documents.worldbank.orgdocuments.worldbank.org/curated/en/... · Table of ConTenTs. ABBREVIATIONS AND ACRONYMS IV. Message froM the Chair of the Joint ManageMent CoMMittee, Ceppie

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69621

2011 PSF PROGRESS REPORT

Jl. Diponegoro No. 72Jakarta 10310

Indonesiaph: 62–21 314 8175

fax: 62–21 3190 3190

Table of ConTenTs

ABBREVIATIONS AND ACRONYMS IV

Message froM the Chair of the Joint ManageMent CoMMittee, Ceppie Kurniadi suMadilaga, deputy Minister for poverty, eMployMent and sMes, national developMent planning agenCy/Bappenas 1

Message froM the Co Chair of the Joint ManageMent CoMMittee, stefan KoeBerle, Country direCtor, the World BanK, indonesia 3

exeCutive suMMary 5

pnpM Mandiri: the ongoing proCess of developing the World’s largest CoMMunity eMpoWerMent and poverty alleviation prograM 7

INSTITuTIONAl INNOVATION 9ThE ROlE OF ThE INTERNATIONAl DONOR COMMuNITY 10Reflection: Ayip Muflich, DiRectoR GeneRAl foR coMMunity AnD VillAGe eMpoweRMent, the MinistRy of hoMe AffAiRs 13

pnpM Mandiri: Core prograMs 18PNPM–RuRAl 18PNPM–uRBAN 23SuPPORT FOR POOR AND DISADVANTAGED AREAS IN ACEh AND NIAS (SPADA) 27RuRAl INFRASTRuCTuRE SuPPORT TO PNPM MANDIRI (RIS–PNPM) 29REGIONAl INFRASTRuCTuRE FOR SOCIAl AND ECONOMIC DEVElOPMENT (RISE) 32Reflecction: Bito wikAntosA, heAD of section, MethoD DeVelopMent, DiRectoRAte GeneRAl foR coMMunity AnD VillAGe eMpoweRMent, the MinistRy of hoMe AffAiRs 33

WindoW one: direCt Budget support and Co–finanCing for CoMMunity eMpoWerMent 36

GREEN PNPM 36PNPM GENERASI 43DISASTER MANAGEMENT SuPPORT 55PNPM–RuRAl III ADDITIONAl FINANCING (CRISIS) 57Reflection: ViVi yulAswAti, DiRectoR foR sociAl pRotection AnD welfARe, the nAtionAl DeVelopMent plAnninG AGency/BAppenAs 59

WindoW tWo: providing iMpleMentation and Coordination support 62PSF SECRETARIAT 62PNPM COMMuNICATIONS 65PNPM SuPERVISION AND MONITORING 70TRAINING OF lOCAl AuDITORS IN PNPM–uRBAN 72INTEGRATED MANAGEMENT INFORMATION SYSTEM (MIS) FOR PNPM MANDIRI: (SIMPADu PhASE 2) 73TEChNICAl ASSISTANCE TO BAPPENAS AND ThE STEERING COMMITTEE OF PNPM (POkJA PENGENDAlI) 74Reflection: JAn weetJens, heAD of pnpM suppoRt fAcility 77

WindoW three: strengthening Civil soCiety organizations WorKing With Marginal, disenfranChised and vulneraBle groups 82

PNPM PEDulI: SuPPORTING ThE wORk OF CIVIl SOCIETY ORGANIzATIONS 82Reflection: suJAnA RoyAt, Deputy MinisteR foR poVeRty AlleViAtion AnD coMMunity eMpoweRMent, cooRDinAtinG MinistRy foR people’s welfARe 85

ii 2011 PSF PROGRESS REPORT

WindoW four: strengthening pnpM Mandiri through teChniCal assistanCe 90MONITORING AND EVAluATION 90DElIVERING SERVICES TO ThE POOR 95POVERTY ENGAGEMENT, kNOwlEDGE AND ACTION 97PNPM REVOlVING lOAN FuND (RlF) CAPACITY BuIlDING AND SuSTAINABIlITY PROJECT 100lOCAl GOVERNMENT CAPACITY DEVElOPMENT PROJECT 105INDONESIA uRBAN POVERTY ANAlYSIS, PROGRAM REVIEw AND PNPM–uRBAN EVAluATION 107Reflection: RuDy pRAwiRADinAtA, DiRectoR of poVeRty ReDuction, the nAtionAl DeVelopMent plAnninG AGency/BAppenAs 109

strategiC direCtions for 2012 and Beyond 112Reflection: scot t GuGGenheiM, foRMeR heAD of pnpM suppoRt fAcility 115

annex one: hoW pnpM–rural WorKs 121

annex tWo: finanCial overvieW 124

annex three: suMMaries of MaJor analytiCal WorK ConduCted in 2011 128

story BoxesGREEN PNPM: lET ThERE BE lIGhT 41PNPM GENERASI: hARVESTING AND EATING lOCAllY IN lARANTukA, EAST FlORES 53REVOlVING lOAN FuNDS: wEAVING A lIVING 103

iii

abbReVIaTIons anD aCRonYMs

ADB Asian Development Bank

AusAID Australian Agency for International Development

BAPPENAS Badan Perecanaan Pembangunan Nasional (National Development Planning Agency)

Bawasda District Government Audit Boards

BkAD Badan kerjasama Antar Desa (Inter–village Cooperative Board)

BkM Badan keswadayaan Masyarakat (Community Organizations)

BkPG Bantuan keuangan Pembangunan Gampong (Fund for Village welfare Assistance)

BlT Bantuan langsung Tunai (unconditional Cash Transfer)

BP–uPk Badan Pengawas unit Pengelola kegiatan (Community–Appointed Financial Management Oversight Body)

BPkP Badan Pengawas keuangan dan Pembangunan (Development and Finance Surveillance Agency)

BPS Badan Pusat Statistik (Central Bureau of Statistics)

BRR Badan Rehabilitasi dan Rekonstruksi (Rehabilitation and Reconstruction Agency)

CDD Community–Driven Development

ChS Complaints handling System

CIDA Canadian International Development Agency

CSO Civil Society Organization

DANIDA Danish International Development Agency

DfID united kingdom’s Department for International Development

DGhS Direktorat Jenderal Cipta karya–DJCk (Directorate General for human Settlements)

DIAlOG Delivery Improvements and local Governance Program

DIPA Daftar Isian Pelkasanaan Anggaran (Budget–Funded Project Proposal lists)

EIRR Economic Internal Rate of Return

EO Executing Organization

Eu European union

Fhh Female household head

GoI Government of Indonesia

IDT Inpres Desa Tertinggal, Instruksi Presiden Desa Tertinggal (Presidential Instruction on Neglected Villages)

Inpres Instruksi Presiden (Presidential Instruction)

Jamkesmas Jaminan kesehatan Masyarakat (health Fee waiver Program)

JMC Joint Management Committee

kDP kecamatan Development Project

kPDT kementerian Pembangunan Daerah Tertinggal (Ministry of Disadvantaged Areas)

kPI key Performance Indicator

kPk komisi Pemberantasan korupsi (Corruption Eradication Commission)

lGCD local Government Capacity Development

lGSP local Government Support Project

llI3 local level Institutions 3

M&E Monitoring and Evaluation

MDTFANS Multi Donor Trust Fund for Aceh and North Sumatra

Mhh Male household head

MIS Management Information Systems

MoF kementerian keuangan (Ministry of Finance)

MohA kementerian Dalam Negeri–Depdagri (Ministry of home Affairs)

MoPw kementerian Pekerjaan umum (Ministry of Public works)

Mou Memorandum of understanding

iv 2011 PSF PROGRESS REPORT

MhP Micro–hydro Power

Musrenbang Musyawarah Perencanaan Pembangunan (Multi Stakeholder Consultation Forum for Development Planning)

NGO Non–Governmental Organization

NRM Natural Resource Management

NTB Nusa Tenggara Barat (west Nusa Tenggara)

NTS National Targeting System

NTT Nusa Tenggara Timur (East Nusa Tenggara)

P2SPP Program Pengembangan Sistem Pembangunan Partisipatif (local Government Participatory Development Planning Program)

P3BM Perencanaan, Penganggaran Dan Pemantauan Yang Berpihak Pada Masyarakat Miskin (Pro–Poor Planning, Budgeting and Monitoring)

P3DT (VIP) Pembangunan Prasarana Pendukung Desa Tertinggal (Village Infrastructure Project)

PAPG Poverty Alleviation Partnership Progam

PD Pendamping Distrik (District Facilitator)

PEkkA Pemberdayaan Perempuan kepala keluarga (women headed household Empowerment)

Pk Pendamping kampung (Village Facilitator)

Pkh Program keluarga harapan (hopeful Family Program)

PMD Pemberdayaan Masyarakat dan Desa (Directorate General of Village Community Empowerment)

PNPM Program Nasional Pemberdayaan Masyarakat (National Program for Community Empowerment)

PNPM Generasi PNPM Generasi Sehat dan Cerdas (PNPM–healthy and Smart Generation)

PODES Potensi Desa (National Census carried out by BPS every three years)

Pokja kelompok kerja (working Group)

Posyandu Pos Pelayanan Terpadu (Village health Post)

PSF PNPM Support Facility

RASkIN Rumah Tangga Miskin (Poor household)

RE Renewable Energy

Rekompak Rehabilitasi dan Rekonstruksi Masyarakat dan Permukiman Berbasis komunitas (Community–Based Settlements Rehabilitation and Reconstruction Project)

RESPEk Rencana Strategis Pembangunan kampung (Strategic Plan for Village Development kDP scale–up, with locally funded Block grant in Papua & west Papua Provinces)

RIS Rural Infrastructure Support to PNPM Mandiri

RISE Regional Infrastructure for Social and Economic Development

RlF Revolving loan Fund

RPJM–Desa Rencana Pembangunan Jangka Menengah Desa (Mid–Term Village Development Plan)

SIMPADu Sistem Informasi Manajemen Terpadu (PNPM Integrated MIS)

SOP Standard Operating Procedure

SPADA Support for Poor and Disadvantaged Areas

Susenas Survei Sosial Ekonomi Nasional (National Social Economic Survey)

TA Technical Assistance

TNP2k Tim Nasional Percepatan Penanggulangan kemiskinan (National Team for the Acceleration of Poverty Reduction)

TPk Tim Pengelola kegiatan (Village Implementation Team)

TPkk Tim Pengelola kegiatan kampung (Village Activity Operational Team)

uPk unit Pengelola kegiatan (Financial Management unit)

uPP Program Penanggulangan kemiskinan Perkotaan (urban Poverty Program)

uSAID united States Agency for International Development

abbReVIaTIons anD aCRonYMs

v

IN 2010, the Indonesian Government launched the National

Medium Term Development Plan 2010–2014, which places

increased emphasis on poverty alleviation through targeted

social protection schemes and through other means. The

Plan establishes clear targets for poverty alleviation.

In particular, in this five–year period, amongst other goals,

the Indonesian Government

will attempt to improve on

previous poverty reduction

practices by striving to:

(a) increase the coverage

and quality of the social

protection scheme; (b)

reduce welfare disparities

between provinces; (c)

improve poor Indonesians’

access to basic services; (d)

protect the poor from the

negative impact of external

forces such as globalization;

and (e) protect the poor

from the negative impact of

climate change.

In order to organize its

poverty reduction programs

more efficiently and

effectively, the Indonesian

Government has defined

three clusters, based on the

objectives and targets of

each of these programs. The

first of these clusters is the

Social Assistance Cluster,

the objective of which is to

provide direct assistance to

poor households to ease

their burdens in meeting

basic necessities. The

second of these clusters

is the Community Empowerment Cluster, the objective

of which is to provide social funds to poor communities

that they can use to improve basic social and economic

services according to their own priorities. The third of these

clusters is the Microenterprise Empowerment Cluster,

the objective of which is to provide access to credit for

microenterprises without constraints related to requirements

to provide collateral.

The PNPM Mandiri program is the key component of

the Indonesian Government’s Cluster Two poverty

alleviation program. PNPM Mandiri, Indonesia’s largest

community–driven poverty

reduction program, works

nationwide to provide

funds to poor rural and

urban communities so they

can invest in their own

development priorities.

These priorities typically

include small–scale social

and economic infrastructure,

education and health

activities, and micro–loans to

women savings groups. Plans

to ensure the achievement

of these priorities are

implemented through

mechanisms to ensure

broad–based participation

and transparency. Through

the PNPM Mandiri program,


provides block grants and

facilitation support to every

rural sub–district and urban

ward in Indonesia.

One of the most significant

physical outcomes of the

PNPM Mandiri program has

been a major increase in

small–scale infrastructure

in both rural and urban

areas. Through PNPM

Mandiri’s largest core

program, PNPM–Rural and its predecessor, the kecamatan

Development Program, first initiated in 1998, the program

has facilitated the building or rehabilitation of more than

109,000 kilometers of roads, 40,700 clean water systems,

17,500 irrigation systems, and 28,500 schools in rural

areas. Through its urban counterpart, PNPM–urban and its

MESSAGE FROM ThE ChAIR OF ThE JOINT MANAGEMENT COMMITTEE

Ceppie Kurniadi suMadilagaDEPuTY MINISTER FOR POVERTY, EMPlOYMENT AND SMES, NATIONAl DEVElOPMENT PlANNING AGENCY/BAPPENAS

1 2011 PSF PROGRESS REPORT

resources (71%), with seven projects and activities totaling

uS$ 133 million.

The JMC also consists of representatives of the world Bank,

which is the other co–chair of the JMC and which acts as

PSF’s Trustee, and development partners from Australia,

Denmark, the Netherlands, the united kingdom, the united

States, and the European Commission. The Indonesian

Government welcomes the significant contributions made

by these development partners, both in terms of their

provision of access to financial resources, but also, and

just as importantly, in terms of the facilitation of access to

international best practice, which provides valuable input

for the Indonesian Government’s ongoing and continuing

improvement of both PNPM and its poverty reduction

programs more generally.

It is worth emphasizing that the exchange of ideas and the

sharing of experiences is a mutual process through which

Indonesia’s experiences benefit other developing countries

around the world. while PSF provides welcome access to

international experience and best practices that enables

it to improve and build upon the PNPM Mandiri program,

it also provides an avenue for the Indonesian Government

to share the valuable experiences it has gathered through

the implementation of the world’s largest community

empowerment program with international development

actors elsewhere. In this way, the PNPM Mandiri program

achieves not only poverty alleviation and community

empowerment within Indonesia, it provides valuable input to

the achievement of those same goals around the world.

Ceppie Kurniadi SumadilagaChair, Joint Management CommitteeDeputy Minister for National Development Planning/National Development Planning Agency for Poverty, labor and Small & Medium Enterprises

predecessor, the urban Poverty Program, PNPM Mandiri

has facilitated the building or rehabilitation of more than

31,000 of small roads, 8,700 km of drainage, 164,700 units of

solid waste and sanitation facilities, 9,400 community health

facilities, and 126,500 houses for the poor.

while the physical infrastructure has been important, of

equal significance is the change the program has brought

in decision–making and management at the local level. The

program advocates for inclusion of women and marginalized

groups in development processes and actively promotes

transparency and accountability. This has led communities to

demand better service delivery in all spheres of development.

In 2011, the Indonesian Government sought to maintain

and strengthen the ability of the PNPM Mandiri program to

facilitate poverty alleviation and community empowerment

by improving management and governance frameworks. In

particular, the Indonesian Government focused on:

zz Strengthening the Directorate General for Community

and Village Empowerment’s (PMD) ability to appropriately

manage the program

zz Redesigning the Management Information System (MIS)

zz Strengthening of the Complaints handling System

zz Reinforcing formal and informal fiduciary controls

zz Improving facilitation

Amongst other means, the Indonesian Government works

to achieve these and other improvements in the design

and implementation of the PNPM Mandiri program through

its participation in the PNPM Support Facility (PSF), a

multi–lateral trust fund established to ensure the effective

management and implementation of the program and to

enable the Indonesian Government to access a range of

donor programs and resources.

The activities of PSF are overseen by the Joint Management

Committee (JMC), which includes representatives of the

major Indonesian Government agencies and ministries

responsible for the design, management and implementation

of PNPM Mandiri. The JMC is co–chaired by BAPPENAS and

includes the Coordinating Ministry for People’s welfare

and the Ministry of Finance. As of 2011, the Indonesian

Government executes the largest share of approved PSF

2

IN a country that often warrants superlatives, the

achievements of Indonesia‘s PNPM Mandiri program deserve

particular accolade. In the 14 years since its inception, the

Indonesian Government‘s centerpiece poverty alleviation

initiative has grown exponentially, with a presence today in

more than 70,000 rural and urban villages and wards. PNPM

Mandiri is simply the largest community empowerment

program in the world.

we should not

underestimate the scope

of this work, nor its

importance. PNPM Mandiri

places significant power in

the hands of communities

to decide on their own

development priorities and

needs. In doing so, the social,

economic and governance

conditions are better for

millions of poor people.

In 2009, the Indonesian

Government announced

that PNPM Mandiri was and

will continue to be key to

helping reduce poverty rates

from 14.1% to a projected

8 to 10% by 2014. This will be

an astounding achievement.

The scope of PNPM Mandiri‘s

platform is increasingly

broad, targeting multiple

sectors, from infrastructure

to health to education and

disaster management. As

the scope of the program

continues to expand, so

does its potential impact

on communities. The PSF

plays an important role

in expanding this capacity. It supports the Indonesian

Government and its partners in the program’s management

and technical implementation. It helps ensure strong

coordination amongst development partners in maximizing

the available funds for the various initiatives, and in

maximizing the impact of these initiatives. This is no easy

feat. The breadth and number of agencies involved in the

implementation of PNPM programs and all its sub–programs

is substantial.

The work of the PSF goes beyond coordination. The PSF

provides technical assistance

in the continuous effort

to build capacities of

communities, governments

at the local, provincial

and national level, and

civil society. It assists the

development of a very

robust monitoring and

evaluation framework

which supports continuous

improvements to the

program. It makes sure

that donor funds are

used appropriately.

The PSF also facilitates

the implementation of

analytical work that forms

the foundation for the

planning, management, and

improvement of government

poverty–reduction

programs. A key element

of the PSF approach is

innovation: it provides

space for explorations and

experimentation. PSF’s

pilot initiatives are highly

innovative and carry the

potential for high rewards.

The PSF has various

comparative advantages.

By tapping into the world

Bank’s global knowledge base, it can facilitate access to

international best practices across a range of development

areas. It also has the credentials and capacity to play a

strong convening role, so that all development partners can

MESSAGE FROM ThE CO ChAIR OF ThE JOINT MANAGEMENT COMMITTEE

stefan KoeBerleCOuNTRY DIRECTOR, ThE wORlD BANk, INDONESIA


leverage their own competitive advantages and particular

expertise. The key is determining what each partner can

bring to the table. The objective is the best possible way to

make the most of the PNPM program.

As a result, the interaction among donors involved in a

PNPM program is very high — much higher than is usual

for multi–donor trust funds. Donors do not just make a

contribution and then leave the implementation to a single

implementing agency. Donors remain engaged, and their

input is constantly sought. The level of excitement amongst

donors towards the PNPM program is unique. This makes the

PSF quite special.

The success of the PSF has not gone unnoticed. In recent

years, PNPM has served as a model for the development of

similar community–driven development programs, such as

in Afghanistan. The PSF plays a direct role in this. knowledge

sharing continues to expand between the PSF and parties

interested in emulating the success of PNPM. None of this

success could have been achieved without the support of

all our development partners, and the strong leadership and

commitment of the Indonesian Government. we cannot

overstate the vital role of the Ministry of home Affairs, the

Coordinating Ministry for People’s welfare, and BAPPENAS

in leading the PNPM program. we must continue our

support for their vision of inclusive, community–based social

development throughout Indonesia.

Stefan KoeberleCo–Chair, Joint Management CommiteeCountry Director, world Bank, Jakarta

4

FOR the PNPM Support Facility (PSF), 2011 has been a busy

year. As the Indonesian Government’s flagship poverty

reduction and community empowerment program,

PNPM Mandiri has continued to support more than

70,000 communities across the country, enabling them to

identify and implement their development priorities. In 2011,

the PSF continued to support PNPM Mandiri through the

provision of technical assistance to strengthen management

and implementation systems; through analytical work and

evaluations to inform data–based policy making; through

pilots to learn how to address new challenges; and through

innovative approaches to expand the impact of the program,

especially on the poorest and most vulnerable.

The results achieved in 2011, summarized in this report,

confirm that PSF’s business model continues to be relevant to

Indonesia’s efforts in the area of community–driven poverty

alleviation. The cycle of research and analysis to inform

policy reform and operational design, pilot testing, rigorous

evaluation, and scaling up has resulted so far in continued

innovation to Indonesia’s PNPM program. It is illustrative that

delegations from countries around the world continue to

visit Indonesia to learn about PNPM. At the same time, there

have been considerable trade–offs: while fostering a social

movement for community empowerment is PSF’s central

mandate, the reality on the ground illustrates the magnitude

of the challenge the Indonesian Government is facing in

its endeavors to establish core systems and to ensure the

efficient management and good governance of the program.

Supporting the development of these core systems to handle

the repercussions of the massive scale up of the program has

been amongst PSF’s top priorities .

PSF also delivered on its commitments under each of its four

windows:

zz PSF Window One—Direct Budget Support and Co–financing: In 2011, development partners increased

their support for PNPM’s pilot operations (PNPM Generasi

and Green PNPM ). They also provided incremental

support to PNPM Rural and urban to help communities

deal with the aftermath of crisis and disaster. PSF’s Joint

Management Committee brought the total allocation

to these activities to uS$ 132. million, of which uS$

73 million was disbursed by the end of 2011. Given the

success of these programs (especially PNPM Generasi, in

which communities are rewarded with additional block

grants if they achieve certain results related to health

and education related MDGs), the question emerges

whether these should continue to operate as pilots or

whether should graduate to become core programs as

they gradually expand their coverage. At the same time,

efforts to support communities in their post–disaster

recovery efforts encountered implementation challenges

as various constraints in the national disbursement

and other systems affected the timely channeling of

resources to these communities.

zz PSF Window Two—Coordination and Supervisory Support: A full restructuring of PSF was completed in

2011. PSF moved from a “project” approach towards a

“portfolio” approach, facilitating the identification and

resolution of systemic issues that cut across the various

programs. In 2011, there was also a marked increase in

the quality of reporting systems, with the introduction

of quarterly reports for all projects under all windows,

ExECuTIVE SuMMARY


six–monthly governance updates, and a new PSF website

facilitating access to all of these reports. Moving forward,

further improvements will be made to support in the

formulation of strategy between stakeholders in the

JMC; to strengthen the exchange of knowledge and

experience across stakeholders and partners in PNPM;

to ensure that data from PSF’s research and analytical

activities are accessible to students, researchers and think

tanks across the country; and to support the Government

in the implementation of its policy of zero–level

tolerance for corruption in PNPM.

zz PSF Window Three—On–granting to Indonesian Civil Society: One of the most encouraging developments

in 2011 was the launch of PNPM Peduli, a program that

supports CSOs that work directly with Indonesia’s most

marginalized groups, including street children, landless

farmers, hIV and AIDS survivors, sex workers, and many

others. Beyond its potential to increase the program’s

positive impact on the most vulnerable members of

the community, PNPM Peduli is also an opportunity for

development partners in general and the world Bank

in particular to learn how to bridge the gap between

donors (with robust fiduciary and supervision systems,

but little access to marginalized groups) and CSOs

(with strong grassroots presence, but less familiarity

with administrative processes). while considerable

progress was made in 2011, the challenge in 2012 will

be to significantly increase the number of marginalized

people who benefit from the program. In addition, the

program will continue to focus on the development of

this new business model to ensure that the program can

benefit from the comparative advantages of both the

development partners and the CSO communities.

zz PSF Window Four—Technical Assistance: Most activities

under this window focus on research and analytical work

to inform data–based policy making. The reader is invited

to explore Annex 3 to this report, which summarizes the

major studies conducted, the key findings, and policy

recommendations of the analytical work conducted in

2011. Moving forward, PSF will work in close collaboration

and consultation with key stakeholders to articulate a

framework to identify which additional areas and subjects

have the highest strategic value to inform policy making

and operational design in Cluster Two.

looking forward to 2012, the PSF will strive to place increased

focus on the fostering of a social movement to promote

community empowerment and the strengthening of local

institutions, good governance and accountability, and better

services for the poor. As the Indonesian Government finalizes

its Road Map for Indonesia’s Community Development

Program up to 2014 and beyond, the PSF will focus on

supporting the analytical and operational work to implement

the Road Map. At the same time, it is clear that continued

attention to the support of the core systems in PNPM,

including the prevention and elimination of corruption, will

remain high on the agenda.

As the reader will discover, this year’s Progress Report

includes personal and professional reflections of a number of

the key actors in the PNPM Mandiri program. while the views

expressed in these reflections do not necessarily represent

those of the PSF or of any other institution, they are included

to convey some of the experiences, hopes and aspirations of

the many stakeholders working to eliminate poverty and to

achieve the empowerment of Indonesia’s communities. ∞

6ExECuTIVE SuMMARY

ThE program nasional pemberdayan Masyarakat Mandiri

(PNPM Mandiri), or National Community Empowerment

Program, is an Indonesian Government program aimed

at empowering communities and alleviating poverty. The

program operates in every sub–district in all of Indonesia’s

provinces. The PNPM Mandiri program grew out of the

successful kecamatan Development Project (kDP) and

urban Poverty Project (uPP), pilot projects which began

implementation in 1998 and 1999 respectively, and which

incorporated the design features of a number of preceding

Indonesian Government programs, including the Village

Infrastructure Project (VIP) and the economic empowerment

program, the Presidential Instruction on Neglected Villages

program (IDT ).

The PNPM Mandiri program has built upon an understanding

that Indonesian communities have a long tradition of

organizing themselves to achieve shared goals, with a

number of studies showing that throughout Indonesia,

community–owned projects perform better than projects

directed and managed by government or NGOs.1 These

studies show that community–owned and driven projects

also have a higher rate of participation of the poor, a

greater degree of participation of women and significantly

greater contributions from the villagers themselves. kDP

was established on the premise that this tradition could be

harnessed to achieve development objectives by devolving

power from government agencies, particularly centrally

controlled government agencies far removed, spatially and

socially, from the communities they claimed to be serving, to

the communities themselves (see Annex 1 for a full description

of how pnpM–Rural works).

while self–directed community organization had shown itself

to be a powerful means of achieving community objectives,

including pro–poor objectives, during the New Order period,

self–directed community projects occurred more despite

Government and its agencies, rather than through the

Government. For many years, the New Order government

supported what was known as the “floating mass policy”,

which explicitly banned or restricted political and other

community activities or groups in rural areas, except

during specified electoral periods, on the grounds that it

fostered needless disputation on issues that could be better

determined by qualified, professional planners in centrally

located planning agencies.

Prior to the East Asian economic crisis, there was certainly

an argument that this policy resulted in the rapid, efficient

development of major infrastructure vital to the nation’s

growth. Through this economic growth, the New Order’s

economic policies were credited with creating economic

expansion that “trickled down” to create dramatic

improvements in the standard of living of most Indonesians,

with official poverty rates dropping from more than 50%

in 1970 to less than 20% in 1997 (although, as the crisis

eventually proved, many had stayed at the “near poor”

level and remained highly vulnerable to price and income

shocks — as they do today). From the 1980’s, as part of its

endeavors to improve the nation’s human capital, the New

Order administration implemented a massive program to

achieve universal enrolment in primary education, improve

the coverage and, perhaps, the quality of community health

facilities, particularly in rural and remote areas.

PNPM MANDIRIThE ONGOING PROCESS OF DEVElOPING ThE wORlD’S lARGEST COMMuNITY EMPOwERMENT AND POVERTY AllEVIATION PROGRAM

1 See, for example, the Local–Level Institution Studies conducted by P. Evers (2001); K. Chandrakirana (2000); L. Dharmawan (2002); and A. Wetterberg (2002), cited in Crises and Contradictions: Understanding the Origins of a Community Development Project in Indonesia by Scott Guggenheim.


however, as subsequent events showed, a number of latent,

unresolved structural problems somewhat detracted from

the overall Indonesian development success story. These

included a weak financial sector, unequal distribution of

benefits from growth, and perceived problems of social

justice. Strong central control and perceived improvements

in living standards kept these problems in check for

most of the New Order period, but when the financial

sector came tumbling down during the crisis, popular

resentment suddenly boiled over into open upheaval. Public

demonstrations and riots shook the country and eventually

led to the sudden downfall of President Suharto after

32 years in power. Indonesia entered into a period of political

transition that in June 1998 lead to the country’s first free

general elections in 44 years.

The change in leadership, however, did not solve the

country’s deeper problems. Despite high rates of poverty

reduction, vulnerability remained high and many poor

did not benefit adequately from economic growth. Three

decades of authoritarian rule had also undermined local

capacity and placed heavy restrictions upon local community

organization. while new decentralization laws were passed in

2000 to give districts greater authority and decision–making

power that did not mean that power would then

automatically shift to communities or indeed be democratic.

Recurrent problems of elite capture, corruption, and political

manipulation in government–sponsored community

development programs were and remain commonplace

to the point of significantly reducing their effectiveness

and credibility.

kDP therefore began in 1998 at a time of tremendous political

upheaval and financial crisis. The economic crisis reversed

years of progress in poverty reduction and plunged millions

of rural poor below the poverty line. Although kDP was not

designed to be a crisis response project, the project proved

to be a strikingly robust way to deliver resources to the rural

poor, despite the institutional turbulence of the post–Suharto

period. As a result, over time the project has evolved into

a key element of the central government’s strategy for

supporting decentralization and local governance reform

across a very broad range of development environments.

There is no doubt that the single most important factor

behind PNPM Mandiri’s success has been the Indonesian

Government’s commitment to the principles of both

decentralization and community–driven development. This

was particularly true in the period during and immediately

following the crisis, when these principles were less a matter

of choice as of vital political, social and economic necessity

if the nation was to remain a viable, integrated unit. But

virtually none of the core concepts in PNPM Mandiri are

new. Rather, PNPM Mandiri built on a number of Indonesian

processes that come from a much larger collection of

programs intended to cut poverty. In Indonesia’s case, the

question at hand was not whether the Government could

find the political will and commitment to a comprehensive

program of poverty reduction. That question was already

central to the policies of the previous thirty years, when

Indonesia saw one of the world’s fastest rates of poverty

reduction in modern times. Instead, the issue at hand

was primarily one of identifying which additional design

mechanisms could make the poverty alleviation program

more efficient and better able to reach groups who had not

benefited from Indonesia’s overall growth.

Three particular elements are essential to understand

PNPM Mandiri’s ancestry. kDP and its urban equivalent,

the uPP, predecessors to PNPM–urban and PNPM–Rural

respectively, built on Indonesia’s tradition of bottom–up

planning. long before kDP was implemented, Indonesia had

developed a national bottom–up planning process whose

purpose was to encourage local communities to propose

investments that could be screened for their engineering and

economic viability and then incorporated into the national

development budget. Thus, the notion of bottom–up

planning was not new at all; what differed when kDP came

along was the level of aggregation against which funds

were provided.

The second source for kDP was a series of projects known

as IDT. IDT built on ideas from economists and planners in

BAPPENAS (Badan perecanaan pembangunan nasional, the

National Development Planning Agency) and the national

universities. This Government program was launched in

1994 to assist villages identified as “neglected” or “left behind”

(tertinggal), especially those on islands outside Java, Bali,

and Sumatra. It was specifically intended to reduce regional

income inequalities. This program made grants to self–help

groups, which were intended to manage funds to on–lend

to other members. while this program was clearly intended

to create opportunities for the poor through economic

8PNPM MANDIRI

empowerment, it failed largely because of elite capture and

inappropriate targeting.

The third root of kDP lay in the Village Infrastructure Project

(pembangunan prasarana pendukung Desa tertinggal, P3DT

or VIP) project, which was closely tied to the IDT program.

whereas IDT provided seed capital for productive investment,

VIP let villages choose from a limited menu of low–input

infrastructure. It introduced a number of technological

innovations to improve the quality and sustainability of

village works. It also recruited and trained civil engineers

from the private sector who were then assigned to clusters

of villages. kDP drew heavily on the VIP’s operational

mechanisms, particularly the engineering designs and its

disbursement and bookkeeping formats.

All three of these foundations had in common a strong

national commitment to local–level planning. Over time

it became clear that the three strands needed to be

brought together into a single program that could support

broad–based participation. kDP was in fact at first housed

within the IDT Secretariat. Although initially conceived to be

a relatively small–scale pilot program that would cover no

more than 1,000–2,000 villages, when the East Asia crisis hit

the project was quickly modified to allow for an accelerated

scale–up.

Strong BAPPENAS and later Ministry of home Affairs (MohA)

ownership of PNPM–Rural and Ministry of Public works

(MoPw) ownership of PNPM–urban have been essential

to the program’s relative success and rapid scale–up.

Community block grant programs frequently suffer from

problems of corruption. Destructive for all projects,

corruption in small projects quickly leads to catastrophic loss

of quality. worse, corruption in highly decentralized projects

such as PNPM Mandiri will quickly spread out of control if

prompt action is not taken to check its spread. Collaboration

with advocacy NGOs who assist villagers to file complaints

against corrupt officials has been helpful.

InsTITuTIonal InnoVaTIon

PNPM Mandiri’s core institutional innovations revolve around

the distribution of functions between higher levels of

government, lower levels of government, and the villages

and the financial tools used to support this. As noted

earlier, PNPM Mandiri built on Indonesia’s long tradition

of bottom–up planning. Its innovations lie in making the

funding approval decision point much further down the

administrative system and in a much more intense facilitation

of the local planning process. Rather than aggregating

and reconciling proposals in districts and then in the

national budget, funds move all the way down the system

to the sub–district, to the inter–village forum, which has

final sign–off on which activities get funded for the year.

Advantages to this approach are its speed and its simplicity.

A significant disadvantage is its divorce from higher order

network planning. By and large, though, village level

infrastructure needs rarely require network planning. Freeing

up sectoral agencies from village level work allows them to

concentrate their own scarce resource on more technically

complex activities.

PNPM Mandiri’s second institutional innovation is its high

level of collaboration with the private sector. Civil servants

play key roles in PNPM Mandiri. They set policies, regulate

the project, supervise implementation, and account for

results. But field activities are carried out primarily through

large numbers of facilitators who support the Government,

participate in monthly coordination meetings, but do not

have the same administrative status as public servants.

The advantage of this approach is that it allows for greater

use of specialized skills in low–tech engineering and social

facilitation. It also avoids burdening the civil service budget

with additional fixed positions and minimizes the managerial

challenges that are inherent to the public sector.

Third, PNPM Mandiri develops village skills and capacities.

PNPM Mandiri’s engineering improvement to village roads,

though simple, double or triple the average life expectancy

of market roads. PNPM Mandiri facilitators train villagers, who

over time take over most functions. Villages are trained in

using the private sector rather than relying on government

for all services. Village record keeping and PNPM Mandiri

procurement rules build up villager’s awareness of how

to shop competitively. Villagers can also directly contract

and manage private sector engineers from a pre–qualified

shortlist certified by the project. There are a large number of

cases where villages reported their surprise at discovering

the savings that result from competitive purchasing.


Fourth, PNPM Mandiri’s decentralized design is very flexible.

This has been especially important in a time of transition.

The program has little difficulty responding to local requests

for adjustments because of cultural, geographical, or

administrative variances. Provincial teams adjust the project

operating manual to reflect such changes. Similarly, because

there are no big contracts involved, stopping, delaying

or modifying works in conflict or natural disaster areas to

meet changed circumstances is relatively simple. This same

flexibility allows PNPM Mandiri to respond quickly once the

problem has passed.

Conversely, PNPM Mandiri is often used by the Government

to provide a rapid response to crises — as, for example, in

the case of several natural disasters, including earthquakes

in Mentawai and the eruption of Mount Merapi, when PNPM

programs have been used to facilitate emergency relief.

The final institutional innovation has been PNPM Mandiri’s

promotion of transparency and civil society involvement in

project monitoring. BAPPENAS managers quickly recognized

that one recurrent problem in their village level poverty work

has been the difficulty of receiving reliable information about

project performance when information sources are restricted

to local officials. A certain level of transparency has been

achieved through the involvement of newspaper journalists

and activist NGOs as independent monitors, which has been

actively encouraged as an integral part of the program. PNPM

Mandiri’s transparency policies extend to the public release

of annual audit summaries. The net result of this openness

has been much more accurate information about project

results, even at the price of occasional embarrassment when

things go wrong. Most observers report that PNPM Mandiri’s

openness and the independence of its oversight also lead to

substantially less loss from mismanagement.

The Role of The InTeRnaTIonal DonoR CoMMunITY

PNPM Mandiri has gone through major transformations

since the first implementation of kDP in 1998. As the

program has evolved from a world Bank–funded pilot

study into a nationwide, Indonesian Government program,

the role of the world Bank and donor agencies has also

changed dramatically.

In the earliest stages of the program, the world Bank played

an important role by providing the Indonesian Government

with the funding to conduct a pilot study that demonstrated

that the PNPM Mandiri community empowerment approach

could work. with the world Bank providing financing, a

number of innovative approaches could be tested that might

otherwise have been considered too high risk.

The world Bank was also able to contribute to the scaling–up

of kDP through the provision of technical assistance. The

world Bank helped by keeping processing delays to a

minimum and by helping the Government improve specific

parts of the project design. The world Bank also worked

closely with the Indonesian Government to make sure

that project formats and disbursement procedures were

kept simple and easy to use. Because of the close working

relationship between the Indonesian Government team and

the world Bank project team, kDP projects essentially had no

policy conditions despite the institutional and policy changes

that the projects bring about. They were all incorporated

into the design of the project and reviewed well before

negotiations. however, both the Bank and the Indonesian

Government devoted fairly significant resources to field

supervision, substantially more than well–performing projects

normally receive. This investment in problem prevention was

particularly necessary because of the ongoing overall change

in central–local government responsibilities across Indonesia

meant that project rules had to be explained to a large range

of new actors.

Additionally, the process of decentralization and the

implementation of electoral and other reforms resulted

in massive process of institutional reform that required an

extended period of learning by doing and capacity building.

without an intensive field presence, the donor community

would not have the knowledge of the real challenges

stakeholders face on the ground, and hence would lack the

ability to provide the support necessary to establish, reform,

and strengthen systems as needed.

Now that PNPM Mandiri and the programs that preceded it

have been established for approximately 14 years, the PNPM

Mandiri approach has been demonstrated to be largely

successful. It is no longer considered a radical, high risk

program. In addition, through experience, the Indonesian

10PNPM MANDIRI

Government and its agencies have developed and improved

on many of the capacities required to implement the

program. So, is there still a need for the involvement of the

donor community? If so, what should this role be?

Indonesia has the resources to achieve community

development and development objectives sitting in its

communities. however, for many decades, these resources

were marginalized from a discourse promoted by both

the New Order and by traditional development agency

paradigms. Ensuring that PNPM Mandiri achieves its goals

involves not just entrenching the language of community

empowerment into formal systems that are implemented by

bureaucrats conducting “business as usual,” it also requires a

thorough, ongoing examination of state building practices

and the related mindset, particularly when these have all

too often led to the abrogation of authority to state systems

through mystification and control over resources.

In some cases, policy makers may be resistant to examining

the processes that have entrenched vested interests.

In other cases, even when policy makers are genuinely

committed to the goals and processes of the PNPM Mandiri

program, they may not have the exposure to the lessons

of international best practices. In addition, their ability to

experiment is limited by the constraints these policy makers

may face as office bearers within the very systems that

they hope to reform. Therefore, one of the major roles for

the international donor community, apart from providing

technical assistance to strengthen PNPM’s core management

systems, is to foster innovation and experimentation within

the PNPM Mandiri program and in implementing the PNPM

approach in other areas of government. The main role for

the international donor community rests in the ability to: (a)

test new approaches through pilot studies that might be too

innovative or risky to implement through standard budget

allocations; (b) provide implementation support to foster a

sense of ownership and to help the Indonesian Government

to assess how to address remaining weaknesses in the

systems; and (c) conduct a robust program of analytical work

to inform next generation policy and operational issues.

In 2007, the Indonesian Government and development

partners established the PSF to provide high–quality,

coordinated technical assistance, policy and planning advice

and targeted financial assistance to PNPM Mandiri. Since the

scaling up of kDP and uPP as the PNPM Mandiri program,

PSF has provided financial and technical assistance for the

design and implementation of a number of pilot studies and

experiments. Amongst other purposes, these have aimed to

test adjustments to PNPM’s core model, such as earmarked

block grants, in order to ensure that that the core model

continues to achieve its aim of poverty alleviation, rather

than degenerating into a standard village infrastructure

development program. One such project is PNPM Peduli,

which aims to leverage the impact of core programs to

reach the most vulnerable and excluded people of Indonesia

through the provision of recourses to Indonesian civil society

organizations with proven experience in poverty alleviation,

particularly amongst marginal groups.

when such pilot studies prove successful, the international

donor community may still play an important role in the

scaling up and expansion of such programs. Examples of

pilot programs whose coverage has been expanded with

the assistance of PSF include PNPM Generasi, which provides

an incentivized block grant mechanism to develop health,

educational and other associated facilities specifically

aimed to meet the needs of the poor and the very poor.

Another such program is Green PNPM, which disburses

block grants that are earmarked to finance community

investments in natural resource management, environmental

conservation, and renewable energy, all activities which

were unlikely to have ever been selected through the core

PNPM–Rural program.

It is a fact that it is easier to implement a successful pilot

study than to scale that study up to become a national

program. with the establishment of PNPM Mandiri as a

nation–wide program, there is a need for increased oversight

and action by multiple stakeholders. The deployment of PSF

field analysts has helped intensify supervision missions, which

are now routinely conducted in more than 20 provinces

and 160 sub–districts each quarter. Special attention has

been put into involving multiple stakeholders in field

supervision, fostering cross–learning and supporting systems

reviews and audits. In this area, PSF can play a role through

its convening power to support a consensus–building on

reform priorities and corrective actions. PSF also provides

technical assistance to follow–up on supervision findings in


the field and to support the design and implementation of

new policies, standard operating procedures and operational

instruments for the strengthening of core management

systems at all levels. Over the last year, the implementing

agencies completed a number of critical benchmarks, leading

to upgrades in PNPM’s overall performance ratings at both

national and province levels.

As stated earlier, a significant number of key policy makers

have not only supported the implementation of the

nation–wide PNPM Mandiri program, they have also been

fully supportive of efforts to maintain and improve the

program’s pro–poor orientation by implementing measures

informed from international best practices. however,

such policy makers often have limited institutional or

other access to gain access to the lessons learned from

international experience. PSF plays a role by providing an

objective platform for the review, sharing and application

of lessons across poverty programs and for fostering debate

on solutions to poverty programs. PSF’s strategy links

operations with applied research to optimize the design of

community–based programs for increased poverty impacts as

well as to better understand social dynamics in Indonesia and

their influence on development and poverty reduction. For

example, several rounds of impact surveys for PNPM–Rural

and PNPM Generasi have conclusively demonstrated positive

impacts on household’s income, including the poor, access to

services and employment as well as strong economic returns

to infrastructure investments and social accountability within

the program. Special studies (such as the Marginalized Groups

study, stock–taking study on local Governance, Revolving

loan funds study or urban poverty Analysis) complement the

monitoring and evaluation work to foster program innovation

and inform policy formulation. In addition to conducting

and preparing such inputs, PSF also provides a forum for the

Indonesian Government and donors to discuss how such

inputs can inform implementation, together with other

managerial and operational challenges associated with

PNPM’s massive scale–up to national coverage.

Finally, PSF provides the Indonesian Government with a

forum through which it can attract and mobilize financial and

other resources from the international donor community. At

the end of 2011, the Indonesian Government had attracted,

through the PSF, more than uS$ 207 million in donor

contributions, from Australia, Denmark, the Netherlands,

the united kingdom, the united States, and the European

union (Eu). Canada and Millennium Challenge Corporation

are planning to join the PSF in 2012. Currently, PNPM Mandiri

is scheduled to run until June 2015, with PSF continuing in

its current role until that point. At present, the Indonesian

Government is in the process of determining how the

lessons learned from its experience with the world’s largest

community–driven development program will inform its

future policy and programs. At the same time, the approach

adopted under the PNPM Mandiri program has had a

significant influence on the formulation of similar programs

elsewhere in the world, including war–torn Afghanistan

and the new nation of South Sudan. PNPM Mandiri is not

just a program, with a set budget and completion date:

it is an approach to community development. hopefully,

the lessons learned from Indonesia’s experience with

this program will not just result in the empowerment of

Indonesia’s communities and the alleviation of poverty

there, but in a global shift in the development sector’s

prevailing paradigms. ∞

12PNPM MANDIRI

ayip MufliChDIRECTOR GENERAl FOR COMMuNITY AND VIllAGE EMPOwERMENT, ThE MINISTRY OF hOME AFFAIRS

beneficiaries, their capacities were limited. There is an

enormous variation in the capacities of communities in

different regions and in different circumstances, and some

communities didn’t have the capacities to formulate and

implement plans to improve infrastructure, health and

education. So, we realized that communities needed

facilitators to help them help themselves.

Those were the two key

components of the kDP

program: the provision of

funds directly to community

groups and the deployment

of facilitators to assist them

to use them appropriately.

Actually, Indonesian

development has always

involved dynamic

tension between two

different approaches: the

top–down approach and

the bottom–up approach.

In the New Order period,

the top–down approach

dominated. The bottom–up

approach has always existed,

village development

plans have always been

formulated through a

consultative approach.

But when the top–down

approach predominated, the

community had no power

and no resources to actually

implement these plans.

They made proposals at the

village level, which were

passed to the district level

and then on to the center.

Very few of the proposals

were ever implemented, so that in the end people got tired

of making proposals.

So, the final step in bringing about the realignment of

the two approaches was to move the locus of power over

decision making and the deployment of resources away from

IN 1998, the Government designed and implemented a

program the goal of which was to change a paradigm. The

goal was to facilitate a shift from centralism to decentralism.

By decentralism, I mean a system in which the community

was empowered to make decisions over their own fate. In this

paradigm, it was the community that had to take the central

role in development initiatives, not the Government.

The barrier to achieving

this paradigm change was

the question in the back of

the minds of all agents of

the bureaucracy and the

Government: can we trust

the community to make

the decisions needed to

improve their own welfare?

For so many decades,

the bureaucracy and the

Government thought of the

community as recipients,

passive beneficiaries. can we

trust them?

At the time, with the impact

of the financial crisis and

the Government’s limited

resources, we realized that

we had no choice but to

trust them. we knew that the

old paradigm was broken.

And we knew that we

couldn’t answer the question

in our own minds without

putting the proposition to

the test. we had to believe

that the community was

capable of identifying

the constraints that held

them back from achieving

their own potential, of

creating solutions and putting them into practice. The only

way for them to do that was by our putting resources at

their disposal.

At the same time, duty bearers realized that after decades

of the community being accustomed to acting as passive


the district and central levels and back to the kecamatan, or

sub–district. The kecamatan was the natural point to achieve

a harmonious alignment of the top–down and bottom–up

approaches. under the old paradigm, the kecamatan was the

point at which proposals were discussed and formulated, but

it had no power over the allocation of resources. The goal

was to devolve power to the point where proposals could be

contested and debated.

Since 1998, I believe that the fundamental question that I

posed before has been answered for the Government and

the bureaucracy. That is demonstrated by the fact that in

2006, PNPM was scaled up to

nationwide level to become

the major component of the

Indonesian Government’s

Cluster Two Poverty Reduction

program, which emphasized

community empowerment.

In fact, the major reason

for that is simply that it has

been proven to be more

effective in achieving the

Government’s goals: it is a

better, more effective way of

building roads, health centers,

educational facilities than

the top–down approach.

District heads, provincial and

central bureaucrats who were

initially cynical now realize

that through PNPM, more is

achieved in terms of what

is spent.

Perhaps the main reason that

community–driven development is more effective comes

from the approach’s commitment to transparency and

openness. under the old approach, the community never

knew what was being done with the money allocated for

development initiatives. under PNPM, the community is

actively encouraged to take note of how money is allocated

and how it is actually utilized. Every expenditure is noted

and publicized on public notice boards, through the media

and through the internet. Community groups can question

and challenge the figures. They feel that they own the

project, so they react strongly to misuse of funds. In and

of itself, that makes funds disbursed through PNPM less

subject to corruption, which leads to greater efficiency and

effectiveness. The community monitors and controls the

funds far more effectively than a central–level agency could,

and at a much lower cost.

Regarding impact evaluations that show that PNPM is better

at improving village infrastructure than at reaching the

very poorest members of the community, in part that is a

natural consequence of the open menu principle espoused

by PNPM. Decisions are made by consensus, with the

community as a whole deciding what initiatives need to

be prioritized. I think that to

some extent, it’s natural that

the community will focus

on initiatives that benefit all

members of the community,

rather than a particular group,

even the poorest members

of the community. So maybe

more specific approaches are

required to meet the special

needs of this group.

At the same time, you have to

realize that a large proportion

of PNPM funds go to support

economic empowerment,

particularly for poor women

in villages, and those funds

are allocated according to

the open menu principle.

The program mandates

that a certain proportion of

proposals must come from

women’s groups, particularly

to support their economic empowerment. Through PNPM,

we now have revolving funds with more than Rp 6 trillion in

assets, specifically intended to assist poor women in villages

to establish small businesses, as tailors, in food production,

weaving, in all sorts of activities. At present, there is also

a maximum limit on the proportion of funds that can be

utilized for these activities, with the cap set at 25% of the

total available funds. The impetus for that limitation came

from the world Bank, because of concerns that the funds

might be misused or might not reach their intended target.

“The barrier to achieving this paradigm change was the question in the back of the minds of all agents

of the bureaucracy and the Government: Can we trust the community to make the decisions needed to improve their own welfare? For so

many decades, the bureaucracy and the Government thought

of the community as recipients, passive beneficiaries. Can we

trust them?”

14

Speaking personally, I don’t agree with that limitation. when

I go out to the villages, women’s groups are always coming

up to me and pleading that we eliminate that cap. They

always say that the funds for economic empowerment have

the greatest positive impact on their lives. I feel that the

cap is not consistent with the principle that the community

itself should decide how PNPM funds are allocated. But the

fact that there is still the strong demand for these activities

shows that it’s not true that communities are only concerned

with infrastructure development and not with community

empowerment. when funds are made available in a way that

encourages the community to use them for empowerment,

then they do. I have no objections to the world Bank’s

drive to improve the efficiency and sustainability of the

revolving loans funds, by establishing linkages with formal

microfinance institutions and so on. The community’s

capacities have grown, so maybe it is time for that kind of

system to be implemented. But we have to be sure that that

system continues to serve the people it was intended to

serve. It comes back to what I said before: we have to trust

that the community can make the right decision.

looking to the future, I see that PNPM could make more

use of mechanisms to reward villages for making the right

decisions. Instead of giving the same budget allocations to

all sub–districts, we have to find means of rewarding villages

that demonstrate a higher level of capacity for community

empowerment. Of course, we also need to concentrate on

the villages with lower capacities, so that they can catch up.

we have to allocate funds to encourage the kind of successes

that we want to achieve. To some extent, we are already

doing that: but it is true that people and communities do

better when they are rewarded for doing better. PNPM should

continue to serve as a platform for providing incentives

to all elements of society to work to achieve an inclusive,

transparent, accountable and democratic society. ∞

15 2011 PSF PROGRESS REPORT15 2011 PSF PROGRESS REPORT

INDONESIA’S National Program for Community

Empowerment (PNPM Mandiri) is the world’s largest

community development program. Through PNPM, the

Indonesian Government endeavors to make development

planning more inclusive, accountable, and reflective of local

needs. PNPM works by giving communities block grants that

they can spend to carry out plans that they have developed

through a participatory, bottom–up planning process that

is facilitated by social and technical specialists who provide

advice to communities but do not control the funds.

The community–driven development approach of PNPM

Mandiri encourages all members of the community to

become involved in the development process. with funds

received through PNPM Mandiri, members of communities

work together to plan, implement and maintain the roads,

schools and other small infrastructure that they need the

most, working with local governments to ensure that the

projects are in line with government’s planning.

Formally established in 2007, PNPM Mandiri grew out of

an innovative pilot program known as the kecamatan

Development Program that in 1997 involved only 25 villages.

Since then, it has grown to a nationwide program

involving approximately 60,000 rural villages. More than

11,000 facilitators hired by the Indonesian Government help

villagers prioritize their development needs, negotiate which

ones take precedence, and train villagers in proper financial

and technical management. The program disburses nearly

uS$ 2 billion per year over some 50,000 sub–projects.

PNPM Mandiri is popular with the members of communities

it is designed to assist. Qualitative impact evaluations

show that through PNPM Mandiri programs, members of

the community eat more, go to school longer, find jobs

and establish businesses, have access to health care and

participate in community and local political forums. PNPM

Mandiri supports development plans made and approved

by communities. By focusing primarily on the process by

which local development projects are planned and managed

rather than on what gets built, PNPM Mandiri marks a

sharp departure from the traditional ways in which large

development projects are conceived and carried out.

PNPM Mandiri’s core programs are programs with a

nationwide reach, operating on the basis of systems

and procedures that have been tested since the first

implementation of the kDP program.

PNPM Mandiri consists of five core programs:

zz PNPM–Rural

zz PNPM–urban

zz Support for Poor and Disadvantaged Areas (SPADA)

zz Rural Infrastructure Support to PNPM Mandiri (RIS–PNPM)

zz Regional Infrastructure for Social and Economic

Development Project (RISE)

PnPM–RuRal

scope: national

2007: 33,300 villages/1971 sub–districts/343 districts

2008: 34,405 villages/2,447 sub–districts/336 districts




PNPM–Rural is a flagship Indonesian Government program

that invests in organized, empowered communities which

are enabled to demand a higher level of services; to hold

local governments and service providers to account; and to

seek more inclusive opportunities for local development.

Through the program, the Indonesian Government has had

a positive impact on the lives of more than 34 million people

in rural areas; has built more than 100,000 kms of roads and

more than 18,000 water supply systems; and reduced poverty

PNPM MANDIRI: CORE PROGRAMS

18PNPM MANDIRI: CORE PROGRAMS

in 60,000 villages. The program is a key element of the

Indonesian Government’s strategy to reduce poverty from its

2009 level of 14.1% to 8–10% in 2014.

PNPM–Rural achieves its development objectives by

providing block grants directly and transparently to

communities to finance an open menu of poverty alleviation

activities identified through a gender–inclusive community

participatory planning process; and by enhancing

the capacity of the Indonesian Government and local

governments to partner with community organizations

to improve the delivery of basic services. The annually

disbursed sub–district block grants range in size from Rp

750 million to Rp 3 billion (approximately uS$ 84,000 to uS$

330,000) per sub–district. Block grant allocations depend on a

sub–district’s population, poverty incidence, and remoteness.

Total funding for the PNPM–Rural program, which began

in 2008 is approximately uS$ 4.4 billion, inclusive of uS$

1.8 billion in world Bank loans and uS$ 2.5 billion of

Indonesian Government funds. In July 2011, world Bank

approved a uS$ 531 million loan to continue its support

to PNPM–Rural (through PNPM–Rural IV ). The Indonesian

Government has secured a block grant budget 2012,

and has requested Bank support again for another three

years implementation.

The program continues to produce good results in

sub–districts, where the model of providing direct control of

decision–making and resources to communities is leading

to improved socio–economic conditions. Research clearly

demonstrates that PNPM Rural has had sustained poverty

impacts: PNPM raises income;2 reaches the poor;3 improves

special meeting for women, an important stage in the pnpM process, which ensures they have a voice in the decision-making and process can express what they want and need.

2 Households in PNPM–Rural areas saw their consumption increase by approximately 5% more than the increase for control areas between 2007 and 2010.3 The same impact is at 6–7% impact among poorest 20% of households. Poor households in PNPM–Rural areas were 2.3 percentage points more likely to move out of poverty;

this is significant given the large number of rural households clustered near the national poverty line. Households in the poorest 20% of kecamatan saw consumption gains which were 19 percentage points higher than the increase in control areas.


access to employment4 and services;5 and provides strong

economic returns on infrastructure investments.6 PNPM

Revolving loan Funds (RlF) have also become a significant

national operation reaching poor rural women who typically

have no or limited access to other sources of credit.7 The

RlF component is currently being reviewed to ensure that

it reaches its objective of improved rural livelihoods and, if

possible, sustainable financial operation.

The program expansion is on track, with more than

75,000 sub–projects implemented in 4,168 of Indonesia’s

kecamatan in 2011 out of a targeted 5,020 (compared to

2,600 kecamatan in 2008). The kDP/PNPM–Rural series

have financed:

Type of sub–projectKDP (1998–

2007)PNPM Rural

(2008–2011)

km of farm/rural roads built

40,371 68,821

# bridges built 9,049 8,142

# irrigation systems built 11,062 6,527

# clean water systems built

11,081 29,701

# public toilets and washing facilities built

4,822 16,101

# school buildings built or rehabilitated

6,732 21,855

# health facilities built or rehabilitated

3,865 10,839

# village electricity units built

842 1,401

# education activities supported

123,837 120,590

# health activities supported

1,037 1,301

# women revolving loan fund activities supported

42,425 258,578

The program’s participatory and transparent framework is

also helping improve local governance by directly involving

communities in decision–making and has been successful in

increasing the poor’s (including women’s) access to tertiary

socio–economic infrastructure and other basic services.

About 60% of funded village proposals arise from women’s

special meetings and a majority of the beneficiaries are

below or at the poverty line.

In addition to being a key platform and direct channel for

resources across multiple development sectors (e.g., disaster

management, finance, health, and infrastructure), the

program also serves as an important mechanism to articulate

and support key policy issues for the future, including

those of integration of community–based programs within

Cluster 2 and also to strengthen the formal and informal

arrangements between PNPM and sector service delivery at

the local level. Dialogue on these policy issues continues to

be enriched through PNPM special programs and pilots. For

example, these special programs and pilots include PNPM

Generasi, which focuses on health and education, and Green

PNPM, which focuses on natural resource management and

village–level renewable energy.

PNPM–Rural’s track record in improving the welfare of

millions of people has gained the attention of other countries

which are sending teams to Indonesia to learn from, create

and adapt their own community empowerment programs.

These countries include Afghanistan, Bangladesh, India,

kenya, Mongolia, the Philippines, Sri lanka and Vietnam.

while the expansion of the program has been successful, it

has strained the management and governance frameworks

upon which the program relies to implement well. with PSF

support — and drawing on findings from PSF–supported

field supervision and systems audits — the Indonesian

4 Individuals living in PNPM–Rural areas who were unemployed in 2007 had a 1.25 percentage point greater chance of being employed in 2010 than in control areas. A greater problem is underemployment, which PNPM addresses to some extent through short term temporary jobs providing a safety net.

5 Individuals in PNPM–Rural areas were 5 percentage points more likely to access outpatient health care.6 39%–68% economic returns to infrastructure investments in water supply, roads and bridges.7 The volume of RLFs under PNPM is much larger than originally estimated, with capital in both PNPM Rural and Urban reached over US$ 600 million and about 700,000 groups

— many of them women groups — with an estimated outreach of nearly 5 million individual borrowers. Client surveys suggest that RLFs have had positive impacts on household income, business development, job creation and children’s education.


could not or were not resolved at the local levels. New

standard operating procedures (SOPs) on complaints

handling, with a three–month deadline for resolution

of fraud and corruption allegations at each level,

improved protocols for escalation of cases and a new

policy for stagnant and deadlocked cases have been

issued. Annual audits are being carried out jointly

by the National Government Audit Agency (BPkP)

and District Government Audit Boards (Bawasda) in

approximately 20% of the sub–districts and increasingly

the results are read in public to help reduce corruption

and increase transparency. Going forward, there will be

closer collaboration with the world Bank’s Justice for

the Poor Program and paralegals and lawyers will assist

communities in legal cases. Such increased cooperation

is expected to include an expansion of partnerships with

legal aid offices for the protection of whistle blowers and

provision of legal assistance to community members.

zz Improving the quality and deployment of human

resources, particularly facilitators: The role that

facilitators play in empowering communities, ensuring

application of program procedures, transparency, and

limiting corruption in PNPM is crucial. As key players

in the oversight system, facilitators train and monitor

community sub–district financial management units

and village implementation teams (uPks and TPks,

respectively). PMD has taken critical steps to reverse years

of underinvestment in facilitators, including: (a) budget

provisions to create 20% reserves staff; (b) restoration of

the competitiveness of salary scales; (c) new guidelines

on recruitment and instruction on performance

evaluation; (d) budget provision for twenty–one days

of pre–service training and semi–annual week long

refresher trainings; and (e) 95% of facilitator positions

have been filled in accessible areas. while these steps are

encouraging, considerable challenges remain to ensure

all facilitator positions are filled with well trained staff.

Going forward, pre–service and refresher training for

facilitators will be improved, and facilitators in remote

areas, such as Papua, will be provided additional benefits

to make such postings more attractive.

zz Utilizing existing fiduciary controls: The program’s

fiduciary systems aim to ensure that: (a) funds flow

as they should to communities and are managed

properly and efficiently for their intended purposes; (b)

accountability is stimulated through a strong flow of

Government and development partners agreed to focus

making progress in the following key areas:

zz Enhancing institutional and management capacity

of PMD, the executing agency for PNPM–Rural: PNPM

now accounts for about 80% of MohA’s budget but

the organizational capacity of PMD has not grown

commensurate with the program’s expansion. A

functional review of PMD to recommend potential

capacity enhancements and organizational realignment

to better manage the nationwide scale and complexity

of the program is ongoing. The overarching objective is

to ensure that PMD has the institutional and managerial

capacity to manage PNPM successfully, in line with the

following principles: (a) staff fully dedicated to PNPM;

(b) staffed with qualified civil servants and technical

assistance TA; (c) staff selected through competitive

processes; and (d) staff movement in line with

government hR regulations.

zz Strengthening the Management Information System

(MIS): Timely and reliable data is essential for program

managers to monitor implementation and make

informed decisions. The MIS had become fragmented

and suffers from inefficiencies and inaccuracies in

data gathering, transmission and reporting. An initial

assessment of gaps in MIS systems has been conducted

and through AusAID support a firm will be hired to carry

out a systems audit and a comprehensive redesign.

Additional technical assistance from AusAID has also

been provided. key principles driving the redesign of the

MIS are: (a) prioritization of data to focus on those that

are critical to inform decision making at various levels; (b)

built–in checks and balances to ensure accuracy of data;

(c) integration of different databases that currently exist;

and (d) generation of simple and automated reports to

inform management decisions.

zz Supporting governance enhancements: The program’s

ability to promote downward accountability and

enhance citizens’ ability to engage as well as to report

on grievances and fraud is critical to its success. In

a program like PNPM which is operating in a highly

decentralized environment across tens of thousands

villages this is an ongoing challenge. PNPM–Rural’s

Complaints handling System (ChS) is being strengthened

to ensure better capture and follow through on

complaints, including the escalation of cases which


information among all concerned levels of government

and in the communities; and (c) the capacity of

communities and local institutions to own and manage

their activities is strengthened. while these systems are

in place there are not always utilized to a satisfactory

level. A number of steps have been taken to increase

the utilization of fiduciary controls: (a) additional staff

has been added to the national and provincial financial

management oversight units; (b) internal audits are

mandatory in all sub–districts; (c) new instructions

were disseminated on increased supervision of village

procurement; and (d) a new risk–based audit manual was

developed. Continuous efforts are nonetheless required

to ensure successful implementation of new SOPs and

system improvements, and reverse recent years of

underinvestment in human resources. while engagement

with civil society, which plays a vital role — as watchdog

— in exposing corruption cases has been stepped up,

progress has been more uneven in regards village–level

social controls. Going forward, strengthening social

controls for improved local governance will be

fundamental. In particular, capacity improvements

and increased oversight are needed for community

self–monitoring groups.

zz Increasing implementation assistance from the PSF:

Just as the Government’s team was being overstretched

by the increased scale and complexity of the program, so

was the Bank’s. The team was increasingly taxed to ensure

timely follow up of issues that required management

decision and to provide adequate field–level support. The

Bank’s implementation support has been strengthened

to meet the requirements of a scaled–up PNPM. A

“portfolio approach” has been adopted for supervision

and monitoring, and the various programs and pilots are

being supervised in an integrated fashion.

Progress in most of these areas is ongoing. The underlying

systemic problems affecting PNPM–Rural’s implementation

are known; action plans have been developed and critical

steps are being taken to address them. Capacity constraints

of implementation units at all levels, however, remain

a key constraint and will affect the speed with which

improvements are realized. Strong implementation support

pnpM facilitators play a crucial role in the empowerment process.


will be needed through the completion of PNPM–Rural IV and

for preparation of PNPM–Rural V to continue to address the

key systemic issues and ensure the program’s success.

The focus for 2012 will remain on strengthening PMD’s

management capacity and making governance and

fiduciary systems more robust. There will be a renewal

of PNPM’s core elements of transparency, accountability,

inclusion, and participation. Government, PSF and other

development partners will continue to engage on: (a)

adjustment of the core PNPM model to different kinds of

poverty across Indonesia’s diverse regions (e.g., targeting

the poorest sub–districts or trying to reach the poorest in

richer areas); (b) bringing the social capital created through

PNPM to bear to strengthen the downward accountability

of local government; and (c) utility/scope of PNPM as an

instrument to address the needs of the most marginalized

and vulnerable peoples (through instruments like PNPM

Peduli, discussed later under window Three of this report,

and through other means).

PnPM–uRban

scope : national

2008 : 8,813 urban wards in 245 cities/districts




like PNPM–Rural, PNPM–urban is a core component of the

Indonesian Government’s flagship poverty alleviation and

community empowerment program. while PNPM–Rural

has been specifically designed and implemented to benefit

the rural poor, PNPM–urban works to ensure that the urban

poor benefit from improved socio–economic and local

governance conditions. Based on the priorities expressed

by the participating communities the program provides:

(a) tertiary infrastructure (such as roads, drainage, housing

rehabilitation, water supply and sanitation); (b) social

programs; and (c) economic support activities to benefit

the poor. Since the first implementation of PNPM–urban

and its predecessor program, uPP, the program has had a

positive impact on the lives of more than 32 million people in

urban areas.

PNPM–urban achieves its development objectives

through: (a) strengthening and institutionalizing elected

representative organizations held accountable to

communities; (b) providing grants to communities directly

and transparently to finance an open menu of poverty

alleviation activities; (c) enhancing the capacity of central and

local governments to partner with community organizations

in service provision; and (d) increasing awareness of disaster

risk mitigation and mainstreaming of measures for resilience.

The annually disbursed block grants range in size from uS$

15,000 to uS$ 40,000 per ward.

The Bank has supported the Government since the

inception of the uPP program to the scale up of the PNPM

to nationwide coverage. In urban areas, coverage extends

to all 11,000 urban wards and 22.3 million beneficiaries.

Total funding for the PNPM–urban program, which began

in 2008 is approximately uS$ 1 billion, inclusive of uS$

442 million in world Bank loans, uS$ 242 million in Islamic

Development Bank loans, and about uS$ 316 million of

Indonesian Government funds.

In 2011, PNPM–urban was operating in 10,948 wards,

1,697 sub–districts, 504 cities (kota/kabupaten) and

33 provinces. Many of the project’s key performance

targets, which go out to 2013, were achieved including the

participation rates of women and the poorest community

members in the planning and decision meetings exceed

their targets for 40% and the percentage of infrastructure

sub–projects evaluated as having good quality exceeded its

70% target. Areas where improvements against performance

targets are needed include local government cost sharing

(only about 60% of local governments are meeting the

minimum investment levels) and riskiness of revolving loan

funds (RlFs). The uPP/PNPM–urban series have financed:

Type of sub–projectUPP/PNPM–Urban

(1999 — 2011)

km of small roads built 31,100

km of drains built 8,800

# of houses rehabilitated for the poorest

126,800

# of solid waste units and sanitation facilities built

164,800

# of health facilities built 9,450

# of revolving loan fund activities supported

222,180


or 43% of the total, of PAPG investment, which has

exceeded the target of 25%. Most performance indicators

have been achieved. As of December 2011, about uS$

135 million of funds from grants, local government, and

community contributions had been utilized, mainly for

roads (52%), drainage (12%), and house rehabilitation

(8%). About 3,500 km of small roads, 480 km of drainage,

and 16,800 housing units have been rehabilitated. The

remaining funds were utilized for education facilities,

water supply and sanitation, excreta; and

zz Neighborhood Development (ND): ND promotes

urban upgrading by significantly increasing the size

of kelurahan grants (to uS$ 111,000 per ward) and

neighborhood level interventions will target the

poorest areas. Eighteen pilot wards are in the process

of completing the physical construction of projects. In

addition, 255 wards have completed their plan and are

preparing for physical construction. As of December

2011, about uS$ 15 million in ND grants had been

disbursed, amounting to 60% of the allocated funds, to

the 273 participating ward.

In addition, in 2011 the PNPM–urban project continued to

implement two pilots.

zz Poverty Alleviation Partnership Program (PAPG):

The PAPG encourages partnerships between local

government and communities to institutionalize a

consultative process between the two for future activities

undertaken by local governments using their own funds.

It allows local governments to access matching grants

for city–level poverty reduction activities and will finance

poverty alleviation sub–projects that are too big to be

financed by the kelurahan grants, or that require local

government involvement (e.g., networked infrastructure

or operations and maintenance) and that cover more

than one ward. PAPG covers 118 cities. By December

2011, implementation of PAPG had been completed in

64 cities, or 54% of participating cities. Implementation

in the remaining cities is expected to be completed by

mid 2012. As of June 2011, approximately uS$ 58 million

of PAPG funds had been utilized. The number of local

governments willing to participate in the program

has well exceeded the project targets. So far, local

government contribution has reached uS$ 58 million,

pnpM–urban supports the creation of small home based businesses. these ‘nata de coco’ producers from south sulawesi started from scratch and now supply mini-markets in the city.


like PNPM–Rural, which was developed by scaling up the

predecessor kDP program in 2007 to achieve nationwide

coverage, PNPM–urban’s predecessor program, uPP, was

also scaled up at the same time with the goal of achieving

nationwide coverage. As in the case of PNPM–Rural, while the

expansion of the program has been successful, the process

has strained the management and governance frameworks

upon. key areas where continued focus will paid include:

zz Project Management: Most of the consultant contracts

will end soon, as the consultants — both NMC and

outside consultants — have been contracted based

on the timeframe of particular loans instead of the

PNPM program timeframe, which is expected to

conclude in 2015. while world Bank and Indonesian

procurement guidelines allow for multi–year contracts

and extension of contracts for continuity purposes, the

executing agency, the Directorate General of human

Settlements (DGhS) within the Ministry of Public works,

will carry out a new selection for all consultants instead

of extending the existing contracts. To mitigate the

resulting discontinuity, DGhS, within the parameters of

its oversight structures need to decide on consultant

contracts and provide legal frameworks for the ensuring

continuity of services. The new selection of consultants

should incorporate this new framework for continuity.

In the case of the project facilitators, contracts are made

on an annual basis, which tend to result in relatively high

turnover of facilitators. The project is seeking to align

facilitator contracts more closely to the project cycle to

minimize continuity issues arising from rapid turnover

during the project.

zz Capacity Building: The capacity across all levels of

government and of communities to implement the

program remains limited. The project will scale up

capacity building at the local level, including training

programs for local government officials (e.g., lurah/head

of ward, and officials at the sub–district, district and city

levels). Implementation support, guidelines, and manuals

will also be updated.

zz Delivery quality and implementation: The ability to

implement the program in a timely manner and with

quality could be compromised by a few key risks. Two

are: (a) the timely authorization and release of the

budget by Ministry of Finance; and (b) procurement

processes and the nature of facilitator contracts, which

tend to be renewed on an annual basis and do not

Many of pnpM–urban’s key performance targets were achieved. the participation rate of women and the poorest community members in planning and decision-making meetings, for example, exceeded 40%.


In 2012, PNPM–urban IV is expected to begin implementation

and will continue to provide nationwide coverage. In addition

to its activities, PNPM–urban plans to begin two pilots that

will cater to the poorest:

zz Specialized Program to target the poorest at

the neighborhood level in selected participating

kelurahan: The specialized program for the poorest

will aim to improve living conditions for the poor on a

programmatic (three year plan), integrative (a “package”

of investments — e.g., housing, drainage, roads), and

spatial (using evidence based on urban planning

expertise) basis. The program will target the poorest

wards in local governments that would like to participate

in the program (and sign an MOu committing matching

funds as well as a commitment for channeling other

local government poverty programs). Communities will

be selected based on population density and poverty

incidence. The size of the grant per kelurahan will be Rp

1 billion (uS$ 111,000, of which a maximum of 20% can

be used for planning). The grant will be matched by at

least the same amount of funds or programs from the

participating local government.

zz Pilot interventions for women’s groups to enhance

participation: This program will aim to provide a greater

emphasis on the participation of women in the program,

especially in terms of the quality of participation. It will

include specialized training for facilitators and BkMs

(community organizations) on gender issues, additional

oversight and mentoring from the Oversight Consultants

in historically poor performing areas, and a pilot grant

allocation from the kelurahan grant to be managed by

women’s groups in selected wards. These programs will

be further assessed by the GoI and the Bank to inform

implementation and potential scale–up.

Additional funding will be channeled through PNPM–urban

for Aceh and disaster management support.

zz Support for Aceh: The PSF will finance uS$ 24.8 million

to support PNPM–urban in Aceh for three years. The

funding will be used for kelurahan grants and capacity

building of community and local Government in Aceh.

zz Disaster management support. The Global Facility for

Disaster Reduction and Recovery (GFDRR) is providing

a uS$ 5 million grant to MoPw to facilitate the raising of

provide certainty or reliability (high rates of attrition).

Discussions are underway with MoPw on how to have

a contracting process more aligned with the timeline of

community development plans rather than an annual

basis. A third risk is maintaining infrastructure quality

while sustaining such a large program as PNPM–urban.

while a study carried out by MoPw to determine

the quality of infrastructure and identify areas for

improvement/strengthening, as well as the PNPM–urban

process evaluation, confirmed that infrastructure

built is of good quality; there is still significant room

for improvement.

Approximately 19 evaluations, studies, and reviews of the

uPP program have been carried out since 2001. These studies

have brought significant improvement to the quality of

project design and implementation over time. key findings

point to the need for improvement in key areas such as:

women’s participation, local government involvement, the

quality of infrastructure, more rigorous oversight of revolving

loan funds in line with existing financial systems, improving

complaints handling and MIS reporting, the negligible

impact on household level expenditures, leadership and

“benevolent” elite capture, and the need for enhanced social

and economic programs beyond the scope of the revolving

loan funds.

under the ongoing PNPM–urban III, a comprehensive process

evaluation, financed by the PSF and discussed later in this

report, was conducted. The evaluation goes into some depth

on a number of key issues related to project design and

implementation, including: (a) how the CDD approach has

evolved and how it is addressing the needs of the urban

poor; (b) the PNPM–urban Program in the context of other

urban poverty programs in Indonesia; (c) institutional issues;

(d) the role of local government; (e) approaches to capacity

building; and (f ) the quality of PNPM–urban infrastructure.

The findings of these evaluations are being addressed

through changes in design for next project, PNPM–urban IV

project, and will include increasing the election threshold

for BkMs, requirements of local government counterpart

funding, introduction of special facilitators for infrastructure,

changes in the composition of facilitator teams,

strengthening of the Complaint handling unit, and the use of

web–based MIS.


community awareness on issues related to disaster risk

reduction and mainstreaming resilience into investments

financed under the project. This program will support

PNPM–urban by focusing on activities related to

preparedness and risk mitigation and will be augmented

with uS$ 700 thousand from the PSF.

suPPoRT foR PooR anD DIsaDVanTageD aReas In aCeh anD nIas (sPaDa)

scope: spADA comprises two projects: spADA national

which covers 186 sub–districts in 32 disadvantaged district

in eight provinces; and Aceh–nias which covers 19 tsunami,

earthquake and conflict–affected district in Aceh and north

sumatra provinces.

SPADA is designed to bring PNPM–Rural experiences in

participatory development planning and implementation

mechanisms to the district level and to build the capacity of

local governments to deliver basic services in disadvantaged

and post–conflict areas of the country. SPADA provides block

grants for local planning and investment at the district and

sub–district levels, with sub–projects determined through

participatory planning processes involving communities

and multi–stakeholder groups at the district level. The

project provides intensive technical assistance and training

to local governments and citizen groups to improve the

local government planning process, specifically to increase

accountability, transparency and community participation.

SPADA operates on the basis of an open menu system to

determine the use of the block grants, but at least 30% of

the district block grants must fund health and education

sub–projects and at least 5% of sub–district grants are

targeted to meet the needs of youth. Both SPADA National

and SPADA Aceh–Nias are implemented by the Ministry of

Disadvantaged Areas (kPDT ).

SPADA was already scheduled for implementation in five

of the poorest districts of Aceh before the tsunami and

earthquakes struck in the Indian Ocean region on December

26, 2004, resulting in one of the worst natural disasters in

recorded human history. In Aceh and North Sumatera, the

disaster left more than 230,000 people dead or missing,

caused an additional 700,000 to become homeless, washed

away hundreds of communities, collapsed many local

governments, and devastated normal social, economic and

political life in the affected areas. Three months later, another

earthquake struck the island of Nias in North Sumatra on

March 28, 2005, killed more than 700 people, leveled or badly

damaged some 10,000 houses, and significantly changed the

very physical layout of the island.

Following the tsunami and the subsequent establishment

of the Rehabilitation and Reconstruction Agency8 (BRR),

the Government accelerated SPADA’s launch preparation

and proposed that the project be expanded to cover

all 17 districts in Aceh, and the two districts in Nias.

The Government also asked that SPADA’s programs for

post–conflict reintegration and development be substantially

strengthened for Aceh by including damage and vulnerability

assessments, support for local justice sector reform, and

practical training to help local governments mediate conflict

successfully. with SPADA’s design fitting well with BRR’s

reconstruction strategy, BRR requested the Multi Donor Trust

Fund for Aceh and North Sumatra (MDTFANS) to provide a

grant a special SPADA project in Aceh and Nias.

SPADA Aceh–Nias closed in December 2011, while SPADA

National has been extended to June 2012 with an additional

top–up cycle of block grants in seven districts in two

provinces. Preparations for a follow–up project are underway.

The SPADA National project amounts to uS$ 134 million, of

which 78% is financed through a world Bank loan and credit,

and 22% is financed from national and local government

resources and community contributions. The SPADA

Aceh–Nias amounts to uS$ 51.6 million, of which 72% is

donor financed through trust funds and 28% Indonesian

Government financed.

After a slow start in 2007 and 2008, SPADA has significantly

increased disbursements and utilization rates. The program

has achieved most of its development objectives, with more

than 10,000 sub–projects implemented in 51 of Indonesia’s

kabupaten and for 186 of Indonesia’s kecamatan from 2007 to

2011 out of a targeted 199 districts listed as disadvantaged

areas by the Indonesian Government. SPADA have financed:

8 BRR was charged with coordinating and implementing rehabilitation and reconstruction activities in the Province of Aceh and on the island of Nias (in the Province of North Sumatra)

Type of sub–project

SPADA

2007–2011

km of rural roads built 1,283

# bridges built 629

# clean water systems built 3,090

# public toilets and washing facilities built 5,490

# school buildings built or rehabilitated 971

# health facilities built or rehabilitated 414

# health and education government workers trained

32,943

# persons benefiting from legal aid case handling assistance

69,800

# school based management training conducted

161

% increase in new business registrations 72

# vulnerable women, IDPs, and ex combatants provided technical assistance and financial support to rebuild their lives

233,115

# District adopting recommendations for improvements in their regulatory environment

17


In 2011, all of the remaining investment block grant

resources, totaling uS$ 1.5 million, were disbursed. A

total of 2,679 sub–projects were completed in 2011:

1,276 infrastructure, 677 education, 526 health and

200 targeted to youth. local governments provided

administrative funds to support the project, and all targeted

districts committed to allocate recurrent funding for

operations and maintenance.

SPADA block grants complemented local government

resources for health, education, and basic infrastructure

development, and helped support community and local

government priorities. In 2011, more than 300 health clinics

and schools were rehabilitated or provided with improved

access through roads and footpaths. The block grants have

opened up access to previously isolated villages, improved

opportunities to start small businesses, and improved

access to health and education services in disadvantaged

communities. A December 2011 sample review of completed

infrastructure sub–projects in six districts found mostly

adequate quality although some road sub–projects showed

the results of poor design or lack of maintenance. Operations

and maintenance appeared to be considerably better for

irrigation systems and public service buildings, such as

schools and clinics.

spADA financed the building of over 1,200km of rural roads.

caused an additional 700,000 to become homeless, washed

away hundreds of communities, collapsed many local

governments, and devastated normal social, economic and

political life in the affected areas. Three months later, another

earthquake struck the island of Nias in North Sumatra on

March 28, 2005, killed more than 700 people, leveled or badly

damaged some 10,000 houses, and significantly changed the

very physical layout of the island.

Following the tsunami and the subsequent establishment

of the Rehabilitation and Reconstruction Agency8 (BRR),

the Government accelerated SPADA’s launch preparation

and proposed that the project be expanded to cover

all 17 districts in Aceh, and the two districts in Nias.

The Government also asked that SPADA’s programs for

post–conflict reintegration and development be substantially

strengthened for Aceh by including damage and vulnerability

assessments, support for local justice sector reform, and

practical training to help local governments mediate conflict

successfully. with SPADA’s design fitting well with BRR’s

reconstruction strategy, BRR requested the Multi Donor Trust

Fund for Aceh and North Sumatra (MDTFANS) to provide a

grant a special SPADA project in Aceh and Nias.

SPADA Aceh–Nias closed in December 2011, while SPADA

National has been extended to June 2012 with an additional

top–up cycle of block grants in seven districts in two

provinces. Preparations for a follow–up project are underway.

The SPADA National project amounts to uS$ 134 million, of

which 78% is financed through a world Bank loan and credit,

and 22% is financed from national and local government

resources and community contributions. The SPADA

Aceh–Nias amounts to uS$ 51.6 million, of which 72% is

donor financed through trust funds and 28% Indonesian

Government financed.

After a slow start in 2007 and 2008, SPADA has significantly

increased disbursements and utilization rates. The program

has achieved most of its development objectives, with more

than 10,000 sub–projects implemented in 51 of Indonesia’s

kabupaten and for 186 of Indonesia’s kecamatan from 2007 to

2011 out of a targeted 199 districts listed as disadvantaged

areas by the Indonesian Government. SPADA have financed:

8 BRR was charged with coordinating and implementing rehabilitation and reconstruction activities in the Province of Aceh and on the island of Nias (in the Province of North Sumatra)

Type of sub–project

SPADA

2007–2011

km of rural roads built 1,283

# bridges built 629

# clean water systems built 3,090

# public toilets and washing facilities built 5,490

# school buildings built or rehabilitated 971

# health facilities built or rehabilitated 414

# health and education government workers trained

32,943

# persons benefiting from legal aid case handling assistance

69,800

# school based management training conducted

161

% increase in new business registrations 72

# vulnerable women, IDPs, and ex combatants provided technical assistance and financial support to rebuild their lives

233,115

# District adopting recommendations for improvements in their regulatory environment

17


As part of SPADA’s capacity development program, more

than 33,500 teachers and health workers have been trained

since 2007 (over 40% women). Others who have benefitted

from capacity development under SPADA include members

of health and education committees, village facilitators

and empowerment cadres. The training helped to improve

school management and health techniques, business

development applications, and sub–project preparation and

implementation. District governments have reported that this

has improved access to water, markets, and education, and

improved the health of young children and mothers.

The SPADA Aceh–Nias project closed in December 2011. The

national SPADA program will close in June 2012. Much effort

was put into project closure in 2011, including sub–project

hand over to district governments, final resolution of

audit findings and the development of lessons learned

studies and workshops. The formal registration and budget

allocation for operations and maintenance are expected

to be implemented in each district and all districts have

committed themselves to provide budgets for operations

and maintenance in 2012. SPADA Maintenance Teams have

been established in all districts, and guidelines and training

provided by kPDT. As of December 2011, 90% of 1,899 audit

cases and complaints reported since 2007 have been

satisfactorily resolved (98% in March 2012, at the time of

reporting). A workshop on lessons learned was conducted

in December 2011, with invited participants including key

stakeholders from community groups, local governments,

and central government. In addition, an additional cycle of

kecamatan block grants in seven high–performing districts in

west kalimantan and Central Sulawesi was finalized in 2011.

Discussions are under way for the preparation of a new

project, SPADA 2, which will build on SPADA’s strengths

and learn from its experiences. SPADA 2, the preparation

of which is being supported with PSF–financed technical

assistance, will focus on local economic development and

rural livelihoods with the aim to increase incomes and

improve livelihoods for poor households and create business

opportunities in targeted poor and disadvantaged districts.

RuRal InfRasTRuCTuRe suPPoRT To PnPM ManDIRI (RIs–PnPM)

scope: Ris pnpM i: 1,724 villages in Jambi, lampung, Riau, and

south sumatra provinces.

Ris pnpM ii: 1,500 villages in Jambi, lampung, Riau, and south

sumatra provinces

The project builds on the existing PNPM Mandiri platform

and the Rural Infrastructure Support Project program that

ended in 2008. RIS–PNPM I was approved in 2008 and has a

total budget of uS$ 62.5 million, comprising a uS$ 50 million

loan from the Asian Development Bank (ADB), uS$ 6.7 million

from the Indonesian Government, and an estimated uS$

5.8 million from community contributions. RIS–PNPM II was

approved in November 2009, and has a total project cost of

uS$ 113.5 million, including a uS$ 84.2 million loan from the

ADB, uS$ 21.8 million from government counterparts and

uS$ 7.5 million in community contributions.

The overarching objective of RIS–PNPM is to reduce poverty

and improve local governance in rural communities by

improving access to services for the poor, near poor, and

women. To support this objective RIS–PNPM aims to:

zz Strengthen capacity for community planning

and development, which includes supporting and

strengthening community participation, empowerment

and the capacity to prioritize, design, implement, manage

and monitor community–based projects.

zz Improve village services and infrastructure through

community development grants. Block grants

are provided to villages to support investments in

priority physical, social and economic infrastructure

areas to meet the local needs that were identified in

the village’s medium–term poverty reduction plans.

Consistent with the PNPM guidelines, the menu of

investment opportunities for communities is open,

except for a short list of activities prohibited by the

Indonesian Government or ADB policies. The selection

of community investments is based on the guidelines

prepared for RIS–PNPM. Block grants are transferred

directly to community bank accounts specifically

opened for the project and managed by the community

implementation organizations.


technical facilitators play a crucial role in the design and implementation of sub-projects. they help communities in assessing whether they have the capacity to build the proposed infrastructure and whether it is useful.


zz Improve capacity for project implementation and

monitoring and evaluation, which supports project

management and implementation support at national,

provincial, and district levels, including monitoring

and evaluation.

By the time of the completion of the project in June 2011,

all 1,724 villages included in RIS–PNPM had completed their

respective projects; 1,082 community facilitators (CFs) had

been engaged and trained; community awareness campaigns

had been completed in 1,500 villages; poverty mapping and

need assessments had been completed in 1,500 villages;

and village medium–term poverty reduction plans had been

completed for 1,500 villages.

RegIonal InfRasTRuCTuRe foR soCIal anD eConoMIC DeVeloPMenT (RIse)

scope: 237 sub–districts/34 districts in the nine provinces of

north sumatra, Jambi, Bengkulu, Bangka Belitung, west nusa

tenggara, west kalimantan, south kalimantan, south sulawesi,

and west sulawesi.

Building on the existing PNPM–Rural platform, the program

aims to accelerate social and economic infrastructure

development by improving access of the poor to the

following: transportation facilities; water supply and

sanitation facilities; irrigation facilities; market facilities;

health facilities and education facilities; and by introducing

micro–credit services on a pilot basis. The project in

this way contributes to: rural poverty alleviation efforts,

the autonomous development of regional economies,

the increasingly self–reliant capacity building of local

communities, and strengthening the administrative capacity

of local governments.

RISE is financed through a International Cooperation Agency

(JICA) loan in the amount JPY 23.5 billion or uS$ 252.2 million.

The project has provided community grants for 2,355 villages

disbursing more than uS$ 42 million over 9,485 packages.

In 2011, these community grants directly benefited

142,275 households (711,375 persons). ∞

Basic tertiary infrastructure, such as water supply systems, is usually the highest priority of poor communities.


Bito WiKantosahEAD OF SECTION, METhOD DEVElOPMENT, DIRECTORATE GENERAl FOR COMMuNITY AND VIllAGE EMPOwERMENT, ThE MINISTRY OF hOME AFFAIRS

COMMuNITY–DRIVEN development is not something that

was created through the PNPM program. At least at the

level of theory, input from the community has been sought

for village level development programs since the New

Order period and before. Village level meetings at which

community aspirations are expressed through consensus

have been a standard component of all of these programs.

however, in these earlier

programs, proposals made

at the local village level were

submitted for approval to

the district level, and then

to the central level. Often,

central level decisions did

not really take account of

the local aspirations. That

was a characteristic of the

highly centralized New Order

system of government.

In many cases, seeking

community input was merely

a formality.

Even so, and with many

imperfections, beginning

with the Inpres Desa

Tertinggal program and

the Village Infrastructure

Program, village level

development plans were

increasingly guided by

community input, supported

by village level meetings

and forums. The biggest

innovation of kDP was the

system of disbursement of

funds directly to community

groups and the deployment

of a large force of facilitators.

The facilitators played a highly significant role by providing

training and assistance to the villages to empower them to

formulate realistic plans and to oversee their implementation

to ensure that they achieved satisfactory results. These

innovations were intended to transform the formal

commitment to community–driven development into

a reality.

To a large degree, the innovations did achieve their intended

purpose. Certainly, the kDP and PNPM Mandiri create a

vehicle for expressing community aspirations far more

effectively than preceding programs. however, there is

some danger that the participatory processes upon which

the PNPM program is based upon may also degenerate

into a formality or, at least, not have an optimal impact on

Indonesia’s social, political

and economic development.

If participatory processes

become regarded as merely

a specific characteristic of

a particular program, rather

than being integrated into

the standard procedures

by which government

is conducted, then

participatory processes may

become little more than

window dressing.

we originally saw the PNPM

program as a means to

change the development

paradigm and transform

the relationship between

government and civil

society. I don’t think that

goal has been entirely

achieved, despite positive

progress in many areas. At

present, community–driven

development is not the

dominant principle by

which the processes of

government are conducted,

it is one approach amongst

many, with other village

infrastructure and other

development programs adopting other approaches. In some

cases, even small scale village level projects are planned by

government agents and perhaps implemented by private

contractors, without community input. Communities have

to be clever at adapting to the guiding principles and

practices of each of the different programs. To be really

meaningful, the principle of community–driven development


the development of a culture of democracy, in which

community members have the power to demand a high

quality of leadership that is capable of ensuring that their

aspirations are met through the regular provision of services

by government. This culture will only emerge when the

community becomes aware, well informed, and organized.

Even in a highly decentralized context, where the role of

local level government representatives and duty bearers

is the most important factor, there is still a strong role

for the central government and its agencies. Central

government and its agencies still retain much control

over local government budgets. Through the power over

these budgets, the center can create a strong system of

regulations, with incentives and disincentives, to encourage

local governments to move in

the right direction. however,

just as change requires political

commitment at the local level,

it also requires ongoing political

commitment at the central

level. In the end, the quality

of local leadership and the

degree to which a strong civil

society emerges throughout the

provinces is highly dependent

on the quality of central

level leadership.

I have been very glad to

participate in the scaling up of

the kDP program to become the

national PNPM Mandiri program.

The scaling up of the program throughout Indonesia has

created a vast body of experiences through which everyone

involved has learned enormously. Everyone involved has

come to understand what works and what doesn’t. In

some ways, the implementation of community–driven

development through the PNPM program has been limiting.

After more than a decade’s experience, it’s time that the

underlying principles that drive the program become

mainstreamed and fully integrated not just into the system

of government in Indonesia, but into its culture, its systems

of social interaction, and its way of thinking. Speaking

personally, I believe that the success of our endeavors over

the years can only be measured in those terms. ∞

has to be adopted as the fundamental guiding principle

of government, not merely as a formal step in a specific

project. The community’s right to determine its own priorities

and to access the resources to implement them must be

institutionalized as a fundamental human right.

The only way that this can be achieved is through a

strengthening of civil society. without this, the impact

of community–driven development will be confined to

specific programs intended to achieve limited and specific

goals, such as the improvement of village infrastructure. By

strengthening civil society, we can facilitate collective action

to ensure that government duty bearers provide services

that meet the aspirations of all members of all communities,

not just through the PNPM program, but through all of

the Government’s activities.

At present, this is not being

achieved. This means that if and

when the PNPM program comes

to an end, the development

of community health centers,

schools, and other basic

services may no longer be

fully guided on the basis of

community input.

At present, to encourage the

mainstreaming of participatory

principles, we are experimenting

with a pilot study to encourage

the full integration of these

principles into government

processes, particularly at the

local level. Through PNPM Integration, we are trying to

develop a system that recognizes and rewards the degree

to which local governments take account of community

aspirations. From what I’ve seen, not every district in the pilot

study has performed well. The quality of leadership in each

district is a vital factor. In districts where the executive has

visionary qualities and is fully committed to the program,

good results can be achieved. without that quality of

leadership, the program is often unsuccessful.

however, we can’t assume that every district will somehow

be blessed with a visionary leader. we have to empower

communities so that they can insist on high quality leaders.

This goes back to strengthening civil society. It involves

“By strengthening civil society, we can facilitate

collective action to ensure that government duty bearers provide services that meet the

aspirations of all members of all communities, not just through the PNPM program

but through all of the Government’s activities.”

34

ThROuGh window One, PSF provides direct budget and

co–financing support for Indonesian Government community

empowerment programs. In particular, PSF provides financial

and other assistance to implement pilot projects. These pilot

programs are intended to test strategies and approaches

that are considered to have the potential to improve the

Indonesian Government’s community–driven development

approach but that have not yet been thoroughly tested

through wide–scale implementation. Examples of innovative

pilot programs whose coverage has been expanded include

PNPM Generasi and Green PNPM. PNPM Generasi uses an

incentivized block grant mechanism to fund community

initiatives related to health care and education to help

Indonesia meet its millennium development goals. To this

point, it is the only program of this kind in the world. Green

PNPM uses an incentivized block grant mechanism to fund

community investments in natural resource management,

environmental conservation, and renewable energy, and

thus supports a diverse range of activities which might

otherwise not have been selected through the core

PNPM–Rural program.

In addition, through this window, PSF resources are used

to provide additional support to communities who face

particular challenges, such as those impacted by natural

disasters and to those particularly vulnerable to falling into

poverty as a result of significant economic disruptions.

Projects funded through window One include the following:

zz Green PNPM

zz PNPM Generasi

zz Disaster Management Support

zz PNPM–Rural III Additional Financing (Crisis)

gReen PnPM

There is a clear and pressing need to enlist Indonesia’s

communities in an endeavor to achieve green,

environmentally sustainable development and growth

for this generation of Indonesians and those that follow.

Since Independence, the exploitation of natural resources

has been a major driver of Indonesia’s economic growth,

but deforestation and wetland destruction, exacerbated

by illegal logging and a poorly controlled expansion of oil

palm and pulpwood plantations, threaten Indonesia’s social

stability, national security, environment, health, and future

economic growth.

Across Indonesia, the demand from pulp and paper

mill operations drives illegal logging, resulting in the

disappearance of old–growth native forests and costing

the Government nearly uS$ 2 billion in lost tax revenue

annually.9 Rapidly expanding palm oil plantations also

are exacerbating the depletion of forests and wetlands.

Deforestation in Indonesia is so prevalent that at current rates

of destruction, old–growth native forests could disappear

within 30 years10. This would have devastating consequences

for the poor, wildlife and the world’s climate. Indonesia is

the third–largest greenhouse gas emitter, behind only China

and the united States,11 and destructive land–use practices

account for 85% of Indonesia’s emissions, while the resulting

oil palm and forest products sectors contribute less than

8% to its GDP12. Fires caused by the draining of peat–land

soils are not only an exceptionally large source of emissions,

but also result in economic losses estimated at uS$ 4 billion

annually, causing major health problems in local populations

through smoke inhalation13.

wINDOw ONEDIRECT BuDGET SuPPORT AND CO–FINANCING FOR COMMuNITY EMPOwERMENT

9 USAID, Growing Conflict and Unrest in Indonesian Forests, 2004; Human Rights Watch, Wild Money, 2009.10 United Nations Food and Agriculture Organization.11 United Nations Food and Agriculture Organization; World Resources Institute.12 The National Development and Planning Agency of Indonesia (Bappenas), Reducing carbon emissions from Indonesia‘s peat lands, 2009.13 The Indonesian National Board on Climate Change, Fact Sheet — Carbon Emissions and Development, 9–6–2010.

36wINDOw ONE

At least until very recently, national legislation regulating

both village governance and natural resource management

has been based on the primacy of centralized state authority

as the ultimate arbiter of “the national good.” while recent

decentralization initiatives have devolved certain powers

and responsibilities to local governments, they have not

yet fundamentally altered this enduring fact. Especially

during the New Order administration, the concept of local

community–based rights was pitted against ideas about

modernity and the national interest. This state–based

paradigm reached its pinnacle in the early 1980s when the

New Order administration classified over 75% of the total

land area as state forest, including over 90% of the Outer

Islands. The approach ignored pre–existing local rights to

millions of hectares of land, forests, coastlines and other

natural resources.

Green PNPM’s design is based largely on the recognition

that remote, rural communities are more adversely affected

by environmental degradation and climate change than

other segments of the population because they are more

dependent on proper management of natural resources

to secure their livelihoods. The pilot–project builds on

PNPM–Rural’s community–driven development model, which

emphasizes that it is rural communities themselves who

are in the best position to identify what local development

activities will lead to the greatest social, economic, and

environmental benefits. Since PNPM–Rural’s inception

participating communities have mostly opted to invest

block grant funds in small–/medium–sized infrastructure

activities which demonstrate an immediate and clear impact

on their welfare and livelihoods. however, this approach

to prioritization has seldom resulted in investments

related to improved NRM practices — as these are typically

longer–term initiatives, with benefits and linkages to

livelihood improvement unknown or less concrete to the

participating communities.

The Green PNPM pilot–project was therefore established

to promote a greater emphasis on environmental issues

in the community–driven development planning process,

and to demonstrate that there are potential investment

opportunities for communities through which they can

realize socio and economic benefits while working to

conserve Indonesia’s natural resources.

Green PNPM is the five year (2008–2012) uS$ 51.7 million

environmental pilot–project of the Indonesian Government’s

PNPM–Rural program of which the PSF finances uS$ 37.3 and

the Canadian International Development Agency finances

uS$ 14.4 million. The pilot–project disburses block grants

and provides technical assistance to target locations in eight

provinces on the Islands of Sulawesi and Sumatra which are

specifically earmarked for community investments in ‘green

sub–projects’ — activities focused on NRM, environmental

conservation, and renewable energy (RE).

In 2008 Green began operating in 33 sub–districts in 4 target

provinces on Sulawesi: North Sulawesi, South Sulawesi,

Southeast Sulawesi, and west Sulawesi. In 2010 the pilot

more than doubled its geographic coverage and expanded

to reach an additional 45 sub–districts within 4 target

provinces on Sumatra: Aceh, Bengkulu, North Sumatra, and

west Sumatra. within each of these provinces, there are three

to five target districts and nine to fifteen target sub–districts

in which Green PNPM’s technical components are currently

operational.

The majority of Green PNPM’s budget (uS$ 28.8 million,

67% of total budget) finances block grants disbursed

at the sub–district and district levels for the planning

and implementation of community–selected green

sub–projects. Every Green PNPM target sub–district receives

a community block grant of Rp 500 million (approximately

uS$ 55,600). Each of the target sub–districts also receives

an Rp 100 million (approximately uS$ 11,100) operational

planning grant to organize village meetings to facilitate the

sub–project selection process.

Since 2010, Green PNPM has been fully operational in all

planned target sub–districts on Sulawesi and Sumatra.

In 2011, a qualitative evaluation was completed and indicated

that the pilot has been effective in supporting community

investments in a broad range of activities focused on NRM,

conservation, renewable energy (RE), and environmentally

sound income generating activities. Also during 2011, an

uS$ 18 million additional financing package was finalized to

ensure sufficient funds were available to disburse two more

rounds of Green PNPM block grants (2011 and 2012). To

improve the quality of technical assistance available, two CSO

grant agreements were extended and the CSOs’ approach


refined to focus more on assisting communities in the design

and implementation of more sustainable ‘green sub–projects’.

The 2011 round of block grants activities supported

the following:

zz Income generating activities: Communities

implemented 306 sub–projects disbursing Rp 16.4 billion,

which were topped up with community contributions

totaling Rp 2 billion. The sub–projects included activities

such as training of farmer groups to increase production,

establishment of organic fertilizers small businesses,

and coconut–shell charcoal briquette production, crab

fattening, orange grove maintenance, bee–keeping,

seaweed farming, and nursery development. Over

22,500 households benefitted from these activities and

about half of the beneficiaries were women.

zz Conservation activities: The project disbursed Rp

2.4 billion, with additional community contributions

of Rp 2.6 billion and communities implemented

271 sub–projects which focused on conservation

activities, which included training communities to

select, cultivate, and plant ecologically appropriate

coastal and forest plants to rehabilitate ecologically

sensitive conservation areas, and measures to combat

erosion in watershed areas. About 30,000 households

benefitted from these activities and more than half of the

beneficiaries were women.

zz Renewable energy: RE block grants disbursed Rp

54.4 billion, with additional community contributions

of Rp 3.1 billion. Communities implemented

134 sub–projects, including 61 micro–hydro power (MhP)

schemes supporting rural electrification and providing

energy access for remote villages. The implementation

of MhP schemes such as small–scale ‘village utility’

projects differs significantly with regard to design,

construction and management from more standard

PNPM implemented sub–projects (e.g., a simple bridge or

road). The lack of qualified technical assistance provided

by the NMC to MhP construction continued to delay

implementation, with the project’s technical support

unit being stretched beyond its capacity to fill this

technical assistance gap. The contracts for 15 additional

the use of biogas from household waste illustrates how green investments can create economic benefits for communities while helping preserve indonesia’s natural resources.

38wINDOw ONE

MhP specialists to fill this gap were being finalized at the

end of the year. Construction of the MhP schemes will

accelerate in 2012 and plans to extend the project into

2013 to complete activities will be considered as needed.

Also during 2011, the NMC launched an overhauled MIS,

and associated training was delivered to the facilitators

responsible for collecting data and maintaining the system.

The MIS is vastly improved. Revised performance target

indicators for GOI executed activities and CSO executed

activities were also agreed in 2011, and the Monitoring

Plan and Qualitative Evaluation Plan were finalized. The

GOI and world Bank agreed on a number of qualitative

evaluations and studies to be conducted over the next

nine months. These studies are designed to assess: (a) the

cost–effectiveness/return on investment on MhP schemes;

(b) economic impact of ‘income–generating activities’; and

(c) possible positive spillover effects from Green PNPM in

other areas. They will used as input for concept development

for a ‘performance based’ model for NRM/RE Block Grant

disbursements in the future.

In 2012, as the current pilot draws to a close, the GoI with

support from the PSF will assess its progress, draw on lessons

learned, and innovate further the green agenda under Cluster

II, including through the core PNPM–Rural program. Thus

the priorities for 2012 include: (a) completing studies on the

quality of ‘green sub–projects’ implementation during the

pilot phase. These studies will be consolidated to produce a

comprehensive evaluation of Green PNPM. The evaluation will

inform decision–making around which current PNPM Green

activities should become a part of mainstream PNPM–Rural,

and which should be phased out, as well as new initiatives for

future piloting; (b) developing concrete ideas on how best

PNPM–Rural may address pressing environmental issues such

as climate change, and the viability of new activities such

as incentive based payments of improved environmental

outcomes; and (c) working with the GoI and involved CSOs

to ensure disbursement of the remaining block grants for

green sub–projects. Particular focus will be paid to MhP

sub–projects to ensure that they can be completed by

December 2012.

this community is being trained by pnpM Green on how to make charcoal briquettes. it will thus be able to access an alternative source of energy.


Project Development Objective: To make the utilization of natural resources by rural communities sustainable.

Approved Commitments: uS$ 37.34 million; Total Disbursements: uS$ 16.24 million

Closing Date: December 31, 2012

KPI 2010 2011 2012 Target

# of project beneficiaries (cumulative) 863,957 1,106,397 912,000 (original target to be revised)

# of environmentally–sound and/or natural resource management sub–projects implemented by communities in target location (cumulative)

1,610 2,243 2,500

# of households deriving energy from renewable sources (cumulative)

15,235 25,678 30,000

Component 1. Block Grants for ‘Green–Sub–Projects’

uS$ million of Block Grant funding disbursed to finance community selected subprojects in target sub–districts (cumulative)

PSF 7.22 16.02 26.00

CIDA+PSF 14.63 24.88 32.40

# of renewable energy (RE) sub–projects financed and being properly managed by participating communities (cumulative)

74 208 250

# of households receiving electricity through MhP schemes (cumulative)

9,249 13,824 19,098

Sustained community maintenance of green subprojects after annual block grant funding is fully disbursed

n/a 40% 75%

Component 2. Facilitation support

# of green facilitators trained 133 146 160

level of participating villages demonstrate that green sub–projects are aligned with RPJM–Desa

n/a 30% 80%

level of community and local government awareness of links between improved NRM practices and enhanced livelihood

n/a 60% 70%

level of community satisfaction with quality of NRM TA provided by facilitators

n/a 60% (estimated; to be confirmed by

planned study)

70%

Component 3. Monitoring, Evaluation and Studies

MIS redesign Ongoing Completed n/a

40wINDOw ONE

uNlIkE on the crowded, fertile island of Java, many of the

districts in Indonesia’s sparsely populated outer islands, in

Sumatra, Sulawesi, kalimantan and Papua, cover wide areas.

In these districts, small communities are spread out and

separated by great distances. This adds expense and creates

serious challenges for the development of road systems,

power and water supplies, as well as health and educational

systems. As a result, people in these outer islands are often

deprived of basic services that people in towns or densely

populated rural areas take for granted.

Amongst other disadvantages, it is often prohibitively

expensive for PlN, the state electricity company, to provide

electric power to isolated communities. Thus, without

resorting to expensive, diesel fueled generators, craft workers

and home industries cannot use power tools to drive their

enterprises. It is hard for farmers to store or process their

produce, which often means that they are often forced to

sell it under duress and at low prices. Poor householders

must either limit their activities to daylight hours or spend a

significant proportion of their income on kerosene for lamps.

Schools cannot light class rooms or operate computers or

other equipment. health workers cannot safely store vaccines

and other sensitive chemicals. It is hardly surprising, then,

that one of the top priorities of local communities in remote

areas is to develop a steady, reliable and affordable supply of

electric power.

Abdul Aziz is the head of a team elected in 2008 by members

of his community to devise and implement a micro hydro

electric power generation system in the village of Peradun

Temeras in Jambi province, Sumatra. A respected member

of the community who makes a modest living as a farmer

and carpenter, he describes his community as follows: “The

village consists of 130 family units. Most of the people here

are farmers, growing rubber or coconut for sale in Bangko,

the nearest major town. By road, in the dry season, it takes

about four hours to reach. Before the Rural PNPM Mandiri

project, the only electricity here came from generators. Only

a handful of the richest households could afford a generator.

A television was a luxury beyond the reach of practically

everyone. Just to light a small house with kerosene lamps

cost Rp 450,000 per month, about a half of the basic wage in

the district. Poor families had to live in the dark.”

when communities in the sub–district were invited to

submit a proposal for funds under the Rural PNPM Mandiri

program, the villagers in Peradun Temeras were unanimous

that there top priority was to secure a supply of electricity.

Abdul Aziz says that they considered a number of proposals:

“The foliage here is thick and the rainy seasons are long. Solar

power would be too unreliable. however, we have a plentiful

supply of rivers. we believed we could harness those rivers to

create power.”

under the Rural PNPM Mandiri program, a community is

usually required to utilize its own resources, in terms of

building materials, labor, and existing facilities to develop

the facilities to which it aspires. Additional funds are then

provided by the program to secure equipment, materials or

other resources required to facilitate the program. As Abdul

Aziz says: “we have a river that flows in all seasons. we have

an abundant supply of rocks and clay. And we have farmers

and laborers who are used to hard work. we proposed that if

PNPM could provide us with the funds to buy the generator,

the community could build a 250 meter course way to direct

the water with our own resources. Alhamdulillah, because

we could demonstrate a clear need for the facilities and a

willingness to dedicate our own resources to obtaining them,

our project was approved.”

lET ThERE BE lIGhT


The project required a massive effort on behalf of all

members of the community. To build the course way, groups

of local women carried a total of 580 cubic meters of rock,

while men dug a wide trench in the hard, clay ground with

spades and shovels. Abdul Aziz describes how the villagers

were deployed: “we set up 21 small working groups, with

each group responsible for an eleven meter stretch of the

course way. That way, the whole village could monitor and

assess the work of each small group. If one group failed to

keep up, the rest of the village could put pressure on them.

But no–one was paid for their labor. we all knew that the

reward would come when the village had electricity.”

when the community had demonstrated sufficient progress,

the PNPM program released funds amounting to Rp

341 million to purchase the generator and other equipment.

Abdul Aziz describes the tendering process as follows: “The

whole village was involved in selecting the supplier from

three tenders. It was a stressful and emotional process. After

all the work we had put in, it would have broken our hearts

if the project failed because the supplier wasn’t able to fulfill

his promises.”

The community was not disappointed. By 2009, the generator

was supplying electricity to 130 families from the village,

with a total capacity of 50,000 Mw. As Abdul Aziz says: “That

is enough for power from 3pm to 7am every day. we’ve only

had blackouts twice this year. Each family pays Rp 500 per

watt, which is less than a city dweller pays. To light a small

house, it now costs less than Rp 40,000 per month. Children

can study at night. women use electric tools to make

coconut milk. The school has a computer now. As a carpenter,

I’ve purchased power tools that I use to make door frames

and other timber products. Because of that, my income has

gone up significantly. I was never paid a single rupiah for

the work I did and neither was anyone else. But the entire

community has benefitted. we did it through our own hard

work, it wasn’t something the Government did for us.” ∞

‘we offered to build a 250 meter canal with our own resources if pnpM provided us with funding to buy the generator’, says Abdul Aziz, illustrating how villagers prioritize access to electricity.

42

PnPM geneRasI14

A cursory examination of the Report on the Achievement of

the Millennium Development Goals in indonesia shows that,

looking at the nation as a whole, apart from a few small

bumps in the road, Indonesia has made significant progress

towards reducing poverty, improving gender equality

at schools, reducing tuberculosis and the prevalence of

malnutrition amongst children, achieving universal literacy

and primary enrolment, and developing more open markets.

unfortunately, development indices and the MDG report

cards focus on data aggregated at the national level.

while the achievements listed in the report may reflect

real economic growth and improved living conditions for

the majority of Indonesians, they hide the fact that not

all Indonesians have benefitted to the same extent. Even

looking at the aggregated national data, it is clear that the

country continues to be characterized by a high rate of

14 The full English title of this program is “National Community Empowerment Program — Healthy and Smart Generation” . However, it is usually referred to by its short Indonesian title, PNPM Generasi.

poverty and a lack of services for its most vulnerable citizens,

including women and children.

The report claims to have “already achieved” a major step

towards Goal 1 (“Eradicate extreme poverty and hunger”),

with a reduction in the proportion of people with a per

capita income of less than one dollar per day declining from

20.6% in 1990 to 5.9% in 2008. however, serious questions

remain about whether this indicates a comprehensive

reduction in the proportion of people living either in

poverty or highly vulnerable to price and income shocks.

There is broad consensus that the line of “one dollar a day”

underestimates the total number of poor: consequently, the

Indonesian Government has set its own poverty level slightly

higher. Even when the poverty line is set at one dollar per

day, 13% of Indonesia’s population of 240 million people still

lives below the national poverty line. In addition, nearly half

the population remains extremely vulnerable to poverty,

living on less than two dollars per day.15

15 United Nations Development Programme: Indonesia: MDG, accessed at http://www.undp.or.id/mdg/index.asp

pnpM Generasi supports the realization of Millennium Development Goals in the education and health sectors. investments in early childhood education are one of the strategies chosen by communities to improve their education outcomes.


Before children had to walk 7km to go to school. women proposed the building of 3 semi-permanent classrooms in the village to pnpM Generasi, and children are now able to study close to home.

In 2007, the Ministry of health’s Basic health Research

survey reported that Indonesia had achieved the first

Millennium Development Goal of reducing the prevalence

of underweight among under–five children to 18%. The

same survey, however, demonstrated an alarmingly high

rate of stunting, with 37% of children under five years old

suffering. This means that one out of every three children in

this age group is shorter than the standard height for their

age. In some provinces such as East Nusa Tenggara (NTT )

the stunting rate rises to 47%, which means that nearly every

second child in this province is stunted. while globally there

is obviously a relationship between income levels and rates

of stunting, it is also true that other factors, such as the level

of awareness of good parenting and nutritional factors,

has a strong impact on rates of malnutrition, and that this

awareness can be improved even in the absence of increases

in income. Indonesia still has room to make significant

progress, as shown by the fact that countries such as Togo

and Ghana, which have lower average income levels than

Indonesia, nonetheless have a better record in reducing rates

of stunting.

while there has been measured progress towards achieving

its maternal health MDG with the maternal mortality rate

falling from 390 deaths amongst mothers per 100,000 live

births in 1991, to 228 deaths in 2007, the rate is still higher

than any other country in Southeast Asia. The rate is more

than twice the figure considered “acceptable” according to

MDG’s defined sub–goals16.

Significant inequalities and imbalances in the level of human

development, particularly between major cities and isolated

rural areas and between the resource–rich and economically

developed western regions and the deeply impoverished

east persist. For example, the current maternal mortality

rate in NTT is 306 per 100,000. This figure, which is 34%

16 The defined target for 2015 is 102 deaths per 100,000 live births.

the community in tenilo Village in Gorontalo proposed a different solution, with the purchase of a boat to transport kids to school. children used to have to walk 4km to go to school, resulting in high drop out rates.


the regular monitoring of the health of children under five is crucial to ensure they stay healthy.

higher than the national average, has remained stubbornly

unchanging for more than a decade and is comparable to

the rate recorded across sub–Saharan Africa. Similar figures

exist for Papua and a number of the “outer islands”. It is hardly

surprising that the areas with the worst rates of maternal

mortality also have the lowest incomes, a greater number

of children who are short, skinny and undernourished, the

worst record for the provision of health services, including

vaccinations, and the worst levels of education.

however, it is also true that significant pockets of poverty

with poor access to decent services persist even within the

relatively better off provinces, with some provinces, such as

west Java, having a particularly poor record in the area of

maternal and child health, despite relatively high average

income levels. Again, this indicates that while income

poverty is an important factor, low levels of community

awareness, a failure to ensure inclusion of the poorest and

most vulnerable, and other factors can also continue to

exert a negative effect on mortality rates and other health

outcomes. In education, Indonesia has come very close

to achieving universal primary school enrolment, but real

challenges remain with quality of education received.

Again, it is Indonesia’s isolated rural regions and its eastern

provinces where the quality of education is lowest. Despite

some reforms to encourage the deployment of teachers in

these areas, schools in these zones are often characterized by

poor standards and facilities, particularly a lack of qualified,

dedicated teachers and teaching materials.

Access to secondary schools in some areas remains limited

as demonstrated by the fact that since the implementation

of minimum educational standards for village heads and

other positions, these positions can stay vacant for years —

simply because no–one in the community has completed

secondary school. One reason for this is that while access to

primary schools has improved dramatically over the past two

decades, access to secondary schools is still limited. while

school fees at the secondary level are now being abolished or

reduced in many districts, many young people remain unable

to access higher education because they cannot afford other

costs associated with education, including transportation to

school, uniforms, books, and other materials.

So, persistent imbalances remain both between large regions

and at lower levels, with certain villages or communities,

particularly those living in mountainous or isolated areas

or otherwise with limited access to transport infrastructure,

having a far higher than average level of poverty, regardless

of how it is measured. Even in relatively prosperous areas

with good facilities, a significant portion of the population,

including women, disabled people, landless laborers,

and ethnic out groups, and others from marginal and

disadvantaged groups, derive few direct benefits from

development initiatives.

In 2007, as part of its efforts to achieve its health– and

education–related MDGs, the Indonesian Government

launched the PNPM Generasi pilot program to reduce

poverty, maternal mortality, child mortality, and to ensure

universal coverage of basic education. PNPM Generasi uses

participatory planning and community block grant funds

to facilitate the achievement of 12 education and health

target indicators. The program uses community–based

targeting mechanisms and performance bonuses to provide

incentives to communities to allocate resources to poor and

disadvantaged households who are unwilling or unable to

use health and education services available locally.

An impact evaluation completed in 2010 showed that PNPM

Generasi was successful in facilitating the achievement of

target outcomes for immunization coverage, prenatal care

visits and assisted deliveries, with increases ranging from

10–11%. Child malnutrition rates fell 2.2% as a result of the

program. PNPM Generasi led to strong increases in coverage

of all types of maternal and child health services delivered

through village health post activities.

In addition to stimulating community demand for

and utilization of services, the program has improved

communities’ levels of awareness and commitment to

providing and monitoring services, as evidenced by the

increase in the number of health volunteers active in

PNPM Generasi communities and increased community

participation in activities such as junior secondary school

committee meetings. The program has even led to increases

in provider effort and quantities, including an increase in

the number of hours midwives spent providing services


Among other goals, pnpM Generasi is designed to support the achievement of universal primary education.

in villages; an increase in the number of junior secondary

schools available (through the construction of satellite

classrooms); and an increase in the number of contract

teachers working at junior secondary schools.

In education, the program increased junior secondary school

enrollment rates in NTT province. however, the program’s

overall contribution to improving education indicators has

been less pronounced, perhaps due to the already high levels

of primary school enrollment in many program locations. As

a result, the PSF is working with the Government’s executing

agency for PNPM Generasi, PMD, and the Ministry of

Education to improve program responsiveness to community

demands for early childhood education, and to leverage the

program’s community approaches to improving awareness

of children with disabilities’ right to an education, and to

support community investments in activities that improve

access to education among the disabled.

As of 2011, PNPM Generasi operates in 2,401 villages in

231 sub–districts across six provinces: west Java, East Java,

Gorontalo, North Sulawesi, NTT and west Nusa Tenggara

(NTB). In 2011, community block grants worth approximately

uS$ 37.5 million were disbursed. Communities spent 36% of

these funds on initiatives to support education and 62% on

activities related to health. Roughly half of the block grant

funds in education were spent on school supplies, including

textbooks and uniforms for poor students. A further 28%

of funds were spent on scholarships and transportation

subsidies for poor students. In health, around half of block

grant funds were spent on supplementary feeding for

lactating mothers, infants, and children under the age of five.

15% of funds in health were used to upgrade local health

facilities, while 13% was used to subsidize transportation

costs of poor households to use pre–natal and neonatal

health services. MIS data on direct beneficiaries is currently

being compiled, quality checked, and uploaded to the

web–based server. however, Initial MIS reports show that

over 212,000 women and children received nutrition

counseling and support, 16,000 cases of underweight

children were eliminated through supplementary feeding

interventions, and 25,600 community health volunteers

pnpM Generasi led to strong increases in coverage of all types of maternal and child health services, delivered through village health post activities.


received training and operational support in 2011. Data on

2011 program outputs will be revised and updated as data

becomes available.

The declining share of block grant resources allocated to

education relative to health in 2011 compared with previous

years suggests that communities are spending funds where

they are most needed. while access is a challenge for the

poorest and disabled, primary school enrollment tends to

be high in participating villages. Funding from education

programs like BOS and BSM (Bantuan Siswa Miskin) can

help poor households cover the costs of primary school

enrollment and attendance. Two of the programs target

education indicators are therefore relatively easy for

communities to achieve. In contrast to education fewer

Indonesian Government resources are invested in health

service delivery and in programs that improve access to

health services among the poor. As a result communities

are investing a larger share of PNPM Generasi resources

in activities that improve performance in target health

indicators that are more difficult to achieve.

On the downside, delays in processing revisions to the

executing agency’s budget document hampered program

expansion in 2011. To avoid risks associated with the

bunching of disbursement of program budgets late in the

Indonesian Government’s fiscal year, the implementing

agency took the decision to reallocate funds for

57 sub–districts to the 2012 budget. As a result performance

in mobilizing sub–district facilitators and computer operators,

training district and sub–district facilitators, and MIS data

entry dipped in 2011. To avoid similar difficulties in 2012,

the executing agency has established a dedicated PNPM

Generasi Program Secretariat within the Directorate for

Empowerment of Community Social and Cultural Institutions

(pemberdayaan Adat dan sosial Budaya Masyarakat—

Sosbud). This is the centerpiece of a series of actions aimed

strengthening internal management capacity required to

support PNPM Generasi expansion.

In August 2011, the Millennium Challenge Corporation

negotiated a compact with The Indonesian Government,

which includes a grant of uS$ 90 million to be disbursed

pnpM Generasi has also supported improvements in service provision, e.g., an increase in the number of hours spent by midwives providing health care and reproductive services in targeted villages.

50wINDOw ONE

through to 2017 to support the further expansion of

PNPM Generasi. The program is part of the Government’s

strategy for improving nutrition outcomes and reducing

stunting, which recognizes the importance of improving

health provider capacity and incentives to respond to

increased community demand with high quality nutrition

education, parental counseling and sanitation services.

while detailed design and implementation arrangements

are being discussed with the Government, the program

will consist of an expansion of PNPM Generasi to

125 sub–districts in districts with high prevalence of stunted

children. On the supply–side, the program will support

intensive technical training for local nutrition workers, a

behavioral change and community outreach campaign,

micronutrient supplementation, and performance based

incentives for service providers grounded in PNPM Generasi

community–generated information on service delivery status.

In 2012 and following years, the Indonesian Government

plans to expand the coverage of the PNPM Generasi program,

particularly in areas with poor health and education facilities

and limited coverage. The Government recognizes the

potential impacts of rolling out PNPM Generasi’s flexible

model in parallel with the program keluarga harapan (Pkh),

a household–based conditional cash transfer targeting

coverage of three million of the poorest households

throughout the country by 2014. PNPM Generasi will

complement Pkh by enabling communities to fill small–scale

supply gaps that generate higher costs and create barriers to

access among the poorest households, organizing collective

awareness–raising and health and nutrition education

sessions, and targeting resources to households who may not

be recorded in Pkh’s beneficiary registry. In June 2011, the

Indonesian Government countersigned a grant agreement

for uS$ 28.1 million in additional financing from PSF to

expand PNPM Generasi coverage to 79 poor sub–districts

in NTT, west Sulawesi, and Maluku provinces. A follow–up

tranche of uS$ 35 million was submitted for JMC approval,

and will expand PNPM Generasi to a further 150 sub–districts

by 2013.

pnpM Generasi has improved communities’ level of awareness and commitment to providing and monitoring services, as evidenced by the increase of health volunteers in pnpM Generasi communities.


*estimated based on extrapolations from data from 65% of participating communities uploaded to program Mis.

project development objective: The development objective of PNPM Generasi is that villagers in PNPM–Rural locations benefit from improved socio–economic and local governance conditions. The program targets three Millennium Development Goals (MDGs) lagging in Indonesia: achievement of universal basic education, reduction in child mortality, and improvement in maternal health.

approved Commitments: uS$ 42.73 million; Total Disbursements: uS$ 35.95 million

Closing date: December 31, 2012

KPI 2010 2011 Est 2012 Target

# of direct project beneficiaries (male) 1,941,430* 1,795,598 2,200,000

# of direct project beneficiaries (female) 1,482,696* 1,835,220 2,300,000

# of sub–districts with communities benefiting from improved access to health and education services

212 231 370

Component 1. Sub–districts grants

uS$ million amount disbursed 32.6 37.5 52.4

% of sub–districts benefiting from increased investments in priority health and education targets

100 80 95

% of women and poorest community members participating in planning and decision–making meetings

63 64 65

Component 2. Capacity–building

% of planned facilitator and computer operator positions (district and sub–district) filled

89 70 90

% of program facilitators (district and sub–district) receive agreed upon training days in participatory planning methods and health and education topics

89 65 90

% of data from target communities uploaded to the program web–based MIS

65 52 85

Component 3. Project Management Support

90% of planned program consultant positions (province and national) filled

88 70 90

70% of sub–districts receive program operations manual and health and education information materials

100 100 70

Program impact evaluation reports finalized and disseminated Mid–term report

published

Final report finalized

Final report published

and disseminated

by Q1

# of implementation support missions completed with participation from Government

11 14 17

# of program facilitators (district and sub–district) receiving supplementary training and capacity building support

n/a 44 76

# of thematic, multi–sectoral workshops involving national and local departments of health and education held

n/a 3 3

52wINDOw ONE

ThE district of larantuka in East Flores is sparse and dry,

one of the poorest places in Indonesia. while corn, sago,

vegetables and fruits grow in the gardens on the thin land

around the villages, incomes are low and people often

spend what little spare cash they have on junk food and

snacks. when the Government implements food distribution

programs for the poor, it hands out sacks of low quality rice

shipped in from Java. Instead of providing gifts of free food,

Delegatus Sosial, a non–prostelyzing Catholic social welfare

agency receiving support through the PNPM Generasi

program, encourages farmers to grow traditional crops with

minimal use of pesticides and artificial fertilizers. The villagers

use these crops to produce tasty, nutritious cakes and

savories that the kids love.

when infants and children are badly nourished, it has a

devastating impact on their health, educational achievement

and productivity for the rest of their life. In the rural districts

of NTT, acute starvation of the sort that occurs after a long

famine is now relatively rare, although it still occasionally

occurs. Rather, a huge proportion of children are chronically

malnourished. Across the district of East Flores, children are

too skinny and too short for their age. Often, it is not the

case that their families have no food or cash resources at all.

Rather, available resources are not used optimally to ensure

that children are well nourished.

The director of DelSos, Rosarius Yansen Raring, generally

known as Father Yansen, says that the poverty in the areas

around larantuka is not due to lack of natural resources.

Rather, he says, the poverty of the district has been due to

the failure to tap traditional wisdom to use these resources

optimally. Rather than being helped by government and

aid agency programs, the problem has been exacerbated

by programs that foster an attitude of dependence. “A

few years ago, a big aid agency sent special biscuits from

overseas for children suffering malnutrition. They sent the

same biscuits from the same factory to Indonesia, Africa,

haiti and Cambodia. No–one here could eat them. Parents

left them on the floor and kids just ate a handful of rice and

salt instead of the biscuit. Instead of spending money on

expensive biscuits from overseas, the Government should be

allocating resources to encourage people to develop their

own resources,” Father Yansen says.

In the areas where DelSos is conducting its programs, it

is very rare for funds to be assigned for food handouts.

Rather, aid is directed towards the provision of training in

agricultural techniques and agricultural equipment which is

managed, owned and operated by small groups of farmers,

often consisting of between fifteen to thirty ‘household

heads’. These small neighborhood groups form the unit

through which training is provided. Each group will have

an organizer, who is usually one of the group’s members

who can read and write and therefore fulfill administrative

tasks. In addition, each village has three local kader, or local

community facilitators, each with their own responsibilities.

These kader have been given special training in organic

and environmentally friendly agricultural techniques that

emphasize the maximal use of natural resources to yield

crops that are best suited to the terrain. Almost invariably,

these are traditional crops that were grown and consumed

almost exclusively even a generation ago, but have more

recently been disparaged as unfashionable and kampungan

(or ‘hick’).

“Only some parts of NTT are really suitable for cultivating rice,”

says Father Yansen. “A generation ago, people mostly ate corn,

coconut, green vegetables, fruits, and palm sugar. The public

health department used to say that rice was more nutritious

than corn. That depends on how it’s combined with other

food and vegetables. Corn can be just as nutritious as rice.”

hARVESTING AND EATING lOCAllY IN lARANTukA, EAST FlORES


however, Father Yansen acknowledges that there is no point

encouraging farmers to grow traditional crops if they don’t

want to eat them. Therefore, the DelSos program strives to

increase demand for healthy food products by encouraging

the production of food that people want to eat. This involves

both rediscovering traditional recipes and exploring new

ones. The neighborhood groups involve people, mostly

women, remembering dishes from their youths and deciding

if they are worth resuscitating. They also involve finding

recipes for modern Indonesian dishes on the internet to see

if the ingredients could be replaced with local ingredients to

produce interesting innovations. DelSos has now prepared

a recipe book which evolves as new creations are added.

The book can be transferred between different villages and

communities, enabling a sharing of local traditions.

One means of establishing and expanding the demand for

local foods has been the monthly feast held on days mothers

and infants visit posyandu (village health posts). Prior to

these meetings, participants pool local ingredients produced

in their own gardens. For the recipes used, very few extra

ingredients unavailable locally are needed, although there is

often a shortage of eggs and other sources of protein. with a

small cash contribution, usually only Rp 1000 per family, and

the local resources, an impressive array of cakes and snacks

can be produced. while in other areas, children have to be

dragged to the local clinic, in areas where DelSos operates,

the day is regarded as a treat and a picnic, swarming with

children chewing on healthy cakes. The event serves to

introduce and share new dishes which other women may

want to try themselves.

The mothers and infants days were held only once a month,

so the food provided at these events was not regular

enough in itself to sustain good nutrition. however, in 2009,

the PNPM Generasi program provided funding to allow

the midwives and community volunteer health workers, or

kader, to provide more intensive supplementary feeding to

children identified as malnourished. By utilizing the recipes

and principles espoused in DelSos’ local harvest program,

small amounts of cash could be matched and leveraged with

community contributions, making this an extremely cost

effective means of treating malnutrition. “Actually, for any

program to be hsuccessful, most of the contribution has to

come from the community itself,” Father Yansen says, “The aid

provided by DelSos or by any charity or government agency

should just be a catalyst to help the community use its own

resources effectively.” ∞

A little girl enjoys her meal during the ‘mother and children’ day, Rangkaha, nurri, ilebura, flores timur. photo: Josh estey.

54

DIsasTeR ManageMenT suPPoRT

On December 26, 2004, the deadliest tsunami in human

history resulted in the deaths of almost quarter of a million

people in 13 countries in a 30 minute period when a

series of waves struck coastal communities. Of these, the

overwhelming majority of deaths occurred in Aceh province,

with the total number amounting to an estimated 167,736, in

addition to more than half a million people being displaced

or losing their homes.

while this tsunami was the most catastrophic natural disaster

to strike Indonesia in history, the country has also been

subject to a number of other major natural disasters since,

including earthquakes, floods, forest fires, landslides, mud

volcanoes, mudflows and storms. These have resulted in

major losses of life and destruction of property. The 2010 Asia

pacific Disaster Report states that people in the Asia Pacific

region are four times more likely to be effected by natural

catastrophes than those in Africa and 25 times more likely

than those in North America or Europe. This report estimates

that more than 18 million people were affected by natural

disasters in Indonesia from 1980 to 2009. The same report

ranks Indonesia fourth highest amongst Asia Pacific countries

that have been hit by natural disasters from 1980 to 2009. The

2009 Global Assessment Report on Disaster Risk Reduction

also ranked Indonesia highly on its level of human exposure

to disasters — ranking third out of 153 for earthquakes and

first out of 265 for tsunamis.

In 2010, in wasior, west Papua, heavy rains resulted in a river

overflowing its banks, causing landslides and killing at least

145 people. In the same year, an earthquake measuring 7.7 on

the Richter scale occurred off the western coast of Sumatra,

causing widespread destruction on the Mentawai islands.

During this earthquake, approximately 20,000 people were

displaced and up to 500 people killed. Finally, in October,

Mount Merapi in Central Java erupted violently, causing

numerous pyroclastic flows down the heavily populated

slopes of the volcano. More than 350,000 people were

evacuated from the affected area. however, many remained

behind or returned to their homes while the eruptions were

continuing, resulting in the deaths of at least 353 people.

The lessons from Aceh and recovery from natural disasters

elsewhere affirm that the sooner reconstruction and

development can begin the more successful it will be.

Since the Aceh/Nias recovery effort, PNPM has developed a

comprehensive set of operational procedures to expedite

and support disaster recovery. The essence of these special

procedures is a series of modifications to PNPM’s normal

operational manual that speeds up planning and expands

the menu of support to account for the special needs of

emergency situations.

The reason to include PNPM as a key pillar in the country’s

broader disaster recovery efforts is that, typically, during

the period after the initial emergency response, and before

various institutions and line ministries are equipped to

finance full–fledged disaster recovery, communities have little

help in restoring their social and economic infrastructure.

This period can take often more than a year. The Disaster

Management Support project provides a platform and

implementation mechanism to (a) access trust funds

through the PSF; and (b) transfer these resources directly

to communities through block grants to finance disaster

recovery activities.

community members employed by pnpM for the clean up of a village devastated by the eruption of Mount Merapi in wonokerto, yogyakarta.


On December 9, 2010, the JMC approved three grants

totaling uS$ 27 million to support communities affected

by the Merapi and Mentawai disasters through three

ongoing operations: PNPM–Rural, PNPM–urban and

the Community–Based Settlement Rehabilitation and

Reconstruction (Rekompak) project.. while the projects

pre–financed recovery activities, there were significant

delays in JMC–approved resources reaching disaster–affected

communities because of the rigidity of Government budget

systems and procedures. More engineers are also needed in

all post–disaster locations to ensure the quality of design and

construction and to help avoid delays in disaster responses.

A case study is being carried out to draw lessons on how to

avoid similar situations in the future, and to clarify a critical

path for the timely disbursement of grants that go through

the DIPA.

The PSF resources began disbursing in August 2011. As of

yearend, uS$ 11.8 million had been disbursed, generating

over 830,000 employment paid days through cash–for–work

programs which supported clean–up activities as well as the

reconstruction of basic infrastructure and housing units in

disaster affected communities, with the following geographic

coverage: 196 villages (PNPM–Rural), 38 keluharans

(PNPM–urban), and 45 villages (Rekompak).

Cash for work activities were closed in 2011, and the

remaining funds will be used as follows in 2012:

zz PNPM–Rural: Over uS$ 8 million will be allocated for

rehabilitation and reconstruction.

zz PNPM–urban: uS$ 700,000 will be used for Disaster Risk

Reduction (DRR) Activities, once site plans (currently

under preparation) are finalized.

zz Rekompak: Over uS$ 6 million will be disbursed for

housing and infrastructure assistance to 45 villages

based on community settlement plans (currently being

finalized). Over 1,150 houses will be constructed in 2012.

Project Development Objective: To support the Government of Indonesia’s (GoI) disaster management efforts at the community level through three ongoing operations: PNPM–Rural, PNPM–urban and the Community–Based Settlement Rehabilitation and Reconstruction (Rekompak) projects.

Approved Commitments: uS$ 27.00 million

Total Disbursements: uS$ 11.82 million


KPI 2010 2011 2012 Target

# of individuals enrolled in cash–for–work programs (cumulative) n/a 177,411 185,000

# of employment days generated (cumulative) n/a 831,795 892,000

PNPM–Rural

uS$ million disbursed (cumulative) n/a 5.87 14.10



PNPM–Urban




# Disaster Risk Reduction activities implemented n/a Site plans under development

25

Rekompak


# of community settlement plans completed n/a Ongoing 45

# of houses built n/a 0 1,156

56wINDOw ONE

PnPM–RuRal III aDDITIonal fInanCIng (CRIsIs)

while Indonesia weathered the global financial crisis and

subsequent global economic volatilities better than many

countries, it still incurred negative economic impacts,

including a reduction in employment and incomes. Nearly

50% of Indonesians live on less than uS$ 2 per day and

14% of the population is below the official national poverty

line. Sixty percent of those below the poverty line are in

rural areas. The rural poor are particularly vulnerable to rice

price shocks, with two thirds of their income spending on

food and one quarter on rice, consuming more than they

produce. workers in rural areas tend to be employed in

the informal and agricultural jobs, which tend to not offer

as much income security. Approximately 67% of informal

workers in Indonesia live in rural areas. Given Indonesia’

strong economic growth, non–agricultural employment

growth has been disappointing, providing rural workers

with limited opportunities to find better jobs and improve

household incomes.

The Indonesian Government has identified and requested

PSF financing for seven provinces where significant

percentages of rural households live below the national

poverty line and where a majority of the sub–districts in

the provinces perform well under the PNPM–Rural program.

This is expected to increase the impact of the program in

these areas. The seven provinces are: Bengkulu, Gorontalo,

Central Java, East Java, Maluku, NTT, and Central Sulawesi. In

these provinces, 433 sub–districts in 86 districts will receive

additional financing allocations based on the population size

of the sub–district.

The grant is financing the incremental scale up of

PNPM–Rural project activities to enhance the poverty

impact of the project in seven poor provinces in Indonesia.

The project provides grants to beneficiaries for (a) planning

for community development, including the preparation

of sub–grant proposals, (b) training and capacity building,

including in development planning and investment, (c)

investment in social and economic infrastructure identified

through community development planning, and (d) investing

in activities identified through community development

planning using revolving funds.

Funding for this project was approved in June 2011. Of the

total allocation, uS$ 12.3 million in sub–district block grants

(or 38% of the total allocation) has already been disbursed

to uPk accounts in 354 sub–districts in the seven target

provinces. Allocations for each province vary based on needs,

with sub–district grants ranging from Rp 500 to 800 million.

Field supervision suggests that criteria used to target funds

were not optimal, as some of the poorest sub–districts

in target provinces did not receive funding, while richer

sub–districts did — particularly in pemekaran areas.

The regular PNPM processes and systems are being used for

sub–project selection, implementation and accountability.

Feedback from the field suggests that sub–project

implementation is progressing well, although late DIPAs have

created delays in some areas. As with PNPM and its linked

pilots, investments in facilitation and training are less than

needed and planned for. The additional facilitators budgeted

for were not provided. In a context where PNPM facilitators

are already overloaded and oversight systems stretched

thin, adding sub–projects without adding human resources

creates a risk of accentuating implementation challenges

in target sub–districts (e.g., lack of proper oversight

of community procurement or of adequate technical

supervision of construction works).

Data on funded sub–projects is currently available for

four provinces out of the seven targeted. In these four

provinces alone, 2,854 sub–projects have been selected by

communities to receive financing under this Project. The vast

majority of these involve the construction of basic village

infrastructure (e.g., roads, bridges, irrigation and water supply,

markets), followed by health and education activities (e.g.,

construction of schools and health posts, procurement of

equipment, scholarships and incentives etc).

The remainder of the allocation for sub–district block grants

(uS$ 19.2 million) will be fully disbursed and utilized in 2012.

PMD may also request a no objection to reallocate funds

from TA to block grants. The total number of completed

sub–projects by the end of 2012 should be around 3,200.

Interim measures may be needed to assure better data

on post–crisis funds and activities as the approved major

redesign of the PNPM Rural MIS and reporting set–up is

carried out. ∞


Project Development Objective: To help finance the incremental scale up of PNPM–Rural III activities to enhance the poverty impact of the project in 7 poor provinces in Indonesia.

Approved Commitments: uS$ 32.7million


Closing Date: December 31, 2012.

KPI 2010 2011 2012 target

uS$ million disbursed in sub–district grants (cumulative) n/a 12.3 31.5

# of sub–districts benefiting from post–crisis support n/a 354 433

# of sub–projects funded n/a > 2,854

[data not yet available for 3 provinces out of 7]

3,200

# of employment days generated n/a > 100.813

[data not yet available for 5 provinces out of 7]

750,000

in Gorontalo, one of the seven provinces receiving additional grants for post-crisis support, a woman uses a sewing machine in the community learning center built by pnpM. (photo: courtesy of the european union).

58wINDOw ONE

improve school buildings, but that doesn’t necessarily make

education more accessible to the poor. If you talk to poor

members of communities in remote areas, they may tell

you that the greatest difficulty that they face in accessing

educational facilities is the lack of affordable transportation

to take children to the nearest school. The increased budget

allocation for education

has not improved that

situation. PNPM Generasi

recognizes that different

communities face different

challenges. It empowers

each community to create its

own solution for overcoming

these challenges. In rural

communities where the lack

of transportation facilities

is the major issue, then

community groups may

decide that funds made

available through PNPM

Generasi might best be

invested in a minivan that

can serve as a school bus.

Initiatives of that sort have

been implemented through

PNPM Generasi even in areas

such as Banten, less than an

hour’s drive from Jakarta.

while this region might have

a good major road system,

there are still pockets of

the population for whom

the lack of transportation

facilities is the major obstacle

in seeking an education.

In other areas, particularly

in fishing communities

or rural communities

with seasonal crops, the

main factor keeping children out of school may be on the

demand side. At particular times of the year, parents may

require their children to work in the fields. This may prevent

them from attending school. In such areas, mainstream

educational facilities, with rigidly scheduled classes and

vivi yulasWatiDIRECTOR FOR SOCIAl PROTECTION AND wElFARE, ThE NATIONAl DEVElOPMENT PlANNING AGENCY/BAPPENAS

PNPM Generasi is a new instrument for achieving poverty

reduction in this country. The idea was partly inspired by

the experiences of latin American countries with programs

intended to reach the very poorest of the poor, particularly

women and children. The program builds upon Indonesia’s

experience with major community–driven development

programs, gained through

more than a decade of

involvement in PNPM–Rural,

PNPM–urban, and other

programs that preceded

them, to meet the

special needs of women

and children.

PNPM Generasi operates

on the understanding

that the community itself

can develop a process to

identify which among certain

problems is most pressing

and then determine how

that problem can be solved.

The community itself has

to identify the constraints

and determine how to

overcome them. So long as

the community addresses

that problem, they can do it

in any way they choose and


will provide the required

resources. If the community

achieves good results,

then they will be given an

increased allocation in the

next cycle.

Community–driven

development can be a

powerful tool for meeting

the needs of the poorest of the poor, whose needs are often

not met by sectoral programs. For example, despite the huge

increase in the overall educational budget, there are still

more than three million school aged children outside the

formal education system. This increased budget allocation

is being used mainly to pay teachers better salaries and to


syllabuses, may not be suitable to local community needs.

Instead, communities need to be empowered to create their

own solutions, perhaps involving part–time evening classes

open to older students, or with classes scheduled around

harvest time.

In other areas, such as in the forests of Jambi, special schools

have been created to meet the needs of semi–nomadic forest

dwellers, some of whom have traditionally been resistant

to education. Special schools may be necessary to serve

these communities, with the

syllabus and organization

of the school structured to

meet their needs. These are

the kinds of initiatives that

could be supported through

PNPM Generasi because they

involve solutions tailored

to meet highly specific

community needs.

There are a number of

reasons why issues related to

education and mother–and–

child health are better

addressed through a specific

program intended to address

them than through the core

PNPM Mandiri programs,

such as PNPM–Rural and

PNPM–urban. These

programs operate on the

‘open menu’ principle, with a

broad community consensus

required to determine the

allocation of PNPM funds.

Impact studies show that

these programs are quite

effective for building village infrastructure that provides

overall benefits for the community, but not specifically for

the poorest members of the community. It is easier to create

consensus for village infrastructure projects: they involve real,

tangible results that can be appreciated by all members of

the community. Overall, the community may not place such a

high level of priority on maternal health or education.

Part of the reason for this is cultural. Many areas of Indonesia

are still characterized by a patriarchical culture. In some areas,

even relatively prosperous areas, men may traditionally make

all decisions related to a woman’s health. A husband may

resist the idea of his wife being examined by a male doctor

and decide that there is no need. Even an open discussion

of women’s health issues may be taboo. Even in prosperous

areas, this can result in avoidable, unnecessary deaths of

women in labor. To address these issues, it is preferable to

have a specific program involving women’s–only groups

and meetings, with clearly

defined goals and with

technical assistance from

facilitators with a high

level of awareness of the

relevant issues.

PNPM Generasi is not just

about making funds available

to women’s groups, it is

about raising their level of

awareness and knowledge

of issues that affect them.

For example, there is still

a lack of awareness about

the importance of seeking

medical attention in the

case of difficulties while

giving birth. Firstly, group

discussion of this can raise

women’s awareness, then

the discussion can be used

to find creative solutions.

In small districts on remote

islands, PNPM Generasi

funds have been used to

develop a network of boat

“ambulances”, with at least one boat on standby in case a

woman needs to be taken to a community medical center

or other facility. Again, each community must find its own

solution, based on its own assets and potential. PNPM

Generasi and other PNPM programs merely provide support

to enable the communities to achieve this. ∞

“PNPM Generasi operates on the understanding that the

community itself can develop a process to identify which among certain problems is most pressing

and then determine how that problem can be solved. The

community itself has to identify the constraints and determine how to overcome them. So long

as the community addresses that problem, they can do it in

any way they choose and the Indonesian Government will

provide the required resources.”

60

ThROuGh window Two, PSF provides incremental

implementation and coordination support to PNPM’s

oversight bodies and executing agencies, with a focus

on assisting the Indonesian Government to strengthen

PNPM’s core management systems, to mitigate corruption

risks, and to maintain program quality and efficiency.

with the establishment of PNPM Mandiri as a nation–wide

program, there is a need for increased oversight and action

by multiple stakeholders to ensure the ongoing integrity

and transparency of the program and to ensure that its

design and implementation support the achievement of

the program’s objectives. Activities under this window

include the provision of specialized training, deployment

of additional staff/consultants for field supervision and the

conduct of systems audits, dissemination and awareness

raising activities as well as information management

programs and institutional strengthening.

PSF deploys field analysts to strengthen the supervision

and monitoring of PNPM Mandiri, with supervision missions

now routinely conducted in over 20 provinces and

200 sub–districts each quarter. Special attention has been

paid to involving multiple stakeholders in field supervision,

fostering cross–learning and supporting systems reviews

and audits. In this area, PSF can play a role through its

convening power to support consensus–building on reform

priorities and corrective actions. PSF also provides technical

assistance to follow–up on supervision findings in the field

and to support the design and implementation of new

policies, standard operating procedures and operational

instruments for the strengthening of core management

systems at all levels. Over the last year, the implementing

agencies completed a number of critical benchmarks, leading

to upgrades in PNPM’s overall performance ratings at both

national and province levels.

Typical activities funded by PSF through this window

include specialized training, the provision of consultants

to support community facilitators, support for PNPM

information dissemination and campaigns, workshops,

information management programs, evaluations, and

institutional strengthening.

For organizational purposes, these activities are conducted

through a number of projects, as follows:

zz PSF Secretariat

zz PNPM Communications

zz PNPM Supervision and Monitoring

zz Integrated Management Information System (MIS) for

PNPM Mandiri: SIMPADu (Phase 2)

zz Training of local Auditors in PNPM–urban

zz Technical Assistance to BAPPENAS and the Steering

Committee of PNPM (Pokja Pengendali)

Psf seCReTaRIaT

The PSF Secretariat provides operational and administrative

services to the PSF to sustain an effective framework for the

implementation of PNPM Mandiri. In addition to supporting

the management of the PSF and coordinating the Joint

Management Committee (JMC), the Secretariat provides

fiduciary oversight and reporting for all PSF programs and

supports the Technical Secretariat.

Specific activities undertaken by the Secretariat include:

zz Administering grant agreements issued through the PSF

Trust Fund.

zz Coordinating program supervision missions

and appraisals.

zz Providing operational and technical assistance to

Indonesian Government agencies managing PNPM

Mandiri programs.

wINDOw TwOPROVIDING IMPlEMENTATION AND COORDINATION SuPPORT

62wINDOw TwO

zz Preparing quarterly progress and financial reports as well

as annual project progress reports.

zz Documenting and disseminating minutes of

JMC proceedings.

In 2011, the Secretariat worked to improve the reporting of

PSF–funded activities through the introduction of quarterly

reporting (http://pnpm–support.org/) and a comprehensive

review of PNPM’s anti–corruption efforts. It also initiated

the extension of the PSF, which is envisaged to run through

2015. In addition, The Secretariat helped prepare and

guide the approval process for ten new PSF projects or

top–ups to ongoing projects. The Secretariat also continued

its day–to–day operational support and oversight of

PSF–funded projects.

In 2012, the Secretariat will focus on: (a) supporting the

decision making process for the development of a Road

Map for PNPM’s future beyond 2014; (b) improving the

quality of the portfolio, including the preparation of project

proposals, timely processing of projects in the pipeline, and,

in coordination with the supervision and monitoring team,

ensure that project progress is being reported and captured

in internal systems; (c) supporting the JMC‘s Technical

Committee in the development of the PSF project pipeline;

(d) extending, in line with the recent extension of the PSF

Secretariat, appropriate PSF ongoing activities; and (e)

supporting JMC meetings.

participants at a 2012 psf Joint Management committee (JMc) meeting. the JMc includes representatives of the major indonesian Government agencies and ministries responsible for the design, management and implementation of pnpM Mandiri. the JMc is chaired by BAppenAs and co–chaired by the world Bank and includes the coordinating Ministry for people’s welfare, the Ministry of finance as well as representatives from agencies of the goverments of Australia, Denmark, the european union, the netherlands, the united kingdom and the united states.


Project Development Objective: To provide operational and administrative services to the PSF to sustain an effective framework for the implementation of PNPM Mandiri. In addition to supporting the management of the PSF and coordinating the JMC, the Secretariat provides fiduciary oversight and reporting for all PSF programs and supports the Technical Secretariat.




KPI 2010 2011 2012 Target

New or amended administration agreements

1 1 6

# of JMC meetings held within the year

2 2 6

New contributions to the PSF (uS$ mil)

90 76 100

Disbursement performance (Disbursed during the CY/undisbursed amount at beginning of CY) (%)

82 157 80–120

# of active disbursement funds

32 30 n/a (JMC decision)

Value of newly approved project proposals (uS$ mil)

48 104 n/a (JMC decision)

# and type of reports to the JMC

1 annual report

1 annual report

2 PNPM semi–annual Governance Reports

Quarterly updates for 17–19 Projects

1 annual report

2 PNPM semi–annual Governance Reports

Quarterly updates for all projects

64wINDOw TwO

PnPM CoMMunICaTIons

The PNPM Mandiri program is a constantly evolving,

innovative program that requires an intensive

communications process if members of the community,

press, government officials, academics, activists, development

sector workers and other key stakeholders are to become

aware of the program’s development and supportive of

efforts to implement its activities.

In order to achieve this aim, the communications program

was established to promote awareness of and facilitate

knowledge sharing within PNPM Mandiri among all

stakeholders by:

zz working closely with media organizations and national

and local civil society organizations to disseminate

the latest news and information on PNPM, enhance

community–based monitoring, and facilitate

community participation.

zz Building the capacity of Government institutions involved

in PNPM in the area of information and communications.

zz Supporting various stakeholders to codify, organize

and share their knowledge through innovative tools

and approaches.

Throughout 2011, the communications team worked with

PSF teams to develop enhanced tools for displaying key

PNPM data; design activities to extend and deepen the

impact of learning events; codify, disseminate, and apply

key lessons learned and best practices as a way to improve

aspects of PNPM; and collect and organize relevant materials

for a website devoted specifically to JMC members. In

addition, a website providing access to comprehensive

information regarding PSF and its activities is currently under

development and will be launched in 2012. In addition,

throughout the year, the program placed an increased

the pnpM communication team organizes quarterly field visits for the media since 2008 to increase their understanding of how pnpM works and promote good practices.


emphasis on knowledge sharing and learning events,

examples include:

zz Sustaining a network of 149 radio stations in

9 provinces to facilitate discussion and promote

the community–based monitoring throughout the

implementation of PNPM Mandiri.

zz Supporting, through the use of Information and

Communication Technologies (ICT ) (e.g., social media

and geo–applications), PNPM governance improvement

and bringing the voice of villagers to the national level.

zz Organizing events to: (a) identify and document smart

field practices (PNPM Generasi National Strategic

Planning workshop); (b) involve a broad range of PNPM

stakeholders in the development a Road Map for PNPM’s

future beyond 2014 (PNPM Mandiri National Congress);

and (c)establish stronger linkages across PNPM programs

to support women empowerment throughout PNPM

Mandiri implementation (Coordination workshop for

women Empowerment).

zz Documenting success stories innovative practices in

PNPM, including in the remote areas which have their

own unique set of challenges (e.g., Papua).

zz Collaborating with the Indonesian Government to

receive delegations from other countries to learn and

share experiences with PNPM stakeholders. In 2011, GoI

hosted delegations from Afghanistan, the China–ASEAN

Forum, China and India. The study visits included a series

of discussions with representatives of national and local

governments, program stakeholders, PNPM actors and

beneficiaries and field visits to PNPM locations to observe

program implementation at first hand. In addition,

there were four high level visits from parliamentary

representatives from the uS, Japan, the European union

and Germany.

zz Reaching out to media organizations to increase their

level of familiarity with PNPM and stimulating greater

transparency and public debate on PNPM. Twenty five

media organizations visited PNPM project location

throughout Indonesia. The media outreach also

resulted in an Op–ed on PNPM in kompas (a national

Indonesian newspaper) by the university of Indonesia;

four high–level events promoting the Invisible People

Book; national media coverage of the launching of PNPM

Peduli; , and PNPM exposure in over 150 national and

local media outlets.

In 2011, news media generated 1,640 articles on PNPM, of

which 833 (51%) were positive, 654 (40%) were neutral, and

153 (9%) were negative in tone.

In 2012, the communication team priorities include: (a)

developing integrated ICT platform, including websites,

social media and geo–applications, to support the

transparency and accountability agendas ; (b) establishing

aninternship/engagement platform with Indonesia

universities, to strengthen awareness and the capacity

ndonesia’s younger generation to engage in country’s

poverty reduction efforts;; (c) enhancing knowledge sharing

through best practices and lessons learned from various

PNPM programs; (d) promoting south–south knowledge

exchange by organizing study visits for delegations from

countries such as Madagascar, Pakistan, Timor leste, and

Afghanistan; (e) strengthening the media outreach and

public diplomacy efforts; and (f ) continuing its information

dissemination and publication activities. ∞

66wINDOw TwO

project development objective: To strengthen PNPM’s overarching communications and learning platform, which supports continuous program improvements through information dissemination, capacity–building and enhanced knowledge sharing among all PNPM stakeholders.

approved Commitments: uS$ 4.35 million



KPI 2010 2011 2012 Target

Component 1. Media outreach and other dissemination activities

# of media organizations participating in field visits and media events

23 25 28

# of ads published in the press, # of radio talk shows produced, # of partner radio stations, # of inquiries made

25 ads

12 radio talk shows

141 radio stations

250 inquiries

27 ads

12 radio talk shows

141 radio stations

300 inquiries

Activity transitioned to GoI

# of national and local media sources monitored daily

49 101 101

# of news articles on PNPM analyzed and reported to its oversight bodies

1,300 1,650 1,800

# of active partnerships with CSOs, Academic Community and other interest groups.

3 (CRI, kBR 68 h, Ontrack Media Indonesia)

1 (kBR 68h) 6 (BakTI, kIPRA, lPPM Cendrawasih, Inspirit,

Internews, CRI)

Component 2. Learning

# of high profile learning events/workshops

5 3 5

# of ICT platforms used to support learning

1 (community radio program)

2 (geo–application for field stories and Facebook

accounts for uPks)

3 (community radio program, geo–application

for field stories and Facebook accounts for uPks)

# of visits/study tours from foreign delegations

4 (Mongolia, kenya, haiti, Timor leste)

5 (Afghanistan twice visits, China–ASEAN Forum, China,

India)

6 (Madagascar, Pakistan, Timor leste, Afghanistan,

and others TBC)

# of titles and exemplars published

25 titles

20,500 exemplars

24 titles

11,000 exemplars

25 titles

10,000 exemplars

Component 3. Accessibility of information

PSF websites (status) PSF library website under development

PSF library website and JMC website up and running

PSF website under development

PSF website up and running and linked to library/JMC websites and ICT learning

platforms.


technical evaluation of the quality of infrastructure built by pnpM.

PnPM suPeRVIsIon anD MonIToRIng

The massive scaling up of PNPM Mandiri since its

establishment as a mainstream, nationwide program has

increased the need for oversight and action by multiple

stakeholders, but also put strain on the management and

governance frameworks. The PSF provides critically needed

implementation support to Government to strengthen core

PNPM management and oversight systems. key elements

include: incremental field supervision and monitoring;

systems audit and fiduciary assessments; dialogue on

systemic issues and collective identification of reform

priorities; follow–up on findings and corrective actions; TA

to support the design and implementation of new policies,

standard operating procedures and operational instruments;

and associated program of analytical work to explore

determinants of program performance.

In 2011, a restructuration of the PSF and additional

human resources improved the breadth and depth of

implementation support services provided to Government.

highlights include:

zz PSF supported consensus–building on five reform

priorities or areas for the strengthening for PNPM–Rural:

(a) ability of PMD to appropriately manage the program;

(b) redesign of the Management Information System

(MIS); (c) strengthening of Complaints handling System;

(d) reinforcing formal and informal fiduciary controls;

and (e) improving facilitation. Formal monthly and

quarterly meetings with PMD and pokja pengadali have

been used to review progress, identify delays and agree

on corrective actions. Six–monthly updates on PNPM

Governance are also used to report and discuss progress

with concerned stakeholders.

zz The PSF Governance and Anti–Corruption team was

further strengthened to limit the exposure of donors

and the Indonesian Government to corruption risks.

Fiduciary assessments are used to identify weaknesses

in mandated formal and social controls, both in terms

of systems design and compliance with existing policies

and procedures in the field. Findings are responded to

through an ongoing program of TA to strengthen the

complaints handling and audit systems as well as village

controls and civil society oversight.

zz The PSF field team recruited additional staff and

intensified field–based supervision, with a minimum

of 21 provinces and 160 sub–districts visited each

quarter. locations for supervision continued to be

prioritized based on well–known risk factors (e.g., high

disbursement, multiple block grants, high turn–over,

remote areas etc.) and covered most of the PNPM

portfolio including PNPM–Rural (including Disaster

and Post–Crisis Funds block grants), PNPM–Generasi,

PNPM–Green, PNPM–Respek, PNPM–Integrasi and SPADA.

Special attention went to increasing participation of

national and local governments in both regular and

thematic missions, and on building the supervisory

capacity of local governments in visited areas, particularly

as regards fiduciary controls and safeguards. The

development of a web–based application for monitoring

and reporting — which integrates supervision findings,

updates on corrective actions and systemic issues, and

risk mapping for each region — is being completed.

zz Special attention has been paid to fostering

cross–learning between PNPM implementers and

stakeholders, including through the organization of

national knowledge sharing workshops involving PNPM

implementers and stakeholders from all levels.

zz An analysis of management and systems at the

community level has also been completed to identify

what can be done to improve governance in PNPM at

the community level. Findings will be disseminated and

discussed in 2012.

This program of support contributed to the achievement of

a number of critical benchmarks by implementing agencies

in 2011, including a recommitment on 21 days of service

training for facilitators, increase in audit sample size to 20%

of sub–districts and marked progress on serious corruption

cases (>uS$ 21,000). There is a clear need to sustain reforms in

2012, however, and hands–on assistance for the operation of

the complaints handling system, continuous assessments of

the robustness of core management systems and mandated

controls and follow–up of corrective actions will still be

needed. Attention may need to be refocused on narrower

set of priority actions, including improved deployment of

technical facilitators, adequate staffing of management units

and MIS overhaul.

70wINDOw TwO

As a national program, PNPM is at a critical juncture.

Although PNPM continues to deliver tremendous results in

communities, ongoing analysis shows the fragility of some of

PNPM’s institutions, both nationally and locally. In 2012, the

PSF will develop an ambitious program of analytical work to

inform improvements in program design and the Road Map

process on the future of PNPM beyond 2014. Planned work

includes: (a) a review of lessons learned as part of the writing

of the Implementation Completion Report for PNPM–Rural

I and II; (b) implementation uPP 2 and uPP 3 evaluation; (c)

a technical evaluation of the quality of the infrastructure

financed by the program in 12 provinces, which includes

a review of fiduciary arrangements and safeguards

implementation; (d) a rapid field assessment of Revolving

loan Funds (RlFs) in 14 provinces, which complements

the analytical work conducted under the PSF–funded RlF

capacity–building project by focusing on social impacts of

RlFs; (e) a review of implementation progress in Papua, which

focuses on Papua–specific implementation challenges; (f ) a

small scale study on Economic Internal Rate of Return (EIRR)

to allow for time series analyses; and (g) a gender study to

look at levels of female participation and involvement in

decision–making to expand good practices and inform a

more ambitious program of gender–related analytical and

operational work downstream.

Project Development Objective: This fund provides for incremental supervision and monitoring of the various aspects of PNPM in order to respond to the increased need for oversight and action by multiple stakeholders under a scaled–up program, while building Government capacity to undertake integrated, risk–based supervision in support of its priority objectives.




KPI 2010 2011 2012 Target

% of corrective actions delivered (vs. agreed upon) 109 436 500

# of meetings/workshops to discuss systemic implementation issues at national and regional levels

22 80 80

Component 1. Implementation Support

At least 160 sub–districts visited every quarter n/a Achieved I60 sub–districts

# of joint–supervision missions involving GoI/lG 16 40 40

Component 2. Follow–up and action on systemic issues

# of action plans/program quality improvement plans

15 45 45

web–based project performance management platform (stage)

Identification Design, tested and improvement

Finalized and running

# and type of sanctions applied as a result of findings (e.g., suspension of payments etc.)

Suspension of 2 provinces

Suspension of one district and 32

kecamatans 0

Component 3. TA to strengthen controls

# and type of SOPs/Guidelines etc. revised with inputs from field supervision?

7 9 9

web–based complaints handling Problem identification

Re–design and testing

Finalized and running


TRaInIng of loCal auDIToRs In PnPM–uRban

Several layers of financial and technical oversight exist

in PNPM–urban, including community self–monitoring,

project facilitation and oversight consultants, local

government monitoring, world Bank implementation support

missions and annual audits conducted by the Indonesian

Government’s Development and Finance Surveillance

Agency (BPkP), which is responsible for conducting annual

audits of public expenditure programs.

BPkP has undertaken annual audits of the urban Poverty

Project (and later of PNPM–urban) since 2000. In fiscal

years 2009 and 2010, their audits covered 14% and 16%

of participating urban districts. Studies and experience

across PNPM have shown that higher audit sample sizes are

associated with a lower level of misuse of funds, particularly

if all stakeholders are informed of the audit and planned

audit rates before the annual project cycle. Based on this, the

Indonesian Government wanted audit coverage to increase

to 20% for fiscal year 2011. As a result the Training of local

Auditors in PNPM–urban was approved to improve the

fiduciary controls in PNPM–urban by building the capacity of

local government auditors (inspektorat kota/kabupaten) and

promoting synergies with BPkP.

Building capacity of local government auditors addresses

current Indonesian Government and Development Partner

priorities of both (a) reducing incidence of corruption at

all administrative government levels and (b) supporting

the process of decentralization through strengthening the

capacity of local government institutions.

The project which began in the second half of 2010 got

off to a strong start: (a) it secured a Mou among the

Directorate General of human Settlements (DGhS), the

executing agency of PNPM–urban in MoPw, Inspectorate

General of MoPw and MohA, and the Deputy of BPkP on

their roles in auditing PNPM–urban as well as Rural; and (b)

prepared, in coordination with BPkP, DGhS, and PMD, auditor

training materials.

In 2011, training was provided in 196 cities and district and

445 auditors were trained. The Inspectorate General of MoPw

committed approximately Rp 1.8 Billion (uS$ 200,000) to

support the implementation of audits in cities and districts.

with BPkP providing quality control, local government

auditors carried out the fiscal year 2011 audits in 21% of

PNPM–urban districts.

All project activities were completed as planned.

project development objective: To improve fiduciary controls in PNPM–urban by building the capacity of local Government Auditors (Inspektorat kota/kabupaten) to conduct transparent audits of PNPM program activities and promoting synergies among the Development and Finance Surveillance Agency (Badan Pengawas keuangan dan Pembangunan, BPkP) and local Government Auditors.


total disbursements: uS$ 0.29 million

Closing date: October 31, 2011

KPI 2010 2011 2012 Target

Design of curriculum and training materials Ongoing Completed n/a

# of BPkP auditors trained n/a 59 n/a

# of BPkP regional offices which participated in the training n/a 26 n/a

# of cities and districts from where local auditors were trained n/a 196 n/a

# of local auditors trained n/a 386 n/a

# of cities and districts where local auditors conducted audit of PNPM–urban

n/a 97 n/a

72wINDOw TwO

InTegRaTeD ManageMenT InfoRMaTIon sYsTeM (MIs) foR PnPM ManDIRI: (sIMPaDu Phase 2)

Indonesian policymakers need access to reliable data

related to Indonesia’s community empowerment and

poverty alleviation programs if they are to formulate, revise

and implement such programs efficiently and effectively.

SIMPADu PNPM, or PNPM Mandiri’s Integrated Management

Information System, was first launched by the Minister of

National Development Planning and the head of BAPPENAS

in August 2009. The system is designed to manage data

related to the implementation of PNPM Mandiri and to make

this data accessible to the program’s stakeholders and the

general public.

The primary objective of SIMPADu PNPM Phase II is to

improve the system’s ability to facilitate access to information

related to Indonesia’s poverty alleviation and community

empowerment programs. This objective will be achieved

through analysis of the existing PNPM MIS systems, and

the design, installation, and operation of an integrated MIS

for all of PNPM Mandiri’s core and support/pilot programs.

The enhanced SIMPADu PNPM will be complemented

with improved and appropriate operating procedures and

capacity building training at all levels to ensure the quality

and verification of data collection, storage, and reporting.

Building on the work done during Phase I, Phase II of this

project consists of two major components:

Component One focuses on improving data collection and

analytical capabilities, includes:

zz Improving the current SIMPADu PNPM analytical

capabilities and data accuracy. This component includes

data verification and development of more enhanced

data entry applications to establish full integration with

all PNPM program sectors.

zz Developing a PNPM MIS Road Map consisting of a

thorough needs assessment at all levels and detailed

plans for integrating SIMPADu PNPM with other MIS at

national and local government institutions; and support

software/hardware procurement and installation,

development of Standard Operating Procedures (SOP) for

collecting, verifying, storing, and reporting programmatic

and financial data, and training of the Indonesian

Government staff.

Component Two involves the implementation of the

Road Map developed during the first year of the project.

This component will provide local government and PNPM

sector programs integrated MIS system of PNPM with

their own program/data as well as knowledge transfer and

technical expertise.

Project Development Objective: To improve the Government’s ability to facilitate access to information related to Indonesia’s poverty alleviation and community empowerment programs.




KPI 2011 2012 Target

# of MIS experts providing technical assistance 4 4

Identification of requirements to roll out the SIMPADu PNPM in pilot provinces Ongoing Criteria for province selection identified

Road Map for SIMPADu PNPM–Mandiri Development ongoing

Completed

Number of MIS units from PNPM–Mandiri programs receiving technical assistance

2 5

# of support/pilot programs for which MIS data can be uploaded into the PNPM central data warehouse as a result of systems compatibility

2 5

Number of province governments receiving technical assistance to improve their MIS

n/a 5


under the project, which begin in mid–2011, MIS experts

were contracted to begin assessing: (a) the quality of MIS data

collection and verification procedures being used through

PNPM’s core and pilot programs; and (b) the statistical

capacity of SIMPADu PNPM Mandiri. Technical assistance to

increase capacity of the MIS departments/staff to manage an

integrated MIS and collect more complete and accurate data

from the field also began.

In 2012, the project will focus on finished the data collection

and capacity enhancements, including: completing all

ongoing assessments, making recommendations for MIS

improvements, and developing a SIMPADu PNPM Mandiri

Road Map; and expanding technical assistance to all PNPM

core programs. The project also anticipates the start up of

the piloting of the SIMPADu PNPM Mandiri Road Map in

five provinces.

TeChnICal assIsTanCe To baPPenas anD The sTeeRIng CoMMITTee of PnPM (Pokja PengenDalI)

Over the past fourteen years, since 1997, the PNPM Mandiri

program has grown out of a small pilot study which involved

25 villages into Indonesia’s flagship poverty alleviation and

community empowerment program which involves over

70,000 villages and urban wards in every sub–district in the

country. This scale–up has created special challenges for the

Government agencies responsible for managing the program.

Pokja Pengendali, the Steering Committee of PNPM

responsible for the overall management and implementation

of PNPM Mandiri, and BAPPENAS, National Development

Planning Agency and Chair of the PSF, are critical to the

success of the program. To support the daily operations of

Pokja Pengendali, a Secretariat has been established under

the coordination of the Deputy Minister for the Coordination

of Poverty Reduction. This Secretariat conducts analysis

and implements administrative and technical services to

support Pokja Pengendali. Its responsibilities include: (a) the

formulation of policy recommendations; (b) the monitoring

and oversight of PNPM throughout its project cycle; (c) the

preparation of reports related to PNPM for cabinet meetings,

minister–level meetings, and the public; (d) supervision of line

ministries’ integration of community–driven development;

(e) coordination of complaints handling with line agencies,

executive staff, and enforcement agencies; and (f ) public

campaigns and socialization. BAPPENAS is responsible for the

planning and budget allocations of PNPM Mandiri.

PSF provides support to Pokja Pengendali to enable it to

perform its functions and tasks in coordination of policy

implementation, planning, supervision, oversight and

increase awareness of the public and local stakeholders

on PNPM Mandiri. Given the special role of BAPPENAS in

the planning, monitoring and evaluation of PNPM Mandiri,

PSF also provides specific support for BAPPENAS including

the provision of technical staff and training to improve the

quality of planning, budgeting, monitoring and evaluation

process for poverty reduction policy and programs. In 2011,

through this project, PSF provided technical assistance to

support the development of a PNPM Road Map, the purpose

of which was to ensure that the program continues to reflect

the aspirations and hopes of its intended beneficiaries.

As a major part of the formulation of this Road Map, a

participatory workshop was conducted in November. This

workshop involved 150 beneficiaries, facilitators, consultants

and representatives of local governments and their agencies

met with 150 representatives of central–level agencies and

ministries involved with the implementation of the PNPM

Mandiri program, as well as representatives of international

donor agencies and civil society organizations.

In addition, PSF provided support for activities related to

the monitoring, supervision and control of executive–level

decisions, including the preparation of a draft decree

prepared by the TNP2k to implement executive–level

action plans for PNPM; the development of related work

plans; the socialization of these plans; the integration

of line ministries’ community–driven development

activities and programs with the PNPM program; and the

monitoring of the implementation of these plans at the

community/local level. ∞

74wINDOw TwO

project development objective: To provide support to Bappenas and Pokja Pengendali in the aspects of coordination, management and oversight of PNPM Mandiri.





BAPPENAS

Number of analysts providing technical assistance (cumulative)

2 2

Number of people trained in the formulation of poverty reduction policies and programs

n/a 3–4

Number of people attending seminars/workshops on the planning/monitoring of poverty programs

n/a 2–3 people/ one event

Pokja Pengendali

Number of TA positions filled in Pokja Pengendali

12 13

Number of kabupaten/kota where new regulations and policies on poverty reduction have been socialized

None (delayed) 1,858 kabupaten/kota

Progress on actions plans for Inpres 1/2010 and 3/2010 is updated on quarterly basis (status/stage)

Action plans and monitoring and oversight mechanisms prepared for

TNP2k approval.

Socialization to 495 local governments kabupaten/ kota

Annual PNPM National Congress/Community Empowerment Exhibition organized

Completed Delivery planned

Recommendations from the National Congress are analyzed and taken into account for the design of the PNPM Road Map (status/stage)

PNPM Mandiri — The People’s Dream was visualized in 27 graphic recordings

based on the dreams of Temnas participants.

The National Congress produced 27 illustrations of people’s dream on

PNPM.

There are 25 recommendations from the Temnas and those have been

incorporated into the design of PNPM Road Map.

The National Congress resulted 25 points of recommendations that have been incorporated into the design of

PNPM Road Map.

Detailed Road Map concept is being finalized (book–1). Second book (for

general public is being drafted (book–2).

Road Map concept will be published into 2 books for internal use and public

use.

Public consultation is scheduled for August 2012 (national level, and

regional level)

Public consultation for Road Map design will be conducted in regional

and national level on August 2012


pnpM peduli aims to reach and empower marginalized groups.

INDONESIA may be reaching a tipping point where its

people are about to take control of development initiatives

that affect all aspects of their lives. Through the PNPM

programs, communities have been given resources to enable

them to determine their own development priorities and

to implement plans to achieve their aspirations. People

have been doing that with a great deal of success. working

collectively and using

their block grants, they

have built more than

100,000 km of roads, more

than 17,000 bridges, and more

than 14,000 hospitals to name

just a few achievements.

More importantly,

they have managed to

significantly reduce poverty

in their communities. It’s

simply staggering to see

how people have been

able to transform their

communities when the

necessary resources are put

under their control.

however, to me the real

revelation of the PNPM

program is not these

achievements: it is the

discovery by people of

their own potential. The

real achievement is that

people, individually and

collectively, have begun to

realize that they are actually

entitled to ask questions

and demand answers

regarding the deployment

of all public resources,

including resources outside

the boundaries of the PNPM program.

Gradually, communities are finding that they are able,

capable and entitled to demand that all public resources

are accounted for and used for the intended purposes. In

that way, PNPM is becoming a platform for demanding

accountability across the board, not just for resources

controlled by the PNPM program, but for the management of

public resources in general.

we should be aware, though, that this growing awareness of

communities about their rights is still in its early stages. we

haven’t yet seen measureable, large scale spillover of PNPM

processes into other areas of government. Nevertheless, in

some areas, this process

has already begun. Many

villages use participatory,

inclusive processes similar

to those developed and

tested through PNPM to

formulate and implement

comprehensive village

development plans. On

a wider scale, similar

community–driven

processes have been utilized

to rebuild communities

in Aceh and Papua in

post–disaster, post–conflict,

and other special

circumstances. Even so, that

approach is certainly not

general across all areas of

government. Much more

could be achieved both

in terms of communities

becoming aware of

their ability to hold local

governments accountable,

and in terms of sector

agencies to develop simple

and effective mechanisms

that can put this

accountability into practice.

Moving forward, I see the

more solid entrenchment

of the basic concepts of participation and inclusion as one

of the great areas of potential of the program. we need to

tap into the vast social capital that exists in Indonesia not

only to ensure the success of PNPM programs, but to ensure

that teachers are at school and teaching students properly,

that there are nurses in the community health centers to

Jan WeetJenshEAD OF PNPM SuPPORT FACIlITY


ensure the health of the community, that the full range of

basic, essential services are available and meet the needs of

the community.

One example of a way in which the basic PNPM approach

has been adapted to ensure that communities have full

access to well administered essential services is through the

PNPM Generasi program. Essentially, this program provides

incentives for communities to improve health and education

services. Communities are given resources to identify

constraints in these area and to plan and implement activities

to overcome these constraints. The program rewards their

achievement of specific goals, such as achieving better

nutrition amongst children

or reducing maternal

mortality, through increased

budget allocations in

following cycles.

what’s interesting here is

that this program not only

effectively achieved the

mobilization of communities,

it also had a distinct impact

on the supply–side: in areas

where the program has been

implemented, community

health centers and schools

respond by proactively

improving their standards,

above and beyond

the specific demands

made upon them by the

community. By offering

incentives to communities,

the program creates a

virtuous cycle and a potential dynamic for the improvement

of services.

At the moment, we are also conducting work to test

mechanisms whereby health workers can receive an

incentive if they reach specific results to reduce stunting.

The hypothesis is that a combination of incentives for

both communities on the demand side and health service

providers on the supply side can further improve results on

the ground. It’s a matter of trying to create the conditions

so that when people do well, their good performance is

recognized. Basically, I believe that people by and large

want to do the right thing and fulfill their professional

responsibilities, but it is also essential to nurture and foster

that by creating the right incentives to reward and recognize

good work. while there is a body of research that supports

this hypothesis, we do need to test in the Indonesian context

which mechanisms can have the highest impact. hopefully,

the rigorous evaluation of these experiences will provide the

necessary data to Indonesian decision makers to determine

whether and how these experiments can be brought to scale.

Testing and developing programs of this sort are part of an

ongoing process to ensure that PNPM remains fresh and

focused on the achievement

of its fundamental aims

and goals: the fostering

of empowered, inclusive

communities across

the archipelago so that

Indonesia can become

a country where all

Indonesians can thrive.

As PNPM has become a more

mature program, the need to

ensure that it remains fresh

and vigorous becomes more

apparent. when the program

was still new, participation

was an exciting concept. As

the program becomes more

established and its ideas

more accepted, there is a

danger of routine settling

in and processes becoming

stale. One of the many

ways in which the Government tries to keep participation

fresh and alive is through the “Creative Communities” pilot,

whereby PNPM taps into the cultural richness of communities

to keep participation in community affairs interesting. This is

for me personally one of the most satisfying aspects of this

job: being part of the team that helps the program to stay “on

the tips of its toes” and to continuously innovate so that the

program can make a difference in the lives of the poor.

Another source of great personal appreciation is the fact that

so many partners decided to pull their efforts and resources

“The real revelation of the PNPM program is the discovery by people of their own potential.

The real achievement is that people, individually and

collectively, have begun to realize that they are actually entitled to ask questions and demand answers regarding the deployment of all public resources, including resources outside the boundaries of the

PNPM program.”

78

as anticorruption, procurement, monitoring and evaluation,

gender, communication and knowledge Management,

amongst others. As we experienced over the last year, this

organization enables a more systemic evaluation and greater

cross learning between programs. As we learned, the key

to facilitating improvements in the way PSF supports the

Government’s PNPM program, was the development of a

more integrated, inclusive and focused unit.

The role of PSF is really to serve as a platform and forum for

the various actors and stakeholders in social development

in Indonesia to come together, to learn from each other, to

share experiences, to be creative. At present, reviving the

spirit of PSF so that it fulfills this role is our primary task. we

need to focus on our relationship with our client: we are a

support function, providing space to try new ideas, initiatives

that push the envelope, approaches that might be too

difficult to test through the normal systems.

To play this role, we need to be more active and engaged

in an intensive dialog with other stakeholders, with

representatives of civil society, with activists, and with people

who work for change across Indonesia. we need to provide

support not just to the Government, but to the whole social

development movement in Indonesia. we need to do that to

put PSF on a sustainable footing for the long haul.

At present, the world Bank serves as PSF’s Trustee. I envision

the world Bank having an ongoing role supporting

Indonesia in the implementation of PNPM. At the same

time, it is becoming clear that some form of community

empowerment program will continue beyond PNPM. The

need for support for such a program will also continue. But

in the long term, that support might well be provided by a

national institution. Such an institution would need good

governance, the ability to formulate strategic vision, the

ability to navigate the political environment, and the ability

to attract resources. It would also need strong leadership

to ensure the institution can meet the challenges at hand

and deliver on its commitments. Finally, it would need solid

systems (administration, hR, resource management, etc.)

so that it can be effective and so that partners can trust

the robustness of its fiduciary processes. working with our

partners in Government, the development community,

and civil society to foster the emergence of such a national

institution is an exciting prospect and will be high on the

agenda for the months and years to come. ∞

together and to join forces to support Indonesia’s PNPM

program. The efforts and results described in this report

would simply be unthinkable without the steadfast support

from AusAID, CIDA, DANIDA, DfID, Eu, the Netherlands,

and uSAID. without the very important contributions from

each and every one of the development partners, it would

just not be possible for the PSF to provide the current

levels of analytical and operational support. The fact that

these development partners decided to contribute to

PSF is a vote of confidence in the PNPM Program and the

PSF team. It also constitutes a tremendous challenge to

honor the trust invested in the team and to live up to the

rightful expectations to deliver high quality services and

tangible results.

My own period of tenure as head of PSF began just as the

massive scale up of PNPM was nearing completion. The

successful scale up of the PNPM program was a great source

of pride for all the stakeholders who facilitated it. At the same

time, the scale–up created massive challenges and placed

serious stresses on the capacities of all involved and on the

core systems needed to manage the program. while I am

impressed with the efforts of our partners in Government to

successfully address these challenges, in spite of often very

difficult working conditions, there is clearly an urgent need

to further strengthen the systems and to ensure that the

people and mechanisms are in place to bring PNPM to its

fullest potential.

Similar to the challenges in PNPM, there are also important

challenges in PSF that require attention. when I arrived in

2009, we had approximately 13 different teams, each with

their own project–specific focus. while this set–up had

its own merits, it made it difficult to approach the various

programs supported by PSF as a portfolio, to address

systemic issues cutting across the portfolio, and to create

critical mass so that we could provide the necessary support

to our clients and counterparts. To overcome the isolation

of individual projects, PSF went through a full restructuring.

First of all, we established a group of staff who specialized

in field supervision and who constitute our “eyes and ears”

on the ground. The Field Team provides support to all the

programs in the PSF portfolio in a given area. In this way,

the organization of PSF mirrors the Government’s decision

to push for the integration of the various PNPM programs.

we also established a number of crosscutting functions to

provide support to the various program in specific areas such


PnPM PeDulI: suPPoRTIng The woRk of CIVIl soCIeTY oRganIzaTIons

Through window Three and its sole component, the PNPM

Peduli program, PSF provides support for Indonesian civil

society organizations (CSOs) that work to alleviate poverty

and to empower communities, particularly those working

with marginal, disenfranchised and vulnerable groups. The

PNPM Peduli program was established in recognition of

the important role that grass–roots CSOs play in promoting

inclusive poverty reduction. These organizations are uniquely

qualified to reach and work with marginalized groups

and people, many of whom derive only limited or indirect

benefits from government programs, including PNPM

Mandiri’s core programs, PNPM–Rural and PNPM–urban.

In the past decade, donor funding has tended to be

project–based, with little core funding or support for

strengthening the CSO sector. The PNPM Peduli model aims

to provide support to CSOs that work with marginalized

groups. Funding aims to strengthen CSO organizational

capacities and, together with their beneficiaries, enables

them to set their own priorities in their work. The program

design and mechanisms have therefore been developed

in partnership with CSOs. CSOs developed Peduli program

targets to achieve the broad changes they hope to see in

their organizations and in the lives of those with whom they

work. Simplified project tools and mechanisms are being

developed to not only to ensure that projects run well,

but to facilitate the strengthening of CSOs’ management

capacity, transparency and accountability and to help

ensure sustainability.

while impact studies have shown that PNPM Mandiri’s core

programs are an extremely efficient means of improving

the infrastructure of villages, including poor villages in poor

regions, there have been questions raised as to whether

these core programs have a specific, significant positive

impact on the poorest or most marginal members of the

community in these areas and elsewhere.17 Despite PNPM

Mandiri’s core programs’ commitment to participatory

process, these programs have not always been able to meet

the special needs of members of groups including street

children, domestic workers, orphans, migrant workers, sex

workers, youth in conflict with the law, drug users, street

beggars, female–headed households, landless farmers,

victims of domestic or community abuse, rural fisher folk,

trafficked women, victims of conflict, people with disabilities

related to leprosy and people living with hIV and AIDS,

and other disabilities. In addition to special needs arising

out of their conditions and circumstances, members of

communities with disabilities of these sorts often face

systemic social, institutional and legal discrimination which

mitigate against their full involvement in community level

participatory processes.

At the same time, a number of CSOs have an excellent

network of contacts among specific excluded groups and a

high level of commitment to advocating for their rights and

improving their welfare. Operating without the constraints

that govern government agencies, these groups are often

in the best position to truly determine the aspirations of

the group that they represent and can test and implement

innovative approaches. with these approaches, they have

often had significant successes in dealing with groups that

have traditionally been left out of the local development

planning and processes.

wINDOw ThREESTRENGThENING CIVIl SOCIETY ORGANIzATIONS wORkING wITh MARGINAl, DISENFRANChISED AND VulNERABlE GROuPS

17 For example, see A Qualitative Study on the Impact of the 2010 PNPM–Rural in East Java, West Sumatra, and Southeast Sulawesi, Muhammad Syukri, Sulton Mawardi, Akhmadi; The SMERU Research Institute, Jakarta, June 2011.

82wINDOw ThREE

In order to facilitate the funding and capacity development

of small CSOs while at the same time keeping overhead costs

to a minimum, the PNPM Peduli program works by providing

grants to a number of major, established Indonesian CSOs

(Executing Organizations, or EOs), who either make grants to

other, smaller, less established CSOs, or, when the major CSO

is a nation–wide membership–based organization, to qualified

branches, to implement activities related to economic

development, access to services and rights and social justice.

In 2010, the design of PNPM Peduli was completed, with

broad agreement on the basic implementation structure.

Extensive stakeholder consultations on the design also took

place with Indonesian CSOs, the Indonesian Government, and

international development partners.

In the early start up phase, local governments have shown

interest in supporting local activities, for example in Silanu

Mountain Village local government offered financial support

for the baseline data collection of the CSO partner in

their region. In Sigi district, local government participated

in a launch of PNPM Peduli activities in their district. In

East lombok, Samanta (a local CSO) is working with local

government and other NGOs to identify key poverty indicators

for assessing and monitoring their activities.

During the start–up phase, the program continued to

collect and record good practices to inform project

activities and mechanisms for working with CSOs to reach

marginalized groups. In partnership with the CSOs, project

officers developed monitoring and reporting systems and

a complaint handling system. They also laid foundations for

a MIS to be tested in the field and finalized by the end of

the pilot phase in December 2012. In particular, following

feedback from the CSOs regarding the challenges that they

faced, procurement processes and related forms were revised

to make them easier to use in the contexts that the CSOs

operated. Adjustments were made to the structure of the

EOs’ banking accounts to accommodate smaller transactions,

reflecting the nature of financing between national Executing

Organizations and their local partners. Also, administrative

processes for approvals were reduced to allow EOs to use

their own approval processes for clearing local procurement

plans, given their demonstrated capacity to manage such

processes. Getting these processes right has been a challenge

and improvements will be made through joint learning and

feedback during the pilot phase.

The Minister for People’s welfare launched PNPM Peduli in

March 2011. later in the year, three EOs were selected through

a competitive process, with grant agreements being signed

in June 2011. Two of the EOs are Indonesian grant–making

organizations (kemitraan and Association for Community

Empowerment — ACE), while the third one is lakpesdam

(the Institute of human Resources Study and Development),

an institute within the Nahdlatul ulama organizational

framework. A Technical Support Group was contracted in

November 2011 to provide technical and financial auditing

to the program as well as managing communications,

knowledge management, complaint handling, monitoring

and evaluation and the MIS. uS$ 1.2 million was disbursed

to these organizations in September 2011. By the end of the

year, 72 Indonesian CSOs (6 national grant makers and 66 local

pnpM peduli works with marginalized people to improve their access to public services, justice and economic opportunities.


project development objective: To strengthen the capacities of Indonesian CSOs to reach and empower marginalized groups to improve their socio–economic conditions.





# Funded CSOs working with marginalized groups 50 66

# Number of direct beneficiaries from marginalized groups n/a 15,000

# Provinces/districts in which Peduli projects are working 27 provinces

90 districts

24 provinces

90 districts

# Community cadres/facilitators from marginalized groups 579 579

# Marginalized women/men trained by CSO/Branch partners 197 women

65 men

15,000

% CSO/Branch engaging with local government related to marginalized people n/a < 6 (10)

% CSO/Branch partners showing significant improvement in organizational capacity (ie financial, planning, implementation, monev and learning)

n/a 60

# EOs managing grants and capacity building for CSOs 3 3

% EO and CSO/Branch partners complying fully with PSF fiduciary Standards n/a 100

n/a 75

partners receiving sub–grants) were engaged in the program.

Together they will implement activities that will benefit more

than 15,000 marginalized people across 24 provinces.

Project priorities for 2012 will be to: (a) analyze current

interventions and refine activities and approaches to

enhance the project’s impact on marginalized people and

its sustainability; (b) test and refine systems developed

for working with CSOs that ensure overheads are kept

at a minimum, but that transparency and accountability

maintained; (c) develop a specific channel of funding for

Development People’s Organizations to facilitate inclusion in

the program of people living with disabilities; (d) complete an

external pilot phase evaluation in the second half of the year;

and (e) extend the grant agreements of the three EOs from

July to December 2012.

84wINDOw ThREE

PNPM Peduli was established to create opportunities for

members of vulnerable, marginalized groups, to improve

their welfare and to enable them to escape the poverty

trap and to live more dignified lives. PNPM Peduli was

established because members of vulnerable groups did not

receive a fair share of benefits from empowerment processes

implemented by “normal” members of the community

under PNPM. Members of

vulnerable groups often

face discrimination and are

shunned by other members

of the community. Members

of such vulnerable groups

are still stigmatized and

discriminated against.

In the face of this rejection

of members of vulnerable

groups, my colleagues and

I felt compelled to act. we

felt that there was an urgent

need for a specific scheme

within the PNPM framework

to meet the needs of

members of these groups.

Such a scheme to benefit

members of vulnerable

groups had to be designed

and implemented to meet

their special needs and in

consideration of the special

challenges that they faced.

we felt that those most

qualified to design and

implement these programs

were the community–based

civil society organizations

that have extensive

experience working with them.

while the specific details of the PNPM Peduli program may

vary from those of the core programs, it reflected the same

general principles. Firstly, it was designed to enable members

of the target group to achieve their aspirations. I call this The

Power of Dreams. The second principle revolved around the

motivation of members of vulnerable groups to advance and

move forward, to improve their lives and to live in dignity. I

call this The Power of Motivation. The third principle is that for

suJana royatDEPuTY MINISTER FOR POVERTY AllEVIATION AND COMMuNITY EMPOwERMENT, COORDINATING MINISTRY FOR PEOPlE’S wElFARE

members of vulnerable groups to fulfill their aspirations, they

must act collectively to assist each through gotong royong, or

mutual assistance. So, I call this The Power of Togetherness.

Through PNPM Peduli, members of vulnerable groups should

have the same opportunities as other members of the

community to develop their potential and to improve their

lives, to achieve dignity. PNPM Peduli enables vulnerable

members of the community

who were previously forced

to live and work through

socially unacceptable

activities in liminal spaces

in the community to leave

such activities behind, to find

self worth and respectability,

and to free themselves of

feelings of inferiority in

their dealings with “normal”

members of the community.

The unique power of the

PNPM Peduli program

is its ability to build the

spiritual and psychological

strength of members of such

vulnerable groups. when

members of vulnerable

groups are empowered in

this fashion, they are enabled

to engage in dignified work

and trade and thereby to

gain acceptance within the

broader community.

The second goal of PNPM

Peduli is to build the

capacity of civil society

and its organizations. Civil

society and its organizations,

including but not limited to those dealing specifically with

vulnerable groups, can play an extremely important role

in improving the delivery of services to the people they

represent and advocate for. In addition, they play a strong

role in improving governance within PNPM and more

generally by monitoring programs and ensuring that they are

implemented appropriately, without corruption or misuse of

funds, to facilitate the achievement of their intended goals. In

general, we are extremely concerned at the current low level


of participation of CSOs in matters related to governance,

particularly as it affects the implementation of development

initiatives at the local level.

At present, such matters too often remain under the control

of elite groups, including political, bureaucratic and other

elites. According to the world view of these elites, the vast

majority of the community are merely passive recipients of

assistance. The community is not even given the space to

dream, let alone to actually strive to fulfill its dreams and

achieve its aspirations. The dreams of the community have

been hijacked by the elites, who have attempted to control

and define these dreams. Parliamentary representatives also

express their own dreams or those of their political party,

rather than the dreams of the community they are meant

to represent. So, to whom can the community entrust its

dreams? There is not a single

person or institution that can

truly speak on behalf of the

community in this fashion.

Rather, the community itself

must become sufficiently

articulate to express its

dreams by itself, to express

its hopes and aspirations.

It can articulate itself best

through civil society and

its organizations. PEkkA, a

civil society organization

that strives to achieve the

empowerment of women

headed households, is an excellent example of how a CSO

can empower the community of which it forms a part.

The community, particularly divorced, widowed, singled

and abandoned women, implement activities through

PEkkA. It is their organization: they are PEkkA. PEkkA has

achieved success by working with the community, for the

community, and by the community. PEkkA has worked with

the community and as part of the community to achieve

the dreams and aspirations of the community. It has helped

women leave poverty as farm laborers behind to become

small businesswomen, it has worked so that elderly women

who have never been to school can learn how to read and

write and understand laws that affect them, it has lobbied for

the election of women village heads in regions where not a

single woman has held such an office.

Through a strong civil society, the sovereignty of the

community can be achieved. It is the community that should

determine the direction of political leaders, rather than the

other way round. with the sovereignty of the community, the

community can ensure that Parliamentary representatives

work to achieve the aspirations of the community, rather

than the aspirations of their party or those of political elites.

If a candidate comes to the community for their support and

offers them promises, the community will be empowered

to ensure that the candidate truly strives to fulfill their

aspirations so that he or she can achieve election. At

present, Parliamentary representatives can make promises

to the community and as soon as they are elected, they

can abandon them. To address that, CSOs need to be

able to play a strong role in monitoring and assessing the

performance of elected

officials, in publicizing their

findings, and in articulating

community responses.

within PNPM, CSOs can play

an important role to make

sure that the PNPM Mandiri

program serves members

of the community, who in

the end are its true owners.

with PNPM, but also more

generally, the elimination

of corruption is not the

task of law enforcement

agencies alone. Rather,

the community as a whole

must be involved. In order to play this role effectively,

the community must be fully aware of the negative

impact that corruption has on the lives of everyone in the

community. when they are fully aware of this, they will be

prepared to fight all cases of corruption, minor or major.

Thus, socialization and education concerning the impact

of corruption and on the means for eliminating it must be

intensified. The prevention of corruption through community

monitoring must be assigned the same level of priority

as enforcement of anticorruption measures through the

legal system.

For this reason, according to our agenda, PNPM Mandiri

must be increasingly placed under the full control of the

community. According to this agenda, PNPM Mandiri must

cease to become a government–driven program and become

“PNPM Peduli enables vulnerable members of the

community who were previously forced to live and work through socially unacceptable activities in the community to leave such

activites behind to find self worth and respectability.”

86

a civil society–driven program. we have designed PNPM

Peduli and other PNPM programs to facilitate full community

ownership, because this is the model that will ensure that we

achieve this system of ownership and management over the

PNPM Mandiri to which we aspire.

After only one year, it is not easy to determine whether PNPM

Peduli is a success. however, after engaging in dialogue with

beneficiaries of the program, I am convinced that there is

hope. There is a light at the end of the tunnel. At the very

least, beneficiaries believe that the program might possibly

assist them to achieve better lives. At the very least, this

hope gives them strength to start to act and to believe in

themselves, to believe in the possibility of a better life.

I believe that the PSF has played a strong, positive role in

facilitating the development of this program. At first, I was

annoyed because I had requested that the PNPM Peduli

program include revolving funds to facilitate economic

empowerment, rather than merely providing capacity

building and other training. however, I was finally convinced

by the PSF team that it was necessary to ensure that the

groups were psychologically and mentally prepared and have

the capacities required to engage in productive activities

facilitated through such funding. In the end, I agreed that

if members of vulnerable groups weren’t ready to access

funding through community block grants or stimulant funds,

it was better to work to strengthen their abilities first.

There have been many complaints about the financial

reporting mechanisms required by the PSF in the

implementation of PNPM Peduli. A number of mediators

have presented their protests to me. while I understand

their objections fully, I have worked to convince them

that procedures to ensure financial accountability are

necessary and standard across the world, and that it is

entirely appropriate to implement a system that ensures

accountability over all expenditure, no matter for what it is

used. If the financial systems do not ensure full accountability

over every cent spent, these systems are inappropriate and

may lead to misuse of funds. One of the dangers of programs

such as PNPM Peduli is that beneficiaries will consider funds

provided for their use as an unconditional grant for which

they are not accountable. To overcome this mistaken view, I

have insisted that they implement the appropriate financial

controls right from the beginning. If the organizations

representing vulnerable groups become accustomed to

these procedures, financial accountability will become part

of their culture and will guide their conduct in all matters. In

this fashion, they will win the trust of all the parties that they

deal with.

In my opinion, the PSF has very strict auditing and financial

accountability standards. But the implementation of such

strict standards comes specifically at the request of the

Indonesian Government, which requested that the world

Bank serve as the trustee of the multi–donor trust fund

through PSF precisely because of those standards. The

government has requested that the world Bank apply

best–practice accounting standards through which every

cent provided by donor agencies can be clearly accounted

for. why did the Government make this request? It was

because we wanted mechanisms and systems to ensure

that the standards of financial accountability at PSF were

impeccable. we hoped they would form the basis for a trust

fund that could serve as a model, a benchmark for other trust

funds which may be established for other purposes. There are

many trust funds that have looked to PSF as a guide in such

matters, including the Millennium Challenges Corporation

Trust Fund, amongst others.

Nonetheless, in my opinion, the PSF should strive to improve

its level of service and the quality of facilities and assistance

it provides to beneficiaries so that these beneficiaries

truly understand the importance of a system that ensures

accountability. It is not sufficient merely to impose sanctions

when groups fail to meet standards of accountability. Rather,

it is a matter of finding a balance between facilitating the

correct behavior and imposing sanctions for failures to

comply with the established standards. In order to achieve

this, PSF should increase the number facilitators and trainers

who can address financial management issues so that

beneficiaries have a better understanding and are able to

participate in the program in compliance with the standards

of accountability.

In the end, accountability forms the basis for a sense

of ownership by the community. It is awareness by the

community of their ownership of PNPM Mandiri that will

keep the program alive and relevant. The community must

realize that they own the PNPM Mandiri program, not the

Government, not the Joint Management Committee, and not

any particular cabinets under a given political regime. If the

community feels it truly owns PNPM Mandiri, then it will strive

to achieve the ongoing development and success of the

program into the future. ∞


Through window Four, PSF provides technical assistance

to enable the Indonesian Government to access global

experience and expertise in poverty reduction and

community–driven development as well as technical

and financial resources for rigorous evidence gathering.

PSF also offers an objective platform to review, share and

apply lessons across poverty programs and foster debate

on solutions to poverty programs. Activities implemented

through window Four consist primarily of monitoring

and evaluation, special studies, and technical assistance

to national and local government. A built–in function of

this window is to develop the capacities of Indonesian

organizations such as universities and think–tanks to provide

specialized services for PNPM and poverty reduction.

PSF’s strategy links operations with applied research to

optimize the design of community–based programs to

improve their effectiveness in alleviating poverty and to

better understand social dynamics in Indonesia and their

influence on development and poverty reduction. Several

rounds of impact surveys for PNPM–Rural and PNPM Generasi

have demonstrated positive impacts on household’s income,

including the poor, access to services and employment as

well as strong economic returns to infrastructure investments

and social accountability within the program. Special studies

(such as the Stock — taking study on local Governance,

Revolving loan funds study or urban poverty Analysis)

complement the monitoring and evaluation work to foster

program innovation and inform policy formulation.

In 2011, PSF programs, projects and activities conducted

through window Four included the following:

zz PNPM Monitoring and Evaluation and Special Studies

zz PNPM Delivering Services to the Poor

zz PNPM Poverty Engagement, knowledge and Action

zz PNPM Revolving loan Fund (RlF) Capacity Building and

Sustainability Projects

zz local Government Capacity Development Project

zz Indonesia urban Poverty Analysis, Program Review and

PNPM–urban Evaluation

MonIToRIng anD eValuaTIon

The monitoring and evaluation of the Indonesian

Government’s poverty alleviation and community

empowerment program provides a solid evidence–based

foundation for learning from past and ongoing experience,

improving implementation and service delivery, planning

and allocating resources, and demonstrating results as part of

accountability to key stakeholders. As such, it plays a critically

important role in the successful development of these

constantly evolving programs.

PSF therefore conducts M&E activities to provide stakeholders

with empirical data regarding the results and impact of PNPM

Mandiri, and with more in–depth and operational research

on special topics related to community empowerment and

poverty alleviation. Amongst other goals, these activities are

intended as the analytical underpinning of PNPM, providing

key decision makers for PNPM and the broader poverty and

community empowerment agenda in Indonesia with timely

and relevant evidence, and doing so in partnership with local

agencies so as to build social science research capacity in

the country.

PSF has been working with the Indonesian Government

to conduct full scale and robust impact evaluations for

kDP/PNPM programs since 2008. The evaluations shed light

on the impact of CDD programs on several key welfare

indicators such as consumption, moving out of poverty,

long–term employment, and access to services. The PSF

established practice of conducting robust imact evaluations,

complemented by a range of mixed methods analytic work,

indicates strong commitment, both from the Indonesian

Government and donors, to support the knowledge–to–

practice feedback loop for its key programs.

wINDOw FOuRSTRENGThENING PNPM MANDIRI ThROuGh TEChNICAl ASSISTANCE

90wINDOw FOuR

Given the high emphasis placed on evaluations and

analysis, it is important to have research partners that

are capable and well recognized for their social science

capacity. unfortunately, the capacity to conduct highly

technical studies among Indonesian research organizations

is somewhat limited and insufficient to meet the demand.

while international expertise is an option in some cases, it

is often too expensive to be mobilized for all activities and,

more importantly, may have little impact on the building

of local capacity. PSF has always focused its approach to

research and impact evaluation on working with and through

national research institutes and, by doing so, tries to foster

capacity in these organizations. To intensify this effort,

particular attention goes to diversification of partners and

working closely on initiatives to strengthen the knowledge

sector in Indonesia, including building on AusAID’s efforts in

this sector.

In 2011, a number of studies were finalized and presented to

the Government, with the findings of these studies reviewed

as part of the PNPM Road Map process. The full studies can

be found on the PSF website (http://pnpm–support.org) and

executive summaries of each are included in annexes to this

report. The studies include:

zz PNPM–Rural Impact Evaluation (Quantitative and

Qualitative): This study estimates and analyses the

impact of the project on household welfare, poverty,

employment access to services, social dynamics and

governance. The results will be used as inputs for the

future PNPM–Rural design and to inform strategic

decision making (including as inputs to the PNPM Road

Map).

zz PNPM Generasi Impact Evaluations (Quantitative

and Qualitative): This study assesses the impact of

incentivized and non–incentivized community cash

ongoing monitoring and evaluation work in papua will inform future design improvements for pnpM-Respek.


transfers on twelve key health and education indicators.

Results from these evaluations are used to improve the

project’s design (including project kPIs) and to inform

decision makers on the design of the expanded PNPM

Generasi (Generasi “Plus”).

zz Women Headed Household Empowerment (PEKKA)

Baseline Survey: This study contains baseline data for

PEkkA, the female–headed household empowerment

project, on basic household welfare information (e.g.,

consumption, access to services, access to credit) to be

used to assess project impact.

zz PNPM RESPEK Evaluation of Village Infrastructure and

Institutional Capacity: This study evaluates the quality

of village infrastructure built by PNPM RESPEk in Papua

and the capacity of local institutions related to PNPM

RESPEk implementation to be used to improve project

design as well as to provide information for development

partners of the opportunities and challenges associated

with implementing development projects in Papua and

west Papua.

In continuing to improve the strategic relevance of PSF M&E

works to the Indonesian Government development priorities,

the PSF has undertaken several key evaluations and studies to

be completed in 2012. These include:

zz Infrastructure Census 2011–2012: This study contains

data on the availability of basic infrastructure (e.g., road,

bridges, health and education facilities) in more than

68,000 villages in Indonesia. Data collection was carried

out in coordination with BPS (Badan Pusat Statistik,

Central Bureau of Statistics) during PODES 2011. The

data will be used to provide the Indonesian Government

with estimation of the financing gap needed to ensure

availability of basic infrastructure in all villages in

Indonesia as well as a Supply Readiness Index for health

and education facilities in Indonesia.

zz Impact evaluations: These studies evaluate the impacts

of the Revolving loan Fund (RlF) pilot project, as well as

a proposed addition to the Generasi program to focus

on stunting to inform project implementers on the

achievements of projects, challenges in implementation,

and lessons–learned/best practices to improve

future projects.

zz The Community Management of Development

Portfolio Study: This study analyzes potential and

challenges for integration of various CDD programs at

the community level. It will support Pokja Pengendali

decision making in this area.

zz The Local Level Institutions III Study: This study analyzes

changes in local capacity and social capital in several

areas in Indonesia since 2001. The information from

this study will provide the Indonesian Government

and development communities with an understanding

of how local capacity influences welfare and

development outcomes.

zz Incidence of Benefits Study: This study addresses issues

related to who benefits from PNPM and who doesn’t and

what factors influence the perception of who benefits

in order to help project implementers improve project

targeting and poverty impact.

zz The Governance Review of PNPM Rural:

Community–Level Analysis: This review analyzes issues

related to the governance of PNPM–Rural at kecamatan

and village levels and will be used to improve the design

of PNPM–Rural V.

In 2012, the following studies and activities will

be undertaken:

zz Development of a framework for PSF’s analytical

work program: As the Government’s efforts to clarify

its strategy for PNPM up to 2014 and beyond becomes

clearer, it will be important to articulate the framework

for analytical work that will be needed to support the

implementation of the program.

zz Infrastructure Census: completion of a summary report

and related database on the existence and quality of rural

infrastructure (e.g., main roads, bridges, water supply,

schools and health facilities) for every village in Indonesia.

The report will describe the remaining infrastructure

deficit at the national, regional and local levels and

demonstrate the financing gap in addressing the deficit,

to inform Government planning and targeting, and

allow the Government and public to track and monitor

progress over time.

92wINDOw FOuR

zz Incidence of Benefit Study: completion of data

collection and final report on the incidence of household

welfare benefits at the village level under PNPM (i.e., who

actually benefits from the program), in collaboration with

the world Bank Jakarta Poverty Team.

zz Economic Impact Analysis (EIRR Plus): Delivery of

a study of PNPM Mandiri and SPADA sub–projects’

economic internal rates of returns, cost effectiveness,

and the economic multiplier effects on employment and

poverty

zz Local Level Institutions III: A mixed method study,

continuing the methodology of two previous studies on

local institutions to observe changes in local capacity

(since 2001) and the extent to which state and local

government structures support or impede community

efforts to organize and problem solve.

zz Community Management of the Development

Portfolio: A qualitative study of community capacity to

manage the diverse development portfolio at the local

level and to find lessons learned as inputs to a strategy of

program integration at community level

zz Papua–focused operational research and evaluation:

A qualitative and quantitative studies for PNPM RESPEk, a

special PNPM–Rural program for Papua and west Papua,

to determine the perspectives and participation levels

among beneficiaries and benchmark key program and

social development indicators for future evaluation.

zz Rapid Gender Assessment for PNPM: A review of

gender related indicators and practices under PNPM

Rural to critically examine strategies that have been

identified and/or used over time with regards to women’s

participation and factors that impact their uptake,

success, sustainability, and outcomes.

zz Development of a strategy and mechanism for

capacity–building to Indonesian research institutions to

improve their ability to conduct impact evaluation work,

including research design, analysis and report writing,

and with a particular focus on qualitative methodologies.

A rapid gender assessment will be conducted in 2012 to look at, among other things, the determinants of women participation and factors that affect pnpM’s gender outcomes.


Project Development Objective: To provide stakeholders with empirical data regarding the results and impact of PNPM Mandiri; research in greater depth special topics of concern to PNPM and the social development field in Indonesia; and enhance the ability of Indonesian social science research organizations to conduct M&E and special studies.




KPI 2010 2011 2012 target

Objective 1: Monitoring and evaluation (M&E) activities provide stakeholders with empirical data regarding the results and impact of PNPM Mandiri.

Findings/evidence from 2010–2011 round of evaluations reviewed as part of PNPM Road Map process

5 evaluations launched

2 evaluations completed

Evaluation results disseminated to PNPM Road Map team and

JMC

Government accepts infrastructure database for use in planning/decision–making for TNP2k and BAPPENAS poverty reduction portfolio, in addition to PNPM Generasi and Pkh programming

Infrastructure Census

completed

Database and report submitted to TNP2k and BAPPENAS

Revised Results Framework and associated program of evaluation for PNPM Rural V

RF completed and endorsed by PMD; concept/strategy for

PNPM V evaluation finalized

Objective 2: Research in greater depth undertaken regarding special topics of concern to PNPM and the social development field in Indonesia.

# of studies completed as part of the 2009–2011 round of evaluations

6 3 All studies (9) completed and published

New 2012 studies launched (llI3; gender; ComMgt; EIRR+; Papua)

Concept notes prepared

5 studies launched and fieldwork completed

Pipeline for analytic work (AAA) 2013–2014 finalized in consultation with key partners

AAA pipeline 2013–14 finalized and endorsed by JMC

Objective 3: Ability of Indonesian social science research organizations to conduct M&E and special studies enhanced.

Strategy for the capacity–building of Indonesian research institutions endorsed by JMC

Consultations initiated

Concept note/strategy reviewed, finalized and

endorsed by JMC

Qualitative methodology ‘community of practice’ network up and running

Network established electronically and meeting on

4–monthly basis

94wINDOw FOuR

DelIVeRIng seRVICes To The PooR

when Indonesia’s ambitious decentralization program was

first implemented in 2001, it was argued that the devolution

of authority and responsibility for matters related to health,

education, and other matters would improve service delivery,

primarily by increasing user participation, facilitating local

responsiveness and encouraging accountability. however,

experience since the implementation of this program has

demonstrated that challenges at the district level, such

as mixed political incentives, weak capacity and limited

financial resources, can mean that decentralization does not

automatically lead to service delivery improvements. District

governments are possibly even more susceptible to elite

capture now than prior to decentralization: that is, public

decision making often reflects disproportionate influence by

well–off and well–connected groups.

Standard mechanisms for accountability, such as elections,

audits, and performance benchmarking, often do not work

well in environments where information is scarce, open

elections are unfamiliar or rare, and clarity about performance

standards is lacking. Decentralization can also aggravate

existing social problems. Polarized local environments

can erupt into open conflict when decentralization

leads to the exclusion of one group from government.

Marginalized groups, particularly the poor, often fare worse

under decentralization when local governments do not

see redistributive or highly targeted social programs as

priorities—particularly if the primary beneficiaries of such

programs are people least likely to vote. A great deal of

work is needed to introduce transparency, consultation,

participation, and accountability mechanisms that can link

public administrations with their surrounding communities

and give the poor a greater voice.

Reducing poverty requires significantly improved

coordination with local government service providers.

with governors who strongly support reforms, Gorontalo

and Papua sought assistance to pilot performance–based

incentive mechanisms to stimulate local governments to

improve the efficiency and effectiveness of service delivery,

particularly in the health and educational sectors. In 2008, the

PSF agreed to finance a pilot project in Gorontalo province

(Gorontalo City, Gorontalo and Pohuwato districts) and

Papua province (Jayapura City, Jayapura and Biak districts)

to facilitate the coordination of reforms in public financial

management to ensure more efficient, well targeted

and transparent planning and budgeting processes. The

program also supports the Delivery Improvements and local

Governance (DIAlOG) program, which provides technical

assistance to the six participating local governments

to identify the challenges in delivering public services.

Following this, the program facilitated a series of workshops

to establish medium–term strategies to improve public

service delivery, particularly in health and education.

In 2011, the program provided technical assistance to

local governments to develop these strategies and helped

deliver the following key outputs: (a) medium–term

strategies for the health and education sectors developed

by the six participating districts with TA from the project

— implementation of the strategies is expected to start

following their dissemination; (b) a consolidated report for

the health and education sectors; and (c) a gender report

which was discussed with key stakeholders, including

BAPPENAS, AusAID and local governments (http://

pnpm–support.org/study/health–gender). These project

outputs are expected to help local governments improve

the quality of public service delivery, although capacity

constraints may hinder the implementation of medium–term

strategies. This suggests the need for follow–on technical

assistance to participating local governments and

implementation of the medium–term strategies. All project

components were completed by the end of 2011, and the

balance of unused resources returned to the PSF.


Project Development Objective: To improve the quality of public service delivery and financial management at the local government level by piloting a performance based incentive system to improve their ability to deliver poverty services and implementing their monitoring and evaluation systems.



Closing Date: June 30, 2012

KPI 2010 2011 2012 Target

Completed kabupaten/City mid–term strategies for health and education sectors

Facilitation and Technical Assistance

12 draft mid–term strategies

12 completed mid–term strategies

Completed consolidated health and education report

Facilitation and Technical Assistance

Consolidated health and education report

Completed consolidated health

and education report

Completed Gender report Gender Review and assessment to local

governments

Completed gender report

Completed gender report

kemitraan, one of the csos supported by pnpM-peduli, organized a training in Bangsal Village, lomobok.

96wINDOw FOuR

PoVeRTY engageMenT, knowleDge anD aCTIon

In the period following the Asian Economic Crisis, Indonesia’s

official poverty rate has fallen dramatically, with the

proportion of the population recognized as living below the

poverty line falling from a peak of 23.4% in 1999 during the

crisis to 12.5% in 201118

however, an almost equal proportion of the population have

been categorized as “vulnerable” or “almost poor”, having a

per capita household expenditure only slightly above the

level that defines poverty. Vulnerability is defined here as

the probability or risk today of being in poverty or of falling

into deeper poverty in the future. At any time in the future,

vulnerable members of the community may fall below the

poverty line as a result of any one of a number of personal or

communal calamities, including losing a job, business failure,

harvest failures, illness, accidents, natural disasters, or social

conflict, to name but a few.

In order to be able to successfully protect the vulnerable,

efforts to identify critical constraints and to address these

constraints need to be carefully formulated and effectively

implemented. This requires cooperation between various

actors involved in poverty reduction, including the

central and local governments, civil society, private sector,

international agencies, and communities.

Established in 2009, the four–year Poverty Engagement,

knowledge and Action program was designed to reduce

poverty, promote pro–poor growth and improve social

protection for vulnerable groups. The program’s stated aims

are to:

zz Strengthen poverty and social protection programming.

zz Deepen analysis of pro–poor growth, poverty

and vulnerability.

zz Build technical capacity and know–how.

zz Stimulate policy dialogue and providing inputs to

policy–makers.

In 2010, through this project, the most comprehensive,

empirical analysis of Indonesia’s labor market in the past

twenty year, the indonesia Jobs Report (http://ddp-ext.

worldbank.org/EdStats/IDNwp10b.pdf )

18 Accelerating Poverty and Vulnerability Reduction: Trends, Opportunities, and Constraints, SMERU, NOVEMBER 2010, p i

) was completed. The report recommends that three main

steps be taken to spur job creation in sectors with the

highest possibility of growth. These steps involve: (a) the

design of an integrated welfare program that can provide

an effective social safety net for workers vulnerable to

wage and employment shocks; (b) the negotiation of

lowered severance pay in exchange for a higher level of

unemployment benefits; and (c) an expansion of training

programs to provide valuable employment skills. In 2011, the

report was disseminated to stakeholders for comment and as

input for policy formulation.

In addition, the project co–financed a social assistance public

expenditure review, which includes an assessment of the

major household–based social assistance programs and of

the conditional cash transfer system. This expenditure review

will serve as input for the development of an integrated

family–centered social assistance system by the Government.

Another major output of this project in

2011 was the protecting poor and Vulnerable families

in indonesia report (http://documents.worldbank.

org/curated/en/2012/02/15879721/protecting–poor–

vulnerable–households–indonesia). This report finds many

of the programs intended to achieve poverty alleviation

amongst the targeted groups demonstrate promise, but

that much remains to be done to develop an effective

social safety net. Each program faces design and delivery

challenges and there are significant gaps, leaving many

vulnerable households exposed to the risk of falling into

poverty. The report identifies key reforms that aim to improve

the performance of individual programs. It also proposes

a vision of how social assistance can be reformed and

scaled–up to provide a true safety net and encourages the

Indonesian Government to continue efforts to integrate and

unify programs into a coherent and coordinated system.

An impact evaluation of the pilot household–based

conditional cash transfer program, Pkh, provided the

Indonesian Government with empirical evidence about one

of its priority social assistance programs. The 2011 evaluation

found that Pkh was effective in improving the welfare (i.e.,

consumption) of beneficiary households and their usage

of primary healthcare services, but less positive changes in

education outcomes. Progress has been made to address


several implementation challenges, which will likely increase

the program’s impact in encouraging positive health and

education behaviors.

The program also contributed to the preparation of a report

on targeting the poor and Vulnerable in indonesia (http://

documents.worldbank.org/curated/en/2012/01/15879773/

targeting–poor–vulnerable–households–indonesia), which

was to be completed in 2012. Around 40% of Indonesians

remain vulnerable to poverty and there is a high level of

churning around the poverty line, making it difficult to

identify which households should receive social assistance

benefits. The analysis finds that programs use suboptimal

targeting due to flaws in the methods used, as well as

poor information and awareness–raising activities at all

levels, which has contributed to a lack of understanding

about program objectives and intended beneficiaries.

Recommendations include developing a national targeting

system featuring a unified registry, involving beneficiary

communities in targeting methods, and introducing

methods to keep the registry current given the high level of

movement in and out of poverty.

The project also provided technical assistance to reform

the national socioeconomic survey (Susenas) as a means of

improving data dissemination. At present, many universities

and research agencies cannot afford to buy Susenas data

on which to base a quantitative analysis of poverty and

vulnerability. To overcome this, the project facilitated

the formulation of a Memorandum of understanding

that guarantees free usage of national data by all

Indonesian universities.

A program and public expenditure review of the

Indonesian Government’s eight major household–based

social assistance programs was co–financed by the

project. The 2012 report, protecting poor and Vulnerable

families in indonesia (http://www-wds.worldbank.

org/external/default/wDSContentServer/wDSP/IB/2012/0

2/29/000333037_20120229231135/Rendered/PDF/672170wP

00PuBl0T00English000PuBlIC0.pdf), finds that many of these

programs demonstrate promise, but that much remains to be

done to develop a true social safety net. Each program faces

design and delivery challenges and there are significant gaps,

leaving many vulnerable households exposed to the risk of

the poverty engagement, knowledge and action project supported the most comprehensive analysis of the indonesia’s labor market in 20 years.

98wINDOw FOuR

falling into poverty. The report identifies key reforms that aim

to improve the performance of individual programs. It also

proposes a vision of how social assistance can be reformed

and scaled–up to provide a true safety net and encourages

the Indonesian Government to continue efforts to integrate

and unify programs into a coherent and coordinated system.

An impact evaluation of the pilot household–based

conditional cash transfer program, Pkh, provided the

Indonesian Government with empirical evidence about one

of its priority social assistance programs. The 2011 evaluation

found that Pkh was effective in improving the welfare (i.e.,

consumption) of beneficiary households and their usage

of primary healthcare services, but less positive changes in

education outcomes. Progress has been made to address

several implementation challenges, which will likely increase

the program’s impact in encouraging positive health and

education behaviors.

Project activities were completed in 2011, and the project

is being closed. Overall, the Project has achieved its

development objective of improving the understanding of

poverty and vulnerability in Indonesia and promoting the

policy dialogue on key reforms areas. knowledge generation

has taken place through the production of a series of flagship

reports, which were prepared in close cooperation with

Indonesian Government partners.

Project Development Objective: To enhance the capacity of government agencies and local think tanks to use poverty analysis as a basis for action in promoting equitable growth, through “stand–alone” projects as well as integrated approaches across all platform activities.



Closing Date: July 30, 2012

KPI 2010 20112012

Target

Reforms to the household–based conditional cash transfer program (program keluarga harapan) based on findings from assessments

n/a Achieved n/a

# of programs taking concrete steps to improve targeting performance n/a 3 4

Agreement for free access for all public universities in Indonesia to survey data produced by BPS

n/a Completed n/a

Program and public expenditure review for the GoI’s 8 major household–based social protection programs

n/a Completed n/a

Impact evaluation of the Pkh program n/a Completed n/a

Report on “Targeting the Poor and Vulnerable in Indonesia” n/a Completed n/a

Indonesia Jobs Report Completed n/a n/a


PnPM ReVolVIng loan funD (Rlf) CaPaCITY buIlDIng anD susTaInabIlITY PRojeCT

The provision of access to micro–credit facilities, particularly

micro–credit facilities accommodated through revolving loan

funds (RlF), has been a significant component in a number of

major Indonesian Government poverty alleviation programs

launched since the later stages of the Suharto era, including

PNPM. The RlF components of this program and others

have been intended to provide small loans to poor people

in rural and urban areas who wanted to start or improve

businesses but who have no credit history and limited or no

access to commercial loans provided by banks and other

formal financial institutions, and thereby contribute to the

overarching goal of poverty reduction.

By the end of December 2009, under PNPM–Rural, there were

3,145 sub–districts with uPks (the financial management

units managing both RlF and block grant resources)

operating RlFs, with a total capital of uS$ 332 million.

These RlFs provided loans to 258,779 groups (58% of

them women–only) with an estimated outreach of at least

1.7 million individual borrowers. According to client surveys,

these loans have had positive impacts on household

income, business development, job creation and children’s

education.19 By the end of 2010, an additional amount of

about uS$ 160 million was to be provided as block grants to

the rural RlFs, thus raising the total capital under PNPM–Rural

to at least uS$ 492 million. Together with PNPM–urban,

the total value of revolving funds under the PNPM

program reached more than uS$ 610 million by the end of

2010 (2011 data not yet available but estimated at about uS$

750 million).

while these government programs have contributed towards

poverty alleviation and overall economic growth, a persistent

criticism is that they have often been managed without

consideration of microfinance best practices, creating an

unsustainable source of cheap funds and unfair competition

to commercial microfinance providers.20 Other issues

identified with RlFs under PNPM–Rural and PNPM–urban

include: (a) failure to meet accepted practices for microcredit

management and monitoring; (b) mixed levels of capacity

19 See MICRA Microcredit Strategy Formulation Mission for PNPM, November 2008, page 39 “Program Impact”.

20 Indonesian Country Profile, Asia Resource Center for Microfinance (ARCM), http://www.bwtp.org/arcm/indonesia/I_Country_Profile/Indonesia_country_profile.htm

and skills on the part of uPks, including failure to separate

the management of grants from that of loans; and (c) lack

of clarity on the legal ownership of RlFs. These issues and

the large volume of funds currently revolving in PNPM

communities reinforce the need to put the RlFs on a clear

path towards sustainability. RlFs present an inherently high

potential risk of misuse and corruption, as well as a high

potential for non–performing loans.

In view of these issues, the JMC approved in 2010 the PNPM

Revolving loan Fund Capacity–Building and Sustainability

project to support the capacity building, restructuring

and institutionalization of the PNPM RlF scheme and to

strengthen the linkages between RlFs and the commercial

microfinance sector. By scaling–up sustainable access

to financial services to a larger underserved population

and the development of microenterprises, the project is

expected to contribute to poverty reduction initiatives and

improve livelihoods in PNPM communities. The project is

implemented in three phases. Phase One began in 2010 and

Phase Three will conclude in 2014.

Building on the start–up activities completed in 2010, in the

2011 the project:

zz Completed independent assessments of RLF

performance: Detailed on–site assessments of

governance, management and financial performance

of 508 PNPM–Rural and PNPM–urban RlFs were

completed by an international firm and results reported

for each RlF and consolidated into six provincial

reports. A report summarizing overall results and

recommendations is being finalized for dissemination

in 2012. The assessments confirmed that: (a) RlFs have

provided poor households with access to financing; (b)

there is widespread perception among borrowers and

community leaders that “loans” from RlFs are effectively

“grants” from the government; (c) governance of RlFs

is weak (e.g., accounting requirements not followed

systematically and only 2–3% of RlFs were audited

in the last two years); (d) management capacity in

operating RlFs is low (e.g., inadequate staffing and

significant weaknesses in MIS); and (d) while financial

performance of RlFs varies regionally and between

100wINDOw FOuR

programs (e.g., PNPM–Rural RlFs and those in Java are

substantially better performing than PNPM–urban and

off–Java RlFs generally), overall loan recovery, cost

efficiency and profitability were not at sustainable levels

in a majority of RlFs. In fact, the assessment found

that 45% of PNPM–Rural Rural RlFs and only 15% of

PNPM–urban RlFs may be sustainable or potentially

sustainable. The results of the assessment suggest a

differentiated approach and strategy is needed for

sustainable, potentially sustainable, and non–sustainable

RlFs. The results of the assessment and follow on work

are expected to inform policy discussions around RlFs

in 2012.

zz Expanded project activities: Project activities were

expanded to PNPM–Rural off–Java locations and all

PNPM–urban locations in 2011, including socialization

workshops for more than 350 urban economic

facilitators, city coordinators and other stakeholders, and

80 PNPM–Rural stakeholders.

zz Developed tool to assess RLF performance: An

analytical framework was developed and tested to assess

financial performance of the broader population of

PNPM–Rural RlFs using existing MIS data. The framework

will support project–level decision making, including

capacity building and MIS activities in the pilot provinces.

zz Explored linkages with the formal financial sector: A

dialogue was initiated with commercial banks to explore

opportunities for linkages between the PNPM RlF

scheme and the formal financial sector. A stock–taking

study on lessons learned from PNPM RlFs that have

established cooperation with bank and non–bank

financial institutions was designed for implementation

in early 2012. Results from the study will be used to

develop the linkage strategy for RlFs and support project

implementation more broadly.

In 2012, the project will focus on: (a) implementing MIS

activities and building capacity of RlF staff according to

needs identified in the RlF performance assessments; (b)

determining legal ownership of RlF funds and considering

models for possible transformation of eligible RlFs into new

legal forms for sustainability; (c) developing a differentiated

approach and strategies for sustainable, potentially

sustainable, and non–sustainable RlFs; and (d) providing

technical and policy recommendations and tools to assess

and improve RlF performance.

pnpM Revolving loan funds have helped poor community members, particularly women, in creating small businesses.


Project Development Objective: To support the capacity building, restructuring and institutionalization of sustainable PNPM RlFs and to strengthen linkages between them and the commercial microfinance sector.




KPI 2010 2011 2012 Target

% increase in no. and amount of loans to groups and their members in RlFs receiving support under the project.

n/a Baseline data collected. TA to RlF staff ongoing.

# of RlFs supported by the project that have institutionalized in a legal form that is appropriate to the local context.

n/a Desk review of relevant laws completed.

Procurement of local legal firm in process.

Available legal structures and process identified. Socialization to eligible

RlFs started.

# of RlFs with increased non–government financial resources and that achieve financial self–sufficiency (for well performing RlFs).

n/a Too early to report Too early to report in 2012. This outcome is expected

to materialize in 2013.

Component 1. Capacity Building and Institutionalization

# of RlFs for which sustainability assessments have been completed

Ongoing 508 Consolidated and individual reports

completed

legal review completed (to determine the appropriate legal structure for RlFs based on a menu of institutional options).

Planned Procurement in process Ownership status of RlFs clarified. Options and process specified for

transformation of RlFs into other legal structures.

# of RlFs supported by the project that have received high quality microfinance technical assistance and training.

n/a Procurement of TA in process

Capacity building ongoing.

% of RlFs supported by the project that have improved in their rating based on key performance indicators.

n/a Baseline ratings provided for sample of RlFs. System

for ongoing ratings being developed. TA

procurement in process.

New rating system established. Capacity

Outcomes are expected to materialize in 2013.

Component 2. Bank Linkages

Stock take on lessons learned from the PNPM RlFs that have established cooperation with bank and non–bank financial institutions.

Planned Review initiated Case studies of good practice socialized to RlFs.

# of RlFs supported by the project with linkages with commercial banks.

n/a Too early to report. Dialogue with Banks

initiated.

Increases are expected for 2013 with capacity

building support.

Revision of current SOPs on PNPM–RlF completed. n/a Ongoing assessment showed which areas need

strengthening.

Revised SOP or technical guidelines issued for RlFs

supported by pilot.

Component 3. Monitoring and Supervision System

Impact assessment designed n/a Design completed Data collection ongoing

% of RlFs supported by the project for which regular, complete and timely performance rating results are available.

n/a Ratings provided for sample of RlFs and system

for ongoing ratings being developed. MIS support

being procured.

Rating system established and RlFs in pilot provinces

routinely assessed. MIS solution deployed to test

RlFs and support more sophisticated ratings.

Component 4. Policy and Strategy

key stakeholders agree on long–term strategy and phasing–out of direct government support.

n/a workshops held with key national level stakeholders

held to discuss progress and future actions.

Strategy reflected in PNPM–urban and

PNPM–Rural 2012 Project Appraisal Documents.

102wINDOw FOuR

wOMEN in Central Java receive loans from the PNPM Mandiri program to establish and expand a number of small businesses, including those producing traditional textiles such as lurik and batik.

Ibu Sunarmi lives in the village of Cabean, in the Central Javanese district of klaten. Since longer than any living member of the village remembers, the women of this village have produced a colorful, stripy cloth known as lurik. It is hand–woven on simple, manually powered and operated machinery. In the past, women mostly produced this cloth for the use of their family, occasionally selling surpluses at local markets. however, as appreciation for fine handicrafts has grown across Indonesia, so has the market value of this cloth, which is now often sold at handicraft and fine textile stores in Jakarta and across the nation.

Ibu Sunarmi describes the growth and development of her business as follows: “until 2006, my weaving business was doing well. Then, the earthquake struck. Thank God, practically no–one in the village was badly hurt. But many of us suffered damage to our houses and to our businesses. Prior to the earthquake, I owned four looms. Two were completely destroyed. At the same time, we had to spend a lot on repairing the house.”

In 2008, the PNPM–Rural Mandiri program was established in a sub–districts and villages throughout klaten. Through this program, cheap business credit was made available to women, many of them weavers. Ibu Sunarmi says: “It was a God–send. The program offered credit at around one or two per cent per month. Before that, a lot of women relied on money lenders, who charged ten or fifteen percent. If you had a bad month, you might be working just to pay the interest. The PNPM program makes loans available to a group, not to an individual. The group takes collective responsibility

wEAVING A lIVING

for the repayment of the members’ loans. If one woman is late, then the others cover her debt. There are eleven women in my group, and fifteen groups in the village. we all know each other and trust each other. we work together and help each other. we want our friends to do well, so that they can each meet their commitments. we’ve never had anyone act irresponsibly.”

“In 2008, I received a loan of Rp 1 million. with some of my own funds, I was able to buy a new loom. That loom helped me increase my income, so the next year I applied for a higher loan, of Rp 1.5 million. As everyone’s business has grown and we’ve established the habit of saving, we’ve become eligible for higher loans. This year, I applied for Rp 3.5 million. Each year, I’ve bought a new loom or expanded my production facility. My business is going well now. we employ 15 workers, as well as providing employment to outworkers, who weave at their own homes. we’ve almost forgotten the earthquake now. we’ve moved on,” says Ibu Sunarmi.

Ibu Sunarmi admits that the growth of her business is hampered by her lack of skills in business administration and marketing. She says: “we realize that to make money, we have to present our cloth in packaging to make it attractive to modern, urban consumers. we also need to be able to keep good records so that we can register our businesses and apply for loans. In 2012 the PNPM program is going to concentrate on developing our skills in those areas. we need to move forward. Even though we are making traditional Javanese cloth, we need to be able to operate in a modern, business context.”

Ibu Sunarmi maintains a website showcasing the lurik cloth she produces at http://luriklaten.blogspot.com/

photo: Josh estey.


loCal goVeRnMenT CaPaCITY DeVeloPMenT PRojeCT

Indonesia has a three–tier unitary government structure,

with 33 provinces and 498 rural districts and urban cities

spread over some 17,000 islands containing more than

300 ethnic groups. Prior to the end of the New Order era,

despite its diversity and size, Indonesia had one of the

world’s most centralized fiscal and administrative systems,

which resulted in tenuous links between local demands and

decisions on local public services, weak mechanisms for

local accountability and ad hoc allocation of fiscal resources

across regions.

In 2001, the Indonesian Government implemented a

massive decentralization program under which authority

and responsibility for the delivery of education, health, and

many other basic services was devolved to the district level.

In 2005, the previous system of central–level appointment of

district executive heads was replaced by a system of direct,

popular elections. Decentralization was carried out with a

“big bang,” often without adequate preparation or capacity

development at either the local or central level and many

gaps remain. There is considerable variation across provinces

and districts in their capacity to implement decentralized

responsibilities, and a discrepancy between the standards for

public services and the resources allocated to them.

One of the objectives of decentralization is for local

governments to become more responsive to the needs

of their constituents. In Indonesia this goal is hampered

by a number of constraints. At the local government level,

the capacity to implement new responsibilities is often

low. Furthermore, local responsibilities are not always

clear. The lack of responsiveness to community priorities

by local government agencies is a main impediment

to mainstreaming and sustaining PNPM and other

community–driven approaches to poverty reduction. The

government’s musrenbang (multi stakeholder consultation

forum for development planning) process does not result

in a large proportion of community–level priorities being

funded through district budgets. Community needs have

largely failed to shape or inform district budgets or poverty

reduction strategies, which result in only a small percentage

of community priorities being incorporated into district level

development plans.

The local Government Capacity Development (lGCD) project

aims to improve pro–poor planning and service delivery

and promote social accountability approaches to foster

local government responsiveness to community demand.

Activities aim to improve the participatory planning process

from communities up to the district level, focusing on

improving pro–poor planning and budgeting and building

better linkages between the community planning in PNPM

and line agency service delivery. Through this program, it is

hoped that improved responsiveness to community level

demand will strengthen local level governance and improve

service delivery, resulting in services that are less expensive,

of better quality, and more responsive to local needs

and preferences.

Phase One of the lGCD project, which ended at the end

of 2011, focused on analytical studies of lessons learned

from various community driven development programs

and piloting of a toolkit for Pro–Poor Planning, Budgeting

and Monitoring (P3BM). All four analytical studies under this

project (local Government stocktaking study, spADA study,

p2spp study, and impact Assessment of p3BM) were completed

in 2011 (http://pnpm–support.org/lG–analytical–study).

Policy notes based on these studies have already been

discussed with key stakeholders, while final reports are being

reviewed by peers prior to publication.

To facilitate the discussion of lessons learned, the findings

from these studies which are most relevant to ongoing

poverty reduction efforts were disseminated in a regional

workshops in May 2011 and a national conference in August

2011, are being consolidated into a single report which

focuses on: (a) the link between community needs and

planning processes; (b) barriers and impediments to the

delivery of quality public services to communities by local

governments; and (c) the interaction between PNPM with

regular development planning, and the preparation of local

government to a transition in PNPM after 2014. This report

will formulate a set of policy recommendations on how local

government service delivery can be made more responsive

and accountable, and thus serve as a foundation for the

design of the Phase Two of the Project.

Following–up on the P3BM training, the provincial and

district governments in Banten, west Nusa Tenggara

and Central Java financed a series of workshops to


Project Development Objective: To improve pro–poor planning and service delivery and pilot social accountability approaches to foster local government responsiveness to community demand.




KPI 2010 20112012 target

(For phase 2)

Component 1. Analytical studies

# of studies on lessons learned from various CDD programs completed to support roll–out of good practices

0 4 1

# of policy notes prepared 0 4 1

# of participants in discussion of policy relevant findings 100 410 750

Component 2. Piloting of P3BM tool kit

# of national and provincial master trainers 26 99 200

# of local government officials trained in P3BM toolkit 0 189 1,250

# of provinces that establish P3BM clinics 0 2 7

# of districts that use P3BM tool to monitor poverty data 0 1 15

support the rolling–out of the P3BM toolkit and improve

pro–poor planning and budgeting. Outcomes included

the establishment of a database system on MDGs and local

development, which feeds into the district planning and

budgeting document. Poverty data will be verified and

validated through a multi–stakeholder forum, while a P3BM

Clinic will be established through a Gubernatorial Decree

to institutionalize pro–poor planning and support village

planning processes. A proposal for a national roll–out during

Phase Two will be submitted to JMC approval in April 2012.

The analytical studies under Phase One focusing on

improving participatory and sector planning, documenting

and analyzing best practices, and identifying and managing

capacity gaps have been completed. The studies build on a

recent shift away from debates about allocations and analysis

of supply side spending to a focus on the quality of service

delivery, and the role that citizen groups and communities

have to ensure that services are provided responsibly and

accountable. They showed that demand–side governance,

including downwards accountability and access to

information, is starting to take root among civil society and

local governments. As a result, there are opportunities for

piloting a range of reform triggers and tweaking the incentive

structure for public service improvements. The studies found

that, when local–level reforms occur, triggers for performance

are commonly a combination of public entrepreneurship,

civil society activism and tweaking of the incentive structure.

Reform–minded government officials can thus integrate

CDD approaches and find traction for performance if they

are backed by civil society action groups and are provided

with recognition and public support. however, there are few

institutionalized mechanisms for citizens to hold government

actors to account.PNPM practices can act as a catalyst for

improvement of these processes.

In Phase Two of this project, which will commence in

2012, the focus will be on the scaling–up of best practices,

supporting networks of reform–minded district governments,

and addressing skill gaps and context gaps identified during

Phase One, with a particular focus on fostering community

demand for improved service delivery through social

accountability and community monitoring.

106wINDOw FOuR

InDonesIa uRban PoVeRTY analYsIs, PRogRaM ReVIew anD PnPM–uRban eValuaTIon

like other developing countries throughout the world,

Indonesia is steadily urbanizing. The proportion of the

population living in cities has increased from 19.4% in 1975,

to 30.9% (or 55 million people) in 1990 to 39.4% at the end of

the millennium. Population projections indicate that urban

dwellers will surpass their rural counterparts as a percentage

of the population between 2010 and 2015, rising to a total of

60.7% by the year 2025 (or a total of 167 million in a projected

population of 276 million) (BPS Susenas data in ADB, 2001).

how many poor people actually live in Jakarta and

Indonesia’s other major cities depends, of course, on one’s

definition of poverty. The truth is no one knows for sure.

Indonesia has used varying — sometimes conflicting —

methodologies to measure poverty. In some cases, it is not

clear that these methodologies draw an accurate, meaningful

picture of poverty in the urban context, where the poor rely

heavily on the cash economy and thus are more vulnerable

to fluctuations in income than the rural poor, who may be

able to supplement their household supplies with kitchen

crops. In addition, there are severe environmental and health

hazards due to crowded living conditions in urban slums,

and no tenure security. Other multidimensional aspects

of poverty relate to access to basic services such as water,

sewage, health and education. Thus, urban poverty is a

multidimensional phenomenon that escapes facile analysis.

The Indonesia urban Poverty Analysis, Program Review and

PNPM–urban Evaluation project has three main objectives:

(a) to provide a basis for understanding the dynamics and

characteristics of urban poverty in Indonesia; (b) to review

urban poverty programs in Indonesia to assess the extent to

which they address the needs of the urban poor; and (c) to

undertake a process evaluation of the PNPM–urban program

which examines internal efficiency, documents good

practice, distills lessons learned, and identifies options for

program reform that could increase its effectiveness.

pnpM-urban financed free health care services in central Java.


The program consists of three major

inter–related components:

1. Urban Poverty Profile: The purpose of this profile is to

provide a basis for understanding the characteristics

and dynamics of urban poverty in Indonesia and to help

identify the needs of the urban poor.

2. Review of Urban Poverty Programs: This review will

involve the compilation of a master list of government

programs aimed at poverty alleviation in urban areas

and a comparison between several of these programs

to determine the extent to which the various programs

meet the needs of poor people in cities.

3. Process Evaluation of the PNPM–Urban Program: This

evaluation is intended to identify the strengths and

weaknesses of the PNPM–urban program, especially in

terms of governance and the facilitation of access to

services. In addition, it will document good practices

and distill lessons learned as input for further program

modifications and design.

In 2011, the Rand Corporation, to which the project was

contracted, completed a version of the process evaluation

of the pnpM–urban program, which has been revised on the

basis of input from the PNPM–urban team. A first draft of

the urban poverty profile and program Review, conducted by

the same contractor, was submitted in November 2011, with

extensive comments provided by the task team and peer

reviews (http://pnpm–support.org/evaluations). A revised

version was submitted in March 2012. key findings from

these documents were incorporated as input for the concept

note for the PNPM–urban IV project, and the task team is

preparing a policy note. while some of the intended analysis

for the urban poverty profile has not been possible due

to unforeseen data limitations, the full study is tabled for

completion in 2012.

During 2012 the key priorities for the project will be to

finalize the work and ensure that the key findings are

incorporated into the design of the PNPM–urban Program

and strategic directions on urban poverty are discussed

with key stakeholders. Two policy notes are being prepared

by the world Bank and will be ready in May 2012 along with

the final RAND reports. In early 2012 a rapid assessment was

also commissioned on the Neighborhood Development pilot

program given that there was a request for more information

on the topic following the November 2011 workshop and

during the project preparation process. This study will be

incorporated into the policy notes and finalized along with

the full package which will be ready for broad dissemination

in June 2012. In May, further plans for dissemination will be

identified. The need for further identifying improvements to

the MIS was also identified and a consultant would be hired to

guide the team on how to enhance the current system. ∞

Project Development Objective: To understand the PNPM–urban approach in the context of urban poverty in Indonesia today, its strengths and weaknesses and links to other urban poverty programs, and bring in global experiences in urban CDD–based poverty interventions.




KPI 2010 2011 2012 Target

Incorporation of key recommendations into the design of PNPM–urban

n/a Ongoing Completed

PNPM–urban process evaluation n/a Final report under review

Completed

urban Poverty Analysis and Program Review n/a Final report under review

Completed

108wINDOw FOuR

however, the first programs in which community–driven

development were really the central and driving principle

were kDP and uPP. In both these, development initiatives

and planning were one hundred percent community–driven.

In addition, funds were disbursed directly to community

groups. The mechanism of channeling funds directly to

these groups was the unique innovation that made these

programs different from all those that preceded them. Right

from the beginning, this has had a dramatic positive impact

on reducing corruption and

achieving better results.

Of course, there are still

incidences of corruption

within the PNPM program,

but a much lower rate than in

other, previous government

programs. Systems are in place

in PNPM to detect corruption

if and when it occurs and

to recover funds and take

actions accordingly.

The other major innovation

of the program was the

deployment of a huge force

of village level facilitators.

These facilitators didn’t create

village level institutions, they

worked with existing ones.

Actually, I believe that what

they do is very natural and

simple: they are helping to

facilitate a process that has

deep roots in Indonesian

culture. In almost every

single region of Indonesia,

there are strong, local level

village organizations that

have always been used

to address matters of community concern. If you go to

any village in Indonesia, you’ll find a community hall or a

public meeting place. Those facilities weren’t created by

the Government, they have existed throughout history.

The exact nature of the organization may vary from place

to place, in Bali it is the banjar, while in west Sumatra it is

the negara, but these institutions exist all over Indonesia.

COMMuNITY–DRIVEN development is a very powerful

force in Indonesia. Indonesia is composed of a multitude

of ethnic groups, each with its own culture. In the past,

development in Indonesia was driven by a top–down

paradigm, with decision–making made at the center. This

meant that development programs were often characterized

by a one size fits all approach. In Indonesia, not only does

each community have a different culture, it has its own

economic and social needs. You can’t apply a single solution

for all of the country’s

different communities.

But community–driven

development gives each

community the space to

determine its own needs.

The top–down development

paradigm was dominant

in Indonesia at least until

the 1980s. At about that

time, the Government

began to experiment with

a more community–driven

approach. One of the first

big government programs

to attempt to include

the principles of

community–driven

development was the program

pembangunan kawasan

terpadu (Integrated zone

Development Program),

which began under

former President Suharto’s

administration. Even though

the term ‘community–driven

development’ wasn’t used

at the time, the program

was designed to canvass the

opinion of local community members and to integrate their

inputs into the implementation of associated projects. later,

the Village Infrastructure Project and Inpres Desa Tertinggal

also moved towards a greater inclusion of input from the

community, with broad input from community members

regarding the design and implementation of projects under

this program.

rudy praWiradinataDIRECTOR OF POVERTY REDuCTION, ThE NATIONAl DEVElOPMENT PlANNING AGENCY/BAPPENAS


different culture. At the level of implementation, PNPM

is always guided by local wisdom. People always say that

you can’t design a single program to meet all Indonesians’

needs, and that’s true if the center enforces its own ideas

and priorities, as under top–down development. It’s the

bottom–up approach that has allowed this program to be

scaled up and implemented across Indonesia.

PNPM is an extremely adaptable and flexible program. It can

be adjusted not just to meet the needs of different cultures

and communities under normal circumstances, but also

to meet the needs of communities devastated by natural

disaster or in other extreme and unusual circumstances.

Following the 2004 Tsunami, I served as the Director of local

Government Capacity Building in Aceh. I saw at firsthand how

the urban Poverty Program could be utilized to solve issues

that could not be solved

by a top–down approach. I

remember that there were

proposals to build new road

systems that led inland

and uphill to make them

more suitable to facilitate

evacuation and escape in the

event of future tsunami or

similar disasters. The problem

was that these roads had to

be built over private land,

for which no funds were

available for compensation.

uPP facilitated a redivision of

land titles to ensure that the burden of the costs was shared

equitably. The process involved a community mapping of the

lands to determine how the redivision was to be conducted.

while it was a time–consuming process, the end result was

far better than any top down process could ever have been.

I believe that community–driven development goes way

beyond the PNPM program. The PNPM program is intended

to run at least until 2014, but whether or not it continues

in its current form, the Indonesian Government will have

to continue to be guided by its underlying principles.

In the end, it’s the approach that works for Indonesia.

Through community–driven development, Indonesia can

achieve the national vision of Bhinneka Eka Tunggal, or

‘unity in Diversity’. ∞

It is not the role of PNPM to create these institutions,

except in rare cases where such institutions have become

dysfunctional or do not exist. Rather, PNPM has to work

with these institutions and through these institutions. PNPM

works by encouraging the community to use these facilities

to determine why they are poor and what they can do

about it. The facilitators really only support the community’s

initiatives and help its members to shape their plans so that

they can be implemented. Of course, that’s a vital role: the

quality of PNPM is highly dependent on the quality of its

facilitators. Ensuring that we have a strong, dedicated corps

of facilitators is vital to the program, and building this corps is

a challenging task. But the primary assets for the program are

the community institutions.

Of course, this does not mean that local governments are

irrelevant under the PNPM

program. They also have a

vital role to play, particularly

as the provider of essential

health, education and other

services. Our goal is to ensure

that with the implementation

of decentralization, these

local governments have

the capacities that enable

them to be responsive

to community needs.

For that reason, we have

implemented a wide range

of pro–poor planning and

budgeting programs and other building capacities for

local governments. One tool that we are experimenting

with now is PNPM–Integrasi, a project within PNPM–Rural,

which provides incentives in the form of increased budget

allocations for local and district governments if their planning

processes are designed to accommodate community–driven

plans developed through participatory approaches under

the PNPM program. Of course, the means by which they

achieve these goals may also vary from district to district

and region to region, because they must be aligned with

community priorities.

So, even though PNPM uses the same basic mechanisms

across Indonesia, with the same operational guidelines,

the way that it is implemented in every village is different,

reflecting the different needs of each community and their

“In the end, community–driven development is the approach

that works for Indonesia. Through community–driven development, Indonesia can achieve the national vision

of Bhinneka Eka Tunggal, or ‘Unity in Diversity’.”

110

STRATEGIC DIRECTIONS FOR 2012 AND BEYOND

ThE 2011 National PNPM Congress provided a platform

for representatives from communities, local governments

and various other stakeholders to share and discuss with

the senior leadership in Menko kesra, TNP2k, BAPPENAS,

the MohA, and the MoPw what their views, dreams and

aspirations are for the PNPM Mandiri program up to 2014 and

beyond. The result of this and various other discussions

are being encapsulated in the PNPM Road Map, which is

scheduled for finalization in October 2012. when completed,

this Road Map will provide a clear articulation of the strategic

directions for PNPM.

while the formulation of the Road Map is not yet complete,

a number of themes have already emerged. In general terms,

a major area of focus is on the provision of the necessary

support so that other areas of local government can adapt

and emulate the lessons learned from PNPM. Another

major theme is ensuring that villages receive the support

and financing needed so that (a) the planning of service

delivery responds to communities’ priority needs; and (b)

communities can hold the local governments and service

providers accountable for the effective implementation of

the plans that were agreed upon, and for the transparent

use of the budget. Much of the practical implications of this

broad direction remain to be developed, but at this point,

the Indonesian Government representatives in the JMC have

already indicated the intention to move forward with the

establishment of “One village, one plan”, through which all

budgets formulated at the village level will be fully accessible

to all members of the community, enabling community

members to actively monitor the use of these resources.

Much of PSF’s focus in 2012 will be on supporting the

formulation and implementation of the Indonesian

Government’s PNPM Road Map. The lessons from the

consultations to date indicate that empowered local

institutions, participatory planning, and accountable

budget execution and service delivery will be the major

focus of these activities. In line with this, the working

hypothesis underpinning PSF’s program is that community

empowerment leads to better welfare outcomes and social

justice. To foster these welfare outcomes, special attention

will go to: (a) making sure that the most vulnerable and

marginalized groups have a say in the development process;

(b) adapting the PNPM program so that it is better able to

respond to the different needs of specific communities;

(c) empowering women; and (d) supporting the economic

empowerment of the poor, especially women’s groups. In

terms of social justice, there will be an increasing focus on:

(a) improving the basic rights of the poor and vulnerable;

(b) strengthening the accountability of local authorities to

communities and beneficiaries; (c) addressing inequality; and

(d) establishing or strengthening the channels for recourse if

and when the rights of the poor are not honored.

Community empowerment by itself has its limits. while it can

increase demand for better services and better governance,

empowered communities on their own can only achieve so

much if they are not supported by their local governments

or if they don’t receive the services they need to support

their development efforts. In other words, the results that

can be achieved through community empowerment alone

are limited if there is no clear accountability on the part of

duty bearers or if there is no transparency in the budgets

that are intended to support these communities. To foster

this transparency and accountability, PSF will continue

to strive to: (a) support the Indonesian Government’s

governance and anti–corruption initiatives for its Cluster Two

poverty reduction programs; (b) strengthen mechanisms

for the effective and transparent transfer of resources to

112STRATEGIC DIRECTIONS FOR 2012 AND BEYOND

communities; and (c) improve core systems and procedures

for the effective management of the PNPM Mandiri program.

In addition, PSF will increasingly focus on supporting leaders

at various levels in government and civil society to ensure

that they can learn from each other’s experiences and that

all stakeholders have access to the data necessary to inform

policy making. To further foster accountability on the part

of local governments and service providers, efforts will be

made to address the information asymmetries between

communities and those who serve and govern them.

The governance and anti–corruption work will also play

an important role, as will a thorough examination of the

internal dynamics and power structures within communities

and households.

Pursuing these various areas of work is a massive undertaking

that will require strong partnerships with a range of

organizations that are active in these areas. At the time of the

printing of this report, PSF is actively involved in discussions

with these partners to determine how the respective

efforts of all stakeholders can complement each other, and

who is best equipped and positioned to do what. It is our

ambition that establishing this collaboration can not only

help to galvanize support of various actors involved in social

development in Indonesia, but that it can also lead to an

increasingly meaningful dialogue between these actors. By

doing so, PSF can move towards achieving the role for which

it was created: to foster the emergence of a social movement

for social development. ∞


sCott guggenheiMFORMER hEAD OF PNPM SuPPORT FACIlITY

whAT I like about PNPM is that when it works it broadens the

way we think about development. Deep beneath the surface,

the PNPM program is founded on a fundamental contract

between government and communities: the understanding

is that if the Government provides money to communities,

the communities will use it well. One of the greatest

achievements of PNPM, above and beyond any of the specific

achievements of any particular project towards achieving

specific goals, has been the

legitimation of a discourse

in which communities are

regarded as valuable, one

in which we recognize that

poor people are capable

of making smart decisions

about the issues that

affect them most critically.

PNPM has legitimated a

discourse in which we

think about partnerships

between governments and

communities, rather than

thinking of government

as above society, and in

that sense the program

symbolizes a break from how

New Order development

programs thought

about society.

By itself, the idea of

community development is

nothing new in Indonesia.

PNPM fits into a long

trajectory of Indonesian

thinking about how to utilize

Indonesia’s vast social capital.

Even so, at the time when

what later became PNPM

first began, a lot of New

Order, top–down, centralized, authoritarian thinking about

the vertical relationship between the Government and the

community was extremely entrenched. The idea of direct

cash transfers to communities was a near heresy. The fact that

this mechanism is no longer controversial shows how far we

have come.

You can see that from the way the PNPM program has spilt

out over its own sides and influenced other government

activities how its ideas have become more widely accepted.

For example, the BOS program, the Indonesian Education

Department’s School Operational Assistance program,

structurally has nothing to

do with the PNPM program

and is administered through

a completely different

bureaucracy. At the same

time, it has adopted many

of the principles and

mechanisms of the PNPM

program, such as the

disbursement of funds for

operational expenses to

schools to utilize according

to the priorities determined

by a school council that

includes parent and

community representatives.

Many provincial

governments have also

established programs that

are run on similar principles

to achieve all sorts of goals in

many different fields.

PNPM had the potential to

change the way we think

about development, and

it has already come some

way. But we aren’t there yet.

I think a sign that PNPM will

have achieved its ultimate

goals will be when people

eventually take participation

and accountability for granted. People should see the

delivery of services as a fundamental right that they can

enforce in the political arena. At the moment, participation is

still regarded as something special, a significant achievement

in its own right. PNPM will have succeeded when people


and worries that something, somewhere, will bring down the

whole house of cards!

keep in mind that absolutely nobody was well prepared for

that scale–up. while the lack of integrated management and

information systems didn’t matter much when the program

was a small pilot, that lack had a qualitatively different

impact when the program was scaled up. Integrating those

systems has taken years, and is only just being achieved.

Another issue relates to human resources. The actual size of

the core team managing PNPM at MohA didn’t increase by

much through the scale–up, although their responsibilities

and duties grew by several

orders of magnitude. All

of the sudden, they had

to coordinate between a

vastly greater number of

stakeholders and oversee a

program that covers some

60,000 villages, three time

zones, and the world’s most

diverse country, all in a

context of political turmoil,

endless fiduciary risk, and

the normal Indonesian challenges of tsunamis, earthquakes,

and floods. They’ve done a surprisingly good job given all

of the constraints facing them — but they shouldn’t have to

be facing so many constraints in the first place. Thirdly, the

scale–up happened in the context of decentralization, when

who is supposed to do what for this program became fuzzier

rather than clearer. Finally, and this is something that we

realized only when senior officials asked us to increase field

oversight, Indonesia has no formal body with the ultimate

responsibility for the coordination and management of

its development initiatives. BAPPENAS does planning, the

Finance Ministry looks after finance, but no single, high level

body is responsible for the coordination of all the elements.

That’s one major reason why the Government first formed the

PSF, and why it continues to play an important role.

we shouldn’t be surprised by the fact that PNPM is not

yet complete. For some reason, people expect that the

social reforms and improvements that took fifty years to

achieve in Germany, England or the united States should

can almost stop thinking about participation, because

it is regarded as the completely normal, standard way of

doing things.

how likely is this to happen? To be honest, I’m not sure.

There are many ways for PNPM to fail. PNPM began with

the idea that it was the first step in a large social reform

movement. Instead, as the program has grown and become

institutionalized, there is an increasing tendency for it to

become viewed as a merely a project, another way for the

Government and development agencies to invest money.

You can see that by how people involved with the project

spend their time. A lot of

the time people are focused

on project–type issues:

what are the mechanisms

to integrate this project with

that local district agency’s

activities? how do we develop

a fair system of remuneration

for facilitators? how do we

pay transport allowances?

Those are all important and

legitimate issues, but they

are specifically bahasa project issues. Too much attention

to these issues on the part of the people involved takes the

focus away from the big picture challenges that a high level

body like the Joint Management Committee must also be

thinking about: what is the role of civil society? how do we deal

with marginality and social exclusion? how is the social contract

between the community and government to be redefined? Those

aren’t questions addressed through a project, they have

to be addressed through a social movement that involves

communities, governments and their agencies, and civil

society organizations in a contested and dynamic process.

Of course, you have to remember what’s happened since

2007. PNPM was actually at the point of being wound up in

2006. Then the Government turned around and decided to

transform a pilot project into a nationwide program by 2010.

People forget what a large country Indonesia is: That’s like

trying to set up a comprehensive, nationwide program that

involves every town and village in the united States. It’s not a

surprise that virtually every person and system involved with

PNPM has been living five years of constant stress, overwork,

“PNPM will have succeeded when people can almost stop

thinking about participation, because it is regarded as the completely normal, standard

way of doing things.”

116

be implemented in a decade or less in Indonesia. long

term institutional and social change takes a long time to

achieve. The idea that you can go from the 1998 New Order

— hyper–centralized, deeply militarized, pretty corrupt and

very authoritarian — to something participatory, inclusive

and transparent in less than 15 years is not realistic, yet

people expect social transformations to happen because

somebody passed a law decreeing them to appear. Still,

if PNPM is to survive as an idea, it needs to keep coming

back to that vision of making community development a

pillar of Indonesia’s democracy and not just a cheap way to

build roads.

Asking me to assess my own and the Bank’s role in this

theater is a little unfair! In one sense it’s been a great

adventure for all of us. I love knowing that all of the pain,

heartache, and stress in the end still mean that villages

in Maluku can for the first time make open, transparent,

harmonious decisions about what development should mean

for them — and then get the resources and freedom to do

it. And I love watching so many young, idealistic Indonesians

take part in the program and visibly blossom at the chance

to help people make development something substantive

and real. Overall I think that PSF has played and continues to

play a useful role as an important technical support unit for

the Government but also, when it works, PSF is a place where

new ideas can be discussed, tested, and used. So no regrets,

and ongoing optimism on the future of PSF.

At the same time, I’m not going to gloss over the problems.

The world Bank’s been as unprepared as anyone else to cope

with the scale–up of a national program. Some problems

have been just been part of the process. But others could

and should have been avoided, such as the large gaps in

senior staffing and effective management decision–making

that happened just when a steady hand was most needed.

The world Bank’s internal coordination is nowhere near as

good as it should be, and I think that there were far too many

missed opportunities when clear, consistent, and relevant

advice would have helped Indonesia more than what they

got. PSF — and here I fault myself more than anyone else

— has also spent so much time on the day to day parts of

running the program that it’s let too much of the long–term

capacity work languish. On balance, I’d give us a B– : okay

performance, plenty of room to improve. ∞


communities decide on their own development priorities through a democratic, transparent process. they often prioritize education to build a better future for the next generation.

The goals of PNPM Mandiri are:

zz To alleviate poverty by raising rural incomes.

zz To strengthen local government and

community institutions.

zz To promote good governance.

The PNPM Mandiri program is based on an understanding

that the process through which development initiatives are

conducted, rather than the end results of these initiatives, is

the key to achieving community empowerment. By pushing

decision–making down to the lowest levels, the PNPM

Mandiri program aims to allow villagers to participate in

decision–making. The program in essence seeks to empower

the rural poor and encourage more democratic and

participatory forms of local governance. All PNPM Mandiri

activities aim at allowing villagers to make their own choices

about the kinds of projects that they need and want. The

program gives power to communities by placing funds and

the planning and decision–making process directly in the

hands of villagers.

PNPM Mandiri’s core programs provide funds to community

groups at the sub–district level. A facilitated planning

process helps villagers decide whether to use these funds for

infrastructure, social or economic activities. These funds are

available to each sub–district each year for up to five years.

The distribution of funds within the sub–district is through a

sub–district forum to a village. The sub–district forum consists

of village heads plus additional, broadly respected persons

(such as religious and traditional leaders, teachers, etc) and

three additional representatives (one man and two women)

selected from each participating village. The sub–district

forum also creates a unit called an Activity Management unit

or uPk to manage PNPM Mandiri funds and to oversee any

large procurement.

PnPM ManDIRI PRojeCT aCTIVITY CYCle

The project cycle goes through various stages: information

dissemination; planning; proposal preparation and

verification; funding decisions; implementation; and

follow–up. The full project cycle generally takes 12 to

16 months to complete although there is variation among

provinces. The socialization and planning stages take

approximately four to six months. All stages aim to have a

high degree of community participation and transparency

throughout the process.

InfoRMaTIon DIsseMInaTIon

Information dissemination occurs in several ways. workshops

are held at the provincial, district and sub–district levels to

disseminate information and popularize the program. The

workshops involve community leaders, local government

officials, local press, universities and NGOs.

Dissemination of information at the village level occurs

through large village meetings as well as through group

and sub–village level meetings to disseminate information

and encourage people to propose ideas for PNPM Mandiri

support. On average, approximately 50 to 100 villagers attend

village meetings, although in some areas, attendance is

reported to be several hundred participants.

PlannIng

Planning meetings occur at the sub–village and village

levels. The village and sub–districtfFacilitators disseminate

information about PNPM Mandiri procedures and encourage

villagers to submit ideas for PNPM Mandiri funding. women

also hold their own separate meetings to decide upon

women’s proposals.

At the second village meeting, villagers’ ideas are discussed

and the forum decides which ideas the village should put

forward to the sub–district inter–village forum as proposals.

The planning stage of PNPM Mandiri usually takes one to two

months for villagers to learn about PNPM Mandiri procedures

and submit ideas for funding.

PRoPosal PRePaRaTIon anD VeRIfICaTIon

Each village can submit up to three proposals to the

inter–village forum, one of which must come from village

women and a second from women’s savings and loan group.

Each proposal is put into written form, to be discussed at

an inter–village forum in the sub–district. The format will

be very simple, only provides minimum information such

as: proposed location, number of beneficiaries, volume/

dimension, and may include rough cost estimates. The

ANNEx ONE:

hOw PNPM–RuRAl wORkS


community selects a proposal preparation team, who are

trained by a facilitator.

PNPM Mandiri has an open menu; project proposals

can include a mixture of various social, economic and

infrastructure activities if the villagers so choose. Project

menus are open to all productive investments except

those on a negative short list. Verification of the proposals’

technical elements occurs during the proposal review stage

prior to projects being chosen. A sub–district verification

team usually includes community leaders, the sub–district

facilitators, and appropriate technical staff recommended by

the District Engineer. The district engineer also does a final

check before the results of the verification are presented and

considered in the sub–district decision forum. The verification

team reviews such criteria as:

zz Are proposals technically and economically feasible?

zz Do they benefit large numbers of people, especially

the poor?

zz Are there maintenance plans (or repayment plans in the

case of economic loans) in place?

zz Do people genuinely participate in the formulation of

proposal ideas?

zz Is there local community contribution?

Verification reports are presented to the sub–district forum,

which must then select through consensus which proposals

get funded. The team does not determine rankings or

priorities. If there were any proposals found to be unfeasible,

these would be discussed with the communities at the time

of the visit, so that the proposal could be modified or at least

the community could understand the reason for rejection by

the facilitators. however, while facilitators can recommend

rejection, the communities must still make the decision

themselves. This verification phase, that usually takes three to

four weeks, is seen as crucial to screen for projects that are of

sound design and quality.

PRojeCT seleCTIon

All proposals are discussed in the 2nd Inter–village meeting

to determine priority ranking. high ranking proposals will

be subject to detailed design and cost estimation. Designs

are made by the village with assistance from the social and

technical facilators. The designs are based on the results of

technical surveys and measurement in the field together with

the communities. Designs will be discussed and approved by

the village and the coach, and then inspected by the district

engineer.

After the designs are ready, the villages assemble one more

time to determine which proposals are funded. A grant

agreement is prepared for those activities that will be funded.

Attachments to this grant agreement include the design,

budget, a map, commitment for community contributions,

and other requirements. It is signed by the PNPM facilitator,

the person–in–charge from the village, the village chief,

and the head of the uPk. At this time the Forum selects a

sub–district–wide independent oversight team that will

monitor all aspects of PNPM Mandiri implementation.

On average, a minimum of six elected representatives

(three of whom must be women) from each village in the

sub–district attend these meetings. Final decisions from the

forum meeting are posted on PNPM Mandiri Information

Boards and shared with the villagers through a third village

level meeting, and smaller sub–village and group meetings.

fInanCIal ManageMenT anD aCCounTs

The head of the uPk, the sub–district facilitator and a village

representative open a PNPM Mandiri account at a legally

registered bank. when the sub–project agreements are

finalized, they are endorsed by the local government project

officer, and a copy is sent to the Government treasury office.

The Treasury then orders an initial transfer to the PNPM

Mandiri bank account. The installments are made in 40%–

40%–20% installments. Villages must report to the community

on the use of the funds after each installment has been

utilized. The last 20% payment to villages cannot be released

until a progress certificate has been signed by the district

engineer.

At the national level, the Deputy for Regional Development

at BAPPENAS heads the National Coordination Team that

provides oversight, strategic planning, and evaluation. The

management of PNPM–Rural is the responsibility of the

PMD. At the national level, PMD deals with the day–to–day

operations of the Program. Government coordination teams,

representing various ministries also assist with PNPM Mandiri.

This structure is replicated at the province and district, with

BAPPENAS’s coordinating role replaced there by provincial

and district planning boards.

Each level of government is supported by teams of

consultants who implement the technical aspects of the

project. Some 25,000 thousand Indonesian facilitators at the

national, provincial, district and sub–district levels provide

technical assistance and guidance to the project. In addition,

every village elects two village facilitators, one man and one

woman. using consultants rather than government staff

provides more flexibility, and it also avoids inflating the civil

service payroll.

122hOw PNPM–RuRAl wORkS

IN 2011 the PSF responded to Indonesian Government

requests for increased financial and technical assistance to

support its poverty reduction efforts and sustain and expand

the achievements already made through the PNPM programs.

Donor partners pledged an additional uS$ 107 million and

the JMC approved uS$ 104 million in new commitments. The

bulk of these commitments (almost 85%) are being delivered

by the Government through PNPM pilot or support programs

directly to communities across Indonesia. About 15% of

the new commitments are being invested in sustaining

the building blocks of PNPM, including building capacity

across all levels of government, strengthening management

systems, and producing high quality analytical work to

support key decision makers.

PleDges anD ConTRIbuTIons To The Psf

Pledges to PSF in 2011 reached over uS$ 262 million and

receipt of cash contributions reached uS$ 207 million.

CoMMITMenTs

with the realization of the project pipeline and topping

up of existing activities, project and activity commitments

grew from uS$ 90 million at the end of 2010 to uS$

195 million at the end of 2011. Almost 85% of the uS$

104 new commitments are for Government executed pilot

projects, including Green PNPM, PNPM Generasi, and Disaster

Management Support as well as for Post Crisis Support for

poorer sub–districts. The remaining 15% was approved for

new and the topping up of ongoing activities, including

the third phases of the national Community Facilitators

Development Program and the Barefoot Engineers Training

in Papua, technical assistance as well as monitoring and

evaluation and special studies to support and help inform

the Government’s and other Development Partner’s

strategic decision making on PNPM and the larger poverty

reduction strategy.

DIsbuRseMenTs

PSF projects and activities have disbursed uS$ 103 million

out of approved commitments of uS$ 195 million. In

2011 uS$ 66 million was disbursed. Disbursements were

strong across all the four PSF windows, especially window

One which utilizes the existing PNPM platform to finance

the expanding green and health and education pilots as

well as emergency/crisis support projects. The four active

ANNEx TwO:

FINANCIAl OVERVIEw

$0

$75

$150

$225

$300

2008 2009 2010 2011 2008-2011

207

7690

1824

Donor Contributions US$ millions

Total Disbursement US$ millions

projects under window One disbursed uS$ 54 million in 2011.

Though less salient, the other three PSF windows had solid

disbursement performances as well.

$0

$35

$70

$105

$140

2008 2009 2010 2011

29

36

103

$0

$25

$50

$75

$100

2009 2010 2011

66

28

7

54

3436

Undisbursed Commitments at Year StartDisbursed within the Year

DISBURSEMENT PERFORMANCE US$ millions

124FINANCIAl OVERVIEw

PSF FINANCIAL STATEMENT AT END 2011 MILLIONS OF US$

2008 2009 2010 2011OPERATIONAL SUMMARY (CUMULATIVE)

Approved Commitments 37.39 42.24 90.27 194.68Disbursements 1.84 8.50 36.17 102.58undisbursed trust funds and grants 35.55 33.74 54.10 92.10

WINDOW 1: DIRECT BUDGET SUPORT AND CO–FINANCINGApproved Commitments 16.00 16.00 44.25 132.07Green PNPM 16.00 16.00 34.05 34.05PNPM Generasi (Community CCT ) Scale up – – 10.20 38.32Disaster Management Support – – – 27.00PNPM Rural Post Crisis – – – 32.70

Disbursements 0.00 1.60 19.39 72.96Green PNPM 0.00 1.60 9.19 16.00PNPM Generasi (Community CCT ) Scale up – – 10.20 32.84Disaster Management Support – – – 11.82PNPM Rural Post Crisis – – – 12.30

undisbursed Funds 16.00 14.40 24.86 59.11Green PNPM 16.00 14.40 24.86 18.05PNPM Generasi (Community CCT ) Scale up – – 0.00 5.48Disaster Management Support – – – 15.18PNPM Rural Post Crisis – – – 20.40

RECEIPTS (ACTUAL) 2008 2009 2010 2011 TotalGovernment of Australia 6.20 3.14 14.89 34.09 58.32Government of Denmark 2.70 4.54 4.27 3.60 15.12Government of the Netherlands 14.68 4.50 0.83 11.90 31.90Government of the united kingdom – 5.63 2.31 0.00 7.93Government of the untied States of America – – 64.70 24.81 89.51European union – – 3.35 1.35 4.71

SuB–TOTAl 23.58 17.81 90.35 75.75 207.49Investment Income 0.44 0.40 0.34 0.18 1.36

SuB–TOTAl 24.02 18.21 90.69 75.93 208.84Administration Fee (1%) 0.24 0.18 0.91 0.76 2.09

TOTAL 23.78 18.02 89.78 75.17 206.76


2008 2009 2010 2011WINDOW 2: COORDINATION AND SUPERVISORY SUPPORT

Approved Commitments 11.95 12.89 19.37 29.37PSF Secretariat 3.65 3.65 5.35 8.39PNPM Communications 2.00 2.00 2.50 4.35PNPM Supervision and Monitoring (Rural) 4.00 4.00 6.00 7.65PNPM Supervision and Monitoring (urban) – 0.00 0.50 0.80PNPM Integrated MIS (SIMPADu PhASE II) – – 0.98 0.98PNPM Community Facilitator Development Program – 0.95 0.95 –PNPM Community Facilitator Development Program Phase III 1.19Green PNPM—awareness training pilot 2.30 2.30 2.30 2.30Training of local Auditors in PNPM Mandiri Perkotaan – – 0.30 0.30TA for Bappenas and Pokja Pengendali – – – 1.66Barefoot Engineers Training wave III – – – 1.75PNPM Policy workshops and Coordination – – 0.50 0.00

Disbursements 0.92 3.21 8.05 11.95PSF Secretariat 0.60 1.56 2.98 4.71PNPM Communications 0.11 0.35 1.26 1.90PNPM Supervision and Monitoring (Rural) 0.22 1.29 2.65 4.24PNPM Supervision and Monitoring (urban) – – 0.22 0.59PNPM Integrated MIS (SIMPADu PhASE II) – – 0.00 0.10PNPM Community Facilitator Development Program 0.01 0.94 –PNPM Community Facilitator Development Program Phase III – – – 0.00Green PNPM—awareness training pilot 0.00 0.00 0.00 0.00Training of local Auditors in PNPM Mandiri Perkotaan – – 0.00 0.29TA for Bappenas and Pokja Pengendali – – – 0.12Barefoot Engineers Training wave III – – – 0.00PNPM Policy workshops and Coordination – – 0.00 0.00

undisbursed Funds 11.02 9.68 11.32 17.42PSF Secretariat 3.05 2.09 2.37 3.68PNPM Communications 1.89 1.65 1.24 2.45PNPM Supervision and Monitoring (Rural) 3.78 2.71 3.35 3.41PNPM Supervision and Monitoring (urban) – – 0.28 0.21PNPM Integrated MIS (SIMPADu PhASE II) – – 0.98 0.88PNPM Community Facilitator Development Program – 0.94 0.01 –PNPM Community Facilitator Development Program Phase III – – – 1.19Green PNPM—awareness training pilot 2.30 2.30 2.30 2.30Training of local Auditors in PNPM Mandiri Perkotaan – – 0.30 0.01TA for Bappenas and Pokja Pengendali – – – 1.54Barefoot Engineers Training wave III – – – 1.75PNPM Policy workshops and Coordination – – 0.50 0.00

PSF FINANCIAL STATEMENT AT END 2011 MILLIONS OF US$

126FINANCIAl OVERVIEw

2008 2009 2010 2011WINDOW 3: ON–GRANTING TO INDONESIAN CIVIL SOCIETY

Approved Commitments – – 4.22 4.27window 3 Phase I Preparation – – 0.22 0.22PNPM Peduli Phase 1 – – 4.00 4.06

Disbursements – – 0.05 1.43window 3 Phase I Preparation – – 0.05 0.17PNPM Peduli Phase 1 – – 0.00 1.27

undisbursed Funds – – 4.17 2.84window 3 Phase I Preparation – – 0.17 0.05PNPM Peduli Phase 1 – – 4.00 2.79

WINDOW 4: TECHNICAL ASSISTANCE TO PNPM MANDIRIApproved Commitments 9.44 13.35 22.44 28.97TA for PNPM GENERASI 1.25 3.16 4.41 4.41TA for Green PNPM 2.25 2.25 2.25 1.00PNPM Monitoring and Evaluations and Special Studies 5.00 5.00 6.56 9.66PNPM Delivering Services to Poor Communities 0.94 0.94 0.94 0.94PNPM Poverty Engagement, knowledge and Action – 2.00 2.00 2.00PNPM Mandiri Revolving loan Fund (RlF) – – 4.21 8.89local Government Capacity Development – – 1.43 1.43urban Poverty Analysis, Program Review and PNPM–urban Evaluation – – 0.64 0.64

Disbursements 0.92 3.70 8.69 16.24TA for PNPM GENERASI 0.62 1.77 2.80 3.11TA for Green PNPM 0.00 0.01 0.12 0.24PNPM Monitoring and Evaluations and Special Studies 0.29 1.27 3.13 6.82PNPM Delivering Services to Poor Communities 0.00 0.30 0.59 0.76PNPM Poverty Engagement, knowledge and Action 0.35 1.73 2.00PNPM Mandiri Revolving loan Fund (RlF) – 0.32 1.97local Government Capacity Development – 0.00 0.96urban Poverty Analysis, Program Review and PNPM–urban Evaluation – 0.00 0.39

undisbursed Funds 8.53 9.65 13.75 12.73TA for PNPM GENERASI 0.63 1.39 1.61 1.30TA for Green PNPM 2.25 2.24 2.13 0.76PNPM Monitoring and Evaluations and Special Studies 4.71 3.73 3.43 2.84PNPM Delivering Services to Poor Communities 0.94 0.65 0.35 0.19PNPM Poverty Engagement, knowledge and Action 1.65 0.27 0.00PNPM Mandiri Revolving loan Fund (RlF) 3.89 6.92local Government Capacity Development 1.43 0.47urban Poverty Analysis, Program Review and PNPM–urban Evaluation 0.64 0.25


ThIS section contains summaries of the major analytical work

conducted and/or published by PSF in 2011. Specifically, this

section contains summaries of the following:

zz PNPM–Rural Impact Evaluation

zz Governance Review of PNPM–Rural:

Community–level Analysis

zz PNPM Generasi Impact Evaluation

zz PNPM RESPEk Evaluation of Village Infrastructure and

Institutional Capacity

zz women headed household Empowerment (PEkkA)

Baseline Survey

zz Targeting Poor and Vulnerable households in

Indonesia Report

zz Protecting Poor and Vulnerable households in

Indonesia Report

PnPM–RuRal IMPaCT eValuaTIon

Background

The pnpM–Rural impact evaluation was designed in concert

with the evaluation for its predecessor, kDP, to ensure

comparability and continuity of impacts and indicators over

the lifetime of the program. Following on the evaluation

of kDP conducted in 2008, the PNPM impact evaluation

was designed to evaluate whether similar impacts were

occurring given the scale up of the program nationwide

as well as look at social capital and governance indicators

which were unavailable for the previous study. In addition,

a qualitative component was included to develop a deeper

understanding of impacts and factors related to social capital

and governance, poverty perception and poverty targeting

and community empowerment.

Research questions and designzz Does PNPM–Rural increase household welfare (measured

as real per capita consumption)?

zz Does PNPM–Rural move households out of poverty and

how well does PNPM–Rural target the poor?

zz Do individuals in PNPM–Rural sub–districts experience

increased access to education and health care services,

and employment opportunities?

zz what is the impact for these indicators for poor and

disadvantaged groups?

zz how does PNPM–Rural impact governance, transparency

and participation in community development activities?

zz Does PNPM–Rural impact social capital in the community

and the quality of local governance?

zz has PNPM–Rural increased the ability of communities to

manage their own development needs and priorities?

The study utilizes two components:

Quantitative: A longitudinal household panel was

established via surveys in 2007 and 2009/2010 consisting

of 6250 households in seventeen provinces and

300 sub–districts. The sample was divided into treatment

and control groups using a propensity score matching

method in which sub–districts beginning participation in

PNPM–Rural in 2007 were designated as the treatment group

and sub–districts beginning participation in PNPM–Rural

in 2009/2010 as control. The survey instrument consisted

of household consumption, education, use of health

services, employment, social capital and governance. A

difference–in–differences matching estimator was used to

determine impact.

Qualitative: key informant interviews, including project and

village leaders, households (including poor and non–poor)

as well as focus group discussions were conducted in

18 villages across three provinces selected from the

quantitative sample and including treatment and control, and

poor/non–poor villages.

Key findingsQuantitative

1. Positive impact on consumption and poverty

reduction: Impacts were found for changes in real

per capita consumption and transition out of poverty.

Impacts were stronger among poor households and in

poor and remote areas. In contrast with the previous

evaluation, impacts were seen for the entire sample

rather than limited to poor households and households

in poor areas.

ANNEx ThREE:

SuMMARIES OF MAJOR ANAlYTICAl wORk CONDuCTED IN 2011

128SuMMARIES OF MAJOR ANAlYTICAl wORk CONDuCTED IN 2011

2. Access to services and employment: PNPM saw

strong impacts on access to health care. The impact

on transition out of unemployment was positive and

significant. No significant impacts were found on access

to education including school enrollment.

3. Limited impacts on marginalized groups: the impacts

noted above did not extend to disadvantaged and

marginalized groups.

4. Limited impact on social capital, governance: Impacts

on social capital and governance indicators were limited

with no pattern of significant impacts.

Qualitative

1. Participation, transparency and accountability

built up within program do not spillover to

other development and governance activities:

key PNPM core values were present within program

processes as participation among the poor, women

and disadvantaged groups was high, and access to

information concerning planning and implementation

was significant. however, PNPM approach/procedures do

not spill over into planning and implementation of other

village and local government development activities.

2. Existing power structures are not impacted

significantly by the program: A key factor in the lack of

spillover is that the program was unable to change the

existing power structure which controls decision–making

at the community level, including government and

sometimes religious/traditional elites.

3. Communities do not perceive PNPM as a poverty

reduction program: In contrast to household–targeted

programs (BlT, RASkIN, etc.) PNPM–Rural is not viewed

as a poverty program, but one designed for the entire

community. Thus, projects selected by the community

are not always in line with needs of poor households,

particularly in areas with good existing infrastructure.

In these communities, needs identified by the poor

include training and capacity building, access to credit

and other income/employment generating activities

do not become approved proposals because they are

viewed as targeted toward particular groups. PNPM is

likely most effective in areas where existing infrastructure

is inadequate leading to closer alignment between

interests of the poor and the overall community.

Policy recommendations1. Continued funding for infrastructure with a focus

on maintenance and sustainability of infrastructure:

PNPM remains an effective means of delivering needed

infrastructure to rural communities which improves

household welfare. The project should continue

given the existing infrastructure gap in rural areas.

however, these benefits will only be sustained if the

infrastructure is of sufficient quality to continue to be

utilized effectively. Future research should focus on the

quality of maintenance and overall sustainability of use

for infrastructure built by the project as well as current

mechanisms and procedures in place to ensure proper

maintenance is conducted.

2. Targeted approach to Block Grant allocation: As

noted above, the largest gains are made in poor and

remote areas. Block grant amounts should be targeted

toward areas with low levels of existing infrastructure in

order to maximize household welfare impacts. Additional

research is needed to understand the effectiveness

of project in a wider range of contexts (poverty,

infrastructure, regional) and implementation procedures

(BlM size, length of participation in the project) and

consideration given to how to customize the block grant

size menu to meet the needs of different local contexts.

3. Strategy to address constraints to stronger

downward social accountability from local

government: The fact that institutions other than PNPM

do not yet emulate the transparency and governance

features of the program indicates that a key objective of

increased social accountability is not being met. while

PNPM is not the sole vehicle nor primarily responsible

for changes in the local government environment, it

is included as one means to introduce and institute

good governance practices in the rural space. Further

research on the barriers to adoption of PNPM principles

of transparency and accountability and potential design

changes to address identified barriers are needed.

4. Continued focus on marginalized groups: The project

should determine whether the project is best–placed to

address the needs of marginalized groups and consider

additional design changes or other development

approaches to address their needs.


5. Renewed focus on strength of participation and

inclusion of the poor and disadvantaged groups in

project decision–making: To overcome the “routine”

approach to project implementation that has developed

due to scale up and the long period of implementation

in many locations, the project needs a renewed effort to

strengthen its core approach of community engagement

in project activities to ensure that all groups are included

in and participate fully decision–making over the project

cycle.

6. Continued collection of data: Although the expansion

of PNPM–Rural to cover all rural sub–districts in the

country necessitates the loss of control areas, the panel

nature of the survey can still be valuable in tracking the

progress of key indicators going forward. Subsequent

survey rounds in 2012 and 2014 should be conducted to

ensure continued examination of project effectiveness.

goVeRnanCe ReVIew of PnPM–RuRal: CoMMunITY–leVel analYsIs

Background

Since 2009, supervision missions for PNPM have identified a

growing number of governance problems in the program.

These include a rise in serious fraud and corruption cases21

and evidence of problems at community level with the

quality of facilitation and participation and other key

elements of governance in the program. the Governance

Review of pnpM–Rural: community–level Analysis is an

attempt to assist the Government in better understanding

the extent and causes of such problems and to generate

recommendations for improvement.

Research Questions and Methodology

The overall objective of the community governance review

is to identify practical recommendations to support the

PNPM Pokja Pengendali in its decision–making to strengthen

governance in the program. This involves gaining a better

understanding of:

21 Reported rates of corruption are overall still low, though are thought to under–report the true extent of the problem.

zz what is the nature and extent of the community

governance challenges facing PNPM?

zz why do existing governance challenges exist?

zz how can governance in PNPM be improved?

The review is a practical exercise intended to generate

discussion, exchange ideas and identify recommendations

for improvement. The methodology was thus based on a

program of ‘action research’ and cross learning in which a

wide range of people with different areas of expertise visited

field locations, shared their observations and generated

ideas and discussion through a series of workshops. The

desk–review, interview, and field visits were conducted

from October–November 2011. Field visits were conducted

in two provinces: west Sumatera and west Java. locations

were chosen to ensure the maximum diversity in the kinds

of factors that might affect local governance and to see how

PNPM functions in a range of contexts.

Key Findings1. The state of local governance in PNPM is mixed. It is still

remarkably strong, but faces problems;

2. Participation rates are still mostly high, but the quality of

participation has in some places declined.

3. There are weaknesses in transparency and information

sharing. The performance of accountability mechanisms

in the program — such as the village accountability

meetings and the creation of the BkAD and BP–uPk —

varies, and the incidence of serious corruption is up.

4. Despite this, the ‘foundations’ of PNPM are still strong.

These foundations, though, are being eroded by

serious pressure from ‘higher–up’ problems related to

the broader governance environment, changes in the

program design, and problems with implementation

and management.

5. Although the foundations of PNPM are mostly still strong

enough to withstand these challenges, in some places,

they have combined to cause multiple accountability

and local governance failures. PNPM must address these

program design, implementation and management

issues to avoid undoing its years of good work at

community level.


Policy Recommendations

There report comes up with a series of recommendations

focused on five key themes: social accountability, financial

management, facilitators, complaints handling, and MIS &

reporting. Some of the key recommendations are:

1. Social accountability: Strengthening BkAD and BP–uPk

through better institutionalization; institute social audits

at village level; provide assistance in prosecuting cases

through legal system.

2. Financial management: Strengthening financial

oversight by improving transaction process (e.g.,

reducing cash transaction, opening village account for

TPk, “barefoot bankers” to provide services directly to the

village); improving capacity of BP–uPk; and increasing

community monitoring (including cross–audits).

3. Facilitators: Improving quality of facilitators through

better learning opportunity (facilitators “learning house”),

certification, and sanctions for poor performance

(through association or “social control”).

4. Complaints handling: Improving quality of socialization,

protecting whistle–blower and ensuring the complaints

handling system is functional.

5. MIS and reporting: Improving the system by simplifying

reporting formats, separating routine reports with urgent

ones (especially related to corruption cases), and

ensuring quality of reports (e.g., by involving external

parties for control).

PnPM geneRasI IMPaCT eValuaTIon

Background

In 2007, the Indonesian Government launched two

large–scale pilots of programs designed to tackle these

issues: (1) conditional cash transfers (CCTs) to households,

known as the hopeful Family Program or Pkh; and (2) an

incentivized community block grant program, known as

PNPM Generasi22. These two complementary pilot projects

began in six provinces and are designed to target the

same health and education indicators. They are consistent

with both the Indonesian Government’s priorities and

the Millennium Development Goals: to reduce poverty,

maternal mortality, and child mortality, and to ensure

universal coverage of basic education. Pkh focused more

on supply–side ready areas, predominantly urban and in

Java, while PNPM Generasi operated in rural areas. The pnpM

Generasi impact evaluation reports on the final evaluation

of the incentivized community block grant program, PNPM

Generasi. A separate report has been prepared by the world

Bank on the results of the Pkh program.


The impact evaluation was designed to evaluate the impact

and effectiveness of PNPM Generasi in addressing 12 health

and education indicators as follows:

Health Indicators

zz Four prenatal care visits for pregnant women

zz Taking iron tablets during pregnancy

zz Delivery assisted by a trained professional

zz Two postnatal care visits

zz Complete childhood immunizations

zz Ensuring monthly weight increases for infants.

zz Monthly weighing for children under three and

biannually for under–fives.

zz Vitamin A twice a year for under–fives.

Education Indicators

zz Primary school enrollment of all children 7 to

12 years old.

zz Minimum attendance rate of 85% for all primary

school–aged children.

zz Junior secondary school enrollment of all 13 to

15 years old.

zz Minimum attendance rate of 85% for all junior secondary

school–aged children.

22 The full English title of this program is “National Community Empowerment Program–Healthy and Smart Generation”. However, it is usually referred to by its short Indonesian title, PNPM Generasi.


To allow for a rigorous, randomized evaluation of PNPM

Generasi, the Indonesian Government incorporated random

assignment into the selection of PNPM Generasi locations.

within the districts selected by the Government for the

program, entire sub–districts were randomly allocated

to either receive PNPM Generasi or to be in a control

group. Each PNPM Generasi location was further randomly

allocated to one of two versions of the program: one

“incentivized” treatment with the pay–for–performance

component (treatment A), and a second, otherwise

identical “non–incentivized” treatment without the pay–for–

performance incentives (treatment B).

The evaluation series also included a qualitative component.

To the extent possible, the report has incorporated findings

from the complementary qualitative study in 12 villages in

two provinces; this qualitative component was conducted

in 2007 and 2009. The qualitative study (using focus group

discussions, in–depth key informant interviews, and direct

observation—provided deeper insights into processes, causal

chains, and villagers’ values, motivations, and reactions.

Key Findings1. After 30 months of program implementation, PNPM

Generasi had a statistically significant positive

impact on average across the 12 indicators it was

designed to address: The strongest improvements

among the health indicators were in the frequency

of weight checks for young children. The program

also increased the number of iron sachets pregnant

mothers received through antenatal care visits. These

improvements were supported by dramatic increases

in mothers and children participating in posyandu activities to receive the targeted maternal, neonatal,

and child health services. Education indicators also saw

improvements in the final evaluation, reversing the zero

or negative impact found at the interim evaluation. The

improvement in education indicators was most notable

in the increased school participation rate among the

primary school–age group.

2. The main long–term impact was a decrease in

malnutrition: The latest wave III survey shows that

childhood malnutrition23 was reduced by 2.2%, about

a 10% reduction from the control level. This reduction

in malnutrition was strongest in areas with a higher

malnutrition rate prior to project implementation, most

notably in the NTT Province, where underweight rates

were reduced by 8.8%, a 20% decline compared to

control areas; severe underweight rates were reduced

by 5.5%, a 33% decline; and severe stunting was

reduced by 6.6%, a 21% decline compared to control

areas. Surprisingly, in Java, there was a negative impact

on stunting and severe stunting which needs to be

explored further. Although reductions in infant and child

mortalities were observed in the interim evaluation, the

same levels of reduction in mortality were not sustained

in the final evaluation. In terms of the longer–term

education learning outcomes, the program did not

improve childhood test scores as yet.

3. Making grants conditional on performance improves

program effectiveness in health but not in education: On average, the incentivized group outperformed the

non–incentivized group in improving health indicators,

particularly in increasing antenatal care services. On

net, between 50–75% of the total impact of the block

grant program on health indicators can be attributed

to the performance incentives. however, for education

indicators the incentivized group did not appear to

perform better than the non–incentivized group. There

may be several reasons for this. The data shows two

results: first, the impact of incentives became weaker

over time; and second, the positive impacts on education

only occurred in Year Two of the program, probably

due to time lags in implementation of the education

interventions. Thus, by Year Two, the incentives were less

strong just when the program was beginning to have

impacts on education. Another factor may have been

that gains in health were easier to attain than gains in

education. Baseline levels for health indicators were

lower than for education, making it perhaps easier to

make gains in health. In addition, education targets may

23 Childhood malnutrition was measured by weight–for–age of children under three.


have been more difficult to achieve since those targets

involved more people and involved school enrollment

and attendance every day, as opposed to once–a–month

for health targets, with fewer villagers involved. The

qualitative report also suggests that communities favored

giving school assistance directly to the greatest number

of students, rather than out–of–school children, and that

motivation may have dampened any effects from the

incentives. lastly, the qualitative report indicates that the

incentives rules were sometimes difficult for communities

to understand.

4. PNPM Generasi had the greatest impact in areas

with low baseline health and education indicators: Areas with lower pre–project health and education

indicators have more room for improvements. The

greater impacts in areas with lower baseline indicators

appear more prominently in the final evaluation survey

than the interim results, with stronger improvements

found in education indicators in these areas. On average,

the program was about twice as effective in areas at

the 10th percentile of service provision (very low health

and education status) at baseline as it was on average.

however, these improvements in health and education

indicators in areas with low baseline coverage did

not appear to have resulted in improving long–term

health and education outcomes in these areas outside

of malnutrition. Furthermore, the greater impacts

observed in health and education indicators were not

simply correlated with pre–project levels of poverty, but

instead were driven by the level of health and education

indicators in the area.


The evaluation results point to several relevant policy

implications and conclusions:

1. PNPM Generasi is most effective in areas with low

health and education status: The impact evaluation

found that PNPM Generasi impacts are stronger in

areas where health and education indicators are low.

This suggests that future expansion of PNPM Generasi

implementation should prioritize areas where these

indicators are lagging behind and not necessarily in areas

identified as poor.

2. Community incentives had mixed results: health

responded more favorably than education: As a

result of the two–year project implementation, health

indicators responded positively to community incentives,

but education indicators saw no positive or negative

response to community incentives. learning from this

experience, the Government may wish to see how

community incentive interventions can work in other

lagging areas, e.g., water and sanitation access. The

policy implications are that poverty programs may wish

to experiment more with embedding incentives into

the designs. however, the interventions and incentives

will need to be monitored and evaluated over time.

One possibility is that the conditionalities may work

less well over time, as there may be more “gaming” of

the system as the program progresses and the rules

become more familiar. Alternatively, the program may

work better over time as it continues to incentivize

communities to work harder toward the specified targets.

In addition, qualitative evidence suggests that simplifying

the incentive scheme may make it much easier for

communities to understand.

3. The Government’s existing national

community–driven development architecture

and network (PNPM) was useful as a platform for

other forms of local assistance: PNPM Generasi was

started as an experiment in adapting the community

participatory planning and block grant process to focus

on specific education and health targets that were not

being addressed sufficiently in the existing community

program. This project has illustrated the flexibility

and adaptability of this community model once the

architecture and machinery are established. It also serves

as a possible vehicle for improving health and education

indicators in supply–deficient areas, where the traditional

household conditional cash transfer model may not be as

effective due to supply constraints.

4. The project should regularly review the

appropriateness of the targets: Target indicators must

be relevant to communities, yet reflect development


priorities of the Government. Although it is important not

to overload the project with too many target indicators,

PNPM Generasi should regularly review its 12 target

indicators and assess if existing ones should be replaced

or added. For example, school participation for children

ages 7–12 has now reached nearly universal coverage

at 98.5% and higher, and the program may wish to add

other targets to capture other priority areas that are

lagging, such as education learning achievement, early

childhood development, or water and sanitation.

5. A follow–up evaluation may be needed in the

future to examine the longer term sustainability

of interventions and impacts: The final round of

evaluation took place after 2.5 to three years of project

implementation. This three–year evaluation series was

useful in providing empirical evidence to inform project

implementation and learn lessons for the next phase.

Should the program continue in the original treatment

sites and should the original control sites remain as such,

the Government may wish to consider the possibility

of another evaluation in a few years to examine if the

impacts of this program are indeed sustainable over time

and if additional progress can be made on learning and

health outcomes.

PnPM ResPek eValuaTIon of VIllage InfRasTRuCTuRe anD InsTITuTIonal CaPaCITY

Background

The evaluation of pnpM Respek: Village infrastructure and

institutional capacity study was conducted to evaluate the

implementation of the PNPM Mandiri RESPEk Program in the

provinces of Papua and west Papua. By 2012, PNPM RESPEk

has reached 87% of villages (4000 villages) in Papua and

west Papua. In this program, which started in 2008, special

autonomy funds of Rp 100 million are directly provided

to villages and can be used for five priority programs,

one of which is village infrastructure. within the funding

provided to the five priority programs, 70% is used for

village infrastructure. This report provides analysis of three

aspects of the implementation of the PNPM RESPEk program:

quality of infrastructure, utilization of infrastructure and the

development of village institutions.


The evaluation aims to answer the following questions:

zz how is the quality of village infrastructure developed

through PNPM RESPEk funding?

zz Is the infrastructure developed through PNPM RESPEk

effective? what benefits does the infrastructure provide

for the local community (for example, improved access

to primary education, health services and access to

livelihood resources)?

zz what are the impacts of PNPM RESPEk on local

institutions and the implementers (district facilitators

— PD, village facilitators — Pk and Village Activity

Operational Teams — TPkk)? In particular with TPkk,

what institutional aspects improve the most as a result of

PNPM RESPEk? what are the related challenges?

To answer the research questions above, a combination

of quantitative and qualitative approaches was used.

Quantitative approaches (surveys and measurements based

on civil engineering expertise and standards) are used to

measure the technical quality of the infrastructure and the

effectiveness and the extent to which the infrastructure is

utilized. Qualitative approaches (secondary data studies,

social mapping, observation, in–depth interviews) are

used to provide an in–depth study on the quality of

infrastructure utilization and the development of institutions

and to understand causal relationships between quality

of infrastructure, the utilization of infrastructure, and the

capacity of institutions.

The research was conducted in 16 villages in eight

sub–districts from four districts in the two provinces

from November 2010 to the beginning of January

2011 (2–2.5 months). The locations were selected to

represent geographically different areas with various levels

of accessibility.


Key Findings1. PNPM RESPEk has successfully built infrastructure

(particularly dry infrastructure) that is of good and

relatively equal quality in all of the villages. Furthermore,

infrastructure built through PNPM RESPEk is 60% cheaper

than infrastructure built by the Regional government.

2. The challenges of building infrastructure are more

pronounced in the wet infrastructure projects (related

to water such as latrines, MCk–public bathing–washing–

toilet facilities or PAh–rain reservoirs). These infrastructure

projects have some functional quality problems

(moderate quality), for example leakage in the piping

system and reservoirs as well as insufficient water

resources. Even though there are some functional

problems, the quality of the infrastructure is generally

sufficient because they are usable. Thus, in Papua and

west Papua, capacity to build dry infrastructure with a

sufficient level of quality exists but capacity to build wet

infrastructure is more limited.

3. Among the infrastructure that is technically useable, 33%

is effectively utilized and capable of reaching both the

majority and poor groups. The quality of infrastructure

has also significantly improved the living quality for these

groups (from the health and economic point of view).

Meanwhile, 50% of infrastructure is utilized only by a

small group within the general community, namely the

village elite. The rest (17%) is not utilized at all.

4. There are three main reasons that 67% of the

infrastructure is not utilized by the majority of the

community:

a. The first reason is institutional issues related to the

village elite group domination. This has not been

handled well by the facilitators because of the limited

facilitation quality;

b. A second reason is the weak operational systems of

infrastructure projects especially for infrastructure

that requires fee such as a generator house, and

infrastructure that needs frequent maintenance

such as MCk (public bathing–washing facilities) and

PAh (rain reservoirs). As a result of these operational

issues, utilization is decreased; and

c. The last reason is technical. Most of the wet

infrastructure have functional problems (leaking

and insufficient water resources), which in turn

lowers utilization.

After 2–3 years, on the institutional side, PNPM RESPEk

has strengthened the potential for accountability

through the enhancement of financial record capabilities,

the emergence of questions from community elements

on the usage of development funds and — although

still at a very limited scale — the emergence of village

chiefs that are copying the accountability model of PNPM

RESPEk to responsibly handle ADD (village allocation)

funds. Aside from accountability, PNPM RESPEk has

succeeded in enhancing the administrative capacity at

the PD level. The challenge is that, similar with PNPM

Mandiri Rural, PNPM RESPEk has not been able to

increase community participation especially among

the poor population. with the limited participation of

community groups outside the elite, the hope for PNPM

RESPEk to be able to build community’s capacity has not

been realized. The capacity enhancement process has

only been enjoyed by implementer groups (TPkk, Pk or

PD), which are the activist groups in the community.

5. The design and mechanisms of PNPM RESPEk that

prioritize administration and accountability allowed for

the enhancement of PD and TPkk administrative capacity

(recording and reporting), but not the capability to

handle domination by the village’s elite or to strengthen

community groups. The limited quality of participation

of the facilitator has been caused by a combination of

factors: the design of PNPM RESPEk (the broad scale and

focus on administration related incentives), the limited

planning process (the facilitators are not following the

whole process well, particularly the planning phase), the

assistance/support to the facilitation is limited, and the

specific challenges in the context of Papua and west

Papua (limited accessibility, insufficient number of local

facilitators, wrong perception of special autonomy fund

by some of the community group).


Policy Recommendations 1. Enhancing Community’s Participation and

Strengthening Village’s Institution through: (a) the

enhancement of facilitation quality offered by the

facilitator through the Facilitator Capacity Building

Program (can be modeled after the barefoot engineer

program in Papua/west Papua); (b) developing PNPM

RESPEk mechanisms that give incentives for facilitation

capacity building (not only for administrative capacity);

(c) creating spaces for community participation outside

the village’s elite (for example, by targeting specific —

usually marginalized — groups as beneficiaries) as well

as strengthening the village’s elite’s ability to support the

needs of the poor groups; and (d) synchronizing PNPM

RESPEk activities with the policy of regional Government

(Province and District), especially regarding block grant

channeling mechanism.

2. Increasing the Function of Wet Infrastructure through: (a) employ stricter selectivity for wet infrastructure projects proposals. There is a need to have a stricter

verification in the planning phase with additional

preconditions such as verifying sufficient water resource

before agreeing to wet infrastructure proposals; (b)

conduct special training for technical facilitators, especially

at the sub–district level, for wet infrastructure projects

bearing in mind the high risk of failure at the field. Based

on experiences of technical facilitators in handling wet

infrastructure projects, module and training materials

can be developed in a more contextual way by learning

from general mistakes made during the past and

providing lessons on how to handle them; and (c) put

together templates of various technical plans/designs

for wet infrastructure. The provincial and district

technical consultants can put together templates of

various alternatives for technical plans/designs for wet

infrastructure. The templates consist of technical design

scenarios that could accommodate the various local

condition and types as well as physical forms that are

best suited to be implemented under each condition.

These alternatives will complement the existing

technical templates.

3. Developing Infrastructure Management System:

so far the existing operational system (infrastructure

management) is slowing the optimization of

infrastructure benefits in Papua and west Papua.

Ideally, we can overcome this problem by building

an institutional system or a group that is responsible

to manage the infrastructure, including the funding

support. According to the recommendations suggested

by the NMC, the institution can be developed with the

support of special autonomy funds. This community

group, with TPkk and Pk facilitation, can propose

maintenance funds through the special autonomy

funds of Papua Province. Another alternative that could

be implemented is the development and building of

infrastructure designs (technical drawings/templates)

that utilize less complicated operational systems and

minimal maintenance fee. Technically it is very possible

to develop various simple designs. For example, for

areas where water is scarce or where a wet infrastructure

project has to be built far away from the water resource,

the type of infrastructure operational design applied

should be one that requires less water. Currently there

are various technical designs (structural and material) for

public bathing–washing–toilets that do not need a lot

of water, for example latrines with larger capacities or

material selections that make it possible to not use a lot

of water.

woMen heaDeD householD eMPoweRMenT (Pekka) baselIne suRVeY

Background

Female–headed households have long been known to be

among the poorest in many societies (Quisumbing, haddad,

and Peña 2001; Drèze and Srinivasan 1997). In response, some

donor agencies target female–headed households in their

poverty reduction projects. In Indonesia, one such program is

the perempuan kepala keluarga (or PEkkA, literally translated

as the female–headed household) program. The program


began in 2001, initially as a pilot project funded by the world

Bank in Jakarta that focused on addressing the plights of

poor widows in Indonesia’s conflict regions. Over the years,

the program has evolved into a program oriented towards

addressing the poverty of many female–headed households

in Indonesia’s various regions. It comprises an economic as

well as a legal–political component. Despite having been

around for almost a decade, its impact has never been study

rigorously. The program’s expansion in 2010 provides an

excellent opportunity to portrait how PEkkA achieve their

objectives. The pekkA Baseline survey was conducted to

collect baseline data on income, expenditure, saving and

transfer, and access of households in both treatment and

control areas.

Research Question and Methodology

The research question of this study is how PEkkA reduced

the marginalized aspect — limited access and control over

resources and policies — of the female headed households

and achieve their objectives. The study will also analyze why

some groups successful implementing the PEkkA program

and why some groups do not.

The study utilizes mixed methods (quantitative and

qualitative) to compare between treatment and

control villages:

1. Key Informant interviews: the research team interviews

key informants, including projects consultants/facilitators,

Village head, hamlet head (dusun or RT ), community

leaders (religious, adat, women) and local communities

and villagers, with focus on female headed households.

2. Focus Group discussion (FGDs): the focus group

discussions are conducted with poor female headed

households, women from poor male headed households,

and women from non–poor households.

3. Household survey: household surveys are conducted

to get detail information on income, expenditure,

saving and transfer. In each sub village 100 households

are surveyed.

The study is conducted in four provinces, four kabupaten,

eight sub–districts and 22 villages.

Key Findings

This report presents the results from the baseline

household survey:

1. Individual female household heads (Fhhs) are older,

less educated, more risk averse, and more patient than

male household heads (Mhhs). They also tend to choose

different employment sectors. Part of the differences can

be accounted by age and sex differences.

2. For objective measures of welfare, there is little evidence

that female headed (Fh) households are worse off than

male headed (Mh) households.

3. For some measures of subjective welfare such as anxiety

and depression, there are some evidence that Fhhs are

worse off than Mhhs and their spouses.

4. On social capital, individual Fhhs participate less in

community groups and village meetings, but are equally

likely to hold leadership positions compared to individual

Mhhs and their spouses. however, Fhhs tend to have

more friends.

5. On the understanding of legal issues, Fhh have similar

knowledge to Mhh, except in terms of child custody and

domestic violence.

6. In terms of balance between treatment and control

villages, treatment villages are somewhat more

prosperous than control villages. This may be due to the

small sample size. Village–level differences need to be

accounted for in the final analysis.


Since this report only provides data from baseline survey, no

policy recommendation is available.

TaRgeTIng PooR anD VulneRable householDs In InDonesIa RePoRT

Background

In the last ten years Indonesia has returned to strong

economic growth. The poverty rate has fallen from 23.4%

of all Indonesians in 1999 to 12.5% by 2011. however, half

of the country still lives on less than Rp 15,000 per day, and


small shocks can move them into poverty. Because of this,

people move into and out of poverty easily in Indonesia. Of

the all poor in each year, over half were not poor the year

before; they are newly poor. Thus social assistance is vital

in Indonesia. however, to work effectively, it needs to be

received by households who need it most. Trying to identify

these households is called targeting. The Government

of Indonesia recognizes has made improving targeting a

key priority. The world Bank recently completed the first

major report to comprehensively assess current targeting

and to outline how a national system can be established

in Indonesia.

Key Research Questions and Design

The report examines six main questions:

1. what methods have been used to target social assistance

in Indonesia? how have they been implemented?

2. how accurate have the targeting outcomes been for

each program?

3. how have targeting and targeted programs been

socialized by government, represented in the media, and

perceived by communities?

4. how effective has community involvement been

in targeting?

5. how could a national targeting system improve targeting

in Indonesia?

6. what are the steps in developing such a system?

These questions are addressed through a range of analysis

and methods. First, operating procedures for each program

are assessed from a range of primary and secondary

research. Existing qualitative research is synthesised, and

original quantitative analysis performed to assess current

targeting outcomes. Media analysis was conducted spanning

a three year period, and was supported with analysis of

community survey data. The results of two recent field

experiments on community targeting conducted by the

world Bank in collaboration with the Government and

international academics were included. Finally, the many

lessons and experiences of targeting in other countries

were brought to bear on how a national targeting

system would benefit Indonesia and the design and

implementation considerations.

Key Findings1. Current programs target the poor using different

methods, resulting in different beneficiaries being selected for different programs, even when the target population is the same.

2. Current targeting reaches many poor households but excludes many more. Around half of the poorest 30% of households are excluded from each program, and half of all benefits go to non–target households.

3. Targeting outcomes can be improved if methods are better designed. The methods used for both data collection and beneficiary selection have flaws and can be improved with lessons from overseas.

4. Targeting methods also depend on successful implementation. In particular, poor socialisation of programs and their targeting has led to low awareness of the purpose of social assistance and who should receive it. This can result in deviation from official guidelines.

5. Greater coordination between programs would improve both targeting and program effectiveness. Targeting would work better if coordinated across programs. Programs with objectives that overlap can make sure that poor households who receive one program also receive the other

6. Targeting in Indonesia could be made more effective by building a National Targeting System (NTS), based on a unified registry of poor and vulnerable households. This has already been done in many other countries and has several benefits: (a) the registry can be built using the best targeting methods, providing quality data for all programs, at a lower cost; (b) social assistance can be coordinated across programs; and (c) duplication, fraud and corruption can be reduced.

7. Indonesia has already made good progress on building a unified registry of poor and vulnerable households. A unified registry has already been mandated by government plans and regulations. A very large–scale survey of poor households was conducted in 2011, covering around 45% of the population. Improved data collection and selection methods mean the PPlS11 will make a good basis for the unified registry.


8. The unified registry is an important part of an NTS, but is only part of a broader system. It needs to reach the right people by being used by all programs. It needs to stay current because of the fluid nature of poverty in Indonesia, so updating the registry is vital. It also needs to be managed well to ensure effectiveness and legitimacy. A key long–term challenge for the NTS is deciding its institutional framework.

9. Recent field experiments demonstrate that incorporating a well–designed and facilitated role for communities in targeting can increase both accuracy and community satisfaction, as can self–targeting.

10. Building an NTS is only a small part of the cost of social assistance. Constructing the unified registry will cost about Rp 600 billion, which is just over 1% of the combined annual program costs of BlT, Raskin and Jamkesmas.

Accompanying Background Papers

Much of the material in the report comes from a range of

background papers and notes produced over a two year

period covering a range of topics. These include:

zz Current Targeting Performance in Indonesia

zz The Role of Community Targeting in Indonesia

zz Optimal Proxy Means Tests in Indonesia

zz Socialisation, Perception and Satisfaction of Targeted

Programs in Indonesia

zz Establishing a unified Database in Indonesia

zz Establishing a National Targeting System in Indonesia

zz Targeting Metrics

PRoTeCTIng PooR anD VulneRable householDs In InDonesIa RePoRT

Background

In the last 12 years, the headcount poverty rate in Indonesia

has fallen by nearly half from 23.4% in 1999 to 12.5% by 2011.

Nonetheless, half of the country still lives on less than Rp

15,000 per day (about uS$ 1.67) and are at risk of exposure

to poverty–inducing shocks that can be either idiosyncratic

or more universal in nature. In Indonesia, rates of entry into

poverty remain substantial: of all households measured

as poor in a given year, over half were not poor the year

before. Social assistance and social insurance is vital for

such households as well as chronically poor households as

they try to mitigate the effects of shocks and idiosyncratic

crises on well–being, assets and savings, and investments in

human capital.

In 2010, the Government of Indonesia outlined an ambitious

plan to reform its collection of social assistance programs. The

national medium–term development plan outlined a series of

concrete actions towards the development of an integrated

family–centered social assistance system, including reforms

to improve the reach and performance of priority programs.

To support the Government’s reform agenda, the world Bank

initiated a major research project examining the country’s

social assistance sector. The intent was to provide Indonesian

policy makers with high–quality and independent research

that could be used to help inform and guide key policy

decisions. The project was designed in coordination with

partners in the Government of Indonesia, was implemented

in conjunction with several local research institutes, and was

generously supported by partner development agencies.

The first major product of the project is a report on protecting

poor and Vulnerable households in indonesia, a comprehensive

public expenditure and program review of all the main

social assistance programs that are currently implemented

in the country. Based on the findings from performance

assessments of each program, the report also provide reform

recommendations to build a true social safety net that

provides real protection for poor and vulnerable households.

The main report is accompanied by series of papers that

examine specific issues or common issues in specific

programs including:

zz Public Expenditure Review

zz unconditional Cash Transfers

zz Conditional Cash Transfer

zz health Fee waivers

zz Scholarships for the Poor

zz Subsidized Rice Distribution

zz Programs For Especially Vulnerable Groups

zz history of Social Assistance


Key Research Questions and Design

The report examines six main questions:

1. Does Indonesia allocate the right level of resources to

household social assistance?

2. Do programs provide the right benefits?

3. Are benefits reaching the right people?

4. Do people receive the benefits at the right time?

5. Are programs implemented in the right way?

6. Does Indonesia have the right programs and system

in place?

These questions are addressed through a range of

analysis and methods. First, operating procedures for each

program are assessed by primary and secondary research

including direct observation, commissioning of field–based

implementation spot checks, commissioning Jakarta–based

evaluations by international experts, and conversations

with implementing agencies and coordinating agencies

at all levels of government. Existing qualitative research

was synthesized, and original quantitative analysis is

performed to assess current outcomes in targeting, benefit

incidence, actual benefit levels, benefit disbursement timing,

implementation, and socialization reach and effectiveness

(among other topics, and depending on data availability

by program). where possible, original impact analysis

was completed for several different household–level

outcomes like health and education, labor market activities,

consumption and composition of expenditures, and others.

Impact analysis for Indonesian social assistance programs

already completed (by both world Bank and non–world Bank

affiliated authors) was also summarized and incorporated.

Finally, media analysis summarizing popular opinion across

a variety of stakeholders was conducted spanning a three

year period and was supported with analysis of community

survey data.

Key Findings

Despite demonstrated promise, much work remains

to be done in the loose collection of household–based

programs. The current range of household–centered social

assistance programs does not go far enough in protecting

the 40% of the population with the highest risk of falling

into poverty. In addition to significant gaps in both risk and

population coverage, all of the household–based programs

have been limited in their effectiveness due to (a) an

insufficient ability to find and prioritize poor or vulnerable

households; (b) a total benefit package that is sometimes

underfunded, sometimes inadequate for addressing

the particular household need or risk, and sometimes

delivered with less–than–optimal timing; (c) a passive and

implicit reliance on poorly–equipped local implementation

partners combined with little explicit financial or technical

support; (d) weakly–monitored and insufficiently–detailed

implementation procedures; or in many cases a combination

of all four of these. The first step on the way to a dynamic and

responsive social safety net should be reform within these

currently available programs.

Meanwhile, Indonesia will need to go beyond program

reform to create a social safety net that is capable of

providing consistent, high–quality, and comprehensive

coverage: The current range of household–centered social

assistance programs provides partial and non–guaranteed

protection to the poor and vulnerable from some, but

not all, of the risks faced. In the current collection of

household–targeted programs, there are risks that are not yet

covered by any program — for example, risks due to sudden

job loss or underinvestment in early childhood education.

however, even among the important risks that are addressed

by current programming, the likelihood that an eligible

household will consistently receive all benefits is small, while

the facilitation, outreach, and information dissemination

that are necessary to ensure households with any type of

background use programs effectively are not consistently

provided. A true social safety net will involve system–wide

planning and coordination between programs and agencies

in order to ensure that all types of eligible households are

reliably protected for all important risks. Suggested reforms

will contribute to Indonesia’s continued economic strength

by promoting pro–poor investments in human capital and

a healthy, educated, and productive workforce. An effective

and efficient social safety net will also enable further

government policy reform by alleviating the burdens that

reform can create for the least well–off.



The following recommendations outline some of the steps

necessary for the creation of a social safety net system in

Indonesia:

1. Spend better by improving programs and achieving

a more optimal mix of initiatives: Increase the benefit

levels and delivery schedule of the cost–effective

conditional cash transfer programs (e.g., Pkh); institute

a package of radical reforms for stopping leakage and

improving targeting in the subsidized rice program

(Beras untuk Keluarga Miskin, Raskin), which delivers too

little at high cost; upgrade capacity for the pilot cash

transfers targeting highly vulnerable groups; re–engineer

the scholarship program (Beasiswa untuk siswa Miskin, BSM); and redefine an appropriate benefit package

for the health fee waiver program (Jaminan kesehatan

Masyarakat, Jamkesmas) in order to provide financially

sustainable and reliable health care utilized by all

poor households.

2. Then, scale up to protect all vulnerable from health

risks, promote continuous education and protect

them from shocks that threaten their welfare: Expand

Jamkesmas and BSM to reach all vulnerable households,

and introduce a pilot early childhood education program.

Scale up Pkh to reach all chronically poor households

and the collection of programs that target marginalized

populations. Right–size Raskin to cover only poor

households. Fill existing gaps in the social safety net

by adding a coordinated emergency response system,

featuring a revised version of BlT that includes conditions

for community service. Such expansion to all vulnerable

households is estimated to require an increase in social

safety net spending levels to 1.4% of GDP; and

3. Integrate the social safety net by consolidating

program support operations under a single roof

and encouraging single window household access

to all services: Consolidate support operations (e.g.,

socialization, complaints handling and M&E) under one

roof and develop a single NTS. Create a reliable public

face for the social safety net under a single agency with

employees that perform outreach and socialization

activities and can encourage and facilitate access to all

initiatives available in the social safety net and beyond.

Accompanying Background Papers

An overview of public expenditure trends and patterns in the

social assistance sector and a summary of Indonesia’s history

with social assistance are accompanied by reports on each

of the 8 main social assistance programs currently offered in

Indonesia. These program chapters cover (in addition to all

items mentioned above):

zz Objectives, Program Size, and Benefit Adequacy

zz Targeting Performance

zz Impact Analysis of household–level outcomes

zz Cost Effectiveness and Efficiency calculations

zz Implementation assessment

zz Public Financial Management assessment

zz Fiscal Performance and Fiscal sustainability assessment
