Beware the Recovery Economy: There's A Lot to Learn from Aceh
If you haven't yet read the Guardian's
"Secret Aid Worker: Two Years After Haiyan, the Aid Economy is
Flourishing," you really should here. We agreed with nearly every word on the page, particularly the
main arguement: 'Economic development (during disaster recovery) is not a
direct result of NGO projects or government initiatives. It's been a more
indirect consequence. The mass influx of international organizations, with
international staff, has injected cash into Tacloban city. Snazzy boutique
hotels, cafes and Italian restaurants have sprung up serving expats and the
middle class (working for those NGOs and international organizations).' In a
nut shell, they argue that recovery is a quick 'path to cash' for the local
community, absent proper local economic development - based on a strategy and
plan. They pose a number of questions about what happens 'after' - after
recovery is complete and there are no more high paying NGO or international
organization jobs; after all of the international humanitarian staff leave and
take their disposable income with them; when the hospitality sector no longer
has international staff on nice per diems arriving daily. What happens then?
The author argues that "Leyte (Tacloban) is an aid experiment" - one
to keep an eye on when the funding stops. It is on this point - and this point
only - that we disagree. Aceh, Indonesia, was the 'experiment' - the largest
ever - during the 2004 Indian Ocean tsunami recovery. We are pleased - and
eager - to answer your questions.
What happens when funds disappear and
donor attention shifts?
So many people who benefitted from
recovery were not ready for life 'after' because they had not thought ahead -
their life 'before' focussed on daily and weekly needs, with little thought to
longer term financial planning. In some cases people are worse off than before
the disaster - before the disaster they made their income as shop owners or
farmers, but the opportunities and elevated income and 'status' experienced
during recovery as made them reluctant to return to their former livelihoods,
with the feel8ng of taking a 'step backwards.' For those who sold off their
original income generating assets - their shops or farms - were forced to sell
off the luxury assets they accumulated (cars, remortgaging property) once the
recovery jobs ended to meet daily needs - which is often not enough capital to
restart their former business.
Will fancy hotels really be necessary
when NGO managers with travel stipends stop visiting?
The funtion of hotels and the entire
catering/hospitality sector adjusts. Recognizing the need to safeguard
hospitality investments for future growth in tourism, such as good quality
hotels, the provincial government works with hotels to provide accomodation and
venues for government trainings of civil servants coming from outer districts.
The hotels also open their facilities to the public - for a small fee people
can use the pool or fitness centre.
In Aceh, coffee is the base of the economy
- with uncountable cafes used by expats and Acehnese alike. During recovery,
the purpose of cafes was to serve coffee, now, with far fewer aid workers
partaking of the local delicacy, cafes have diversified their services to
include free internet amd meeting rooms. There are also partnerships opening
with nearby restuarants to serve snacks and light meals. Local buisness - that
which was the foundation of the local economy before the tsunami - continues to
thrive. Acehnese did not try to be something that they were not. They are not
Starbucks or the Outback Steakhouse. They are local cafes serving local coffee
with good local food at local prices. Certainly some business practices were
adjusted to accommodate the influx of expats (take-away coffee, anyone?) But
overall local business did not fall over itself to serve the whims of a few
(big spending, to be sure) customers.
People who invested in property and
transport, however, have felt the absence of international organizations and
NGOs. Rental prices for housing skyrocketed with the demand following the
tsunami, so much so that housing was five to six times the price compared to
housing in Jakarta. With the drop in demand, property owners are hurting. So
too are those who invested in rental vehicles. But, as in any economy, there
will be winners and losers based on supply and demand. Adaptation is critical.
Some learn quick while others take longer to learn and adapt.
Will local people be willing to pay 5
times the sum of a normal meal for an American-style breakfast?
Basically, no. Those businesses which
catered to expat dining needs have more or less gone out of business, but there
were few to begin with. As mentioned above, existing local businesses such as
cafes and small 'warungs' - small restaurants serving local fare to locals amd
expats alike at local prices - was a way of life before the tsunami, they have
sustained and thrived ever since.
When international cash evaporates, so
too will jobs for the middle class. And what about the people who have migrated
from rural areas to the cities like Tacloban to profit from this growth? What
about their livelihoods 'after'?
Three trends emerged in Aceh. People
from the government bureaucracy who were involved in recovery (at the national
level) returned to their respective positions but with significantly improved
skill sets - to international standards - and have been promoted to senior
positions and have a positive impact on the quality of governance in the
province. This is a valuable asset for the Aceh government (specifically
politicians) to implement their future development plans.
People who worked in NGOs also
improved their skill sets - good understanding of planning, implementation and
monitoring that now serves them well in local and provincial government. Others
have benefitted from improved English language skills and are employed in the
private sector. Others moved on to national government or private sector in
other parts of Indonesia while others still have developed their careers with NGOs
or intenrational organizations such as the EU or UN and now serve as
intenrational staff in other countries - taking their experiences of Aceh's
recovery with them and applying lessons in places as diverse as Afghanistan,
Nepal, Vanuatu and yes, even Leyte.
And then there is the private sector -
which probably went through more upheaval, positive and negative, than the
government. Before the tsunami, local governments had to use contractors from
Banda Aceh or from other provinces as local companies did not have the
knowledge or assets to undertake contracts. During the recovery process there
was such demand for construction works that there was no option but to use
local companies, and many new ones formed as well. With the experience of the
recovery behind the, there are now companies in all districts with the capacity
to undertake partnerships with local governments which are far more cost
effeciove than in the past. However, with the reduced demand for reconstruction
works, there was an oversupply of contractors throughout the province. This
lead companies into competiton for contracts, and has weaned out
under-perfoming companies, leaving the best to build up their businesses. Those
who have lost out have had to adapt - return to old jobs or find new opportunities.
As we noted above, supply and demand produces winners and losers in all
economies and adaptation is necessary for survival.
Disaster recovery results in what we
like to call a 'false economy' - a time limited construction boom-based economy.
The scale of growth doesn't last - and yet those who are benefitting from from
this 'boom' often fail to remember that.
Aceh survived on the recovery economy
for nearly 10 years. While many economic developmemt strategies were developed
by multiple actors, none were ever truely implemented. The key factor that
separates Aceh from Leyte is that Aceh is also a post-comflict economy. The
influx of disaster recovery money also served as instant peace dividends for
nearly everyone in the province. And then the real peace dividend kicked in -
Special Autonomy funds from oil amd gas revenue. Until recently, Aceh could
survive without a proper economic development strategy due to the disposable
income generated by recovery employment opportunities and donor funds
circulating through its economy. The challenge now will be for the government
to recognize that it is time to put the oil amd gas money to use to stimulate
the eoconmy so that people who were not prepared for 'after' do not become
secondary victims of the tsunami 11 years on.
Moreover, the Aceh government is faced
with an increasing wealth gap - those that continue to benefit from residual
recovery activities and oil amd gas income (basically, those people well placed
in the government) and the majority of the population who do not. Acehnese
people got a taste of a differnent life after the trunsami (and 30 years of
conflict) and while many are not so naive as to believe that it is necessarily
their due, they also need the government to step in to stimulate the economy so
that people have opportunities for income growth and improved standards of
living. The government also needs to have a strong sustainable development strategy and plan to
safegurad the results of the $7 billion in recovery investments (assets, human
resources), and ensure that the oil and gas money (which is not infinite) is
used for capital investments to leverage sustained economic growth and quality
public services.
More generally, however, there is also
a role for the international community and humanitarian/development sector to
play - in Leyte and elsewhere although it is too late for Aceh. There needs to
be learning or training programs to help local staff plan for 'after' - many
are hired by NGOs and other development or humanitarian actors out of necessity
and have not previously been in a situation whereby they have disposble income.
Buying luxury items is surely on the list of 'to dos' but guidance and programs
on financial planning or career investment is also critical. It doesnt need to
be bold - taxi driver to mechanical engineer is certainly not the expected
route for everyone - but neither does everyone need to pick one of three
business opportunities like constuction contractor, mini mart owner or phone
shop owner. Suggestions might include helping staff to invest amd grow their
existing farms or businesses, or identifyig gaps in the supply chain that they
can fill to help the local economy grow - in Aceh the coffee industry has grown
immensly with the growth of export based businesses initiated by recovery
veterens.
This is all to say that while no
recovery process will be exactly as those that have come before, there are
certainly lessons to be learned for communities, governments and the
international community on how to soften the blow when the inevitable 'path to
cash' abruptly takes a downward turn. More study on what Aceh and the Acehnese
have experienced is certainly necessary to understand how to go about dealing
with recovery economies of massive scale in the future.
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