In Jan-Feb 2010, I spent the better part of a month in Indonesia, working on several Mercy Corps projects. Most of my time was spent in Jakarta, but I also managed to do a four day trip to the Maluku Islands.
With 8 million people in the city proper, and 13 million in the metropolitan area, Jakarta is absolutely mammoth. The airport is on the west side of the city, so if you're coming in from the east, you fly the full length of the city before landing. It took about 20 minutes at 200 mph!
The people are incredibly warm, friendly, and polite. The traffic is always jammed, yet you rarely hear someone lean on the horn. They just sit there patiently, waiting for their turn. It was easy to strike up a conversation on the streets, albeit not a very deep one, given the language differences — it was rare to encounter anyone who knew much English beyond "Hello, Meeester!", and I certainly didn't know much more Bahasa Indonesian (the local language)!
Located in the tropics, the climate is hot and humid, but not oppressive. It rains nearly every day, freshening the otherwise polluted air.
Like other big cities in developing countries, Jakarta has vast slums where people somehow get by. It was in these areas that the efforts of Mercy Corps are focused. While life can be tough in these slums, if you were to ask the average person if life is better than a few years ago, most would unequivocally answer "Yes!" Good news for a relief organization!
While parents living in Jakarta’s urban slums want healthy food for their children, their options are severely limited. Most residents do not have kitchens and so they buy food from a kaki lima (literally "five legs", a street vendor pushcart; see here for a good description), rather than cooking it themselves. Unfortunately, food sold on the street is not very appropriate for small children because it's high in fat and sugar, prepared under unhygienic conditions, and too spicy. A diet of standard street food can lead to high rates of malnutrition, stunting, anemia, and other related illnesses.
Kedai Balitaku (“My Child’s Café”, abbreviated KeBAL) is a project Mercy Corps started in order to address this problem by providing cheap, nutritious food specifically targeted for young children. Over the last 12 months, Mercy Corps has run a pilot project where four prototype street carts were created. Local entrepreneurs were recruited to cook the food and sell it. A nutritionist created a menu of inexpensive, but nutritious porridges, suitable as morning meals and as a snack, with a price of about 2,000 Rp ($0.22 USD) per serving. Yes, that's right. Less than a quarter, US, apiece. Things are cheap in Jakarta!
While the pilot has been a great success, it has its problems. It depends on individual vendors to do the cooking, then going out and selling their product. While they regularly sell out, they are unable to cook more because of their cramped kitchens and limited time. It's also difficult to control hygiene and quality standards. Clearly, a different business model is called for, one that offers more opportunities for economy-of-scale and assured quality.
A group of MBA students from MIT's Sloan School of Management came out to Jakarta and studied the situation. They recommended setting up a three-tiered franchising system where a central headquarters was responsible for franchising and recruiting "cooking centers," which would cook the food, and a third group of street vendors who would then buy the food from the cooking centers and sell it on the streets. All three layers were expected to be profitable.
I overlapped by a few days with the group from MIT and took the project a few steps farther by writing the actual business plan, modifying the business model, and writing a job description for the person to run the whole project. My concern, verified by a few interviews, was that there is so little experience with franchising, particularly in Jakarta's urban slums, that the cooking center owners would not see the value of sending a royalty check to headquarters each month for vague services such as "branding," "quality control," or "marketing". My version has the headquarters owning the cooking centers for the first few years, and then perhaps expanding with a franchise model once the value of the KeBAL brand had been demonstrated.
The Maluku Islands are a set of mountainous and jungle filled islands about 1,400 miles (it amazes me how big Indonesia actually is!) east of Java. About 10 years ago they erupted in a religious civil war between Muslims and Christians, which killed thousands and displaced hundreds of thousands more. The origins of the conflict are murky, but it seems to have been enflamed by Laskar Jihad, a local militia centered around Ambon, the provincial capital of the Maluku Islands, that had been trained and radicalized in Afghanistan, . Laskar Jihad disbanded in 2002, and things have very much calmed down since then. Nevertheless, the scars and tensions of the conflict remain. Mercy Corps has an office in Ambon, with the goals of reducing tensions, increasing employment, and improving sanitation.
Sean, the head of Mercy Corps in Indonesia, and I went out to Ambon and a nearby island, Seram, for a few days to see how the projects were going.
One project that I expected to spend a lot of time on was fuel-efficient stoves. Phoenix Fund had funded a pilot project to introduce them in the outskirts of Jakarta. The idea is that they would improve indoor air quality, reduce the amount of wood consumed and, possibly, earn some carbon credits. A similar project that the Climate Team at Mercy Corps had started in the Democratic Republic of Congo has been a great success, so we were hoping we could replicate the model in Indonesia.
Unfortunately for the project although perhaps fortunately for the poor, the Indonesian government has recently decided to subsidize the cost of propane for small consumers throughout the country. This makes it very difficult for the fuel-efficient stoves to compete with fossil fuels except in the more rural areas where wood is free, propane still costs something, and the subsidy program has a difficult time reaching. Unfortunately, in these areas wood is so abundant in the tropical Indonesian climate that there is no motivation to use a more efficient stove. While there are still health benefits, these are more difficult to sell than the immediate cost-saving benefit of improved efficiency.
There are some arid areas in southeast Indonesia, as well as in Timor-Leste, where wood is very valuable and so could still enjoy the benefits of the stoves. We will retrench and look at these areas.