‘It’s okay to be poor’: Why fighting poverty remains challenging in Indonesia

Thejakartapost August 2019

Poverty remains an ingrained problem in Indonesia despite the country’s success in cutting its poverty rate to a single-digit level for the first time in 2018.

As of September 2018, Indonesia’s poverty rate stood at 9.66 percent of the total population. This means that around 25 million people live below the poverty line.

The government has been distributing cash and non-cash benefits like distributing cards for health benefits and food discounts to eradicate poverty in remote and urban areas.

But in some provinces in Indonesia, poverty remains a challenge.

 

Economic Index of Indonesia

Gfmag

wealth distribution - Indonesia

Indonesia has one of the biggest gaps between rich and poor in South East Asia with a low income and high poverty rate.

Poverty in Indonesia is a multidimensional problem, and the root cause of poverty in each region is different.

The government’s one-size-fits-all approach to poverty by distributing cash and rice to poor people can’t solve some regions’ poverty problems.

A lot of suggestions that increased community participation is the ultimate way to reduce poverty.

Community Crowdfunding based on donation

Indonesia Harnesses Islamic Donation Tradition to Support SDGs

Iisd.org

According to UNDP Indonesia, 79% of Indonesians donated money in the past month, making Indonesia the second most generous country in the world.

Islamic law mandates that all Muslims who are eligible donate at least 2.5% of their income or accumulated wealth to the poor and needy, a practice known as Zakat.

UNDP Indonesia calculated that, if every eligible Muslim pays US$74 annually, the country could generate US$16 billion, an amount that “represents a huge potential to support the SDGs.”

wiki

Islam is the religion in Indonesia with most adherents, with 87.2% of the Indonesian population identifying themselves as Muslims in a 2010 survey.  Indonesia has the largest Muslim population in the world, with approximately 225 million Muslims.

In terms of denomination, the overwhelming majority (99%) adheres to Sunni Islam, while there are around one million Shias (0.5%)
Although Indonesian is very keen on a donation, the amount is not sufficient to really help the community.

Community Crowdfunding based on cashback

If the funding can be coming from cashback from merchants such as people eating out every day, buying out every day, it will be a good compliment to the donation.

The mathematics:

  • As an example, GDP per capita for Indonesia is about US$ 3,974 per year https://data.worldbank.org
  • Assumed retail merchant networks can cover all walks of life in Indonesia.
  • 5% cashback will equate to 5% x US$3,974 =US$200 per year
  • Indonesia has a population of over 260 million. If 79% of Muslims participate, 200 million users will generate cashback close to US$ 40B annually.
  • 5% cashback for wealth redistribution can also mean reducing the Gini Index by at least 5%.

Sustainable benefits such as :

  • Establish small enterprise funds
  • Young people venture funds
  • Education funds
  • Public Transportation Infrastructure funds

 

Conclusion

Based on 5% cashback, it will be US$40B in addition to US$ 16B donation per year.

If the funding is used wisely across all provinces, it will boost the economy of all provinces as well as reducing the gap between the rich & poor.

To learn how to create a Cashback program at retail nationwide, please visit CharityiBonus.com