91825 the world bank Empowering Indonesian Communities through Direct Participation in Developing Infrastructure and Services IBRD Results Synopsis With poverty alleviation among Indonesia’s highest priorities, the country has centered its focus on community-driven development programs. The overall National Program for Community Empowerment encourages local communities to participate in the planning process; provides financial support to the communities to allow direct and transparent funding of poverty-alleviation activities; and enhances the partnership of central and local governments to best provide services where most needed. Challenge With 17,000 islands and millions of villages across the archipelago, Indonesia had to reach out to its poorest areas to ensure that these populations enjoy an equal In 1998, Indonesia faced political upheaval and financial opportunity to grow and develop. Non-income poverty crisis. The country was marred by its graft-ridden politi- is a serious problem in terms of high malnutrition and cal and administrative systems and poverty had increased maternal mortality rates, inadequate access to safe water tremendously. The devaluation of the domestic currency, and sanitation, and education outcomes. Furthermore, the Indonesian Rupiah, by more than 50 percent and the inequality is increasing and disparities between regions shutdown of many manufacturing shops had a tremen- remain high. Poverty alleviation has become a priority dous impact on people’s incomes. Programs that would for Indonesia. bypass the graft-prone top layers of government were sought by the new Government to increase the people’s trust. Approach Despite significant progress over the past several years in re- Community-Driven Development: Reaching out ducing poverty, many people remain poor and vulnerable. to poor areas where resources are limited. Sustained economic growth has helped many Indonesians to escape from poverty by creating jobs and permitting The CDD approach allows communities to get in- increasing public expenditures for health, education and volved in the development process. With funds re- infrastructure. Poverty has fallen from 16.7 percent of the ceived through a CDD-type project, communities plan, implement and maintain the roads, schools population in 2004 to 14.1 percent in 2009. Although and other small infrastructure that they need the these gains are significant, more than 32 million Indone- most, working with local governments to ensure that sians currently live below the national poverty line, which is the projects are in line with government’s planning. the equivalent of US$21 per month, and approximately half of all households remain clustered around it. March 2010 2 Empowering Indonesian Communities To accelerate Government efforts to reduce poverty and to have increased community participation in governance and ensure equity and inclusiveness, on August 16, 2006, the Pres- have found creative new ways to combine formal and in- ident of Indonesia, Susilo Bambang Yudhoyono, announced formal anti-corruption programs. Being subjected to the the National Program for Community Empowerment (Pro- most intensive independent audits and public scrutiny, they gram Nasional Pemberdayaan Masyarakat - PNPM) as the have become an attractive choice for leading the country’s policy and operational umbrella for all community empow- national poverty reduction strategy. erment programs in the country. The PNPM builds primarily upon the previous ten years of successful experience with the Results Kecamatan Development Program (KDP) and the Urban From 1998 to 2006, the KDP and the UPP reached more Poverty Project (UPP), now the PNPM-Rural and PNPM- than 50,000 urban and rural villages and benefited more Urban, respectively. Adopting a community-driven devel- than 11 million families with significant achievements. A opment (CDD) approach and with technical and financial rigorous 2008 impact evaluation of the KDP showed that assistance from the International Bank for Reconstruction real per capita consumption gains were 11 percent higher and Development (IBRD), the PNPM is now a national among poor households and the number of households program covering all villages and cities in the country. moving out of poverty in poor sub-districts was 9.2 per- cent higher in KDP areas compared with control areas. The The overall PNPM objectives are being achieved through: evaluation showed that, as a result of KDP participation, (a) communities participating in an open planning process; vulnerable households near the poverty line were less at risk (b) the provision of grants to communities directly and of falling into poverty and that the longer a sub-district re- transparently to finance an open “menu” of poverty-allevia- ceived KDP funding the greater was the estimated impact tion activities; and (c) enhancing the capacity of central and on rural household expenditure. The KDP reduced unem- local governments to partner with community organiza- ployment by 1.5 percent in comparison with control areas. tions in the provision of services. As of October 2009, the combined KDP/PNPM-Rural The KDP started in 28 villages on a pilot basis in 1998. The and UPP/PNPM-Urban Programs have built or rehabili- KDP went national with full Government ownership only tated over 62,000 kilometers of roads, 11,000 clean water after consistent achievements in economic returns in the supply units, 11,000 irrigation schemes, 6,500 kilometers 30–40 percent range, strict discipline in penalizing poorly- performing districts (kecamatan , and the sanctioning of vil- lage leaders in several communities for trying to embezzle money. The UPP began in 1999 in response to the rapid rise in ur- ban poverty triggered by the  financial  crisis.  Through its innovative and flexible approach to learning, the UPP has successfully involved a growing number of communities and local governments in shaping the development of Indo- nesia’s national-level urban poverty plan. The communities, with the support of local governments, have implemented a successful CDD program, supported by thousands of vol- unteers from the communities themselves. The PNPM-Rural and the PNPM-Urban have also been instrumental in delivering the IBRD-supported capacity building and governance program at the local level.  They IBRD RESULTS 3 of drainage, 17,500 village health posts and 10,000 new Program Steering Committee, an inter-ministerial coordinat- schools. Also counted in addition to these projects are more ing body. The Steering Committee comprises representatives than 30,000 other types of economically-productive infra- from the Ministries of Disadvantage Areas, Public Works, structure activities. Some 90 million work-days have been Finance, Home Affairs, People’s Welfare, Cooperatives and created from KDP/PNPM-Rural and 20 million work-days Small Medium Enterprises, Agriculture, Communications from the UPP/PNPM-Urban. During a visit to Manado and and Information, Marine and Fisheries, and Industry and Gorontalo on Sulawesi Island in December 2009, the Vice Trade. The Coordinating Ministry of People’s Welfare also President of Indonesia, Boediono, remarked that overall the chairs the Government’s National Poverty Reduction Coor- PNPM-Mandiri has progressed well in all areas: “For exam- dination Committee. Overall project oversight is a function ple, the provision of clean water in North Minahasa, Sulawesi, of the Ministry of Home Affairs for PNPM-Rural and the which only cost approximately US$30,000 can reach 3,000 Ministry of Public Works for PNPM-Urban, while day-to- people or 900 families,”. “Effectiveness to reach the mass should day coordination is undertaken by project management units be the priority in choosing projects.” Economically productive assisted by administrative units (satuan kerja or ‘Satker’) at KDP-built infrastructure has resulted in expanded business central, provincial and district levels. opportunities and employment. Economic rates of return on sample infrastructure sub-projects have ranged from 39 The PNPM includes major operational pilots or sub- to 68 percent. Independent technical evaluations rated the programs funded through grants from bilateral donors quality of the infrastructure as 91–93 percent “good” to (including Australia, Canada, Denmark, The Netherlands “very good”. An independent evaluation found that village and the United Kingdom). All of these pilots build upon infrastructure built through KDP/UPP/PNPM cost sig- the main PNPM platform and principles of community nificantly less – on average 56 percent less – than equivalent participation. These programs include the PNPM-Genera- works built through government contracts. si (Millennium Development Goals achievement grants or conditional cash transfer pilots) in 178 sub-districts Community participation in PNPM-Rural and PNPM- in five provinces across the country for the achievement Urban is high. The participation of women in PNPM of education and health outcomes; Green PNPM to sup- meetings averaged 45 percent. Nearly 60 percent of those port natural resource management and renewable energy who attend these meetings are from the poorer segments initiatives; PNPM-SADI supporting agricultural develop- of the community. The 2008 impact evaluation and gender ment initiatives to provide technical assistance and finan- review did find, however, that the PNPM could do much cial resources for smallholder farmers; PNPM RESPEK, more to promote the participation of women and vulner- which supports Papua and West Papua’s customized ap- able groups. proach to adapting the PNPM to the distinct conditions of those two provinces; Aceh Multi-Donor Trust Fund for post-tsunami recovery and PNPM-specific adaptations for IBRD Contribution Aceh and Nias; and the Creative Communities pilot in 30 sub-districts aimed at cultivating a cultural approach to The PNPM distributes US$1.6 billion each year to approxi- poverty reduction. mately 79,000 villages in poor areas. The total contribution of the IBRD and IDA so far has been US$2.299 billion to AusAid has extended its support for the PNPM by provid- the PNPM-Rural and US$915 million to the PNPM-Urban. ing additional financial resources of approximately US$200 million over the period 2009–2014, in which part of the contribution will be targeted toward the far east of Indo- Partners nesia, Papua. Approximately US$100 million will be con- tributed to PNPM-Generasi as to provide block grants to In implementing the PNPM, IBRD works with the Coordi- communities to achieve health and education Millennium nating Ministry of People’s Welfare, which chairs the PNPM Development Goals. 4 Empowering Indonesian Communities Good Practices Developed/ Next Steps Replicated The CDD-based projects will remain the major models in alleviating poverty in Indonesia. The Government has The KDP and UPP models were adopted by the Commu- discussed continuing the PNPM until 2015 in two phas- nity-Based Settlement Rehabilitation and Reconstruction es. The current phase (2007–2009) is the scale-up to full projects (CSRRP) for rebuilding houses and community national coverage of all 79,000 villages and urban wards. infrastructure in Aceh in 2005 and in the provinces of Yog- After the scale-up, the PNPM would shift into a more yakarta Special Region, Central Java and West Java in 2006 self-sustaining mode whereby local governments will take in the aftermath of the tsunami and earthquakes. The proj- on greater responsibility for financing. Some local gov- ects were financed through the Multi-Donor Fund (MDF) ernments have actually replicated the model, using their for Aceh and Nias and the Java Reconstruction Fund ( JRF). own funds, to implement investments in areas that have Also supported by the MDF, the Kecamatan Rehabilita- not had previous interventions. For example, based on the tion and Reconstruction Project for Nias is using a similar Community Settlement Planning of CSRRP, local gov- community-based approach. At the initial stage of the MDF, ernments chose to help villages that were not affected by the then-Head of the Agency for Rehabilitation and Recon- the earthquake in Java to plan required infrastructure that struction of Aceh (BRR), Kuntoro Mangkusubroto, saw this would fit into the sub-national planning. Also over time, approach as “high impact, with benefits immediately trickling small poverty-reduction initiatives will be folded into the down to the people”. The CDD-based model also required less PNPM to make programming at the community level supervision and involvement from the overwhelmed BRR, more streamlined, coordinated and responsive to benefi- which had a lengthy agenda to tackle. The MDF was con- ciaries’ needs. sidered the best platform to fund CDD-based projects. The CDD-based models were also adopted by the Government as a flagship of the poverty reduction program, PNPM. learn more In-depth information (such as project documents) –– Projects under PNPM –– Decision Note – PNPM Regional Management Review Meeting dated Dec 20, 2007 Country/sector work –– Overview of PNPM Rural Link to Government Web-sites –– PNPM Mandiri Web (in Bahasa Indonesia) More on Project/Sector/Country –– Borrowing History http://web.worldbank.org/external/projects/main?Projectid=P105002&theSitePK=40941&piPK=6430277 2&pagePK=64330670&menuPK=64282135&Type=Financial IBRD RESULTS 5 learn more ( continued ) –– Data & Statistics http://web.worldbank.org/external/projects/main?Projectid=P105002&theSitePK=40941&piPK=6430278 9&pagePK=64330676&menuPK=64282137&Type=Implementation Contact Us Pengaduan.pnpm@gmail.com Key Statistics and Results –– US$1 billion per year to be transferred to communities. –– 11 million families benefited from CDD-based models, not including those who benefited from disaster trust funds. –– 70,000 villages per year are reached by the National Program for Community Empowerment Project. –– 38,000 houses rehabilitated and reconstructed in Aceh, Nias, Special Province of Yogyakarta and Central Java. MULTIMEDIA Bridge development in Ambarawa - Central Java Hanging Bridge built through PNPM in Jambi – Sumatra Health Center built through PNPM in Subang - West Java 6 Empowering Indonesian Communities learn more ( continued ) Road project in Tabanan – Bali Irrigation project in Jombang - East Java PNPM road built over muddy field in Dompu - West Nusa Tenggara Beneficiary of Women Headed-Household Program for income generation in West Java