92883 May 23, 2007 Links: - What is IDA? - Our Work in Indonesia More on Indonesia: - Borrowing History - Data & Statistics - Research - Contact Us The Kecamatan (Sub-district) Development Program (KDP) was initiated as a pilot in 1998 in 28 villages in Indonesia at a time of great political and financial upheaval. With poverty rising to 23 percent and institutions of government weakening with Suharto's exit, conventional top-down approaches to development did not offer the most effective way to address the needs of the rural poor. Further, challenges posed by widespread corruption and cronyism were hampering delivery of development projects and created the need for an innovative method that was transparent in providing project funds directly to villagers. Later in 2001, when Indonesia decentralized its governance structure, the KDP provided support in building local level capacity for governance through its large network of facilitators. KDP is one of the world's largest community-driven development program, bringing development decision-making to the grass-roots level in tens of thousands of poor rural communities across Indonesia. The program enables rural communities to decide how to improve their livelihoods, build appropriate infrastructure, provide health care and education services and build effective local government and community institutions. Flexible grants, ranging from US$50,000 to US$150,000 per sub- district, are channeled straight to the communities to finance activities that villagers define as the most important. Trained local facilitators provide technical assistance to communities across the country. In nine years, KDP has improved the lives of people in more than 34,000 villages or close to half of Indonesia's poor rural communities. Infrastructure projects generated 55.5 million workdays between 1998 and 2006, resulting in the creation of over 31,000 roads, over 8,000 bridges, over 9,000 clean water supply units, 9,000 irrigation systems, 3,000 new or improved health posts and more than 5,000 new or rehabilitated schools. Highlights: - Besides providing better basic infrastructure, the project's micro-financing scheme has helped more than 1.3 million people obtain loans to start or complement local businesses. - Around 101,500 young people have received scholarships to attend school. - Poverty is successfully targeted – Numerous evaluations show that KDP's poverty targeting is successful and that its infrastructure projects bring high economic returns to the communities – from 39 per cent to 68 percent. - Lower construction cost – KDP's construction costs are routinely 30-50 percent lower than conventional approaches and quality is assessed as “good to very good”. - Corruption rates are low – The level of corruption in KDP projects is very low with independent audits showing that the loss of funds through corruption is lower than 1 per cent. - Participation of women and the poor is high – Because of its requirement to involve women and marginalized groups in all decision-making, KDP has brought about a high level of participation of these groups. - Communities extend impact through voluntary contributions – High levels of financial and in- kind contributions from the local community to KDP projects enable communities to extend the impact of each grant. Analysis of 113 randomly selected project sites in four provinces showed that US$1.6 million in KDP grants have generated additional value equivalent to US$226,000 (around 14 percent of the cash injected). - Low levels of conflict – Local forums reduce community conflict, with these benefits rising over time. - Evaluations of cost-benefit (Dent 2001; Torrens, 2005), poverty targeting (Alatas 2005), infrastructure quality (Ekart 2004; Torrens 2005), local governance conflict management (Barron 2006), voluntary community contribution (MIS) and corruption control (PriceWaterhouse, Moores Rowland, Government Audit Agency) have all found the KDP approach to be highly effective. - The model is also working effectively for sustainable reconstruction in Aceh and elsewhere in Indonesia when natural disasters and conflict have affected poor communities. - KDP is supported through a mix of loans from the International Bank for Reconstruction and Development (IBRD) and credits from the International Development Association (IDA), grants, and counterpart government funds. Total financing for KDP to date (April 2007) is approximately US$1.6 billion of which more than $300 million came from IDA and roughly US$700 million from the IBRD. - IDA's contributions have been critical to KDP's success. Because of its flexibility, IDA has been able to quickly direct KDP funds to respond to crises (2002 bombings in Bali; 2004 tsunami in Banda Aceh; 2005 earthquake in Central Java). - IDA has also attracted extensive donor grant funding and convinced government to match funds on a large scale. IDA, bilateral grants and government resources are also guiding the reintegration program for former combatants in Aceh province where the IDA contribution of US$5 million has catalyzed an additional US$35 million in national government funding. - KDP has influenced an entire generation of thinking about community development in Indonesia. Projects modeled on KDP cover health, education, water and sanitation, rural development, post-conflict work and disaster management. The success of KDP has also influenced similar community-led approaches in other parts of the world, including Afghanistan and the Philippines. KDP has leveraged over US$200 million in trust funds and grants, including US$40 million in co- financing for KDP 2 from the Netherlands. Seeing its success on the ground, the government of Indonesia decided in 2006 to expand KDP to all rural communities by 2009. Together with KDP's urban sister program, Urban Poverty program, KDP will form the government's national flagship poverty reduction program. The World Bank will provide support through additional financing that will complement national budget resources and funds from other donors, including the Asian Development Bank and Japan ICA. Kecamatan Development Project (1998-2008)