1 MEASURIN POVERTY BENEFIT INCIDENCE ANALYSISTARGETING THE POOR IN INDONESIA 1 ROLE OF COMMUNITY TO IMPROVE TARGETING 1 REGIONAL POVERTY FORUM 1-3 December 2010 Role of Communities to Improve Targeting: Indonesia’s experience

2 ROLE OF COMMUNITY TO IMPROVE TARGETING 2 Who may involve in the decision making process  A community leader or a group of elite  Whole community member or representative subset Advantages  Utilizes local information on individual circumstances  Allows for local concept of welfare  Better acceptance Limitations  Risk of elite capture  May face low administrative capacity  May exacerbate patterns of social exclusion There has been a growing interest in community targeting

3 ROLE OF COMMUNITY TO IMPROVE TARGETING 3 Targeting process of Anti-Poverty Program for Left-behind Villages (IDT)  Central government selected poor villages received grants designated for loans for productive investment  Village head and Village Community Resilience Board then identified poor households eligible for the loan, without any imposed selection criteria from central government Targeting outcomes  Wealthier and more unequal villages tend to target better  Overall, the poorest was more likely to be beneficiaries  Village headed by young and educated person more likely to exhibit better targeting Key lessons  Elite capture is not always associated with inequality  Community target well the poorest  Capability of local agents enhance better targeting  Seems work better if strict limited budget/quota imposed Indonesia’s IDT program used community-based selection of recipients

4 ROLE OF COMMUNITY TO IMPROVE TARGETING 4 Targeting process of BLT (unconditional cash transfer)  The first stage was community heads to nominate lists of poor households in their area  A PMT survey was then conducted for those households listed in the first stage, to identify eligible households Targeting key outcomes  Relatively high exclusion error (53%)  Exclude less poor and include more non-poor in rural areas than urban ones Key lesson  Community face difficulties to choose too many members to be beneficiaries (in BLT up to near-poor, where the difference between near-poor and slightly above is not too obvious )  Require clear guidelines and good facilitation in selection process  Community setting in terms of level in knowing well individuals in the community matters BLT first-stage targeting used community-based nominations of prospective beneficiary households

5 ROLE OF COMMUNITY TO IMPROVE TARGETING 5 The World Bank and Statistics Office (BPS) conducted a pilot to examine how the different targeting methods can optimally applied in Indonesia … PMT  49 indicators – Housing characteristics – Assets – Household composition – Head education and occupation – Village characteristics  Scoring weights from existing socio-economic surveys  Door-to-door collection of data by Central Bureau of Statistics (BPS)  PMT scores calculated  Those below specific cut-off received transfer CommunityHybrid  Community ranks all households in sub-villages from poorest to richest  Community meeting held with different sub-treatments – Full community meetings – Elite only meetings – Day meetings – Night meetings – Randomised order of households for ranking – Identifying ten poorest first  Facilitator has community make pairwise household comparisons to produce a complete rank-list  Community ranks households as per community method  Told that government will verify their rankings  PMT assessed on lowest-ranked households – 1.5 times the village beneficiary quota

6 ROLE OF COMMUNITY TO IMPROVE TARGETING 6 The community compares two households’ relative well-being to each other

7 7 ROLE OF COMMUNITY TO IMPROVE TARGETING 7 Community better identify the very poor, although PMT had the lowest rate of mistargeting overall Beneficiaries PMT centered to the left of community methods —better performing on average. However, community methods select more of the very poor (those below PPP$1 per day).  Note that the target beneficiaries are up to near poor, and PMT was conducted with census Key lessons  Community-led approaches better incorporate local knowledge and definition on poverty and so might reduce exclusion error of the very poor

8 ROLE OF COMMUNITY TO IMPROVE TARGETING 8 Satisfaction with the distributive outcome was higher for community Community Satisfaction Is the method applied to determine the targeted households appropriate? (1=worst,4=best) Are you satisfied with P2K08 activities in this sub-village in general? (1=worst,4=best) Are there any poor HH which should be added to the list? (0=no, 1 = yes) Number of HH that should be added from list Number of HH that should be subtracted from list Community treatment 0.161***0.245***-0.189***-0.578***-0.554*** (0.056)(0.049)(0.040)(0.158)(0.112) Observations Mean in PMT treatment Comparing to PMT  Fewer complaints in comment box and also to sub-village head  Facilitators report less problems  Sub-village head more likely to think that programme appropriate, community happy, less likely to think households missing from list Key lesson  Community satisfaction, and hence buy-in, is significantly higher when they are involved in the targeting process

9 ROLE OF COMMUNITY TO IMPROVE TARGETING 9 Moreover, there is no evidence of elite capture  The mis-targeting rate for the elite treatment was not significantly different than the whole community treatment  And, that the mis-targeting is worse under the community method is not due to increased elite capture of the community process Other key findings  There is no significant difference results from meeting during the day (more women participants) and the night  The community outcomes match individual self-assessments  some form of self-targeting system?  The hybrid method resulted in both poor targeting performance and low legitimacy

10 ROLE OF COMMUNITY TO IMPROVE TARGETING Raise a number of policy questions  Should communities be allowed to target themselves? – Closer to own concept of poverty and vulnerability – Higher satisfaction – Less likely to exclude the very poor  Are there other PMT-Community hybrids which would more effectively combine the benefits of both approaches? – e.g. Conducting PMT first, then using the community to verify and reduce exclusion and inclusion error in the very poor  Should different approaches or combinations of them be adopted for different locations? Targeting Experiment 2 – PMT, Community-hybrid, On Demand Application – Target beneficiaries of CCT (PKH): very poor + eligibility criteria

11 ROLE OF COMMUNITY TO IMPROVE TARGETING 11 Circumstances where community-based targeting may work best  At community-setting where most likely to know each other well  Identifying the poorest (a few members of community to be beneficiaries)  For programs with strict budget constraint/quota  For programs that is temporary or with relatively small benefits  Well facilitate Consideration  Capability of local agents  Required good social consensus; motivators to participate  May combined with other targeting methods How to minimise risk and maximise gains of community-targeting?