ASIAN DEVELOPMENT BANK

Transcription

1 ASIAN DEVELOPMENT BANK JFPR: INO PROPOSED GRANT ASSISTANCE (Financed by the Japan Fund for Poverty Reduction) TO THE REPUBLIC OF INDONESIA FOR THE SUSTAINABLE LIVELIHOOD DEVELOPMENT FOR POOR COASTAL AND SMALL ISLAND COMMUNITIES May 2004

2 CURRENCY EQUIVALENTS (as of 15 February 2004) Currency Unit - rupiah (Rp) Rupiah = $ $1.00 = 8, ABBREVIATIONS ADB Asian Development Bank COREMAP II Coral Reef Rehabilitation and Management Project II DGCI Directorate General of Coasts and Small Islands DMC developing member country EA executing agency JBIC Japan Bank for International Cooperation JFPR Japan Fund for Poverty Reduction JICA Japan International Cooperation Agency MMAF Ministry of Marine Affairs and Fisheries MOF Ministry of Finance NGO nongovernment organization OISCA Organization for Industrial, Spiritual and Cultural Advancement PIM project implementation manual PMO project management office NOTES In this report, $ refers to US dollars.

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4 I. Basic Data Name of Proposed Activity Country Grant Amount Requested JAPAN FUND FOR POVERTY REDUCTION (JFPR) JFPR Grant Proposal Sustainable Livelihood Development for Poor Coastal and Small Island Communities Indonesia $1.5 million Regional Grant Yes / No Grant Type Project / Capacity building II. Grant Development Objective(s) and Expected Key Performance Indicators Grant Development Objectives (GDO): The goal of the Project is to raise the income levels of the poorest of the poor and women s groups in selected coastal and small island communities. The objectives of the Project are to: (i) initiate and facilitate the development and implementation of sustainable livelihood activities; and (ii) expand livelihood development to all possible areas under the counterpart project Coral Reef Rehabilitation and Management Project (Phase II). Expected Key Performance Indicators (maximum 5 indicators): Per capita income in target coastal communities increased by 30% in real terms Living standards of 1,000 very poor households directly improved Women should constitute at least 50% of the beneficiaries Various types of livelihood activities implemented in 10 villages 1 Capital built up for livelihood development and implementation in target villages III. Grant Categories of Expenditure, Amounts, and Percentage of Expenditures Category Amount of Grant Percentage of Allocated in $ Expenditures 1. Civil Works 109, Materials, Equipment, and Other Input Supplies 338, Training, Workshops, and Consultation 75, Consulting Services 162, Project Management and Administration 125, Production Counterpart Funds for Microfinancing 623, Contingencies 65, Total 1,500, Incremental Cost 75, Ten villages will be selected from 35 villages of ADB-financed counterpart project based on the selection criteria to be developed by the lead nongovernment organization (NGO) and project staff consultants.

5 2 JAPAN FUND FOR POVERTY REDUCTION JFPR Grant Proposal Background Information A. Other Data Date of Submission of 1 December 2003 Application Project Officer (Name, Position) Zhou Weidong Sr. Agriculture and Natural Resource Management Specialist Project Officer s Division, , Phone Agriculture Environment and Natural Resource Division (SEAE) wzhou@adb.org, Tel: (632) Other Staff Who Will Need Mr. Bobur Alimov, team member Access to Edit/Review the Ms. Kristine Marie S. San Juan, Administrative Assistant Report Sector Marine and Fisheries Sector Theme Poverty/Environment Name of Associated ADB ADB Loan No INO: Coral Reef Rehabilitation and Financed Operation(s) Management Project (Phase II) Executing Agency Directorate General of Coasts and Small Islands Grant Implementing Agency(ies) (Names, Exact Address, Contact Persons, , Phone, Fax) B. Details of the Proposed Grant Ministry of Marine Affairs and Fisheries Organization for Industrial, Spiritual and Cultural Advancement (OISCA) International, Japanese nongovernment organization. Address: Jl. Tebet Timur Dalam II/26, Jakarta Selatan, Indonesia Mr. Tomoji Suzuki, Senior Adviser Tel Fax HP Mr. Kenji Sawada, Chief Representative, Indonesia Tel Fax HP rsawada@indosat.net.id The Project comprises three components: (i) community development, (ii) livelihood development and expansion, and (iii) project management. 1. Description of the Components, Monitorable Deliverables/Outcomes, and Implementation Timetable Component A Component Name Community Development Cost ($) $339,236 Component Description This component will support the following activities: (i) poverty assessment and social preparation to organize very poor individuals, particularly very poor fishers and women in coastal communities to identify and prepare prospective economically and ecologically viable livelihood projects such as mariculture, post-harvest processing, and other land-based activities; and (ii) skills development to assist very poor fishers and women in coastal communities in livelihood techniques through demonstration. The development of skills and capacity building will emphasize identification of economically and environmentally viable livelihood and enterprise as well as financial

6 3 Monitorable Deliverables/Outputs Implementation of Major Activities: Number of months for grant activities and project management skills. Training programs will be provided by nongovernment organizations (NGOs) and academic institutions based on the needs of the coastal communities and may include: the preparation, management and monitoring of livelihood projects, techniques on sea-farming, mariculture, fish processing, coral rehabilitation and mangrove plantation; access to financial systems for savings and credit and marketing; and basic financial management. Participatory planning for identification and development of livelihood projects conducted in each target village Identification of livelihood opportunities and preparation of feasibility studies in 10 villages Socioeconomic and poverty assessment conducted for 10 villages Training needs assessment conducted for 10 villages 1,000 households trained on sustainable livelihood development and obtain financing or inputs assistance for livelihood development 30 months Component B Component Name Livelihood Development and Expansion 2 Cost ($) $1,017,176 Component Description This component will support establishment and development of (i) a production assistance fund 3 to facilitate access to existing formal microfinance schemes by the very poor fishers and women and assist target beneficiaries in initial production activities; (ii) livelihood support organizations that provide technical services, production inputs, financial facilitation services, and marketing information or services; (iii) a production profit- and risk-sharing system among the project participants (NGOs, technical personnel, and beneficiaries) to minimize risks to target individual participants and to establish a selfsustained support service for livelihood development; (iv) a production marketing system to assist target beneficiaries to access market facilities; and (vi) a savings program to mobilize savings from capital buildup and the profits of the livelihood projects of participants and NGOs to ensure the continuation and expansion of livelihood activities. Monitorable Deliverables/Outputs Assessment of rural microfinance schemes and financial needs completed in target areas Technical or financial assistance provided to 1,000 very poor households, including women Assessment of needs of institutional support conducted and 2 The detailed guidelines, criteria, and manuals for livelihood development, including the operation of the production assistance fund, and establishment of livelihood support organizations and production profit and risk-sharing system, will be prepared by the lead NGO and JFPR consultants in consultation with other project stakeholders. 3 In general, the production assistance fund will be managed and utilized as counterpart or emergency funds by participating NGOs and organized community groups to (i) facilitate organized groups and individual poor and women to access existing microfinancing and meet the financing requirement of these microfinancing institutions, and (ii) assist target beneficiaries in case of initial production failure (first production circle) due to unforeseen reasons. At the end of the Project, the production assistance fund will be owned by participating NGOs and organized community groups based on the agreement established by the Project and replaced by a savings program initiated by the Project.

7 4 Implementation of Major Activities: Number of months for grant activities implementation arrangements of the livelihood support system agreed upon by all participating community members and implemented Profit- and risk-sharing contract agreed and implemented by all participating community members Social, technical, environmental, and financial risk assessment of livelihood activities conducted in target villages Production assistance fund principles agreed and implemented At least 50 coastal community groups formed for livelihood development Marketing arrangements agreed upon by local NGOs and participating communities Savings program established and available for individuals and groups to continue livelihood activities and expand the operation of livelihood activities Successful livelihood activities expanded to other beneficiaries and areas under the counterpart project 36 months Component C Component Name Project Management and Impact Assessment Cost ($) $143,588 Component Description This component will support: (i) overall project coordination, supervision, management, and monitoring to be assisted by local project consultants; (ii) preparation of work plans and implementation guidelines, criteria, and schedules; and (iii) an independent impact assessment. The Project will support (i) a literature survey on livelihood risks in Indonesia and how communities, the governments at various levels, funding agencies, and NGOs address these; (ii) development of future livelihood replication criteria and risk mitigation measures for the poorest of the poor and women, and (iii) the conduct of workshops on sustainable livelihood development for poor coastal and small island communities involving private sector participation. Monitorable Deliverables/Outputs Comprehensive project work plan and implementation schedule prepared At least 10 agencies consulted during the literature survey on livelihood risk in Indonesia At least 10 site-specific livelihood risk surveys on the poorest of the poor and women conducted One district-, one province-, and one national-level workshop conducted on sustainable livelihood development for poor coastal and small island communities Funds budgeted for each component disbursed and utilized Various reports, including inception, progress, completion, financial and impact assessment prepared Implementation of Major Activities: 36 months Number of months for grant activities

8 5 2. Financing Plan for Proposed Grant to be Supported by JFPR Financier Amount ($) JFPR 1,500, Government 117, Other Sources (NGOs, Beneficiaries) 167, Genesis Total 1,784, The vicious cycle of unsustainable coastal resource use and poverty among coastal communities in Indonesia has resulted in severe marine resource degradation. To increase incomes through more catch, rather than better value of catch, poor fishers often resort to destructive and illegal fishing methods. This leads to further destruction of the coral reefs and collapse of marine resources. At the same time, agricultural land resources are scarce and the very poor have no access to them. As a result, land-based livelihood activities are normally not an option for very poor fishers. This increases dependency on coastal and marine resources; however, over-fished fishing grounds and damaged coral reefs further reduce income opportunities. Livelihood projects for poor fishers, which build upon the further expansion of fish and aquatic resources, are thus unsustainable. Alternative marine-based income opportunities beyond direct fishing need to be found. Against this background, the Asian Development Bank (ADB), at the request of the Government of Indonesia (the Government), approved on 6 December 2002 the Coral Reef Rehabilitation and Management Project (Phase II). ADB Loan 1962-INO (SF), in the amount of $33 million for the Project, became effective on 7 November This project is the counterpart of the proposed Sustainable Livelihood Development for Poor Coastal and Small Island Communities (the JFPR Project). The proposed JFPR Project will complement the counterpart project. Specifically, the JFPR Project is conceptually linked to the community livelihood and income generation activities of the Community Resource Management and Development component of the counterpart project, which has the same objective of enhancing income of coastal fishers through the development of livelihood activities. The JFPR Project was prepared through intensive consultation and discussions with national and regional government agencies, NGOs, academic institutions, poor coastal communities, and external funding agencies. The JFPR Project includes some indigenous peoples areas, and its activities will be prepared and implemented in a culturally appropriate manner. 4. Innovation The JFPR Project will pilot and demonstrate innovative livelihood development (i.e., sea farming, cage culture, fish hatchery, fish processing, and land-based activities) and participatory poverty reduction approaches in 10 selected villages of the counterpart project and make livelihood development more viable by focusing on identifying, testing, financing, and implementing these livelihood activities through organized community groups, established production assistance funds, and established profit- and risk-sharing systems among very poor fishers and women s groups. The JFPR Project will also develop arrangements to link input supplies to household goods, and outputs to markets, as well as link the savings mobilization to production sharing and financing systems.

9 6 5. Sustainability The participatory poverty reduction approaches followed in identifying communities and target groups, as well as livelihood activities, extensive community mobilization, capacity building, and skill development, will contribute to the sustainability of the JFPR Project. Livelihood activities under the JFPR Project, such as sea farming, fish hatchery, cage culture, fish processing, and land-based activities will be strengthened by the profit- and risk-sharing system, which in turn will be linked to the savings program; this should also help ensure the sustainability of the Project. 6. Participatory Approach The JFPR Project will adopt a participatory approach to the development of livelihoods for poor coastal communities and management of coastal resources. It will involve all stakeholders, including national and regional governments, private sector, NGOs, and coastal communities in project preparation and implementation through an extensive consultation process. The JFPR Project will have multiple economic, social, and environmental objectives and will tackle the difficult and complicated issues related to poverty and coastal resource management in a comprehensive, scientific, systematic, and participatory fashion. The process will enable coastal communities to have the opportunity to organize themselves, with the assistance of local governments and NGOs, identify their specific needs, design and implement their community-specific livelihood development programs based on their own needs, and sustain their initiatives. The Project will be nationally coordinated by the central Government with the assistance of international and national NGOs, but implemented under a decentralized management, with the bulk of the Project s capacity-building efforts to take place at the district (kabupaten) and community level. Close coordination and effective linkages will be established among national and regional governments, private sector/ngos, and communities within the context of their defined roles and responsibilities in project preparation and implementation. Primary Beneficiaries and Other Affected Groups and Relevant Description About 1,000 poor households from 10 poor coastal villages in Nias and Tapanuli of North Sumatra and Mentawai of West Sumatra Province will participate in livelihood development, and benefit from the project assistance in terms of social and technical preparation and implementation, and financial scheme. About 15 women s groups from 10 poor coastal villages in the target areas will participate in livelihood development, and benefit from the project assistance in terms of social and technical preparation, inputs supplies and financial assistance. Other Key Stakeholders and Brief Description National Development Planning Agency (BAPPENAS) will be responsible for overall project coordination Ministry of Marine Affairs and Fisheries will be responsible for coordination, supervision, and implementation of all specific project activities Regional government in Nias and Tapanuli Tengah of North Sumatra and Mentawai of West Sumatra will be responsible for project implementation and regional development OISCA International (Japanese NGO) and local NGOs will be responsible for rural and agriculture development, community organization, and resource conservation 10 coastal communities will be responsible for implementation of specific livelihood activities

10 7 7. Coordination During the project preparation, extensive and close consultations were held with other multilateral and bilateral agencies including the World Bank, the Japan Bank for International Cooperation (JBIC), and the Japan International Cooperation Agency (JICA). The World Bank is a co-financer for the counterpart project to cover five other provinces outside of ADB-financed areas and it may follow a similar approach for livelihood development project to be implemented in its project areas. JBIC and JICA have financed several coastal and fisheries resource management and development projects. The concept of the Project was shared with staff of the World Bank, JBIC, and JICA. The proposed approaches, including the provision of technical, financing, and marketing support and establishment of a production assistance fund, profit- and risk-sharing system, and a savings program to support livelihood development of the poorest of the poor, were of interest to them. Close liaison will be maintained during project implementation and project information will be disseminated to these agencies in a timely manner. 8. Detailed Cost Table Please refer to Appendix 1 for the detailed cost estimates. C. Linkage to ADB Strategy and ADB-Financed Operations 1. Linkage to ADB Strategy Document Country Strategy and Program Update ( ) Partnership Agreement on Poverty Reduction Document Date of Last Number Discussion Sec. M89-03 October July 2001 Objective(s) ADB gives great emphasis to regional inequalities, the mainstreaming of environmental management, the sustainable use of natural resources, and poverty reduction. ADB also underlines the need for coastal, fisheries, and marine resources sector policies that support institutional development, the conduct of core environment activities and poverty reduction through local partnerships, the development of transparent, market-oriented participatory approaches, and expanded livelihood for communities and families dependent on depleted resources. ADB will support (i) improvement of basic institutions that govern the lives of the poor; (ii) propoor and inclusive growth, through balanced regional development; (iii) human and social development to be promoted through improved delivery of basic services; and (iv) sustainable development through strengthened environmental management.

11 8 2. Linkage to Specific ADB-Financed Operations Project Name Project Number Coral Reef Rehabilitation and Management Project (Phase II) ADB Loan No (SF) INO Date of Board Approval 6 December 2002 Loan Amount ($ million) $33 million 3. State the Above-Mentioned Project s Development Objective The Project is the follow-on phase of a national coral reef rehabilitation and management program whose overall goals are rehabilitated, protected, and well-managed coral reef ecosystems and reduced incidence of poverty in coastal communities. The objectives of the Project are to (i) enhance the national and local capacity to manage the country s coral reef resources and (ii) raise income levels and improve living standards among poor coastal communities. The Project is being implemented in 16 districts in eight provinces in Indonesia. 4 ADB will finance project activities in six districts in Riau, North Sumatra, and West Sumatra provinces, namely: (i) Kota Batam, Kepulauan Riau, and Natuna in Riau; (ii) Nias and Tapanuli Tengah in North Sumatra; and (iii) Mentawai in West Sumatra. 4. List the Project s Main Components No. Component Name Brief Description 1. Institutional Strengthening and Project Management 2. Community-based Resource Management and Development 1.1 Strengthening National and Regional Government Institutions for Marine Resource Management and Community Development 1.2 Development of Coral Reef Resource Research and Training Center 1.3 Human Resource Development and Extension for Resource Management and Social Development 1.4 Project Management Support 2.1 Community Empowerment 2.2 Community Resource Management 2.3 Community Social Services and Infrastructure Development 2.4 Income Generation Program 5. Rationale for Grant Funding versus ADB Lending The JFPR Project will synchronize particularly with the community income-generation activities of the ADB-financed counterpart project. The JFPR Project will finance specific poverty reduction aspects not covered by the counterpart project but that complement and add value to the counterpart project s objectives, such as provision of a production assistance fund, and establishment of a workable system for the poorest of the poor and women s groups. The JFPR Project will pilot livelihood activities in selected villages and identify, test, and finance these livelihood activities through an innovative production assistance fund system, and production 4 Out of the total of 16 districts in 8 provinces, 10 districts in 5 provinces are under consideration for World Bank financing.

12 9 profit- and risk-sharing system among the poorest of the poor and women groups to ensure the sustainability of these livelihood activities. These modalities and the support systems to be developed and tested under the JFPR Project will ensure a more sustainable and environmentally sound process of livelihood development. Such interventions could not be directly included in the ADB lending due to the pilot nature and high cost in targeting the poorest of the poor and the most vulnerable groups. The JFPR Project will benefit from investments of ADB lending to be made in improving the social infrastructure and provision of some production equipment, and of extension and support services. The JFPR Project will further improve and strengthen the poverty focus of the counterpart project through its participatory poverty reduction approach, The innovative approaches and support systems developed through the JFPR Project will be eventually mainstreamed through the ADB counterpart project. JFPR Project support will optimize the impact of ADB lending activities by enhancing participation and ownership of the poorest of the poor and women. The use grant funding is justified for piloting such a new and innovative development scheme. D. Implementation of the Proposed Grant 1. Implementing Agency Organization for Industrial, Spiritual and Cultural Advancement (OISCA) International, a Japanese NGO, to be recruited by ADB under direct selection procedures in accordance with ADB s Guidelines on the Use of Consultants, will be responsible for the dayto-day implementation of the Project as the lead NGO. OISCA, established in 1961, is a voluntary organization, which contributes to environmentally sustainable development through a holistic approach emphasizing the interconnectedness of agriculture, ecological integrity, human spirit, and community development. To accomplish this, OISCA implements and advocates hands-on experiential programs for people of all ages, transmitting knowledge and skills, and cultivating such spiritual qualities as dedication, selfreliance, and universal brother- and sisterhood. OISCA is operating agricultural, rural development, and environmental conservation programs in 13 developing member countries of ADB. OISCA has extensive experience in coastal community development and natural resource management in Indonesia, where it has six development training centers and several development programs for agriculture, forestry, coastal community, and fisheries activities. It has established close linkages and networks with local NGOs for community mobilization and natural resource management. OISCA s major sources of financial support include: A. Government of Japan Ministry of Foreign Affairs Ministry of Agriculture, Forestry, and Fisheries Ministry of Manpower Ministry of Economic and Industry

13 10 B. Private Sector C. Membership Fee 2. Risks Affecting Grant Implementation Political and Institutional As of mid-2003, OISCA had a total $12 million equivalent for its operations. In view of its extensive experience, and established networks and resources, OISCA is considered to be the most appropriate organization to use the JFPR grant for the proposed Project. Type of Risk Brief Description Measures to Mitigate the Risk Political instability due to national elections in 2004 may affect project implementation The Ministry of Marine Affairs and Fisheries (MMAF) has qualified and dynamic professional staff who are responsible for supervision of the implementation of coastal community development projects. The stable position of counterpart staff of PMO for ADB counterpart project will ensure timely implementation of the JFPR Project. Governance Infrastructure and Safety Government budget commitment to the Project and adequate qualified staff assigned to Project at local level Coordination and cooperation among government, NGOs, and local communities Transparency and accountability of the implementing agency, organized communities, and established funds system in implementation of the Project Lack of infrastructure may affect the livelihood opportunities. The peace and order situation in some areas may also be a risk. Assurances have been received from MMAF and participating local governments to provide adequate budget and staff for the JFPR Project. Institutional strengthening will enhance staff capability of local government officials and staff. Clear definition of role and functions of government, NGOs, and communities in project implementation and proper selection of local NGOs will help implementation of the Project. ADB s close monitoring of the use of project funds, and approval of specific project activities and budget should provide adequate safeguards. Submission of annual financial reports and audited financial reports and NGO s project progress report will also facilitate monitoring. The social infrastructure developed under the counterpart project will help provide basic infrastructure for the JFPR Project.

14 11 3. Incremental ADB Costs Component Incremental Bank Cost Amount requested $75,000 Justification Although the JFPR Project is closely associated with the ADB loan (Loan 1962-INO), the main focus and activities are very different. The incremental services of experts for the management and implement of the Project are required for proper monitoring and supervision of JFPR-funded activities. The incremental costs will cover two staff consultants: (i) project management specialist (PMS) to coordinate overall project implementation and liaison with the ADB loan project, and (ii) Social Development Specialist (SDS), working with NGOs to develop guidelines and project supporting systems to implement and monitor livelihood development. The PMS will be required for 12 person-months for intermittent inputs over 3 years, at an estimated cost of $55,000. The SDS will be required for 5 person-months, at an estimated cost of $20,000. Type of work to be rendered by ADB The two project staff consultants will be recruited by ADB under ADB s Guidelines on the Use of Consultants. The PMS will (i) develop a project implementation manual (PIM); (ii) work with ADB financed counterpart project to assist in setting up the project implementation unit; (iii) together with the lead NGO prepare work plan and implementation schedule, (iv) work with the lead to assist in procurement of project equipment and recruitment of local NGOs based on ADB s relevant policies and guidelines; (v) monitor, supervise, and coordinate overall project implementation and progress; (vi) coordinate with ADB, the project implementation unit, the lead NGO, and the PMO of the counterpart project; and (vii) assist ADB in conducting inception and regular review missions. The SDS will work with the lead NGO to (i) develop social and poverty assessment guidelines and criteria based on ADB s relevant policies and guidelines on the social preparation and microfinancing, (ii) facilitate the conduct of various workshops during the social preparation, (iii) facilitate the development of a livelihood development program targeting the poorest of poor fishers and women, and (vi) guide and monitor the development of various schemes, such as a production assistance fund, and production profit- and risk-sharing among extension workers, NGOs, and the communities to ensure the consistence with ADB s relevant policies and guidelines on social preparation and sustainability of these livelihood activities.

15 12 4. Monitoring and Evaluation Key Performance Indicator Reporting Mechanism Plan and Timetable for M&E Number of participatory planning for livelihood identification and development in 10 villages Inception report Quarterly progress reports Annual project review reports Project completion report Project inception stage, annual review missions, and the project completion review at end of the Project Number of livelihood Poverty impact assessment opportunities identified report Implementing agency will Completion of socioeconomic prepare and submit quarterly surveys progress reports during project Number and percentage of poor implementation people trained on sustainable livelihood development A poverty impact assessment will be conducted at end of the Number of poor and women beneficiaries received technical and financial assistance Establishment of projectsupporting systems such as production assistance funds, risk- and profit-sharing system Number of coastal community groups formed for livelihood development Amount of funds generated from livelihood development and is available for continuation and or expansion of livelihood activities Number and percentage of successful livelihood activities implemented and expanded to other beneficiaries and areas Number of participatory planning for livelihood identification and development in 10 villages Number of livelihood opportunities identified Completion of socioeconomic surveys Number and percentage of poor people trained on sustainable livelihood development Inception report Quarterly progress reports Annual project review reports Project completion report Poverty impact assessment report Inception report Quarterly progress reports Annual project review reports Project completion report Poverty impact assessment report Project Project inception stage, regular review missions, and the project completion review at end of the Project Implementing agency will prepare and submit quarterly progress report during project implementation A poverty impact assessment will be conducted at end of the Project Project inception stage, annual review missions, and the project completion review at end of the Project Implementing agency will prepare and submit quarterly progress reports during project implementation A poverty impact assessment will be conducted at end of the Project

16 13 Key Performance Indicator Reporting Mechanism Plan and Timetable for M&E Number of poor and women beneficiaries received technical and financial assistance Establishment of projectsupporting Inception report Quarterly progress reports Annual project review reports Project completion report Project inception stage, regular review missions and the project completion review at end of the Project systems such as Poverty impact assessment production assistance funds, report Implementing agency will risk- and profit-sharing system prepare and submit quarterly Number of coastal community groups formed for livelihood progress report during the project implementation development Amount of funds generated from livelihood development and is available for continuation and or A poverty impact assessment will be conducted at end of the Project expansion of livelihood activities Number and percentage of successful livelihood activities implemented and expanded to other beneficiaries and areas 5. Estimated Disbursement Schedule Fiscal Year (FY) Amount ($) , , ,000 Total Disbursements 1,500,000 E. Clearances The Director General of Southeast Asia Department (SERD) endorses the cleared JFPR grant proposal to the Government of Japan, through the Office of Cofinancing Operations (OCO). Cleared By Name / Division / Signature Comments 1. Director-general of the relevant regional department Shamshad Akhtar Director General, SERD Cleared / Not Cleared Comments: 2. Director of the division in the relevant regional department or resident mission 3. Staff review committee (SRC) members Muhammad A. Mannan Director, SEAE Name / Division 1. S. Akhtar, SEOD 2. M.A. Mannan, SEAE 3. D. Dole, EREA 4. E. Brotoisworo, PAHQ 5. H. Heqing, CTL 6. I. Simbolon, RSES Cleared / Not Cleared Comments: Comments Cleared / Not Cleared Comments:

17 14 4. Other reviewers 7. J. Perera, RSES 8. J. Weinstock, RSES 9. M. Araki, OCO 10. M. Chin-Yee, COCS 11. N. A. Fernando, RSFI 12. R. Teng, COCS 13. S. Kawazu, OGC 14. T. Kondo, OED 1 5. CC list F. Checklist 1. Does the application support activities that will assist the poorest and most vulnerable groups eligible for JFPR funding? Yes / No Response is found in Section C.5 2. Do the proposed activities fit within at least one of the following basic purposes of the JFPR? a. Support innovative social programs which directly respond to the needs of poor and vulnerable groups in recipient countries and have high potential for ameliorating their destitute living conditions. b. Provide relatively rapid, demonstrable benefits for affected populations through initiatives and mechanisms with positive prospects for sustainability over the long term. c. Provide direct assistance to programs designed and implemented by local populations, civil society, and NGOs to facilitate their empowerment and enhance their participation in the development process. Yes / No Response is found in Sections B.3-B.6 3. Are the proposed activities designed and expected to be implemented with full participation by local community groups and NGOs? Yes / No Response is found in Section B.6 4. Do the activities support interventions that will have a catalytic effect or magnify the impact of ADBfinanced operation(s)? Yes / No Response is found in Section C.5 5. Does the application identify methods to monitor and evaluate outcomes, implementation progress, and the impact of the grant on the beneficiaries? Yes / No Response is found in Section D.4 6. Are Japanese NGOs participating in this JFPR activity? Yes / No Response is found in Section D.1 7. Have Japanese aid agencies (e.g., JBIC, JICA) been consulted in the development of the JFPR application? Yes / No Response is found in Section B.7

18 15 Please confirm statements 8-16 below. 8. Proposed JFPR activities are not eligible or cannot be funded under loans, or through other sources of funding available to ADB. Confirmed 9. Proposed JFPR activities are not being used to prepare projects or grants, or supplement existing project or grant preparation activities being funded through JSF or other project/grant preparation funds. Confirmed 10. The application does not include pilot activities that are not linked to ADB -funded operations in the pipeline or under implementation. Confirmed / Not Applicable 11. The application includes an exit strategy or a mechanism to ensure long-term sustainability. Confirmed 12. The legal status, financial soundness, track record, and arrangements for use and accounting of grant funds have been checked for grants that are expected to be executed by community groups or NGOs. Confirmed / Not Applicable 13. Where funding of incremental costs (staff or consultants) for grant preparation and/or implementation is requested, a full justification is provided. Confirmed / Not Applicable 14.. The grant will not include study tours or foreign training. Confirmed 15. The application does not include support for academic training, research work, and core program activities of global/regional programs. Confirmed / Not Applicable 16. The director-general and the director of the relevant regional department have endorsed the grant activity. Confirmed Appendixes 1. Detailed Cost Estimates 2. Fund Flow Arrangement 3. Implementation Arrangements

19 Code Supplies and Services Rendered DETAILED COST ESTIMATES Unit Government Quantity Units Costs Contributions Cost per Unit Total $ JFPR Beneficiaries NGOs 16 Appendix 1 Amount Method of Procurement Component A - Community Development Subtotal: 339, , Civil Works Mariculture Plot a. Grouper unit 2 4,706 9,412 9,412 DP b. Rumput Laut (seagrass) unit ,529 1,529 DP c. Milkfish unit ,647 1,647 DP Maintenance Demonstration Plot unit ,335 3,335 DP Storage a. Cold Storage unit 2 11,765 23,529 23,529 DP b. Dry Storage unit 2 2,941 5,882 5,882 DP 1.2 Equipment and Supplies Building a. Home Industry unit 2 1,412 2,824 2,824 DP b. Equipment Storage unit DP c. Project Coordinator Office unit/year Equipment a. Ice Box subdistrict DP b. Large Plastic Can subdistrict DP c. Jerican unit DP d. Metal Barrel subdistrict DP e. Test Kit unit DP f. Fish Net subdistrict DP g. Large Plastic Cover subdistrict DP h. Water Tank unit DP I. Camera unit DP Machinery a. Boat unit 2 2,941 5,882 5,882 DP b. Water Pump unit ,412 1,412 DP c. Fish Flour Machine unit 2 3,529 7,058 7,058 DP DP=direct purhase; HH=household; JFPR=Japan Fund for Poverty Reduction; NGO=nongovernment organization; PM=person-month.

20 Costs Contributions Code Supplies and Services Rendered Unit Government Quantity Units Cost per Unit Total $ JFPR Beneficiaries NGOs Amount Method of Procurement d. Fish Paste Machine unit 2 2,353 4,706 4,706 DP e. Freezer unit 2 6,421 12,842 12,842 DP f. Generator Set unit ,648 1,648 DP g. Personal Computer unit 3 1,176 3,529 3,529 DP h. Laser Printer unit ,235 1,235 DP Vehicle unit 1 29,412 29,412 29,412 DP Other Cost a. Stationary unit ,236 4,236 DP b. Telecommunication unit ,236 4,236 DP c. Electricity unit ,646 2,646 DP d. Operational Cost unit ,528 3,528 DP 1.3 Training, Workshops, Seminars Training unit 6 1,765 10,588 10,588 DP Workshop unit 2 5,882 11,765 11,765 DP 1.4 Consulting Services Participatory Rural Appraisal (PRA) a. Sociologist/Gender Specialist PM 9 1,412 12,706 12,706 DP b. Socio-economist PM 9 1,412 12,706 12,706 DP c. Training Specialist PM 9 1,412 12,706 12,706 DP d. Mariculture Specialist PM 9 1,412 12,706 12,706 DP e. Small Industrial Specialist PM 9 1,412 12,706 12,706 DP f. Marketing Specialist PM 9 1,412 12,706 12,706 DP g. Marine Environmental Specialist PM 9 1,412 12,706 12,706 DP Project Development PM 0 a. Marine Culture Specialist PM ,588 10,588 DP b. Small Industrial Specialist PM ,588 10,588 DP Travel Costs PM ,941 16,941 DP Appendix 1 17

21 Code Supplies and Services Rendered Unit Government Quantity Units Costs Contributions Cost per Unit Total $ JFPR Beneficiaries NGOs 18 Appendix 1 Amount Method of Procurement 1.5 Management and Coordination of this Component Wages a. Head of Training Office PM ,235 4,235 DP b. Treasurer PM ,353 6,353 DP Other Project Inputs Seeds unit 6 1,240 7,437 7,437 DP Feeding unit 6 1,351 8,104 8,104 DP Fertilizer unit DP Medicines unit DP 1.7 Contingencies subdistrict 6 4,706 28,235 28,235 0 Component B - Livelihood Development and Expansion Subtotal: 1,301,411 1,017, ,176 67, , Civil Works Fish Pond subdistrict 12 4,706 56,471 56,471 DP Maintenance (program membership fund) subdistrict ,059 7,059 DP 2.2 Equipment and Supplies Equipment group ,647 17,647 DP Machinery group ,647 17,647 DP Other Costs group ,412 9,412 DP Motorbike subdistrict 2 1,647 3,294 3,294 DP 2.3 Training, workshops, seminars subdistrict 4 11,765 47,059 47,059 DP 2.4 Consulting Services

22 Costs Contributions Code Supplies and Services Rendered Unit Government Quantity Units Cost per Unit Total $ JFPR Beneficiaries NGOs Amount Method of Procurement 2.5 Management and Coordination of this Component Wages a. Local Advisory Support (Technical Foreman) PM ,471 8,471 DP b. Market Information and Grading PM ,471 8,471 DP Production Assistance Fund HH/year ,941 52,941 DP Project Management subdistrict 4 1,588 6,353 6,353 DP 2.6 Other Project Inputs (Specify) Production Assistance Fund group 100 6, , ,529 DP Value of Livelihood Activities HH 1, , ,647 DP Livelihood Support Organizations Input Supplies, Small Scale and Domestic Goods Cost a. Input Supplies subdistrict ,412 1,412 DP b. Small Scale Assistance Fund subdistrict 2 1,647 3,294 3,294 DP c. Domestic Goods subdistrict ,176 1,176 DP 2.8 Extension Services (Government) Travel Cost district 3 11,765 35,294 35, Reporting district 3 5,882 17,647 17, Office Space district 3 1,176 3,529 3, Wages and Salaries district 3 8,471 25,412 25, Other Costs district 3 11,765 35,294 35, Technical Assistance (NGO) National NGO a. Offices 3 2,941 8,824 8,824 b. Operational Cost 3 3,529 10,588 10,588 c. Equipment Cost 3 1,765 5,294 5, Local NGO a. Offices 6 1,765 10,588 10,588 Appendix 1 19

23 Code Supplies and Services Rendered Unit Government Quantity Units Costs Contributions Cost per Unit Total $ JFPR Beneficiaries NGOs 20 Appendix 1 Amount Method of Procurement b. Operational Cost 6 3,529 21,176 21,176 c. Equipment Cost 6 1,765 10,588 10, Communtiy Participation Labor district 3 29,412 88,235 88, Livelihood Organization Participation Contribution district 1 11,765 11,765 11, Contingencies subdistrict 10 3,529 35,294 35,294 DP Component C - Project Management Support Subtotal: 143, , Equipment and Supplies Personal Computer unit 8 1,765 14,118 14,118 DP Laser Printer unit ,824 3,824 DP Camera unit ,529 3,529 DP Faximile Machine unit ,365 1,365 DP Desk unit ,835 1,835 DP Filing Cabinet unit ,176 1,176 DP White Board unit DP Meeting Table unit DP Office Rent unit 3 1,765 5,294 5,294 DP Stationary unit 10 1,176 11,765 11,765 DP Coffe Table unit DP Motorbike unit 3 2,118 6,353 6,353 DP Operational Costs years 3 1,176 3,529 3,529 DP 3.2 Training, workshops, seminars Workshop 1 1,176 1,176 1,176 DP Training 2 2,353 4,706 4,706 DP

24 Costs Contributions Code Supplies and Services Rendered Unit Government Quantity Units Cost per Unit Total $ JFPR Beneficiaries NGOs Amount Method of Procurement 3.3 Consulting Services External Audit/Public Accountant 3 11,765 35,294 35,294 DP 3.4 Reporting, Monitoring, and Evaluation Reporting years 3 5,882 17,647 17,647 DP Monitoring and Evaluation years 3 7,059 21,176 21,176 DP 3.5 Other Project Inputs (Specify) Communications 3 1,176 3,529 3,529 DP Electricity 3 1,176 3,529 3,529 DP 3.6 Contingencies subdistrict ,118 2,118 DP Components A to C = Subtotal Subtotal: 1,784,234 1,500, ,176 67, ,000 Contingency (Maximum 10% of total JFPR Contribution) Total Grant Costs Total: 1,784,234 1,500, ,176 67, ,000 Incremental Cost Details: Total Incremental Costs Source: Asian Development Bank estimates. 21 Appendix 1

25 22 Appendix 2 FUNDS FLOW AND DISBURSEMENT ARRANGEMENT 1. A Japan Fund for Poverty Reduction (JFPR) special account will be opened in a commercial bank to be operated by the Executing Agency (EA) through the project management office (PMO) under statement of expenditures (SOE) procedures. The special account will be established, managed, replenished, and liquidated in accordance with the provisions set forth in ADB s Loan Disbursement Handbook (January 2001). Local nongovernment organizations (NGOs) will prepare budget requirements based on the proposed project activities and submit the budget requirements to the lead NGO. The lead NGO will consolidate all budget requirements and forward them to the JFPR project consultants for review. Upon its approval, the EA will send to ADB a formal request for fund release. The approved budget will be disbursed to the NGO consortium, which will maintain a separate JFPR account for both the lead and local NGOs. The initial fund deposit will be based on the estimated expenditures for a 6-month period, but will not exceed the equivalent of $500,000. Future replenishment of the special account held by the EA will be based on the liquidation of the imprest account, while the ceiling of the special account will be adjusted based on the evaluation of previous funds absorption and revised contractual arrangements. The ceiling for the statement of expenditures is $20,000. The funds flow and disbursement arrangement is shown in Figure A2. 2. Transfers to the independent public accountant (IPA) will be based on the contractual arrangements between the IPA and the EA and endorsed by ADB.

26 Appendix 2 23 Figure A2: Funds Flow and Disbursement Mechanism Ministry of Finance NGO Selection Criteria MMAF (EA) ADB MoU International, National and Local NGO Signing of Collaboration Agreement Establishment of Special Account (EA) First Year Project Plan Yearly Project Realization Approved by EA, NSC, DCU Financial Audit Yearly Report Disbursement for 1st Year to Lead NGO account Second Year Project Plan Approved by EA, NSC, DCU Disbursement for 2nd Year Project Implementation Yearly Project Realization Financial Audit Yearly Report Third Year Project Plan Approved by EA, NSC, DCU Disbursement for 3rd Year Project Implementation Yearly Project Realization Financial Audit Final Project Report Approved by EA, NSC, DCU, ADB Project Completion ADB=Asian Development Bank; DCU=district coordinating unit; EA=executing agency; MMAF=Ministry of Marine Affairs and Fisheries; NSC=national steering committee.

27 24 Appendix 3 IMPLEMENTATION ARRANGEMENTS A. Executing and Implementing Agencies 1. The Ministry for Marine Affairs and Fisheries (MMAF) is the Executing Agency for the Project, as it has the mandate for marine and costal resource management and coastal zone development, including coastal community development. MMAF is responsible for the coordination, supervision, and implementation of the counterpart project. Two staff consultants recruited by the Asian Development Bank will set up a Japan Fund for Poverty Reduction (JFPR) project office at the project management office (PMO) of the counterpart project and will be responsible for overseeing the implementation of project activities, will coordinate with central and regional governments, and will supervise linkages between the Project and counterpart project. Figure A3.1 shows project implementation arrangements. 2. The national steering committee (NSC) of the counterpart project will function as the NSC for this JFPR Project comprising MMAF, National Development Planning Agency (BAPPENAS), Ministry of Finance (MOF), MMAF, Indonesia Institute of Science (LIPI), Ministry for Women s Empowerment, the Ministry of Home Affairs (MOHA). NSC will meet at least once a year to provide policy guidance and supervision, review the progress of the Project, and recommend solutions to impediments to project implementation. At the district level, a district coordination unit (DCU) will be set up at the district government office, under the responsibility of the Bupati (mayor), comprising senior officials of district governments, including staff of BAPPEDA (Regional Development Planning Agency), BAPPEDALDA (Provincial Environmental Impact Management Agency), Fisheries dinas (provincial/district), Forestry dinas, and other relevant district agencies involved in coastal community development, nongovernment organizations (NGOs), as well as local academic institution representatives and representatives of selected coastal communities. The DCU will hold quarterly meetings to review project progress and provide overall policy guidance for project implementation. 3. The implementing agency will be the lead NGO, Organization for Industrial, Spiritual and Cultural Advancement (OISCA) International Japan, which will be directly recruited by the Project with government endorsement. OISCA has extensive experience in coastal community development and natural resource management in Indonesia. The lead NGO will be responsible for overseeing project implementation at the village level. The national project implementation unit (NPIU) will be located at the lead NGO. Because of the nature of the project components and activities, a lead NGO is regarded as necessary to provide required capacity building, interregional marketing assistance, and overall local NGO coordination. 4. The Project approaches poverty reduction through partnerships among NGOs, academic institutions, individual poor fishers and groups, and district governments. Given the prerequisite of a dynamic agency for implementation, local NGOs or academic institutions working in the targeted district, selected by the lead NGO in consultation with the local government, will support the implementing agency. One NGO per subdistrict will be selected. Local NGO selection committees will include members from the lead NGO and the local government. The lead NGO and the local government will have authority to annul local NGO contracts on the basis of nonperformance. These local NGOs will report directly to the lead NGO. Since the Project has a strong environmental, income generation (for poverty reduction), and gender and development focus, NGOs with proven capacity to implement environmental, income generation, and gender considerations will be prioritized.