Table of Contents I. PROGRAM OVERVIEW

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4 Table of Contents I. PROGRAM OVERVIEW 1.1 Introduction 1.2 Program Objectives 1.3 Key Principles 1.4 Areas Covered and Consultants Employed 1.5 KDP in Postdisaster Locations - Padang and Bengkulu 1.6 KDP in Papua and West Papua 1.7 Pilot Programs II. PROGRESS AND OUTCOMES 2.1 Disbursement of Funds 2.2 Level of Community Participation 2.3 Outcomes of KDP Activities During Training and Capacity Building 2.5 Pilot Programs P2SPP, SADI, Education, Generasi, 2.6 Information, Education and Communication Activities 2.7 Microcredit Groups III. SPECIAL REGIONS AND CONDITIONS 3.1 Papua and West Papua RESPEK Program 3.2 PNPM-KDP in Postdisaster Locations IV. MONITORING AND EVALUATION 4.1 Complaints Handling 4.2 Internal Financial Supervision 4.3 Review of Key Performance Indicators V. CHALLENGES AND PLANS 5.1 Challenges during 2007

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6 1.1. INTRODUCTION The National Community Empowerment Program for Self-Reliant Rural Villages (Program Nasional Pemberdayaan Masyarakat Mandiri Perdesaan - PNPM Mandiri Perdesaan) is one of a number of empowerment programs currently managed under the Indonesian Government s national PNPM Mandiri umberella. During 2007, the program was tasked primarily with accelerating the government s poverty alleviation efforts and increasing employment in rural areas. Current government planning indicates that PNPM Mandiri Perdesaan will continue to support efforts to increase the quality of life, general welfare and self reliance of rural communities at least until PNPM Mandiri Perdesaan has now been operating since 1998 under its previous name - the Kecamatan Development Program (KDP). PNPM Mandiri Perdesaan is currently the largest community empowerment program in the country and focuses its activities on the poorest rural communities in Indonesia. The program facilitates development through community empowerment by forming and strengthening local institutions at the subdistrict (kecamatan) and village levels, direct facilitation, capacity building and providing block grants (BLM) directly to communities ranging from Rp 1 billion to Rp 3 billion per kecamatan. PNPM Mandiri Perdesaan encourages all community members to become involved in each phase of the program s activities, starting with detailed planning, implementation/construction of projects, and post-project maintenance for assets built by the village. KDP activities at the village level normally include: rehabilitation or construction of infrastructure; capital loans and revolving funds; and social activities related to education and health. During implementation, KDP disburses grant funding directly to communities and provides technical assistance through consultants and facilitators. The Implementing agency for Rural PNPM Mandiri is the Directorate General of Rural Community Empowerment (PMD) in the Department of Home Affairs. Funding for the program comes from the national budget, local government budgets, loans from the World Bank and grants from donor agencies. KDP Phase I (KDP I) was executed during the period 1998/1999 to The next program, KDP Phase II (KDP II), started in 2003 and ended in late KDP Phase IIIA (KDP III) began in late 2005, and then continued into its second phase (KDP IIIB) which began in early Phase III of the program placed greater emphasis on trying to decentralize and institutionalize the KDP process at the local level to enhance sustainability. In 2007, KDP was rebranded as PNPM-KDP under the new integrated PNPM approach. KDP, and many other similar empowerment programs, were put under the overall coordination of the Coordinating Ministry for Peoples Welfare (Menko Kesra). During 2007, all of the government s community empowerment and poverty alleviation programs were asked to focus primarily on reducing overall poverty levels and increasing employment. In the case of PNPM-KDP these goals were to be pursued in rural areas.

7 1.2. PROGRAM OBJECTIVES PNPM-KDP implementation in 2007 maintained the program s focus on making rural communities more independent and self reliant through its well known and communitybased methods. Although during 2007, field consultants were also instructed to devote more time and resources to working with communities during the initial stages of the KDP planning cycle to more accurately document individual cases of severe poverty in villages that until now had been over looked. Additional attention was also refocused on maximizing local labour content in infrastructure projects and documenting this key aspect of KDP s community-based approach more carefully. KDP implementation in Padang, West Sumatra and Bengkulu, South Sumatra, concentrated more on accelerating post-disaster rehabilitation and reconstruction efforts within the worst affected districts of those areas after they were both rocked by large earthquakes in March and September 2007 respectively KEY PRINCIPLES PNPM Mandiri Perdesaan actively ensures that all program activities adhere to the following basic principles: The Development of Human Potential. Each activity is expected to support capacity building for individuals to help maximize existing human resources and enable residents to develop their communities with dignity and respect for basic human rights. Autonomy. Communities are given the authority to decide how they will manage their own development. Decentralization. Authority to manage sectoral and regional development has already been delegated to local governments under the regional autonomy law. The relative success of each region s development now largely depends on the capacity of local government and communities. Pro-Poor Approach. All activities should be planned and implemented after taking into account the needs of the poorest members of the community. Participation/Community Involvement. Community members are empowered to make critical decisions about their own development priorities and given the opportunity implement projects themselves. Gender Equality. Men and women are given the same opportunities to take active roles in each stage of the program cycle and are entitled to enjoy equally the benefits of their combined work. Democracy. Every decision is taken collectively and with the needs of the poor taken into consideration. Transparency dan Accountability. All community members must have the same access to information about the program, and about all decisions taken in their name. This must be done to ensure that those chosen to manage project implementation can be held accountable morally, technically, legally and administratively. 2

8 Priorities. Local government and communities must be able to correctly prioritize local needs that help to alleviate poverty, address urgent issues and provide benefits for the largest number of community members by optimizing available and limited local resources. Collaboration. All parties and stakeholders involved in local poverty alleviation programs are expected to work together in synergy for the common good. Sustainability. Each decision taken during the program should take account of likely impacts on community welfare, not only during the project, but also over the longer term. Project decisions should also be take into account longer term local environmental impacts AREAS COVERED AND CONSULTANTS EMPLOYED In 2007, PNPM-KDP was active in 1,842 subdistricts (kecamatan), while 22,124 villages participated in the PNPM-KDP initial selection process of village and intervillage meetings to determine which villages would receive funding for the 2007 program. 14,688 villages eventually received community block grants (BLM) to fund the activities selected by their residents. From the kecamatan dan villages mentioned above, 682 kecamatan participated and received funding from PNPM-KDP for the first time, and 8,216 villages within those kecamatan also participated for the first time in the program. This means that 1,160 kecamatan were participating, and receiving BLM funding again in 2007 after participating in preceding years. Likewise, 6,472 villages were participating, and receiving BLM funding again in 2007, also after participating in preceding years. Table 1.A. Coverage of KDP Locations Per Year Up To 2007 Administrative Level KDP PNPM-KDP 2007 Total KDP Coverage Total Indonesia* Percent Coverage % Provinsi Kabupaten Kecamatan 2, ,688 5, Villages 34,103 8,216 42,319 62, Source: MIS National Management Office - PNPM Mandiri Perdesaan National Secretariat for PNPM Mandiri Perdesaan/ Directorate General, PMD */ Ministerial Decree of the Minister of Home Affairs (Permendagri) No. 18/ 2005 KDP locations are provided with consultants and facilitators to assist with program implementation from the national level down to the kecamatan level, i.e. National Management Consultant, Provincial Management Offices, Kabupaten Management Consultants and Kecamatan Facilitators. At the end of 2007, there were 5,061 consultants working in the field. This represented an increase of 1,633 from 2006 due to an increase in total program locations and a restructuring of the provincial management offices which on average increased the number of specialists in each provincial office from four to six. Some provinces also received additional regional-based specialists for training, microcredit and financial supervision/auditing duties. The number of total consultants shown below does

9 not include Village Facilitators (FD). Each PNPM-KDP village is entitled to select two village facilitators (one male and one female) to assist the kecamatan facilitator. These local community-based facilitators have now become an essential part of the program, and as the number of kecamatan are increased from year to year they are assuming ever more data gathering and local organizing duties to assist the already overstretched kecamatan facilitators. Table 1.B. Total Consultants and Facilitators as of December 2007 Consultants & Facilitators Total Nasional Management Consultants 69 Provincial Manajement Consultants 167 UPK Support Facilitators 59 Kabupaten Manajemen Consultants 658 Kabupaten Assistant Management Consultants 2 Kecamatan Facilitator (FK/FT) PNPM KDP 3,789 Kecamatan Facilitator (FK/FT) Pilot Generasi 254 Kecamatan Facilitator (FK) Pilot Education 19 Information Facilitators (FI) 44 Total Consultants 5,061 Total Village Facilitators ± 44, KDP IN POST-DISASTER LOCATIONS The last few years have seen Indonesia hit by a series of destructive narural disasters. At the end of 2004, a huge earthquake followed by a tsunami devastated Aceh Province. The first Aceh quake was followed by another large earthquake that shook the Nias Islands in North Sumatra in March Following Nias, further large quakes rocked DI Yogyakarta and Klaten in Central Java in May KDP responded rapidly to all these disasters with rehabilitation and reconstruction activities in each disaster area. KDP provided special funds and specially adapted procedures to facilitate a rapid response to the needs of the affected communities. On March 6th, 2007 Padang in West Sumatra suffered a 6.3 magnitude earthquake which claimed 71 lives and badly injured 47 others. On September 12, 2007 Bengkulu in Southern Sumatra was also rocked by a large earthquake of 8.5 magnitude which killed 25 people and destroyed 52, 522 buildings. As with other previous natural disasters KDP in these two locations adopted special arrangments to optimize assistance; these arrangments included: 1) expansion of operations to cover affected areas; 2) increased BLM allocations for each subdistrict; 3) increasing the types of activities able to be funded; 4) simplified activity stages to speed up implementation; 5) faster and easier disbursement procedures for BLM funds: 6) providing additional facilitators; 7) modification of operational technical guidance documents (PTO) to accommodate conditions in the disaster areas. Fortunately the extent of the damage caused and loss of life in both Bengkulu and Padang, were not nearly on the same scale as the disasters that occurred in Aceh in 2004 and Nias in

10 2005. As a result, PNPM-KDP did not have to allocate substantial additional resources in money or field staff to handle the extra workload KDP IN PAPUA & WEST PAPUA Since 2005, KDP operations in Papua and West Papua have used a modified version of the Program s operational technical guidance that was designed for Papua, i.e. (PTO PPD). The main differences in these special arrangments are for channeling funds directly to the village level, instead of the kecamatan level as for other KDP regions. These changes were made to speed up delivery of BLM funds due to the distances between villages and kecamatan saw a significant reduction of the number of program locations in Papua due to preparations for the new RESPEK program which will cover all kecamatan (called districts in Papua) in both Papua and West Papua beginning in The RESPEK program is essentially an autonomous local version of PNPM-KDP. The BLM community block grants will be funded by the large special autonomy funds that have been allocated to both Papua and West Papua, while the cost of technical assistance (consultants and additional management support) will continue to be borne by the Central Government as part of its support for the national PNPM program. Table 1.C. PNPM-KDP Locations in Papua & West Papua December 2007 Papua KDP 1 KDP2 KDP 3 PNPM-KDP Kecamatan (District) Villages West Papua KDP 1 KDP2 KDP 3 PNPM-KDP Kecamatan (District) Villages PILOT PROGRAMS PNPM-KDP has proven to be a valuable platform from which to launch and field test new methodologies and refine existing approaches to the community-based approach to rural development. As part of this learning process, PNPM-KDP supported four pilot programs during 2007: P2SPP In 2006 the national coordinating team for KDP decided to undertake a special pilot program called Program Pengembangan Sistem Pembangunan Pasrtisipatif (P2SPP) in May The main objective of this pilot is to fully integrate the regular development planning mechanism with the PNPM-KDP bottom-up model. Institutionally, the P2SPP pilot is based at the kabupaten level and uses kabupaten sourced BLM funds as a stimulant to bridge the missing link between village and kecamatan project proposals. It also ensures that

11 kecamatan-based proposals are included in the final budget decisions that are always taken at the kabupaten level. Education Pilot In 2007 the education pilot program entered its third year. Although the initial planning and preparations for the pilot began in 2005 the first year of implementation was actually in 2006 due to prolonged delays caused by interagency coordination problems. The pilot has been conducted in 19 kecamatan and 186 villages spread over four provinces and seven kabupaten. The education pilot is being conducted in ten kecamatan that have already participated in PNPM-KDP, and nine other kecamatan that have never participated before in the Program. Implementation of the education pilot in 2007 was significantly affected by the late disbursement of block grants (BLM) and operational funds for training and socialization (DOK). Smallholder Agricultural Development Iniative (SADI) The AusAID funded SADI pilot program is actually divided into three subprograms. The first is Subprogram 1 which is linked to PNPM-KDP and has been designed to dovetail with the mainstream program. Its purpose is to provide block grants to groups of farmers that participate in a KDP styled approach to determine suitable agricultural-based subprojects designed to support household-level economic activities. The second subprogram is being supported by the International Finance Corporation (IFC) which is providing detailed marketing assistance for the cash crops that are expected to be produced by the first subprogram. The third subprogram is being supported by the Australian Center for International Agricultural Research (ACIAR) which will provide high level technical support from agricultural scientists. As with other PNPM-KDP related activities, SADI also experienced a late start in It is expected that block grants will be disbursed to SADI s target kecamatan by mid PNPM Healthy and Intelligent Generation (Generasi) KDP communities have consistently proposed a large number of health and education activities. However, due to pressing infrastructure needs, and limited funds, only a small percentage of those proposals have been implemented. To accommodate these second priority proposals, another pilot program was created called PNPM Generasi Sehat dan Cerdas to focus on these types of activities - complete with additional funds and special facilitators. PNPM Generasi (as it is now called) is focused on upgrading health care for new mothers and infants up to five years old, and improving education standards to help rural children complete primary school and middle high school. Implementation of this pilot will be guided by 12 key performance indicators: 1. Pregnant women examined at least 4 times by midwives. 2. Pregnant women to receive 30 iron supplement pills (Fe) each month. 3. Childbirth to be handled by qualified midwives or doctors. 4. Mother and child receive a post natal examination in the first 40 days after birth by a doctor or midwife, at least twice. 5. Infants under 12 months old to receive full immunization.

12 6. Babies under 12 months old should increase body weight each month (babies under 6 months should put on 500gr each month and babies 6-12 months should put on 300gr per month. 7. Infants aged 6-9 months are to receive Vitamin A 2 times each year. 8. Children under 5 years old to be weighed every month. 9. Primary school aged children (6 years and over) must be enrolled in a local primary school or its equivilant. 10.Primary school students must attend school every day. 11. Middle high school aged children (13-15 years) that have graduated from primary school, should be enrolled in middle (SLTP) school, or its equivilant. 12. Middle high school students must attend school every day. This pilot program commenced in 2007 in five PNPM Mandiri Perdesaan provinces (West Java, East Java, Gorontalo and North Sulawesi) covering over 3,000 poor villages in 200 kecamatan and 20 kabupaten. Key members of each target community are invited to become more proactive about their roles in their community s development by being the best in their fields. The program uses the acronim SUPER, from Sukses and Perhatian, to motivate participants to become Super parents, Super consultants, Super teachers, Super government officials, etc. (Volunteers putting up posters) (Midwife stamping immunization books) 7

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14 The Gantt chart below shows the relationship between KDP cycles and calendar years. The solid green bars depict the anticipated (scheduled) time required to complete the 2007 program cycle in accordance with national budget allocations. The pink bars represent the additional time required to complete all the locations that were started in the years represented by the solid green bars. This chart shows the difficulty the Program has had in matching the time-consuming community-based approach with the rigid 12 month national budgeting system. On average, it takes between 14 to 16 months to properly prepare, plan and implement one KDP project cycle. 2.1 DISBURSEMENT OF FUNDS As of December 2007, a total of 2,688 kecamatan received Rp trillion (see Table 2.1.B) in direct community grants (BLM) from KDP loans. These funds covered all cycles and pilot projects. This figure represents a disbursement rate of 78% for all funds allocated to direct community grants (Rp trillion) via KDP during The low disbursement rate achieved during 2007 was a direct result of the late start experienced by the Program and the subsequent delays that resulted in implementation in the field. Approximately 30% of 2007 kecamatan locations were forced to complete their activities well into mid The main cause of delays in 2007 was the time required by the Program s main stakeholders (PMD, Bappenas, Menko Kesra & World Bank) to arrive at an agreed list of program locations 11

15 (kecamatan) for The final list was finally approved by a Ministerial Decree issued on April 13, Revisions then had to be made to PMD s budget documents (DIPA) based on the new list of locations. The budget revisions were completed in July 2007; disbursement of BLM funds then followed in August Cost sharing funds from local governments were also affected by the late agreement of program locations and these funds only commenced disbursement in July Uses of funds disbursed for the PMD managed Local Government Development Planning Pilot (P2SPP), were not reported to the NMC as part of the PNPM-KDP routine reporting system. Therefore data for the P2SPP locations has not been included in KDP data for 2007, although, separate sections detailing with the activities of this pilot program have been included in this report. As of December 2007 the cumulative disbursements for all sources of KDP funds since the beginning of KDP I in 1998, totaled US$1.208 billion (see Table 2.1.B). Local government contributions if converted into US dollars (@ Rp9,000 = US$ 1.00) for the same period totaled US$ Included in this amount over the same period KDP received a total of US$172.8 million in grants. 12

16 A noteworthy aspect of PNPM-KDP during 2007 was the continued willingness on the part of local governments to contribute more of their own local budget funds to the Program. A total of 1,864 kecamatan provided cost sharing contributions worth Rp 418,072,798,050 during 2007 based on each local government s fiscal capacity. Those with high capacity paid 70% of the cost of BLM funds, those with medium capacity 40%, and those with low capacity paid 20%. Once again the cost sharing arrangement seems to have been well received during 2007 by both local governments and their parliaments (DPRD) which had to ratify these contributions since they were sourced from local budgets. 54 meter long suspension bridge built by Tambangan Village, Kabupaten South Lampung, Lampung Province 13

17 2.2 LEVEL OF COMMUNITY PARTICIPATION In 2007, the level of attendance at various KDP village forums continued to be high. Of those who attended 44 percent on average were women (see Figure 2.2.A.). Attendance figures for women remained consistently high during 2007; consistent with figures for 2006 and Participation of women alone during 2006, the first year of KDP III, ranged from 28 to 44 percent, not including the special women s meeting. By comparison, figures for women s participation in 2005 (KDP II) ranged from 31 to 46 percent, also not including the special women s meeting. A number of standard KDP poverty mapping activities were redesigned during 2006, and further refined in 2007 to try and optimize the identification of the poor and to ensure that their real needs are included in each village s project proposals. Significant and consistent increases in participation by the poor have occurred since the beginning of KDP. KDP I achieved an average participation rate of 53 percent. This increased to 61 percent at the beginning of KDP II in 2002, and increased again to 68 percent by the end of KDP II in The average participation rate for the poor in 2007 was 63 percent (see Figure 2.2.A.). (Village meeting (Musdes) in Lamatewelu village, Kec. Paga, East Flores, NTT province) Community participation in KDP does not only take the form of attendance at KDP village meetings, but also manifests in the form of voluntary labour and materials ( swadaya ) that communities contribute to the projects they propose. During 2007, communities added voluntary labour, cash and materials worth approximately 6.04 percent of the value of the BLM funds disbursed to fund KDP activities during

18 Figure 2.2.A. 1. Inter-Village Forum 1 2. Village Forum 1 3. First General Discussion of Ideas 4. Women s Special Forum 5. Village Forum 2 6. Inter-Village Forum 2 7. Inter-Village Forum 3 8. Village Forum 3 9. Village Accountability Report 10. Project Handover Meeting 11. Maintenance Meeting (Village meeting (Musdes) in Lamatewelu village, Kec. Paga, East Flores, NTT province) 15

19 2.3 OUTCOMES OF PNPM-KDP ACTIVITIES DURING 2007 In 2007, KDP funded more than 25,835 separate activities in 1,864 kecamatan from BLM funds with a total value of Rp 1.53 trillion (US$171 US$1=Rp9,000). This was slightly less than in 2006 where KDP funded over 27,849 activities from both KDP II and KDP III subprojects that were implemented during that year. However, this number will increase after all the 2007 locations have completed their activities and submitted their final reports. Intensive support backed by additional donor funds for postdisaster locations, (Pre-service training of facilitators in Central Sulawesi) especially Aceh (NAD), contributed heavily to the larger number of activities implemented in Since KDP started in 1998, this program has cumulatively funded more than 180,067 separate community based activities- not including scholarships or education packages (see Table 2.3A). The percentage of activities, or village subprojects by major activity grouping during 2007 was: infrastructure 35.4%; women s revolving funds 48.5 %; education activities 10.4%; and health and sanitation activities 5.3%. (see Figure 2.3.A.) During 2006, the percentages for the same activities groupings were: infrastructure 53%; women s revolving funds 35%; education activities 7%; and health and sanitation 5%. The increase in education activities in 2007 can in part be attributed to initiatives reported in the 2006 Annual Report to more aggressively promote education subprojects - like the Education Pilot Project. This pilot was continued during It should be noted that the figures presented in Table 2.3.A. under Economic Activities/UEP & SPP only include persons (women) recorded as individual members of microcredit groups at the time of the third village meeting (MD III) where final proposals are decided. Although accumulated capital and repayment rates are monitored continuously, actual numbers of additional or repeat loans received by individual members after the initial capital grants (BLM) are disbursed are not recorded at the national level. Likewise, additional members that might have joined the groups after the MD III as a result of accumulated loan capital are not recorded in these figures. (Women helping to build cement road in Lubuk Kayuaro Village, Jambi) (Irrigation canal in Lubuk Mayan Village, Jambi) 16

20 Figure 2.3.A. Figure 2.3.B. Percentage of Community Block Grants Disbursed (Rp) by Activity 17

21 Infrastructure Activities As in previous years, KDP villagers continued to give high priority to infrastructure; confirming yet again the persistent deficit in rural infrastructure. Although, 2007 saw a marked decrease in total infrastructure activities compared to In 2006, KDP villages completed 13,982 infrastructure activities costing approximately Rp 1,112,398,269,450 or 77% of total BLM disbursements, accounting for 53% of total activities. One reason for the larger percentage of activities devoted to infrastructure in 2006 (53%) was the large reconstruction activities undertaken in postdisaster locations, especially Aceh. However, late reporting from many 2007 locations has also had an impact on the total number of activities shown in this report. Within the infrastructure category, roads continued to dominate in 2007 accounting for 28% of all infrastructure activities, bridges 7%, water supply 13% and irrigation and drainage works 14%. Besides the long-term economic and social benefits, KDP infrastructure projects also provided significant short-term benefits by generating over 9,188,973 workdays and employing more than 685,883 people during However, these figures will rise significantly as the locations that are still finishing their 2007 activities send in their final reports. Since the commencement of KDP I in 1998 up to and including December 2007, KDP as funded a total of 180,067 village infrastructure activities. This number does not include construction of health and education facilities which separately accounted for 4,902 activities and 11,773 activities respectively during the same period. Intake and distribution tank connected by 3,000 meter pipeline in Huta Ginjang Village, Kecamatan Palipi, Kabupaten Samosir, North Sumatra Province Water storage tanks and public attached stand pipes in Riang Jati Village, Kecamatan Naga Taman, West Kalimantan Province 18

22 Balayon Village, kecamatan Liang, kabupaten Bangkep, Central Sulawesi shows the state power company PLN how to do rural electrification. "A few years ago the people from our village would have to go the kecamatan center just to watch TV. Including me and my family, said Muchlis Alisyi, a well known member of the community in Kecamatan Liang. According to Muchlis, a retired official from the local department of education in Liang, this situation changed dramatically about four years ago (2004/2005), or to be more precise, when PNPM Mandiri Perdesaan, together with the residents of Mamulusan Village in Kecamatan Liang, successfully built a mini hydro power plant (PLTMH). This was the first mini hydro plant built in Central Sulawesi by a local community. "Electricity is now available day and night in our village, whereas in the kecamatan center, PLN can only supply electricity from 6 pm to 12 midnight, said Muchlis. (Pak Muchlis shows the control board at the Balayon Village mini hydro station, in Kecamatan Liang, Central Sulawesi) Note: Data shown in this table was compiled in April Only 29 of the 32 provinces in the program are represented in this data. Provinces that have not yet reported project and activity data are : Bengkulu, Riau Islands dan Papua 19

23 Now the situation has reversed, and many residents of the kecamatan capital come to our village to watch important broadcasts or popular sporting events on TV like the directly televised Thomas & Uber Cup, and the recent 2008 European Cup. "If the President s national address on the 16 th of August is broadcast during the day, everybody will be going to our village to watch it," said Muchlis. Just in Kecamatan Liang alone, PNPM Mandiri Perdesaan has successfully realized the dreams of three village communities that (The Balayon Village mini hydro station, in Kecamatan Liang, Central Sulawesi) wanted to have 24 hour electricity, i.e. Mamulusan Village (2004/2005), Basosol Village (2005/2006) and Balayon Village (2006/2007). These village communities took this action because they had been waiting for tens of years for electricity, and had become tired of PLN s usual answer of, later, later, later to their yearly requests for electricity. Strangely, electricity poles had been erected in the villages since the 80s, but the electricity never came. Luckily we had PNPM Mandiri Perdesaan," said Gafar Kahar, the head of Balayon Village. The village communities unanimously proposed electrification projects to PNPM Mandiri Perdesaan and were even prepared to wait a few program cycles to get their projects. Finally the Liang kecamatan level meeting agreed to prioritize funding the mini hydro project. The project idea was also supported because it was not considered too costly; at between Rp 150 million to 250 million per unit for each village. For instance, the mini hydro in Mamulusan Village only cost Rp151 million and supplied electricity to 200 homes, the village office, the village clinic and local street lights along the main village streets. Prior to construction of the mini hydro plants, villagers and PNPM-KDP consultants approached both the Public Works department and PLN to ask for technical advice and support. Disappointingly, both agencies declined to provide assistance of any kind and the communities and their consultants had to seek advice from other sources. All the components for the mini hydros and the transmission networks were sourced or fabricated locally (within Central Sulawesi). The lives of the people in these three villages, indeed throughout the whole kecamatan, have changed dramatically thanks to the mini hydro projects they built, and thanks to the funds they received from PNPM Mandiri Perdesaan. "We have saved a lot of money now that we no longer have to buy diesel (for a genset). The money can now be used as capital for small businesses. Apart from that, we also get important information from Jakarta much quicker now," said Pak Gafar. Before the mini hydro, village residents had to pay on average Rp 250,000 per month just to light up their homes. After the mini hydro, residents now pay on average Rp 15,000 per month. The fees were agreed upon by all the residents at village meetings. In Balayon for example, the fees collected are not only used to cover maintenance costs for the mini hydro, the transmission network and the wages of the maintenance team, but also to top up the low salaries of the hard working and dedicated teachers who work in the local schools. "We want them to be happy working and living in our village, so our children will become smarter. At night the children study at home, during the day they study at school," said Pak Gafar. Interestingly, a large canal and flood control gate were also built in the same village with a duel function; to help channel water to the mini hydro, and to reduce local flooding. Considerable integrated planning went into the whole mini hydro project, even to the point where the outflow point at the edge of the small local bay has been developed into a local recreation area. 20

24 (Flood control canal works (top) and connected concrete bridge (bottom), all parts of the integrated infrastructure to support the mini hydro plant in Balayon Village, Kecamatan Liang, Central Sulawesi) 2.4 TRAINING & CAPACITY BUILDING By its very nature PNPM-KDP is largely a training program. Most of the Program s resources are directed toward training activities, both in the form of traditional classroom training, and practical hands-on activities in the field with communities designed especially for adults. KDP s bottom-up empowerment approach demands extensive, on-going training at all levels of the Program for facilitators and consultants, local government officials and most importantly, for community members who accept the responsibilities and benefits of participating in the Program to develop their villages. The following is a brief description of the training and capacity building activities undertaken during Types of Training and Capacity Building Activities Conducted Capacity building activities in PNPM-KDP cover a wide range of activities and 2007 was no exception. Training and capacity building activities routinely fall into one of nine main categories, these are: 1.Pre-Assignment Training; 2.Refresher Training; 3.In-Service Training (IST); 4.On-the-Job Training (OJT); 5.Workshops; 6.Monthly Coordination Meetings; 7.Working Meetings; 8.Hearings with local legislators; and 9.Other special training as needed. (Facilitators roll playing during training in Central Sulawesi) Participants in Program Training and Capacity Building During 2007, all consultants and facilitators assigned to Program locations received either, refresher training, preassignment training or other forms of more specialized training to help them carry out their facilitation and capacity building tasks with community members. A total of 4,507 consultants and facilitators at the kecamatan and kabupaten levels received the formal training mentioned above, as well as, In-Service-Training (IST) and On-The-Job (OJT) training. Local government officials at the kecamatan level who are assigned full-time to the Program (PjOK) also receive the same refresher and preassignment training as facilitators. 21

25 Training and Capacity Building Reports At the end of every program cycle provincial management offices provide comprehensive reports on training and capacity building activities. However, due to the late start in 2007 in all provinces, training data for community and local government training activities, including funds spent on training, has still not been compiled and reported to the national management consultant. At this point the only training data available is for pre-assignment and refresher training that was conducted during April, May, June and July of 2007 after agreement on the final list of participating kecamatan was finalized in mid April Table 2.4.A. below shows the number of kecamatan facilitators, kabupaten consultants and kecamatan officials (PjOK) who received pre-assignment and refresher training in mid 2007: Table 2.4.A. Facilitators, Consultants & Kecamatan Officials Given Training in 2007 Type of Training Kabupaten Kecamatan Information Kecamatan Officials Consultants Facilitators Facilitators (PjOK) Refresher training 234 2, ,067 Pre-Assignment Training 310 1, Total Trained 544 3, ,703 Community Training and Capacity Building PNPM-KDP procedures for community training activities specify that Operational Funds (DOK) for community training can only be used for the following types of training: 1. Orientation for village forum leaders (MAD) & follow-up training 2. Basic training for kecamatan assistant facilitators 3. Training for the kecamatan based financial management unit (UPK). 4. Orientation for the Verification Team. 5. Capacity building for Village Heads (Kepala Desa). 6. Orientation for village technical cadres. 7. Orientation for the proposal writing team. 8. Orientation for the UPK supervisory body. 9. Training for the maintenance management team. 10.Orientation for the village project management teams (TPK). 11. KDP training for the Village Heads and village council (BPD) All provinces conducted the training activities listed above during 2007, although not all at the same time or during the same month. These extra activities were nearly all initiated and funded by provincial or kabupaten governments responding to the demands of local communities or addressing what they considered to be additional needs for capacity building and special training. (New facilitators training in road construction incentral Sulawesi) It should be mentioned that consultants routinely pre-finance many training activities from their salaries and travel allowances. Facilitators, kabupaten consultants and provincial managers (Korprov) often pay for their own training expenses, and sometimes cover shortfalls in funds for important activities at crucial times in the PNPM-KDP cycle 22

26 rather than lose momentum and hard-won support from participating communities and local governments. Consultants are not reimbursed for many of the incidental expenses they pre-finance. This is an indication of the dedication, commitment and professionalism of KDP consultants to the communities they serve. (New facilitators in pre-assignment training North Sulawesi) (Village heads from kecamatan Wori, North Sulawesi receive preimplementation briefing on 2007 PNPM-KDP) 2.5 PILOT PROGRAMS Program Pengembangan Sistem Pembangunan Partisipatif (P2SPP) The main objective of the System for Participatory Development Program (P2SPP) is to fully integrate the regular development planning mechanism with the PNPM-KDP bottom-up model. Institutionally, the P2SPP pilot is based at the kabupaten level and uses kabupaten sourced BLM funds as a stimulant to bridge the missing link between village and kecamatan project proposals. It also ensures that kecamatan-based proposals are included in the final budget decisions that are always taken at the kabupaten level. (Socialization workshop for P2SPP in Ngada, Flores) This program was launched in May 2006 in four pilot kabupaten (Group 1): 1. Kabupaten Batanghari, Jambi Province; 2. Kabupaten Boyolali, DIY Province; 3. Kabupaten South Minahasa, North Sulawesi Province; 4. Kabupaten Ngada, N.T.T. Province. 23

27 The pilot was then expanded to another four kabupaten in 2007 (Group 2): 1. East Ogan Komering Ulu (OKU), South Sumatera Province; 2. Jombang, Central Java Province; 3. Tabanan, Bali Province; and 4. Tapanuli Induk, North Sumatera Province. Local governments were selected to participate in P2SPP based on the following criteria: Previous KDP Kabupaten with good performance; High level of local government commitment and support for the Program; Prepared to contribute 25% of the total community block grants (BLM) of Rp 4 billion; Prepared to contribute a minimum of 5% of BLM funds as local counterpart funds. The motivation that prompted the Department of Home Affairs to develop P2SPP was a desire to continue, and capitalize on the hard won benefits of the KDP approach. To do this requires that KDP s ad hoc project nature must be replaced with a more formal place in the local government development planning cycle. Therefore, P2SPP s specific objectives are: Increase the level of integration with other local government managed poverty alleviation programs; Increase the level of integration in planning, implementation, control and maintenance of development activities by local communities, local governments and central government; Increase the involvement and strengthen the capacity of local communities, especially the poor, in local development; Increase the capacity of local community institutions and village government for sustainable development management; Integrate the direct community financing model into the local government budgeting system; Increase the capacity of local governments to provide community facilitation through empowering and training special local government facilitators called Setrawan. Table 2.5.B. Block Grants (BLM) Disbursed in 2007 to Group 1 Locations Kabupaten 1 Year Total Allocated Total Disbursed Batanghari ,000,000, Boyolali ,000,000, Ngada ,000,000, South Minahasa ,000,000, ,000,000, These 4 kabupaten (Group 1) commenced activities in 2006 Table 2.5.C. Block Grants (BLM) Disbursed in 2007 to Group 2 Locations Kabupaten 2 Year Total Allocated Total Disbursed OKU Timur ,000,000,000 3,000,000,000 Jombang ,000,000,000 3,999,996,775 Tabanan ,000,000,000 4,000,000,000 Tapin ,000,000,000 4,000,000,000 16,000,000,000 14,999,996,775 2 These 4 kabupaten (Group 2) commenced activities in

28 Conclusions after two years of implementation After two cycles of implementation consultants have identified a number of improvements and supporting factors, and a number of persistent problems and obstructing factors. Improvements and supporting factors: Generally the second year has shown greater support from all the participating Bupati in Group 1. However, the three Bupati from Batanghari, Boyolali and Ngada continue to show the greatest understanding of the program s objectives and often provide additional funds and facilities from their own resources. There has been a marked improvement in the level of planning integration between the different village level activities and the local government agencies that manage them in Group 1 kabupaten. (Training Setrawan in Ngada, Flores) Initiatives by kabupaten Ngada and Batanghari to increase the involvement of DPRD (local legislature) members in the Musrenbangdes (village and kecamatan level plans), and include the DPRD Commission 1 in joint monitoring visits to program locations have been well received by the members. Participation and enthusiasm of most communities in Group 1 during the early village level planning stages, and their support in the form of donated labour and materials (swadaya) has been impressive. Persistent problems and obstructing factors across the Pilot Program: There is still a significant reluctance among the members of the kabupaten level interdepartmental working groups (SKPD) in Group 2 (and a few in Group 1) to seriously accommodate and integrate the results of the kecamatan level Musrenbangdes planning process into their final kabupaten development plans and budgets. This situation has arisen because of a number of factors, among them being poor socialization about the program, poor understanding about participatory development, entrenched sectoral egos and Kabupaten departments (Dinas) continuing to subordinate community proposals as low priority to their own development plans. In general the kecamatan setrawan still do not understand their role as facilitators of the planning process, preferring instead to focus on technical issues like management of village subprojects. Neither they nor the PNPM-KDP facilitators have been able to fully understand or realize the opportunities inherent in the village visioning (MMDD) process. However, the setrawan in Kabupaten Ngada, Boyolali and Batanghari, although still rather project focused, have still performed much better than other locations because of the considerable support they have received from their Bupati s. In most of the Group 2 locations, (kecamatan) community members are still not convinced that the Musrenbangdes can produce anything of value for them after many years of seeing this process reduced to mere lip service to community concerns, and having their proposals routinely sidelined by the kabupaten level SKPD development planning forum. In most Group 2 kabupaten, support from the Bappeda planning agency has remained weak resulting in poor coordination among kabupaten level agencies and a lack of integration of kecamatan level plans into kabupaten programs. 25

29 In general, the control and management of the P2SPP pilot by the national management consultant, the Central PMD working unit (Satker) and the Provincial working units (Satker) is quite weak. In most of the Group 2 kabupaten the working units (Satker) are also quite weak. Specific implementation problems during 2007: In a number of kabupaten and kecamatan that joined the Pilot for the first time in 2007 (see Table 2.5C, Group 2 above), there were significant differences in perception and understanding among kabupaten and kecamatan officials to the point where many basic P2SPP principles were no longer followed. The worst case being Kabupaten East Ogan Komering Ulu (OKU). In P2SPP Group 2 locations, socialization about the Pilot among the local government agencies involved was generally not effective and resulted in poor understanding about the Pilot s mission and operational objectives. Support received from Bupati in Group 2 locations during 2007 was generally weak and basically took the form of the local government s obligatory contributions to BLM funds. Direct oversight and stewarding of the politically complex integration process did not happen. Coordination in Group 2 locations, and a few Group 1 locations, between the local PMD agency, Bappeda, SKPD and DPRD was weak. As a result, efforts at integrating the kecamatan level Musrenbangdes process with the kabupaten level SKPD planning forum were not effective. Conflicts arose in some Group 2 locations between the local PMD agency and Bappeda about who had authority to direct and guide certain aspects of the Musrenbang process up to the kabupaten level. This problem was particularly acute in Kabupaten East OKU. None of the pilot locations (Group 1 and 2) submitted routine monthly reports on time. Due to the late disbursement of BLM TA funds during 2007 a number of pilot locations were unable to complete their infrastructure subprojects. Recommendations The P2SPP pilot has now amassed two full years of valuable experience in trying to integrate KDP s community-based, bottom-up development planning model, with the current top-down local government development planning system. Generally speaking, the Pilot s second year showed significant progress in a number of areas, particularly in Group 1 kabupaten; but even persistantly problematic locations provided valuable lessons on what can go wrong, and why. However, the important thing to note is that the ambitious integration objectives of the Pilot were shown to be achieveable if local governments decided to support the principles and ideals of the P2SPP initiative. There is no doubt that the majority of problems were (and still are) at the kabupaten level, but to a large extent many of these problems have been resolved in most Group 2 locations. For other locations, at least the next steps in resolving them are clear. It would now be timely for the Pilot s more successful local governments to share their experiences after two years in the Pilot with other kabupaten local governments to show them that a more democratic, participatory and representative method of integrated development planning is achievable. Perhaps the best forum for this exercise might be a seminar sponsored by the Association of Indonesian Kabupaten Governments (APKASI). 26

30 Smallholder Agricultural Development Iniative (SADI) The AusAID funded SADI pilot program is closely linked to PNPM-KDP and has been designed to dovetail with the stages of the mainstream program. Its purpose is to provide block grants to groups of farmers that participate in a KDP community-based, bottom-up planning approach to determine suitable agricultural-based subprojects designed to support household-level economic activities. Funding for the rural PNPM-Agribisnis consists of operational funds (same as KDP) DOK (Dana Operasional Kegiatan) totaling Rp 55,510,000 per year for each kecamatan. There are also direct block grants BLM (Bantuan Langsung Masyarakat) of Rp 555,100,000 per year for each kecamatan. The implementation of the SADI pilot program will closely follow the same institutional mechanisms and activity stages as PNPM-KDP. The general objectives of the SADI pilot are: To accelerate rural poverty alleviation efforts by increasing the household incomes of poor farmers via special capacity building with groups of selected farmers to increase their productivity and access to markets. The specific objectives of the SADI pilot are: Increase the capacity of poor farmers by helping them to acquire the agricultural infrastructure needed to increase their productivity. Increase both the volume and quality of crops/goods produced by poor farmers. Increase the incomes of poor farmers by reducing the post-harvest obstacles they face in marketing their produce. Increase the effectiveness of agricultural community institutions via capacity building activities for farmers groups. Develop partnerships between farmers groups and the private financial/banking sector. Field locations for the SADI pilot are in four provinces in Eastern Indonesia: South East Sulawesi; South Sulawesi; East Nusa Tenggara; and West Nusa Tenggara. A more detailed breakdown of locations to the kabupaten and kecamatan level can be seen in the table below: SADI Pilot Program Locations by Province, Kabupaten and Kecamatan No. Province Kabupaten Kecamatan 1 South Sulawesi 1. Tana Toraja 1. Mengkendek 2. Rindingalo 3. Sesean 2. Bantaeng 1. Bissappu 2. Tompobulu 3. Gantarang Keke 2 South East Sulawesi 1. Muna 1. Lawa 2. Kusambi 3. Wakorumba Selatan 2. Konawe Selatan 1. Lainea 2. Palangga 3. Konda 3 Nusa Tenggara Timur (NTT) 1. Timor Tengah Selatan (TTS) 1. Amanuban Selatan 2. Mollo Utara 3. Kuan Fatu 27

31 2. Ngada 1. Aimere 2. Golewa 3. Riung Barat 4 Nusa Tenggara Barat (NTB) 1. Lombok Barat 1. Gerung 2. Bayan 3. Narmada 2. Dompu 1. Hu u 2. Manggelawa 3. Pekat Total PNPM Agribusiness (SADI) Activities During 2007: SADI Workshop The SADI team conducted a workshop in Bogor during the first week in November 2007 to discuss the first annual workplan for the SADI Program. Recruitment of National and Provincial SADI Specialists Ten SADI specialists were recruited on November 27, Their assignments and locations are detailed below: 1 Agricultural Specialist and 1 Assistant Specialist located in the National Management Consultant (NMC) in Jakarta. 4 Provincial Agricultural Specialists, and 4 Monitoring and Evaluation Specialists located in the offices of the four pilot provinces. Workshops To Write the Technical Operating Manual (PTO) and Modules for Facilitator Training All SADI specialists, assistant specialists and monitoring and evaluation specialists participated in a special workshop conducted from November 28 to December 5, 2007 in Jakarta to write the Pilot s socialization materials, the technical operating manual and the pre-assignment training modules for SADI kecamatan facilitators. Orientation/ pre-assignment training for SADI consultants (in conjunction with NMC consultants) was conducted from December 9 to December 13, 2007 in Jakarta. Coordination workshops for provincial management consultants and the provincial government coordinating teams (TK Provinsi/BPM) were conducted in each provincial pilot location in the second and third week of December Recruitment of Kecamatan Facilitators (FK) for each province was undertaken in the third and fourth week of December Pre-assignment training for all FKs was conducted in Malang, East Java, on January 8 to January FKs were trained in accordance with the numbers required to staff all of the SADI kecamatan locations. 28

32 Disbursement of funds: As of December 2007, PMD (the main executing agency) has not been able to process any funding for SADI activities due to budget processing problems. This funding problem prevented SADI personnel from undertaking any field activities, accept where partnering with PNPM-KDP activities was possible. Education Pilot Program The general objectives of the education pilot program are: To develop a facilitation model that will help communities to identify and understand the problems and obstacles they face in trying to secure at least nine years of quality education for their children. The pilot aims to use the PNPM-KDP community-based model to help communities find their own solutions to their specific education needs. The specific objectives of the education pilot are: Provide capacity building for providers of education in pilot areas. Broaden the scope of understanding within communities about education services so they can overcome the problems they face, like opportunties to secure primary education, the quality of education and the management of education services. Increase the general knowledge of communities about education so that they find solutions and create new ideas to increase the quality of local school-based education. Institutional a close working relationship between communities, schools and local governments in an effort to create new ways to reduce the financial burden of education to parents, make schools more accessible to communities, and increase the overall quality of primary education. The education pilot is being implemented in 19 PNPM-KDP kecamatan located in seven kabupaten and four provinces. Administrative Level Pilot Locations Provinces 4 Kabupaten 7 Kecamatan 19 Villages 186 Each pilot kecamatan receives four types of special funding: Direct community block grants Bantuan Langsung Masyarakat (BLM) totaling Rp 225 million; Operational activity funds (DOK) for pilot education activities totaling between Rp16.5 to Rp 125 million; Operational activity funds (DOK) for school committees totaling Rp 40 million; Additional Education Block Grants totaling Rp120 million allocated to each Kecamatan. Implementation During 2007 Activities for the Pilot began in earnest in 2007 after training for the education facilitators was completed in October Progress varied considerably because some of the pilot locations were not part of the PNPM-KDP program for Because of this, two different approaches had to be used in the early stages of implementation. In locations which were part of the PNPM-KDP 2007 program, the education facilitators conducted a review of community proposals to ensure 29

33 that educational issues were addressed. However, in cases where the planning process had produced impractical or poor quality proposals, the planning process was redone Implementation Schedule for the Education Pilot Program No. Timing Activities 1 February 2007 Received an additional grant from the Netherlands Government (No.TF090003) for the Education Pilot 2 April June 2007 Determining locations, editing the PTO and securing No-Objection-Letters from the World Bank. 3 June 2007 Processing budget documents (DIPA) 4 Week 2 May to Week 1 June 2007 Writing training modules for refresher training for facilitators and trainers. 5 Week 2 June to Week 3 July 2007 Selection of new education facilitators for vacant positions. 6 Week 1 August 2007 Refresher training for education Facilitators. 7 Week 2 August 2007 Refresher training for education trainers. 8 Week 2 August 2007 to Week 4 Implementation activities. April Week 1 August 2007 to Week 4 May Supervision and monitoring of pilot activities Week 2 to Week 4 May 2008 Final evaluation of the Education Pilot a. Kabupaten and Province level b. National level 11 June 2008 Final Report for 2007 activities. Education block grant funds that should have been used during 2007 were not able to be disbursed until April 2008 due to the late inclusion into the 2007 budget. The funds allocated and disbursed during 2007 can be seen in the table below: Table 2.5.D. Block Grants Allocated and Disbursed for Education Pilot Province Allocation Disbursements % (Rp) (RP) Activity Block Grants (BLM) South Sulawesi 900,000,000 West Sulawesi 1,125,000, ,000, North Sulawesi 900,000,000 South Kalimantan 1,350,000,000 Total 4,275,000, ,000, Operating Funds (DOK) South Sulawesi 125,000,000 75,000, West Sulawesi 142,500,000 95,500, North Sulawesi 140,000, ,000, South Kalimantan 257,500, ,500, Total 665,000, ,000,

34 School Committee (DOK) South Sulawesi 160,000,000 96,000, West Sulawesi 200,000, ,000, North Sulawesi 160,000, ,000, South Kalimantan 240,000, , Total 760,000, ,000, Education Block Grants South Sulawesi 480,000,000 West Sulawesi 600,000,000 North Sulawesi 480,000,000 South Kalimantan 720,000,000 Total 2,280,000,000 Progress with activities funded by block grants (BLM) It was always intended that the major activities of the Pilot would be funded by block grants. However, progress with major pilot activities during 2007 was minimal because of the budgeting problems mentioned above. No activities were able to be funded during 2007 by block grants. Late salaries for facilitators also had a significant impact on motivation and performance levels. The different problems encountered in some locations, especially with local government, also accounted for considerable variations in progress. The table below shows briefly the general level of progress made in all four target provinces during Brief Summary of Progress by Province for 2007 Provinces Implementation Progress Comments North Sulawesi Detailed designs and project budgets (RAB) prepared. South Sulawesi Detailed designs and project budgets (RAB) prepared. West Sulawesi Completed 3 rd inter-village meeting (MAD3) and commenced planned activities. South Kalimantan Revised detailed designs and project budgets (RAB) and prepared for (MAD 3). 3 kecamatan disbursed 60% of their BLM funds and 1 kecamatan disbursed 100 % of its funds. PNPM Healthy and Intelligent Generation Pilot Program (Generasi) KDP communities have consistently proposed a large number of health and education activities. However, due to pressing infrastructure needs, and limited funds, only a small percentage of those proposals have been implemented. To accommodate these second priority proposals, another pilot program was created called PNPM Generasi Sehat dan Cerdas to focus on these types of activities - complete with additional funds and special facilitators. PNPM Generasi (as it is now called) has two main objectives: Upgrading health care for pre and postnatal mothers and infants up to five years of age in target rural communities; 31

35 Improving education standards and facilities in target communities to help rural children complete primary school (SD), and continue to middle high school (SMP) to complete their nine years of compulsory education. The Generasi Pilot is the largest pilot ever undertaken by KDP. It is being implemented in 129 kecamatan, 20 kabupaten and 5 provinces. Funding for the Pilot, as for the mainstream PNPM- KDP program, is from a combination of World Bank loans and local government cost sharing. However, from the 129 Generasi kecamatan, 21 kecamatan are receiving special grant funding of Rp 1.25 billion per kecamatan from the Netherlands Government. The Netherlands funded locations are also not required to provide cost sharing funds from their local governments. A more detailed breakdown of the 129 Generasi locations, complete with allocated funds for the 2007 program, and the 21 locations funded by the Netherlands grant, can be seen in Table 2.5.E. and Table 2.5.F. below: Table 2.5.E. Generasi Pilot Locations 2007 and 2008 Province Kabupaten Total Kecamatan Total Villages Total Total West Java 1 Sukabumi Kuningan Majalengka Sumedang Subang East Java 1 Malang Pamekasan Trenggalek Nganjuk Magetan N.T.T. 1 Sumba Timur Rote Ndao TTS Lembata Flores Timur Manggarai Gorontalo 1 Gorontalo Boalemo Pohuwato N. Sulawesi 1 Minahasa Utara Total (2007) (2008) Total (2007) (2008) Total 32

36 Table 2.5.F. Kecamatan Recipients of Netherlands Government Grant Funds No. Provinsi Kabupaten Kecamatan 1. Lengkong 2. Purabaya 3. Sukabumi Cireunghas 4. Kadudampit 5. Caringin 6. West Java Cibeureum 7. Garawangi Kuningan 8. Cigandamekar 9. Pancalang 10. Situraja Sumedang 11. Tanjungmedar 12. Trenggalek Gandusari 13. Malang Ngajum 14. Berbek East Java 15. Loceret Nganjuk 16. Ngronggot 17. Rejoso 18. Matawai La Pawu East Nusa Tenggara Sumba Timur 19. Rindi 20. Pulubala Gorontalo Gorontalo 21. Mootilango Generasi activities are community-based and utilize the existing network of local health centers and local healthcare professionals, like midwives. Where communities deem it necessary, the Pilot will provide upgrading to these centers, including training for staff. Community members will also receive training so they can take a more active role in community health activities. Table 2.5.G below shows the number of such health centers targeted to receive support from the Generasi pilot. 33

37 Table 2.5.G. Total Health Centers Serviced by Generasi Pilot Program No. Province No. Health Service Points of Kec. Puskesmas 1 Pustu 2 Polindes 3 Bidan 4 1. West Java East Jawa N.T.T Gorontalo Nth. Sulawesi Total Kecamatan level health clinic, 2 Branch of kecamatan clinic, 3 Village level clinic, 4 Midwife The pilot has already identified target populations of mothers, infants, primary school and middle school students that are eligible to receive assistance from the Program s activities. The table below shows the populations targeted by category in each of the 129 kecamatan. Table 2.5.H. Target Population Identified in Program Areas No. Province Number of People Eligible for Assistance No. of Pregnant Primary Middle Kec. Babies Infants Mothers Students Students 1. West Java 45 34,825 34, , ,012 88, East Java 36 27,641 27, , ,992 79, N.T.T ,192 22,192 75,289 96,557 30, Gorontalo ,481 26,119 37, Nth.Sulawesi ,553 2,150 Total ,050 91, , , ,059 Disbursement status as of December 2007 As of December 2007, 122 of the 129 Generasi locations/ kecamatan had disbursed their allocated funding. The other seven kecamatan in NTT (East Flores and Manggarai) have not yet disbursed all of their funds. Table 2.5.I. below shows the status of Generasi disbursements as of December Table 2.5.I. Disbursement of Block Grants (BLM) as of December 2007 Disbursements to UPK (Management Units) Details Total Netherlands Loan Grants Kecamatan Funded Villages Funded 238 1,372 1,610 Funds Allocated (Billions Rp) Rp Rp Rp Cost Sharing Funds (Billions Rp) - Rp Rp Total All Sources Rp Rp Rp Funds Disbursed (Billions Rp) Rp Rp Rp Percentage Disbursed (%) Details of the seven kecamatan that did not disburse all of their allocated funds by December 31, 2007 are shown in Table 2.5.J below: 34

38 Table 2.5.J. Kecamatan That Did Not Disburse All Their Funds by December 2007 No. Kecamatan Allocation (Rp) Disbursement Balance (%) (Rp) (Rp) 1. Larantuka, Flores Timur, NTT 1,000,000, ,000, ,000, Solor Barat, Flores Timur, NTT 750,000, ,000, ,000, Solor Timur, Flores Timur, NTT 750,000, ,000, ,000, Wulanggitang, Flores Timur, NTT 1,000,000, ,000, ,000, Kota Komba, Manggarai, NTT 1,000,000, ,000, Elar, Manggarai, NTT 1,000,000, ,000, Lamba Leda, Manggarai, NTT 1,250,000,000 1,000,000, ,000,000 T o t a l 1,350,000,000 Participation Participation levels thus far in the Generasi pilot have been relatively high in all the target communities. Participation by women has been especially high, particularly in the focus group discussions and hamlet level (Dusun) meetings. Detailed figures showing attendance at the various meetings and pilot activities are shown in Table 2.5.K and Table 2.5.L. Table 2.5.K. Community Participation In Generasi Planning Meetings Province MAD 1 Socialization Village Socialization Hamlet Socialization Men Wom RTM 2 Wome Men RTM 2 Wome Men en n n RTM 2 West Java 1,882 1, ,346 11,225 8,135 22,671 66,622 42,480 East Java 1,673 1, ,102 11,945 9,339 22,439 45,153 34,444 East Nusa Tenggara 1,586 1,344 2,214 13,947 14,485 24,539 25,420 42,756 63,597 North Sulawesi , ,349 1,532 Gorontalo ,555 6,250 7,880 4,900 19,280 20,127 5,770 5,351 4,192 42,969 44,421 50,197 75, , ,180 1 MAD Intervillage Meetings 2 RTM Poor Households Tabel 2.5.L. Community Participation in Activity Stages Activity Stage Focus Group Discussions MAD 2 Funds Allocation Provinsi Men Women RTM 1 Men Women RTM 1 West Java 7,199 68,162 44,380 1,815 2, East Java 8,905 56,122 38,482 2,015 2,266 1,119 East Nusa Tenggara 2,853 46,850 43,794 1,951 2,363 3,493 North Sulawesi 285 2, Gorontalo 6,062 20,585 18, , , ,839 6,242 7,941 6,251 1 RTM Poor Households 2 MAD Intervillage Meetings 35

39 (Training of village facilitators for the Generasi Pilot Program in Kecamatan Larantuka, East Flores, August 2007) 2.6 INFORMATION, EDUCATION AND COMMUNICATION In 2007, the Information, Education and Communication (IEC) unit continued to disseminate information about program policies and activities to PNPM-KDP actors, communities and stakeholders. The IEC unit was involved in national level PNPM-Mandiri socialization activities that culminated in the launching of the national program by the President of Indonesia at the end of April The unit also accompanied several high ranking government officials to PNPM-KDP sites and organized exhibitions and displays as part of those events. All those activities required the IEC unit to coordinate closely with the Coordinating Ministry for People s Welfare and the Programs implementing agency PMD. IEC activities and materials supported capacity building and training for field consultants and facilitators, and helped to raise awareness among participating communities about the purpose of the Program. More specifically, the IEC unit undertook the following activities in 2007 in support of the Program s communication strategy: 36

40 PNPM-KDP Information Packet: In 2007 the IEC unit upgraded the 2006 KDP Information Packet with more complete and up-to-date program information. 38,000 copies of this document were printed and distributed to every PNPM-KDP kecamatan location. The information packet, which is published in both Indonesian and English, is the most widely read KDP publication, and as such is an important socialization tool. It is supplied to central, provincial and local government officials, academics, journalists, the private sector and foreign guests who come to see the Program. KDP Bulletins: During 2007 the IEC unit published two bi-monthly bulletins; Buletin PPK and Gigeh. The Buletin PPK is published every two months and distributed to every PNPM-KDP kecamatan. Gigeh is only distributed to all villages in Nanggroe Aceh Darusslam Province (NAD) and Nias Islands in North Sumatera. Both bulletins have been well received for many years by all levels of KDP actors because of their reader-friendly language and presentation style. Most of the articles and materials come from consultants and facilitators, although there is always information about new initiatives and policies from the Central Government that affect the Program. 87,169 copies of the Buletin PPK, and 44,259 copies of Gigeh were printed in Surat dari Desa: In 2007 the IEC unit published a book entitled, Letters from the Village (Surat dari Desa). This book was complied to raise awareness about PNPM-KDP and to collect examples of best practice and interesting stories that highlight the achievements of the community-based rural empowerment method of development. This book was published in April 2007 and 6,500 copies were printed. Some were given to guests at the official national PNPM Mandiri launching in Palu, Sulawesi, while the others were distributed to each participating province and kabupaten. This book was so well received that an additional 2,000 copies had to be printed at the end of 2007 by the World Bank to fulfill requests from the Coordinating Ministry for People s Welfare for extra copies. PNPM-KDP 2007 Annual Report: The IEC unit is primarily responsible for producing the Program s Annual Report. The Annual Reports are an obligatory requirement of the KDP loan agreements to ensure transparency and accountability. These documents are compiled through the combined efforts of many KDP specialists from the Program s National Management Consultant office (KM-Nasional) and are published in both Indonesian and English. PNPM-KDP Website: The IEC unit is responsible for managing and updating the Program s website. There have been significant improvements to the website in terms of layout, breath of content and technical innovations since its launching in The website is now frequently used by both KDP actors, community members and interested private citizens to send in comments, complaints and questions about the program. Over 217 enquires were received by the IEC unit via the website in The number of enquires already received as of June 2008, is already well in excess of the 2007 figure. (see Page 33 ) The Program website also has operational links to the websites of its main partners and institutional stakeholders. These include the following institutions: 37

41 The World Bank; Coordinating Minister for Social Welfare (Menko Kesra); The Urban Poverty Program (UPP/P2KP); Dept. of Home Affairs; Dept. of Communication and Information; The National Coordinating Team for Poverty Alleviation; and The Multi-Donor Fund (managed by the World Bank) (Members of the national parliament visit a women s microcredit group, top. World Bank supervision mission from Washington, bottom ) Hosting Press and Study Tours: PNPM-KDP is now one of the oldest and largest communitybased rural development programs in the world, as such it attracts considerable attention and interest from other developing countries eager to learn from Indonesia s unique experience. Every year the IEC plays host to study groups from foreign governments and accompanies them on visits to PNPM-KDP sites all over Indonesia. To date KDP has received visits from study groups from China, Vietnam, Pakistan, Afghanistan, Iran, India, Nepal, Sri Lanka, Nigeria, Yemen, Italy, and also United States. A number of these countries have sent delegations up to three times. In 2007, the IEC unit accompanied three foreign visitors from the World Bank s Washington DC office; a delegation from Yemen; and a group from the International Fund for Agricultural Develompent (IFAD) from Rome. In addition to hosting foreign delegations, the IEC unit also accompanied one group of local journalists on a field visit to program sites in These visits have become more frequent since 2006 and show an increasing interest in the Program s achievements by the media. Exhibitions and Displays: The IEC unit organized several exhibitions during The main purpose of these was to show PNPM-KDP activities in conjunction with displays organized by other government agencies, or to enhance visits to PNPM-KDP sites by ministers and other high-level officials. In 2007, the IEC unit, together with field-based consultants and local governments, held an exhibition in Palu, Central Sulawesi, which was part of national PNPM Mandiri Launching event. Displays were also organized in South Lampung province, Lampung and Kupang provinces and East Nusa Tenggara province as part of an official visit by Coordinating Minister for People s Welfare. The IEC unit also participated in an exhibition for Information and Communication Technologies and an Intermediate Techologies (Teknologi Tepat Guna) Exhibition organized by the Ministry of Home Affairs. 38

42 39

43 2.7 MICROCREDIT GROUPS In 2007, the National Management Consultant s Microcredit Support unit continued the two initiatives that had been started in 2006 to help decentralize more of the Program s management of microcredit groups to the provincial management offices. The first of these was to provide technical support on microcredit for the joint internal audit program conducted by the Financial Supervision unit. The second was to continue an on going (Designer Oscar Lawalata buying tenun woven by women s credit group kec. Niki- Niki, Timor, NTT) national evaluation of all the PNPM-KDP kecamatan Activities Management Units (UPK) that manage microcredit funds. The main purpose of these evaluations is to determine the financial health of each UPK s microcredit portfolio, and the quality of each unit s financial management. The final output of the evaluation is to group the UPKs into one of four categories. Financially viable UPKs with potential for further development are classified as either A or B. UPKs considered unviable and unlikely to benefit from further support are classified as either C or D. Three main evaluation criteria used in the evaluation are: 1. A risk analysis of the loan portfolio or collectable factor that indicates the quality of the loans given compared to the total number of loans that have not made repayments for more than six months. 2. Productivity or income potential that indicates the income earning potential for UPKs from the fee they receive from regular loan repayments. This is compared to the total number of performing loans still in the hands of community borrowers. 3. Quality of portfolio and general management. This criterion was evaluated using six main variables, i.e. Handling of Problem Loans, Good Administrative Practices, Pro- Active UPK Officers, Commercial and Credit Performance of Groups, Adherence to KDP Principles for Revolving Funds, and Support from Kecamatan Officials. During the evaluation period between October and December 2007 audit teams inspected 1,726 UPKs. Of these 56% were ranked as A, 23% ranked as B, 12% ranked as C and 9% ranked as D. The results for evaluations conducted on UKPs between January to March (1,623 units) and April to June (1,630 units) were almost identical, i.e. within 1 to 2 percentage points for each category in terms of the percentage of UPKs ranked as either A,B,C or D. 40

44 In terms of repayment rates for 2007, the microcredit support unit s figures show that the women s microcredit groups (SPP) achieved an annual average repayment rate of 94%, while the remaining mixed microcredit groups (UEP) achieved an annual average repayment rate of 86%. UPK Training Activities During 2007 During 2007, kecamatan activities units (UPK) that managed sizable microfinance portfolios, and were classified as A category UPKs, were given special capacity building training funded by three sources of funds: Operational planning funds (DOK) which were used (as usual) for normal pre-project training. Special provincial DOK funds which were used for UPK basic microfinance management training, and channeled via each provincial government. Special (more advanced) microfinance management training for 599 category A only UPKs to enhance the sustainability of their credit groups. This training was spread over 26 provinces and 163 kabupaten that received BLM funding as part of the 2007 program. The training funds allocated to each kecamatan for special UPK microfinance training varied slightly between regions. The higher amounts for Maluku and Papua were in recognition of their higher local costs. The next most expensive regions were Sumatra, Kalimantan, Sulawesi and NTT. The least expensive regions for conducting training were considered to be Java, Bali and NTB. Table 2.7.A below shows the funding ceilings allocated to each kecamatan by region: Table 2.7.A UPK Training Funds Allocated Per Kecamatan 2007 No Provincial Regions Fund Ceiling per kecamatan 1. Maluku, North Maluku, Papua, West Papua Rp ,00 2. Sumatera, Kalimantan, Sulawesi, NTT Rp ,00 3. Java, Bali, NTB Rp ,00 The total training funds allocated to the 599 potential kecamatan were Rp 6,910,000,000 to be disbursed at the latest by December From the amount allocated for microfinance training, Rp 6,772,500,000 or 98%, was disbursed and used for training as specified. The provinces that did not use all their training funds (100%) were: West Java; West Kalimantan; Central Kalimantan; South Kalimantan and Maluku. To ensure that the UPK training was practical and of high quality, the NMC Microcredit Unit (MCFS) designed special training scorecards to be used by the trainers to determine the subject matter covered and the level of skills and knowledge to be gained on completion of the training. The actual scorecards had to be made by the participants and the results (post training) filled in by the trainers. The training cards have been kept by the UPKs as a record of the skills they gained during the training. The list below shows the subject matter covered and the types of practical exercises that each UPK had to complete during the 2007 training. 41

45 1. A training contract 2. A basic SWOT analysis of each UPK s porfolio 3. A Matrix showing the difference between managing program (BLM) funds and microfinance funds 4. A special microfinance report 5. A draft plan for using UPK surplus funds 6. Draft procedures for handling problematic loans 7. Exercise sheet outling facilitation methods for developing credit groups 8. Exercise sheet showing facilitation methods for different types of groups 9. Exercise sheet showing how to identify problems within groups 10.Exercise sheet showing how to facilitate credit executing groups 11. Exercise sheet showing how to strengthen credit groups 12. Exercise sheet for profiling credit groups 13. Exercise sheet to quickly diagnose the financial health of credit groups 14.Create/design an UPK profile 15. Create/design an UPK needs analysis 16.Create/design an UPK financial fundamentals checklist 17. Draft a proposal for securing additional capital from third parties 18.Design a checklist for reviewing an UPK financial report 19.Design a checklist for reviewing the Articles of Association/Charter and balance sheets of intervillage cooperation bodies (BKAD) and UPK SOPs 20.Design a check list for handling problem loans 21. Design guidelines for a budget to manage a revolving credit business As mentioned above, there are currently 599 category A UPKs receiving special support from the Program and the NMC MCFS unit in particular. The distribution of these UPKs by province is shown in the Table 2.7.B. During 2007, a total of 12,104 women s microcredit groups (SPP) received funds from PNPM- KDP for economic activities. This number is external to groups that received loans from funds that were disbursed from previous KDP cycles and already in circulation with UPKs. The cumulative total for all microcredit groups since KDP started in 1998 is now 70,055 (see Table 2.7.C.), of those 42,425 are women s groups (SPP) and 27,630 are mixed credit groups (UEP) that received their final funding prior to January The 70,055 groups represent 1,680,065 individual members. It is interesting to note that many of the UPKs that were established during KDP I and KDP II, have already re-lent their available loan funds 12 or more times to microcredit groups. 42

46 Most program locations have recorded a significant increase in women s credit groups over the last few years. One indicator of the latent demand for microcredit funds among rural women is the long line women s groups still waiting for loans in most KDP locations. For instance, in Kecamatan Liang, Banggai Islands, Central Sulawesi, there were 34 SPP women s groups waiting in line for loans as of December The number of groups allowed to apply for loans and join the waiting lists is determined by each community at special intervillage meetings. The demand for KDP microcredit loans has increased due to the many success stories and the simplified loan criteria used by UPKs to select borrowers. Perhaps the most popular aspect of KDP microcredit loans is that no collateral is required to secure a loan. Borrowers also accept the interest rates determined by community intervillage forums which monitor the UPKs. Ibu Sri Junianto, used her loan to start a blacksmith business with her husband, North Aceh (above) Ibu Nyak Ti, although blind, borrowed to expanded her rotan weaving business, Aceh Tamiang (left) 43

47 (UEP mixed microcredit group in Gianyar, Bali making table mats and hand bags) 44

48

49 3.1 PAPUA & WEST PAPUA RESPEK PROGRAM As a result of KDP s achievements in rural community-based development in Papua and West Papua, the Provincial Governments of both provinces decided in 2007 to establish a KDP look-a-like program called RESPEK to tackle rural poverty in Papua. The full name of the program is: PNPM Mandiri - Rencana Strategis Pembangunan Kampung, or PNPM Mandiri Respek. The RESPEK program has adopted the PNPM-KDP model with only minor (Bridge inspection in Kab. Waropen, Papua) technical modifications to better adapt the program to the conditions in Papua. The RESPEK program is quite ambitious and plans to provide Rp 100 million in direct block grants from their special autonomy funds to each village in Papua (and West Papua). However, the cost of technical assistance (mainly consultants and facilitators) will still be shouldered by the Central Government, primarily with loan funds from the World Bank. KDP in Papua is known as the District Development Program (PPD). The new RESPEK Program will replace PPD and will commence in PNPM-KDP also had a late start in Papua and West Papua in Papua only had 83 kecamatan (called Districts in Papua) participating in the Program, while West Papua only had 35. As of June 2008, Papua had only five districts that had completed all their 2007 activities, while only 32 had disbursed all of their allocated funds. West Papua managed to complete 2007 activities in only one district by June 2008, and only 26 districts were able to disburse all their funds for Data reporting from Papua has also been very problematic due to difficulties in recruiting suitably qualified IT staff to fill the key MIS specialist position in the provincial management office. The position was eventually filled in May 2008 after being vacant for over two years. (Pre/post natal clinic kab. Ransiki, West Papua) (Elevated walkway in fishing village kab. Waropen, Papua) 47

50 3.2. PNPM-KDP IN POSTDISASTER LOCATIONS KDP/PNPM-KDP uses modified implementation procedures to speed up rehabilitation and reconstruction assistance for areas that have suffered natural disasters. These special procedures include: 1) increasing locations receiving assistance to include all locations that have been affected by the disaster; 2) increasing the community block grant funding (BLM) originally allocated to each kecamatan Earthquake damaged house in Kabupaten Klaten in the disaster area; 3) increasing the number and types of activities that can be funded; 4) simplifying the activity stages to speed up implementation; 5) accelerate and simplify BLM disbursement procedures; 6) provide additional facilitators if needed; and 7) adopt specially modified operational technical guidelines (PTO) to accommodate the special conditions encountered in most postdisaster areas. Before the Aceh tsunami, for example, KDP only operated in 111 kecamatan in Aceh Province. However, post tsunami December 2004, KDP was operating in all 221 rural kecamatan. The same was true after the large earthquakes that rocked Nias Islands in north Sumatera, Special Region Yogyakarta and Klaten in Central Java. All the affected kecamatan in these provinces were included in the Program after sustaining substantial damage due to earthquakes. In West Sumatera, which was rocked by an earthquake in March 2007, 56 affected kecamatan were added to the program because of earthquake damage. In Bengkulu, which suffered a strong quake in September 2007, 19 kecamatan were added. In both areas special postdisaster procedures were used to speed up the delivery of assistance. The total number of postdisaster locations handled with special postdisaster procedures in 2007 by PNPM-KDP can be seen in the table below. Table 3.1.A. Total Kecamatan Handled by Postdisaster Procedures Postdisaster Location Total Kecamatan Year Since Aceh Province Nias Islands, North Sumatera Special Region Yogyakarta Klaten, Central Java** West Sumatera Province Bengkulu Province Note: * Nias consists of both North and South Kabupaten NIas ** Klaten is a kabupaten in Central Java Province 48

51 Communities in Nias repairing earthquake damaged village roads In badly affected postdisaster areas which had large numbers of quake victims, the Program allocated up to four times the usual amount of BLM assistance. This increase in funding was made possible by additional large aid grants from countries that participated in the Multidonor Trust Fund for Aceh and North Sumatera (MDTFans). Prior to additional funds being allocated to special postdisaster locations, BLM funds ranged from Rp 750 million to Rp 1 billion per kecamatan. However, after the additional funds, these special areas received between Rp 2 billion and Rp 4 billion per kecamatan. The total BLM allocated for postdisaster work in Aceh Province was Rp billion. Whereas funds allocated for Nias Islands totaled Rp 79 billion. Funds allocated for rehabilitation and reconstruction in Special Region Yogyakarta and Klaten, in Central Java, totaled Rp 121 billion. Table 3.2.B. Block Grants Disbursed to Postdisaster Areas Per 2007 (Rp) Postdisaster Locations Aceh Province Nias Islands, Nrth Sumatera Province PNPM-KDP (Housing Program -Nias) Special Region Yogyakarta Klaten, Central Java Province West Sumatera Province Bengkulu Province Note: * Funds have been allocated up to 2009 BLM Funds Allocated Rp billlion Rp 79 billion Rp billion* Rp 81.5 billion Rp 39.5 billion Rp 168 billion Extra funds still being processed As with regular PNPM-KDP locations, local communities affected by disasters made all their own decisions on how best to utilize the funds they received via previously established KDP community forums. The Program has learnt from previous experiences in Aceh, Nias, Yogyakarta and Klaten that disaster victims often face urgent and immediate household needs that cannot wait for lengthy planning meetings. Since the Aceh tsumani of December 2004, the Program has allowed up to 25% of total BLM funds to be allocated by 49

52 community forums as Social Funds for urgent household, health and education needs. In recognition of the increased technical workload and need for public infrastructure, the Program decided to add an additional technical facilitator to each kecamatan for affected areas in Aceh and Nias Islands. The extra technical facilitators were provided to speed up work on budgeting and design for civil works and public facility projects, and to ensure adequate supervision and quality control. Besides the additional technical facilitators, Aceh and Nias provinces were provided with one special Information Facilitator; one for three kecamatan. These facilitators were tasked with collecting, sharing and disseminating information from other programs, NGOs, government agencies and local communities in an attempt to increase awareness and coordination between programs. Progress in Postdisaster Locations Postdisaster Activities in Aceh & Nias Islands By early 2007, postdisaster program activities in Aceh Province were declared complete. All funds allocated were disbursed to kecamatan level activity managment units (UPK) and then subsequently used for construction and other works by the village level activity implementation teams (TPK). All the activities and construction projects undertaken were successfully completed and formally handed over to their communities via special handover forums (MDST) - complete with final project documents. Likewise in Nias Islands, by the end of 2007, all funds allocated for postdisaster activities via PNPM-KDP were disbursed to all 22 Postdisaster road repairs in Nias Islands 2007 kecamatan locations. Funds allocated to Nias totaled Rp78,998,216,600, and consisted of special Social Funds Rp13,284,855,400 and normal BLM allocations totalling Rp65,713,361,200. However, despite the best efforts of communities, local government and program facilitators, the amount of funding that was actually used for activities at the village level reached 93 pecent of total funds allocated. Table 3.1.C. Disbursements of BLM Funds to Nias Islands 2007 Type of Allocation Allocation Disbursements Percentage Social Funds 13,284,855,400 13,247,912, BLM Allocations 65,713,361,200 60,328,508, Average

53 Program implementation in Nias Islands followed the same specially modified procedures that were used in Aceh Province after the tsunami in December During program implementation community participation in postdisaster locations was high. Even though large demands were made on villager s labour by many other donor agencies and NGOs, the communities participating in PNPM-KDP still showed considerable enthusiasm for PNPM-KDP s postdisaster program. Indeed there was a noticable preference among communities to participate in KDP forums compared to other aid programs due to the efforts made to ensure high levels of representation, participation and transparency in all aspects of program decision making. In general, communities preferred the postdisaster approach of PNPM-KDP because they saw the results of their own project decisions implemented they way they wanted them. Involvement of the poorest members of Nias s communities during postdisaster program implementation was about 86 percent. The level of women s participation was also relatively high at about 24 percent. Interestingly, many other NGOs and aid programs made use of the high levels of attendance at KDP forums and frequently requested time from KDP facilitators to socialize their own programs during KDP forums and meetings, and where possible integrated their assistance with that of KDP to avoid duplication of effort and wasting valuable resources. The results of postdisaster activities completed by December 2007, in both Aceh Province and Nias Islands, that were funded by grants from MDTFans, can be seen in the table below. Table 3.1.D. Postdisaster Activities Completed in Aceh Province & Nias Islands as of 2007 Type of Activity Totals Type of Activity Totals Infrastructure/ Public Facilities Economic Activities Roads (units) 2,193 Microcredit (Women s Groups) 349 Length of Roads (kilometers) 2,224 Beneficiaries (persons) 3,685 Bridges (units) 822 Clean Water Supply (units) 774 Education Public Washing Sanitation (units) 684 New Schools (units) 244 Irrigation Works (meters) 1,205 Rehab of Schools (units) 2 New Markets (units) 12 Scholarships (persons) 6,022 Rehab of Markets (units) 1 Electrification (No. Villages) 27 Health Other Infrastructure (units) 1,760 Village Pre & Post Natal Health Posts (units) 31 Persons Employed 424,770 Paid Working Days 4,576,611 Total Activities 8,104 51

54 It is very clear that up to the end of 2007, village roads remained by far the top priority for most postdisaster communties in Aceh and Nias Islands. The earthquake and tsumani that hit Aceh and the earthquake damage that devastated Nias both caused extensive damage to existing rural road networks. In Aceh alone, World Bank consultants tasked with surveying the damage to local infrastructure calculated that 61,196 meters of rural roads were in need of major repairs, and that 6,589 meters of that figure needed to be completely rebuilt. Postdisaster road construction also helped to significantly reduce the shortage of rural roads in both Aceh and Nias. Communities took advantage of the large amounts of aid coming into Aceh and Nias to construct many new roads and open up areas that had been isolated for over 20 years. In total, the postdisaster program for Aceh and Nias Islands provided 2,224 kilometers of badly needed rural roads. Construction of irrigation works was also a very high priority for many postdisaster communities. In total, KDP communities constructed 1,205 meters of irrigation canals. The earthquakes that hit both Aceh and Nias caused extensive damage to the existing canal systems to the extent that farmers were unable to guarantee successful planting of rice seedlings due to a lack of water. Many other types of supporting infrastructure like roadside retaining walls, culverts and drainage canals and large landslide retaining walls were also proposed. These types of infrastructure accounted for 1,760 activities. During 2007, the special postdisaster procedures for Nias Islands were continued with the special Rehabilitation and Reconstruction Program for Nias Islands (R2PN). This program was strongly supported by the special ad hoc Body for Rehabilitation and Reconstruction (BRR) that was set up by the government to coordinate the massive international aid effort that followed the tsunami and both earthquakes. The R2PN Program for Nias was established primarily to help rebuild houses destroyed by the earthquake of 2005, although funding was also made available within the Program for communities to rebuild damaged village facilities like village offices, schools and other supporting infrastructure. This program generally followed the standard KDP cycle, although modifications were necessary to accommodate the special needs of the housing component. The KDP-R2PN Program received a total funding allocation of Rp billion which will be completely disbursed by During 2007, KDP-R2PN allocated a total of Rp billion for nine kecamatan to be used for four main types of activities; these were: rebuilding of destroyed and badly damaged houses (Rp billion); school construction (Rp 54.6 billion); construction of village offices (Rp18 billion); and other supporting village infrastructure (Rp 18 billion). By the end of 2007, the KDP-R2PN activity cycle in the nine target kecamatan, had by enlarge reached the Village Socialization stage and Special Women s Village 52

55 Meetings. The level of participation, especially among the poorest villagers, was also quite high, varying between 82 to 85 percent. Postdisaster Activities in Yogyakarta and Klaten PNPM-KDP s postdisaster program following the earthquake in Yogyakarta and Kabupaten Klaten, in Central Java, followed the same modified activity cycle as the postdisaster program used in Aceh and Nias Islands. Implementation of the postdisaster program in Yogyakarta went according to plan. All the allocated funds were disbursed and used for project activities at the village level by November However, as of December 2007, there were still 16 of the 292 villages in Yogyakarta that had not yet completed the final handover procedures for their projects (MDST). The results of postdisaster work in Yogyakarta and Klaten, as of December 2007, can be seen in the table below. Table 3.1.E. Postdisaster Activities Completed in Yogyakarta & Klaten, Central Java as of 2007 Type of Activity Totals Type of Activity Total Infrastructure Public Facilities Economic Activities Roads (units) 538 Microcredit (Women s Groups) 306 Length of Roads (kilometers) 336 Beneficiaries 46,614 Bridges (units) 81 Clean Water Supply (units) 39 Education Activities Public Washing Sanitation (units) 33 New Schools (units) 101 Irrigation Works (meters) 91 Rehab of Schools (units) 332 New Markets (units) 6 Scholarship Recipients 962 Rehab of Markets (units) 35 Other Education Activities 49 Electrification (No. Villages) 1 Other Infrastructure (units) 957 Health Activities Village Pre & Post Natal Health Posts (units) 142 Persons Employed) 32,535 Rehab of Helth Posts (units) 6 Paid Working Days 327,405 Other Health Activities 66 Total Activities 2,786 Postdisaster Activities in West Sumatera The earthquake that hit West Sumatera in March 2007 badly affected 54 kecamatan spread accross five kabupaten. Among those, 18 kecamatan where already PNPM- KDP locations prior to the earthquake. As with other postdisaster locations the program in West Sumatera immediately adopted special KDP guidelines that were rapidly agreed on to speed up rehabilitation efforts in West Sumatra s quake affected locations. 53

56 Although shortened procedures were provided, there were still a number of quake affacted kecamatan in West Sumatra that still wanted to use the longer standard KDP activity cycle. This was made possible because prior to the start of KDP s activity cycle the communities in the quake-affected locations had already made significant progress themselves with large amounts of voluntary labour. As a result these locations were able to use the regular program activity cycle. As of Desember 2007, program implementation in the 54 postdisaster kecamatan in West Sumatera had in general reached the stage in the cycle where ideas are discussed prior to formulating proposals (penggalian gagasan). Some of these 54 locations had previous experience with the KDP method, and they where further advanced. Most had already reached the stage where formal village proposals are reviewed before taking them to the intervillage forum. Postdisaster Activities in Bengkulu House completely destroyed by earthquake in Bengkulu The 7.9 richter scale earthquake that rocked Bengkulu in September 2007 caused extensive damage to housing and public infrastructure. The worst damage occured in three kabupaten: Muko-Muko, North Bengkulu; and Seluma. Immediately after the quake KDP program consultants who were working in Bengkulu at the time, conducted an extensive damage survey of the three most badly affected kabupaten. Their findings and recommendations became the basis for the local government to declare the three kabupaten as disaster areas and request special assistance in October 2007 to the Director General of PMD, Department of Home Affairs, via PNPM-KDP. In total 25 kecamatan were proposed to the Central Government for special postdisaster assistance; nine of the 25 were already PNPM-KDP locations. All of the proposed locations were very badly affected with over 52,522 buildings recorded as badly damaged. Almost every house in the affected areas had damage ranging from minimal to serious; the number of houses suffering severe damage ranged from between 20 to 60 percent depending on the area. Unlike Aceh and Nias, the implementation guidelines for rehabilitation activities in Bengkulu did not specify a specific amount to be allocated for emergency social funds. The postdisaster guidelines used for Bengkulu were the same as those used for West Sumatera. 54

57 Table 3.1.F. PNPM-KDP Postdisaster Cycle for Bengkulu No. Program Cycle Activity Stages Implementation Level 1. Intervillage Forum I Kecamatan 2. Form Damage Assessment Team Village 3. Training of Damage Assessment Team Kecamatan 4. Verification of Damage Report Data Village 5. Hamlet/ Subvillage Group Meetings Village 6. Special Women s Village Meeting Village 7. Village Forum Meeting I Village 8. Make Public Information Boards Village 9. Training of Empowerment and Technical Cadres Kecamatan 10. Drafting Formal Village Proposals Village 11. Field Verification of Village Proposals Kecamatan 12. Intervillage Forum II Prioritization Kecamatan 13. Drafting of Technical Designs & Budgets Village 14. Certification of Designs Village 15. Opening Community Bank Accounts Kecamatan 16. Village Forum Meeting II Village 17. Training of Village Implementation Teams Kecamatan 18. Official Acceptance of Village Proposal Village 19. Drawdown of APBN Funds from KPPN Kecamatan 20. First Disbursement of Project Funds Village 21. First Stage of Implementation Village 22. Village Accountability Meeting I Village 23. Village Accountability Meeting II Village 24. Second Disbursement of Project Funds Village 25. Village Handover Meeting of Project Village 26. Intervillage Accountability Meeting Kecamatan 55

58 57

59 4.1 COMPLAINTS HANDLING The Complaints Handling unit of the National Management Consultant (NMC) had a relatively busy year during 2007 due to the relatively large backlog of complex corruption cases that were uncovered by the new (SP2M) complaints handling specialists based at the province level. Reinstatement of these specialists during 2007 by the Directorate General of Community and Village Empowerment (PMD) had a significant impact on the number of cases uncovered and handled in Total Old and New Cases Handled During 2007 During 2007, the NMC recorded a total of 457 new complaints in all categories (Table 4.A.). In addition to this, 807 cases of all categories were carried over from 2006 (Table 4.B.). The total number of cases recorded (in all categories) during both old and new - was therefore 1,264. Of these, 826 cases were still in process as of December 2007, and 438 cases had been resolved (Table 4.C.). 59

60 Misuse and Corruption of Funds The majority of both unresolved and new complaints were Category 2 complaints related to the misuse and embezzlement of funds. This type of complaint accounted for 932 of both old and new cases handled during 2007; although 34% of these cases had been resolved by December Typically the largest number of cases by category has always been Category 2 complaints which involve the misuse, theft and corruption of program funds. These cases are also the most time consuming and difficult to resolve. Table 4.D. below shows the funds involved in the 932 cases and the amount still to be recovered which totals Rp17,891,027,375 or US$1,987,891 (@ US$1 = Rp 9,000). While KDP expends significant energy and resources on preventing, uncovering and combating corruption, it is important to keep the total corruption picture in perspective. Total losses to corruption in 2007 were Rp 5,334,641,874 or US$592,737. However, compared to the total BLM funding disbursed during 2007 (Rp 1,735,018,737,573 or US$ million) this represents a loss to corruption of 0.38%. If this comparison is extended to the whole program; and we compare cumulative disbursements for KDP since its beginning in 1998 (US$ 1,208.7 billion) to the cumulative corruption case load of unrecovered funds as of December 2007 (US$1,987,891), then the total losses to corruption over nine years of KDP represent 0.16% of total disbursements. By any standards this is a very impressive corruption management record in a country where development projects have to maintain constant vigilance to deal with this problem. 60

61 Sources of Information During 2007 the most frequent source of information about complaints and problems was field consultants; they reported 1,035 cases from all categories (see Table 4.E.). Interestingly the number of written complaints received from the public increased considerably from 82 in 2006 to 154 in This was the result of more proactive socialization to communities by consultants about reporting complaints, and forwarding the additional letters received at the provincial offices to the NMC in Jakarta. The total number of reports received from all sources during 2006 was 1,724 even after adding residual data from December By comparison, 1,425 complaint reports were received in However, after initial screening most of the reports received were not entered into the NMC data base as genuine complaints; most being program management or personnel issues. A new component in the complaints handling system during 2007 was the Program s website. The homepage of the website has a clearly identified window to access a direct reporting facility for people who wish to send a complaint or enquiry directly to the National Management Consultant (NMC). This facility received 219 enquiries and complaints during 2007 from a wide range of KDP actors and community members. It is clear that this method of communication with the Program is becoming increasingly popular. As of June 2008, the NMC had already received over 240 complaints and enquires via the website. Actors Identified in Complaints During 2007, the KDP actors most frequently reported for violations of all types were: community members (392 complaints) almost all for microcredit repayment problems; the officers of the subdistrict activity management units UKPs (339 complaints); and the village project management teams TPK (239 complaints). These actors were closely followed by consultants (184) and village heads (131). (see Table 4.F.) 61

62 The number of times KDP actors were involved in the misuse of funds was very similar to the pattern shown in Table 4.F. The officers of the subdistrict (UKPs) were the biggest offenders (296 incidents). They were followed by community members who had misused or stolen microcredit funds (296 incidents). Next were the TPKs who had misused or stolen project funds (166 incidents). Then came consultants (132 incidents), village heads (107 incidents) and KDP subdistrict operations officers PjOK (59 incidents). As usual, there was a close correlation between the frequency that a certain KDP actor misused funds, and the authority that actor had to access and control KDP funds. (see Table 4.G.) 62

63 Cases Processed Through Legal Channels in 2007 During 2006, there were a total of 177 Category 2 (misuse of funds) cases that had to be handed over to law enforcement agencies. The police were called in to handle 109 cases, public prosecutors handled 62 cases and 5 cases went to court. There was only one court ruling handed down during (see Table 4.H.) 63

64 Large Cases Processed Through the Courts During 2007 During 2007, provincial-based complaints handling specialists processed three large cases to through the police, public prosecutors and finally through the courts. However, case number two (described below) required intervention and additional assistance from the national management consultant s complaints handling unit and the financial management services unit. 1. East Nusa Tenggara Province, Kabupaten West Manggarai, Kecamatan Sano Nggoang: This case centered around the embezzlement of microcredit funds (SPP), program operational funds (DOK) and UPK office operating funds by officers of the UPK to the amount of Rp 437,322,759. Most of the funds were stolen about May 30, 2007 but the theft was only discovered on November 14, The first stage of processing was a special intervillage meeting MAD held on December 5, 2007 to discuss the theft and decide on the next steps. Facing overwhelming evidence, the main actors in the case subsquently signed statements admitting their guilt. On December 4, 2007 the community formed a special complaints team which then lodged a formal police report about the theft at the local police station. The police subsequently interrogated the main actors, and in addition called as witnesses the FK, PJOK and PJAK. As of December 2007, the case was still in police hands awaiting handover to the local prosecutor s office. 2. West Java Province, Kabupaten Subang, Kecamatan Pusakanagara: The main actor in this case was the head (Ketua) of the UPK Pak Maksum who embezzled Rp 442,691,554 by using false UPK documents to deposit and withdraw UPK funds illegally via a private account he used for his own private businesses. The first case of embezzlement happened on November 11, However, the true extent of the case was only uncovered on January 7, Subsequent investigations discovered that he had built a new house with the funds he had taken over the four years. Pak Maksum was processed by both the local police and prosecutor s office and first appeared in court on November 14, The trial has continued into 2008 and a guilty verdict is expected within the first 3 months of Pak Maksum, Head of UKP Pusakanagara, Subang (left). Maksum s house built with funds embezzled from KDP (above) Pak 64

65 3. South Sumatera Province, Kabupaten OKI, Kecamatan Padamaran: This case was centered on funds embezzled using markups on materials purchased for a KDP project. The community implementation teams (TPK) were coerced by the FT, PjOK and PjAK (local kecamatan KDP officials) into accepting inflated prices for materials supplied by suppliers selected by the PjOK and PjAK. A total of Rp94,000,000 in project funds was embezzled during KDP II cycles 4 and 5 (20% of the infrastructure budget). The funds were first embezzled on June 1, 2004 and then the case was discovered on December 1, In early 2005, the case was reported to the police. By mid 2006, the main actors (PjOK and PjAK) had returned all Rp94,000,000 of the funds embezzled. However, despite the return of the funds the legal process continued. As part of the process, the returned Rp 94,000,000 was requested by the public prosecutor as evidence. Then on July 20, 2007 the court handed down its ruling finding both defendents guilty and sentencing each one to one years jail. Unfortunately, the court also ruled that the Rp 94,000,000 held as evidence be returned to the national treasury on the grounds that it was sourced from government project funding and did not belong to the communities that received the direct grant funds. 4.2 FINANCIAL SUPERVISION Overview of the KDP Internal Audit Program During 2006 the work program and approach of the NMC Financial Management Services unit (FMS) was redesigned to provide more intensive support to empowering consultants and communities. This new approach was continued during In general, the work program of the FMS was directed towards strengthening the capacity of field consultants so that they could handle financial supervision and audit duties themselves rather than continue to rely on external audit teams. Internal Audit Strategy Beginning in March 2006, the FMS undertook an extensive program of on-the-job training through joint audits called audit bersama. These audits were conducted in 30 provinces by the provincial managers (Korprov) and the Monitoring and Evaluation Specialists (MonEv) under the close supervision and guidance of the central IFS unit. The main objectives of this closely supervised on-the-job training approach were: (Training for women s microcredit group in West Sulawesi) (Internal audit of TPK Tirta Mulya Village, Kab. Bungo, Jambi) 65

66 1. Develop the capacity of consultants to undertake effective Financial supervision duties and pass on those skills to capable community members so as to leave behind an independent local auditing capacity for future development projects. 2. To create an internal audit system complete with inbuilt supervisory and control mechanisms that could be cascaded in an integrated way down to the kecamatan level thereby strengthening community perceptions of (Internal audit of UPK, Tirta Mulya Village, Kab. Bungo, Jambi) accountability and deterrence. This audit program was considered successful and continued in 2007, only now it is under the authority of the new Financial Management Services specialists (FMS) who replaced the Monitoring and Evaluation specialists in a restructuring of the provincial management offices in early Results of the Joint Internal Audit Program 2007 During 2007, the joint internal audit program covered the same financial and procedural issues, and the same number of program locations (30 provinces) as in However, the audit activities were significantly affected by the late start for the 2007 Program. As a result, completed audit data from provincial management offices is still coming into the NMC. It is expected that all data will be received and compiled by July 2008, at which time a special report on the results of the internal audit will be published. (Internal audits in Sirih SekapurVillage (left) and Dwi Karya Bakti Village( right), Kab. Bungo, Jambi) 66

67 4.3 PERFORMANCE INDICATORS FOR PNPM-KDP 2007 INDICATORS Project Targets Results 2006 Jan to Dec Results 2007 Jan to Dec INPUTS No. of project Kecamatan 750 1,144 1,842 No. of villages with sub-projects 12,000 18,007 14,688 % of women in village meetings 40% 43% Av. 44%Av. % of Grants disbursed 80% 100% 1 86% % of villages with O & M committees 85% 100% 100% formed % of villages with 3 Perda issued 85% 2 NA 2 NA % of UPK receiving training 75% 100% 100% OUTPUTS IRR on investments > 30% 3 53% 3 53% % of agreed work completed (by type, value, etc) 85% 99% Construction is still ongoing % of Kecamatan visited by project 50% 100% 100% staff % of national database complaints 50% 57% 55% resolved % of villages with DESA formed Perda 65% NA NA % of Inter-village forum by Perda 65% NA NA IMPACTS 1. Poverty No. of beneficiaries 12,000,000 18,122,779 14,951,052 % beneficiaries who are women 40% 50% 50% % beneficiaries who are poor 65% 61% 63% No. of primary schools rehabilitated 700 1,247 1, Governance No. of provincial and national complaints database published 3. Sustainability % infrastructure reviewed as Good 70% 65% 65% to Excellent No. UPKs retaining > Rp 100 million 200 1,189 2,788 Studies on long-term maintenance Studies of options for sustainable financing Progress on 2007 disbursements as of 23 June, disbursements are still ongoing. 2 NA (Not Available) Review of local Perda (local government bylaws) is still ongoing. 3 Figure used is based on Economic Impact Analysis conducted on 113 villages in 2004/

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