Urban Poverty and City Consultation Process: Poverty Reduction Programme
The programme showed significant results in poverty reduction and creating employment.
In order to reduce poverty, the city of Ijebu-Ode established the Urban Poverty and City Consultation Process Programme. When the programme started in 1998, around 90% of the population lived below the poverty line of USD 1 per day. The programme (initially designed by DPC, Development Policy Centre, Ibadan, Nigeria, and supported by UN Habitat Urban Management Programme) aimed at increasing inhabitants’ income, by offering vocational education and micro-credits.
The central element of the programme was to initiate a city consultation process, involving national, regional, local authorities, and all relevant stakeholders. The Ijebu-Ode Development Board IDB was established to raise the community’s confidence in the programme, and provide oversight. The IDB collected and managed funds, distributed micro-credits, and organised vocational training. These actions significantly reduced poverty. Through micro-financing and new productive activities, more than 8,000 jobs were created. Cooperatives, based on sustainable science technology and indigenous practitioner knowledge, for producing crops, small animals, and fish were established. Funds acquired by IDB helped to redevelop the city hospital.
The programme showed significant results in poverty reduction and employment. Furthermore, it succeeded in creating a participatory culture via the process of public city consultation and enhanced cooperation between numerous actors.
Background and objectives
One of the most common explanations for poverty in Africa is the concept of the poverty trap: since a community has little or no savings for investment, and nations suffer due to low domestic income, there is no hope for development.
In the case of Ijebu-Ode, 25-30% of the population is described as 'economically active'. This is caused by restricted opportunities for employment and a massive migration of young workers to newly created economically successful cities, such as Lagos and Ibadan, causing a massive migration of young workers. Also, large sections of inhabitants work in these neighbouring cities instead of Ijebu-Ode. Local poverty is mostly relieved through payment sent by sons and daughters from the city who live and / or work abroad, government aid is either absent or minimal.
Before the programme started, a study on Ijebu-Ode poverty profile found in 1998 that less than 20% of household heads were wage earners in the public or private sector, more than 60% were working in minimal or informal sector activities, around 8% were in subsistence farming, and some 7% were unemployed or receiving pensions. Informal sector activities, figuring as the main source of employment, mostly imply low productivity and low incomes. Thus, almost 70% of the household heads reported earning USD 80.00 per annum, only 10% claimed to earn USD 160.00 per annum. In consequence, about 90% of Ijebu-Ode inhabitants lived below the international extreme poverty line of USD 1.00 per day.
Ijebu-Ode poverty reduction programme had four main objectives. It foremost aimed at exploring whether reduction of extreme poverty could be achieved by initiating a city consultation process, and assembling the forces of the entire community. Second, it wanted to activate the social capital of the city's sons and daughters living abroad. A third objective was to exploit indigenous knowledge and local skills. Finally, it sought to create a sustainable; long-lasting impact on Ijebu-Ode economic situation by initiating a powerful participatory culture within society.
As about 90% of the city population endures poverty, the programme can be described as being designed to affect the whole population.
The first step in Ijebu-Ode poverty reduction programme was a city consultation process. All relevant stakeholders in the city were brought together to share their knowledge and to find a consensus on how to reduce poverty in the city. Not only local and traditional authorities, but also representatives of local interest groups such as market trader women, cooperatives, religious groups, etc. were brought together.
After several days of meetings, a final action plan was developed by an elected committee. The action plan outline the goals to change the bad infrastructure (for example in hospitals), improve waste disposal, increase the water supply available, and most importantly support enterprises able to provide employment, capability development, and generate income. The chosen enterprises were active in animal breeding, fruit cultivation, agriculture, and traditional arts and crafts. In order to generate income and employment for city inhabitants, special training, and changes in attitude would be required. One goal was to increase tourism by developing arts and crafts in the city. Finally the action plan stated that assistance in implementing the numerous measures would be needed on the part of private sector enterprises, NGOs, and national government.
After the action plan was approved, the question about a convenient institutional setting for implementation remained unsettled. It would have been logical to set a location within the local government, but city inhabitants claimed that a board, reflecting stakeholder diversity, should be created, not influenced by the constitutional triennial changes in government institutions in Nigeria, nor associated with suspicions of corruption or inefficiency often attached to local government. Subsequently, IDBPR, Ijebu-Ode Development Board for Poverty Reduction, was founded in 1999, with a staff of 30 persons representing stakeholder groups involved in the programme: representatives of traditional authorities and local government, Ijebu-Ode Development Association, market trader women, cooperatives, artisans, Chamber of Commerce, and National Association of small-scale industrialists. IDBPR was tasked to mobilise funds from the donor community, the state, NGOs, and several private stakeholders, for distribution and vocational training. It also had the duty to supervise the use of credits and loan repayment.
When the programme started in March 2000, IDBPR had collected a sum of USD 100,000. Considering that poverty reduction can only be achieved by providing people with knowledge, skills, and capability, one main programme instrument was workshops training potential microcredit beneficiaries. Throughout the duration of the programme (August 2000-October 2006), 15 workshops were held attended by about 3,210 participants. Training was given to enhance skills in specialised crops, small animal rearing, fish production, use of mini-finance, building cooperative organisations, and transferring the poverty-reduction approach to other regions. Support for the programme was provided by several international organisations, such as: UN Food and Agricultural Organisation (FAO), the World Bank, and the UN Development Programme (UNDP).
IDBPR established three main rules to which groups and individuals had to adhere in order to obtain credit: training, savings, and cooperative membership. The first rule implied that beneficiaries had to attend relevant workshops in order to enhance their knowledge and gain skills in business management. The second rule was directed towards ensuring that loans would be repaid and gaining experience about the advantages of saving: every beneficiary had to open an account at the local bank distributing credits, which achieved both positive results for beneficiaries and programme functioning. The third rule was introduced to minimise the risks of non-payment of credits. Various cooperatives were founded to which every beneficiary had to affiliate. These cooperatives bore in part responsibility for disbursing credits, served as categories for credit conditions and were also considered to encourage one-step action by providing a network.
Financing and resources
The exact amount of funds raised IDBPR differs according to various sources. The most reliable source, an article by Akin Mabogunje dating from 2007, states that from 2000 to 2006, IDBPR received about USD 630,000 from several stakeholders. The largest donor with approx. 60% was the federal government, giving USD 378,000. Donor agencies contributed USD 114,030, equal to 18%. Individuals gave 9.5%, USD 59,850. State and local government contributed 10%, USD 63,000. NGOs and CBOs gave 1.5%, USD 9,450. Other civil actors contributed the remaining 1%, USD 6,300.
International organisations and NGOs provided expertise and knowledge transfer to IDBPR, e.g. between 2004 and 2006, FAO made available two technicians providing support in the domains of fish production and crop farming. National government provided 156 hectares of farmland now being used by the relevant cooperative for fish farming.
Results and impacts
Within 7 years, the programme generated 638 direct and 8,110 indirect employment opportunities. 198 cooperatives were either active in microcredit financing, providing direct employment, or enhancing activities up to 2,865 members. Another great impact was created by providing enterprise development financing. Between 2002 and 2007, 48 were formed which had a highly positive impact on the economic situation in the city by enhancing local business and cooperating with other enterprises.
Since 2004, IDBPR deficiencies were resolved, and the latest financial statements show profits. An exact evaluation of the current economic situation and poverty reduction in households is still pending, but the general financial situation of inhabitants has noticeably improved, as a high amount of employment opportunities were created providing citizens with incomes. Aquaculture has turned out to be the most costly, but also the most profitable activity enhanced by IDBPR. Other cooperative activities might not show such high remuneration as aquaculture but are nonetheless very sustainable.
Besides generating employment, several infrastructure development measures have been achieved. A feed mill was established, providing locally generated animal food to farmers. Also reconstructing and expanding local health care institutions was supported with IDBPR funds.
Barriers and challenges
Even though Ijebu-Ode poverty reduction programme can clearly be described as having set a track record, several critical challenges remain considering its aim of providing a sustainable and effective poverty reduction strategy.
First, there is growing concern about programme leadership and staff and members performance. Tasks attributed to IDBPR require service that goes beyond its capacity. Staff members still provide services free of charge, but there is an observable trend towards certain fatigue over organising meetings. Another concern is that programme leadership, undertaken without remuneration for the last number of years by a well-respected retired civil servant, remains uncertain as stated in the last current information sources found.
Secondly, default rate on loan pay-back is growing, associated with lack of staff due to shortage and lack of capacity to monitor activities.
A third concern is the amount of funds available to IDBPR in order to distribute microcredits and carry out its activities. As stated by Mabogunje in 2007, there were 500 potential beneficiaries awaiting loans that were not able to be distributed due to unavailability of funds.
Lessons learned and transferability
Despite constraints, Ijebu-Ode poverty reduction programme has been a great success. A large number of jobs were created, and even if there is no statistical evidence, poverty was diminished for a considerable portion of city inhabitants. Furthermore, by its focus on participatory elements and capability development, the city consultation process has given confidence to people that societal changes can also be achieved by their efforts.
However, the programme has shown that extensive funding is needed and that sustainable poverty reduction achievement is linked to high motivation and achievements by many actors. Another point of criticism is that microcredits can only help people up to a certain point in economic development. Competition in the free market is still a major challenge for microcredit beneficiaries.
Steps advancing solutions for poverty reduction should thus be undertaken on a national level in order to exert real impact on inhabitants' economic situations. Measures should consist of better educational programmes for large sections of the population, as well as land reforms, specifically in the case of sub-Saharan Africa. Providing affordable land to citizens could augment credit-worthiness in collectives or individuals for larger financial institutions, and thereby enhance economic growth without the work and cost-intensive intercalation of an institution such as IDBPR.
Nevertheless, Ijebu-Ode programme has many advantages, and is already being replicated by other cities in Nigeria and other countries. Several cities sent representatives to Ijebu-Ode to study program implementation, and IDBPR itself held several workshops in order to disseminate knowledge about main programme features. Moreover, it received recognition from international organisations such as USAID and others.
- Adetunji, Adebesin Afees (2011): Fish Production, Poverty Alleviation and Cooperative Success of Eriwe Cooperative Fish Farm at Ijebu-Ode, Ogun State, Nigeria. University of Agriculture, Abeokuta, Nigeria.
Retrieved December 2012 from: http://www.unaab.edu.ng/ugprojects/2011baquacadebesinaa.pdf
- Kates, Robert W./ Dasgupta, Partha (2007): African poverty: A grand challenge for sustainability science. Proc Natl Acad Sci U S A (PNAS). 2007 October 23; 104(43): 16747–16750.
Retrieved December 2012 from: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2040431/
- Mabogunje, Akin L. (2007): Tackling the African ‘‘poverty trap’’: The Ijebu-Ode experiment. Proc Natl Acad Sci U S A (PNAS). 2007 October 23; 104(43): 16781–16786.
Retrieved December 2012 from: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2040443/
- Mabogunje, Akin L., and Robert W. Kates (2004): Sustainable Development in Ijebu-Ode, Nigeria: The Role of Social Capital, Participation, and Science and Technology. CID Working Paper No. 102, Cambridge, MA: Sustainable Development Program, Center for International Development, Harvard University.