Core Program

Scope: National

2007: 33,300 desa/1971 kecamatan/343 kabupaten

2008: 34,405 desa/2,447 kecamatan/336 kabupaten

2009: 57,266 desa/4,371 kecamatan/379 kabupaten

2010: 61,000 desa/4,791 kecamatan/385 kabupaten

2011: 63,000 desa/5,020 kecamatan/393 kabupaten

Summary: Like its predecessor the Kecamatan Development Program (KDP) which began in 1998, PNPM–Rural’s overall objective is for villagers in its rural locations to benefit from improved socio–economic and local governance conditions, through the provision of investment resources to support productive proposals that have been developed by communities using a participatory planning process. The project helps efficiently fill Indonesia’s large tertiary infrastructure gap: PNPM projects cost 30–56 percent less than those executed by contractors, and 94 percent of PNPM projects are still fully functional after four years.

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 GoI and local governments to partner with community organizations to improve the delivery of basic services. The annually disbursed kecamatan block grants range in size from Rp 750 million to Rp 3 billion (approximately US$84,000 to US$330,000) per kecamatan. Block grant allocations depend on the level of a kecamatan’s population, poverty incidence, and remoteness.

Total funding for the first and second PNPM–Rural projects, which respectively began in 2008 and 2009 was approximately US$1.9 billion, inclusive of US$531 million in World Bank loans, US$1.2 billion of GoI funds, and about US$160 million in community contributions. On March 30, 2010, the World Bank approved a US$785 million loan to continue its support to PNPM–Rural (through PNPM–Rural III).

Progress :

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 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:

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.

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 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)

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Scope: National

2008: 8,813 urban wards in 245 kota/kabupaten

2009: 11,014 urban wards in 267 kota/kabupaten

2010: 10,948 urban wards in 268 kota/kabupaten

2011: 10,948 urban wards in 268 kota/kabupaten

Summary: PNPM–Urban works to ensure that the urban poor benefit from improved socio–economic and local governance conditions. This is achieved through:

• Forming and institutionalizing elected representative organizations that are accountable to communities
• Providing grants to communities directly and transparently to finance poverty alleviation activities, especially infrastructure services
• Enhancing the ability of central and local governments to partner with community organizations in the provision of services
• Increasing awareness of disaster risk mitigation and mainstreaming of measures for resilience and recovery

PNPM–Urban is designed to promote the development of community organizations (BKM) at the urban ward (kelurahan) level. The BKM are eligible for up to three block grants ranging from US$15,000 to US$40,000 per kelurahan to help meet the goals of the community development plan.

PNPM–Urban builds primarily on the World Bank–funded Urban Poverty Program (UPP1, UPP2/Additional Financing, and UPP3) that began in 1999. In 2008, the World Bank approved the first PNPM–Urban project and provided subsequent additional financing in 2009. PNPM–Urban III was approved in 2010. The total project cost is US$217.4 million, including a US$155 million loan from the World Bank (including co–financing of US$5 million from the Global Facility of Disaster Reduction and Recovery), US$36.9 million provided by GoI, and an estimated US$25.5 million from community contributions.

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:

In addition, in 2011 the PNPM–Urban project continued to implement two pilots.

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, 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

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 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:

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.

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.

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Scope: SPADA comprises two projects: SPADA National which covers 186 kecamatan in 32 disadvantaged kabupaten in eight provinces; and Aceh–Nias which covers 19 tsunami, earthquake and conflict–affected kabupaten in Aceh and North Sumatra provinces.

Summary: PNPM–SPADA is designed to bring PNPM–Rural experiences in participatory development planning and implementation mechanisms to the kabupaten 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 kabupaten and kecamatan levels, with sub–projects determined through participatory planning processes involving communities and multi–stakeholder groups at the kabupaten 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 with an “open menu” system for the use of the block grants, but at least 30 percent of the district block grants must fund health and education sub–projects, and at least 5 percent of kecamatan grants are targeted to youth. Both SPADA National and SPADA Aceh–Nias are implemented by the Ministry of Disadvantaged Areas.

The SPADA National project amounts to US$134 million, of which 78 percent is financed through a World Bank loan and credit, and 22 percent is financed from national and local government resources and community contributions. The SPADA Aceh–Nias amounts to US$51.6 million, of which 72 percent is donor financed through trust funds and 28 percent GoI financed.

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:

Systemic Issues: A major challenge in both 2009 and 2010 (a period in which disbursements rapidly increased) has been to ensure the quality of fiduciary systems and staff. Issues around MIS and quality of sub–projects have been identified and addressed through training, improved safeguards and capacity upgrading. During late 2010, the rapid disbursement of funds from the national treasury to individual community accounts raised concerns about financial risks; intensified efforts from the executing agency, State Ministry for Disadvantaged Areas and extra implementation support from the World Bank are being employed to ensure that funds are being properly utilized. The performance of government’s implementation units at the field level has improved, particularly related to issues around procurement procedures and preparation of financial reports. The handling of complaints has also improved in collaboration with relevant government agencies. As of December 2010, 96 percent of 1,899 cases reported since 2007 have been satisfactorily resolved.

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, improve 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.

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.

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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

Summary: 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 GoI, 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: (a) 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; (b) 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 GoI 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; and (c) improve capacity for project implementation and monitoring and evaluation, which supports project management and implementation support at national, provincial, and kabupaten levels, including monitoring and evaluation.

2010 Progress: RIS–PNPM I has been progressing well. All 1,724 villages have completed their works. It is expected that the project completion report will be submitted by DGHS by June 30, 2011. Civil works under RIS–PNPM II started in late 2010, in 1,474 project villages. Based on observations during field visits and findings from monitoring reports, implementation of civil works is progressing well with good quality standards. Community implementation organizations have been established in all 1,500 project villages.

In May 2010, DGHS engaged 1,082 community facilitators (CFs) to continue supporting communities in project villages under RIS–PNPM II. 705 well–performing CFs were retained from RIS–PNPM. The selection was based on a comprehensive performance evaluation carried out by the EA in close consultation with provincial project implementation unit (PPIUs) and kabupaten project implementation units (DPIUs). Based on lessons learned from RIS–PNPM I, the CF teams were rearranged so that, on average, a team of two CFs (one to support community empowerment, financial management and reporting and one to provide assistance on technical matters) assists a cluster of three villages.

Prior to their assignments in project villages, all CFs received five–day pre–service training to improve their skills in (a) inclusive community mobilization, (b) preparing technical designs, (c) supervising the implementation of civil works, and (d) the formulation of operation and maintenance plans for infrastructure built and financed under the project. DPIUs are now more involved in monitoring and guiding CF teams. Regular meetings with CFs and kabupaten consultant teams take place at DPIU offices to discuss work plans and review progress in the respective kabupaten. DPIUs review and endorse monthly CF reports; payments from PPIUs to CFs are only released after the DPIU’s endorsement. In general, DPIUs, PPIUs and community members have expressed their satisfaction with CF teams working in the respective project villages.

Systemic Issues:

• In the early stages of the project, it was observed that the level of community participation in participating villages varied. While the empowerment process was successful in involving the entire community in the planning and decision making process in most villages, feedback from monitoring reports revealed that socialization activities in some communities were rushed; as a result, the poor and/or less educated community members were not fully engaged in planning and decision making. In these cases, village heads often appeared to be the actual decision maker. In other cases, it was obvious that a majority of women were not involved in the decision making process, or the project scope and its procedures were not fully understood by all community members.
• In some villages the quality of infrastructure constructed under RIS–PNPM I was poor, often because the construction design of roads, bridges, or water supply and sanitation facilities did not follow technical construction codes or because the implementation of civil works did not follow the technical design specifications. To address this, technical support and supervision provided by CFs, kabupaten consultants and officers have been strengthened. Recent observations confirmed that newly built roads, footpaths, and sanitation and water supply facilities reviewed during field visits were generally well constructed, indicating that technical support for the design and implementation of civil works has been successfully reinforced.
• Inclusive community mobilization remains a challenging task, particularly in villages with scattered households from different cultural backgrounds or with large income and educational disparities. DGHS and respective PPIUs and DPIUs are aware of these challenges and try to provide the best possible guidance to CFs and consultants. The performance of some CFs, particularly the technical CFs, needs improvement. CFs’ understanding of the project manuals (the Juklak and Juknis) needs to be further improved as well.
• Some kabupaten are still not complying with the requirements to provide operational budgets for the DPIUs in the amount of at least 5 percent of the total block grant allocations. In these cases, the limited operational budget has prevented DPIUs from carrying out proper project monitoring and evaluations.

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.

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Scope: 237 kecamatan/34 kabupaten in the nine provinces of North Sumatra, Jambi, Bengkulu, Bangka Belitung, West Nusa Tenggara, West Kalimantan, South Kalimantan, South Sulawesi, and West Sulawesi.

Summary: 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 JPY23.5billion or US$252.2 million.

2010 Progress: The project has provided community grants for 2,355 villages disbursing more than US$42 million over 9,485 packages. In 2010, these community grants directly benefited 142,275 households (711,375 persons).

Systemic Issues: In general, the RISE project has been well organized and implemented on schedule. However, in order to maximize development outcomes, it may be necessary to (a) strengthen the integrated planning and budgeting process through the National Development Planning Mechanism (SPPN), and (b) improve the operations and maintenance capacity of community groups.

2011 Plans and Activities: The program will continue to implement community grants. An in–depth, mid–term Impact Evaluation Study was launch at the beginning of 2011. Collaboration with JICA’s technical assistance project “Sulawesi Capacity Development Project” will be considered in order to strengthen the capacity of local government in integrated regional development planning (pilot base).

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