Indonesia Managing Corruption in the Scaled-Up PNPM Program PNPM team members: Behdad Nowroozi, Jana Halida Uno, and Unggul Suprayitno March 2008

Why PNPM Is Interesting Scale – Nationwide coverage Role in national poverty reduction strategy Local participation and accountability Robustness for post-conflict and emergency work Governance and anti-corruption Simple and innovative FM features

PNPM’s Internal Architecture Unearmarked block grants of $50, ,000 are sent directly to sub-districts ( villages) Community organizations plan and manage activities, aided by facilitators Open menus (i.e. Multisectoral) Procurement and financial management are done at sub-districts and villages Provincial and district oversight and support -- but no veto power

Geographical Coverage From 1998 to 2006, KDP aqnd UPP have covered 34,000 of the poorest communities in Indonesia, covering approximately 49 percent of the entire country.

PNPM Challenge KDP and UPP are VERY LARGE PROJECTS Total financing is $1.8 billion They disburses about $200+ million/year BUT PNPM IS MUCH LARGER It will disburse $1.2 billion each year over time It will annually cover 70,000 villages, all of them in a poorly communicated archipelago

PNPM Urban Challenge “UPP” IS THE URBAN ARM OF PNPM Its scale-up is very steep Urban communities are more volatile than rural areas Initial greater use of revolving funds that are hard to monitor But opportunities for better FM management include Good access to information Active urban civil society Ability to organize and resist High literacy rates

PNPMs Rural Challenge Communities are highly dispersed and isolated Functional illiteracy is high Distance to government is large But there are opportunities too… High social solidarity/social capital Local elections Prior experience with revolving funds

KDP Corruption Cases Reported

UPP Corruption Cases Reported

PNPM’s Design Strategy For Reducing Corruption Lower costs of acquiring information Minimize transactions Promote participation and ownership Use social controls Strengthen transparency Strengthen formal oversight capacity Apply sanctions swiftly and consistently

FM Challenge Weak national oversight agencies Highly dispersed subprojects Elite capture remains a concern Making controls meaningful Better use of audit Use technology to promote transparency

PNPM’s FM Innovations Formal Transparency Policy Book-keeping by trained community members NGOs and journalists provide oversight and reporting Risk-based audit manual for government auditors Legal and paralegal assistance for using the courts

HOMEPAGE HOMEPAGEwww.p2kp.org Running text Announcement of facilitator recruitment Important document: guidelines, letter, TOR, socialization materials, training module UPP today (news) Dialogue forum Complaint Handling Contact Number of Facilitator and Community Consultant’s Contract Dissemination of learning and article on interesting experience, best practice Data on : - Implementation progress : MIS and quick status - Utilization of fund at village, region, national level, - Profile of kelurahan - Address of UPP Information Center visitors per day

Strategy For Strengthening Formal Oversight Improving the audit Increasing audit sample from 2.5% to 7.5% Tailoring the audit manual Sharing audit results with communities and local governments Strengthening capacity Twinning local audit agencies with national agencies Special training Promoting feedback from clients

World Bank Supervision Strategy For Reducing Corruption Supervise frequently Check the checkers Visit the sub-projects and confirm end-uses Find allies in government and civil society Measure & report Respond quickly and consistently Graduated application of sanctions

Future Directions Better use of Info Technology (i.e. websites) Educate population, esp. leaders Restitution rather than sanctions Constant evaluation

PNPM-UPP Illustrating Complaint Handling

UPP: Complaint Handling Web based CHU visitors per day Type of Complaint Type of Case

SMS Broadcast & Tele Supervision Request for SMS Broadcasting SMS Pool (Database at PMT) Revie w Broadcasting SMS Archive in UPP Website Yes No

Complaint Handling