control group. This outcomehas been the result of the positiveincrease in participants'household income madepossible by Ikhtiar economicintervention. This finding seemsto validatesub- hypothesisone(a) and sub-hypothesis two(a) andtherefore can be acceptedas true. 292
Table 64: Possessionof HouseholdItems Between the ProgrammeParticipants and Control Group : The "Before" and "After" Situations
Participants Programme Control Group
Before After Before After
Particular N Percent N Percent Percent N Percent N Percent Percent Increase Increase
1. Car 0 0 1 0.39 0.39 0 0 0 0 NX
2. Motorcycle 57 50 193 22.4 2.80 43 16.2 45 IG. 9 0.7
3. Bicycle 60 23.6 68 26.7 3.10 23 8.6 2G 9.8 1.2
4. Television 45 17.7 51 20.0 2.30 52 19.6 52 19. G N. C
5. Radio 58 22.8 G3 24.8 2.0 80 30.1 81 30.5 0.4
G. Sew. Machine 5 IAG 9 3.54 2.7 8 3.01 9 3.05 0.4
7. Fridge 3 1.18 7 3.14 2.3 3 1.1 3 1.1 NX
8. Gas Stove 0 0 11 4.30 4.3 2 0.75 4 1.5 0.75
9. Kerosene Stove 121 47. G 55.9 8.3 142 111 41.8 IIG 43.7 1.97
10. Electric Iron 2 0.78 7 3.14 2.72 6 2.2G 6 2.26 N. C
It. Rice Cooker a 3.14 12 4.70 1.56 2 0.75 2 0.75 NX
12. Lounge Set 0 0 2 0.78 0.78 1 0.39 1 0.39 N. C
13. Dining Set 0 0 0 0 NX 0 0 0 0 N. C
14. Bed 67 26.3 81 31.8 5.5 75 28.3 104 39.2 10.9
15. Cupboard G5 25.5 127 50.0 24.5 93 35.0 132 49.8 14.8
Note : N. C = No Change 293
9.4.2 HOUSEHOLD ITEMS : TESTING OF SUB-HYPOTHESES ONE(B) AND TWO(B)
Another indicator of living standardsor quality of life is the use of the items in the household.The range of householditems was included in the household survey as an index of wealth (seeTable 64 above).
Table 64 summarizesthe information of the householditems owned by the participants and control group for the "before" and "after" situations.By comparingthe two groups on every item, it becameclear that the percentageincrease for every item is relatively higher among the programme participants. The percentage increasesfor cupboards (24.5 percent) and kerosene stoves (8.3 percent) were higher among the Ikhtiar memberscompared to the control group, where the figures for similar items stood at 14.8 percent and 0.7 percent respectively. The only exception was beds, where the percentageincrease was higher among the control group, 10.9 percent comparedto only 5 percentamong the programmeparticipants [161.
However, Table 64 also shows that for II items (cars, motorcycles, bicycles, televisions,transistor radios, sewing machines,fridges, gas stoves, irons, lounge sets) the percentageincrease among the Ikhtiar memberhousehold was rather small, ranging from only 0.4 percent (only I car was added) to 4.3 percent for gas stoves.However, it is also interesting to note that for this single caseof an Ikhtiar member (from a very poor rural household)who acquired a car (used car), which can be regardedas quite an achievementfor her family. A car is normally regarded as an index of wealth by better (especiallyin the Malaysi&s rural sector) or item that is affordable only the off household.
On the other hand,the control group, basedon similaritems, could only managean lower increasein percentageterms on only 4 of the 11 items,ranging from an even However percentage,i. e. 0.7 percent(motorcycles) to 1.9 percent(kerosene stove). household there seemsto be no significantchanges in the possessionof the other 7 items (car, television,fridge, iron, rice cooker, lounge set and dining set) for the "before"and "after" situations.
Informal discussionswith respondentsfrom both groups suggestedthat most of the income had gone to savings,ploughing profits back into activities, household expenditures(such as childreifseducation and food) and to a certainextent towards the upgradingrimprovementof their houses(such as installingelectricity, piped water supplyand other minor repairs/works).As a resultsof these,few amongthe 1khtiar 294
membersand the controlgroup felt they could afford to acquirethe householditems as listedin Table 64. This thereforeexplains why the increasein percentagefor most of the itemslisted in Table 64 amongthe lkhtiar memberswas below 5 percentand as low as0.39 percent, but the percentageincrease (from "before"to "after" situations)in the acquistionof the householditems had occurredin all the II householditems. On the otherhand, among the control group,the percentageincrease in the acquisitionof the householditems was rathermarginal, i. e. below2 percentand had occurred in only 4 out of the II itemsas listed in Table 64.
The aboveanalysis also suggests that it would be unrealisticto expecta higherincrease in the acquisitionof the householditems as priority (as mentioned)seems to be given towardssavings, ploughing profit backinto activities,household expenditures and to a certainextent towards the upgradingof their housesrather than acquisitionof luxury items.Most respondentsalso noted that only when "extra" incomebecame available, would they useit to buy someof the householditems such as thoseas listedin Table 64. In this sense,we can arguethat rural households,notably the Ikhtiar members, werequite rational in makingdecisions in relationto their increasesin income.
Furthermore,items suchas gas stoves,cars, motorcycles,bicycles and fridgeswere usedgenerally in connectionwith their Ikhtiar activities.For instance,a motorcycle (usually bought second-hand)was widely used for selling of agriculturalor non- agriculturalgoods, traveling from onevillage to anotherand gas stoveswere usedby participantsin the hawkingof food.
From the abovefindings we canconclude that thereis a significantdifference between the two groupsin termsof possessionof householditems. Statistics in Table 64 imply that with the higherincomes enjoyed by the lklitiar members,the percentageincrease of the householditems possessedfor the "afler" situationhad increasedonly slightly over the "before" situation,but was neverthelessrelatively higher than that of the control group.This seemsto suggestthat the memberhouseholds are relativelybetter off. As suchsub-hypothesis one(b) andsub-hypothesis two(b) werefound to be true andcan be accepted.
9.4.3 HOUSEHOLD CONSUMPTION EXPENDITURE 1171 : TESTING OF SUB-HYPOTHESES ONE(C) AND TVO(C)
Improvementin the quality of life of the programmeparticipants is also suggestedby comparisonsof expenditureson food and non-fooditems with that of control group. The household expenditurepattern in this study was only limited to comparisons 295
between the programmeparticipants and the control group for the "after" situation (1992) and no attempt has been made for the collection of data on the "before" (1989)household situation expendituredata. The household'smonthly expenditure on food was collectedbased on a one month period, preceedingthe actual household survey 1181.The expenditurepatterns for the non-food items like clothing/apparel, rent/energy,transportation, health and medical expenses,education and other expenditurescollected in this studywere basedon I year period,preceding the period of the householdsurvey 1191. The structureof the expenditurebetween the two groups is shownin Table 65 andis examinednext.
The expenditureon food for the memberhouseholds was around 6 percent higher than that of the control group. It is also interesting to note that even though the average expenditureon food for the Ikhtiar members,which stood at around M$116.00, was higher than M$103.00 for the control group, tile former accounted for around 53 percent of the total expenditure,while the latter was 60 percent. This is closely related to Engel's law which stated that the poorer the family, the greater is the total expenditurefor food. This observationsuggests that the control group tends to spenda bigger proportion on food while the member householdsspent a lesser proportion, indicating the higher income status relatively.
The findingsof this study seemsupport someearlier findingsboth in Malaysiaand other developingcountries. In the Malaysiancontext, Ahmad (1983) noted that on averagethe poor rural householdsspend around 60 to 69 percentof their cashincome on food. SimilarlyMohamed (1982) notedthat the better off rural householdsspend around56 percentof their cashincome on food. It has also been noted that (Tee, 1986)poor householdsspent a significantlygreater proportion of their income(64 percent)on food than better-offhouseholds (48 percent).In the Philippines,Ardales and David's(1986) findingsshow that the poor rural householdsspend more than 60 percenton food andin Bangladesh,Rahman and Hossain (1988) noted that around60 percentwent to food alone.It hasbeen argued (Miller et al, 1982,cited in Tee, 1986) that aspoor familiesreceive an increasein income,they usually devote a big fractionof that increaseto additionalfood expenditure.This percentageincrement declines as total incomeincreases. [For the definitionof poor rural households,see Footnote 201. 296
Table 65: Monthly Household Expenditure - Between the Participants and the Control Group
Participants Control Group Percent Difference Between PIpants Mean (M$) Mean (M$) and Control Group
1. Food 116.39 103.54 5.9
2. Cigarette/ Tobacco 7.82 4.92 22.7
3. Apparel/ Footwear 8.81 6.65 13.9
4. Rent/Energy 6.02 4.90 10.3
5. Transportation 30.04 17.56 26.2
6. Furniture 5.69 3.42 24.9
7. Health/ Medical 5.54 3.49 22.7
8. Educational 24.94 17.40 17.8
9. Recreational/ Sport Elment 1.43 1.18 9.6
10. Services and Other Items 5.78 4.29 14.8
43.7 11. Other Expendit ure 6.46 2.53
12. Total ExIture 218.92 169.88 12.1
13. Per Capita Expenditure 37.37 29.02 12.6
Note: Participants = 254 cases and Control Group = 265 cases.
Source : Field Data 297
interesting It is also to note that with an increasein income,the samplemember householdshave been able to a certainextent to allocatesome amount of cashincome into acquiringfurniture and Table 65 shows that the householdexpenditure on furniture for Ikhtiar members(M$5.54) was around 24 percenthigher than in the control group (M$3.49). As Allen (cited in Chong, 1981) has noted "as income increases,the proportionof the budgetdevoted to luxuriesincreases" The expenditure on this item (furniture) can be regardedas an index of wealth. Similarlythis is also relatedto Engerslaw which impliesthat the greaterthe incomethe morewill be spend on conspicuousconsumption. However the findings show that the expenditure allocatedto furniture accountedfor only 2.6 percentof the total expenditurefor the participantsand 2 percentfor the controlgroup, which was rathera smallamount. This seemsto suggestthat priority was given to other expenditures,rather than the acquisitionof a "luxury item" which will be examinednext.
The householdexpenditure on educationfor memberswas 17 percenthigher than for the control group. Similarly expenditureson apparel/footwear,transportation and healthand medicalexpenses were 13.9 percent,26 percentand 22.7 percenthigher thanthat of the controlgroup. By looking at the total expenditureon itemsthat canbe regardedas essential,such as food, apparel/footwear,transport, education and health, they accountedfor around86 percentof participants'income and 89 percentof the income of the control group. Thus, the poor rural households(both the member householdsand the control group) cashincomes were thereforespend only on the item essentialitems. In general,by comparingthe two groupswith respectto every be in favour listed in Table 65, the percentagedifferences for everyitems seem to the of the programmeparticipants.
(Monthly) Between Table 66 : The overall Total Household Expenditure Group the Programme Participants and the Control Independent Samples T-Test
N Mean Standard SE-andard Expenditure Deviation Error
1.888 1. Participants 254 218.92 30.09 1.019 2. Control Group 265 169.88 16.59
Unequal Variance E3timate
T-value Degree of Freedom P>T
22.8560 390.2 0.0001 298
The findings, as revealedby Table 65, can be further substantiatedby comparing the overall monthly expenditure for the two groups by means of independentsample T- Tests. This is to test whether the differencesin the householdexpenditure between the two groups is statistically significant or not. The results are shown in Table 66.
The result of the test shows that the income difference between the programme participantsand the control group is highly significant at the 0.0001 significancelevel. Thus, the householdexpenditure was significantly higher for the member households when comparedto the control group. This suggeststhat the higher income generated by the member householdshas resulted in a relatively higher household expenditure among them, which stood at M$218.00 and only MS169.00 among the control group. Thus the lkhtiar Organization!s emphasison improvement in the quality of life of its membersthrough the social developmentprogramme (based on the 16 decisions,as shown in Appendix 4) seemsto be supportedby the action on the part of its members. From the above discussion we can conclude that the quality of life among the programmeparticipants has improved and can be seenirl their householdexpenditure which is relatively higher than that of the control group. This finding tends to validate sub-hypothesis one(c) and sub-hypothesis two(c) and therefore could be acceptedas true.
SECTION TWO (B)
9.4.4 SAVINGS: TESTING OF SUB-HYPOTHESESTHREE AND FOUR
From the surveyconducted, it was interestingto find that the improvementin living standardsand incomesof the participantshave also promotedthe habit of savings amongthe memberhouseholds. This will be discussedbased on Table 67 below.
The findingsshow (seeTable 67) that 70.9 percentof the participantshave savings afterjoining the lkhtiar Programme,compared to only 2.4 percentprior to joining the programme.On the other hand,only 12.1 percentof the respondentsin the control group had savingsat the "after" situation,compared to 3.1 percentin the "before" situation. 299
Table 67 : Savings Among the Respondents : Programme Participants Versus the Control Group, "Before" and "After" Situations
Savings Participants Control Group
Before After Before After ------(N) % (N) % (N) % (N) %
No 248 97.6 74 29.1 257 96.9 233 87.9
Yes 6 2.4 180 70.9 a 3.1 32 12.1
Total 254 100% 254 100% 265 100% 265 100%
Table 67 showsthat the attitude towards savings,especially amongst the member households,has been very positive,as the likelihoodfor themto saveis approximately 59 percenthigher than that of the control group, no doubt a reflectionof the higher incomeamong the memberhouseholds which enablesthem to set asidesome cash for savings.The mainreasons given for the increasein savingswere as follows:
6 1. Constantencouragement from Ikhtiar staff This is alsoin line with item number of the "16 Social DevelopmentProgramme" (as shown in Appendix 4, discussedin Chapter5), i. e. "we shouldminin-dze our expenditure".
2. The control group hasalso managedto set asidesome income for savingsand the from main reasonsgiven (throughinformal discussions)was due to encouragement Ikhtiar members.
It will be equallyinteresting to elaboratefurther on the monthlysavings pattern among the two groups,which will be discussednext.
9.4.4.1 MONTHLY SAVINGS PATTERNS: "BEFORE" AND "AFTER" (see Table 68)
In termsof monthlysavings, Table 68 showsthat only 12.1percent of respondentsin the control group have savingsas much as M$10.00 and no one in the samplehad more in the "after" situation. On the other hand, 51.6 percent of the member householdshave savingof up to M$10 and 19.3 percent(15% + 3.5% + 8%) had in more that period.However, by comparingthe two groups,the memberhouseholds I-
300
have "extra" savings, i. e. the "compulsory weekly saving" in Ikhtiaes group funds owned by all the 254 members.
Table 69, shows that around 29.1 percent (74 cases)of the Ikhtiar membershave no personal saving after joining the programme, but they still have some savings in the form of "group savingsfund". The importance of "public" weekly saving as noted by Burkey (1993: 185) is that it "provides an enormous stimulus to the individual membersto make their saving efforts. The fact that the total savingsgrow weekly by an amount many times larger than the individual contribution provides a strong incentiveto continue the process".
Table 68 Average Monthly Savings Among the Respondents : Participants and the Control Group, "Before" and "After" Situations
Participants Control Group
Items Before After Before After (1989) (1992) (1989) (1992)
(N) % (N) % (N) % (N) %
No Savings 248 97.6 74 29.1 257 97.0 233 87.9
With Savings 6 2.4 180 70.9 8 3.0 32 12.1
M$10.00 32 12.1 and below 6 2.4 131 51.6 8 3.0
M$11.00 - M$20.00 38 15.0
M$21.00 - M$30.00 9 3.5
M$31.00 - and above 2 0.8
Total 254 100 254 100 265 100 265 100
Source: Field Data 301
9.4.4.2 TYPES OF SAVINGS (seeTable 69)
here does Type of savings not include the "compulsory weekly saving". The most popular types of savings are shown below in Table 69. Prior to joining the programme, the sample member households did not keep their savings in formal institutions. It was only after joining the Ikhtiar Programme that they have opened an account with some formal banking institution, most frequently the National Saving Bank. This was made possible by Ikhtiaes intervention. This has been confirmed by many respondents through infonnal discussions. Thus approaches to the formal banking sector by the member households is a very recent and an encouraging phenomenon.The most popular savingsinstitutions have been the "National Unit Trust Scheme"(ASB) [211 and the National SavingBank.
Table 69 : Types of Savings Among Participants and the Control Group : The "After" Situation.
Types of Savings Participants Control Group
(N) Percent (N) Percent ------1. National Unit Trust Scheme 82 45.5 24 60.0 (ASB]
2. National Saving Bank 136 75.5 12 30.0
3. Other means of savings 25 13.8 8 20.0
N refers to the number of respondents with savings. N- 180 (Programme Participants) and 40 (Control Group). Some respondents have two types of savings. Therefore N will not add up to 180 or 40.
From the above analysis,it can be concludedthat the Ikhtiar Programmehas (i) inculcatedthe habitof savingamongst member households, (ii) introducedmembers to formal banking institutions and (iii) positively introduced the innovative "weekly savings"through the group fund. The increasein the numberof Ikhtiar memberswith savingsis encouraging.This number has increasedfrom 2.4 percent (before the Programme)to 70.9 percent(as indicatedearlier in Table 67) sinceparticipants have joined the programme.On the other hand, the level of savingsamong the control 302
group has been very limited. The above findings seem to validate sub-hypotheses three and four respectivelyand therefore can be acceptedas true.
9.4.4.3 BORROWING HABITS (seeTables 70,71a, 71b, 72 and 73)
The respondentswere also asked (1) Whether they have any knowledge about the interest free loans offered with the government's backing of the Bank Pertanian Malaysia (Agricultural Bank) and (2) If they knew about theseloans, whether they had ever applied for them. The results are shown in Table 70 (question 1) and Tables 71a and 71b (question 2). Similarly they were also asked (3) whether they had ever borrowed from the other formal banking institutions. The results are shown in Table 72.
1. Borrowing from the Bank Pertanian (SeeTable 70,71a and 71b)
Table 70 below showsthat only 21.6 percent(58 respondents)of the Ikhtiar members and 7.5 percentof the control group (20 respondents)have knowledgeabout the interestfree loans from the Bank Pertanian.On the other hand,the majority of the respondentsfrom both groups, i. e. 78 percent (196 respondents)of the Ikhtiar membersand 92 percent(245 respondents)ofthe control group were not awareabout the interestfree loans from the BankPertanian.
Table 70 : Knowledge about the Interest Free Loans From the Bank Pertanian (Percent)
Partcipants Control Group
Percent (N) Percent
Yes 58 21.8 20 7.5
No 196 78.4 245 92.5
Total 254 100 265 100
In relationto Table 70, Table 71a and71b summarizeonly responsesof respondents (from both groups)who havethe knowledgeabout the interestfree loansfrom Bank Pertanian.From Table 71a as shownbelow, it is clearthat both the Ikhtiar members 303
and the control group have never had any accessto loans (i. e. never applied) from the Bank Pertanian(despite having the knowledge about the interest free loans).
Table 71(A) : Knowledge of Interest Free Loans and History of Applications (Percent)
Participants Control Group
(N) Percent (N) Percent
Have Applied 00 0 0 For the Loans
Never Apply 58 100 20 100 For the Loans
Total 58 100 20 100
Note: Only those respondents answering "Yes" in Table 70, are included in this Table
The mainreasons given by the 58 lkhtiar membersand 20 respondentsin the control groupfor not havingaccess to the interestfree loansof the Bank Pertanianare shown in Table 71b. Oneof the mainfactors that seemsto be a stumblingblock for the rural poor householdsfrom having accessto governmentloans is the requirementof guarantor.
Table 71(B) : Reason For not Borrowing From Bank Pertanian Among the Participants and Control Group
Participants Control Group
(N) Percent (N) Percent
Guarantor requirement 42 72.4 15 75
2. Tight procedures 5 8.6 is
3. Bank far away in the city 8 13.8 15
4. Not confident in getting loans 3 5.2 15
Total (N) 58 100 20 100
Note : This Table is only applicable to the same respondents as in Table 71A. 304
2. Borrowing From Other Formal Banking Institutions (seeTable 72)
Table 72, on the other hand, summarizesresponses from all the respondentsin both groups, whether they had ever applied for loans from other formal institutions. The results from Table 72 clearly shows that 100 percent of the member householdsfrom both groups have never had accessto loans from other formal banking institutions. Being shut off from formal banking institutions, most of the respondentshave resorted to the non-formal institutions and this is discussedwith the aid of Table 73.
Table 72 : Applied For Loans From Other Formal Banking Institutions, Participants and the Control Group (Percent)
Participants Control Group
(N) Percent (N) Percent
Yes 0000
No 254 100 265 100
Total 254 100 265 100
Source : Field Data
I Borrowing From the Non-Formal Sources (seeTable 73)
Table 73 showsthat relativeswere the mostpopular source of non-formalborrowing. In general,the moneywas borrowedmainly for unproductiveconsumption purposes from andloans ranged from aroundM$50.00 to M$150.00.An interestingobservation the Table 73 showsthat memberhouseholds stopped borrowing from non-formal loan sourcesafter joining the Ikhtiar Programme,as they have found the 1khtiar has schememore attractive.This trend seemsto suggestthat the Ikhtiar loan scheme has replacednon-formal sourcesof borrowing and therefore,to a certain extent, reducedthe role of the non-formalsources [221 of lendingamong the rural households in the studyarea. 305
Table 73 : Borrowing From Informal Institutions By the Respondents: "Before" and "After"
Participants Control Group
Before After Before After (1989) (1992) (1989) (1992)
(N) (N) (N) (N)
1. Did not borrow from informal 215 84.7 00 199 75.1 207 78.1 institutions
2. Borrowed from informal 39 15.3 00 66 24.9 58 21.9 institutions
a) Local Shopowner3 10 3.9 0072.6 7 2.6
b) Local Landlords 7 2.7 00 14 5.4 14 5.4
c) Relatives 22 8.7 00 45 16.9 37 13.9
d) Pawnshops
Sub-Total 39 15.3 00 66 24.9 58 21.9
overall Total 254 100 00 265 100 265 100
Source : Field Data
9.4.5 CONCLUSIONS
Significantchanges in the quality of life of the members'households have been observed.These include improvements in their housingconditions, possession of new in householditems (such as gas cookers,bicycles, motorcycles, etc. ), improvement householdexpenditures, and also increasesin the level of savings.These positive changesare unlikely to havebeen realized had it not beenfor the increasein income whichresulted from the utilization of theIkhtiar loans. On the otherhand, changes in the qualityof life amongthe controlgroup along four similarvariables has been marginal.
Findingsin thisstudy tend to validatethe first, second,third andfourth sub-hypotheses of HypothesisTwo. Hadit not beenfor the 'catalyst'in the form of Ikhtiar loansthat 306
have led to increasesin householdincomes of the participants,their quality of life havebeen be would expectedto moreor lesssimilar to that of the controlgroup.
9.5 FINDINGS OF THE ANALYSIS
From the above discussionswhich are divided into two sections, i.e. (i) the effectivenessof the Ikhtiar Programmeon increasingmember household incomes and (ii) on the qualityof life of the memberhouseholds, the majorfindings of the analysisin this chapterare as follows:
The Ikhtiar Programmeso far has been successfulin increasingthe incomeof its memberhouseholds and helpingthem to graduatefrom being "very poor" to "poor" (lesspoor) and also to "non-poor",i. e. out of poverty.Even thoughthe performance of its membersin crossingthe nationalpoverty line of M$375-00could be regardedas modest (around 22 percent of the samplehouseholds), it was neverthelessvery encouragingand a sign of a "good beginning".It would be unrealisticto expecta majorportion of the householdswho were, after all, very poor, to totally comeout of povertyin so shorta period.They have at leastgraduated from the "hard-corepoor" to "poor" (lesspoor) category.However, Ikhtiaes role in changingthe mind-setof the incurablepessimist has to be recognized.With subsequentloans (sincemost of the participantsare still on the first loan)from Ikhtiar, it is likely that manymore members will be ableto crossthe nationalpoverty line.
Similarlythe qualityof life shownthrough several development indicators of improved housingconditions, possession of householditems, household expenditures and in the level of savingshave also beensignificantly higher than that of the control group. It should also be noted that programmeparticipants were quite rational in making decisionsin relationto their increasesin income,where priorities were given towards savings, household expendituresand housing improvements.With respect to household expenditure, priority was given to items such as such food, apparel/footwear,education, health and transport. Member households have also been able to set aside some cash for savingson their own account, apart from the compulsoryweekly savingsin the Ikhtiar Group Fund. In the area of housing improvement, priority was given to basicamenities, namely in installingpiped water suppliesand electricity. 307
it hasbeen arguedthat in the poor rural households,even a small increasein income is enoughto createsome spin-off effects. On this, Farbman(1981: 35) argued that:
"The differencein earning a dollar a day can be regarded as dramatic where, for instance,children may be sent to school, the sick can see a doctor, the housing can be upgradedand somethingeven set asidefor saving".
Similarly Remenyi(1991: 106) addedthat:
"When one is living at the marginal of survival, earning around US$ 1.00 a day, an increasein earningcapacity of 50 cents a day represents substantial improvement in cash flow and the capacity to act on the range of economic choices available for investment, saving and consumption".
has From the abovediscussion we can safelyconclude that the Ikhtiar Programme broughtabout positive changes in the life of the rural householdswho were oncevery poor householdsand has made them less poor and,in somecases, brought them out of down for poverty.The prospectof further economicimprovement has been laid these very poor rural householdsof Baling.Thus, the Ikhtiar Programmeprovides some rays of hopefor thesevery poor rural householdsin their battleagainst poverty. 308
FOOTNOTES
In generalthe very poor rural householdsin the districts of Baling, based on the samplesof 519 households(both the Ikhtiar participants and the control group), received their incomes from various sources. However the main sources of income are from their main occupations, cash income from part-time occupations and cash income from transfers. The latter mainly take the form of remittancesfrom children and spousesworking outside, pensions,land rents and monetary assistancefrom the Welfare Department. Thus, the income received for thesetwo groups, as mentionedabove, is defined in this study as the Non-Ahliar Sources of Income. On the other hand, with the emergence of the Iutiar Programmethrough the provision of loans, the Ikhtiar member householdsalso have an additional sourcesof income, i. e. income derived specificallyfrom Ikhtiar project activities. Thus, income derived from Ikhtiar-financed project activities is defined as the Ikhtiar Sources of Income. Based on the above explanation,we can therefore make the following breakdown: 1. Control Group Income only from Non-1khtiar sources. 2. Ikhtiar Participants Income from (i) Non-Ahtiar Sources (ii) Ikhtiar Sources
For the programmeparticipants, their total householdincome is derivedfrom both the Ikhtiar andnon4khtiar sources. Sub- 2. "Groups"among the Ikhtiar membersthemselves, involved in the testingof hypothesisv ofBypothesisOne arehighlighted in sub-section9.3.1.
3. A joint study by SERU (Socio-EconomicResearch Unit in the Prime Ministees Department)and UKM (NationalUniversity of Malaysiain KualaLumpur)(1990: levels 84) on the profile of the very poor found that the averageincome of the very poor or poorestof the poor in ten selecteddistricts were as follows: District State Level of Incomes(M$) of the Poorestof the RuralHouseholds.
1. Perlis Perlis 157.00 2. PadangTerap (Balings neighboringdistrict) Kedah 161.00 3. Pendang(Baling! s neighboringdistrict) Kedah 141.00 4. Kerian Perak 156.00 5. Kuala Pilah N. Sembilan 111.00 6. Hulu Terengganu Terengganu 162.00 7. Besut Terengganu. 180.00 8. Kemaman Terengganu 212.00 9. Kota Bahru Kelantan 219.00 10 Bachok . Kelantan 172.00 309
Note: This studywas carriedout in the 1989/90period and was entitled"Socio- EconomicProfile of the Citizen: Poverty" which focussedon three groups of households,namely the poorestof the poor, the poor and the non-poorbased on the above10 districts,involving 10,745households in 146 villages.In relationto this study only the findingson the poorestof the poor categoryare highlighted above.The abovestudy is not a study of the Ikhtiar Programme.
Source: SERU, 1990a "Kajian Sosioekonomi Rakyat: Kemiskinan - SemenanjungMalaysia (10 daerah).
4. Inflation is taken to mean an increasein the general level of prices based on the ConsumerPrice Index (CPI). The inflation rates in Malaysia from 1970 to 1993 (Jusoh, 1989; Yahya, 1991; Kementerian Kewangan Malaysia, 1992; Malaysian Digest 1993) are as follows:
Year Inflation rate ( %) Year Inflation rate (%)
1970 1.9 1982 5.8 1971 1.6 1983 3.7 1972 3.2 1984 3.9 1973 10.5 1985 0.3 1974 2.5 1986 0.6 1975 2.6 1987 0.8 1976 2.6 1988 2.5 1977 4.8 1989 2.8 1978 4.9 1990 3.1 1979 3.6 1991 4.4 1980 6.6 1992 4.6 1981 9.7 1993 3.8
lowest The inflation rate in the Malaysiancontext can be regardedas amongthe %; when comparedto other developingcountries (such as Argentina = 174 Ecuador= 32.5 %; Mexico = 159 %; Zaire = 106 %; Turkey = 55 %; Peru = 1997 114.5% and Ghana= 34.2 %- all the valuesfor eachcountry is basedon situation) (Jazairyet al, 1992). MalaysiansGovernment has made a positive contributionwith its anti-inflationarymeasures to keep price increasesat the lowest possiblelevel and it includes(i) frequentenforcement and price checks includinga compulsoryprice-tagging exercise of all essentialretail items since (ii) June 1993 which has contributedto the moderationin price pressureand settingup a priceinformation centre to give consumersup-to-date information on pricesof goods.Government has stated its intentionof aimingto achievea zero inflationrate (Jusoh,1990; Asian Development Outlook, 1993;New StraitsTimes - August 1992,December 1993, August 1994;Malaysian Digest, 1993).Recently the MalaysianGovernment has abolishedthe import duties on more than 2600 food items (New StraitsTimes, 1994). This developmentseems to suggestthe seriousnessof the governmentin reducingand controlling inflation in this country. 310
5. As mentionedin Chapter 5, to be eligible for joining the Ikhtiar Programme, rural householdsneed to have a monthly income of not more than 2/3 of the official government poverty fine income (M$350.00 based on 1986/87 poverty line) or M$250.00 per month or a M$50.00 per capita monthly income when the Ikhtiar Programme made it debuts in Malaysia during those period. In 1992/93 period, the nationalPLI has increasedto M$375.00, but the Ikhtiar Organizationhas stick to the original hard-core poverty line of M$250.00 in the selection of participants and all official matters. It has been noted by the Ikhtiar official that the hard-core poverty line of M$250.00 will be adjusted in the near future. As a result of this, this study has used the hard-core poverty line of M$250.00 for both 1989 and 1992 periods.
6. The M$375.00 National Poverty Line is similar to the Poverty fine used by IkhtiaesIn-House Impact Evaluation Study 3. Howevertheir final analysisof the Impact Study 3 has yet to be madeavailable. For a detaileddiscussion on the povertyline incomein the Malaysiancontext, see Chapter 4.
7. Theseissues of supportingservices/extension services and other relatedissues are takenup againin Chapters10 and 12.
8. On the basisof evidencein Africa, it hasbeen tentatively suggestedthat a dollar increasein agriculturalincome may generatean additional50 centsin non-farm goodsand services by the rural non-farmentrepreneurs (jazairy et al, 1992).Thus thereis someform of linkagebetween the farm andnon-farm sectors. Due to time in and financialconstraints such linkages (multipliers) in Baling were not studied this study. in detail in 9. As in footnote 7 the issueof supportingservices is taken up again Chapter10 andChapter 12. lower 10. It is interestingto investigatewhy the householdincomes in this studywere than householdincomes obtained in the Ikhtiaes internal and SERUs studies. be: Findingsseem to suggestthat the possibleexplanation could perhaps districts Northwest (a) Impact studiesI and 2 were conductedonly in the of is to the Selangorand SeberangPerai (in Penang).Seberang Perai very near city in Perai. of Georgetownin Penangand the industrial area of Mak-Mandin Similarly,Northwest Selangor is very nearto the capitalcity of KualaLumpur and has the industrialarea of Mang valley, Selangor.On this, 1khtiarofficial noted in Penangfor (Kasim,1990) that the existenceof incomegenerating opportunities instanceare much higher compared to Bating.
(b) Impact study 3 as mentionedin Chapter5 was only a preliminaryanalysis. loans Howeverthis studyhad a sampleborrowers who hadutilized the maximum in i.e. the maximumloan of M$2000.00in the ILS I and includedborrowers the first to the sixth cycleof loans.As noted in sub-section9.3.1, there seemsto be it positive correlation betweenthe level of income and the number of loans disbursements.Borrowers in Bating as the presentstudy indicates only involved borrowersin their first (M$500.00)and second (M$1000.00) cycles of loans. 311
(c) SERUs included study,while a very smallsample of borrowersin the districts Sik in Kedah of Baling and (as mentionedin Chapter5), tendsto focus in sample borrowers the district of SeberangPerai in Penangand Northwest Selangor, 92 as nearly percentof the samplehouseholds of their study were from thesetwo districts includedborrowers in and also the third and subsequentcycles of loans. perhapsthe earlier explanationof the Ikhtiar official regardingthe existenceof income generatingactivities opportunities which are much higher in the richer districtthan in Baling couldalso be appliedhere.
11. in addition, other studies on the credit-based income generation programines households amongthe very poor in other developing countries,have shownthat it was associated with an increase of its participants, incomes are (a) BRAC (Bangladesh Rural Advancement Committee): average impact on income increasedin the range of 25 percent (rice n-diling)to 250 percent (small trading), (b) MBM (Bridge to Progress) in Bali, Indonesia: averageincrease in income of borrowers exceed30 percent, (c) CCDB (Christian Comn-dssionfor Development in Bangladesh):average increase in income of borrowers exceeds25 percent, (d) PBSP (Philippines Business for Social Progress): average increase in income exceedby 33 percent,(e) World Vision in India: averageincrease in income by more than 160 percent (Remenyi, 1991) and (0 MYRADA (Mysore Settlement and Development Agency) in India: increasedin income ranged from 30 percent to 50 percent and in some cases 100 percent within I to 2 years (Banking with Poor, 1992).
12. A goodexample to illustratethis is the caseof first time borrowerwho hadleased rubberland with an 1khtiarloan. After payinga lump-sumof M$450,she and her husbandnow "own" the land for the agreedleasing period. During the household survey,she provided to the author the following written record of their net incomederived from the tappingof rubberfor a period of 12 months(an extract from her own hand-writing):
October 1991 =M $98.00(rainy season) November 1991 = M$167.00(still somerainy season) December 1991 = M$295.00 January 1992 = M$338-00 February 1992 = M$257-00 March 1992 = M$249.00 April 1992 = M$157.00(some rain) May 1992 = M$188.00(some rain) June 1992 = M$245.00 July 1992 = M$199-00 August 1992 = M$188.00 September 1992 = M$218.00
Their other sourceof Non-1khtiarincome on averageper month was around M$85.00.Therefore in generaltheir averagemonthly income was: M$216-59 1. Ikhtiar sources = M$2599divided by 12 monthsis equalto per month. 312
2. Non-1khtiarsources = M$85.00per month. 3. Overalltotal (I + 2) = M301.66per month.
However if this household had remained in sharecropping, their income of M$216.58 "would hasbeen reducedby half'.
13. The better quality goods that have attracted more customerswho, as a result, do not haveto travel to the nearbytown, include: 1. "Western" type food, Ekejam and peanutbutter; 2. Cigarettes,well known brands such as Dunhill and Rothman; 3. Condensedmilk, well known brands such as Dutch Baby and F and N; 4. Toilet soap,well known brands such as Lux and Palmolive. 5. Toothpaste,well known brands such as Colgate, Close-Up and Darlie; 6. Varieties of "instant" noodles,notably "Maggi" brand; 7. Chocolateand biscuitsPand. 8. Other daily needs,such as rice,,sugar,, flour and cooking oil.
14. The methodof collectingdata for the housingconditions of the control group for the "before"situation is givenin Footnotes14 and 15 in Chapter 6.
15. It needsto be mentionedhere that the increasein percentagefor every item as fistedin Table 63 (i. e. items I to 9) was basedon the increaseof percentagethat We had taken placefor every individualitem betweenthe two periodsof time. instancein 1989 will take oneexample here as an illustration- electricity.For only In 1992, 48.4 percentof the Ikhtiar householdshave an electricityin their houses. in an additional28 percentof the samplehouseholds have installed electricity their houses.Thus in 1992,76.4percent (i. e. 48.4 percent+ 28 percent)of the member 63 householdshave electricity in their houses.Other item as listed in Table was computedsimilarly based on this particularexample. Some household members listed in may have changesin more than I item of their housingconditions as Table63.
16. It needsto be stressedhere that itemssuch as radiosbeds, cupboards and gas in Baling, stoveswhich are gaining in popularityamong the poor rural households (below25 areitems that are quite cheap and affordable, costing less than M$100 basis, pounds).Most of theseitems were bought on aninstalment payableover a periodof I to 2 years.Items such as irons, for instanceare much cheaper, costing lessthan M$50.00 (below 13 Pounds for thecheaper brand name). data 17. The questionnairedesign for the collection of the householdexpenditure inclusion basedon food and non-food items in this study benefitsfrom the of Malaysian standarditems used in the HouseholdIncome Survey (RIS) by the Government'sDepartment of Statistics.These are as follows:
The Food Items: Thebroad categories of food itemsinclude rice, breadand other cereal,meat fish, milk, oil and fat, fruit and vegetable,sugar, coffee, tea, cocoa andother foods. 313
The Non-Food Items: Includes beveragesand tobacco, medical care and expenses,education, recreation and entertairunent,clothing and footwear, furnitureand household equipment, rent, fuel, transportand communicationand miscellaneousand services.
18. As mentionedin the text, the household'smonthly expenditureon food was collectedbased on a one month period, preceedingthe householdsurvey. The figures obtainedhave been multiplied by 12 to get expendituresfor the year. While recognizingthat the informationmay suffer from seasonalvariations on food expenditures,informal discussions with the respondentsand the opportunity of staying in the village during the survey period suggeststhat expenditure patternson food were quite uniform throughout the year (12 months)under study.This methodwas also used by Hossain(1988) in his study on Grameen Bank, but he had collectedthe expendituredata on food for the week preceding the householdsurvey, and the figures have been multiplied by 52 to get expendituresfor the year.
19. This methodis alsosimilar to Hossaids(1988) analysis of the expenditureson the non-fooditems was based on a oneyear period (similar study as noted in footnote 18). Ardalesand David (1986), in a study on poverty in the Philippines,used a similarapproach to Hossainand the authoesmethods. Ardales and David, in their study had askedthe respondentsto give estimatesof their expensesfor their childrereseducation and medical care of their householdmembers for a periodof I year.
20. In generalthe poor rural householdsare definedas comprisingthose who earn insufficientincome to pay for a minimumnutritional and non-foodrequirement in order to sustaina decentstandard of living. The three caseswere Malaysia: Ahmad (1982) and Mohamed (1983) who definethe poor householdas those householdsearning a monthly incomes of below M$250-00 and M$255.00 respectively(based on poverty line income for the 1981 and 1982 period respectively),The ]Philippines:Ardales and David definethe poor householdas those earningsper capitaare below P83.33(Pesos) per month (basedon 1983 povertyline income)and Bangladesh: The poor householdswere thoseearning a per capita income of TK291.00 per month (basedon 1984/85 poverty line income).
21. The ASN, or the "National Unit Trust Scheme",is run with the backing of governmentwhich encouragespoor people,especially the rural population,to take the opportunityto participatein the sharemarket. Syed Salem and Othman (1992)noted that in a periodof 10years (since it was launchedin 1981),the ASN schemehas mobilized more than M$10,000 million from 2.5 million Bumiputra.A substantialnumber of its unit-holders(80 percent) are those from the lower incomegroups like farmers,fishermen, Felda settlers and manual workers.
22. The sourceof informalloans was not investigatedin detailby the author. 314
CHAPTER 10: ON REACHING POOR HOUSEHOLDS AND PERCEPTION OF MEMBERS TOWARDS THE IKIITIAR PROGRAMME
10.1 INTRODUCTION
This chapter deals with the analysis of the 1khtiar Programme from two aspects, namely (i) on reaching the target group as stated in Objective number 4 and (ii) the perception of the programme participants towards the Iklitiar Programmeas stated in Objective number 5. As such this chapter is divide into two sections.Section One deals with aspect(i) and section Two with aspect(ii).
10.2 SECTION ONE: ON REACH ING Til E TARGET GROUP IN THE STUDY AREA
As mentionedin Chapter5, the Iklitiar Programmewas establishedwith the sole purposeof assistingvery rural householdsto lift themselvesout of poverty,primarily by meansof its benevolentloans to be usedfor financingincome-generating activities. Thus, the Iklitiar Programmeis targetedat the very poor rural householdsfor the improvementof their socio-economicconditions.
However,there is a generalfeeling that underexisting socio-economic conditions, it is difficult to reach the'poor with resourcesfor development.As we have seen in Chapters2,3 and 4, the general experiencefor most developingcountries and Malaysia,was that the poor havereceived very little or no benefitsfrom government- sponsoredrural credit programmesor otherrural developmentprogrammes. In relation to this it is importantto examine,whether and to what extentthe Ikhtiar Programme hasbeen effective in reachingthe targetgroup in the studyarea, Baling.
It is the purpose of this section to test the third hypothesisthat "The Ikhtiar Programme, or the AmanahIkhtiar rural credit-cumpoverty alleviationprogramme, hasbeen in effective reachingvery poor rural households(its targetgroup) becausethe programmeis designed exclusivelyfor the very poor and implementedthrough a speciallydesigned delivery system" 315
The hypothesiswiU be testedby two sub-hypotheses:
The Ikhtiar Programme has its reached target group, consisting of the eligible poor rural householdsin the study area. r0i), The non-eligiblerural householdshave been effectively excluded from the Ikhtiar Programmein the studyarea.
10.2.1 ON BECOM[NG IECHalARPARTICEPANTS
Thevery natureof the Ikhtiar Programmesuggests that theremust be an effectiveway of identifyingthe very poor rural householdsin an accuratemanner. In the caseof Bangladesh,this is not difficult, asmaybe 80 percentof rural householdsare very poor andthe poorestamong them are the 50 to 60 percentof the rural householdswho have no land at all. In such a situation, a rigorous meanstest is not really necessary. Grameedsworkers have only to checkthe land holdings,occupation and assetsof householdmembers to determinepoverty.
Howeverin Malaysia,where there are more opportunitiesfor earningincome, the task of identifyingthe eligiblehouseholds is more complex.As a result a rigorousmeans test is required.This is merelyto preventleakage to non-poor householdsand to enablethe programmeto start at the bottom with the poorestof the poor. As such,in the Ikhtiar Programme,a speciallydesigned mechanism of checkinghas been instituted to screenthe poor rangingfrom a housingindex, a meanstest and interview (see Chapter 5 for detailon Ikhtiaesspecially designed delivery system and their approach in identifyingpoor rural households).
In general,a particularhousehold is regardedas meetingAINfs "first requirement" whentheir housing index score obtained by a particularrural household is lessthan 10 points(see Chapter 9). Anotherbasic requirement (which is in factthe main factor) is that householdincome be lessthan M$250.00 per monthor per capitaincome of less thanM$50.00. 316
10.2.2 RESULT OF THE FINDINGS
10.2.2.1 THE PROGRAMME PARTICIPANTS
254 respondentswere interviewed in the household survey and this study needs to know whether these members!households (selected by the Ikhtiar Organization) were eligible and rightly selectedto join the programme.This will be done by analyzingtheir housing index scores and household incomes for the "before" situation, i. e. prior to joining the programme.
1. Crude Housing Index (seeTable 74)
Dased on the crude housing index measure,90.5 percent of the members'households have obtained 10 points and below. On averagetheir score was'7.09 points (as shown in Table 74. Statistics from Table 74, thus suggestthat'9.5 percent of the members have scores of slightly above 10 points and were acceptedinto the programme after making an appeal to Ikhtiar Organization. The majority of sample members were deemedeligible and met the requirement.
Table74: CrudeHousing Index Score: Ikhtiar MemberHouseholds Prior to Joiningthe Ikhtiar Programme
Score Frequency Percent (Point) (N)
1 2 0.8 2 2 0.8 3 17 6.7 4 19 7.5 5 27 10.6 6 31 12.2 7 56 22.0 8 17 6.7 9 44 17.3 10 15 5.9 11 18 7.1 12 4 1.6 13 2 0.8
Total 254 100 317
2. Household Income (seeTables 75 and 76)
Based on the cut-off point of M$250.00 income per month obtained by a particular household,stuvey findings show that 100 percent of the 254 sample members have met AIMs income requirement(see Table 75). By looking at the per capita income (seeTable 76), it is seenthat 5 percent of the householdshad per capita incomes of aboveM$50.00 per month. By using both the household and the per capita income, it suggeststhat majority of samplemembers were eligible. Ikhtiar has thus been effective in the selectionof only the eligible householdsin joining their programme.
3. Land Ownership (seeTable 77)
It is alsonecessary for us to seethe statusof the memberhouseholds in termsof their land-ownership.Table 77 shows that 68.1 percent are landlessand 31.9 percent ownedsome land. However, the size of land for those who owned was below 0.5 hectarewhich is well below the nationalaverage of 2 hectaresand also below the economicalsize of 4 hectaresand above 111. The "before"and "after" situationsof land ownershipdo not show any difference.This obviouslyhad nothing to do with the Ikhtiar Programmeintervention, because had the borrowers'position been different, suchas havingmore land, they may not have qualifiedto join the programme.This againshows that not only the memberhouseholds have low housingindex and low incomeprior to joining the programme,they were alsoland poor. At this juncturethe third hypothesisseems to be valid but it is interestingto elaboratefurther and alsoto corWderthe controlgroup.
Furtheranalysis shows that by November1993 (as mentionedin Chapter7), Baling I hada total of 1428Ikhtiar members.AWs target is for everybranch to haveat least 2000members. As suchAIM has(by November1993) covered around 71.4 percentof its targetin Baling 1. Suchachievement in terms of membershipis very encouraging andwas in fact the highestin termsof numberof members,based on all the 34 Ikhtiar branchescurrently in operation.Based on this observation,there is the possibilityof the 2000 targetbeing exceeded in the nearfuture in the study area.Thus for a new Programmeto reachthe 24,834very poor rural householdsthroughout the country and 1429in Baling 1, providingthem with an opportunityto improvetheir economic conditions,can be regardedas a significantachievement. 318
Table75 : Ikhtiar MemberHouseholds' Income Per Month Prior to Joiningthe Ikhtiar Programme (Percent)
(M$) Frequency Percent (N)
250 and Below 254 100
251- 375
376 andAbove
Total 254 100
Average Income = M$165.00
Source: Field Data
Table76: Ikhtiar MemberHouseholde Per CapitaIncome (Monthly)Prior to Joiningthe Ikhtiar Programme (Percent)
(M$) Frequency Percent (N)
50.00and Below 241 94.9
51.00- 75.00 9 3.5
76.00and above 4 1.6
Total 254 100
AveragePer CapitaIncome = M$29.00
Source:Field Data 319
Table77: Land OwnershipAmong the Ikhtiar MemberHouseholds, "Before" and "After" Situations
Before After
Size Frequency Percent Frequency Percent (Hectare) (N) (N)
Landless 173 68.1 173 68.1
0.01-0.24 69 27.2 69 27.2
0.25-0.49 12 4.7 12 4.7
0.5 and Above
Source: Field Data 320
10.2.2.2 THE CONTROL GROUP
Next we turn to see to what extent the control group (Ikhtiaes potential or future member households,which we have seen in Chapter 8) has been approached and encouragedto join the Ikhtiar Programme.In relation to this, severalrelated questions needto be asked:
1. Whether they havebeen approached by Ikhtiar staff explaining and encouraging themto join the programme? 2. How theycome to know aboutthe Ikhtiar Programme? 3. Whetherthey are interested in joining the programme? 4. Whatis their mainreason for beinginterested in joining?
In relationto these,the generalbackground of the housingindex score, household incomeand ownershipof land, will alsobe notedby meansof Tables 78,79 80 and 81.
All the 265 samplerespondents of the controlgroup were askedwhether they hadbeen approachedby Ikhtiar staff, explainingthe conceptof the Ikhtiar Programmeand encouragingthem to join. The findingsshow that all the 265 respondentshave been approachedby Ikhtiar staff.
Theywere also asked how they cameto know aboutthe Ikhtiar Programmein the first placeand the resultsare shown below:
1. ThroughIkhtiar staff = 171(64.51/6) 2. Throughfiiends = 79 (29.81/6) 3 Throughthe massmedia = 15 (5.7%)
The aboveresults suggest that Ikhtiar staff havebeen instrumental in promotingthe new concept of Ikhtiar in Baling I among the potential members-to-be.More importantly,all the 265 respondentshave been approached and encouragedbY Ikhtiar staffto join the programme.
The respondentsin the control groupwere alsoasked whether they were interestedin joining the Ikhtiar Programme.The findingsshow that 76.2 percent(202 respondents) interested were in joining, while 23.8 percent(63 respondents)were not keen.Of the 202 respondents(76.2 percent) who indicatedtheir interest in becoming Ikhtiar members,the breakdownsare asfollows: 321
1. WiU be joining the programmein the very near future - 104 (51.5%) 2. SO observingthe programme = 77 (38.1%) 3. Undecided(wait and see) = 21 (10.4%)
On the other hand,63 respondents(23.8 percent) who were not keen in joiining lkhtiar Programme gavethe Mowing reasons:
1. Hope to get assistancefrom the governmenVsPPRT programme 8 (12.7%) 2. Do not like AIWs rules and procedures 9 (14.3%) 3. Do not wantto borrowany money 18(28.6%) 4. Do not haveany activities to carryout with Ikhtiar loans 11 (17.5%) 5. Not confidentof repayingloans 17 (26.9%)
With this brief backgroundof the control group we win turn to analyzewhether the 265 samplerespondents have met AIWs basicrequirements by reviewingtheir housing index,household income and land ownership.
1. Crude HousingIndex (seeTable 78)
The "before"situation for the housingindex score,as indicatedin Table 78 showsthat 91.3 percentof the control group had obtaineda scoreof 10 points and below. The figure went down to 86.4 percentfor the "after" eituation.Thus 13.6 percentof the potentialmembers would haveto makean appealif they were interestedin becoming Ikhtiarmembers. However, Ikhtiar also reviews their household incomes.
2. HouseholdIncome (see Tables 79 and 80)
Table 79 showsthat all the respondents(100 Percent)in the control group havea monthlyhousehold income of lessthan M$250.00 for the "before"and 99.6 percentfor the "after" situations.On the other hand, 100 percentof the respondents,as shownin Table 80 hada per capitaincome of M$50.00 andbelow for the two periods.LDoking back at the Ikhtiar members(as aiscussedearlier, in sub-section10.2.2.1), there werealso some members who hadobtained a housingindex score of slightlymore than 10 points,but, were still eligibleto becomeIkhtiar membersby virtue of havinglow householdincomes and passing the interviewsessions.
evAE,ff JELD
LlBwAl 322
Table 78 Crude Housing Index Score : Control Group For the "Before" and "After" Situations
Before After
Score Frequency Percent Frequency Percent (Point)
1 9 3.4 7 2.6 2 1 0.4 1 0.4 3 15 5.7 12 4.5 4 is 6.8 7 2.6 5 40 15.1 19 7.2 6 13 4.9 16 6.0 7 53 20.0 41 15.5 8 10 3.8 10 3.8 9 70 26.4 101 38.1 10 13 4.9 14 5.3
11 23 8.7 36 13.6 12 - - - -
Mean Point 7.06 7.88
Source:Field Data
Table79: ControlGroup Households Income Per Month: "Before" and"After" Situations
Income(M$) Before After
Frequency Percent Frequency Percent (N) (N)
250 andBelow 265 100 264 99.6
251-375 1 0.4
376 andAbove
AverageIncome M$158.00 M$181.00
Source:Field Data 323
Table 80 : Control Group : Per Capita Income (Monthly) For the "Before" and "After" Situations
Income (M$) Before After
Frequency Percent Frequency Percent (N) (N)
Below 50.00 265 100 264 99.6
37.00 - 50.00 --10.4
51.00 and Above --
AverageIncome M$28.00 M$31.00
Source: Field Data
Table81 Land OwnershipAmong the Control Group : "Before" and "After" Situations
Before After
Size Frequency Percent Frequency Percent (Hectare) (N) (N)
Landless 147 55.5 147 55.5
0.01-0.24 102 38.5 102 38.5
0.25-0.49 16 6.0 16 6.0
0.50 and Above ---
Source: Field Data 324
However,"preliminary" eligibility of havinga low housingindex and low incomesare not a good guaranteeof becomingIkhtiar members.This is because"eligible" householdshave to be interviewedbefore being acceptedofficially into the Ikhtiar Progmmme.
3. lAnd Ownership (seeTable 81)
Land ownershipinformation is summarizedin Table 81. The result suggeststhat 55.5 percent of the householdsin the control group are completely landless. Of the 44.5 percentof the householdswho owned some landýthe size is small (below 0.5 hectare). Thus apart from having low income and poor housing conditions, the control group is alsoland poor.
10.2.3 The Validity of the Hypothesis and Sub-hypotheses
Fromthe aboveobservations, it hasbeen shown that the 254 memberhouseholds who are the existingmembers of the Ikhtiar Programmewere thosewho were eligibleand rightly selected,by virtue of meetingAIM basic requirementof low housingindex andlow income.In additionthey were alsolandless and own uneconomicalamounts of land. Similarly,the 265 respondentsin the control group who are the potential membersof the Ikhtiar Programmealso shareda similar economiccondition with Ikhtiar members.
However,households in the control group who are deemedeligible,, have to be thoroughlyscreened and interviewedif they are interestedin becomingIkhtiar members.Thus there is no chanceof membershipbeing extended to non-deserving households.
Basedon the abovefindings, we can thereforeconclude that the Ikhtiar programme has succeededin reachingthe right target group, i. e. the 254 genumepoor rural householdsbased on their eligibility criteria.It has effectivelyeliminated the non-poor from becomingmembers. At the sametime Ikhtiar has also been instrumentalin pushingits programmeaggressively to manymore poor ruýralhouseholds in the study areaas suggested through the sampleof the 265 respondentsin the controlgroup, Who have been approachedand encouragedto join the programme.Thus the third hYPOthesýls along 'with sub-hypothesesone and two were found to be valid and thereforecan be accepted. 325
Someof the fitctorsthat havecontributed to the effectivenessof the lkhtiar approach in reachingthe "right" targetgroup (as describedin detailin Chapter5) were: i) Through the approachof sending the Branch Manager alone in first instance to study the situation in Baling before opening the branch. The crude housing index measureand householdincome and other related information of householdswere alsothoroughly studied. All the very poor rural householdsthat are deemedeligible are also subjectedto an interview sessionby the senior membersbefore being accepted.Thus the filteringprocess is usedto weedout the unwantedelements, i. e. the non-eligiblehouseholds. The Ikhtiar Organizationdoes not want its programme to be seizedby the betteroff rural households.
R) The formationof the groupand centreconcept along with the compulsoryweekly meetingalso act as a naturalfilter as it helpsto keep out the economicallybetter off. Groupformation in generalprovides an opportunityfor theBranch Manager to verify furtherthe householdand incomeinformation of eachhousehold from the othermembers and this may evenweed out undesirableelements or "unqualified" persons.The selectionprocess is thereforeclosely monitored. As tightly arguedby Jazairyet al (1992:350):
"NGOs can help to reach the poor communities,but unlessthere is closemonitoring, opportunities may still be seizedby local eliteswho are in a better positionto take advantage,thus capturingor co-optingsome of the benefitsintended for the poor".
Fromthe above observation, it is importantto notethat in reachingthe target group in any povertyprogramme, defining the poor aloneis not enough,unless they are properlyidentified, which as Bhatt (1991: 32) putsit:
"Defining the poor is important but at the actual operationallevel, to identify the personwho fulfills the criteria and include that person and nobody else is equallyimportant. Most large governmentprogrammes like IRDP in India have failed in this. The non-poor somehowsmuggle themselves in".
We cantherefore conclude that thd ikhfiar Programmehas succeededin reachingits targetgroup and also has been instrumental in persuadingmany more rural households to becomemembers. 326
10.3 ON RECEIVING GOVERNMENT ASSISTANCE
In the poverty alleviation programme executed by the government, a variety of approachesto assistancehave been given and the main ones are listed in Table 82. This information was basedon the household survey of the 519 respondents(265 in control group and 254 in the programmegroup).
Basedon the information given in Table 82, it has shown that the majority of the very poor rural households children of school age have received assistance from the governmentunder the free school textbook scheme,amounting to 78.9 percent for the control group families and 66.2 percent for Ikhtiar member households. Another elementof assistancewas the toilet and piped water schemewhere the figure benefiting stood at 24.2 percent of the control group households and 19.3 percent of the lkhtiar members.
For other forms of assistance,the percentagebenefiting was below 15 percent. These figures show that government assistance that has reached the very poor rural householdin the District of Baling I were rather minimal. Thus the filtering down processof government assistancewas not widespread enough since the benefits did not reach a bigger spectrum of the target group. This finding seemsto support an earlier finding by SERU and UKM (1990) joint study in two neighboring districts of Baling, i. e. District of Pendang and Padang Terap, which noted that government assistance(quite similar to the list in Table 82) has only reacheda very tiny portion of the very poor rural householdsin the two districts. On the other hand, the assistance was also being received by the non-poor even though it was from the outset being targetedonly at the "very poor" and "poor" households.
Similarly,a study by Sail (1992), in the State of Selangor,Malaysia, shows that smallholdersdid not receive any specific extensionservices. Dixon (1990) and Naftinger(1990) also noted that experiencesin manydeveloping countries show that governmentassistance in the form of extensionprogrammes have not beensuccessful in reachingthe pooresthouseholds. Table 82: Respondents That Received Government Assistance
Participant Control Group
(NUMBER) Percent (N) (NUMBER) Percent (N)
1. Social Welfare 3 4.0 75 5 4.3 115
2. Toilet/Piped Water Scheme 49 19.3 254 64 24.2 265
3. Mother/Child Milk Scheme 11 8.2 135 17 11.7 145
4. Small Business Programme 0 0 254 0 0 265
5. Livestock Project 2 0.8 254 7 2.6 265
6. Fertiliser Scheme 25 14.8 168 19 10.6 178
7. Rubber Replanting 6 9.2 65 9 11.1 81 Grant
8. Agricultural Extension 31 12.2 254 23 8.7 265 Services
9. Housing Renovation 9 3.5 254 17 6.4 265 Programme
10. School's Text Book 137 66.2 207 176 78.9 223 Scheme
Notes: "N" is referred to the total of sample, i. e. those who are eligibile for each type of the assistance (as in items 1 -10) and are included i n this Table. "NUMBER" ref ers to the number of respondents f rom "N" who had received the a ssistance (as in items 1- 10). It needs to be mentioned that, for instance, in the "school is textbook scheme", assistance applicable only to respondents with children of school age. Respondents without children of school age are therefore not included in this Table. similarly rubber replanting grants are applicable only to those with land. Some rubber repondents may receive more than one type of assistance. 328
Fromthe aboveanalysis we can concludethat the Ikhtiar memberhouseholds as well as the control groupbelong to the very poor rural householdcategory, but were not majorbeneficiaries of governmentassistance or programmes.The Ikhtiar Programme, despitebeing a "newcomer"in the areaof poverty alleviation,has beeneffective and hassuccessfully accomplished its missionof reachingonly its targetgroup, giving them the opportunity to improve their economic position.
10.4 SECTION TWO: PERCEPTION AND ATTITUDES OF IKHTIAR MEMBERS TOWARDS THE IKHTIAR PROGRAMME.
10.4.1 INTRODUCTION
This sectionexplores the perceptionsof the 254 Ikhtiar membersincluded in the householdsurvey towards the Ikhtiar Programme in which they have been participating.This sectionwill highlightthe following aspectsof members'perceptions on (i) the Ikhtiar Programme,(ii) Ikhtiaes conceptof group/centreformation, group responsibilityand close supervision,(iii) Ikhtiar's ruling on loan utilization, (iv) the working relationshipsbetween Ikhtiar participantsand the staff and (v) whether Ikhtiar-financedproject activities are sustainablewithout furtherloans.
In addition,two other aspectsrelating to the aboveperceptions will alsobe discussed andthese are (vi) problemsfaced by Ikhtiar membersand (vii) members'suggestions towardsthe overallimprovement of the Ikhtiar Programmein future 121.
10.4.2 THE MEASURING INSTRUMENT
This sectionwill explorethe opinionsof the membersregarding certain issues relating to the Ikhtiar Programme.These opinions were solicitedin the surveythrough the use of questionsincorporating a three-stagecontinuum scale. Certain open-ended questionswere includedso respondentscould be free to statetheir opinions.Answers basedon the three-stagecontinuum scale limits participantsresponses where extremity and intensitytowards certain issuesexist. The main reasonfor using this approach follows the suggestionby Mohamed(1982) that it is difficult for rural inhabitantsto intensity express of opinion towardscertain issues. This was found to be true in this Nicol casestudy. (1991) noted that respondentsmay even answerwithout using the 329
scaleas intended;they could even fail to see the scale as a range of attitudes along a single dimension.He further added that it is advisableto explore attitudes through in- depth case studies as well as structured interviews plus informal discussions.These suggestionswere kept in mind when dealing with the Ikhtiar membersin the household survey.
10.4.2.1 PERCEPTION OF MEMBERS TOWARDS THE IKHTIAR PROGRAMME
Table 83 and Table 84 summarize the information on the perception of Ikhtiar memberstowards the programme.Table 83 shows that 100 percent of the participants have a positive or favorable perceptions towards the lkhtiar Programme. Table 84 providesa summaryof the main reasonswhy the Ikhtiar Programmehas been regarded as good by its members
44.5 percent of the respondentsthought that AIM was very keen in helping the poor towards a better life. In relation to this, 31.5 percent thought that AIM had been providing loans to the needy with a suitable rules and procedures,which made them feel that this was somethingwhich was hard to accept in the first instance.Many of the respondentsargued that they have virtually been excluded from the institutional credit sources.This was due to the fact that they do not have the assets to provide as collateral against which the loan could be granted. Ikhtiar has reversed this by providing loans to very poor householdswithout any collateral. 11 percent of the respondentsthought that Ikhtiar had made it easyfor them through a simple systemof weekly repayments.8.3 percent were happy that Ikhtiar had also provided school loans. 2.8 percent of the respondentsthought that getting loans from Ikhtiar was easy comparedto other financial institutions. Meanwhile 1.9 percent were looking forward to applyingfor housingloans in the nearfuture.
10.4.2.2 PERCEPTION OF THE MEMBERS TOWARDS IKIITIAR'S CONCEPTS OF GROUP/CENTRE UNION, RESPONSIBILITY AND SUPERVISION
In an attempt to assesswhat the respondentsthoughts on the Ikhtiar concepts of group/centreunion, group responsibility and supervision,this study tried to extract the respondentsperceptions on 3 counts, basedprimarily on whether items as listed in 330
Table 85 posedany problemsto them. Questionswere in the form of statements.Each respondent was required to state whether they "agreed", "disagreed" or were "undecided".The responsesare summarizedin Table 85.
From information provided in Table 85, an average of 93 percent of the Ikhtiar membershave positive or favorable perceptions towards the items listed in Table 85 (i. e. items 1 (920/6),2 (89%), 3 (95%) and 4 (96%)). This suggeststhat the concepts, as listed, did not pose any problem to the members.
The conceptof group/centreunion and also group responsibility in replacing collateral requirements,along with close supervisionof membersby Ikhtiar staff in pursuing their income-generatingactivities have actually made a great contribution. Since loans are only to be used for income generationpurposes, malpractices or misuse of loans have been totally eliminatedthrough close supervision by Ikhtiar staff and close "Policing" by membersover each other. The result (as describedin Chapter 9) was the increasein incomeand improvementin the quality of life of the participants. The concept of group membershipwhich encouragespeer interest seemsto work and this was shown by the (see fact that the repaymentrate has been very impressive- around 99 percent Chapter 5 for the macro-leveland Chapter 7 for the micro-level repaymentachievements).
Table83 : Perceptionof Ikhtiar MembersTowards the Ikhtiar Programme.
Perception Frequency Percentage
1. Very Good 159 62.0
2. Good 95 38.0
3. No Good
254 100
Source: Field Data 331
Table 84: ReasonsFor Saying Ikhtiar Programmeis Very Good or Good
Codes Reasons Frequency Percent (N)
1. AIM is very keen to help the very poor 113 44.5 rural householdstowards a better life.
2. AIM provides loanswith suitablerules 80 31.5 and procedures.
3. The repaymentof loans is very easy. 28 11.0
4. AIM provides school loans for the members 21 8.3 school-agedchildren.
5. Easyto get loans. 7 2.8
6. Housing improvementloan is also available. 5 1.9
254 100
Source: Field Data
Not e This Table is based on an 'open-ended' question. (See question 40 of Questionnairein Appendix 6a). Similar answersgiven by respondentsare grouped into codes I to 6. 332
Table 85 : Perceptionof Ikhtiar Members Towards the Concept of Group/Centre Union, Responsibility and Supervision (Percent)
Perceptions
Statement "Agreed" "Disagreed" "Undecided"
1. "Close supervision of 5 person per group 92% 6% 2% does not raise any problem".
2. "Combining the group into centre does not 89% 8% 3% raise any problem".
3. "Group responsibility as a way of policing each member while 95% 5% pursuing Ikhtiar loans does not raise any problem
4. "Close supervision by Ikhtiar staff over participants income 96% 3% 1% generating activities does not raise any problem".
Source : Field Data
N 333
10.4.2.3 PERCEPTION OF MEMBERS TOWARDS IKHTIAR'S BASIC RULES OF LOAN UTILIZATION
This sectiondiscusses the perceptionof the Ikhtiar memberson some of the basic rules related directly to the utilization of Ikhtiar loans. Respondentswere asked to state whether such rules were "acceptable", "not acceptable" or whether they were "undecided".The responsesare summarizedin Table 86 (see below). More than 70 percentof the Ikhtiar membershave positive or favorable perceptionsof Ikhtiar's basic rules on loan utilization. Detailed analysisshows that:
1. Most members(99 percent) acceptedthat the compulsory weekly saving of M$1.00 has been very innovative and has reinforced the habit of saving among them. Similarly, the majority of the members (93 percent) accepted the rules that they makea5 percentcontribution from their loan into the groupfund.
2. The rule that loans are to be utilized within 7 days after disbursementon any income generatingactivity has been accepted (94 percent). This was becausethe types of activities to be financed by Ikhtiar loans have been thoroughly discussed and approvedin the group/centremeeting prior to receiving them.
3. By looking at the rules under items 1,2,7 and 8 as listed in Table 86, the percentageof the respondentswho thought that theserules were not acceptable stood at 25,21,11 and 29 percentrespectively. These members suggested that suchrules could createproblems if the Ikhtiar Organizationdid not amendthem. Theseproblems will be discussedin sub-section10.4.3.6.
From the aboveanalysis, we can concludethat on the whole the majority of the memberhouseholds have positive of favorableperceptions of the rulesrelated to loan utilization.
10.4.2.4 THE WORKING RELATIONSHIP BETWEEN THE PARTICIPANTS AND IKIITIAR STAFF
Of equal interest is the working relationshipsbetween the participants and the Ikhtiar staff. This study tried to extract the participants perceptions on 6 counts. Questions were in the form of statements. Every respondent needed to state whether they "agreed", "disagreed" or were "undecided" on the veracity of every statement. The responsesare summarizedin Table 87. 334
Table86 : Perception of Members Towards Ikhtiaes Bask Rules on Loan Utilization(Percent)
Items Acceptable Not Acceptable Undecided
A. The "Weekly" rules:
1. Weekly meeting 73 25 2
2. Weekly repayment 78 21 1
3. Weekly savingof M$ 1.00 99 - I
B. Other Rules
4.5% of the loan to be contributedto group fund 93 4 3
S. Membersmust bear project cost of M$25.00 91 7 2 ([st loan), M$50.00 (2nd loan) andM$75.00 (3rd and subsequentloans)
6. Loans are to be uffied 94 2 4 within 7 daysof disbursement
7. Loansare to be givenin 86 13 turn
8. If borrowerfail to repay, 67 29 4 othermembers denied a loan.
Source:Field Data 335
Table 87 Perception of the Members Towards the Working Relationships Betweenthe Staff and Participants (Percent)
Statements Perceptions
"Agreed" "Disagreed" "Undecided"
l. "AIM staff are friendly and get 93 52 along very well with participants"
2. "AIM staff under- stand problems faced 89 10 by the participants"
3. "AIM staff accepts participants' ideas" 91 81
4. "AIM staff are very dedicated to 90 73 their jobs"
S. "AIM staff are a good source of 95 5 advice"
6. "AIM staff are not difficult to 88 12 meet"
Source : Field Data 336
Analysisbased on Table 87 shows that an averageof 91 percent of (based on items I to 6 as listed) the participants have positive or favorable perceptions regarding their working relationshipswith Ikhtiar staff.
In general the working relationships were clearly visible through the weekly centre meetingsand the supervisionby Ikhtiar staff of its members'activities. The staff also visited the members'projects from time to time. Through informal discussions,most membersagreed that Ikhtiar staff are friendly, listen to their problems, accept their ideas, are very dedicated to their jobs and act as a good source of advice when required.Most important, it is easyto meet staff in the office (when necessary)without making a prior appointment.The closenessof this relationship was becauseeach staff memberhas a small group/centreunder his/her responsibility.
From the above analysis,it was clear that besidesthe provision of credit to the very poor rural households,an equally important factor is the "human factor" in the form of Ikhtiar staff who are dedicatedand committed to their jobs. This has made members have faith in the organization that is specially created for them in the war against poverty. The project personneltherefore can be regarded as a catalyst in pushing the participantsso as to be successfulin their projects. As Remenyi(1991: 122) puts it:
"If programmeparticipants perceive project personnel as more concernedwith what personalgain they can get out of programme,a similarattitude will be mimickedby borrowers.Corruption breedscorruption, but honesty andintegrity encourage the like in return"
10.4.2.5 THE SUSTAINABILITY OF THE IKIITIAR-FINANCED PROJECT ACTIVITIES
It is importantto know whether Ikhtiar membersare confidentthat their activities financedby Ikhtiar loansare sustainablewithout further or subsequentloans from the organization.The responsesare summarizedin Table 88.
Table 88 shows that 100 percent of the first-time borrowers were not confident that their Ikhtiar projects of various income-generatingactivities could be sustainedwithout getting a further loan. This suggeststhat a subsequentloan is needed as one loan is rarely enoughto lift householdsout of poverty, since most of the membersbelong to the very poor group prior to joining the Ikhtiar Programme. The first loan therefore be can regardedas a stepping stone towards a better prospect in follow-up loans. 337
Table 88 : Perceptionof the Sustainabilityof Ikhtiar Projects
lst Timer 2nd Timer All Borrowers
Freq. % Preq. % Freq. (N) (N) (N)
Confident 5 12.8 5 2.0
2. Not Confident 215 100 34 87.2 249 98.0
Total (N) 215 100 39 100 254 100
Source : Field Data
On the other hand only 12.8 percentof second-timeborrowers were optimistic that their income generatingactivities could be sustainedwithout resorting to further Ikhtiar loansin future.However, through informal discussion they did not rule out the possibilityof apply*mgfor the third loan if circumstancesarise. On the other hand87.2 percentof the second-timeborrowers were pessimistic that without further loans,their projectswould not be sustainable.
From the aboveanalysis, we canconclude that Ikhtiar loansare an importantsource of capitalas well as a catalystin providingthe opportunityfor improvingtheir economic situation.In generalone loan mayincrease the householdincome, but is rarely enough to lift the memberhouseholds comfortably over the poverty line. (The questionof in whetherthe Ikhtiar Programmewill becomefinancially viable is discussedin detail be Chapter11. On the otherhand the questionof whetherthe Ikhtiar schemeitself will sustainableis howeverbeyond the scopeof this study, as it is too early to reachany conclusions).
10.4.2.6 PROBLEMS FACED BY IKHTIAR MEMBERS
This section will discusssome of the problemsfaced by the ikhtiar membersin connectionwith their participationin the Ikhtiar Programme,based on their own perceptionas well as on the authoesobservations. These problems are discussed below: 338
10.4.2.6.1 IKHTIAR LOANS : WEEKLY PAYMENT, STAGGERED DISBURSEMENT AND ARREARS PROBLEMS
Somemembers felt that the loan repaymentperiod was too short. This has most often been the case with the agricultural activities, such as vegetable growing and animal husbandry.Increases in income are not necessarily instantaneousas these types of activities involve the purchaseof young animalsor seedwhich have to be nurtured for somemonths before they can be sold. As a result most of them have to rely on non- Ikhtiar sourcesof income to meet the weekly repayments.
However, the impressive repayment performance of around 99 percent in Baling 1, suggeststhat this rule (while still posed as a problem to some members) seemsto be followed obediently131. Even though group funds can be used to repay the loan of any memberin time of trouble, 141members have complained that it could not be made availableinstantly.
Membershave acceptedthe ruling of staggereddisbursement of loans (i. e. waiting in turn to get loan). However, what they seemto complain about is the problem of "late loans" (not getting them when expected). There were several cases of loans being received 7 to 8 weeks later than scheduled. As a result (based on one particular example),the land-owner rented land to another farmer as they could not afford to wait for the Ikhtiar member. This has forced the member to find an alternative and causeddelay in her project. In generalmembers get loans three weeks after submitting the applicationform to Ikhtiar staff 151.
In the Ikhtiar Programme,it has beena ruling that when a borrower fails to make weeklypayments, every memberis denieda loan. In relation to this, somemembers suggestedthat this ruling was not acceptableas this was unfair to thosewho hadbeen makingrepayments on loansconsistently. However, evidence suggests that this hasnot yet beena majorproblem, as official recordssuggest an impressiverate of payment.
10.4.2.6.2 ON LEAVING THE IKHTIAR PROGRAMME
As of October 1992, official data in the Baling I branch shows that a total of 107 membershave left the organization 161.Interest here is on wily they have left. From the 25 ex-membersthat were interviewed, the responsesare summarizedin Table 89. 339
Table 89: Main Reasonfor Leaving the Ikhtiar Organization by the Ex-members
Reason Frequency (N) Percent
1. Project not doing well 10 40.0
2. Left for anotherjob 7 28.0
3. Could not keep up with weekly 3 12.0 payments
4. Could not attendthe weekly 2 8.0 meetings
5. Problemof "lateloaft" 2 8.0
6. Problemwith Ikhtiar staff 1 4.0
Total 25 100
Source:Field Data 340
Based on Table 89, it can be concluded that the main reason for the ex-member leaving the organization was mainly because of poor performance in their Ikhtiar activities (40 percent)andalso due to other job opportunities (28 percent) 171.Other respondentshad left because they could not keep up with loan repayments (12 percent),could not attend the weekly meetings (8 percent), problems with "late loans" (8 percent)and becauseof misunderstandingswith Ikhtiar staff (4 percent).
The above analysissuggests that the majority of the memberswho had left the Ikhtiar Programmedid so either becauseof the poor performanceof project and for other job opportunities.
10.4.2.6.3 TRAINING AND TECHNICAL ASSISTANCE NOT PROVIDED BY THE IKUTIAR ORGANIZATION
It is generally thought that the Ikhtiar Organization still holds the opinion that the poor's "survival knowledge and skills" will generateprofitable activities and thus they continuewith a credit-only approach.
Ikhtiar does not provide training or technicalassistance for the participants.The Ikhtiar Organizationdepends on other governmentagencies to lend a helpinghand. Variousextension services are also providedby governmentagencies but they are not governedby Ikhtiar rulings. As indicatedabove, in Table 82,87.8 percent of the memberhouseholds had not receivedthe extensionservices. Perhaps Ikhtiar shouldgo for a credit-pluspackage and providetraining and technicalassistance. An "in-house" divisionof "adviceand training service" and "technicalassistance service" are therefore necessaryin the Ikhtiar Organizationitself Theseissues have to be addressedin the light of an expandingmembership.
However,this is not possibleat presentsince Ikhtiar is heavily subsidizedand not financiallyviable 181.AIM is essentiallystill in the expansionmode due to large start up/fixed costslike staffing and other infrastructurerequirements (such as computer hardware).As such it would be unrealisticto expect AIM to go for a credit plus package
Perhapsneeds for assistancecould be passedon to other agenciesin a more serious andcommitted way, given the desireof the Malaysiangovernment to give priority to the hard-corepoverty group underthe currentSixth MalaysiaPlan. It hasbeen noted by severalwriters in Chapter9 that a credit programmewould be more effectiveif it was complementedby other support servicessuch as good infrastructure,extension 341
services,marketing and training of participants. Even the Ikhtiar Oragnization has noted that coordination between relevant government agenciesis important as credit alone is not sufficient for some of the Ikhtiar members.They need extension services, training and expert supervisionin addition to credit (Kasim.and Gibbons, 1990) [9]. It is therefore hoped that an integrated government-Ikhtiar approach will materialize in future.
However, it will be more meaningful if government can step in and help the Ikhtiar Organizationin establishingthe "Training" and "Technical Assistance"divisions within the framework of the Ikhtiar Organization.
10.5 CONCLUSIONS
On the basisof the evidenceadvanced in the analysis,Section One of this chapter,we canconclude that the membershipof the Ikhtiar Programmeconsists overwhelmingly of memberswho satisfythe eligibility criteria. Similarly,the control group, basedon the sampleof 265 iispondents,has also been approached and are beingencouraged to becomeIkhtiar members.However, their final acceptanceinto the programmecould only be determinedthrough an interview session.The seriousnessand the whole processof the "screeningexercise" that havebeen carried out by Ikhtiar staff, appear to haveeffectively eliminated the chancesof non-eligiblepersons enrolling as members. Sincethe Ikhtiar Programmehas been effectivein reachingthe eligible poor rural householdsand has effectivelyeliminated the non-poor from its domain, the third hypothesisalongyýith the two sub-hypotheseswere thereforefound to be true and can be accepted.
The analysisin SectionTwo of this chaptersuggests that majority of Ikhtiar members being havefiLvorable or positiveperceptions towards the Ikhfiar Programme:it was basic perceivedas a very good programme.The group/centreconcept and also the ruleson loanutilization were acceptable.Ikhtiar staff hasalso regardedas committed anddedicated.
Throughthe provisionof loans,the very poor householdsare capableof channelingthe loansto productiveuse, throughvarious income generating activities. The result has been increasesin income and improvementin their economicposition (basedon in findings Chapter9). As rightly suggestedby Yunus(1982), the findingsconfirm that 342
credit is one of the critical missinglink in the development model. The important role of credit hasbeen summedup by Remenyi (1991: 71) as follows:
"That a key obstacle to poverty alleviation in the Third World is the restrictions imposedby the lack of accessto investmentfinance"
Makingloans effectively delivered to the deservinggroups can also be regardedas a measureof the Ikhtiar Programmesuccess since the very poor householdsincluded in the householdssurvey were not the main beneficiariesof the governmentrural developmentprogramme and also they had no accessto institutionalcredit. With this we canconclude that the Ikhdar Programmeis a programmethat has provided some raysof hopefor the very poor householdin their battle againstchronic poverty. 343
FOOTNOTES
- 1. For the discussionon the sizeof landin Malaysia,see Chapter 4.
2. The suggestionsby the participantstowards the improvement of the Ikhtiar Programmeare discussed in Chapter12 under "Recornmendations". '
3. Most of the participants seem to have a greater sense of loyalty to their fellow group/centremembers. As one of the participants argued "It is very shamefulto let your fellow membersdown and deny them their right to loans. We have to make surethat the loan is paid when the time is up".
4. The group fund is a source of borrowing by any member of the group for emergencysmall credit needs(including consumption), subject to the unanimous approvalof the otherfour membersof the group.
5. Accordingto Ikhtiar staff in Baling, someof the "late loans" arise becausethey haveto thoroughlyscrutinize the loan applicationsby consideringthe following factorsbefore approval:
fal Thetype of activityto be undertakenby the member. (b) Review of the member'srýcords in terms of their attendanceat the weekly meetings. (c) The repaymentrecord for thosewho areapplying for subsequentloans. (d) Whetherthere are any arrears in a particulargroup centreto which the member belongs.
6. The breakdownof the Ikhtiar membersleaving the organizationin Baling I are as follows:
(1) 1990 - 24 (2) 1991 - 38 (3) 1992(as of October) - 45 Total - 107
It wasonly possibleto interview25 ex-1khtiarmembers. They were not includedin the householdsurvey because they failed to meetthe criteria: (a) theydid not borrow while still beinga member. (b) they did not completetheir loancycle (most of themwere on the first loan).
As a resultmost of thesediscussions were informal, with emphasison the main reasonsfor leavingthe Mtiar Programme.The 25 respondentscould only be met in their housesafter a second-or third visit. It was quite difficult to tracethem. Howeverthey were very co-operativein providingthe information.We had managedto trace the ex-memberswith the help of 1khtiar staff and Rhtiar members,whom we hadinterviewed. 344
7. Most of the ex-mernbershave since left for factory jobs, mostly in Sungai Petani industrial area,one of the major industrial areasin the state of Kedah and are being paid more.
As mentioned in Chapter 5, the issue of financial viability of the 1khtiar Organization is discussedin Chapter 11 under the "Limitations of the Ikhtiar Programme"
9. AIM envisagesthat the various governmenttechnical agencies,such as veterinary, agriculture, fisheries, marketing and others, can give extension and training to upgradethe existing skills and facilitate the marketing of AIM borrowers. 345
CHAPTER It : LESSONS TO BE LEARNED FOR THE PLANNING AND IMPLEMENTATION OF BROAD-BASED AND POVERTY- FOCUSSED RURAL DEVELOPMENT PROGRAMMES
11.1 INTRODUCTION
This chapter focuses on the question of lessons that may be learned from the experienceof the Amanah lkhtiar Rural Credit-Curn Poverty FocussedProgramme for the planning and implementation of broad-based and poverty-focussed rural developmentefforts.
11.2 ACHIEVEMENTS, LIMITATIONS AND LESSONS LEARNED
11.2.1 ACHIEVEMENTS AND LIMITATIONS
The central discussion of this chapter are the lessons that may be learnt from tile experi6nceof the Iklitiar Programme. However we will first highlight briefly tile achievementsand tile limitations of the lkhtiar Programme based on analyses of previouschapters.
11.2.1.1 ACHIEVEMENTS IN GENERAL III
The successof the Ikhtiar Programmecan be attributed to severalachievements: lkhtiar hasmanaged to reachits target group effectivelyand hasin a way stimulated their activeparticipation in the programmefor their own betterment.Tile programme hashad a positiveand beneficial effect in termsof raisingthe incomesand the quality of life of the participants.
1khtiarhas also adopted someinnovative proceduresand regulationsthat suit the needs of the very poor. What is also interesting is the ability of the Iklitiar Programme in facilitating the organization of its membersinto groups/centresbasis, which also serves as the main vehicle for participation in the programme!s activities. 346
At the macrolevel, Mdar hasmade a rapid expansionboth in terms of branchesand membership.It startedwith only I branchand now has a total of 34 branches.Its membershiphas increased from 3220 in 1990to 24,834in 1993.The programmehas also experienceda very rapid expansionin terms of the types of loans given out. Startingwith only the benevolentloan (ILS 1), it now includesthe semi-commercial loan (ILS 2) andthe nearly-commercialloan (ILS 3). It has also expandedto include school and housing loans, thus diversifying its lending pattern to meet the ever increasingdemands of its clients.
The successof the Ikhtiar Programmeis also reflected in the excellentrepayment record,achieving a near-perfectrecord of around99 percentsince its inceptionbased on all its branchesin operation,including the District of Baling. The main contributing factorshave been the awarenessof the participantsof the importanceof credit in lifting them out of poverty, rigorous selectioncriteria and the "indoctrination"of Ikhtiar principles,intensive and close supervisionof loans on regularbasis by the staff and productiveuse of loans.It hasbeen argued that willingnessto repaycan be increased with a closersupervision and personalcontact (Onchan, 1988). More importantis the effectivenessof Ikhtiar in puttingto work the use of peergroup pressureby providing incentivesto monitor the action of their peers [2]. The concept of peer group approacheshave also been used by the GrameenBank (Stigliz, 1990)and other similar institutions elsewhere(Mosley and Dahal, 1985). As mentioned in Chapter 3, experienceshows that group lending schemeshave a better repaymentrecord than individualschemes in developingcountries (see Footnote 23 in Chapter 3).
Another major achievementis the low cost of the Ikhtiar Programme,which on averagecosts around M$7000 to bring a participant'shouseholds out of poverty comparedto M$55,00oin the FELDA model.In its effort to promote socialvalues amongits memberhouseholds, Ikhtiar hasalso addedthe socio-economicprogramme componentanchoring them with their income-generatingactivities, which is usedas a catalystin socioeconomicdevelopment. This hasbeen promoted through the concept of "sixteendecisions" (see Appendix 4) wheresocial values have been stressed. Ikhtiar has also managedto establishformal linkageswith someformal bankinginstitutions whichprovide a line of credit asthe sourceof its loan fund. This developmentis a sign of a good beginningand seemsto suggestthat a rather revolutionarydirection for conventionalbanking practice is slowly emerging.
The above achievementscan be regardedas quite good when one takes into considerationthat most of the Ikhtiar memberswere not the major beneficiariesof othergovernment poverty alleviation efforts. From the policy point of view, Ikhtiar has 347
at least achievedsome successof reaching and genuinely providing the poor with self- help opportunities.
11.2.1.2 LIMITATIONS
Ikhtiar takes financial viability to mean the ability to cover all operational costs including the cost associatedwith programme expansion.AIM intends to cover all its operational cost (this has been touched upon in Chapter 5) by the year 2000, with income generatedfrom a fixed administrative charge of M$75.00. Ikhtiar hopes to break even at the branch level when at least 1800 loans are outstanding per annum (Banking with the Poor, 1992).With the administrativecharge remaining unaltered and the unforeseenlevel of inflation, Ikhtiar is not in a position to break even with a fixed charge of only M$75.00. For instance,the fixed administrative charge of M$349,995 collected by AIM in 1992, could only covered around 7.4 percent of the total operatingcost for 1992 (AIM Annual Report, 1992). The only alternativewould be to make adjustmentsto its administrativecharges so as to be in line with inflation levels. However, Ikhtiaes Board of Trusteesis opposedto raising the charge to its borrowers on the groundsthat it would be exploitative of the poor.
As a result of this development,after more than 5 yearsof operation,Ikhtiar hasnot yet achievedfull financialviability [3]. Another limitation stemsfrom the fact that Ikhtiar seemsto be lackingin financialautonomy due to its continuingdependence on the government(Federal and also StateGovernment). Shrestha (1989) notedthat the most commonweaknesses of NGOs in developingcountries is that they operatewith very limited resourcesand (13hatt,1989) are heavily dependenton government resourcesor foreignfunds. Ikhtiar is also facedwith a very challengingfuture in that (Kasim,1992) it doesnot havea largeenough loan fund to reachits target of 50,000 borrowersby 1995.Ikhtiar had requestedM$18.2 million from FederalGovernment for the SixthMalaysia Plan but only M$8.45 million was committed.Additional funds hasto be soughtfrom othersources.
Ikhtiar members,as evidencedfrom the findings,have managed to savea significant amountin the compulsorygroup fund and on their own accord.There is a scopefor mobilizingsavings among the poor rural households.Ikhtiar depositsthe GroupFund Savingswith the NationalSavings Bank andIslamic Bank. Ikhtiar in its own right can not acceptdeposits nor lend them outsidethe mobilizing self-helpgroups without becoming a bank.There is an opportunityfor Ikhtiar to becomea bank andat the same be time ableto attainfinancial viability. However,as notedby Kasim (1992), it is not 348
likely that Ikhtiar will become a bank like its counterpart the GB as licenses for establishingnew banks have been frozen and are not likely to change within the foreseeablefuture. On the other hand, as Gibbons (1991) noted, by becoming a bank Ikhtiar would becomeconcerned with the multifarious activities of a bank and might be distractedfrom its main objective of helping the poor to help themselves.
Since the Ikhtiar Programmeis not able to become a bank, the only alternative is to establishlinkages with a commercialbank. Thus Ikhtiar has establishedlinkages with a few financial institutions for getting the supply of loan capital. However as noted by Banking With the Poor (1992), even though Ikhtiar has been able to make arrangements,for instance with the Islamic Bank (BIN4B), for providing a line of credit, Ikhtiar must provide its corporate guaranteeto 80 percent of the financing. The requirement of corporate guarantees indicates that BIMB has not accepted the collective responsibility of Ikhtiar borrowers as a substitute for borrowers collateral and/or guarantors, despite the recognition that Ikhtiar's system does not leave loopholesfor bad loans. The nearly-commercialloan (ILS3), provided by Ikhtiar to its membersthrough linkageswith the Islamic Bank, is, however, only confined to North- West Selangor,i. e. the pioneer branch (Kasim, 1993b). On the other hand, the Credit GuaranteeCorporation (CGC) funds are solely for Ikhtiar's second and subsequent borrowers.
Ikhtiaeslimitations also lie in its inabilityto provideadequate training for its borrowers so as to be more successful(such as skill training for further refinement).While the findingssuggest that most borrowerswho had managedto improve their economic performancewere not dependenton training from Ikhtiar 141but merelyfrom their is own skills and experienceswhile pursuingtheir variouseconomic activities. Ikhtiar not equippedfor "in-house"training or technicalassistance for the bettermentof the participants.This limitationis understandablein that the very natureof Ikhtiar, beinga non-governmentalorganization, is not in the position of providing everythingor comprehensiveservices apart from loans. Ikhtiar should be aware of the above limitations(this issuehas been touched upon in Chapter10). It hasbeen argued that (Osmani,1988) if a credit programmeis to act as a major anti-povertyprogramme, it mustbe integratedwithin the overallframework of the developmentplanning.
In general,Ikhtiar merely has to dependon other governmentagencies for the provisionof technical/extensionservices. However, based on the findings(as we would recall from discussionin Chapter 10) the servicesobtained from other government hasbeen agencies quitelimited asIkhtiar hasno control over them. 349
Another limitation is that, unlike the GB borrowers, Baling's borrowers have yet to take advantageof pursuing collective activities with Ikhtiar loans, which have the potential of reaping economiesof scale and can lead to improved technology and thereby increase labour productivity. Ikhtiar borrowers, as shown from Baling experience,are pursuing their own or individual activities with Ikhtiar loans. However it is still too early to reach any conclusions,but the findings show that none of the 254 sample borrowers had reported undertaking joint projects. Perhaps Ikhtiaes managementshould look into the possibility of encouragingits borrowers to venture into joint or collective enterprisesin the near future.
In generalagricultural producers are subjectto incomeinstability and this can affect their householdmonthly incomes. The economicwelfare of rubbercultivators (one of the most popular activities undertakenby Ikhtiar participants)for instance,are dependenton price fluctuationsin the world commoditymarkets, which is further reinforcedby seasonalvariation in output andalso weather and other botanical factors. Thingscan be madeeven worse as there is no domesticstabilization scheme to protect farmers!income from commodity price cycles (Mehmet, 1988) 151.
11.2.2 LESSONS TO BE LEARNED FROM AMANAH IKHTIAR EXPERIENCE.
Now we turn to the questionof lessonsthat maybe learnedfrom the experienceof the AmanahIktiar Programmefor the planningand the implementationof broad-basedand poverty-focussedrural developmentefforts. There are severalmain lessons.However it needsto be notedthat someof the lessonsare slightlyinter-related with others,even though they are discussedhere separately.This is merely to elaboratea particular issue.
OF CREDIT 11.2.2.1 FIRST LESSON - THE IMpORTANCE
in Ikhtiar's experiencebrings out the vital importanceof credit as an entry point a povertyalleviation programme. Provision of credit as an importantelement of a rural developmentprogramme can be tracedback to the early I.960's (see Chapter 2), but its role as an important weapon of combating poverty has not been adequately recognized.Given the desperatepoverty of the very poor rural households,the Ikhtiar Programmeis very appealingas it offers its clients an effectivemeans and potential prospectsfor economicimprovement. 350
With credit, the very poor householdshave been able to capitalizeon their survival knowledgeand skills by purchasingor creating the assetsnecessary to create the additionalself-employment, often immediately.]Furthermore, credit for the poor does not involveany prior socio-politicalstructural change and avoidsthe kind of problems encounteredin assetredistribution via land reform.As we would recallfrom discussion in Chapter1, pastexperiences have shown that the implementationof land reform via land redistributionin many developing countries has not been successful.The technocraticnature of the Malaysiangovernment's rural developmentmachinery as seenin Chapter4, suggeststhe preferenceof governmentto leavethe patternof land- ownershipunchanged and to maneuverwithin the existingstructure via technological, administrativeand pecuniary means.
11.2.2 SECOND LESSON -- APPROPRIATE TRAINING AND ORIENTATION OF THE FIELD STAFF
Most rural developmentprogrammes have an extensionstaff or developmentworkers at the field level.This suggeststhe importanceof havingdevelopment workers that are speciallytuned and trainedfor the job. In the Ikhtiar Programme,the field staff (the Ikhtiar Trust Assistant),is the developmentworker who accountsfor around 90 percentof the programmestaff and thus forms the backboneof the programme.In relationto this, Ikhtiaesexperience brings out a vital ingredient,i. e. the importanceof appropriatetraining and orientation of the field staff for the successfulaccomplishment of their programme.
Staff training (similarto GB training approach)includes intensive field training,with it sometime spentin the classroom.Training is simplebut tough and vigorous and eliminatesthose who are not physicallyand mentallyprepared to work in the rural areas. Training is based on the "learning by doing approach" through direct observation.The whole processof training is to inculcatea senseof commitmentto intended overall programmeobjectives and some degree of empathy with the beneficiaries.The Ikhtiar Programme'ssuccessful outcome is alsodirectly attributed to oneof the mostimportant underlying factors, i. e. its staff.
11.2.2.3 THIRD LESSON -A WELL DEFINED TARGET GROUP
As mentionedearlier, credit should be an important componentof any poverty alleviationprogramme. However it will be rendereduseless if it fails to reachthe target groupeffectively. This bringsout the needfor a povertyalleviation programme to have 351
a strongorientation towards designated and a well-definedtarget group. 1khtiarshows that it is possibleto deviseprogrammes which can directly and preferentiallyreach the targetgroup if theyare well defined.
Experience shows that very poor rural households have been traditionally bypassed under the more conventional programmes. This was because development policies were couchedin terms of atomistic householdsin a classlessrural society. As a result the selection process tended to treat the poor as undifferentiated groups. Ikhtiaes membershipconsists overwhelmingly of the very poor householdsas defined in their eligibility criteria (basedon findings discussedin Chapter 10), accompaniedby a simple selectionsystem, where severalmechanisms of checkshave been instituted in screening the poor ranging from the housing index, the meanstest and interviews. As a result of this "multi-layered" process, the non-poor have been effectively excluded. Ikhtiaes experiencethus showsthat not only must the poor be properly defined, they must also be properly identified at the operationallevel.
11.2.2.4 FOURTH LESSON - EXCLUSIVE DELIVERY SYSTEM
its Experiencesuggests that the more conventionalprogramme with omnibusor generalizeddelivery systemhas generallynot been effectivein reachingthe target group.Ikhtiar's experience brings out the needto designan exclusivedelivery system to cateronly for the target group that is properlydefined and identified.As a result a simplebut effectiveoperational system needs to be establishedthat permitsthe delivery of resourcesto its beneficiaries.
The main designfeatures of the Ikhtiar deliverysystem are: suitableloan conditions; fill in simple,flexible and easyloan procedures;no complicatedapplication forms to [6]; takingthe programmeto the villageswhere the poor live; incentivesof subsequent developmentinputs and on a continuousbasis; intensivetraining for building up consciousness,organization and managementefficiency of the participants;intensive highly supervision;open transactionsso that everyoneknows who is getting what; routineoperations with an emphasison regularityof repaymentsand regular meetings.
11.2.2.5 FIFTH LESSON - INNOVATIVE "BANKING" PRACTISE
The Ikhtiar Programmeillustrates some new innovationsin reachingthe very poor households who potentially participatein the developmentprogramme. The major 352
innovation is the removal of the traditional types of security and collateral normally requiredby formal banking institutions and replacing them with group guarantees.The concept of joint responsibility has encouraged mutual supervision and cooperation amongstthe membersof the group. In general, to ensure the effectivenessof group guaranteesas the best collateral, they are being accompaniedby direct and regular contact with the beneficiaries.This is also a key element in this new approach. The Ikhtiar Programme has actually instituted a specialty designed "delivery-recovery" mechanismfor the provision and collection of its loans. As mentioned earlier in lesson four, AIM is also breaking new ground in establishing"mobile banking" in Malaysia. Ikhtiar takes its programmealong with its staff to the villages where poor people live rather than taking people to the bank. This contributes to borrowers' confidence and savesthem costly and time-consumingtravel to the town or city where the bank is normally located.
11.2.2.6 StXTII LESSON - ORGANIZtNG THE POOR INTO GROUPS
The Ikhtiar Programmebrings out the importanceof organizingthe poor within some form of organizationalframework. The successof Ikhtiar is directly related to the conceptof forminga smallhomogenous group, which is in itself a major innovation. Beyondthat, the organizationof the very poor householdsserves a numberof crucial functions:
a) It is a starting point for the poverty alleviation programme and forms a basic building block of the programme. b) It provides the foundation for group guaranteeswithout any collateral. It ensures mutual accountabilitythrough peer pressure. C) It is an avenueof promoting social and economic cooperation amongstborrowers. It thus helps in strengtheningthe senseof solidarity, which is further strengthened through horizontal linkageswith other similar groups federatinginto a centre. d) It promotes group organization which in turn promotes the habit of group discussion,consultation, planning and implementation of economic activities and resolution of conflict through debate. e) It leadsto basic managementand decision making skills which can be acquired by the group as a result of regular meetings with the staff which acts as a teacher. Somediscipline in financial mattershas also beeninculcated. It hasthe advantageof being a legally establishedorganization, composedof a large memberof small groups and is therefore in a stronger position than any number of dispersedand weak unorganizedinformal groups. 353
In the Malaysiancontext, the experienceof the cooperative movementshave invariably beentaken over by the more influential farmers and other rural elites, who also happen to be the majority as far as membershipis concerned.Mehmet (1988) and Ali and Idris (1992) noted that the farmer organizations were mainly controlled by the richer farmers and rural elites. It is believed that Ikhtiaes group formation is indirectly the reversepattern.
The organization of the poor has now become an important element in the poverty alleviation exercises, especially among the non-governmental sectors in many developingcountries. In relation to this, ILO (1984) noted that groups with more than 20 memberstend to becomesunwieldy and (Padmanabhan,1988; Huppi and Feder, 1990) may lose cohesionand be susceptibleto default. The size should not exceed 10 (IFAD, 1985). Olson (1971) suggestedthat in many cases small groups are more efficient and viable than the larger one and (Yunus, 1984; IFAD, 1985; Egger, 1986) also tend to have better accessto information, work well and may last longer. Thus, in Ikhtiar model, the group of 5 was found to be the most appropriate arrangement achievedthrough trial and error.
PARTICIPATION 11.2.2.7 SEVENTH LESSON - THE ELEMENT OF
The poor needto be empoweredso that they cangenuinely participate in the decision- Seen makingand planning of developmentprogrammes which affect their livelihoods. is in this connection,one major idea that has emergedfrom Ikhtiaes experience the promotionof participationof the very poor householdsin the developmentprocess. has Organizationaldevelopment at the grassrootswhich makesparticipation feasible not featuredprominently in Malaysiansmore conventionaldevelopment programmes exceptas lip-service. On this Kasim(1987: 70) arguedthat:
"Peopleat the villagelevel still minimallyhave a chance to Participatein planningand implementationfor their own development,although government policy has intended to allow people to be involved in such process...planning and implementationoverwhelmingly decidedby governmentofficials still exists"[7].
Choo(1989) further noted that the dominanceof top-downdecisions and programmes at the local or villagelevel often limit andminimize the considerationof the bottom-up demands(village level) and feedbackin the system of planning and programme implementation in Malaysia.Oakley (1991: 12) similarlynoted that in most developing 354
countries,rural developmentplanning takes place in ministries in urban areasand there is rarely any genuine desire to devolve this responsibility effectively to local level. In his words "in most Third World Countries administrative structures are invariably centralizedand by definition essentiallyanti-participatory".
Ikhtiar has thus broken new ground in terms of establishing,on a quite massivescale, links between resources and previously excluded people. This is the fundamental rationaleof their operation: to begin a processof participation by providing previously bypassedrural people in the more conventional programmes with the means to establishan economicbase. In Ikhtiar's model the concept of participation is reflected through the weekly meetingswhere membersparticipate in decision making and play key roles in the main activities of the programme.It has been noted that (Singh, 1991; Oakley, 1991) people's participation is now becoming an important and growing element in most of the micro-enterprise credit programmes in many developing countries181.
Within the broadframework of the bankpolicies and with guidanceand adviceof the lkhtiar staff, it is the membersthemselves who decideon the amount,purpose and utilizationof loans.This is an elementof participatorysystem where groups can play rolesin the appraisalprocess. While Ikhtiar cannotclaim to havemoved very far in this direction,it hasat leastset in motion the processof participation.The role playedby membersis likely to enhancetheir capacity for organization and management capability.
Ikhtiar membersare given the opportunityto becomegroup chairman,secretary and alsoa centrechief on a rotationalbasis. At a higherlevel of participation,i. e. at the nationallevel, Ikhtiar hascreated a BorrowersRepresentative Board of 12 members,3 memberseach from each of the four Ikhtiar administrativeregions 191.From this board,two membersare chosento attendmeetings of the Ikhtiar Board of Trustees (the highestin the hierarchy)1101. From the abovediscussion it canbe concludedthat peopleshould be given a genuineopportunity for participationin any development programmeand the Ikhtiar Programmeis contributingto somesocial changes in tile Malaysian'srural society.In this connection,Remenyi (1991) arguesthat the most fundamentalpoint is thereforenot to spurnthe poor but to recognizethem as an asset whichis the foundationto sustainablesuccess. 355
11.2.2.8 EIGHT LESSON - THE LEARNING PROCESS APPROACH
It hasbeen noted in Chapter3, that the "blueprint approach" is an inadequateresponse to rural development, but the "learning process approach" is more appropriate. Ikhtiar's experiencealso brings out the importance of the "learning process". The Ikhtiar Programmewas initially launchedas a two and a half year action-researchpilot project, through which an innovative approach of foreign methods were tested on a small-scale.The end result suggeststhe viability of the Grameenapproach, but needs some minor modification to adapt it to the local socio-economic and cultural environment,
Ikhtiar's experiencealso suggeststhat for a particular programme to be effective, it needs to be tried on a small-scale basis, goes through a learning process and is gradually scaledup in responseto dynamic development needs of its clientele. Pilot projects therefore perform valuable functions of testing new methods under local conditions. If they prove unworkable, they can be abandonedor altered. Furthermore the knowledge gained from the undertaking may still prove to be useful in the continuing searchfor a better ways of increasing programme effectiveness.And the learninggoes on II 11.
SELF-RELIANT RURAL 11.2.2.9 NINTH LESSON - ON BECOMING A COMMUNITY
Another important lessonfrom Ikhtiar's experienceis the importanceof having a saving scheme.Ikhtiar has demonstratedthat the poor are able to achievehigh marginalrates of savings.This is a very importantachievement as it will pavethe way for self-sustainedself-reliant patterns of growth. In extremelypoor communitieswhere meetingsubsistence needs is an everydaystruggle, the ability to save can only be consideredas phenomenal. Compulsory savings in the form of groupfunds can be used for meetingemergency needs. More importantis to strengthenthe group over time. In the longerrun, thesesavings can be usedto financegroup joint projects.Ikhtiar has showninnovation by incorporatingthe savingsset-up within the framework of its credit-basedpoverty alleviation programme. Ikhtiar is aimingat transformingthe poor from a dependentsubsidy-oriented community into a viable self-reliant rural community.
The mobilization of savingscan be regardedas a pre-requisite for genuine self-reliant development efforts. Sham (1991) noted that the ability to save, even small amounts basis, is on regular a pre-condition to sustainabledevelopment and (Ghai, 1989) 356
further evidenceof a self-reliant approach. Singh (1991) noted further that building self-reliant village organizations is a long, slow process, but they are and will be organizationsof the people,which can work for developing people.
11.2.2.10 TENTH LESSON - PROGRAMME'S DURATION SHOULD BE ON AN ON-GOING BASIS
In general,the design of a poverty alleviation programme needs to provide sufficient time for continued support to the poor covered under the programme. Experience showsthat it generallytakes a considerabletime for a poor people to come out of the poverty thresholdto be strong enoughon his own to face againstthe rather challenging open market, without the risk of falling back into poverty
Experiencesof SEWA (Self-EmployedWomen Association) in India and the Grameen Bank in Bangladeshsuggests that they have had to provide credits on on-going basis (Sham, 1991). This has contributed much to the building up of poor households'assets and skills to overcomepoverty and will definitely reduce the risks of failing back into poverty. Similarly, Ikhtiar has resorted to this concept of providing loans on a continual basis, starting with a very small or meagre amount in the first instanceand raising it slowly. The Ikhtiar Organization believes that poverty alleviation is a long term affair. Credit is an investmentand "one-shot" programmesare totally ineffective 1121.Thus it is necessaryfor the national policy-makers to incorporate this idea of Ikhtiar into the planning of the more conventionaldevelopment programmes.
11.2.1.11 THREE FINAL LESSONS
The pioneeringwork of Ikhtiar hasrevolutionized the idea of small-scalecredit. The eleventhlesson to be drawn from the Ikhtiar experienceis the demonstrationthat contraryto widespreadbeliefs and perceived wisdom, the poor canbe trustedand also creditworthyand are thereforebankable. The twelfth lessonshows that one key to successappears to be the introductionof a socialmechanism into the livesof the poor. In the Ikhtiar case,this takesthe form of peer pressurefor screeningloan applicants and collectingloans. One final lessonfrom Ikhtiar experienceis that it is possibleto design a programmewhich candirectly help the poor if thereis enoughdetermination. On Holloway this (1990: 143) writes "If we are seriousabout helping the poorest villagemembers, it is necessaryto set up structureswhich reflect the needsof them aloneand which singlethem out for specialattention. If this is not done,the tendency 357
will be for the rural elite to "filter out" any benefits and for the gaps between them and the poorestto becomeeven larger".
11.3 CONCLUSIONS
From the above discussionof some of the lessonsthat can be learnt from Ikhtiar's experience,we can therefore conclude that with appropriate organization, the poor are able to use credit profitably, are capableof repaying loans and are therefore bankable. It has been demonstrated that lack of collateral should not stand in the way of providing credit to the poor. Perhapsthe mainstreamsuppliers of credit, notably the Agricultural Bank and other financial institutions, have to revise old-fashionednotions about the poor being an unbankableproposition. However, the design of a programme such as Ikhtiar for reachingthe very poor rural householdsis by no meanseasy. Credit (not loans) should also be given to the Ikhtiar Organization for their ability to put the Grameenbank approachinto the Malaysian context, which is indeed a very tricky and delicateexercise. In this connection,Burkey (1993: 193) argues:
"Operatingloan funds for the poor is a tricky business.It is a delicatebalancing act involving, on the one hand, maintaininga business-likeand viable loan fund without becomingan oppressiveloan collectorand, on the other hand, trying to fuel the developmentprocess for the poor without establishingnew dependencyrelations whichin the long run destroythe process".
From our discussionabove, we can conclude that the Ikhtiar Programmeis a convincingdemonstration that credit grantedunder the right termsand conditionscan enablethe poor to improve their economicconditions and hence is an effective instrumentin combatingpoverty. 358
FOOTNOTES
Section 12.3 in Chapter 12 which summarizesin detail the findings of this study, will only indirectly highlight someof the achievementsdiscussed in this section.
2. This was provided by the fact that membersof the peer group arejointly liable for repaymentof loans and by the fact that they cannot gain accessto credit until the debtsof the group are discharged(see Chapter 5).
3. Ikhtiar loans are designedto be self-sustainingand becomefinancially viable through the fixed administrativecharged imposed on loan disbursement.It is expectedto take six to twelve yearsfor a branchto reachfull capacityof 2000 borrowers,as the paceof group formationcannot be forced and also depending on the densityof extremerural poverty.In general,Ikhtiaes transaction costs in its loansscheme is high initially becauseof heavyhuman investment (staffing) and networkof infrastructure(which haveto be amortizedover a long period). The questionof AIM meetingits financialviability is neverthelessa subjectof future research.It is too earlyto reachany concreteconclusion, but availableevidence seemsto suggestthat AIM is not likely to achievefull financialviability. Whether it may adjust its fixed administrative charge or takes other measuresin the very near future to achieve the financial viability is however beyond the scopeof this study. CurrentlyIkhtiar is not in the stateof financialself-reliance. Ikhtiar is nevirthelessain-dng to be financiallyself-reliance. This, as envisagedby Ikhtiar will be achievedthrough the fixed administrativecharge, which is only possiblewhen a newbranch reaches its full capacity.
In general,Ikhtiar providesa generalextension services in the form of advice, guidanceand information for its participants.For instancethe provision of informationto its borrowersis mainlyin the form of which departmentor agency in the governmentneed, to be contactedwhen a particularservice is required. in 5. A suggestionto overcomethe problem of agriculturalprices is taken up Chapter12. In generalthe priceof rubberhas increased since early 1994and went up to around M$3.30 to M$3.50 per kilogram, after being in the region of The M$2.10 per kilo for the past five years (UtusanMalaysia, August 1994). good newsfor rubberand cocoaproducers is the recentreport which notedthat the pricesof thesetwo commoditiesare set to soar (New Straits Times, June in 1994).Our study was carriedout when the generalprice of rubber was the region of M$2.10 per kilo. In general,the prices of rubber during the 1989to 1990 period (MalaysiaEconomic Outlook, 1990) have been in the region of M$2.45 and M$2.65 per kilogram.In the context of the study area,there were variousforms of rubber,namely latex, sheetand scrap.Scrap rubber fetches the lowestprice of aroundM70 centsto M85 centsper kilo. For an exampleof IkhtiaesLoan ApplicationForms refer to Appendix11. 359
7. Cheeand Khong (1978: 245) add:
"The basic weaknessesof rural organization in Malaysia is the low level of community involvement and the local bureaucratic do participation... organizations not provide an open forum for inputs from common peasants".
8. As mentioned in Chapters 2 and 3, the Community Development Programme (CDP) of the 1950's and 1960's failed tragically because practitioners in those days did not realize the importance of empowerment. However, today's community development through the micro-enterprise credit programmes that have emerged in many developing countries is different, where emphasis is given to the process of participation in the development process. This is also reflected in the Ikhtiar Programme.
9. A Borrower's RepresentativeBoard (LembagaPerwakilan SahabatAmanah Ikhtiar Malaysia)has been established for AmanahIkhtiar Malaysiawith twelve members,three eachfrom the 4 regions(as mentionedin Chapter5), i.e. the regions of Kedah, Perak, Kelantanand Trengganu.The twelve membersare chosenby the Councilof CenterChiefs for eachregion from its own membersfor a period of office of two years.From this Board of Borrower Representatives, two memberschosen from amongits membersare invited to attendmeetings of AIM's Board of Trusteesas observersfor a period of one year, after which they will be replacedby two differentrepresentatives. It needsto be mentionedhere that a Council of CenterChiefs is establishedfor eachof the abovementioned regions.This Council will be composedof CenterChiefs in the Region,and will meetat leastonce a year.The Councilis chairedby the Director of IkhtiaesLoans Division,with the RegionalManager/Programme Officer asDeputy Chairman.
10. Ikhtiaes,Board of Trusteesconsists of 13 key people and it includes(as of September1991):
1. DatoMahbob Osman (Chairman) 2. Dato Haji MusaMuhammad, Vice Chancellor,Universiti Sains Malaysia. 3. Dato Dr. Mohd ShahariAhmad Jabar. 4. ProfessorYunus, Managing Director, Grameen Bank of Bangladesh. 5.1& AhmadAhmad, Secretary. 6. AssociateProfessor Kasirn Kasim, Director of LoanDivision. 7. ProfessorDavid S Gibbons,Ikhtiar ManagingDirector. 8. Mr Hashim, Representaiveof Chancellor Director General, Economic PlanningUnit, PrimeMinister's Department. 9. StateSecetary of Selangor. 10.Mr Haji BasriIsmail, Director of YPEIM. 11.Professor Syed Hussin Alhabshi Al-Habbshi. 12. Dr Abdul Abdul RahmanMohamed, Representative of the Director General, Implementationand Co-ordination Unit, PrimeMinister Department. 13. Anotherperson appointed by the Trusteesfrom time to time. 360
1. One lessonof Ikhtiaes experienceis that the design and redesignof poverty alleviationprogrammes is best done by those who have to managethem and mounta reviewthat permitsthe managementand staff of a particularorganization to analyzewhat they havelearned in the first phaseand build on this experience for the future.
12. Sham (1991: 244) provides useful views on the design of a viable poverty- alleviationprogramme:
"Poverty can be alleviated only when the poor, who lack accessto productive resources, are provided with resourcesto increasetheir income. This has to be on a continuing basis, enabling the clientele to undertake productive and income-earningactivities over a number of years.Poverty alleviation programmes,therefore, are not like one shot vaccinations, where programme activities end abruptly upon completion of a time-bound project investment. Poverty alleviation programmes require resource investments and social development efforts on a continuing basis, spread over a number of years". 361
CHAPTER 12: SUMMARY9 RECOMMENDATIONS AND CONCLUSIONS
12.1 INTRODUMON
This chapter summarizesthe findings of the research. It also considers some of the policy implications regarding the implementation of the Ikhtiar Programme towards national developmentpolicy. It concludeswith recommendationsfor the improvement of the Ikhtiar Programmeand identifies issues for furtherresearch.
12.2 THE ESTABLISHMENT OF THE IKHTIAR ]PROGRAMME
It hasbeen stated that the Ikhtiar rural credit-cumpoverty focussedprogramme is a totally new conceptfor the alleviationof poverty, attemptingan alternativeapproach (seeChapter 5). It is established"for the sole purposeof assistingvery poor rural householdsto lift themselvesout of poverty,primarily by meansof benevolentloans to be used for financingincome-generating activities". As a non-governmentaleffort, Ikhtiar seesit role as complementaryto Government'spoverty alleviationprogramme. Thusthe Ikhtiar Programmeis basicallyin line with the GoverrimenesNew Economic Policy (NEP) and the New DevelopmentPolicy (NDP) that puts emphasison the eradicationof poverty as overriding objectives.Being a new programme,1khtiar is alreadymaking headway in Malaysia.Therefore it is in the spirit of discoveringthis new phenomenonthat this study, exploratory in nature, was undertaken(for the Objectivesand Hypotheses of this study,see Chapter 1).
12.3 SUMMARY OF THE MAIN FINDINGS
From the discussionsin the previouschapters, the major findingsof the researchon this exploratorystudy of Ikhtiar rural credit cum-povertyfocussed programme are as follows: 362
1. By most indicators, the Ikhtiar Programme has been rather successful. Its achievementis consideredquite good when one takes into consideration that it has taken place against the background of failure of the more conventional poverty alleviationprogrammes in improving the conditions of the poor, notably the hard-core poverty groups in the rural areas.Ihktiar has thus provided some ray of hope for the improvement of the rural poor's living conditions. This is generally true in the Malaysian context, where structural changes in rural society is needed for the improvementof poor people'swelfare under the existing "technocratic" nature of the socio-politicalset up seemsto be the main obstacle.
2. The Ikhtiar Programmehas clearly shown that by providing credit, many of the very poor householdscan be reacheddirectly and preferentially. The main messageof this programmeis the importanceof credit as an entry point for a programmeof social and economicdevelopment. This was further attestedto by the fact that the poor are not only trustworthy, but also creditworthy and bankable.
3. Ikhtiar has madea very rapid expansion.Starting with only I branch in 1986, it has by now a total of 34 branchesoperating in the 33 poorest districts of the country. The rapid expansionof the programmefrom its pilot phasehas demonstratedits replication potential. By 1993, Ikhtiar's membershiphas increasedby quite a substantialnumber, rising from only 3220 in 1990 to 24,834 by November 1993. Such an achievementis quite good and it clearly implied that large numberof the rural poor had beenbypassed by the more conventional programmes. By organizing the members into the group/centre concept, which form the basic building block around which the programmeis organized,Ikhtiar has thus provided these "bypassed"households with be an opportunity to make changesin their lives by meansof credit. Credit can thus seenas a catalystfor the improvementof their economicconditions.
4. The rapid expansioncan also be seenin the evolution of its loans. It started only include with the Ikhtiar benevolentloan scheme(ILS 1). To date it has expandedto the semi-commercialloan (ILS 2), the nearly- commercial loan (ILS 3), school and housingloan schemes.The ILS 1, being the backboneof Ikhtiar Programmehas been translated into various types of agricultural and non-agricultural activities. By November1993, a cumulativetotal of about M$13 million in loans had beendisbursed to its membersin the Baling I branch.At the State level, i. e. Kedah, and the national level, the figures stood at M$6.5 and M$22.9 million respectively.
5. The Ikhtiar Programmehas been successful in raising the incomesof its participants. The averageincome of member householdswas about M$317.00 comparedto only 363
M$181.00 for the control group. The difference is statistically significant. Prior to joining the programme,the householdincome was M$165.00, while that of the control group was M$158.00. The findings also support the earlier study by SERU and lkhtiar's various internal impact studiesthat the Ikhtiar Programmehas been successful in raising its participants!incomes. Various studies of the GrameenBank Progamme and similar experienceselsewhere also cameto similar conclusions.This clearly shows that credit is one of the critical missinglinks in the rural developmentmodel, especially in the areaof poverty alleviation.
6. In general,Ikhtiar member householdsreceive two sourcesof income, namely (i) from the Ikhtiar-financed project activities and (ii) from non-Ikhtiar sources. The findings suggest that the participants' household incomes resulting from Ikhtiar- financedproject activitieshave been very significantas they formed a major proportion of the overall householdincome, about 55 percent.Generally the Ikhtiar-financednon- agricultural activities tend to yield a higher return than agricultural activities. Furthermorethe secondcycle loans (bigger in size) have been associatedwith higher incomes.There seemsto be a positive correlation betweenthe level of income and the numberof loan disbursements.
7. Among the Ikhtiar members(females) there was also a noticeableshift from householdwork (suchas unpaidservice as housewives)in favour of self-employment in petty trading,livestock rearing, rubber cultivation and variousother activitieswith the emergenceof the Ikhtiar Programme'sintervention. This was one of the factors thathas contributed to the increaseof householdincome. Ikhtiar providesa mechanism of drawingwomen out of their traditionalfemale confinement within householdsand providinga changedsocial organization capable of providingopportunities for female self-employment.
8. Thereis a potential for membersto switch to non-agriculturalactivities that promise a prospectof higher incomes,but needsfurther support from governmentagencies (see suggestionin section 12.5). There is also one area which has not been tried or fully exploited among memberhouseholds, i. e. the joint activities financedby Ikhtiar loans that have the potential of reaping scale economies through the use of improved technology(see suggestion in section 12.5).
9. Ikhtiar has also madea positive contribution in the area of poverty alleviation in the study area.An overwhelming82 percent of memberhouseholds have managedto rise Ikhtiar hard-core above poverty line of M$250.00. From this figure, a further 22 percenthave managedto surpassthe national poverty line of M$375.00. On the other 364
hand, 99.6 percent of the householdsin the control group remained below the hard- core poverty line. Obviouslyit would be unrealistic to expect a major portion of Ikhtiar members,already very poor, to cross the national PLI in so short a period. However, 1khtiar'srole in changingthe mind-setof the incurable pessimistshas to be recognized.
10. The increasein income as suggestedabove also had a positive impact on the participants!quality of life. It was notably apparentthat there were significant changes with regardto housingimprovement, an increasein the possessionof householditems and also a positive improvementin their expenditure on food, education, health and medicalexpenses, transportation and other expenses.Comparatively the quality of life amongthe participantswas significantlyhigher than that of the control group.
11. The increasein income had also made a further positive impact on their level of savings.The Ikhtiar Programmehas inculcatedthe positive habit of savingsamong the memberhouseholds. There was a noticeableincrease in the amount of participants' savingsin local financial institutions and has contributed to capital formation. One of the most encouragingphenomena has been the creation of "compulsory group fund" savedby memberson a weekly basis. It can thus provide a vital contribution to the economicand social securityand well-beingof the members.
12. The Ikhtiar Programme has succeededin reaching its target group. The membershipof Ikhtiar consists overwhelmingly of the members who satisfy the eligibility criterion. In general the member householdshad, when they joined the scheme,a low housing index and low householdas well as per capita income. Thus Ikhtiar membersare not only resourcepoor, they are in generalland poor and also do not seemto be the beneficiariesof the government'srural developmentprogrammes.
13. One of the most interestingaspects of the 1khtiarProgramme is the way the target group is identified. The various mechanismsof checks instituted to screenthe poor rangingfrom the housingindex, a rigorous meanstest, the interview processand group has formation have made it very difficult for the non-poor to becomemembers. This beena great achievementas far as reachingthe target group is concerned.
14. The Ikhtiar Programmehas also providedthe target group with financial resources to which the group did not previouslyhave access.
15. The loan in recovery performance(at the macro level - see chapter 5 and Balines branch - see chapter 7) is excellent. The amount of overdue loans since the programme!s inception a few years ago has been less than I percent. Thus the Ikhtiar Programmehas demonstratedthat the lack of collateralshould not standin the way of 365
providing credit to the poor. The poor people, through their survival knowledge and skill, can utilize loans and repay them if effective proceduresfor credit operationscan be established.This finding is also similar to the loan repaymentperformances of the GrameenBank and similar experienceselsewhere (see chapter 3) which have been excellent.
16. Someof the main factors that have contributed to the higher repaymentrate are : (i) extensivestaff training, (ii) the provision of loans that generateregular income, (iii) collection of paymentsfrequently in small amounts,(iv) the positive role of the group fund as an emergencyresource when membersface difficulty in payment,(v) intensive supervision of loans on a regular basis (vi) rigorous selection criteria and "indoctrination" of borrowers with Ikhtiar principles and procedures and (vii) the prospect of getting further loans on a continuous basis for memberswith excellent repaymentrecords.
17. It has beenfound by SERU that the costs of getting the hard-core poverty group out of poverty through the Ikhtiar Programmeis, on average,low comparedto other governmentpoverty alleviation programmes.It is also anticipated that if Ikhtiar can reach its target of 2000 borrowers for every branch, it is likely that the cost will be muchlower.
18. The Ikhtiar Programmealso offers a number of useful lessonsfor the planningand implementationof broad-basedand poverty-focussedrural developmentefforts- These include among others: the importance of credit as an instrument for raising incomes and employmentand as a meansof avoiding the unpopularmeasure of redistribution of land; the importance of designing an exclusive poverty programme along with an exclusivedelivery systemto cater only for the poor; put into practise the concept of "delivery-recovery"mechanisms for the provision and collection of its loans; taking banks to the people; providing an innovative feature of using group guaranteesin replacementof the normal collateral requirement;the importance of organizing poor peoplewithin someform of organizationalframework for an effective executionof the development programme; empowering the poor for genuine participation in the developmentprogramme which affectstheir livelihoods;bringing out the importanceof the "learning process" rather than the "blueprint" approach in designing a more successfulprogramme and; the integration of a social component - the Sixteen Decisions,(as a subsidiary)into the overall framework of a developmentprogramme. However, one of the most important lessonsfor the successfulaccomplishment of the is project none other than the importanceof the appropriate orientation and human 366
qualitiesof developmentworkers, i. e. the field staff which form the backboneof the IkhtiarProgramme.
19. Ikhtiaes experiencealso suggeststhat putting together small groups (within an organizationalframework) of poor peoplewith similarinterests and other homogenous factors enablesthe poor to augmenttheir meagreresources and helps them sort out their own priorities accordingto their felt needsand problems.To suchwell organized self-helpgroups, assistancecan be renderedto securegreater financial, technical and moral strength.
20. The majorityof the Ikhtiar membersalso have favorable or positiveperceptions towardsthe Ikhtiar Programme:it is beingperceived as a very good programme;the group/centreconcept and also Ikhtiaesbasic rules on loan utilization are acceptable andIkhtiar staffare regarded as very comn-dttedand dedicated.
2 1. After morethan five yearsof operation,the 1khtiarProgramme's obvious limitation hasbeen the lack of financialviability due to its continuousdependence on government funds.While it is true that the Ikhtiar Organizationhas also establishedlinkages with the local financialinstitutions to get a supplyof credit for its loan fund, there were someshortcomings. The IslamicBank that providedthe capitalfor nearly-commercial loans(ILS 3) is at presentconfined only to the North-West Selangorbranch. The CreditGuarantee Corporation Malaysia (CGC) funds, on the otherhand, are solelyfor Ikhtiaessecond-time and subsequent borrowers.
22. Lastly the experienceof the Ikhtiar Programmehas shownthe concreteform an alternativeapproach to rural developmentcould take and how it could be made to work
12.4 POLICY IMPLICATIONS
Both the Govermnenfs poverty alleviationProgramme and the Ikhtiar Programme haveone common aim, i. e. to eradicate Poverty.Ikhtiar doesthis throughthe infidion of creditbased on self-realization.The government, being the major actor, doesthis through various meanssuch as land resettlement schemes,integrated agricultural development,providing agricultural infrastructure and through macro-policysupports 367
(Abdul Rahman, 1991) such as credit, taxation and price policies, investment programmes,realistic exchangerates, trade policies, etc.
Seenin this connection,the Ikhtiar Programme is also playing its roles in the rural developmentof this country, alongsidethe government programme and has proved to be viable. As a private organization it would see its role as complementary to government'spoverty-reduction programme.
The research findings show that the Ikhtiar Programme has been successful in improving the economic conditions of its participants. It has therefore played a very prominent role in changing the n-find-setof the incurable pessimists. It has also provided some very valuable lessonsthat can be incorporated into the planning and implementation of the more conventional rural development programmes. The implementation of the Ikhtiar Programme therefore has some very important implications towards national developmentpolicy which include policies relating to poverty eradication, promotion of rural industry, creation of the Bumiputra!s commercialand industrial community, agricultural policy, district administration and regional developmentpolicy, borrowing attitudes from formal banking institutions, humanresource development and women in development.It has been noted by IFAD (1985) that the successof credit programmesalso dependson the wider national policy framework in which they are implemented.The above mentioned policies will be discussednext.
12.4.1 POLICY RELATING TO POVERTY ERADICATION
As we would recallfrom the discussionin Chapter4, despitehuge amounts of money beingset asidefor the alleviationof povertyduring the NEP period,its effectson the alleviationof povertyhave been quite limited.Poverty has still continuedto persist, especiallyhard-core poverty. Under the new developmentplan, the NDP, government hard-core has given priority towardsthe eradicationof poverty with emphasison poverty.
The findings of this study suggest that financial resources, Le. credit through the Ikhtiar Programme,devoted to very poor rural householdshas been an effective and appropriatemeasure of raisingtheir incomesin a relatively short period of time, as well as a meansof reducingpoverty. Future policy on poverty eradicationshould therefore stressthe need to remove the obstaclesthat keep people in poverty. Thus, denial of 368
accessto credit and the availability of financial intermediaries'services to the poor are two of the more important of theseobstacles.
The more conventionalprogrammes, as we have seen, were based on the shot-gun principle - lack of targeting and little penetration. Not only were the development policies couched in terms of atomistic households in a classlesssociety, but the delivery of the developmentinputs was not designedwith the poor in mind. As a consequencethey were either bypassedor received very few benefits. While it is true that the government'sdevelopment model is very impressive, such as the FELDA scheme,it was costly in terms of financial investmentand technology and the prospect of land being scarcemeant that no more new settlerscould be taken in. This has made the Ikhtiar Programmea more attractive proposition. It has the reputation of being low cost and hasbeen effective in providing its servicesto the poor households.
The findings of this study will help the government in determining why its poverty alleviation programme,despite the huge allocation, has not been able to achievethe NEP objectives.Among others the major weaknessesare the overlappingof functions, target groups not being clearly identified and the fact that the goal of poverty eradicationwas not even clear among the implementingagencies. Thus it is necessary to review which of its programmesor agenciesinvolved need to be maintained or eliminatedtotally in future programmesrelating to poverty alleviation. There is also a far needto review the cost of the poverty alleviationprogramme and to determinehow it hasachieved the objectiveof the NEP and is likely to achieveit under the NDP. With theseconsiderations, the financial and humanresources can be properly utilized for the overall nationaldevelopment without any wastage.
There is also a need for government'spoverty alleviation machinery to adequately recognizethe potential of poor people.They are not without resources,their untapped creative potential could be converted into an enormous productive assetsprovided they could be organizedinto a coherentforce and gained a role in decision making. Thus, to be truly poverty oriented, future programmedesign must pay attention to all theseelements, which hasbeen sadly lacking in the more conventionalprogrammes.
As will be recalledfrom the discussionin Chapter 4, in late 1989 and continuing into the Sixth Malaysia Plan, governmentfor the first time introduced a new programme "Program PembangunanRakyat Termiskin" (PPRT or Development ProgammeFor The Poorest),which is a poverty-focussedprogramme. In line with this development, there shouldbe a close coordination and cooperationbetween the Ikhtiar Programme the PPRT both have focus and as a very similar - the hard-core poverty group. Thus 369
while Ikhtiar will be focussing on the provision of credit for income generation activities, the PPRT, especially its ASB loans, should be extended to the Ikhtiar members[1].
The above discussion suggeststhat government policy-makers need to take into considerationall the essentialfeatures of Ikhtiaes development framework, which shows the form that "alternative development"could take and make to work. At the sametime they should not discount their own wealth of experiencegained during the NEP (whether successor failure) in pursuing and formulating policy relating to poverty alleviationin future.
12.4.2 POLICY RELATING TO THE DEVELOPMENT OF RURAL INDUSTRIES [21
The findings show that about 20 percent of the participants of Ikhtiar schemewere in non-agricultural undertakings, involving themselves in a simple manufacturing processes,producing dry foodstuffs such as cakes,biscuits, bananaand tapioca chips, other local delicacies,coffee powder, betel-nuts,chilly sauceand curry powder. These products are marketedlocally and are in good demand.Howeverg these goods were producedon an individual or householdbasis.
There is potential for these participantsto expandtheir businessinto more viable and profitable undertakingssuch as on a joint venture basis. This is in line with the stated policy of the NEP PI and the NDP. OPP2 (Malaysia, 1991b: 124), for instance,stated that "rural development...will continueto emphasizethe developmentof the small and mediumsize industries".Towards achievingthese efforts (Malaysia, 1991a) a number Sixth of Rural Growth Centreshave been identified and will be implementedunder the MalaysiaPlan [4].
Ikhtiar hasalready played its role in helpingthe participantsto rise abovethe poverty threshold,promoting them into small-timevillage entrepreneurs. What is needednow is for other governmentagencies 151, through cooperation with Ikhtiar, to providea sourceof know-how,industrial advisory services and training, handling the marketing of the productsamong others. Thus, there is the potentialfor nurturingthese village entrepreneursto be involvedin settingup smallrural industries,basically in the agro- basedand food-based industries on a groupbasis in order to reapeconomies of scale. Thesecould also be operatedon an individualor cooperativebasis. The small-and medium-sized industries,as noted by Mahbob (1992), have a crucial role as a spawningground for the birth of tomorrow'sentrepreneurs. 370
It has also beenreported recently that (New Straits Times, August 1994) the Ministry of Rural Development will be introducing a new concept called Desa Wawasan develop (Village With a Vision) to more than 10,000 villages in the country. In line industries with this new concept,village will be further developedso that more rural is folk can take part 161.Thus there scopefor Ikhtiar and governmentagencies to work out a suitablestrategy to promote 1khtiar'svillage entrepreneursstill in the "embryonic stage",that may representfuture Bumiputra rural entrepreneurs.As the saying goes, "Romewas not built in one day".
12.4.3 POLICY TOWARDS THE CREATION OF COMMERCIAL AND INDUSTRIAL COMMUNITY AMONGST THE BUM][PUTRA (BCIC).
The developmentof BCIC was a major goal under the NEP and will continue to be pursued under the NDP 171.Under the NEP, the achievementsof Bumiputras in mediumand small industrial activities were least successful.On the other hand, in the wholesaleand retail sector,there were at least someencouraging results, but thesestill need to be promoted, especially retail business, which, as noted by Mahathir (Mohamad, 1992), has poor representation among Bumiputras. Most of these operationsare in petty trading and the retailing activities, which include mini-markets and supermarkets(Malaysia, 1991b).
Under the OPP2, government will continue to make available the necessary institutional and financial resourcesto ffirther support the developmentof the BCIC been concept. Consistentwith the BCIC policy (Malaysia, 1991a) a special fund has createdby the Burniputra InvestmentFoundation (Yayasan Pelaburan Burniputra) with an initial amountof M$200 million [8].
The findings of this study show that Ikhtiar members pursuing non-agricultural activities, such as petty trading, hawking, opening a small provision shop, tailoring businessand operatinga small petrol kiosk, are quite consistentwith the governmenes industrial aspirationsof encouragingthe participation of Burniputra in commercialand activities.Thus in order to push them further, venturing into somethingmore viable so (such as to generatea much higher income, it is appropriatefor governmentagencies as the PNB, MARA, SEDC and other related agencies)to work closely with and coordinate their effort with the Ikhtiar Programme. This is necessaryin order to promote the promising and successfulIkhtiar memberswith various and necessary facilities, such as training, consultancy,advisory services and more important, the 371
provisionof businesspremises, especially those with the potentialof beingviable and innovative.
Our study shows that most of the Ikhtiar members had been bypassed by the governmentprogrammes in the past. This reflects the fact that governmenVsmachinery had not penetrateddeeply enough into the rural areas,where there were rural people who with the help of the Ikhtiar scheme,have shown that given the opportunity, organizationand nurture, they have the potential of becominga strong force in BCIC.
12.4.4 NATIONAL AGRICULTURAL POLICY (NAP)
Due to some shortcomingsof the NAP formulated in 1984, [91 a new NAP has been formulated for incorporates development the period 1992 - 2020 which the new philosophy and directions as embodied in the Second Outline Perspective Plan and Vision 2020 [101. The main issues to be addressed here are how the Ikhtiar Programme(and its members)fit into the overall framework of the NAP.
The successof Ikhtiar membersin improvingtheir householdeconomic situation has resultedfrom variousincome generating activities, such as crop cultivationand animal husbandry,which arein line with theNAP which aimsat incomemaximization through efficientutilization of resources[111. The successof the Ikhtiar membersin improving their economicsituations was not the resultof the variousextension services provided by the goverment agencies.
As we would recall from discussionin Chapter9, to have a truly successfulcredit it programmeas a major anti-povertyprogramme, it will be necessaryto make an integral part of the rural developmentprogramme, i. e. there must be supporting services,a viablemarket, good infrastructureand extensionservices. Since the Ikhtiar Organizationis not capableof providing such services,it has to dependon other governmentagencies. However, the extension servicesprovided by government agencieshave been quite limited.We haveseen in Chapter10 that around88 percent of the sampleIkhtiar membersin Baling did not receivethe extensionservices while pursuing their activities. Findings also suggeststhat there is a rather "loose" associationbetween the Ikhtiar Organizationand the government,notably the extensionservices provided by its agencies.
The sustainabiltyof the participants'projects should be stressedand at the sametime steps be taken must to ensurethat participantswill receive the various extension 372
serviceson a sustainablebasis. An approach involving coordination and cooperation betweenthe Ikhtiar Organizationand Government agencies,such as the Department of Agriculture, Department of Fisheries, Department of Veterinary, Farmer Agriculture Marketing Authority (FAMA), Farmer Organization Authority (FOA) and others, should be promoted. The Fifth Malaysia Plan (1989) recognized that the adequate provision of support services is one of the key factors to higher productivity in agriculture.
12.4.5 POLICY TOWARDS BORROWING PRACTISES AMONGST THE FORMAL BANKING
The traditional types of security and collateral normally required by formal banking institutions include mortgagesover land or immovable property and personal or third party guarantees.Not being able to fulfill the above criteria is a major constraint precludingthe poor from having any satisfactory accessto formal banking credit. The formal banking systemsin Malaysia do not service the financial needs of the poor becausethey believeit would be bad for their profits. The banks also perceivethe poor to be bad credit risks. Thus only the rich and better-off customersare given accessto bank credits and services.
The Ikhtiar conceptof group-basedcredit programmesand "mobile banking" has shownthat not only are the poor trustworthy, they are also creditworthy.This is attestedto the fact that the repaymentperformance on Ikhtiar loanshas been around 99 percent.The AgriculturalBank of Malaysia,with the better off as its customers, could only managea cumulativerepayment rate of 52 percent(see Chapter4). It would seemthat financiallyviable institutionscould be establishedin rural areasand run alongcommercial lines if their serviceswere madeavailable to all. The primary responsibilityfor expandingbanking servicesin rural areaslies with the existing bankingsystem.
Thusit is possiblefor the banksto reachthe poor if they are preparedto amendtheir conventionaloutlook and way of doing business.However, such a changein the outlookof banksshould be activelypursued by the nationalpolicy-makers, particularly sincebanks are controlledby Government1121. We haveseen in Chapter 5, that the recent developmentthrough the actions of the Islamic Bank, Credit Guarantee Corporation and Malayan Banking, in establishinglinkages with the lkhtiar Organizationfor supplyingthe loan capital (despitesome shortcomingsas noted in section12.3 above), suggests that a revolutionarydirection for bankingpractise is now 373
local slowlyemerging. Many more financialinstitutions be should encouragedto come forward in helpingthe poor peopleand begin to appreciatethe nationalobjective of eradicatingpoverty.
12.4.6 17HE RED BOOK II (BUKU MERAII DUA) AND REGIONAL DEVELOPMENT
The Ikhtiar to implementingits conceptof adhering developmentstrategy at the micro- i. based districts in its level, e. on operations (having a branch office in every district) is basically in line Government's [131 with the Red Book II that was launchedin late 1987 as an effort to return to micro level planning with the district as its focus 1141. Governmentthought that this was necessary,since micro planning was seen as being directly ableto address certain specific issuesrelated to poverty and to give impetusto its human resource development programme (UPP, 1988b) [151. Seen in this connection,the Ikhtiar concept is therefore very similar to the government'sapproach to micro-planning.The main objective of the district developmentunder the Red Book II is to encourageeconon-dc activities at the district level, through the combinedeffort of the private sector, voluntary organization and local population with government agenciesfor the developmentof a district (Siwar, 1992). Vrith regard to this, Ikhtiaes effort is also in line with government'saspiration of encouragingthe private sector and voluntary organizationsto play their roles in the economic developmentof a district. The practicality of using the district as a pragmatic territorial framework for planning and implementation of development has also been supported by Friedmann (1980, cited in Mohd Zain, 1989) who contendsthat districts are large enough to meet most of the basic needsof the population and they are also small enough so that the entire population of the areacan have reasonableaccess to developmentinitiatives.
The refocuson districtsas the basicunit of developmentby government,suggests that the role of the variousRDAs might be progressivelyreduced and subsequently phased out (UPP, 1988b)1161. This might be a reality as the Ministry of Rural Development has recentlyannounced (New StraitsTimes, July, 1994)that by 1997 all the RDAs exceptfor threewill be disbanded1171. This developmentsuggests that emphasisnow is on existing administrativedistricts which will constitute the basis for regional district developmentplanning. Mohd Zain (1989) sees the potential of the administrativeframework (i) as an effort towardsa bottom-upapproach to planning, (iii) (ii) as providinglinking mechanismsbetween the peopleand the governmentand the as helpingto hastenthe processof decentralizationand thus reducingsome of problemsassociated with centralism. 374
The above developmentsuggests that the District Office through its District Officers will be playing a positive role in the development of the district. However, District Offices do not have the power (INTAN, 1991) to coordinate the activities of the various development agenciesof the government that are district-based. Therefore District Offices should be given full power to enable them to coordinate the implementation of poverty alleviation programmes at the district level and also to coordinate the development activities of the various development agencies in the districts through intra or inter-departmentalcooperation. In relation to this, the Ikhtiar Organizationand the District Offices should work closely together. While Ikhtiar will be providing credit to its participants,District Offices can play a role as "Local Central Agencies" in linking the services and assistancefrom the various agencies in an integratedmanner as neededby Ikhtiar participants and also the poor in general.
It is also interestingto note that the establishmentof the Ikhtiar regional offices based on a combinationof more than one state to form an administrativeregion [181 is quite similar to the government'sregional development programme of region delineation. The Fourth Malaysia Plan noted that a region may encompassan entire state or a group of states(Malaysia, 1981) 119]. It has been noted that (Cho, 1990) there was a gradual shift from thinking along state lines towards regarding the region as spatial entitycontaining one or morestates.
Regional development,being part of the national development policy, is concerned with the improvement in the livelihoods of the people, especially those in the less developed regions. The redress of regional imbalances would create greater opportunities for social and economic amelioration and advancementof people in the different parts of the country and hence enhance their well-being, but would also contribute to improved cohesion and accelerationof developmentof the country as a whole (Mohd Zain, 1989). Seen in this connection, the Ikhtiar Programme has been playing a positive role in fulfilling the national objective of poverty eradication by helping the very poor rural households in the poorest districts located in the less developedregions of the country, especiallythe Northern Region.
Therefore,as far as the District of Baling is concerned,which is also under the jurisdictionof KEDA, it would be in the spirit of helpingthe poor if there shouldbe a coordinationand cooperationin the roles playedby Ikhtiar and KEDA 1201.This would avoidthe overlappingof functionsand avoid unnecessary wastage of resources. Such cooperationshould be actively pursuedby national policy-makers,so as to integrate the functionsof the two agenciesin a more comprehensiveor integrated manner. 375
12.4.7 HUMAN RESOURCES AND WOMEN IN DEVELOPMENT
An important in the development human aspect of resourcesis the provision of for Malaysiansin opportunities all order to participatein the economiclife of the (Malaysia, nation.Under the NDP 1991b),attention will be given to developingthe labour force it rural to enable to enter the labour market that is becomingmore sophisticatedand technology- oriented.
be The rural labour force should encouragedand motivated to shift from traditional low activities,usually associatedwith productivity to high value-addedmodern sector business, activities such as manufacturingor Thus improved accessto information and new skills through training are therefore necessary.The rural poor must be helped towards the upgrading of their skills and also managementcapacities in order to respondto the changingdemands in the labour market. This in turn will improve their productivity and enablethem towards the utilization of resourcesmore economically and effectively.
The last two decades,as noted by the OPP2 (Malaysia, 1991b), have seenan increased participation of women in the developmentprocess in the Malaysian context and also in other developingcountries as mentionedin Chapter 3 1211.In 1988 femaleworkers madeup about 35 percent of the labour force. About 82 percent of the femaleworkers were found in the wage-employment and unpaid family work. Government, upon recognizing the vital role of women in development, stated that future policies will focus on ensuringwider employment opportunities for them. In relation to this, more training and retraining facilities will be provided.
In this connection,the emergingroles of womenas important development partners, as seenin the Ikhtiar Programme,shows that women have and can becomeimportant forcestowards contributingto the householdeconomy. Ikhtiar women participants havecontributed to householdeconomic improvement in the areaof study.Thus their in roles(together with that of their partners)could be enhancedwith further training sharpeningtheir alreadyexisting skills. The findingsof this study haveshown that at present,the interestof the Ikhtiar memberhouseholds could be eitherin agriculturalor non-agriculturalactivities. Therefore steps must be takento ensurethat they are given 1221. suitabletraining or retrainingthat shouldbe in line with what they are pursuing Thus,in the rural areasof Malaysia,there is an abundantof humanresources that will be further be ableto contributetowards national growth if their capabilitiesand skills sharpened. 376
12.5 RECOMMENDATIONS
Two types of recommendations are discussed here. The first group of recommendationsconcerns the improvement of the Ikhtiar Programme. They are derived basically from the questionnaire survey of 254 samples. It also includes observationsand analysis from the author. The second type of recommendation is more general on the overall improvement of the government's poverty alleviation efforts that can have direct bearing on Ikhtiar participants in particular and other rural poor in general. It includes institutional, agrarian, marketing reforms, macro-policy supportsand others.
However, the recommendations proposed here are not exhaustive and will not necessarilybring forth immediate solutions to the problems and issuesrelated to the poverty alleviation efforts both by the government and the Ikhtiar Organization. It is hopedthat theserecommendations will initiate more seriousthinking of the issuesthat are being highlighted.
12.5.1 FIRST GROUP OF RECOMMENDATIONS: SUGGESTIONS FOR THE IMPROVEMENTS OF THE IKIITIAR PROGRAMME
Table 90 summarizesthe suggestionsput forward by Ikhtiar memberstowards the overallimprovement of the programmein which they are currentlyparticipating. The most popularsuggestion was: the needto speedup the processof giving out loans (notedby 21.2 percentof the samples).There still existsthe problemof "late loans" which can interrupt the smoothnessof members'pre-specified and well planned activities,which aredisrupted by late arrivalof loans.
16.3percent of the memberssuggested that it was necessaryto changethe weekly meetingformat to either a fortnightly or monthlybasis. Members felt that this would reducethe needfor havingto attendthe weekly meeting.15 percentsuggested the needto review the rule of "other membersbeing deniedfurther loans if there is an arrearsproblem". Members also suggest that the weekly paymentwhich is a burdento some,needs to be changedto a monthlybasis (noted by 13.3percent of the samples). 377
Table 90 Suggestions For the Improvement of The Ikhtiar Programmme By Members
Codes Suggestions Freq. (N) Percent
1. Speedup the processof giving out loans. 51 21.3
2. Weekly meetingshould be changedto either a 39 16.3 fortnight or monthly basis.
3. Review the ruling that "if a memberis in arrears 36 15.1 other memberis denieda loan".
4. Weekly paymentsshould be changedto monthly 32 13.4 payments.
5. Increasethe size of the first loan by at least 26 10.9 30 to 40 per cent.
6. Bigger loans (secondloans onward) should be 16 6.6 repaid in between70 to 100 weeks insteadof 50 weeks.
7. RequestingAIM to providea placefor carryingout 4.6 their smallbusiness (e. g. for sellingof agricultural or non-agriculturalgoods).
8. To increasethe extensionservice. 8 3.3
9. Group savingsshould be investedin the ASB scheme. 6 2.5
10. To re-schedulerepayments of loansfor members 4 1.7 underspecial circumstances of genuineproblems (e.g. projectnot doingwell).
11. To reducecentre membership by at leasthalf 4 1.7
12. To increasethe numberof Ikhtiar staff. 3 1.3
13. Reducethe transferring of Ikhtiar staff. 3 1.3
Total (N) 239 100
Note :N= 239. Only 239 (out of 254 respondents) gave the suggestions.The remaining 15 did not make any comment or suggestions.This table is based on an 'open-ended' question (i. e. question 44 of the Questionnaire as in Appendix 6a). Sin-dlaranswers given by respondentsare grouped into codes I to 13 and are shown in the abovetable. 378
However, this suggestionof changing weekly meeting and weekly payment to either fortnightly or a monthly basisis likely to undermine repayment rates as experiencehas shown that weekly payment and regular contacts through weekly meetings has been associatedwith high repaymentrates of Ikhtiar loans.
Similarly, 7.5 percent of the second-timeborrowers (with bigger loans than the first- timers) suggestedthe need to review the repaymentperiod by spreadingit out over a period of 70 to 100 weeks, dependingon the type of activity, especially agriculture, but indicated that weekly payment should be maintained. There were also some very eager entrepreneurswho thought that the first loan of M$500.00 was too "small" for their activities and suggestedthat it should be increasedby at least 30 to 40 percent (noted by 11.3 percent of the samples).In this connection it is therefore appropriate for the Ikhtiar Organizationto review it presentpolicy of loan size.
Somemembers (3.3 percent)felt that the extensionservices "provided" by Ikhtiar throughvarious government agencies were quite limited and thereforeneeded to be intensified.In general,Ikhtiar depositsthe GroupFund with the National SavingBank via trust accountsin Ikhtiaesname. A competitiverate of interestis paid by the Bank on thesedeposits. However 2.5 percentof the membersthought that it would generate moreprofit if theywere depositedinto the ASB scheme.
Some'ofthe isolated,but still importantsuggestions put forward by memberswere: (i) in the needto reschedulepayment of loansfor memberssuffering temporary setbacks their activities,(ii) the centremembership of 30 memberswas too large andneeded to being be reduced.Furthermore members also complainedthat centreswere generally "dominated"by the "senior"members. However, the conceptof 5 per group was seen increase as importantand shouldbe maintained.Some members also saw the needto in the numberof Ikhtiar staff in Baling branchas the numberof field staff is to small termsof the increasingnumbers of participants(1.3 percent).Finally 1.3 percentof the membersalso thought that the idea of transferringand changingstaff had created problems."New" staff (from otherbranches) joining the Baling branchneeded time to establishclose relationships with the participants.
From the abovediscussion, it was thus clear that there are someareas in the Ikhtiar Programmethat needto be reviewed,so as to makeit more effectivein future. The findings of this study show that most membersseem to agree that the Ikhtiar Programmewas very good and effective.Nevertheless what they have suggested does above not meanthat the membersdislike the organization,but imply that there 379
are someareas that may havebeen overlooked by the Ikhtiar Organization and need to be addressed.This is necessaryin order to reduce the number of membersfrom leaving the organization. Afler all, Ikhtiar has stressed its concept as a "learning process approach"and feedbacksfrom its own membersshould not be overlooked.
Other suggestionsalso include the author's own observationswhich are summarizedas follows:
1. The problem of "late loans" should be overcome as soon as possible or the borrowers may resort to the conventionalway of borrowing, i. e. from non-formal institutions and are likely to be locked into a cycle of debt.
The findings of this study suggestthat Ikhtiar's policies on loan duration are not tailored to the nature of the project activities undertake by its members. For instance,in the agricultural activities such as animal husbandry(chicken rearing), Ikhtiar should considerextending the loan period from 12 to 16 months, by virtue of the fact that young animalshave to be nurtured for some months before being sold to generatecash. Thus, a repayment grace period should be applied for the first four months or so. On the other hand, in the case of non-agricultural activities, such as hawking and retailing activities, in which generally the generationof income or turnover of stock is quite rapid, a loan period of I year is appropriateand can be repaid on a weekly basis as required by Iklitiar. In relation to this, it is therefore necessaryfor the Ikhtiar managementto be sufficiently flexible so as to ensurethat its policies on loan duration are in accordancewith its members'nature of activities and needs.
3. While default shouldbe discouraged,re-scheduling of debtsmay be considered is under specialcircumstances of genuinehardship, for instancewhen a project not doingwell (suchas those members in the animalhusbandry).
4. One possibleand desirableinnovation is to create a crop/livestockinsurance scheme,which hasnot beenfeatured in the lkhtiar Programme.This is important as insurance schemesare an obvious way of dealing with unforeseen circumstancesof participantactivities relating to crop failureor deathof livestock. Ikhtiar managementshould look into this possibility1231. 380
5. The main limitation of the Ikhtiar Programme,being a non-government scheme,is obviously the lack of financial viability and it needs to depend on outside funds (but within the Malaysia context). As mentioned in Chapter 11, the government allocation of M$18.2 million for Ikhtiar in pursuing its activities for the Sixth Plan was extendedfrom its original disbursementperiod from 1991 to 1995 to 1991 to 2020 has causeda seriousshortfall of loan capital. While it is true that by creating linkageswith the local banks is a positive step, it may only overcome some of the shortfall. Furthermore, there were also some shortcomings (as noted in Section 12.3). The only way out is for a government take over. If so, what is likely to happenis that the repaymentrate will drop as in the government-sponsoredrural credit programme.The poor will lose an effective way of pulling themselvesout of poverty. What is neededis for the governmentto give all the necessarysupport financially and the necessarysupport servicessuch as the extensionservices. Thus in the spirit of helping the poor, the Ikhtiar Programmeshould be functioning as a non-government organization but should play a complementary role to the existing governmentpoverty alleviation programmes.
6. Ikhtiar should also look into the possibility of encouraging and nurturing its participantswith the potential to pursuejoint-venture projects by providing them with bigger loans. Some of these potential activities are in the area of food processing industries, aquaculture or pond-fish rearing, honey bees and rabbit rearing. Rabbit meat is gaining in popularity in Malaysia and therefore promisesa good market. There are also other areas that can be exploited, notably the production of industrial crops such as cocoa and tobacco, which have not been prominently featured in the participants'activities. Cocoa prices, it is noted (New Straits Times, June, 1994) are set to soar 1241.The recently establishedMalaysia Cocoa Board (MCB) in 1989 marked the growing importance given to cocoa production in the agricultural developmentof the country (Malaysia, 1991 a).
7. Ikhtiar managementshould also look into the need of revising annuallythe maximumlimit for an individualloan so asto be in line with inflation.
8. Ikhtiar participants who have managedto cross the income level of more than M$15000. should be encouragedto seek credit from other financial institutions, but Ikhtiar managementshould be playing as an advisory roles in this aspect. 381
12.5.2 SECOND GROUP OF RECOMMENDATIONS: SUGGESTIONS FOR THE OVERALL IMPROVEMENT OF THE GOVERNMENT POVERTY ALLEVIATION EFFORT.
improvement The recommendationsfor the of the national poverty effort need to take the following issuesinto consideration as discussedbelow. These have an important bearing not only amongthe poor and the very poor householdsin general, but also on 1khtiar membersin particular.
12.5.2.1 INSTTrMONAI,,,, AGRARIAN AND MARKETING REFORMS: SOME CONSIDERATIONS
1. Institutional Reform: Thereis a needfor an institutionalreformation in the existing poverty alleviationmachinery of the government.The existing delivery systemin particularmust be designedwith the target group in mind. As suchit mustbe efficient and effectiveand developmentinputs must be deliveredto target groups that are properlyidentified. It has been statedin Chapter4 that there was a proliferationof governmentagencies leading to overlappingof functions.There is an urgent needfor inter-departmentalor inter-agencycooperation in the areaof poverty alleviation.This is to ensure smoothnessin the implementationof programmesand to avoid unnecessaryduplication of effort. 1khtiarparticipants! performance would havebeen enhancedif someservices which were needed had been provided in parallelwith credit, by suchas veterinaryservices, agricultural extension and marketingsupport provided the government.However, as noted in sub-section12.4.4 above,the successof the Ikhtiar membersin improving their economicsituations was not the result of the variousextension services as providedby the governmentbecause 88 percentof the samplehouseholds did not receivesuch services while pursuingtheir activities.
Furthermorea new agencyto dealspecifically with povertyissues and problems should leading be established,such as a "Department of Poverty Affairs". It shouldplay a involved role asthe "centralagency" that coordinatesthe activitiesof variousagencies by in povertyeradication. Another important agency that couldbe created government deal is the "National Institute of Poverty Research", an agency that would specificallywith poverty research.
deficiencies 2. Agrarian Reform: There is also a needto review and deal with the landless long associatedwith the structuralproblem issues, i. e. land.Farmers, whether or near-landless,tend to rent land.Therefore it becomesnecessary for governmentto createor promotea new institutionin the form of a Land Bank. This bank could play a 382
leading role as an institution from which land or additional land could be rented or bought by the rural households,notably the poor or the very poor, as well as the Ikhtiar members.This bank and its networks would act as a central agency (and local central agencies)keeping all data related to land ownership, operation, idle land and other land matters.It would also be guiding and advising the poor in obtaining land.
In the first instance,the above suggestionmay seeminfeasible. In Malaysia, land is a state matter (as noted in Chapter 4) and the Federal Governmenthas no direct control over land. Assumingthat the Federal Governmentis willing to promote the concept of a Land Bank throughout the country as suggested,but if there was no support from the states,then such a concept could not be implemented.However as noted by Mohd Arif (1989), even though land is a state matter and the Federal Government has no control over land, the Federal Government can coordinate land matters uniformly through the National Land Council, which is comprised of membersfrom tile Federal and various state governments.
Thus, the FederalGovernment can at least exercisessome influencein the Land Council.Furthermore, politically, all the statesin PeninsularMalaysia (except for the State of Kelantan)are under the "National Coalition", as the ruling party, which suggeststhat "somethingpositive can be worked out" by virtue of the fact that (i) as we haveseen in Chapter5, both the Federaland statesgovernments, have supported financiallythe 1khtiarProgramme and (ii) the objectivesof the Ikhtiar Programmeare to reducerural poverty andtherefore help the statesin the reductionof rural poverty, notablyin their poorestdistricts. Furthermore the role of AIM is also in line the New DevelopmentPlan (NDP) philosophyof poverty reduction.Seen in this context, it would be in the spirit of helpingthe poor if the conceptof a LandBank was tried. The relationshipbetween the statesand Federal governments with the lkhtiar Organization havebeen established, which could be further strengthenedfor the benefitsof the poor rural households.
The findingsof this study show that more than 70 percent of the sampleIkhtiar memberhouseholds were involvedin the variousagricultural-related occupations (such as rubbercultivation, padi farmingand other crop cultivation)which is basicallyland- basedfor both the "before"and "after" situations.We haveseen in Chapter9 (basedon one of the popular activities among Ikhtiar members,i. e. rubber cultivation for instance), that with the availabilityof Ikhtiar loans,many of the poor rural households have resortedto the leasingof rubber smallholdingfrom various land-owners.This seemsto suggestthat land is obviously an important factor in the generationof householdincomes amongIkhtiar members.The findingsof this studyalso suggest(as 383
in Chapter10) that Ikhtiar shown majority Of memberhouseholds (68.1 percent)were land landlessand among those who owned (31.9 percent), the size was rather (below 0.5 hectares).Perhaps uneconomical government,in line with its poverty eradicationpolicy couldlend a helpinghand in this area,especially through the leasing (or land) Ikhtiar of land rentingadditional to the membersfor cultivationpurposes at a leaseprice or rent whichcould be madelower when comparedto the local landlord.In be the long run, local landlordsmay "forced" to reducethe leaseprice of land or land rent. This couldbe madepossible through the conceptof a "Land Bank" as suggested discussion, above.Based on the above it can be arguedthat land is neverthelessan importantfactor in the livelihoodof the rural people,which asAhmad (1983: 157)put it:
"Land is without doubt an important source of livelihood or income generator in the rural areasif agriculture is to remain the mainstayof rural activities"
3. Marketing Reform: It has been argued that the present poverty alleviation strategy by the governmentseems to focus more on productivity rather solving the problem of marketing(SERU, 1990).Experience also shows that farmers generallyface a problem of getting a fair price for their agriculture produce. They are generallysubject to unfair price practisesfrom middlemen and other buyers. In this connection, it is therefore necessaryto reform the area of marketing. It would be appropriate if government could resort to the concept of "buyer of the last resort" of agricultural produce of the rural producerswhere necessary.FAMA (Farmer Agricultural Marketing Authority), for instance, could play a leading role in this area. LPN (National Padi and Rice Authority), for instance, has been established,among others, as an agency (SERU, 1991) that buys padi from farmers on a fair price basis.
our study has shown that Ikhtiar membersin the agricultural-relatedactivities (such as vegetablefarmings as seenin Chapter 9) had to harvest their farm produce and market farm it immediately as they lack storage and refrigeration facilities. in general, this producewas bought by the local buyers or middlemenat a price lower than the market its price. Thus in order to ensurea fdir return on their produce, government can play role through its marketing agencies(such as FAMA) of buying this farm produce at a be fdir price. In addition, "local central refrigeration and storage facilities" could also set up in various locations in the 5 mukims of Baling 1. This could at least overcome Ikhtiar the problem of perishablegoods. These servicescould be provided not only to local members, but also to other poor rural farmers. It is suggested that the Department of Agriculture in the district of Baling could play a leading role in this area. 384
It has been shown in the earlier (sub-section 12.4.2) that the Ikhtiar members in the non-agricultural activities were involved in various simple manufacturing processes, producing dry foodstuffs such as cakes, biscuits, banana and tapioca crisps, chilly powder and curry powder. However, these goods were only marketed locally (or mainly confined to the District of Baling). Thus, it is necessaryfor the appropriate government agencies to step in and provide the necessary advisory services and technicalknow-how particularly in the upgrading of the quality of the goods produced. This can be seenas a first step towards the enlargementof market thresholds, not only within Baling but also the other areasoutside the district.
12.5.2.2 MACRO-POLICY SUPPORT: SOME RELEVANT ASPECTS
Apart from the variousreforms discussed above, the micro-leveldevelopment efforts of Ikhtiar which can havefurther impact on the lives of the poor and poorestof the poor requireappropriate macro-policy support 1251.Th6se include pricing policies, subsidypolicies, interest rate structures,exchange rate policies, monetarypolicies affecting credit expansion and inflation, expenditure policies and investment programmes.Haque and Tusneem (1992: 6) haveargued that "while the exactresult of thesepolicies will dependon a variety of factors, nationaland international,which cannotbe predictedin advance,it is likely that poverty reductionwill be greaterwith themthan without". Amongthe relevantmacro-policies are:
4. One of the most important programmesundertaken by government in its poverty alleviation effort are subsidy programmes,cash and credit subsidiesas incentives to promote the adoption of new technology, finance production and marketing (Mustapha, 1988a). But experience shows that government subsidies (based on discussionin Chapter 10) have fdiled to reach the target group effectively as they are siphoned-off along the way by the richer farmers both in Malaysia and other in developing countries. Similarly our study has also shown (based on Table 82 Chapter 10) that government assistanceand subsidies(such as livestock assistance, by less fertilizer subsidies,replanting grant and extension services)have been received than 15 percent of the Ikhtiar members,which suggeststhat the benefits did not reach a bigger spectrum of the target group. Thus in order to reach the target group effectively, it is necessary to resort to suggestions on institutional reforms as discussedearlier. This is to ensure that government's subsidy programme or other assistancecan be directly aimed to the target group, including the householdsin the Ikhtiar scheme. 385
5. Apart from the programmes, subsidy governmentcan also resort to Pricingpolicies to farmingcommunities. Government asa measure support canexercise the conceptof fixed definitely a price systemwhich would assurethe prospectof a fair returnto rural including agriculturalproducers, smallOperators in the 1khtiarscheme.
12.5.2.3 OTHER RECONMENDATIONS
Steps be to 6. should taken encouragethe participation of the rural people in rural in food industries,especially the area of processing,handicrafts based on the utilization of local resources, agro-based and other industries on a small-scale basis. The emergenceof an informal sector among the rural people as evidencedfrom the Ikhtiar participants, involving themselves in various petty trading activities should be promoted with the necessarysupport. Steps should be taken to provide them with a smalltrading area(such as a hawker complex, a small stationary stall or a push-cartfor those in the hawking activities).
7. Lastly, there is also a need for the governmentand the Ikhtiar Organizationto cooperateand coordinatetheir efforts in a mutually supportiveway so that their combinedimpact on poverty alleviationis maximized.The government,as a major initiator in development,has huge financial and manpowerresources at their disposal. On the otherhand, the Ikhtiar Programmeis well-knownfor its capacityto servepoor householdseffectively, but it lacks the kind of resourcesthe governmentcommands. Thus, only through an integratedgovernment-1khtiar approach, can the problemof extensionservices, training and expertsupervision in additionto credit, be overcome. Thus there is also a potential of integratingthe governmenfsrecently introduced "DevelopmentProgramme for the Poorest"(Program Pembangunan Rakyat Termiskin or "PPRT")with that of the 1khtiarcredit-based poverty programme so as to achieve maximumbenefit. To avoidduplication or incoherenceamong the two parties!actions, futureplanning should be built on a dialoguebetween them.
ý12.6 SCOPE OF FUTURE RESEARCH
Ikhtiar Being an exploratorystudy, it is inevitablethat not all pertinentissues of the Programmecould be examined.
In this study the main focus is specificallyon Ikhtiaes economic effects on the programmeparticipants. The successof this programmeis measuredin materialterms, 386
that is in increasesin householdincomes. In relation to this, the main concernof this studyis with the changesthat havetaken place in the participants'quality of life, based on 4 main developmentindicators, namely housing improvements,household expenditures,possessions of householdsitems and savings.The Ikhtiar Programme's successis alsomeasured in termsof its ability to reachthe very poor householdsin the studyarea. Having saidthis, we are now in a positionto suggestpossible areas that canresearched in future:
Beside economic benefits, there are range of social benefits, which are of great significanceto the poor arising from economic interventions.Robinson (199 1) has noted that amongthe social benefits are: (i) reduced dependenceon moneylenders and local political elites, (ii) greater independencein decision-making,(iii) greater participation and awareness,(iv) reduced social discrimination and (v) increased self-respectand mobility for women. These are some of the issues that can be investigatedin the contextof the programmeparticipants.
2. Similarly, there is a potential for exploring the impact of Ikhtiaes social component,i. e. the Sixteen Decisions on the programmeparticipants. (See Appendix 4)
3. The questionof sustainability,specifically financial sustainability,is clearly of fundamentalimportance for credit and income generation projects. For a programmeto be financiallysustainable it hasto be ableto cover its costs.Future researchshould look into this aspectof the Ikhtiar Organization.
Ikhtiar- 4. There is also a needto explorethe potential of creatingan integrated in governmentapproach in addressingthe poverty eradicationproblem this bodies, country.Now, there is a rather "loose" associationbetween these two found notablythe governmentextension services provided by its agencies.It was that the extension services have not adequatelyreached the programme participants. 387
12.7 CONCLUSIONS
The three main hypothesesthat were tested in this study are as follows:
HYPOTHESIS ONE:
Credit granted to the Ikhtiar Programme participants in the study area has been effective in increasing participants' income as well as reducing the incidence of 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 incomes based on the (i) cycles of Ikhtiar loans and (ii) types of activities they pursued with Ikhtiar loans.
HYPOTHESIS TWO:
An increase in income results from the economic ventures (through the utilization of Ikhtiar loans) undertaken by the programme participants ill tile study area has had a positive impact on their quality of life and also their savings. They are therefore better off than they were before and better off than the control group (non-participants).
HYPOTHESIS THREE:
The lkhtiar Programme, or the Amanall lkhtiar rural credit-culn poverty alleviation programme, has been effective in reaching very poor rural households (its target group) because the programme is designed exclusively for the very poor and implemented through a specially designed delivery system.
Findingsin this study tend validate the above three hypothesesand have been summarizedin sub-section12.3. The findings of this study suggestthat the Ikhtiar Programmehas succeededin reachingits target group and has effectivelyeliminated the non-poorbeing included in the programme.It hasalso succeededin improvingthe economicconditions of its participants.This has resultedin a further positive impact on the quality of life of its participants.The Ikhtiar Programmeconvincingly shows that is credit a critical missingelement in the developmentmodel of rural development. 388
By providing credit, many of the very poor rural householdscan be reached directly and preferentially.
The Iklitiar Programmealso provides some valuable lessonsthat can be incorporated into the planning and implementation of the broad-based and conventional rural developmentprogrammes. The implementation of the Ikhtiar Programme has some very important implications towards the national development policy, particularly related to poverty eradication,restructuring of society and various other development policies.
Two types of recommendationswere put forward. The first was specifically aimed towards the overall improvement of the Ikhtiar Programme based on its participants' perceptions.The secondwas more of generalrecommendations on the suggestionsof the overall improvementof the government'spoverty alleviation efforts. It includes the need for institutional, agrarian and marketing reforms. Some macro-policy support is also necessaryalong with the potential of the Ikhtiar Organization and governmentto cooperateand coordinate their efforts. Lastly some of the possible areasthat can be investigated were highlighted. These included the social impact and financial sustainabilityof the programme.
One main conclusionthat can be derived from this exploratory study is that the experienceof the Ikhtiar Programmeshows that a well-designedpoverty alleviation programmecan play a major role in reachingthe poor directly. It shows that a successfuldelivery system for the poor canbe designedand that othersmay learn from it.
The Ikhtiar Programmehas proved that the poor can utilize credit and other developmentinputs efficiently and productivelywhen they are organizedand work in groups.The Ikhtiar programmehas the merit of showingan alternativeapproach to rural developmentand how it could be made to work. Ikhtiar's approachcan be regardedas an effectiveinstrument of combatingpoverty. Experiencesfrom many developingcountries pursuing credit-basedpoverty alleviation programmeshave convincinglyshown that, as Sham(1991: 250) put it:
"Credit is increasinglyperceived as one of the most powerful meansfor alleviationof poverty in the short run. It providesthe poor with much neededaccess to productive resources, which can generate new employmentand income generating opportunities". 389
FOOTNOTES
The package of the PPRT has put emphasison 6 main projects (as stated in Chapter 4- See Footnote 33, chapter 4). However the most popular forin of assistanceunder the PPRT is the provision of interest-free loans of M$5000 for investment in the ASB schemes.Only households with incomes of less than M$175.00 per month are eligible. The M$5000 loan is to be repaid over 15 years. During the period of the loan, poor householdsare only entitled to the yearly dividend and bonus (dependingon the performance of the investment market; in generalthe dividend and bonus are in the regions of 10 to 15 percent, per year). However, part of the yearly bonus and dividend are to be deducted as repayment of the M$5000 loan. Thus, during the 15 year period, the initial capital of M$5000 is actually "owned" by government.Upon completion of the loan repayment,the poor households are fully entitled to the M$5000 plus all the dividends and bonuses accumulated.In practise,the borrowers do not have to pay anything from their pockets. Borrowers can also invest from time to time upon the availability of their own money into ASB schemes.For Ikhtiar participants,the provision of such ASB schemes(if they ever get one) will boost their spirits in their economic endeavor.The yearly dividend and bonus can be used as an additional source of capital in pursuing their income generating activities. There is a clear distinction betweenIkhtiaes credit basedprogramme and the ASB schemeunder the PPRT and if they go hand in hand will boost the spirit of the poor to strive hard in their battle againstpoverty. At the time of the survey none of the samplehouseholds had reported receiving the assistanceunder the ASB scheme. This is not surprising as the schemewas then at its preliminary stagesof implementationin the District of Baling.
This policy is inter-relatedwith the Policyof creatingthe BumiputraCommercial andIndustrial Community (BCIC)as, discussed in the next sub-sectionof 12.4.3.
3. Under the Fifth MalaysiaPlan (during the NEP) severalrural industrieswere promotedby the government,including (Ismail, 1989): (i) handicraftindustries using available raw materials such as minerals, livestock-by-products,sea- shells/coral,forest productsand textiles; (ii) manufacturingand serviceindustries comprisedof welding,motor repairs,building materials based on local resources suchas rubber, wood, coconutand palm oil and(iii) food processingindustries. 4. The Rural Growth Centre(RWG) is part of the rural urbanizationstrategy which hasbeen adopted by the governmentunder the Fifth MalaysiaPlan. This hasbeen discussedin Chapter4.
5. Some of the governmentagencies that constitutethe implementingbodies of the rural industriesprogrammes are: I. The Community DevelopmentUnit (KEMAS) of the Ministry of Rural Development, duty is whose to provideknow-how and expertise; 390
2. Agricultural Bank of Malaysia (BPM) and People!s Bank (Bank Rakyat) to provide the financingfor the activities; 3. NLARA, which plays the role of providing industrial advisory services, financingand training; and 4. Batik Malaysia and PernasaranKaryanika (Government marketing Agencies) who handlesthe marketing of products.
6. Under the Desa Wawasan concept, villages will be categorized as developed, developingand backward. Once the progress of the villages has been determined, it will enablethe government to plan and develop them accordingly. There are also plan make the villages progressive, attractive and profitable. As Malaysia is headingtowards achieving developednation status by the year 2020, the villages would have to competeto progress or they would not be able to reap the benefits enjoyedby the urban folk. Under the Desa Wawasan concept, rural industrieswill be further developed.
7. The new dimensionof the New Development Plan is to focus more on a rapid development of an active Bumiputra Commercial and Industrial Community (BCIC) as -an essential strategy to increase and render permanent Burniputra participation in the economy. This is actually part of the of the on-going exercise towards the restructuring of the society that has been pursued sincethe NEP.
8. The Governmentfor its part will continue to make availablethe necessary institutionaland financialresources to further support the developmentof the BCIC under the Sixth Plan. The Governmentwill set up an appropriate mechanismto monitor the performanceof the beneficiaries.The role and contributionof smallBun-dputra enterprises and traderswill also be given focus. Anotherimportant measure is the developmentof a complementaryand effective linkagebetween the role of Burniputracommercial and industrial associations with that of the governmentinstitutions and trust agencies.The linkage,it is hoped, data will enablegreater coordination of commercialactivities, strengthening of a for basefor entrepreneurs,providing advisory roles and developing potential more strategicparticipation by Bun-dputrain the modem sectors of the economy. Agenciessuch as the State Economic DevelopmentCorporation (SEDC) and PermodalanNasional Berhad (PNB) will be actively involved in setting up Commercialenterprises to assist the Bumiputra especiallyin the sectors of construction,repairing, business, motor mechanics,petrol service station and othersuch activities (Malaysia, 1991 a: 4647).
9. The previousshortcomings of the NAP were as follows: (i) It hasnot adequately addressedthe increasinginter-sectoral productivity differencesin particular developed betweenagriculture and the manufacturingsector, (ii) it has not sufficientviable options to supply-sideconstraints nor has it (iii) sufficiently the positionedthe sectorto take advantageof marketopportunities and manage (National developmentchallenges at both national and international levels AgriculturalPolicy 1992- 2000,1993).
10. The National AgriculturalPolicy (NAP) for the period 1992- 2020 replacedthe previousNAP afterthe latter'sreview in 1991. TheNAP (1992-2020)will address 391
important the NAP. shortcomingsof previous It Will continue to acceleratethe the into transformation of agriculture sector one that is highly modernized, commercializedand sustainable,whose growth and development momentumwill driven human led. be market and resource The overriding objective of the Policy is income the maximization of through the utilization of resources. Its specific include balanced development aims the achievementof between agriculture and The long the manufacturingsectors. term growth and development objectivesfor the creation of modem and commercialized agriculture sector will be achieved following (1) through the strategies optimization of resources,(2) accelerationof industriesdevelopment, (3) agro-based researchand development,(4) leading role (5) of private sector, reformed marketing, (6) development of a dynamic food industry. The NAP also stresseshuman resource development through training and upgrading of skills. The extension systemwill be improved with emphasison upgrading of expertise and on specialization and enhancing communication and extension methodologies.Access to credit will be improved and in the area of marketing, outlets and infrastructure will be increased. The NAIR therefore sets out efficiency as the overriding criterion for resource allocation and competitiveness as a fundamental basis to achieve further growth and developmentsof the agricultural sector (National Agricultural Policy 1992- 2000p1993).
Both the 1984NAP and the recentlyreformulated NAP (1992 - 2020) haveone commonaim, i.e. the maximizationof income through optimal utilization of resources.This is, in fact, the overridingobjective of the newNAP as mentioned above.
12. The Central Bank (Bank Negara Malaysia) was establishedin 1959 by the government.The bank has the authority to control and influencethe monetary systemand also the activitiesrelating to the financialinstitutions in'this country.In general,Bank Negaracan resortto a "moral persuasion"(rather than forcing) in in it encouragingbanks supplying capital into the sectorslareasthat are needof -
13. For instancethe State of Kedah has 9 Ikhtiar branchesoperating in 9 different districts,depending on the densityof the very poor rural households.The District of Baling, by virtue of having the highest number of the very poor rural households,was divided into Baling 1 and Baling 2, eachwith its own Ikhtiar Branch Office. The two districts of Kulim and Bandar Bahru, also in Kedah, to where,as there is a muchlower densityof very poor people,they are combined form one"district" with oneBranch Office servingthese two Districts.
14. The Buku Merah Dua, launchedin August 1987, is aimed at enhancingthe districts in developmentplanning function and capabilityof the administrative nationaldevelopment.
15. It has been arguedthat sincenational development tends to emphasizemacro planningstrategy whether at sectoralor spatiallevel (regionalor subregional), (that gives thereforeto overcomepoverty, development strategy at the micro level be specificfocus on local criteria and factors associatedwith the poor) should givenattention (INTAN, 1991). 392
development 16. The recent which suggeststhe possibility of some of the RDA roles will be slowly reduced and subsequentlyphased out are (Upp, 1988b): (1) the districts basic refocus on the as the unit of development, (2) the government For instance development privatization policy. the of the 9Desaru'tourist complex in KiEjORA was given to the private sector, (3) the realization on the part of the long it governmentthat in the run will be increasingly difficult to provide sufficient financial meansto redressregional imbalancesand (4) the fact of vastly improved physical accessibility to and within the RDA areas plus the ever-improving infrastructurefacilities in the RDAs which makes it possible for other fine agencies (or the private sector) to take over the functions of the RDAs.
17. The Rural Development NEnistry plans to disband all regional development authorities exceptfor KESEDAR, KEDA and PERDA by 1997. The RDAs which are expectedto be disbandedare KIETENGAIL DARA, KEJORA and JENGY..k The tasks to further develop the areas could be undertaken either by the state governments,government departments, or the private sector. For instance, the constructionof new roads could be given to the Public Works Department (PWD) while the opening of new land for plantations (if ever there is a need) could be given to the private sector (New Straits Times, July 1994).
18. Ikhtiaesoperation is decentralizedinto 4 regionaloffices (See Chapter 5). As such it is basedon delineatingthe statesas regionsbased on a combinationof a group of states.
19. MalaysiaRegional Framework is basedon using: identified (a) states/multistates- The Fourth MalaysiaPlan therefore six regions basedon states: (1) NorthernRegion, (2) Central, (3) Easternand (4) singlestate regions of Johor(Southern), (5) Sabahand (6) Sarawak.
4. Thus (b) the areaunder the jurisdiction of the RDAs hasbeen noted in Chapter underthese delineations, the areaunder various regional development authorities aretherefore a micro-regions. For Poorest 20. KEDA PPRrs is part of the national "Development Programme the (PPRT) discussed Households" or "Program Pembangunan,Rakyat Termiskin" as that in Chapter 5. This study seesthe potential role of KEDA as an agency can districts provide the Ikhtiar participantsnot only in the study areabut other under its jurisdiction with its PPRT programme that contains five main components (KEDA, 1992: 3):
1. econon-dcprojects; 2. kitchen gardeningprojects; 3. economicand skill training projects; 4. resettlementand 393
basicamenities and agricultural infrastructure.
in Chapter 21. Recall from the discussion 3 that the emerging role of women as an important partner in development has been widely recognized especially in the credit based poverty alleviation Programmes in many developing countries. For details, See 3.4.12- the Footnote in sub-section -- and accompanying 23' Chapter 3. The findings of this study also testified to the fact that Ikhtiaes women have madean important contribution to family welfare.
22. IFAD field experiencesin the credit based poverty alleviation programmes in many developingcountries have suggestedthat the rural poor need to be trained in their respective activities. IFAD (Jazairy et al, 1992: 183) has suggestedthe following:
a) Those directly involved in agricultural production need training in farm planningand management;rational decision-making;record-keeping; cost and revenuecomputation; the use of credit; the application of the new varieties, technology and improved farm practises; storage, processing and food preservation;skills for farm maintenanceand improvement and generating supplementaryincome; knowledge of governmentand other rural development services,policies and programme; knowledge and skill relatingto the family, such ashealth, nutritionand home econon-dcs.
b) The types of training required by those engagedin the off-farm.or non- agriculturalactivities includes new and improved technicalskills applicableto particulargoods and services;quality control; technicaland advisory skills to educatecustomers on the use and maintenanceof their products;management skills covering business planning, record keeping and cost accounting, procurementand inventorycontrol, marketanalysis and salesmethods, customer relationsand knowledge of governmentservices.
23. While it is true that paymentof insurancepremiums would definitelyconstitute a heavy burden on the alreadyvery poor rural households'tight budgets,this problemcould be overcomesfor instance,by apportioningpremium payments pro rata accordingto incomeamongst membersof a group, or perhapsIkhtiar can It think of a suitableway of makingpayments towards the insurancescheme. may It not be popularin rural areas,but it appearsto be a very necessarymeasure. shouldbe tried.
24. It hasbeen reported that the cocoaprice is projectedto increasefrom the present to price of US$750.00a tonne to US$825.00a tonne in the year 2000 and U$880.00in 2005(New StraitsTimes, August 1994). designed 25. Macro policies are generallytaken to mean guidelinesthat are and implementedby governmentto foster and achievethe developmenttargets Of economicgrowth, price stability,employment, manageable balance of payments, efficientresource allocation and equitable redistribution of income. REFERENCES
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NEWSPAPERS
BeritaHarian, March 1991
New StraitsTimes, December 1993.
New StraitsTimes, April 1993.
New StraitsTimes, July 1994.
New StraitsTimes, August 1994.
New StraitsTimes, December 1994.
UtusanMalaysia, March 1993.
UtusanMalaysia, September1993.
UtusanMalaysia, March 1994
UtusanMalaysia, July 1994. APPENDIX 1
THE SIXTEEN SOCIAL DEVELOPM[ENT PROGRAAME: THE SIXTEEN DECISIONS OF THE GRAMEEN BANK
1. We shall follow and advance the four principles of Grameen Bank - discipline, Unity, Courage and Hard Work - in all walks of our lives. 2. ]Prosperity we shall bring to our families. 3. We shall not live in dilapidated houses. We shall repair our houses and work constructing new housesat the earliest. 4. We shall grow vegetables all year round. We shall eat plenty of them and sell the surplus. 5. During the plantation seasons,we shall plant as many seedlings as possible. 6. We shall plan to keep our families small. We shall minimize our expenditures. We shall look after our health. 7. We shall educate our children and ensure that we can earn to pay for their education. S. We shall always keep our children and the environment clean. 9. We shall build and use pit latrines. 10. We shall drink water from tubewells. If it is not available, we shall boil water or use alum. 11. We shall not take any dowry at our sons' wedding, neither shall we give any dowry at our daughters' wedding. We shall keep the centre free from the curse of dowry. We shall not practise child marriage. 12. We shall not inflict any injustice on anyone, neither shall we allow anyone to do so. 13. We shall collectively undertake bigger investments for higher incomes. 14. We shall always be ready to help each other. If anyone is in dill'iculty, we shall all help him or her. 15. If we come to know of any breach of discipline in any centre, we shall all go there and help restore discipline. 16. We shall introduce physical exercise in all our Centres. We shall take part in all social activities collectively. 432
ArrENDIX 2
BENEFICIARIES PLEDGES
MUSLIM BORROWERS'PLEDGE
"It is our responsibilityto Allah to sWve to increase our income, to help our fellow Group and Centre members whenever they are in difficulties, to usetheprofitsfrom our loans to bring ourfamilies out of poverty, to motivate and provide the opportunityfor our children to continueschooling and to repay our loans weeklywithoutfaiL ALLAH bearswitness to all that we say and do."
NON-MUSLIM BORROWERS'PLEDGE
"It is our responsibilityto God (ourselves,our families and Amanah 1khtiar Malaysia) to strive to increaseour incomet to help our fellow Group and Centre memberswhenever they in difficultiesp to use the proflisfirom our loans to bring ourfamilies out ofpoVertyt to motivate andprovide opportunityfor our children to continue schooling and to repay out loans weeklywithoutfaiL God (Membersof our Group and Centre)bear witness to all that we sayand do." 433
APPENDIX 3
THE 9 PRINCIPLES OF THE AALANAH IKHTIAR RURAL CREDIT CUM- POVERTY FOCUSSED PROGRAMME
After our prayers, We Muslims, are responsible to Allah to strive to increase our income.
2. Using the Ikhtiar Al-Qardhul Hasan (benevolent) loan is one way of increasing our income.
3. Ikhtiar Loans are provided without interest, collateral or guarantors and no legal action will be taken to force us to repay. Outstanding debts will be written off for borrowers who pass away providing they had shown good overall performance.
4. We may borrow according to what is required for our project and our ability to repay weekly.
We agreeto contribute 5 per cent of our loan capital receivedinto our Group Fund and to pay the administrative charge of M$25 ringgit for the first loan, MS50 ringgit for the second,and M$75 ringgit for the third and subsequent loans.
6. In Amanah Ikhtiar Malaysia, we must come early to our Centre Meetingsq we must make our weekly repayment of the Ikhtiar Loang we must save M$1 ringgit weekly in our Group Fund and we must bear the consequences of a repayment default in our centre by paying into the Special Centre Savings Fund.
7. We agree to help our fellow centre memberswho cannot meet their weeldy repaymentas long as they responsibleand trustworthy. If not, then we must pay into the SpecialCentre SavingsFund.
8. After repaying fully our first loans according to scheduleand acceptedas AIM benericiaries,we are entitled to a secondloan. After repaying fully our second loans,we will be entitled to the third loan and so on as long as we needit.
Allah bear witness to all that we say and do. We are responsible to Allah in the end. 434
APPENDIX 4
BORROWERS SOCIAL DEVELOPMENT PROGRAMMES WrMN THE CONTEXT OF THE IKHTIAR PROGRAMME
The four Principles of Ikhtiar - Taqwa, Discipline, Unity, Courage and Hard Work - We shall follow and advance in all walks of our lives.
2. Prosperity we shall bring to our families.
3. We shall not live in dilapidated houses. We shall repair our houses and work towards constructing new housesat the earliest.
4. We shall grow vegetables all year round. We shall eat plenty of it and sell the surplus.
5. During the plantation seasons,we shall plant as many seedlings as possible.
We shall minimize our expenditures. We shall look after our health.
7. We shall educate our children and ensure that they can earn to pay for their education.
B. We shall always keep our children and their environment clean.
We shall build and usepit-latrines.
10. We shall drink tubewell water. If not availablegwe shall boil water or usealum.
11. We shall not inflict any injustice on anyone, neither shall we allow anyone to do so.
12. For higher income we shall collectively undertake bigger investments.
13. We shall alwaysbe ready to help each other. If anyone is in difficultyg we shall all help him.
14. If we come to know of any breach of discipline in any centre, we shall all go there and help to restore discipline.
15. We shall take part in all social activities collectively.
16. We shall be patient in all our activities. 435
APPENDIK5
THE SAMPLING FRAME AND THE DETERMINATION OF THE SAMPLING UNIT IN THE DISTRICT OF BALING I: THE VERY POOR RURAL HOUSEHOLDS: IKHTIAR PROGRAMME PARTICIPANTS AND T1111ENON- PARTICIPANTS (CONTROL GROUP).
In this study the samplingframe is defined as the total number of the hard-core poverty householdsthat reside in the 5 Mukims in the district that make up the BALING 1. The starting point for measurementof income for this study was prior to the field-work, 31A October 1992.
Accordingto Ikhtiar OrganizatioWsofficial datathere was:
An estimatednumber of 3556of the very poor rural householdsin the district of Baling 1, whenthe Ikhtiar Programmemade it debutin early 1989.
2. By June 1992,3475 (from the total estimate of 3556) had by then been subjectedto the means test in the process of encouraging more new members to join the programme.
3. Throughthe re-interviewprocess, only 2682 (from the above3475) were regardedas eligible to becomeIkhtiar members.However, the very poor householdsdid not immediatelyregister as Ikhtiar members.This is generallya gradual process.The Ikhtiar Organizationdoes not force the rural householdsinto becomingits members, exceptto encouragethem through the motivationprocess.
4. As of 31st October1992, the startingpoint of this study, there were a total of 1192 Ikhtiar members.
5. This leavesout the 1490households (2682 minus 1192)who despitebeing eligible to becomeIkhtiar membershad yet to registeras a new member.
6. By November 1993, the latest availabledata shows that Ikhtiar participantshas increasedto 1428,thus indicatingthat a further 236 memberhouseholds from the 1490control group had by thenjoined the programmesince October 1992. The figure of 1490is expectedto be reducedfrom time to time when more householdswill join the Ikhtiar Programme.
Basedon items I to 5 (excludingitem 6), the breakdownof the samplingframes as of October1992 were as followed: 436
lkhtiar Programmeparticipants = 1192.
2. Control group = 1490.
3. Total households = 2682.
1. Ikhtiar Programme Participants
In this study only those memberswho have completed their first, second and third loan cycles were eligible and included in the household survey. As noted by Bolninck and Nelson (1990), an "impact period" of longer than 1 year was generally needed to get a meaningfultest. In the Ikhtiar Programme and its counterpart, the Grammen Bank, each particular loan cycle is 12 months. The breakdown of the 1192 Ikhtiar participants are shown below:
1. Total Numberof Participants. 1192
2. (a) First-time borrowers (total). 1009
(b) First-timeborrowers who havecompleted the first loan cycle 567
(c) First-timeborrowers who were still activebut havenot completed the first loan cycleat the time of the survey 442
3. (a) Second-timeborrowers (Total) 172
(b) Second-timeborrowers who havecompleted the second-loancycle 46
(c) Second-timeborrowers who were still activebut havenot completed the secondloan cycleat the time of survey 126
4. (a) Third-timeborrowers (Total) 11
(b) Third-timeborrowers who havecompleted the third loan cycle None 437
Thereforethe numberof eligiblehouseholds that have fulfilled the above definition and formedthe samplingframes of this studywere asfollows:
1. First-time borrowers = 567.
2. Second-time borrowers = 46.
3. Total numberof borrowers = 613.
(Non-Pa rtici pant) Control Group
There were, accordingto Ikhtiar officials in Baling 1, an estimatedtotal of around 1490** such households sharing similar socio-economic conditions with that of the Ikhtiar participantsand theseformed the samplingframe for the control group.
3. The Sampling Frames
The main samplingunit of this study therefore consists of two different samplingframes as follows:
Ikhtiar ProgrammeParticipants = 613.
(a) First-time borrowers = 567.
(b) Second-timeborrowers = 46.
2. ControlGroup = 1490.
Note Includedin the 1490sampling frame of the control group arethe list of the hardcorepoor rural householdsprovided by the mukimsheadmen. 438
APPENDIX 6A
HOUSEHOLD SURVEY QUESTIONNAIRE : THE PROGRAMME PARTICIPANTS
SOCIO-ECONCHIC BACKGROUND
1. Sample Number. II
2. Marital Status.
(1) Single (2) Married (3) Widow (4) Others (specify
3. How old are you? ...... years old.
(1) 20 - 29 (2) 30 - 39 (3) 40 - 49 (4) 50 - 59 (5) 60 and above
4. What is your highest educational attainment?
(1) Never attended school (2) Primary school (3) Lower Secondary (4) L. C. E (5) Upper Secondary (6) M. C. E (7) (specify Other ......
Are you the head of the household?
(1) Yes (2) No
(If the answer is YES in question 5, skip questions 6,7 and 8)
6. If the answer is No, what is your relationship with head of household?
(1) Wife (2) Other (specify ...... 439
What is the age of the head of household? I
(1) 20 - 29. (2) 30 - 39. (3) 40 - 49. (4) 50 - 59. (5) 60 and above.
8. Head of household level of education. II
(1) Never attended school. (2) Primary school. (3) Lower secondary. (4) L. C. E. (5) Upper secondary school (6) M. C. E (7) (Specify),, Other ...
9. Number of your household members (including yourself). Before After Codes (01) -1 person.. (05) -5 persons. (10) - 10 persons.
10. General Profile of Household Members. (fill in where relevant)
Members Sex Age Educational occupation Background
Children no 1. Children no 2. Children no 3. Children no 4. Children no 5. Children no. 6
Code : Sex: Male - 1, Female - 2; Age: (01) rep. 1 year old; Education: Use same codes as that of question 8. Occupation: Use the same codes as that of question 29 440
IKETIAR LOANS AND BACKGROUND OF BORROWING HABIT
11. What is your current Cycle of Ikhtiar loans?
(1) Completed first cycle of loans (2) Completed second cycle of loans (3) Completed third cycle of loans
12. Do you have any knowledge of the interest free loan from the Bank Pertanian Malaysia (Agricultural Bank)?
(1) Yes (2) No.
(If the answer is NO in question 12, skip questions 13, 14 and 15)
13. If Yes. Have you ever tried to apply for the loan?
(1) Yes (2) No
14. If Yes. Did you get the loans?
(1) Yes (2) No
15. If No. Give the main reason for not borrowing.
(1) Guarantor requirement. (2) Tight procedures. (3) Bank far away in the city. (4) Not confident of getting loans. (5) other (specify reasons ......
16. Have you ever applied loans from other formal institution?
(1) Yes (2) No
17. Have you ever obtained loans from non-formal institution?
(1) Yes (2) No
(If the answer is NO in question 17, skip questions 18, 19 and 20) 441
18. If Yes. state the main source of informal borrowing? Before After (1) Local 3hop-owners 1 11 1 (2) Local landlords (3) Pawnshops (4) Relatives (5) Others (specify... 000)
19. State the amount borrowed from the informal source. Before After (1) Below M$50.00 IIEI (2) M$51.00 100.00 (3) M$101.00 150.00 (4) M$151.00 200.00 (5) M$201.00 and above
20. State the main purpose of the above borrowing. Before After IIII (1) Consumption purpose (2) Productive purpose (3) Other purposes (specify
21. Type of activity pursued with Ikhtiar loans.
(1) Agricultural (2) Non-agricultural.
22. The actual activity.
Use code below:
Agricultural:
(11) Animal Husbandry (12) Padi Cultivation (13) Tree crop cultivation (rubber) (14) Other crops (15) Mixed agricultural
Non-Agricultural:
(16) Hawking and distribution of food (17) Hawking Agricultural food (18) Hawking Non-Agricultural food (19) Other non-agricultural activities (20) Services (21) Mixed non-agricultural activities. 442
23. State the amount of loans taken from the Ikhtiar ( ] Programme (M$ ...... ) "......
(state the actual amount) 0300 - $300 1000 - $1000
24. Amount of your own capital injected into the (M$ Ikhtiar-financed project activities ...... (...... 1
(state the actual amount) 00 none 050 $50.00 150 $150.00
HOUSING CONDITIONS
25. House Ownership. Before After II(I (1) Own house (2) Rent (3) Others ... *so..
26. Housing conditions (crude measure)
(a) Size of building:
1- Big 2- Medium 3- Small
(b) No. of storey:
1- One 2- Two
(c) Structural condition:
1- Firm 2- Average 3- Below Average
(d) Roofing material:
1- Asbestos 2- Zinc 3- Zinc/attap 4- Attap 443
(e) Wall:
1- Brick 2- Wooden 3- wooden/attap 4- Attap or bamboo
(f) Electric supply:
1- Yes 2- Shared 3- Not available
(g) Piped water supply:
1 Yes 2 Shared 3 Not available
(h) Toilet facilities:
1- Pour flush 2- Pit latrine 3- None
M Total Score for housing index
Use the following code: 02 -2 points. 11 - 11 points.
OWNERSHIP Or LAND
27. State the size of land that you owned (in hectare). Before After (1) landless II(I (2) 0.01 - 0.24 (3) 0.25 - 0.49 (4) 0.50 - 0.74 (5) 0.75 - 0.99 (6) 1.00 - 1.99 (7) 2.00 - 2.99 (8) above 3.00 444
HOUSEHOLD ITEMS
28. Do you own any of these items: Before After
(1) Yes (2) No
(a) motorcar (b) Motorcycle (c) Bicycle (d) Television (e) Radio (f) Sewing machine (g) Refrigerator (h) Kerosene stove (i) Gas Stove (J) Electric Iron (k) Rice Cooker (1) Lounge Set (m) Dining Set (n) Bed (0) Cupboard
IMLOYMENT (IKHTIAR MEMBERS AM HUSBAND)
After 29. What is your main occupation? Before
(a) Ikhtiar member
(b) Husband
Use the following codes:
10 - Unemployed 11 - Animal husbandry 12 - Padi farming 13 - Tree crop cultivation 14 - Other mixed crop farming 15 - Mixed agricultural farming 16 - Selling/distribution of food 17 - Selling of agricultural good 18 - Selling of non-agricultural good 19 - Other non-agricultural activity 20 - Services 21 - Mixed non-agricultural activities 22 - Doing odd job 23 - Factory worker 24 - Labourer (agricultural) 25 - Labourer (non-agricultural) 26 Others ) - (specify ...... 445
ROUSEHOIM MONTHLY INCCME
]Before situation (1989)
30. What is your total household monthly income in the past 3 years? (write the actual value from M3)
After situation (1992)
(For Questions 31 to 33, please record all the detail of household income in Tables A and B to arrive at the total household Monthly income)
Table A: Income From Ikhtiar-rinanced' Activities - (based on 12 months incomes)
Table B: Income From Non-1khtiar Sources - (based on 12 months incomes)
1. Incomes from main occupation and part-time occupation; 2. Income transfers - remittances from children and spouse, pensions# land rents and monetary assistance from the welfare department and 3. Other sources of income.
1. 2. 3. 4. 5. 6. 446
31. What is your total income from Ikhtiar-financed activities ["""" . 1] (from Table A)
] 32. What is your total household income from non-Ikhtiar ["" . 1.. sources? (from Table B)
33. Calculate the total household income (Ikhtiar and ) non-Ikhtiar sources) " "....
MONTHLY SAVING PATTERN
34. Do you have any saving? Before After II[I (1) Yes (2) No
35. What is your monthly savings? Before After IIII (1) None (2) M$10.00 and below (3) M$11.00 - $20.00 (4) M$21.00 - $30.00 (5) M$31.00 - $40.00 (6) M$41.00 and above
36. Type of savings.
(1) Yes (2) No Before After (a) ASN/ASB (b) National Saving Bank (Bank Simpanan Nasional) (c) other Means of Savings
VIEW AND PERCEPTION OF LIVING CONDITION
37. Compare to the time before joining the Ikhtiar Programme, do you feel you are better off now?
(1) Better off. (2) No difference. (3) Worse off. (4) Don't know. 447
PROJECT SUSTAINABILITY
38. Are you confident that your current project will be sustainable without further Ikhtiar loan in future?
(1) Confident. (2) Not Confident
OPINIONS AM PERCEPTIONS TOWARMS THE IKHTIAR, PROGRJUOW
39. What is your opinion of the Ikhtiar Programme? II
(1) Very good (2) Good (3) No good (4) Don't know
40. If your answer is 1,2 or 3, state the main reason.
...... Cs ... S.. ".. """"" "" ... S "S" SS St " "t "5..... "SSSS" 5IsS"tS" . ... "5
" S"" 5I5t"""I 5ss"eI "ICeCSS S "ItISSSSSSS "" "SS SS" "S" "" S" S
.... SS". s. s Sstt"e" 5"""ssS "S" "" SSS 555555555"S SSS"SS"" SS "S "SI"SSSSC
41. Please choose only one:
(1) "Agreed" (2) "Disagreed" (3) "Undecided"
relating to the following statements on the Ikhtiar's concept of Group/Centre Union, Responsibility and Supervision.
(a) "Close supervision of 5 person per group does not any problem" (b) "Combining the group into centre does not raise any problem" (c) "Group responsibility as a way of policing each member while pursuing Ikhtiar loans does not raise any problem" (d) "Close supervision by Ikhtiar staff over participants income generating activities does not raise any problem" 448
42. Please choose only one:
(1) Acceptable (2) Not Acceptable (3) Undecided
relating to Ikhtiar'3 basic rules on loan utilization.
The "Weekly" Rules:
(a) Weekly meeting (b) Weekly repayment (c) Weekly saving of M$1.00
other Rules:
(d) 5 percent of the loan to be contributed to group fund II f und (e) Members must project cost of M$25.00 (Ist loan), M$50-00 (2nd loan) and M$75.00 (3rd and subsequent loan) (f) Loans are to be utilized within 7 days of disbursement (g) Loans are to be given in turn (h) If borrower fails to repay, other members denied a loan
43. Please choose only one:
1. Agreed 2. Disagreed 3. Undecided
relating to following statement on the working relationships between Ikhtiar staff and participants.
(a) "AIM staff are friendly and get along very well with participants" (b) "AIM staff understand problems faced by the participants (c) "AIM staff accepted participants ideas" (d) "AIM staff are committed to their jobs" (e) "AIM staff are good source of advice" (f) "AIM staff are not difficult to meet"
44. What is your main suggestion towards the improvement of the Ikhtiar Programme in future? *-o ......
Is... I...... """ IS S 115.5 I"" ". s.. SI ". "Is. SS. s .. 5"s" "5"" 449
ON THE GOVERMENT ASSISTANCE
45. For question on Government assistance use the following codes:
Yes (2) No (3) Not related
Do you ever receive the following assistance from the Government?
(a) Social welfare (b) Toilet/piped water scheme (c) Mother and child milk scheme (d) Small business programme (e) Livestock project (f) Fertilizer subsidy (g) Rubber replanting grant (h) Agricultural extension services (i) Housing renovation programme (j) School's text-book scheme
POSSESSION OF SKILL
46. (a) Do you posses any skill? II
(1) Yes (2) No
(b) If yes, state the type of skill. II
(1) Agriculture/farming (specify ) (2) Non-agriculture ) (specify ......
(c) Do you utilize the skill in Ikhtiar project activities? II
(1) Yes (2) No 450
HOUSEHOLD MONTHLY EXPENDITURES
47. Please state the following expenditures:
(a) Food (b) Cigarette/tobacco (c) Apparel/footwear (d) Rent/energy (e) Transportation (f) Furniture (g) Health/medical (h) Educational M Recreational/sport equipment (J) Services/other expenditures
Total Expenditure (M$) II 451
APPENDIX 6B
HOUSEHOLD SURVEY QUESTIONNAIRE : THE CONTROL GROUP (NON-PARTicipANTS)
SOCIO-ECONOMIC BACKGROUND
1. Sample number: ......
2. Marital status.
(1) Single (2) Married (3) Widow (4) Other (specify...... )
3. How old are you? ...... years old.
(1) 20 - 29 (2) 30 - 39 (3) 40 - 49 (4) 50 - 59 (5) 60 and above
4. What is your highest educational attainment?
(1) Never attended school (2) Primary school (3) Lower secondary (4) L. C. E (5) Upper secondary (6) M. C. E (7) others (specify ......
5. Are you the head of the household?
(1) Yes (2) No
(If the answer is YES in question 5p skip questions 6l 7 and 8)
6. If the answer is No, what is your relationship with the head of a household?
(1) Wi fe (2) Others (specify 452
7. What is the age of the head of household?
(1) 20 - 29 (2) 30 - 39 (3) 40 - 49 (4) 50 - 59 (5) 60 and above
Head of household level of education.
(1) Never attended school. (2) Primary school (3) Lower Secondary (4) L. C. E (5) Upper secondary school (6) M. C. E (specify (7) Others ......
household Before After 9. Number of member ..... person. IIII
10. General profile of household members (Fill in where relevant)
Members Sex Age Educational Occupation Background
Children no. 1 Children no. 2 Children no. 3 Children no. 4 Children no. 4 Children no. 5 Children no. 6
......
Codes : Sex Male 1, Female - 2; Age: (01) rep. 1 year old; Education use the same code as that of question 8; Occupation use same codes as that of question 29. 453
ENOWLEDGE OF TEX IRETIAR PROG7LM*M AND BOPMOWING MARITS
11. Have you been approached by the Ikhtiar staff explaining the concept of the Ikhtiar Programme?
(1) Yes (2) No
12. How did you come to know about the Ikhtiar Programme in the first place?
(1) Through Ikhtiar staff (2) Through friends (3) Through the mass media (4) (specify Others ......
13. Are you interested in joining the IKHTIAR programme?
(1) Yes (2) No
14. If Yes. what is your plan?
(1) Will be joining the programme in the very near future (2) Still observing the programme (3) Undecided (wait and see)
15. If No. state the main reason. I
(1) Hoping to get from government's PPRT. (2) Do not like AIM's rulings and procedure (3) Do not want to borrow any money (4) Do not have any activities to carry out with Ikhtiar loans (5) Not confident of repaying loans
16. Do you have any knowledge of the interest free loan from the Bank Pertanian Malaysia (Agricultural Bank)?
(1) Yes (2) No
(If the answer is No in Question 16, skip questions 17, 18 and 19)
17. If Yes. Have you tried to apply for the loan?
(1) Yes (2) No 454
18. If Yes. Did you get the loans?
(1) Yes (2) No
19. If No. Give the main reason for not borrowing?
(1) Guarantor requirement. (2) Tight procedures. (3) Bank far away in the city. (4) Not confident in getting loans (5) (specify Other reasons ......
20. Have you ever applied loans from other formal institutions?
(1) Yes (2) No
21. Have you ever obtained loan from the non-formal institution?
(1) Yes (2) No
(If the answer is No in question 21, skip questions 22,23 and 24)
22. If Yes. State the main source of informal borrowing? Before After IIII (1) Local 3hop-owners (2) Local landlords (3) Pawnshops (4) Relatives (5) Others (specify..,, *.. **)
23. State the amount borrowed from the informal sources. Before After II(I (1) Below M$50.00 (2) M$51.00 100.00 (3) M$101.00 150.00 (4) M$151.00 200.00 (5) M$201.00 and above
24. State the main purpo3e of the above borrowing. Before After IIII (1) Consumption purposes (2) Production purpose (3) Other purposes (specify 455
HOUSING CONDITIONS
25. House ownership. Before After IIII (1) Own house (2) Rent (3) Others ......
26. Housing conditions (crude measures):
(a) Size of building:
1- Big 2- Medium 3- Small
(b) No. of storey:
1 One 2 Two
(C) Structural condition:
1- Firm 2- Average 3- Below average
(d) Roof materials:
1- Asbestos 2- Zinc 3- Zinc/attap 3- Attap
(e) Wall materials:
1- Brick 2- Wooden 3- Wooden/attap 4- Attap or bamboo
(f) Electricity supply:
1- Yes 2- Shared 3- Not available
(9) Piped water supply:
1- Yes 2- Shared 3- Not available 456
(h) Toilet facilities:
1- Pour flush 2- Pit latrine 3- Not available
(i) Total Score for housing index:
Use the following codes:
02 -2 points. 11 - 11 points.
OWNERSHIP OF LAND
27. State the size of land that you owned (in hectare). Before After (1) landless IIII (2) 0.01 - 0.24 (3) 0.25 - 0.49 (4) 0.50 - 0.74 (5) 0.75 - 0.99 (6) 1.00 - 1.99 (7) 2.00 - 2.99 (8) above 3.00
HOUSEHOLD ITEMS
After 28. Do you own any of these items: Before
(1) Yes (2) No
(a) Motorcar (b) Motorcycle (c) Television (d) Radio (e) Sewing machine (f) Washing machine (g) Refrigerator (h) Kerosene stove (i) Gas stove (J) Electric iron (k) Rice cooker (1) Lounge set (m) Dining set (n) Bed (0) Cupboard 457
EMPLOYMENT
29. What is your main occupation? Before After
(a) Female: (Wives/female headed household)
(b) Male: Husbands
Use the following cmdes:
10 - Unemployed 11 - Animal husbandry 12 - Padi farming 13 - Tree crop cultivation (rubber tapping) 14 - Other mixed cropping 15 - Mixed agricultural farming 16 - Selling/distribution of food 17 - Selling of agricultural good le - Selling of non-agricultural good 19 - Other non-agricultural activity 20 - Services 21 - Mixed non-agricultural activity 22 - Doing odd job 23 - Factory worker 24 - Labourer (agricultural) 25 - Labourer (non-agricultural) 26 - Others (specify..,,. *)
HOUSEHOLD MONTHLY INCOME
Before Situation (1989)
Before I I 30. What is your total household income (in the previous ...... 3/4 years)
For question 30, please record all the detail of the household income in the following Table A.
1. Total household income from main occupation and part-time occupation. 2. Income transfers - remittances from children and spouser pensions, land rents, monetary assistance from the welfare department. 3. Various other sources of income. ------458
After Situation (1992)
For question 31, please record all the details in the following Table B
Af ter 31. What is household income? your current total ...... 459
MONTHLY SAVING PATTERN
32. Do you have any savings? Before After IIII (1) Yes (2) No
33. What is your monthly saving? Before After
IIII (1) None (2) Below M$10.00 (3) M$11.00 - 20.00 (4) M$21.00 - 30.00 (5) M$31.00 - 40.00 (6) M$41.00 and above
34. Type of savings. Before After
(1) Yes (2) No
(a) ASN/ASB (](I (b) National saving bank (](I (C) Other means of savings (I(I
PERCEPTION OF TEZ LIVING CONDITION
35. Compare to your living condition about 3/4 years ago, do you feel you are better off now?
(1) Better off. (2) The same. (3) Worst off. (4) Don't know.
ON THE GOVEPlaam JLSSIsTANCZ
For question 36, use the following codes:
(1) Yes (2) No (3) Not Related 460
36. Do you ever receive the following assistance from the Government?
(a) Social welfare (b) Toilet/piped water scheme (c) Mother and child milk scheme (d) Small business programme (e) Livestock assistance (f) Fertilizer subsidy (g) Rubber replanting grant (h) Agricultural extension services (i) Housing renovation programmme (J) School's text-book scheme
HOUSEHOLD MONTHLY ]DWENDITURES
37. Please state the following expenditures:
(a) Food (b) Cigarette/tobacco (c) Apparel/footwear (d) Rent/energy (e) Transportation (f) Furniture (g) Health (h) Educational M Recreational/sport equipment (J) Services/other expenditures
Total Expenditure (M$) Lo *so 461
APPENDIX 7: ACTIVITIEES AT THE WEEKLY GROUP/CENTRE MEETING IN BALING I- PLATE A TO D.
Plate A: Members arriving at the group/centre meeting.
Plate B: Meeting in Progress 462 PL t*w*
by Plate C: Loan repaymentand disbursementat the weekly meeting, supervised Ikhtiar staff. Seen counting the money is the Centre Chief in front of the Branch Manager and Trust Assistant.
PlateD: Sessionin progress- this meetingwas conductedby female Ikhtiar staff (seenin the foreground) 463
APPENDIX 8: TYPES OF ACTIVITIES CARR]"-ED, OUT WITH HCHTIAR LOANS - PLATE E TO H.
Plate E: Leasingrubber land is very popular among Ikhtiar members.
PlateF: Membergrowing padi 464
PlateG: Petty trading - hawking of non-agriculturalgoods.
PlateH: Petty trading of agriculturalgoods. 465
APPENDIX 9
HOUSING INDEX
MAININDICATORS
In AIMs model, 7 main indicators are used to determinethe housing conditions based on "crude" measuresas shown below:
1. Size Big = 4 points. Medium = 2 points. Small = 0 point. (The meaning of size is discussed later).
2. No. of storey 2 stories = 4 points. 1 storey = 1 point.
3. Structural Firm = 4 points. Conditions Average = 2 points. Below Average = 0 point. (The meaning of structural conditions is di scu ssed later) 4. Roofing Materials Asbestos = 2 points. Zinc = 1 point. Mixture of zinc/attap 0.5 point. Attap 0 point.
5. Wall Materials Brick 2 points. Wooden 1 point. Mixture of Wooden/Attap = 0.5 point. Bamboo or attap = 0 point.
6. Electricity supply Available = 2 point. Shared = 1 point. Not Available = 0 point. 7. Piped Water supply Available = 2 point. Shared = 1 point. Not Available = 0 point.
For everyindicator, a numericalscore ranging from 0 to 4 points is given.A household having a total scoreof 10 andbelow is consideredas meetingIkhtiaes basic requirements having andthose scoreof above10 canalso make an appealto be reconsideredif they are interestedin joining the Ikhtiar Programme. 466
17HEMAIN FEATURE OF AL41AY RURAL HOUSES
The most common feature of the Malay rural houses in Bating are described below (Ahmad, 1983):
1. It is commonto seehouses built on high stilts of 5 to 6 feet (1.5 to 1.8 meters)above the ground.
Most of the Malay housesare made of wood. Wooden houseswith palm-leaveroof (or attap)are part and parcel of the rural scene.
3. Wood andrelated material, such as bamboo and palm, which canbe usedas building materialsfor roofs,walls and floors, are found in abundancein Baling.
With affluence,most of thesecommon building materials, however, slowly give way to moredurable and long lastingmaterials such as:
(a) zinc sheets,asbestos roofs replacimgattap or tHeand asbestosrep acmgworn out zinc sheets.
(b) cementfor flooringreplaces eard4 or cementreplaces wooden flooring material.
(q) concreteblocks replace wooden stilts.
It is a generalpractise for the ruralMalay. to graduallyrenovate or replacecertain partsof the housewhen they manage to accruea smallsavings or whenthey have extraincome. It normallytakes "ages" before the whole house is renovatedor renewed with new materialsreplacing the worn-out ones such as new walls or roofing materials.But thishas been the most common feature of therural landscape. However, only for thosewithsignificant extra income will rebuildtheir housestotaUy.
In this study,there are severaltypes of housesidentified basedon the building materials used:
I- Houseswith zinc roofs,wooden walls andfloors.
2. Houses with palm-leafroofs with a mixtureof woodenand bamboo walls andfloors. 467
3. Houseswith woodenwalls, but havingpalm-leaf materials as roofing.
4. Houseswith brick or concretewalls and zinc roofs.
5. Houseswith mixture of brick and wooden waUsand zinc roofs.
6. The pillars of a houseare commonlymade of woodenmaterials and in somecases, consistof a mixtureof woodenmaterial/brick.
All theseare shownin PlatesJ to Q (SeeAPPENDIX 10) basedon photographstaken during the field study in the district. in this study most of the changesof the housing conditionsamong the poor rural householdsIkhtiar membersand the control groupwere mainlyin the form of improvementsto the worn out or old materialssuch as renewalof roofs or the rebuildingof certainparfs of the house(extension of the kitchenor addinga verandahto the mainhouse) or otherminor repair works. The mainchanges have been the installationof pipedwater supply and electricity in someof the respondents!houses.
THE MEANING OF SIZE
Ikhtiar field staff were instrumentalin explainingto the author, someof the aspectsto look for in relationto the size of a houseduring the survey.In general,looking at the housebased on generalobservation and visual inspection will determineroughly the size, whetherit is big, smallor medium.In general,the sizeof the housesare arbitrarily divided asfoHows:
I. Houseshaving an areaof not morethan 60 squarefeet areregarded as smal
2. Housesbetween 60 to 80 squarefeet are regarded as medium sized and
I Thosehaving more than 80 squarefeet areconsidered big.
THE MEANING OF STRUCTURAL CONDITIONS
Structural conditionis generallyreferred to in this studyas the structureor the whole set- house, up of a which includesthe wall, roof, floor, pillar andthe typesof materialsused in the construction. 468
Similarly,the 1khtiarstaff were instrumentalin explainingand guiding the author the general/crudemethod of observingthe structuralconditions of a housein the villages.In general,looking at the housebased on observationand visual inspection,will determine roughlyand crudely its structuralcondition. In addition,by askingthe respondentsto give their recent account (i.e. the previous 3 years) of the house upgrading exercises/conditions,where necessary, were also important.
Based on photographin ]PLATE J to Q, as shown in Appendix 10 (mentionedabove), the structural conditionsof the Malay housesin Baling are crudely identified as follows:
1. Housesas shown in PLATE J andK areregarded as "BELOW AVERAGE"
2. Housesas shownin PLATE L and M are regardedas "AVERAGE".
3. Housesas shownin PLATE N and 0 are regardedas "FUM".
Note: An addedadvantage for the authorwhile observingthe housingcondition in Baling, was the fact that he himselfwas broughtup in a village (in the Stateof Penang,i. e. the neighboringState of Kedah),where his parents currentlylive. Rural Malay housesin thesetwo stateshave similar features asdescribed above. The authortherefore has some background knowledge, whichin way contributedtowards the observation. 469
APPENDIX lo: MALAY HOUSES IN THE DISTRICT OF BALING - GENERAL SCENARIOS: PLATE J TO
Plate J: House of peasant: Zinc wall and roof This type of house is generally seen as "below" averagein terms of its structural conditions.
PlateK: House of peasant: Attap and bamboo wall. This type of house is generally seen as "below average"in terms of its structural conditions. 470
Plate L: House of peasant: One of the many exampleof the typical pattern/type of Malay peasant'shouse in Baling. This type of house is generally seen as "average" in terms of its structural condition.
Plate M ý:House of peasant: Another typical example of peasant'shouses in Baling and is also seenas "average"in terms of its structural conditions. 471
. IL 'A
PlateN: Houseof peasant(double storey) : Mixtures of wooden/cementblock wall and zincroof This type of houseis generallyseen as "firm" in terms of its structural condition.
Plate 0: 110use of peasant (single storey) : Cement wall and zinc roof This type of house in is generallyseen as "firm" terms of its structural condition. 472
Plate P: A housenormally associatedwith the "better ofP' or rural elite. Generally seen as firm in terms of its structural condition.
PlateQ: An exampleof Governmentsubsidized house, completed with electricityand pipedwater supply. 473
APPENDIX 11
IKHTL4R LOAN'S APPLICATION FORM
A. Borrow6r's Proposal
1. Borrower
Name " Name of the Group : "...... """" Name of the Centre : "...... """"" Amount Requested : Purpose of Borrowing (Project To Be Carried out) : . Borrower's Signature .
2. Certification of the Group
Date of meeting 0.00.0000.009. *000*0000009 Time of meeting 0000000400000000000000000 Place of meeting 0.0*0**. 0.0000.00.0.0.... Group Decision of Loan Application : Accept/Reject/Postpone. Amount of Loan Approved by Group (M$) :*000*0.0&0000900*991*00*0*
3. Confir: Qation of the Group
Name Signature
1. Chairwomen : 2. Secretary es...... es......
3. Member 1 ...... :...... 4. Member 2 ...... "" 5. Member 3 :......
4. Certification of the Centre
Centre DeC13ion : Accept/Reject/postpone Amount Approve by Centre
(M$) ...... "... ".. " .... SISS"I "" : Date ...... S" SS "" SS" S" :... Signature of Centre Chief ...... SS SS SS"I 5555