Linking Sustainable Livelihoods to Natural Resources and Governance

Linking Sustainable Livelihoods to Natural Resources and Governance

Abdul-Mumin Abdulai Elmira Shamshiry Linking Sustainable Livelihoods to Natural Resources and Governance The Scale of Poverty in the Muslim World

Abdul-Mumin Abdulai Elmira Shamshiry Institute for Environment and Development National University of Malaysia (Universiti Kebangsaan Malaysia, UKM) Bangi, Selangor, Malaysia ISBN 978-981-287-052-0 ISBN 978-981-287-053-7 (ebook) DOI 10.1007/978-981-287-053-7 Springer Singapore Heidelberg New York Dordrecht London Library of Congress Control Number: 2014941867 Springer Science+Business Media Singapore 2014 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Exempted from this legal reservation are brief excerpts in connection with reviews or scholarly analysis or material supplied specifically for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser of the work. Duplication of this publication or parts thereof is permitted only under the provisions of the Copyright Law of the Publisher s location, in its current version, and permission for use must always be obtained from Springer. Permissions for use may be obtained through RightsLink at the Copyright Clearance Center. Violations are liable to prosecution under the respective Copyright Law. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. While the advice and information in this book are believed to be true and accurate at the date of publication, neither the authors nor the editors nor the publisher can accept any legal responsibility for any errors or omissions that may be made. The publisher makes no warranty, express or implied, with respect to the material contained herein. Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)

Our families the (late) Abdulai and Shamshiry families and all people-centred leaders in the world

Foreword The Muslim world constitutes about one-fifth of the world s population. This means that higher poverty incidence in the Muslim world will contribute significantly to the total poverty incidence in the world. It is against this backdrop that the authors deserve commendations for their attempts to investigate poverty and the ways to reduce poverty in the Muslim world. The increasing incidence of poverty in the developing world has led many individuals, both in the public and private domains, to question the effectiveness of the conventional poverty alleviation strategies, and has led to the growing need to explore alternative policy approaches to alleviate poverty, particularly in the developing countries. This is due to the fact that poverty amidst plenty has been seen as the greatest challenge of the twenty-first century (World Bank 2000/2001: World Development Report Attacking Poverty ). The global picture of poverty is not encouraging. Out of the estimated world s over six billion people, 1.23 billion (21 %) live under US $1 per day, 2.8 billion (47 %) live under US $2 per day. Average income has almost doubled in the developing countries, but widening global disparities have also increased the sense of deprivation and injustice for the poor. Globalization expects to burden the poor more than the non-poor. This scenario has well positioned the state as a key player in poverty alleviation. Even though different countries adopt different policies to eradicate poverty, which is based largely on the economic strength of the individual countries, the main goal of these strategies has been to achieve improved quality of life for their citizenry. With regard to natural resources, socio-economic development can be improved immensely by the efficient use of the endowment of valuable natural resources, particularly mineral resources, water resources and land. Therefore, utilization of natural resources seeking to achieve socio-economic development must be done in a manner that will not expose the majority of the population to environmental externalities, especially the poor people. It has been acknowledged that poverty and poor environment stewardship reinforce each one. The traditional consensus on poverty and environment is that poverty is both the cause and effect of environmental degradation. vii

viii Foreword Sustainable utilization of natural resources has crucial implications for poverty alleviation. The reason being that most of the economic costs of environmental degradation generally fall on the poorest due mainly to their inability to take remedial actions, engage in alternative livelihoods, and provide themselves with alternative sources of income and employment. In the developing countries, most of the people live in rural areas and are heavily dependent on natural resource based economy. Livelihoods can be made more resilient and sustainable when good governance becomes the bedrock of natural resources management. This is the subject-matter of this book. It will add value to the literature on natural resources, sustainable livelihoods and governance, at least, in the Muslim world. Institute for Environment and Development, UKM Bangi, Selangor, Malaysia Prof. Emeritus Chamhuri Siwar

Preface In this book, the authors have investigated poverty and its reduction strategies in the Muslim World using, as proxy, selected member countries of the Organization of Islamic Cooperation (OIC). The principal objective in this study lies in exploring the possible channels out of poverty leading to livelihoods sustainability in the Muslim countries. The analysis has, therefore, been patterned along the parameters of natural resource endowments (particularly mineral resources), the level of social and economic development and finally the enabling role of governance in poverty reduction. Again, the significant role of Zakat in resources mobilization for poverty reduction has been demonstrated in this book, especially on the urgent need to give Zakat a befitting institutional support. Using linear regression in Chap. 8, the study has discovered an inverse correlation between GDP per capita PPP and poverty reduction. The coefficient of determination ( r 2 ) is.3672, which means 36.72 % of reduction in poverty has been accounted for by the independent variable GDP per capita PPP performance. Although performance in social and economic development (measured by GDP per capita PPP for the period 1993 2007) has taken a nose-dive except in 2007 for a few of the selected Muslim countries, the study has identified pockets of stronger GDP per capita PPP values with many of the oilproducing Muslim countries compared to the non-oil-producing countries. However, the study has found no correlation between oil-resource endowments (daily oil production) and poverty reduction, as some of the oil-producing countries pose high poverty headcount ratios as in many of their non-oil-producing counterparts. On the other hand, the majority of the oil-producing countries pose quite minimal poverty headcount ratios. This finding seems to suggest that natural resource endowments present mixed blessings if you like, and, to a significant extent, cannot be utterly described as constituting a complete curse or panacea, as portrayed in some quarters of the development literature at least in the case of the selected Muslim countries. Against this backdrop, the study has recommended, among others, the intensification of collaboration among the Muslim countries to facilitate achieving sustainable development objectives. For that reason, a multi-dimensional development collaboration model called Development Collaboration Octagon Model ( DeCOM ) has been developed that seeks to offer an alternative approach to ix

x Preface achieving effective collaboration among the Muslim countries and beyond. The model also seeks to fill the loopholes characterizing the existing conventional bilateral and multi-lateral collaborations. Acknowledgements We send our praises to Almighty God for enabling us to undertake and finish this book. In addition, we will like to acknowledge our deepest appreciation and profound gratitude to Emeritus Professor Chamhuri Siwar for urging the lead author to write his Ph.D. thesis on natural resources, governance and sustainable livelihoods in the Islamic countries, which has culminated into the writing of this book. We thank Prof. Dr. Mazlin Mokhtar, who is now the deputy vice chancellor of UKM (Research and Innovation), for his leadership as the director of the Institute of Environment and Development at the time we enrolled as Ph.D. candidates. Furthermore, we thank a former colleague of the lead author Dr. Walid Ahmed Abdu Ali, who is now working with UNDP in Yemen for his mammoth assistance in the collection of data on Zakat in Yemen and Malaysia. Many thanks to Mr. Azmir Hashim (Kuala Selangor) for translating some responses given in Bahasa Malaysia into English, Ms. Nasyrah Ahmad Damanhuri (Former graduate student at LESTARI, UKM) for interviewing the Zakat recipients in Bahasa Malaysia, Abdul-Hamid Abdul-Wahab (Master s degree student in Finance, IIUM) and Emiel Chowdhory (Student of IIS) for checking some of the tables. Our appreciation goes to the editorial team at Springer-Singapore, especially Mrs. Jayanthie Krishnan, Mr. Vishal Daryanomel and Ms. Kanako Tanaka for guiding us through the editorial process and our gratitude to Mr. Prakash Marudhu for his invaluable queries on the manuscript, and to two anonymous reviewers for their constructive comments. Finally, may God ( the most high ) bless and amply reward everyone who, in one way or another, is connected to the fulfillment of this book. Any shortfalls arising from this book remain the sole responsibility of the authors. Bangi, Selangor, Malaysia Abdul-Mumin Abdulai Elmira Shamshiry

Contents 1 Introduction... 1 1.1 Background... 1 1.2 The Need to Investigate Poverty in the Muslim World... 3 1.3 The Aspects and Scope of Poverty Investigated... 5 1.4 Determining the Link Between Development and Poverty Variables... 6 1.5 Significance of the Study... 6 1.6 Some Limitations of the Study... 7 1.7 Chapter Organisation... 7 References... 8 2 Theory and Practice on the Nexus Between Poverty, Natural Resources and Governance... 11 2.1 Introduction... 11 2.2 Theoretical Framework on the Causes of Poverty... 11 2.2.1 Islamic Perspective of Poverty... 12 2.3 Other Theoretical Explanations of Poverty... 16 2.3.1 The Individualistic Theory of Poverty... 16 2.3.2 The Culture of Poverty... 18 2.3.3 The Structural Theory of Poverty... 19 2.3.4 Geography of Poverty... 20 2.3.5 The Cyclical Theory of Poverty... 21 2.4 Theoretical Perspective of Poverty, Natural Resources and Governance... 22 2.4.1 Good Governance... 22 2.4.2 Natural Resource Utilisation and Development... 26 2.4.3 Poverty Alleviation and Redistributive Justice... 28 2.4.4 Poverty in Muslim Countries... 29 xi

xii Contents 2.5 Empirical Perspective of Poverty, Natural Resources and Governance... 30 2.5.1 Good Governance... 31 2.5.2 Natural Resource Utilisation and Development... 33 2.5.3 Poverty Alleviation and Redistributive Justice... 34 2.5.4 Poverty in Muslim Countries... 36 References... 38 3 Techniques and Methods Used to Investigate Poverty in the Muslim World... 41 3.1 Conceptual Framework... 41 3.1.1 Sustainable Livelihood Framework... 41 3.2 Zakat and Poverty Alleviation... 46 3.3 Operational Definitions of Concepts... 48 3.3.1 Poverty... 48 3.3.2 Muslim World... 49 3.3.3 Resources... 50 3.3.4 Development... 50 3.3.5 Governance... 51 3.3.6 Sustainable Livelihoods... 51 3.3.7 Zakat... 52 3.4 Research Design... 55 3.5 Source of Data... 55 3.6 Research Instruments... 55 3.7 Methods of Data Collection... 56 3.8 Methods of Data Analysis... 56 References... 56 4 The Incidence and Trend of Poverty in the Muslim World... 59 4.1 Introduction... 59 4.2 Poverty Indicators and Measurement... 59 4.2.1 Poverty Headcount Index... 60 4.2.2 Poverty Gap Index (PGI)... 60 4.2.3 Squared Poverty Gap Index... 61 4.2.4 Significance of Poverty Measures... 61 4.3 Poverty from Islamic Perspective... 61 4.4 Poverty Trend in the Selected Muslim Countries... 63 4.4.1 The African Region... 63 4.4.2 Middle East and Central Asian Region... 65 4.4.3 East Asia, the Pacific and South American Region... 70 4.4.4 Poverty Trends Within and Across the Muslim Regions... 72 4.4.5 Conclusion... 75 References... 76

Contents xiii 5 Natural Resource Endowments and Development Trend in the Muslim World... 77 5.1 Introduction... 77 5.2 Trend of Natural Resource Endowments in the Selected Muslim Countries... 77 5.2.1 Oil-Resource- and Non-Oil-Resource-Endowed Countries... 78 5.3 Trend of Economic Growth in the Selected Muslim Countries... 83 5.3.1 Productivity (GDP Per Capita PPP)... 83 5.3.2 Manufacturing... 87 5.3.3 Investment and Savings... 91 5.3.4 Trade Pattern... 96 5.4 Socio-economic Development Trend in the Selected Muslim Countries... 102 5.4.1 Human Capital Enhancement... 102 5.4.2 Infrastructure and Social Amenities... 114 5.5 Conclusion... 128 References... 129 6 Governance and Poverty Alleviation in the Muslim World... 131 6.1 Introduction... 131 6.2 Good Governance and Poverty Alleviation... 132 6.2.1 The Dimensions of Good Governance... 132 6.2.2 Political Stability... 133 6.3 Institutional Strategies and Programmes for Poverty Alleviation in the Muslim World... 134 6.3.1 The African Region... 135 6.3.2 Middle East and Central Asian Region... 135 6.3.3 East Asia, the Pacific and South American Region... 135 6.4 Institutional Support... 141 6.4.1 Planning, Implementation and Delivery... 141 6.4.2 Budgetary Allocation for Poverty Alleviation... 147 6.5 General Impact of the Poverty Reduction and Livelihood Sustainability Programmes... 148 6.5.1 Income Poverty... 150 6.5.2 Assets or Human Poverty... 153 6.6 Constraints and Weaknesses of the Programmes... 156 6.6.1 Over-Reliance on Primary Commodities... 157 6.6.2 Weak Investment Climate... 157 6.6.3 Debt Servicing... 157 6.6.4 Financing Gap... 158 6.6.5 Weakening Public Ownership... 158 6.7 Conclusion... 158 References... 159 Further Reading... 160

xiv Contents 7 Zakat as Policy Tool to Reduce Poverty and Improve Livelihoods... 161 7.1 Introduction... 161 7.2 The Centrality of Zakat in Poverty Eradication... 162 7.3 The Effectiveness of Zakat Collection in the Selected Case-Study Countries... 163 7.4 Distribution Pattern of Zakat in the Case-Study Countries... 163 7.5 The Role of Government in the Administration of Zakat in the Selected Countries... 165 7.6 Impact Assessment of Zakat on Poverty Reduction and Livelihoods in the Selected Case-Study Countries... 165 7.7 Conclusion... 171 References... 171 8 Addressing Pertinent Development Questions in the Muslim World... 173 8.1 Introduction... 173 8.2 The Questions... 174 8.2.1 Addressing Question One... 174 8.2.2 Addressing Question Two... 175 8.2.3 Addressing Question Three... 179 8.2.4 Addressing Question Four... 181 8.3 The Relationship Between Oil Resources, Productivity and Poverty Reduction in the Muslim World... 182 Further Reading... 186 9 Towards a Practicable Development Collaboration... 187 9.1 Introduction... 187 9.2 Policy Recommendations... 188 9.2.1 The Development Collaboration Octagon Model ( DeCOM )... 189 9.3 Conclusion... 192 9.3.1 Further Research... 193 Further Reading... 193 Index... 195

List of Boxes Box 6.1 Box 6.2 Box 6.3 Box 6.4 Box 6.5 Box 6.6 Planning, Implementation and Delivery Mechanisms for Poverty Alleviation in Chad... 142 Planning, Implementation and Delivery Mechanisms for Poverty Alleviation in Gambia... 143 Planning, Implementation and Delivery Mechanisms for Poverty Alleviation in Kyrgyzstan... 144 Planning, Implementation and Delivery Mechanisms for Poverty Alleviation in Uzbekistan... 144 Planning, Implementation and Delivery Mechanisms for Poverty Alleviation in Malaysia... 146 Planning, Implementation and Delivery Mechanisms for Poverty Alleviation in Guyana... 146 xv

List of Figures Fig. 3.1 Sustainable livelihoods framework... 45 Fig. 3.2 Zakat and poverty alleviation... 47 Fig. 3.3 Impact of Zakat on poverty... 48 Fig. 3.4 Member states of OIC used as proxy of Muslim world are shown in dark colour... 49 Fig. 4.1 Poverty headcount average comparisons at $1 a day among the OIC member regions from 1980 to 2005... 76 Fig. 5.1 Export compositions of OIC countries in 2006... 101 Fig. 5.2 Import compositions of OIC countries in 2006... 102 Fig. 7.1 The centrality of Zakat in poverty eradication... 162 Fig. 8.1 Trend of poverty in the selected Muslim countries... 175 Fig. 8.2 Natural resource endowments and development performance in the selected Muslim countries... 176 Fig. 8.3 Trend of balance of trade (averages) of the selected Muslim countries... 178 Fig. 8.4 Trend of poverty incidence (averages) of the selected Muslim countries... 180 Fig. 8.5 Trend of human/assets poverty incidence (averages) of the selected Muslim countries... 181 Fig. 8.6 Relationship between poverty reduction and growth in GDP per capita PPP in the Muslim countries as of 2008 (linear regression plot)... 184 Fig. 8.7 The relationship between poverty reduction and mineral resource endowments in the Muslim countries (linear regression plot)... 185 xvii

xviii Fig. 9.1 Fig. 9.2 List of Figures Development Collaboration Octagon Model (DeCOM) (Octagon concept: multidimensional in nature)... 189 DeCOM based on the average GDP per capita PPP in the selected Muslim countries from 1993 to 2007 (US$ 000)... 192

List of Photos Photo 5.1 Shanty and substandard settlement... 115 Photo 5.2 (a) Improved housing and road network. ( b ) Improved housing and road network... 116 xix

List of Tables Table 3.1 Type of wealth on which Zakat is due, its rate ( Nisab )... 53 Table 3.2 Zakat on sheep and goats... 54 Table 3.3 Zakat on cattle and water buffaloes... 54 Table 4.1 Poverty headcount in African OIC member countries from 1980 to 2005... 66 Table 4.2 Poverty gap index in African OIC member countries from 1980 to 2005... 67 Table 4.3 Poverty headcount in Middle East and Central Asian OIC member countries from 1980 to 2005... 69 Table 4.4 Poverty gap index in Middle East and Central Asian OIC member countries from 1980 to 2005... 71 Table 4.5 Poverty headcount East Asia, the Pacific and South American OIC member countries from 1980 to 2005... 73 Table 4.6 Poverty gap index in East Asia, the Pacific and South American OIC member countries from 1980 to 2005... 74 Table 4.7 Poverty headcount averages at $1 a day across the OIC member regions from 1980 to 2005... 75 Table 5.1 Selected oil-resourced African OIC member countries... 79 Table 5.2 Non-oil-resourced African OIC member countries... 80 Table 5.3 Oil-resourced Middle East and Central Asian OIC member countries... 81 Table 5.4 Non-oil-resourced Middle East and Central Asian OIC member countries... 82 Table 5.5 Oil-resourced East Asia, the Pacific and South American OIC member countries... 82 Table 5.6 Non-oil-resourced East Asia, the Pacific and South American OIC member countries... 83 xxi

xxii List of Tables Table 5.7 Natural resource endowment and development trends in the selected African OIC countries measured in GDP per capita PPP 1993 2007... 85 Table 5.8 Natural resource endowment and development trends in the selected Middle East and Central Asian OIC countries measured in GDP per capita PPP 1993 2007... 86 Table 5.9 Natural resource endowment and development trends in the selected East Asia, the Pacific and South American OIC countries measured in GDP per capita PPP 1993 2007... 86 Table 5.10 Natural resource endowment and development trends within and across the OIC regions measured in GDP per capita PPP (averages) 1993 2007... 87 Table 5.11 Trends of manufacturing in the selected African OIC member countries... 89 Table 5.12 Trends of manufacturing in the selected Middle East and Central Asian OIC member countries... 90 Table 5.13 Trends of manufacturing in the selected East Asia, the Pacific and South American OIC member countries... 91 Table 5.14 Trends of manufacturing within and across OIC member regions (averages)... 92 Table 5.15 Patterns of investment and savings in the selected African OIC member countries... 93 Table 5.16 Patterns of investment and savings in the selected Middle East and Central Asian OIC countries... 95 Table 5.17 Patterns of investment and savings in the selected East Asia, the Pacific and South American OIC countries... 96 Table 5.18 Trends of investment and savings within and across the OIC regions (averages)... 96 Table 5.19 Trade pattern in the selected African OIC member countries... 97 Table 5.20 Trade pattern in the selected Middle East and Central Asian OIC countries... 99 Table 5.21 Trade pattern in the selected East Asia, the Pacific and South American OIC countries... 100 Table 5.22 Trade pattern within and across the OIC regions (averages)... 100 Table 5.23 Educational trends in the selected African OIC countries... 104 Table 5.24 Educational trends in the selected Middle East and Central Asian OIC countries... 105 Table 5.25 Educational trends in the selected East Asia, the Pacific and South American OIC countries... 106 Table 5.26 Educational trends within and across the regions (averages)... 106 Table 5.27 Health-care indicators in the selected African OIC countries... 108

List of Tables Table 5.28 Table 5.29 Table 5.30 Table 5.31 Table 5.32 Table 5.33 Table 5.34 Table 5.35 Table 5.36 Table 5.37 Table 5.38 Table 5.39 Table 5.40 Table 5.41 Table 5.42 Table 5.43 Table 5.44 Table 5.45 Table 6.1 Table 6.2 xxiii Health-care indicators in the selected Middle East and Central Asian OIC countries... 109 Health-care indicators in the selected East Asia, the Pacific and South American OIC member countries... 109 Health-care indicators within and across the OIC regions (averages)... 110 Employment and housing in the selected African OIC member countries... 112 Employment and housing in the selected Middle East and Central Asian OIC member countries... 113 Employment and housing in the selected East Asia, the Pacific and South American OIC member countries... 113 Employment and housing within and across the OIC regions (averages)... 114 Trend of transportation in the selected African OIC member countries... 118 Trends of transportation in the selected Middle East and Central Asian OIC member countries... 119 Trends of transportation in the selected East Asia, the Pacific and South American OIC member countries... 120 Electricity per capita and Internet usage in the selected African OIC member countries... 122 Electricity per capita and Internet usage in the selected Middle East and Central Asian OIC member countries... 123 Electricity per capita and Internet usage in the selected East Asia, the Pacific and South American OIC member countries... 124 Electricity per capita and Internet usage within and across the OIC regions (averages)... 125 Water supply and improved sanitation in the selected African OIC member countries... 126 Water supply and improved sanitation in the selected Middle East and Central Asian OIC member countries... 127 Water supply and improved sanitation in the selected East Asia, the Pacific and South American OIC member countries... 127 Water supply and improved sanitation within and across the OIC regions (averages)... 128 Poverty alleviation strategies and programmes pursued in the selected African OIC member countries... 136 Poverty alleviation strategies and programmes pursued in the selected Middle East and Central Asian OIC countries... 138

xxiv List of Tables Table 6.3 Poverty alleviation strategies and programmes pursued in the selected East Asia, the Pacific and South American OIC countries... 140 Table 6.4 Budgetary allocations for poverty alleviation in selected OIC member countries... 149 Table 6.5 Poverty incidences in African OIC member countries... 151 Table 6.6 Poverty incidences in the Middle East and Central Asian OIC member countries... 152 Table 6.7 Poverty incidences in East Asia, the Pacific and South American OIC member countries... 152 Table 6.8 Assets/human poverty in the selected African OIC countries... 154 Table 6.9 Assets/human poverty in the selected Middle East and Central Asian OIC countries... 155 Table 6.10 Assets/human poverty in the selected East Asia, the Pacific and South American OIC countries... 156 Table 7.1 Zakat revenue in the selected countries... 163 Table 8.1 Correlation matrix between poverty reduction and growth in GDP per capita PPP in the selected Muslim countries... 183 Table 8.2 Correlation matrix between poverty reduction and oil-resource endowments in the Muslim countries... 185