Dr. Suprayoga Hadi Deputy Minister for Special Region

1. Ministry of Disadvantaged Region Republic of Indonesia INDONESIA’S COMMUNITY DRIVEN DEVELOPMENT AND LOCAL GOVERNMENT: BUILDING ACCOUNTABLE AND SUSTAINABLE LOCAL SERVICE DELIVERY Dr. Suprayoga Hadi Deputy Minister for Special Region Ministry of Disadvantaged Region, Republic of Indonesia Regional Meeting on Public Sector Management in Support of the MDGs Co-organized by Asia Pacific CoP-MfDR, ADB, UN-ESCAP and UNDP Bangkok, 13-15 June 2012 

2. OUTLINE Poverty in Indonesia Government’s poverty reduction strategy and policy PNPM Mandiri – a strategy for poverty reduction and job creation Acceleration of the MDGs Achievement Some lessons learned and evaluation results

3. A Dimension of Poverty in Indonesia Access inequality in health, nutrition, education, water & sanitation, etc., especially for the poor households in remote and isolated areas Poverty rate across regions, 2009

4. POVERTY FIGURE Head count (million) Poverty rate (%)

5. B STRENGTHENING AND EXPANDING PRO-POOR PROGRAMS • Near • Poor • Near • Poor Poor* Poor The Poorest The Poorest* MACRO ECONOMIC POLICY To Increase Social Welfare and expand job creation Accelerate Poverty Reduction • Cluster-1 • Scholarships • Health Insurance • Rice Subsidy • CCT • UCT(when needed in crisis) • Different kind of social assitances. Cluster-2 COMMUNITY EMPOWERMENT PROGRAMS (PNPM) Cluster-3 SMEs Credits Cluster-4 Housing transportation Clean water Electricity Fishermen livelihood*) Marginal group in urban areas*) Focus targets to communities of fishermen, margi-nal group in urban areas, and in less developed regions

6. DUAL TRACK STRATEGY:Synchronize Master Plan Economy and Four Track Strategy MASTER PLAN ECONOMY Expand the Economic Growth (PRO-GROWTH) Social Protection & Assistance Program (Cluster I) Expand the job Opportunity (PRO-JOB) DUAL TRACK Increase the People’s Welfare (GROWTH with EQUITY) Community Empowerment Programs (Cluster II) Accelerate poverty reduction (PRO-POOR) SMEs Empowerment Programs (Cluster III) Green Economy (PRO- ENVIRONMENT) Pro Poor Programs for acceleration (Cluster IV) FOUR TRACK STRATEGY

7. OTHER HIGHLIGHTS OF POVERTY REDUCTION PRIORITIES IN GOVERNMENT ANNUAL WORK PLAN OF 2012 • Expansion and improvement of CCT • Expansion to cover 1,516 thousand of poorest HH and include Eastern Indonesia • Improvement of targeting method in 2011 Database, socialization, verification, and payment system • Strengthening the effectiveness of PNPM Mandiri • Increase the impact and effectiveness of the program for job creation; • Strengthen the quality of integration among CDD programs and local pro-poor planning, budgeting & policy; • Expansion of pro-poor programs • Affordable housing for the poor; • Cheap transportation, including for rural transportation and efficient car; • Clean water for the poor; • Cheap and efficient electricity for the poor; • Improvement fishermen livelihood and quality of 400 PPI (fishing ports); • Improvement of vulnerable in the urban, including housing and basic services as well as economic productive activities. • Land ownership of the poor • Strengthening access and quality of family planning for the poor, especially in remote areas

8. C Poverty Reduction Through Community Empowerment – PNPM Mandiri • RESPONSIVE GOVERNMENT & EMPOWERED COMMUNITIES • Strengthening bottom-up dev’t approach; • Improving local government (sub-districts, village heads & legislative) responsiveness • Improving social service delivery to the poor. • Pro-poor planning and budgeting • SOCIAL PROTECTION • Women’s participation • Justice for the poor • Helping marginal groups • Transparency • MARKET LINKAGES • Infrastructure • Microfinance • Smallholder dev’ t • Renewable energy & NRM Block grant tansfer and technical assintance to the poor communities

9. To solve difficulties in reaching the poor and fulfill people needs particularly in remote & isolated areas due to imperfect market.  Current decentralization doesn’t guarantee local governments perform participatory and pro-poor approaches. 2. To avoid inefficiency & confusion of overlapping activities, procedures, & institutions formed by different kind of projects. PNPM attempts to harmonize: Location by targeting poor sub-districts Principles & performance indicators. Simplifying procedures (planning, disbursement, facilitation training, and unit costs). Community institutions as a forum for community decision making What is PNPM? • PNPM is a program use CDD approach that attempt to reduce poverty and create job opportunities • It consists 5 core programs: PNPM Rural; PNPM Urban; PNPM for Disadvantage Area; Rural Infrastructure Support for PNPM; PNPM - Infrastructure for socio-economic development • Currently , it is supported by several sector CDD program: PNPM for rural agribusiness, PNPM tourism, PNPM fishery and marine. • Since 2009, PNPM Mandiri has covered all sub-districts (6,400 sub-districts) Why is PNPM?

10. Poverty Reduction Through Community Empowerment – PNPM Mandiri • RESPONSIVE GOVERNMENT & EMPOWERED COMMUNITIES • Strengthening bottom-up dev’t approach; • Improving local government (sub-districts, village heads & legislative) responsiveness • Improving social service delivery to the poor. • SOCIAL PROTECTION • Women’s participation • Justice for the poor • Helping marginal groups • Transparency • MARKET LINKAGES • Infrastructure • Microfinance • Smallholder dev’ t • Renewable energy & NRM Block grant tansfer and technical assistance to the poor communities

11. ROAD MAP OF PNPM 2012 2025 2020 2015 UPSHIFTING • Enggaging (networking, partnership) • Decentralization • Entrepreneurship • Regional/global economic linkage asset building UPSTREAMING • Supporting System • Institutionalization • Pro-poor LGs • Quality  socialassets UPGRADE • Empowerment Process • Activity: open menu • Infrastructure • Quantity  physical assets

12. PNPM’s Strategic Phases 12

13. Basically the block grant can be used for open menu. The implementing Agency only issues the negative list (ie. buidling praying place, creating bomb, etc) The activities as vary as follows: Train the communities in identification, analysis and decision making process to tackle their poverty problems Create/expand small scale infrastructures and community economic productivities. Increase community capability and self-help to achieve better standard of living What are the activities for community empowerment?

14. The source of funding for PNPM • Central Government Budget • Local government contributions (based on fiscal capacity, from 5%-20% out of block grant) • Private/CSR contributions • Financing Mechanism • Multi Donor Trust Fund (PNPM Support Facility/PSF) grants from WB, AUSAID, DFID, Netherlands, Danida, EU, USAID. • Multiyears financing for community block grants and technical assistance  WB (PNPM Urban & Rural), IDB (PNPM Urban), ADB(RIS-PNPM), JBIC (RISE), WB (SPADA).

15. PNPM Community Grant Utilization

16. GENDER MAINSTREAMING IN PNPM(from the Gender Review for PNPM Strategy, 2007) 1. Strategy, Institution, and Accountability • Decide key performance indicator to include woman participation and gender mainstreaming in any activity from planning until the implementation phases. 2. Social Empowerment • Separate proposal proses for women group can guarantee bigger response to women needs, which oftn time relates to solve the root of poverty • The Operational Manual has been set up to include and give bigger role to women • Monev could help the awareness to women participation 3. Sustainability and Impact • Women involvement particularly in operation and maintenance has been impacted to the sustainability of the project results 4. Economic Empowerment • Support women role in household’s economic increases their power in deciison making process within a family; • Women participation in different kind of level increases their capacity and self esteem.

17. Self-help mapping: • Needs & asset identification • Problem solving • Community Organization: • Form & set up community organization • Poverty reflection: • Poverty diagnostics • Problem identification • Solution identification • Planning: • Programs & activity • identification and • Prioritization • Community meetings: • Binding interest • Democratization • Self reliance • Implementation: • Form implementation units • Set up agenda / action plan • Dissemination: • Social mapping • Socialization • Beneficiaries: • Set up beneficiaries The Cycle of Empowerment Process

18. D ACCELERATION OF MDGs ACHIEVEMENT 48 Indicators on the basis of 1990 18 targets In 2015 8 Goals • Financial Crisis has impeded some MDGs targets achevement, e.g. National poverty, nutrition, nett enrollment rate, etc. • Period of Mid-term Development plan 2010-2014 is: • Last shot to accelerate MDGs achevement in sistematic way • Basis to mainstream MDGs achievement whithin sectors, programs, activities, along with the target, funding, and other resources • Presidential Decree No. 3/2010 issued to instruct ministers, governors and other leaders to accelerate MDGs achievement. It is a basis for the establishment of Road Map MDGs, Regional Action Plan, improve MDGs related database, and strengthen local government capacity in pro-poor planning and budgeting Poverty & Hunger Maternal Health EDUCATION Comm. Diseases ENVIRONMENT GENDER CHLD HEALTH PARTNERSHIP

19. Strengths: Community groups receive the funds directly in their bank account from MoF treasury The community has strong ownership which creates incentives for community control over the funds An external monev unit is established through the PMU An internal financial management team provides hands-on training & oversight to community groups SOME STRENGTHS & WEAKNESSES FROM THE IMPLEMENTATION Weaknesses: The capacity of untrained community groups to manage & implement the grant is weak The capacity of local governments to supervise & monitor project implementation is insufficient The capacity of facilitators is uneven data management and performance indicators are in different quality Complaint tracking & reporting can’t provide the resolution progress • Enhancing Effectiveness of PNPM Mandiri: • Quality improvement of PNPM M implementation (management, MIS, fasilitators, governance) • Improve capacity at the local level (village and sub district). • Integration of participatory planning into regular planning process at the local level • 4. Focus and increase effectiveness of program at poorest sub district.

20. Poverty targeting to the sub-district level is successful (Alatas, 2005) Covered 34.000 poor villages & 60-70% poor in the community Increased basic infrastructure with quality ranges good to very good (MIS; Ekart, et. Al, 2004; Torrens, 2005) Built & improved 27.590 km roads, 6.040 bridges, 6.565 unit of water infrastructure & 2.660 unit sanitation Built & renovated 1.760 schools & 1.450 health post & its network; and provided school supplies & 61.100 scholarships. Rural infrastructure projects have high economic returns (EIRR 39-68%) & costs significantly lower 56 % than equivalent works built through government contracts (Dent, 2001; Torrens, 2005; Alatas, 2005) Over 62 work-days of short term employment from infrastructure activities & more than 1.3 million villages established/ expanded their micro & small enterprises (MIS). Better community capacity in project planning & implementation as well as good governance (McLaughlin et. Al 2007) Corruption rates are low, <1% of total program costs (Price Waterhouse; Moore’s Rowland, BPKP, MIS) Community participation is high. Women participation in meetings & activities ranges from 31-46% (Barron, et.al, 2006) Approx. 60% of those who attend planning meetings & 70% of the labor force are the poorest of community (MIS) Households in poor sub-districts (kecamatan) were 9.2%-11.7% more likely to move out of poverty than households in control areas (Voss, 2007). Unemployment rates in control areas increased by 1.5% more than in PNPM areas (Voss, 2007) E SOME LESSONS LEARNED (from some quantitative studies)

21. SOME LESSONS LEARNED (from some qualitative studies ) • Good governance practices support reform at the village level • Village head has a strong influence in people participation, project legitimacy, & transparency (when people’s present is low, the village head can be very dominant) • Collective action is bigger at the neighborhood rather than at the village  village head, facilitators, & implementation team work as instrument of cooperation at the village level. • People participation expands the community capacity • Participatory decision making process & trainings increase community self-esteem & willingness to cooperate. • Ignorance of complaint handling, especially when the project runs well  community supervision is needed to control the quality of project and good governance • Women participation is greater when decision making is at the lower level ie. neighborhood or groups). • The activities identified are consistent with the community needs or village problems. • Open the opportunity of villagers to help the needy/poorest, although the vote mechanism isn’t always benefiting groups who live far from the village center (ie. irrigation, health post, etc) • The willingness toward CDD’s principles need support of external change  supportive legislative body & local government.

22. THANK YOU for further information, please email to: suprayoga@kemenegpdt.go.id and suprayoga@bappenas.go.id or yogahadi@gmail.com