1. Indonesia Indonesia National Program for Community Empowerment (PNPM)
PNPM team members:Jana Halida Uno,
Unggul Suprayitno, Zoe Elena Trohanis, and Behdad Nowroozi
Fiduciary Forum
March 24-28, 2008
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2. Why PNPM is Interesting
Scale
Central role in a new MIC’s national poverty reduction strategy
Local participation and accountability
Robustness for post-conflict and emergency work
Simple and innovative FM features
Governance and anti-corruption
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3. Brief Description
Provides tertiary services and infrastructure through direct transfers and facilitated community planning
Scaled-up as a quick response to East Asian financial crisis in 1998
Nationwide program as of 2008 covering initially 40,000+ urban and rural billion/yr
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4. General PNPM Challenges
Enormous size of PNPM
Disbursement of $1.2 billion each year over time
Coverage of 70,000 villages – all of them in a poorly communicated archipelago
Weak national oversight agencies
Increasing role for local governments with even weaker FM capacities
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5. PNPM’s Fiduciary Risks
Risks posed by overall size and dispersion over communities (high oversight costs)
Risks posed by community management of block grants
Risks posed by low capacity of local government staff to supervise and monitor sub-project implementation
Risks posed by uneven capacity of field consultants to assist Sub-District Financial Management Units on financial management
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6. Key Challenges to FM Specialists
Making controls meaningful
Distinguishing transactional from structural problems
Striking right balance between formal oversight and simplicity of procedures/documentation
Using feedback-based system rather than just ex ante controls
Measuring effectiveness of FM interventions
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7. PNPM Integrated Internal Control Framework
Monitoring and oversight by:
Community participatory monitoring
Government monitoring
Consultants and facilitators
NGO monitoring
MIS and reporting
Bank supervision
Audits
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8. PNPM’S Supervision Strategy
Lowering costs of acquiring information (i.e. use of SMS reporting)
Promoting social controls (i.e. cross audits, community FM groups)
Strengthening formal oversight (i.e. tailored FM manuals)
Check the checkers
Visiting the sub-projects, not just offices (check end-uses)
Finding allies for oversight and reform
Measuring which interventions are most effective – and adjust
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9. Going Forward: PNPM’s Risk-Based Oversight Framework (2008-2011)
Strengthen effectiveness of local auditors
Use threat of audit more effectively and make audit findings more accessible
Better use of IT (i.e. websites, hand phone reporting)
Improve access to information
Further train all parties involved on financial management
Promoting cross audits between villages
Provide legal and paralegal assistance for using the judicial system
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10. THANK YOU
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