52898 REBUILDING TOGETHER Multi-Donor Fund for Aceh and Nias Progress Report | December 2005 NAD Nias TABLE of CONTENTS 1. Introduction 3 · Foreword 5 · Joint Donor Statement 6 · Abbreviations 8 · Acknowledgements 9 · Executive Summary 11 2. The First Six Months 17 1. Establishment 19 2. Building a Portfolio and Achieving Results 23 3. Looking Forward 36 REBUILDING TOGETHER | Multi-Donor Fund for Aceh and Nias | Progress Report No. 1 - December 2005 3. Finance and Operations 39 1. Finance 41 2. Operations 47 3. Communications 49 4. Monitoring and Evaluation 50 5. Fighting Corruption 52 4. Annexes 55 1. Recovery Assistance Policy 57 2. RAP: A Review 71 3. Project Fact Sheets 75 4. Members of the Steering Committe 81 5. Logical Framework 82 6. Secretariat Organizational Chart 87 7. Sitemap of the Website and References 88 The findings, interpretations and conclusions expressed here have been prepared by the Secretariat of the Multi- Donor Fund and do not necessarily reflect the views of the Steering Committee of the Multi-Donor Fund or of the entities represented by individual members. 1 INTRODUCTION Foreword by Steering Committee Co-chairs The stark scenes of devastation and human suffering in the wake of the earthquake and tsunami on December 26, 2004, were televised to audiences around the world. These images of torment and loss shocked the international community, and prompted unprecedented support. Recognizing the need for a coordinated approach to long-term reconstruction and recovery, the Government of Indonesia asked bilateral and multi-lateral donors to consider pooling their resources to establish a multi-donor trust fund, with the World Bank as trustee. The establishment of the Multi-Donor Fund for Aceh and Nias came at a critical juncture for the people of Aceh. Prior to the tsunami, Aceh was a province under civil emergency rule, still caught in the middle of a decades-long conflict, with a declining economy. The recent peace accord, coupled with the inflow of financial assistance for reconstruction, offers the opportunity for creating a new and more prosperous future. Significant progress has been made during the Fund's first six months of operation. With its support, land titles will be provided for 600,000 land parcels, houses are being constructed, waste is being converted into building materials, and grants are being provided to communities throughout Aceh and Nias. Much work remains, however, and we must not underestimate the challenges that lie ahead. The on-set of the wet season makes the need for housing and basic infrastructure even more urgent. This need for a rapid response must always be balanced with the longer-term requirements for quality and ensuring that reconstruction takes place in a transparent, accountable and sustainable environment. Forming strong partnerships with all stakeholders in the recovery process is essential as it allows the sharing of lessons learnt and avoids overlaps. The Multi-Donor Fund plays a key role in forging these partnerships, as its Steering Committee brings together fifteen donors, Government representatives at both provincial and national levels, civil society, United Nations and international NGOs. The shared voice and common vision of its Steering Committee allows the Fund to respond swiftly to the needs on the ground. The Multi-Donor Fund and the Government of Indonesia will continue to work together over the coming years to meet these challenges to assist the people of Aceh and Nias to build a brighter future. Kuntoro Mangkusubroto H. E. Jean Bretéché Andrew Steer Co-chair Co-chair Co-chair Director of BRR Ambassador, Head of Delegation Country Director Badan Rehabilitasi European Commission World Bank dan Rekonstruksi Indonesia 5 Joint Donor Statement We, the contributors to the Multi-Donor Fund, would like to reiterate our support for its goal which is to efficiently and effectively contribute to the reconstruction of a better Aceh and Nias following the earthquakes and tsunamis. In this context, a "better" Aceh and Nias means not only improving infrastructure in accordance with the Government's Master Plan, but also addressing social concerns such as reducing poverty, improving livelihoods, and increasing equity. This overall goal is being accomplished by: · Pooling donor resources to support a mutually-agreed portfolio of projects and programs; · Working through and within the Government of Indonesia's Master Plan for recovery; · Promoting bottom-up and demand-driven development of initiatives that are eligible for financing; · Partnering with government and non-government agencies; · Serving as a forum for donor coordination; · Supporting a policy dialogue between the international community, civil society and the Government of Indonesia on progress in the recovery process; · Having funds flow through the Government of Indonesia budget wherever effective, and outside of the budget if the Steering Committee deems this more effective; · Pursuing gender-sensitive activities; · Seeking opportunities to support the peace process (conflict sensitivity); and · Avoiding worsening regional disparities. The Multi-Donor Fund is and will continue to be a unique mechanism for supporting the recovery of Aceh and Nias as it is characterized by: a) participation of key partners in the donor community, Government of Indonesia and civil society through its Steering Committee; b) substantial grant financing that is available over a five-year time period; c) a great deal of flexibility in being able to support projects as well as programs that are not earmarked in advance; d) a common concern with promoting good governance and combating corruption; and e) the accumulation of development experience that is available through the currently accepted Partner Agencies (World Bank, Asian Development Bank and the UN organizations), and other members of the Fund. 6 H.E. Jean Bretéché H.E. Nikolaus Van Dam Sarah Sanyahumbi Ambassador, Head of Delegation Ambassador of the Netherlands Head of DfID Indonesia European Commission Indonesia Andrew Steer H.E. Bjorn Blokhus H.E. Niels Erik Andersen Country Director, World Bank Ambassador of Norway Ambassador of Denmark H.E. Randolph Monk H.E. Lennart Linner Edgar A. Cua Ambassador of Canada Ambassador of Sweden ADB Country Director H.E. Joachim Broudré-Gröger William Frej H.E. Hans-Christian Kint Ambassador of Germany USAID Mission Director Ambassador of Belgium H.E. Markku Niinioja H.E. Phillip Gibson H.E. Hugh Swift Ambassador of Finland Ambassador of New Zealand Ambassador of Ireland (Singapore) 7 Abbreviations ADB Asian Development Bank BPN Badan Pertanahan Nasional (National Land Agency) Badan Rekonstruksi dan Rehabilitasi NAD-Nias (Agency for the Rehabilition and BRR Reconstruction of Nanggroe Aceh Darussalam - Nias) CFAN Coordination Forum Aceh / Nias CRS Catholic Relief Services CBO Community-Based Organization CSO Civil Society Organization DIPA Budget Execution Document DPR Dewan Perwakilan Rakyat (Indonesian National Parliament) EC European Commission GAM Gerakan Aceh Merdeka (Free Aceh Movement) GoI Government of Indonesia IDP Internally Displaced Person ILO International Labour Organization INGO International Non-Governmental Organization KDP Community Recovery Through the Kecamatan Development Project M&E Monitoring and Evaluation MDTFANS Multi-Donor Trust Fund for Aceh and North Sumatra MIS Management Information System MoF Ministry of Finance NAD Nanggroe Aceh Darussalam (Aceh Province) NGO Non-Governmental Organization RALAS Reconstruction of Aceh Land Administration System Project RAN Database Recovery of Aceh and Nias Database RAP Recovery Assistance Policy Rp Indonesian Rupiah $ United States Dollars SBY Susilo Bambang Yudhoyono SC Steering Committee UN United Nations UNDP United Nations Development Programme UNICEF United Nations Children's Fund UPP Community Recovery Through the Urban Poverty Program WB World Bank WFP World Food Programme WHO World Health Organization 8 Acknowledgements This report was prepared by the Secretariat of the Multi-Donor Fund with contributions from the Partner Agencies, UNDP and the World Bank, as well as the project teams. The Multi-Donor Fund Secretariat team was led by Joe Leitmann, the Multi-Donor Fund Manager, and includes Sabine Joukes, Diane Zhang, Georgia Wimhöfer, Safriza Sofyan, Geumala Yatim and Rahayu Novianty. Many thanks to Steven Orr and Stuart Andrews for their contributions. The report was prepared under the guidance of Andrew Steer and Joel Hellman. The following people also contributed to the report: Anja Latacz, Gary Swisher, George Conway, George Soraya, Isono Sadoko, James Sheppard, Keith Bell, Lis Nainggolan, Puteri Watson, Scott Guggenheim, Susan Wong, Tim Brown, Tim Walsh, Vic Bottini and Widjajanto. We would also like to express our gratitude to members of the Steering Committee from the BRR, European Commission, DfID, Sweden, Denmark and Canada, who commented on the report. Special thanks go to the contributions of Kristin Thompson, for bringing our projects to life with her wonderful photos and to Christianto Nusatya for interviewing the many beneficiaries and project implementers in Aceh. Contributions from Aceh and Nias The Multi-Donor Fund team has actively encouraged the involvement of the communities of Aceh and Nias over the past months. Their valuable contribution is reflected in two ways in this report: 1. The Multi-Donor Fund logo was developed using elements of the winning logos and slogan from a Logo Design Competition which received almost 150 entries from high school students throughout Aceh and Nias. Three winners were selected and they contributed to the logo in the following way: · Hands reaching out ­ helping each other, supporting each other; · A House ­ symbolizing the reconstruction of Aceh and Nias; · "Bersama Membangun" or "Rebuilding Together" ­ a slogan, NAD Nias indicating that rebuilding is a joint effort with the people of Aceh and Nias. 2. Some of the photos you see throughout the report were taken by people from communities in Aceh and Nias. As part of the one-year anniversary commemoration activities, the Secretariat distributed 100 disposable cameras to the people to take photos which, in their opinion, best reflect the theme "One Day in the Recovery of Aceh and Nias". This provided those involved in the day-to-day efforts of rebuilding Aceh and Nias with the opportunity to share their views on the progress of the recovery in an exhibition called "Reflections of Aceh and Nias". (Copyright of all other photos belongs to Kristin Thompson) 9 First Prize : Zakiul Fuadi (24) "Fishermen working together" Muria Batu, November 16, 2005 (Reflections of Aceh and Nias) 10 Executive Summary During its first six months of operations, the Multi-Donor Fund received pledges of $525 million from 15 donors and approved eight projects valued at $237 million to support the Government of Indonesia's plan for post-tsunami reconstruction. Implementation of each of these projects is underway and the Fund will disburse over $82 million to these projects by December 31, 2005. Another five projects valued at $58 million are approved in principle, and should commence implementation in January 2006. The Multi-Donor Fund is governed by a Steering Committee representing the Government of Indonesia, contributors, civil society, and other key partners (international NGOs and the UN). The government's reconstruction coordination body, the BRR (Badan Rekonstruksi dan Rehabilitasi NAD-Nias), co-chairs the Steering Committee, along with the European Commission (EC) as the largest donor and the World Bank as the Trustee. The broad representation of stakeholders on its Steering Committee has established the Fund as an important donor coordination mechanism and forum for dialogue on recovery policy between the Government and the international community. The Steering Committee is guided by the Recovery Assistance Policy, which provides strategic direction to assess whether a project is suitable to receive financing. The Fund supports quality projects in under-funded sectors, which promote capacity building, good governance, sustainable development, gender equity, geographic balance, and conflict sensitivity. Building a Portfolio Projects already approved or under development address four broad sectors: community-led housing, land titling and infrastructure; capacity building to the BRR; civil society and private sector; urgent infrastructure and logistics; and environmental restoration and protection. Community-Led Housing, Land Titling and Infrastructure A package of four projects to issue land titles and rebuild houses and infrastructure, was approved at the first Steering Committee Meeting on May 10, 2005. Each of these projects makes use of community decision- making structures developed with the assistance of the network of facilitators put in place by the Kecamatan Development Project (KDP) and the Urban Poverty Program (UPP). Prior to the tsunami, this network of facilitators was present in 45 percent of rural sub-districts and 10 percent of urban neighborhoods in Aceh. The Multi-Donor Fund provided financing to increase the coverage of KDP and UPP to every urban neighbor- hood and every village in all sub-districts in Aceh and Nias. 11 These community-driven governance structure are used to: · Assist communities with land mapping to establish the basis for secure land ownership. The Land Titling Project, financed by the Multi-Donor Fund as part of this initial package of four projects, issues land titles through the community-based land inventory process and the recovery of land records damaged by the tsunami. Over three years, an estimated 600,000 landowners from Aceh and Nias will receive land titles and the provincial land administration system will be restored. · Assist rural and urban communities to compile their own community development plan that identifies the priority needs of the village. This development plan allows communities to access block grants from the KDP and UPP projects. These grants are used to rebuild and repair community-level infrastructure such as roads, drains, sanitation units and also create local employment and livelihood opportunities. · Assist communities to complete damage assessments to identify houses that need repairing and rebuilding. The Housing and Settlements Project, which completes the package of four community- based projects, will repair and reconstruct 14,000 houses throughout Aceh and Nias. This project also provides grants to build infrastructure and supplies an additional 200 housing facilitators to supplement the UPP and KDP networks to ensure quality of reconstruction. With support from the Fund, this network of facilitators has expanded to approximately 531 employees and more than 10,240 volunteers at the village level in Aceh and Nias. This network is also one of the primary vehicles for distributing information materials on the peace process. KDP facilitators have also been actively facilitating district coordination forums, which are attended by all NGOs working in the district. This ensures better coordination and helps to identify key gaps in financing. In addition, other agencies and NGOs, such as Oxfam, UN Habitat and Care also use the above mentioned community development plans to match their spending with community identified needs. Community participation and consultation are vital to empower- ing communities to retain ownership of their futures. Capacity Building to BRR, Civil Society and the Private Sector The Fund recognizes the importance of strong institutional capacities and governance processes to the long- term sustainability of reconstruction. Its first contribution has been to enhance the technical and operational capacities of the BRR through the Technical Support for BRR Project. This grant allows the BRR to 1) recruit technical specialists to assist with development of policies and programs, appraising proposals and monitoring of project implementation; 2) engage contractors to provide legal, IT, communications, human resources and logistics services; and to 3) enhance participation by stakeholders in decision making processes of the BRR. The Strengthening the Role and Capacity of Civil Society Organizations Project was approved in December 2005 and will provide training and small-scale grants to civil society organizations (CSOs) and community-based organizations (CBOs) so that these organizations can play a long-term role in the recovery process. To build private sector capacity, the Labor-Based Rural Roads Rehabilitation and Reconstruction Project, also improved in December 2005, trains small-scale contractors in labor-intensive road repair techniques and provides them with increased managerial capacities. Urgent Infrastructure and Logistics With the onset of the rainy season, the urgent need has arisen for large-scale infrastructure and transport facilities to guarantee continuation of reconstruction activities. This resulted in the development of the Immediate Action Program (IAP), which consists of the following projects: · Road and Bridge Repair Lamno-Calang Project: undertakes emergency repairs to the road and bridges on the 85km stretch between Lamno and Calang. 12 · Flood Mitigation Program for Banda Aceh: this project rehabilitates and upgrades existing pump systems in Banda Aceh to mitigate flooding in high-risk areas. · Reconstruction and Rehabilitation of Ports: this project undertakes minor rehabilitation to several ports, as well as support the design of permanent reconstruction of three strategic ports, namely Calang, Sinabang and Gunung Sitoli in Nias. · The Sea Delivery and Logistics Program: facilitates sea delivery of reconstruction materials by providing temporary rehabilitation of nine ports and establishes a logistics network to deliver up to 140,000 metric tonnes of cargo to west coast communities, Simeulue and Nias. The development of these projects is almost complete, and implementation will start in late December 2005 or early January 2006. Environmental Restoration and Protection The Multi-Donor Fund is strongly committed to rehabilitating the environment and is currently the largest contributor in this sector. The Tsunami Recovery Waste Management Project supports local governments to manage both municipal solid waste collection and tsunami waste recycling. This project also creates liveli- hood opportunities in waste management such as manufacturing from tsunami wood, establishing a timber mill to process tsunami wood and using waste to make concrete and road base. Another project, which will start implementation in January 2006, is the Aceh Forest and Environment Project which will protect Aceh's rich and untouched forests in the Leuser and Ulu Masen ecosystems from illegal logging. This goal will be achieved through close cooperation with multiple stakeholders, particularly with national and local government, and will result in protection of 60 percent of Aceh's water supply. Wherever possible, this portfolio has built upon or rehabilitated existing infrastructure and community decision-making structures. This has helped the Multi-Donor Fund to balance the need for swift implemen- tation while maintaining quality, and lays the foundations for sustainable long-term recovery. Achievements A summary of the results from the six projects currently in implementation is found below. Land Titling · 25,000 land parcels already mapped with a total of at least 50,000 expected by the end of 2005 · 5,000 land title documents to be handed out by the end of 2005 · 700 personnel trained in community-driven land adjudication Rural Community Recovery* · Project coverage expanded to 221 sub-districts in Aceh and 22 sub-districts in Nias, reaching all villages in both areas · Construction/repair of 215 km of roads, 94 bridges, 153 irrigation and, 31 drainage units, 41 sanitation facilities, 30 schools, and 8 health posts; provision of $76,000 worth of scholarships and educational packages; 57,113 persons employed through infrastructure projects Urban Community Recovery* · Start-up of the Urban Poverty Project in 48 urban neighborhoods, with 1,553 community members trained; to be expanded to 402 urban areas in 2006 · Ongoing rehabilitation/reconstruction of 41 km of roads, 187 drainage canals, 9 sanitation facilities, 7 community assembly halls (meunasah), 2 schools, 1 drinking water system, 1 irrigation canal; 501 high school student scholarships; generation of 25,372 person-days of employment * The Multi-Donor Fund intends to retroactively finance expenses incurred by the Gol for initial implementation. The results to date have been achieved with Government and World Bank loan financing. 13 Housing and Settlements · Community settlement plans completed for the rebuilding and repair of 1382 houses · 150 housing groups formed in 16 different communities (pilot activity) · $1.68 million expected to be disbursed to housing groups for the reconstruction of 1,000 houses by the end of 2005 Waste Management · Cooperation established with Municipal Governments of Banda Aceh and Meulaboh, six further district cooperation agreements in preparation, including Nias · Over 1,100 cash-for-work jobs created, primarily for IDPs with 40 percent for women · Clearance of 14,000 m3 of tsunami waste for recycling and permanent disposal (expected to increase to 42,000 m3 by the end of 2005); support for municipal waste management in partner cities established Technical Assistance to the BRR · 36 new advisers hired or under recruitment · Contracts concluded for quality assurance services, installation of IT hardware, and public relations services Contributions, Receipts and Disbursements Of the $525 million pledged, 65 percent has been formalized as as Contribution Agreements. The Fund is currently in the process of signing agreements for the remaining 35 percent of pledges, and is confident that all commitments will be fulfilled. Table 1 shows the list of donors, their pledges and contribution agreements signed. As of December 14, 2005, the Fund has received $208 million, consisting of contributions of $206.2 million and $1.8 million from investment income. To date, the Fund has disbursed $53 million to its projects and an additional $29 million will be disbursed by December 31, 2005. As with any fund, it is common for dis- bursements to be slower during its establishment phase. A significant part of the first six months was used to select and design projects suitable for financing and doing the preparatory work prior to implementation. Table 1: List of Pledges by Donor as of December 8, 2005 Pledges Contribution Agreements Source in $ million signed in $ million European Commission 239.40 101.26 Government of the Netherlands 100.00 100.00 Goverment of the United Kingdom 44.51 10.00 World Bank 25.00 25.00 Government of Norway 17.06 17.06 Government of Denmark 17.54 8.31 Government of Canada 11.04 11.04 Government of Sweden 10.44 10.44 Asian Development Bank 10.00 10.00 Government of Germany 10.00 10.00 Government of the United States 10.00 10.00 Government of Finland 9.46 9.46 Government of Belgium 9.46 9.46 Government of New Zealand 8.80 8.80 Government of Ireland 1.20 1.20 Total Contributions 524.71 342.92 Exchange Rates from Dow Jones/Reuters November 29, 2005 14 For project funds that are channeled through the Government of Indonesia's national budget, the Fund also experienced delays in budget preparation on the part of Line Ministries and approval by the Ministry of Finance. Since the budget approvals have been issued, disbursements to projects have increased signific- antly in November and December and will continue to accelerate in 2006. Looking Forward In the immediate future, the Steering Committee of the Multi-Donor Fund will, together with the BRR, make a decision on priority areas for the use of the remaining resources. During the seventh Steering Committee meeting in Banda Aceh on December 13, 2005, the BRR presented the Steering Committee with an outline of its proposed strategy for 2006. The BRR indicated that, in the future, the Multi-Donor Fund will be asked to support immediate and longer- term recovery projects that will focus on large-scale, mid-level and community infrastructure. Both commu- nity and mid-level infrastructure have been identified as the "missing middle" of the reconstruction process which is vital to link local communities and economies with those at regional and provincial levels. Further, the BRR stressed that local government capacity building is an activity that has to go alongside with recovery activities, and local governments should become increasingly involved as on-the-job training. In addition to this sectoral focus, the BRR indicated that the Multi-Donor Fund will be called upon to address specific recovery needs of Nias. At the first Nias Islands Stakeholders Meeting on December 4, 2005, the Indonesian Government highlighted that out of the $1 billion required, only approximately $40 million was available from donors, and $300 million from the GoI, leaving a funding gap of $660 million for the recovery of Nias. 15