After the Asian financial crisis 1998, Indonesia faced political upheaval and an economic crisis, with a number of political and fiscal challenges and an increase in levels of poverty. “The devaluation of the domestic currency, the Indonesian Rupiah, by more than 50 percent and the shutdown of many manufacturing shops had a tremendous impact on people’s incomes. Programmes that would bypass the graft-prone top layers of government were sought by the new government to increase the people’s trust."
Similarly, the country’s dispersed population made it difficult to reach isolated regions to provide them with adequate resources. “With 17,000 islands and millions of villages across the archipelago, Indonesia had to reach out to its poorest areas to ensure that these populations enjoy an equal opportunity to grow and develop. Non-income poverty is a serious problem in terms of high malnutrition and maternal mortality rates, inadequate access to safe water and sanitation, and education outcomes. Furthermore, inequality is increasing and disparities between regions remain high. Poverty alleviation has become a priority for Indonesia."
In 2005, the then president, Susilo Bambang Yudhoyono, announced the government's aim of halving the national poverty rate (from 16.7 percent to 8 percent) by 2009. However, this was an ambitious goal, given the lack of cohesion in the country's strategy. “At the time, we had 52 poverty [reduction] programmes, driven by 27 central ministries, but there was no linkage between them.”
In 2006, in order to accelerate government efforts to reduce poverty and to ensure equity and inclusiveness, President Yudhoyono announced the launch of the National Programme for Community Empowerment [Program Nasional Pemberdayaan Masyarakat] (PNPM) as the policy and operational umbrella for all community empowerment programmes in the country. “The PNPM builds primarily upon the previous ten years of successful experience with the Kecamatan Development Programme (KDP) and the Urban Poverty Project (UPP), now the PNPM Rural and PNPM Urban, respectively. Adopting a community-driven development (CDD) approach and with technical and financial assistance from the International Bank for Reconstruction and Development [part of the World Bank], the PNPM is now a national programme covering all villages and cities in the country."
The key project events between 2006 and 2012 included the following:
- 2006 – Aburizal Bakrie, the Minister for People’s Welfare, "unveiled an ambitious plan to combine the KDP and other community-based poverty reduction programmes into the PNPM Mandiri. (In Bahasa, Indonesia’s official language, the term mandiri means self-reliant and independent.) Outside the cities, the programme operated under the name PNPM Rural."
- 2007 – The Indonesian government, the World Bank, and other partners established the PNPM Support Facility (PSF) to provide operational and financial support.
- 2007 – The Indonesian government piloted PNPM Generasi [Generation] in 1,605 villages and 5 provinces.
- 2008 – PNPM Green was established to adapt the PNPM Rural model to address environmental sustainability.
- 2009 – 106 high school graduates were trained as technical facilitators in the region of Papua in the second phase of barefoot engineers.
- 2011 – The PNPM Peduli pilot project was initiated and grant agreements between the PSF and three national civil society organisations were signed.
- 2012 – The PNPM Rural impact evaluation found that, from 2007 to 2010, the programme raised household consumption by poor families by almost USD4 per person per month.
The public impact
The PNPM achieved very positive results in reducing poverty and improving the living conditions of Indonesian citizens. A 2012 report by the World Bank found that the programme had produced significant benefits for a large proportion of the population and exceeded some of its development targets. More specifically, its major achievements included:
- Poverty alleviation – The PNPM aimed to combine two of the government’s leading social programmes. “One of these, KDP, provided block grants for poor rural communities, which could use the money for almost any purpose of their choosing. KDP was already one of the world’s largest CDD programmes, active in roughly half of rural Indonesian villages." PNPM Impact Evaluation showed increased per capita household consumption of about 9 percent on average in PNPM areas, and consumption increases of 19 percent in the poorest 20 percent of the sub-districts.
- Local level governance – Governance improved, especially through the consistent use of participatory planning processes, followed by community involvement and monitoring during implementation. However, this could only be measured at the project level and not at the village level.
- Investments in community infrastructure and microcredits – Access to economic and social services was improved, and the revised coverage target of 4,000 sub-districts was exceeded by almost 10 percent. Almost 50,000 infrastructure sub-projects were completed, which included around in 10,000 education and 5,000 in health, and approximately 30,000 microcredit groups were funded.
- Education and health – PNPM saw increases of around 10 percent in immunisation coverage for 12-23 month-olds, in prenatal care visits, and in deliveries assisted by trained professionals.
Public Confidence Good
Information on citizen satisfaction with PNPM is available only from surveys evaluating the programme after a few years of implementation, and they show an overall approval of the PNPM and its activities.
A 2012 World Bank report stated that the majority of the participants were positive about the initiative. “Project monitoring reports indicated high satisfaction levels from beneficiaries, and the preliminary results of [the] ongoing 2012 Technical Evaluation confirmed high satisfaction levels of beneficiaries regarding functionality and utilisation of infrastructure: 65 percent of beneficiaries surveyed rated functionality and utilisation as High and 24 percent rated them as Average."
Stakeholder Engagement Strong
The many previous poverty reduction programmes in the country had operated in isolation from each other, and PNPM's main achievement was to bring together existing activities under one umbrella programme. This required the collaboration of several actors, including the World Bank, national ministries, local leaders, and the private sector.
International organisations already supporting the Indonesian government provided significant support to the development of the PNPM. “The World Bank and other development partners had supported the KDP, the PNPM’s predecessor, through a series of grants and loans. Home Affairs, together with other government ministries, urged the partners to organise a dedicated trust fund for the support of PNPM. The new partnership was called the PNPM Support Facility (PSF)."
Together with the World Bank, the international donors included the Royal Embassy of the Netherlands, the Danish International Development Agency (DANIDA), the United Kingdom’s Department for International Development (DFID), and the Australian Agency for International Development (AusAID). They contributed between them over USD62 million to the Facility.
The PSF was intended to provide a mechanism for the government and the donor community to support and facilitate the harmonisation and decentralisation of the PNPM programme. It was formed by four integrated units: the Joint Management Committee (JMC), the Technical Committee, the Technical Secretariat, and the Advisory Panel. During 2008, the JMC met four times: “topics discussed included the PNPM Oversight Body’s regional coordination meetings for PNPM Mandiri, monitoring and evaluation, facilitator training, new proposals and the progress of PNPM Mandiri activities.”
At the local level, the Ministry of Home Affairs hired Indonesian firms to implement PNPM Rural on the national and regional levels, and also collaborated with the ministries responsible for leading each of the individual programmes under the umbrella of the PNPM.
Political Commitment Strong
The economic problems facing the country posed a serious challenge for the government, and President Yudhoyono made the PNPM initiative a symbolic goal for his first term. He also received significant support from local government and the international community (see Stakeholder Engagement above).
Local government provided key resources and backing for the initiative. “Support from local government was crucial under PNPM Rural. The central government and development partners provided about 80 percent of the money for each block grant, but districts had to contribute about 20 percent from their own budgets depending on their financial resources."
Clear Objectives Good
The PNPM had clear and measurable objectives. It was a nationwide programme for community empowerment, with the broad aim of accelerating poverty reduction. More specifically, the president had the goal of halving the national poverty rate in four years from 2005.
The overall objectives were to be achieved through:
- “Communities participating in an open planning process
- “The provision of grants to communities directly and transparently to finance an open 'menu' of poverty-alleviation activities
- “Enhancing the capacity of central and local governments to partner with community organisations in the provision of services."
The PNPM used the previous experience drawn from the many poverty reduction programmes that had been implemented in different parts of the country. Similarly, it used pilots to test new initiatives throughout the course of the project.
The PNPM built on two existing poverty reduction models that were operating successfully in Indonesia at the time – the KDP and the UPP. Existing analysis demonstrated that these two outperformed others in their results, with the KDP being particularly effective. It was a CDD programme which provided block grants for poor rural communities. These communities were then able to use the money for their own local projects. “The programme tried to ensure that resources reached intended beneficiaries by depositing funds directly into community bank accounts. Project and budget details were posted on public information boards in the villages to promote transparency, and a village verification team monitored results.”
The KDP's impact on rural poverty was significant. “Households in KDP areas moved out of poverty in greater proportions than those in non-KDP areas. Studies found that most infrastructure projects were high quality, had high economic rates of return, and cost less than if the work had been handled through traditional government channels.”
Similarly, through the course of the programme, new initiatives were introduced by using pilot to test their potential. “Important new goals were to encourage use of the block grants for a wider range of activities – not just public works – and to expand access for the disenfranchised. And beginning in 2007, the PSF's JMC developed several pilot projects to test ways to attain those goals."
The PNPM received substantial resources (both in funding and in technical expertise) from local government and consultants as well as from international partners.
Financial resources were provided by the Indonesian national and local governments, as well as a range of partners from the international community through the World Bank and the PSF. “Government and development partners spent a combined USD4.4 billion on the programme, including for block grants and administrative expenses, such as the wages of more than 9,000 facilitators in 2009 and even more in subsequent years."
The PSF's Technical Committee oversaw some of the key feasibility aspects of the programme's organisation. Some of the main issues that were addressed by the committee included:
- “Development of a Technical Committee work plan to support the JMC
- “Development of a Standard Operational Procedure containing:
- (i) Criteria for activities executed by GOI [Government of Indonesia] or the World Bank
- (ii) Principles of GOI-executed and Bank-executed activities
- (iii) Activity mapping based on execution by GOI or the World Bank
- “The PSF Technical Secretariat will provide reports on PSF financial and activity status regularly.”
The PNPM had a very thorough management structure, established through the PSF, which centralised resources from international donors and local government. Programme facilitators were allocated local tasks and responsibilities and played a major part in the success of the programme.
The PSF was one of the main parties supporting the GOI in the management and technical implementation of the overall PNPM programme, as well as in harmonising donor contributions. The JMC provided the overall policy guidance and review, and its members were representatives from both the GOI and donor countries. “GOI representatives on the JMC come from the National Development Planning Agency or BAPPENAS, the Ministry of Finance, and the Coordinating Ministry for Social Welfare. The JMC chairman is the deputy for poverty, labour and small and medium-sized enterprises, BAPPENAS. The co-chair is a representative of the World Bank, which acts as trustee for the PSF.”
At the local level, the programme allocated facilitators to communities, with responsibilities such as promoting participation, conducting training, and providing technical supervision and financial management. “Empowerment facilitators encouraged participation in PNPM projects and built villagers’ capacity through training and regular consultation. Their partners, technical facilitators, had backgrounds in civil engineering: they reviewed project design and monitored progress on public works projects. Later, districts added a third specialist – in financial management – in part to better advise and monitor women’s revolving-loan fund activities funded by PNPM grants." The facilitators had a broadly positive impact on citizens' participation.
The management structure was relatively complicated, but “while the many layers of controls may be contributing to the administrative burden on facilitators, BKMs [elected leaders] and KSMs [community self-help groups], they appear to be working relatively well".
The Ministry of Home Affairs had consultants operating across the country to carry out monitoring activities, with the support of external advisors. “The PNPM Support Facility had dedicated units to monitor budgets and activities in support of the Ministry of Home Affairs... Monitoring from Jakarta was possible because of regular reporting up the ranks from villages to the central level, but field visits and financial audits and compliance audits were also parts of the oversight strategy."
The World Bank's 2012 report concluded that the monitoring and evaluation (M&E) framework was well designed, being able to inform as well as improve the operations and strategic directions of the PNPM. “The M&E was a comprehensive system relying on internal (by participating communities and the consultants) and external (auditors and independent local NGOs) monitoring.”
Key Performance Indicators were tracked against the Project Appraisal Document to measure the effectiveness of PNPM Rural and PNPM Generasi. On the PNPM Rural evaluation, the research methodology was designed to ensure that the outcomes could be attributed to the programme. A propensity score-matching approach was combined with qualitative studies in 18 villages in 3 provinces in 2007 and 2010 to enhance understanding of the findings from the quantitative analysis.
This enabled the evaluation to conduct difference-in-differences estimates of the PNPM's impact on a set of six groups of indicators:
- Real per capita consumption
- Poverty status
- The use of outpatient health services
- The unemployment rate
- Primary and secondary enrolment rates
- Measures of social dynamics and governance.
As to the PNPM Generasi impact evaluation, a three-wave impact evaluation of the PNPM Generasi pilot was conducted. The evaluation incorporated randomisation in the selection of treatment and control sub-districts. The baseline survey was completed in August 2007, with the midline and endline surveys completed in December 2008 and December 2009 respectively.
The programme also made use of integrated and shared management information systems (MIS). "To enhance accountability, the GOI has also established two monitoring and evaluation working groups that cover the PNPM Urban; one for MIS and one for reviewing and finalising performance indicators for the programme... The open governance approach to the MIS provides an excellent platform for monitoring project performance and potentially a large role as a coordinating mechanism for a wide range of stakeholders."
The PNPM programme involved close collaboration between the GOI and the World Bank and other international partners, particularly through the PSF.
The Ministry of Home Affairs brought together poverty reduction initiatives led by several ministries and coordinated activities and hired external consultants where appropriate. “The Ministry of Home Affairs hired Indonesian firms to implement PNPM Rural on the national and regional levels. The top level, called the national management consultants, was based in Jakarta. Seven regional management consultants units, each responsible for several of the country’s 34 provinces, had offices both in Jakarta and in the provinces. Both groups had specialists in financial management, complaints handling, information management, infrastructure, training, and communication."
A World Bank study showed that most community actors were supportive and participated in programme activities. “On the whole, most respondents in the study perceive that PNPM Urban provides important and needed services. It was clear from the responses that PNPM Urban infrastructure programmes are well-received and beneficial to the community, and viewed as being well chosen and targeted. Community organisations are also perceived to be working relatively well, independent of government programmes and structures. BKM representatives... regularly attend KSM meetings in all sites."