COMMUNITY DRIVEN DEVELOPMENT AND INSTITUTIONAL SUSTAINABILITY

IN INDONESIA

By:Deputy For Poverty Alleviation and

Community Empowerment

Coordinating Ministry for People’s Welfare

Republic of Indonesia

ADB Regional Workshop on CDD and Institutional Sustainability in Asia21-22 June 2011, Jakarta, Indonesia

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Overview

Why Indonesia develops CDD Program ?

CDD in Indonesia : the PNPM Mandiri Institutional Framework of PNPM Outputs and Outcomes Impacts of PNPM Mandiri Sustaining Institution of PNPM

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Why Indonesia Develop CCD Program? (1)

CDD was developed nationwide in Indonesia as a consequence from Presidential Instruction No. 5/1992 on Backward Village Development (IDT) to alleviate poverty, which was reached to 34% mostly in rural areas, among other 1.236 sub-districts were in poor condition among 3.625 sub-districts

CDD in nationwide through IDT was effectively implemented since 1 April 1994.

Reasons to use of CDD in alleviating poverty mostly in rural areas : Bypassing line of bureaucracy from central to local government, thus

eliminating corruptions on pro-poor programs Increasing community participation through community grouping and

community forums. Traditional Community institutions is strengthened through CDD. Balancing top-down approach of development, to let people could

have their voices in directing development in their locality. CDD programs were on top of regular and sectoral programs that

already implemented and distributed to all villages.

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CDD-IDT was developed and improved and in 1998, the Kecamatan Development Program (KDP) was created and implemented in 900 sub-districts

In 1999, the Urban Poverty Project (UPP), a nation wide CDD project in urban areas was also started in 20 cities.

The KDP and UPP, later in 2007 will be backbone for biggest CDD program: the National Program on Community Empowerment or PNPM-Mandiri.

Hit by the monetary crisis on 1998, the KDP and UPP were only CDD projects that effectively implemented during the crisis and help people from crisis impacts

Why Indonesia Develop CCD Program? (2)

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The Cabinet of President Susilo Bambang Yudhoyono (SBY) decided to continue CDD programs and integrate all CDD programs into a single National Program, called PNPM Mandiri (National Program for Community Empowerment).

In 30 April, 2007, the PNPM Mandiri was launched in Palu City, capital of the Province of Central Sulawesi, as an important program to reduce poverty and to achieve MDGs through community capacity and community initiatives.

Based upon success experiences in integrating CDD programs into PNPM Mandiri, the Government regrouped all pro-poor programs (57 programs executed in 27 line ministries/central bodies) into 3 cluster of pro-poor programs: Cluster I : Social Assistances based on family Cluster II : Social Assistances through CDD, which is under PNPM

Mandiri Cluster III : Empowerment through micro and small economic

activities, in which the program of Credit for People Business (Kredit Usaha Rakyat/KUR) is main program.

Why Indonesia Develop CCD Program? (3)

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CDD Program in Indonesia: The PNPM Mandiri

The Objective of PNPM Mandiri is to alleviate poverty through increasing community income, strengthen their good attitude, local tradition and mentality, increasing their capacity capable to utilise their local potentialities and to reach their self-help

The PNPM is applied to community and not to individuals in order to strengthen the spirit of togetherness ( Indonesian terminology : “Gotong-Royong”)

The goal of PNPM Mandiri : transforming poor community from social problem into social capital and assets.

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CDD Program in Indonesia : the PNPM Mandiri

PNPM Mandiri is the biggest CDD program in the world (World Bank) in coverage and number of active participants (until december 2009, it covers 77,1 millions active participants of PNPM).

PNPM Mandiri in 2011 presents in all sub-districts and it covers 72,700 villlages ( total villages in Indonesia : 78,000 villages), mostly in poor villages with a criteria of eligibility to receive PNPM Mandiri (minimum village poverty rate is 20%).

Community groups created under PNPM Mandiri : 750,000 community groups, among them 22,000 groups for economic empowerment driven by women.

63% of recipients of PNPM are women, they act also as agents of change in village.

Since PNPM launching in 2007 until 2011, the government has disbursed a budget which is amount of : 42.85 Trillion IDR or approximately 4.51Billion of USD.

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Basic Principles of PNPM Mandiri

PNPM Mandiri encourages every community group, participant of PNPM Mandiri program to develop and apply the basic principle of PNPM Mandiri : The power of dream; The power of Motivation; The power of Togetherness.

Once a community group agree to have a common dream and want to realise their dream, they have to implement certain working principles : Planned by community, Implemented by community, and; Controlled by community.

(in PNPM Mandiri, it is prohibited to do through constractors or consultants, community should implement their activities, if they are not capable yet, facilitators will train and teach them and also facilitate them from time to time along the process until they are capable to do with good quality of work).

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PNPM Mandiri Components

PROGRAM CONTAINS:1. A UNIFIED SYSTEM AND MECHANISM;2. A UNIFIED PROGRAM DESIGN;3. BETTER NATIONAL TARGETING OF THE

POOREST;4. DIRECT TRANSFER OF FUNDS; AND5. INCREASED COMMUNITY BLOCK

GRANTS.

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Community Empowerment Process

In PNPM Mandiri

Facilitators

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PNPM Mandiri Implementation Mechanism Design

Local government capacity building and local implementors

PIU of PNPM-Core in Local

Government (APBN/APBD)

PIU PNPM strengthened in Local Government(APBN/APBD)

Road, Drinking Water, Housing, School Building, Hospital, UMK, Revolving Fund, Livestock, etc.

Facilitator/Community Empowerment Process Assistance

Facilitator/Activity Implementation Assistance(prepared by related sector)

BLM(Community

Direct Grant/Block Grant )

+

Community Trust Fund

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Institutional Framework of PNPM Mandiri

National Team for Acceleration on Poverty Reduction

Chairman : Vice PresidentVice Chairmen : Minister Coord. People’s Welfare &

Minister Coord. Economic Affairs

Executive Secretary

Working Group Cluster I Working Group III/People’s Business Credit

Provincial Team forPoverty reduction Coord.

District/Municipal Team forPoverty Reduction Coord.

Working Group Cluster II/PNPM Mandiri

Community Institutions

Government Institution

Community level

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Community Institutions in PNPM Mandiri

Community Forum

CommunityGroup,

ImplementatorOf activity

Unit of ActivityManagement/

Board of Community Self-help

CommunityGroup,

ImplementatorOf activity

CommunityGroup,

ImplementatorOf activity

Facilitators

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POVERTY ALLEVIATION SCHEMES:FROM 3 CLUSTERS TO AN EMPOWERED AND SELF-HELP

COMMUNITY (MASYARAKAT BERDAYA DAN MANDIRI)

Timeframe of Integrated and well Coordinated Poverty Alleviation Programs: 2007 – 2015, to achieve MDGs based upon community driven development and community initiatives

In 2015, each village will have “ participatory community board/forum”, “community development action plan” on economic, social and environmental activities, and “community development trust fund” to support community activities.

Program Cluster I : Social

Assistance andProtection

Program Cluster II:Community

Empowerment

Program Cluster III:

Micro, Small

& Medium Economic Acitivity

Empowerment

Community forum

CommunityTrust fund

CommunityPlan decidedBy community

EndorsedIn comm.

forum

Steps to increase community capacity

Empowered and self-help community

2010 : all villages should estabish particp.comm. board2015 : participtry. comm.board

effective

Empowered and self-help

Until 2010 Until 2015 since 2007 -2015

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Good Governance in PNPM Mandiri

Objectives : To increase accountability and apply as much as

possible the principles of Good Governance ( participatory, transparency, accountability) in PNPM Mandiri program as a patron or “benchmark” for other national program in Indonesia ( Instruction from Vice President of Indonesia)

To increase community and public awareness, involvement and courage to watch and control PNPM Mandiri and other National Programs

To setting up a more accountable system to eradicate all kind of corruptions, misuse of fund and other violation of procedures at all levels.

To avoid all kinds of politization in PNPM Mandiri, as a basis to be followed up by other national, sectoral and local government programs.

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Governance system in PNPM Mandiri

Governance principles are applied in any level, but the sparehead is at the grassroot level or at community level.

The community as voluntary basis, establish a group to watch and to control all process of CDD, this group can request a spot check from time to time, read financial reports, check the cashflow. If some irregularities found, this group can inform and report to the board in sub-district level, then a special forum can be held to check furthermore the case.

If community forum cannot handle the case, then within 2 weeks, the case should reported to district/municipal level. And if 2 weeks this also cannot be handled, the case should be reported to the national team, and a verification team will come with district attorney and police to interrogate related actors. Within 1 month the case should be handled and solved.

If it is related to the case of politization, the national team will handle the case directly, and report to Board of local and National Election Watch (Bawaslu), the political party or the actors who push politization of PNPM program will be disqualified and the actors will be proceed to attorney and judiciary system.

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Achievement of PNPM Mandiri : (1998-2009)Implemented by Communities

Infrastructures :• More than 65,000 km of roads constructed and improved by

communities• More than 12,000 bridges constructed and rehabilitated by

communities• More than 17,000 cleanwater supply system constructed • More than 15,000 units of Sanitation system and sewerages

constructed• More than 17,000 kilometers of irrigations canals

constructed• More than 1.500 traditional markets developed and

improved• More than 1.500 rural electrification activities (electricity

generating, distribution and management, and maintanances) funded by PNPM, including microhydro electricity, renewable energies, etc

• More than 6.700 units of rural health centers built and improved.

• More than 12,000 unit of elementary, and yunior high schools built or reconstructed.

• More than 118,000 scholarships are given to the poor students and pupils.

Revolving fund :• More than 2 million of recipients /year• 22,000 economic empowerment groups led by women.• Rate of return above 98 %, it means NPL is only 0,2%.

Manpower, Employment Creation :• 35 million of employment opportunity created in rural areas • 87.06 million of daywork created from labor intensive

infrastructure development.• 7.8 million of indirect new employment opportunity created• Rate of women participation in all activities : 47 -70%

Sumber: Paket Informasi PNPM Mandiri, 2010

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12,400 hectares land used by activities in PNPM Mandiri with any complaint to request land compensation cost from the landowner. All parcels of land used for PNPM are voluntarily given by landowners.

PNPM Mandiri has contributed 60% to reduce national poverty rate from 18% in 2000 to 13.3 % in 2010.

Achievement of PNPM Mandiri : (1998-2009)Implemented by Communities

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Outcome of PNPM Mandiri

10,000 community groups have received credit from banking system.

Social capital building in village level. Social entrepreneurships in village level. Conflict resolution driven by community: if there is

conflict, community forum is a conveneince place to search win-win solution, with the spirit of togethreness.

Community plan as an engagement for everybody to achieve. Community plan as a social contract whenever external part want to search their supports ( Government, Political Parties, etc).

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Social Impacts and Lesson Learnt from PNPM Mandiri

Social Capital dan Good Governance :PNPM has developed a culture based upon strong participation

and involvement from any stakeholder, encourage transparency and accountabiliy in any PNPM activities :

• Participatory rate of women, economic 70%, social 60%, infrastructure :47%

• Level of community satisfaction on this program : ~95%

1. PNPM has been replicated and developed in more specific purposes and targeted groups :1. Region-based : PNPM-BKPG in Aceh Province, PNPM RESPEK in

West Papua and Papua Provinces, PDPM Palu (CDD based on PNPM but funded by local government budget).

2. Spesific purposes : PNPM Rural Infrastructures Services, PNPM-KP (Marine and Fisheries and coastal poor villages), PNPM-Permukiman (Housing and Human Settlements), PNPM-DT (for Backward and Remote villages), PNPM-Tourism( for villages having tourism objects and ressorts), PNPM –PUAP (for agribusiness in rural areas), PNPM-Desa Siaga ( for Rural Health Services), PNPM-MDK( for community groups living near conservative forests), PNPM-SPADA (for social conflict resolution to conflicting areas), Pansimas (community water supply), Sanimas( community sanit.system)

Sumber: : Laporan Tahunan PNPM Perdesaan dan Perkotaan 2009; Impact Evaluation of the second Phase of the Kecamatan Development Program in Indonesia:World Bank, John Voss, 2008; Local Conflict and Community Development in Indonesia:Assessing the Impact of the KDP: World Bank. Barron, Patrick, Rachael Diprose and Michael Woolcock, 2006

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3. Social Targeted groups : PNPM Generasi Sehat Cerdas (Healthy and Smarty) -

> ( for Mother and children health and welfare). PNPM-PEKKA ( For Female Head of Households). PNPM PEDULI (specific for vulnerable groups ;

trafficking victims, prostitutes, transgender groups, HIV/AIDS sufferers, Leprosy sufferers, other malady sufferers, orphans, handicapped, widows, aged people, street childrens, nomadens, indigenous people, and all marginalized groups)

And in immediate future : PNPM Creative Community, PNPM Pesantren (Islamic school or education system)

Social Impacts and Lesson Learnt from PNPM Mandiri

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Lesson Learnt from Infrastructures Development and access to public services :1. Infrastructures mechanism : it is proven that through PNPM, in

all neighborhood and community infrastructures development the cost-effectiveness is high : Average IRR (based on economic IRR) ~ 52% Construction costs is 30-35% under costs if it were

constructed by contractors. 2. Impacts of PNPM seem stronger in poor regions and on poor

community comparing to non poor regions and non or near poor communities.

3. Community institutions are more stronger, more organized and more focused to the interest of group. Social engagement is high because everybody owns his community and its institutions.

Sumber: laporan Tahunan PNPM Perdesaan dan Perkotaan 2009

Impacts and Lesson Learnt from PNPM Mandiri

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Some Challenges in PNPM Mandiri

Corruptions, mis-use of fund and misprocedures are increasing, done by community groups, local NGOs, facilitators

Disobediance of procedures at community level. Intervention from head of villages, community leaders,

elites in villages. At national level, some ministers and director general,

executing PNPM schemes reject to be coordinated, disobey the procedure and common consensus, these phenomenes are impacted by the appointment of ministers from political parties supporting government.

Politization of PNPM in certain provinces and districts. Too much institutions to give directions and to interven

to PNPM, including from parliament, individuals who has strong influence to gov”t elites or public figures who are closes to government elites.

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Principles to Face Challenges in PNPM Mandiri

STRONG LEADERSHIP, RISK TAKING LEADERSHIP.

A CLEAR POLICY AND REGULATION CONSISTENT IMPLEMENTATION SUPPORT FROM PUBLIC, COMMUNITY, RECIPIENT

OF PNPM MANDIRI. CONTINUES INFORMATION AND

COMMUNICATION TO PUBLIC : BAD NEWS AND GOOD NEWS OF PNPM MANDIRI.

INCREASING PUBLIC OWNERSHIP ON PNPM MANDIRI.

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Institutional Sustainability of PNPM Mandiri in Indonesia

Institutional Framework of PNPM as a key of PNPM Sustainability, driven by empowered community.

The Strategy : Changing social paradigm to business paradigm Strengthening 6.490

community institutions (UPK/BKM) in sub-district level in rural areas and in village level in urban areas, to become communal business units.

Encouraging facilitating these community institutions to develop themselves into 3 business types : cooperatives, syariah cooperatives, and regular microbusiness units.

Encouraging all actors involved and being involeved in PNPM to create a foundation : PNPM foundation, association of PNPM Facilitators, etc. Let them to manage, to safeguard and to continue PNPM with support of Multidonors PNPM Trust Fund.

After 2014, PNPM will be managed by community through these foundation. The Government including local governments will act as foster parent and to protect PNPM continuation and its actors.

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Funding Institution for Future PNPM Mandiri

The PNPM Support Facility will be continued, the grants from multidonors will be managed by reliable and credible international financial institutions, selected from open procurement for PNPM Trust Fund Manager. The Government and World Bank could supervise the fund manager to apply certain principles and criterias adopted from PSF actually (PSF managed by World Bank).

The source of fund for PNPM Trust Fund : from any source, CSR, community, individuals, local government, central governments, etc.

PNPM trust fund is owned by people, by community. This institution will act as alternate funding mechanism beside funding mechanism from government budget.

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Thank You for YourAttention