Why investing in human capital can save Indonesia’s future generation

WHY IT MATTERS

The startup ecosystem talks a lot about Indonesia’s impending boom this decade and how entrepreneurs and investors can capitalize on the opportunities. But for this growth to be sustainable, Indonesia has to ensure it curbs one major issue: childhood stunting.

Stunting, defined as the impaired growth and development of children, often happens to kids who experience poor nutrition, repeated infection, and inadequate psychosocial stimulation. According to the Ministry of National Development Planning, the problem will lead to a 3% loss in the country’s gross domestic income – around US$20 billion or the equivalent to 13.8% of the nation’s income per year. 

Nutrition interventions are among the most cost-effective investments for human capital. Priority packages for nutrition intervention only costs US$2.3 per child per year, while a full package costs US$7 per child per year.

A report by the World Bank also found that early nutrition programs have been shown to increase school completion by one year, raise adult wages by 5% to 50%, and increase gross domestic product by 4% to 11% in Asia (10.5% in Indonesia). In addition, children who escape stunting are 33% more likely to break out of poverty as adults.

ABOUT

Indonesia is Southeast Asia’s biggest economy and has the world’s fourth-largest population. Today, 51% of its population is under the age of 30, gearing the nation up to reap the benefits of a demographic bonus. But pushing the quality of human capital is still one of the government’s biggest tasks.

While Indonesia has successfully decreased early childhood mortality, its stunting rates are among the highest in the world.

The condition has lifelong consequences for health, human capital, poverty, and equity. In 2019, nearly 8 million children under the age of five were stunted, higher than most regional and income-level peers.

What’s more, being stunted in early childhood is associated with reduced cognitive development, lower educational attainment, and decreased adult productivity and wages. This means Indonesia’s next generation will only be 53% as productive as it could have been if given full health and complete education.

Government intervention

In August 2017, Indonesia’s government launched the National Strategy to Accelerate Stunting Prevention (StraNas Stunting) in an effort to combat the issue. The country committed 22 ministries and approximately US$14.6 billion to cover priority interventions across several sectors: health, water and sanitation, early childhood education, social protection, and food security.

The strategy targeted 160 districts with high stunting rates in 2019 and will be scaled up to 390 districts in 2020. By next year, it plans to target all 514 districts and cities in Indonesia.

Recognizing that tackling stunting requires a complex and multisectoral effort that spans all levels of government, the strategy aims to ensure better coordination and resource allocation across national, regional, and local governments.

StraNas Stunting has three main priorities:

CONCLUSION

SOURCES