1. NATIONAL PROGRAM FOR COMMUNITY EMPOWERMENT (PNPM MANDIRI)
Indonesia’s CDD Response to Rural Poverty

2. Indonesia

3. Background Objectives To Reduce Poverty, by:
Modeled on 2 former government programs:
Kecamatan Development Program (KDP/PPK) &
Urban Poverty Planning (UPP/P2KP).
Objectives
To Reduce Poverty, by:
Providing cost-effective socio-economic infrastructure and access to basic services
Improving local governance & capacity
Strengthening local institutions
Increasing local employment opportunities
Empowering communities

4. Indonesia’s population
The biggest poor population are living in Java-Bali (57%). 25% in the Western regions, and 17% in the Eastern regions (the most lagging regions). In total there are ~ 36 million poor population
Source: CPS Change Team

5. Indonesia’s economy
Source: CPS Change Team. Provincial’s size shows the proportion of provincial GDP relative to national GDP

6. CDD in Indonesia
Villagers plan and decide on investments, control funds, implement the projects themselves, account for funds, and maintain facilities/ infrastructure built.
With facilitation and technical backstopping

7. Poverty Program ‘Clusters’
Programs: Rice for the Poor (Raskin), School Operations Support (BOS), Health Security for the Poor, Cash Transfers & other social programs (post-disaster).
Cluster I: Social Safety and Protection.
Cluster II: Community-based programs; now known as PNPM Mandiri.
Cluster III: Strengthening small and micro enterprises: Kredit Usaha Rakyat (KUR), Pengembangan Usaha Agribisnis Perdesaan (PUAP), micro-finance services.
Source:pnpm-mandiri website

8. Key Principles Decentralized Pro-poor Participatory
Transparent and Accountable
Sustainable
“Simple”
Open Menu (with allocations based on prioritization of proposals decided on by village representatives)

10. From Village Proposals to Funding Decisions
Village Meeting
To agree on 3 proposals (2 from women ) to be brought to the inter-village forum
To agree on 6 village reps (3 females), proposal writing team & candidate for UPK etc
Inter-Village Prioritization
Village Proposals discussed and ranked
Forum officers elected
UPK staff (re)elected
Designs & Budgets
Using standard templates, detailed (engineering ) designs and cost estimates prepared (villagers involved in the process, consulted)
Inter-Village Funding Decisions
Final decision made on funding for subprojects
Reps elected for Kabupaten Planning (Musrenbang) deliberations

12. Approx. Funding (in US$ million, approx.) PROGRAM LOAN GRANT KDP I
$273.2
KDP II
$344.3
$70.8
PNPM 2007
$381.9
$121.7
PNPM 2008
$226.1
PNPM 2009
$300
PNPM 2010
$785

13. How Funds are Channeled and Disbursed
Transferred by KPPN (Govt Treasury Office) to village collective accounts at the kecamatan level.
Villagers then use these grant funds for productive infrastructure, loans to existing women’s groups for working capital, or for social investments in education and health.

14. Replenishement
Withdrawal request & financial statement
3 stages: 40%-40%-20%
UPK
Expenditure & progress report
Work plan & progress based

15. MANAGEMENT STRUCTURE OF PNPM MANDIRI RURAL
Coord. Ministry of People’s Welfare
Bappenas
MoHA, DG-PMD
Project Management (Satker)
TKPK
TK-PNPM Mandiri
National Management
Consultant
CENTRAL
Governor
TKPKD Propinsi
TK-PNPM Prov.
Provincial
Oversight Consultant
PROVINCE
Bupati/ Mayor
Kabupaten Facilitators
TKPKD Kab.
TK-PNPM Kab.
REGENCY/ MUNCIPAL
CAMAT
Inter Village Meeting (MAD)
KECAMATAN (Govt Admin Unit)
Ops Staff
Kecamatan Fasilitator
Facilitator Local (PL)
Unit Pengelola Kegiatan (UPK)
Village Head
Village Meeting
Village Cadres
Monitoring teams
Village Impl Unit
VILLAGE
Community (Groups)
Supervision/ Oversight
Reporting Lines
Coordination
Supervision and Tech Assistance
Facilitation

16. Program Staffing of PNPM Rural
National
National Management Consultants – 75 specialists
Regional Mgt Consultants
Province
Provincial Oversight Coordinators (32)
Team of 10 specialists/province, on average
Kabupaten
3 Kabupaten Facilitators (Social, Technical and Financial)
Plus assistants and computer operators
Kecamatan
At least 2 Kecamatan Facilitators (Social and Technical)
A Financial Mgt Unit (UPK) and Local Asst Facilitator(s)
Village
At least two Village Cadres (one of the two must be female)
Elected Village Implementation Committee

17. Results Between 1999 – 2007, villagers built or rehabilitated over:
65,500 km of roads
9,000 bridges
11,000 irrigations systems
28,300 drinking water systems and almost 17,500 sanitation facilities (MCK)
6,950 schools (and provided almost 120,000 scholarships to poor students)
5,700 health posts

18. Impacts of PNPM Rural have been positive Household welfare
Increase in consumption per capita 5% greater in PNPM locations compared with control.
The same impact is 5% impact among poorest 20% households.
Impact increases to 19% in the poorest 20% of kecamatan.
Households moved out of poverty (2.3% more likely than control areas) and reduction in risk of households falling into poverty.

19. Impacts of PNPM Rural (cont.)
Employment Generation
1-2% greater chance of escaping unemployment.
Unemployment already very low (<4%).
Provides temporary jobs during slack season for agricultural laborers and the poor (>72 million person-days for >6.1 million villagers)

20. Impacts of PNPM Rural Physical Economic Infrastructure
Creates greater access to markets and services (roads) and increases productivity (irrigation)
Improves access to and quality of health and education services (health centers, schools)
Strong impact on expansion of access to health services (5% more than control areas)
Proven Track Record of Low Misuse of Funds (< 1%)

21. Impact Participation of women and poor is generally high (about 45%)
Poverty targeting is successful (Alatas, 2005)
Rural PNPM forums reduce conflict (Barron)
Rated beneficial--as expected or better: 92%
Satisfied with results: 96%
Infrastructure fully functional (years after construction): 94%
No serious environmental impact or safeguards issues
Rural PNPM construction costs are 30% – 56% less than alternative means (ie. construction by contractors)

22. The Using KDP/PNPM Rural As “Vehicle” for Other Funds
Aceh
The Using KDP/PNPM Rural
As “Vehicle” for Other Funds
For example:
KDP-IOM, IDR 50 million per village for 230 villages and 350 villages in conflict-affected areas in Aceh;
KDP-BRA, to channel funds to conflict victims in 67 sub-districts (IDR billion)
KDP-BRR, to built infrastructure for community settlements in 72 sub-districts (IDR billion)

23. The Using KDP/PNPM Rural As “vehicle” for Other Funds
Aceh
The Using KDP/PNPM Rural
As “vehicle” for Other Funds
For example:
CARE, to built sanitation in Peukan Bada Sub-district, Aceh Besar
AUSAid, development Meunasah & Village Halls in 108 villages in 8 sub-districts, Aceh Besar
Village Surveys, 2005/2006, surveyed more than 5,900 villages to identify damages and changes post-tsunami and -conflict

24. PNPM-BKPG—integration of community development programs
Aceh
PNPM-BKPG—integration of community development programs
In 2009 Aceh allocated > Rp. 962 billion for block grant investment funds to every village and linked its funds to PNPM Rural. Aceh’s BKPG also links musrenbang planning to more transparent & participatory BKPG + PNPM community planning, as shown below:
January
February
March
2010
2009
June-Oct
Nop
Dec
Implementation of PNPM-BKPG
Period of Musrenbang until Kec (March)
Each village produces a RPJM & RKG (annual work plan) and budget/APBG
Base d on its RPJM, each village reviews & prepares an RKG (annual work plan)
Musrenbang Kec and MAD II of BKPG + PNPM can be done together

25. Infrastructure Infrastructure Project: Bridge at Siwalubanua Village
Suspension Bridges
Pati-iron bridge

26. Subak Road, Tabanan, Bali
Infrastructure
Road in Central Java
Subak Road, Tabanan, Bali

27. SCHOOL TK (Kindergaten ) in Magetan
Exterior of a School (and KDP Notice Board) in Kairatu
Irrigation channel at Lamatewelu , Kec. Adonara Timur, Kab. Flores Timur, NTT
Clean Water Project at Pengotan, Kec. Bangli, Bali
Women actively participating in building a road in Garut

28. SAVING & LOANS
SPP beneficiary shows her fish crackers, Parit Baru, Selakau, Sambas, Kalbar
First Loan Disbursement at Cikeusal
New Polindes in Magetan
Socialization in a kecamatan

29. Challenges/Issues
The delay of DIPAs every year (mutli-year budgeting, carry-over, PMK 168 rules, etc.)
Technical Assistance (too little training, too late and too many empty TA positions)
Better inter-sectoral support & coordination needed going forward
Intensive routine supervision required
Better pro-poor targeting—more grant funds to poor, remote areas

30. Recommendations
PNPM can serve as an effective “vehicle” to build village infrastructure, provide employment opportunities, reduce poverty and help provide a safety net in times of crisis:
The architecture and program machinery in place & process familiar (facilitators trained and in place)
Poverty-targeted (larger block grants for poor kecamatan)
The funds provided proven to result in cost-efficient village infrastructure & local employment opportunities, reducing poverty in poor areas.