An Overview of PNPM Mandiri Urban Indonesia Government...

USERTypewritten textICDD Phase II

An Overview of PNPM Mandiri UrbanIndonesia Government Effort in Community Empowerment Based Poverty Allevation1

Government of Indonesia has several programs to alleviate poverty based on community empowerment. One of the programs was launched in 1999 with the name of Poverty Alleviation Program in Urban Areas (P2KP) which was initially implemented to overcome poverty based on human empowerment as a respond to 1997-1998 economic crisis. Later evolved into multi-dimensional crisis implemented by the Ministry of Public Works with the support of World Bank.

Starting in 2007, an idea of adopting P2KP to be part of the National Program for Independent Community Empowerment (PNPM MANDIRI) as it has been initiated and therefore since 2007, PNPM MANDIRI – Urban was directed to

support in the efforts of improving the Human Development Index (HDI) and the achievement of Millenium Development Goals (MDGs) target. Then the reduction of poverty up to 50% can achieved by year 2015. In 2008, P2KP fully became National Program for Independent Community Empowerment (PNPM Mandiri – Urban). The Aims of the program, Principles as well as Approach applied in the Village Community Committee (VCC).

PNPM MANDIRI - URBANIndonesia Government Effort in Community Empowerment Based Poverty Allevation

An Overview of PNPM Mandiri UrbanIndonesia Government Effort in Community Empowerment Based Poverty Allevation 2

The Integrated Community Driven Development (ICDD) Project, which is a part of the overall National Program for Community Empowerment (PNPM) was designed in 2009 with the aims to reduce poverty by empowering communities, so they will be an effective development players and partners through a comprehensive, integrated community-based approach. The overall objectives of the project are to (i) improve the socio-economic conditions of communities in the targeted areas, especially women and the poorest, through (a) improving community infrastucture, both physical and social; (b) social activities aimed at the dependent/vulnerable segments of the communities; (c) facilitating economic growth and livelihood development, and (ii) build capacities & skills of communities and their local institutions.

The ICDD implementation in the location that reach at 4886 Wards / Villages at 111 City / District as it was scattered in 14 Provinces of the total 34 Provinces in Indonesia supported by the Islamic Development Bank.

At present, the implementation of PNPM MANDIRI-Urban covered more than 11.000 VCC/BKM/LKM, spread in 1189 sub-districts, 269 cities/districts, and have brought up more than 600.000 volunteers from local areas, as well as 22 million beneficiaries (the poor) throughout 860.000 Self Help Groups (KSM).


GOAL ofPNPM MANDIRI -URBAN

PNPM MANDIRI general goal has been set in PNPM MANDIRI General Guidelines, which is to improve the welfare and employment opportunities of the poor independently.

A specific goal of PNPM MANDIRI Urban is to assist urban poor people in urban villages/wards as the participants of the program to receive benefits from the improvement of the environment and good governance.

PNPM MANDIRI general goal has been set in PNPM MANDIRI General Guidelines, which is to improve the welfare and employment opportunities of the poor independently.

A specific goal of PNPM MANDIRI Urban is to assist urban poor people in urban villages/wards as the participants of the program to receive benefits from the improvement of the environment and good governance.


TARGET of PNPM MANDIRI- URBAN

• To strengthen and institutionalize a credible, inspirational, representative, and responsible VCC/BKM/LKM to support the growth of community’s participation and independence;

• Mid-term Planning of Poverty Alleviation Program (PJM Pronangkis) at the ward/village level, as a tool of realizing a synergy of comprehensive poverty alleviation program and fits with the community needs and aspiration in order to create a healthy, harmonious, own cultural identity, and sustainable neighborhoods;

• Realization of Block Finance (BLM) utilization, including other funds that are right on target, transparent, and accountable;

• Establishment of VCC/BKM/LKM forum on sub-district and city/district level to oversee the existence of harmonization of various regional programs;

• Increment of central and local government’s capacity to partner with VCC/ BKM/LKM in providing services to the poor;

• Realization of technical assistance and


funding contribution according to Index of Fiscal and Area Poverty (IFKD) from the city/district government in PNPM MANDIRI-Urban and establishment of environmental quality improvement; realization of program partnerships between BKM/LKM with various stakeholders;

• Community who are aware, caring, and able to conduct a series of PNPM MANDIRI-Urban activities in their areas independently and continuously according to substance of the implementation guidelines of PNPM MANDIRI Urban;

• Volunteers and Special volunteers (specialization based on interest) as the activator of participatory development process in it’s area and participatory monitoring forum to ensure the implementation of poverty alleviation based on PJM Pronangkis; and

• Raising community and local government’s awareness in structuring more comprehensive neighborhoods, disaster risk management, and community livelihood development.


ACTIVITY COMPONENTS IN PNPM MANDIRI-URBAN

The activities held by PNPM MANDIRI-Urban are directed to improve community’s independence and increase the capacity of the local government and actors.

Community DevelopmentA series of activities to build community’s critical awareness consist of potential mapping, identifying community’s needs and problems, participative planning, community organization, resource utilization, monitoring and maintaining the results that have been achieved.

Block Finance (BLM)Formed in stimulant funds of self-suppor ting given to community groups to fund some activ ities which have been planned by the community in order to improve especially the poor’s welfare.

Capacity Building of Local Government and Actors

A set of activities to increase the capacity of local government and actors or other concerned groups to be able to create a conducive situation and positive synergy in assisting the community, especially those who are poor, to have a decent life. Activities related in this component are as follows: seminars, trainings, workshops, field vi sits that done selectively, and so forth.


Management Support and Program Development.

The component of program development and management support includes activities that assist the government and other concerned groups in conducting activities such as providing consultancy management, quality control, evaluation, and program development.

SCOPE of ACTIVITIES IN PNPM MANDIRI-URBAN

The scope of PNPM MANDIRI-Urban activities is open for all poverty alleviation as it suggested and approved by the community, such as:• Provision and improvement of neighborhood

facilities, social, and economic through labour intensive activities.

• Provision of financial resources through revolving fund and micro credit to improve economic activities of the poor. More attention should be given to women in utilizing the revolving funds.

• Activities related to improving human resource quality, especially the one that aims to speed up the achievement of MDG’s target.

• Capacity building of community and local government through critical awareness, business skill trainings, organization and financial management, and application of good governance.


IMPLEMENTATION STRATEGY of PNPM MANDIRI-URBAN

The approach of Community Institutions and Organizations in PNPM MANDIRI-Urban is set according to the characteristic of target location1. Referring to PNPM MANDIRI-Urban

Guidelines, at urban village/ward level, community organization/ institution approach is implemented.

2. The implementation of PNPM MANDIRI-Urban is set based on the following target location:

• Learning approach (new location), which is the development of community institution and community program planning.

• The approach of strengthening the community institution and community integration program with the local government planning.

3. Conducted by starting the process of Program planning integration at sub-district level.


ADVANCED PROGRAM of PNPM MANDIRI- URBAN

An organization of an area aimed to create an order residential neighborhood that is able to support the walfare of the poor. Neighborhood Development Program has been implemented since in the year 2008 up to the year 2014. In total can be seen in the following table :

The activities to be carried out includes: : construction of green environment facility development, road, drainage, bridge, waste water canal, fisheries facility, water supply, public lightning, waste disposal, livestock facilities, economic facilities, housing, School construction and others.

Neigborhood Development Program - ND

No Fiscal Year

No.of Districts/

Cities

No. of Wards/Villages

Total of Amount

1 2008 15 18 17, 7 billion

2 2009 66 258 254,51 billion3 2012 80 176 172,55 billion4 2013 100 280 65,90 billion5 2014 16 53 2,25 billion


Livelihood program is a continuation of PNPM Mandiri-Urban intervention, which focuses on strengthening and improvement of Self Help Group toward sustainability. This program as a part of Integrated Community Driven Development (ICDD) supported by The Islamic Development Bank (IDB). It provides a productive and creative economic business learning and opportunity for the poor in order to increase their income in more sustainable way.Sustainable Livelihood Program Based on

Community Driven Development (or Program Peningkatan Penghidupan Masyarakat-

PPMK) is one of special intervention program of PNPM Urban to achieve the self-help community (Intervention 6).To assist in strengthening and developing Self Help Group (SHG/KSM) as well as poor people businesses, the Livelihood

/ PPMK program is facilitating them to be able to access various sustainable livelihood

resources. The principles of sustainable livelihood carried out by PNPM Urban by

increasing access of the poor people (SHGs/KSMs) to five (5) livelihood assets as follows:

(1) Human Capital, (2) Social Capital, (3) Natural Capital, (4) Physical Capital as well as (5) Financial Capital.

Livelihood Program


The Objective of the Livelihood Program

To strenghten “The SHG’s/KSMs” Institutions and bussines activities for improving the life of the poor community on self reliance and sustainable manner.Type of businesses implemented by the SHGs/KSMs supported by the Livelihood Block Finance are:

• KUBE (a Group Business) SHG/KSM It is a group of members who have the same type of business and managed by themselves together. All members as shareholders of the business i.e.

• Similar type of business of SHG/KSM It is an individual member who has similar type of business and gather together as a SHG/KSM, i.e.

• Various type of business of SHG/KSM It is an individual member who has various type of business and gather together as a SHG/KSM, i.e.


The Livelihood program is implementing in 596 Wards/Villages for the year 2012 and 845 Wards/Villages for the year 2014. The progress up to April 2015 are as follows :

Progress Implementation :

No Province FY 2012 FY 2014Total Location

Total Block-finance

(million)

Total SHGs/KSM

Total SHGs

members

Total Lo-cation

Total Block-

finance (million)

Total SHGs/

KSM

Total SHGs members

1 Aceh 51 5.100 253 1442 0 0 0 0

2 North Sumatera 76 7.600 350 1877 100 10.000. 259 13243 West Sumatera 46 4.600 21912 1211 62 6.200 186 9464 Riau 15 1.500 71 390 21 2.100 56 2945 Riau Islands 13 1.300 104 344 16 1.600 47 2366 Bengkulu 16 1.600 80 444 9 900 27 141

7 Jambi 10 47 248 20 2.000 54 2808 South Sumatera 38 3.800 163 913 64 6.400 164 8469 Babel 11 1.100 49 252 12 1.200 13 66

10 Lampung 19 1.900 91 498 17 1.700 47 246

11 Banten 46 4.600 234 1226 65 6.500 267 141512 DKI Jakarta 33 3.300 212 1415 57 5.700 166 97813 West Kaliman-

tan11 1.100 53 274 22 2.200 58 303

14 West Java 211 21.100 1.100 6.640 380 38.000 867 4.332

Total 596 59.600 3.026 17.174 845 84.500 2.211 11.407

The Block-Finance allocation for the SHGs FY 2014 only utilized 60% of the amount and will be allocated the rest of the amount 40% in the FY 2015


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To meet the increasing capacity to manage the incomes of the SHGs members, the Livelihood block-finance is allocated for each Ward/Village on the amount of Rp. 10 million. Those amount has been used for Community Trainings (VCC,Units, SHGs members) and Vocational Trainings to

Capacity Building

support the quality improvement of products as well as increasing the capacity of SHGs members to be qualified entrepreneurs in managing their small businesses. For the target groups FY 2012, there were 14.900 SHGs members participating in the training program, while for FY 2014, there were 25.583 SHGs members participating in the training program.


Business Development Center (BDC) - a Pilot Project

Small Enterprises carried out by the SHG’s members have gradually evolved much through mentoring Livelihood/PPMK program of - PNPM Urban - ICDD.

There are 15 districts / municipalities will be selected as a target of pilot. The selected BDC will have function to facilitate in reaching the expansion of market, to increase product quality, business networks and cooperation as it should be built. On that basis, PNPM Mandiri Urban will establish and develop the Business Development Centre (BDC) as pilot in the 15 Cities / Districts.

The purpose of Business Development Center / BDC development, in addition to helping the poor who are members of Livelihood SHGs to be able to increase the bargaining power of productive enterprises, also to improve market access, as well as building a partnership between the Small Entrepreneur businessman with the supreme products businessman in the City / District. It

also realize synergies between policies with the City/ District government programs. To get 15 cities / Districts become pilot locations of BDC, necessary stages of its development activities until 30 April, 2015 is still in the preparatory stage of the selection process that have been carried out by a team of facilitators and the City Coordinator Team in collaboration with the Community.

The result was the 15 Cities / Districts that potentially for the BDC establishment and operationalization selected. To further ascertain the role and function, it is necessary to do the feasibility study and the results of feasibility studies will be as the basis for the establishment of a selected BDC in 15 Cities / Districts. The feasibility study is targeted to begin immediately and BDC was targetted to be formed in the month of September-October, 2015.


Partnership Activities

Partnership is a form of cooperation bet-ween the community represented by the VCC/ BKM with Government, Private Sector, Banking, and other Concerned Groups in reducing poverty.Partnerships that have been accomplished

in PNPM MANDIRI-Urban done by a number of VCCs/BKM with private sectors such as: PT. BFI Finance Indonesia, Rotary Club Jakarta Center, PT. Sun Microsystem and PEPP UNDP, Social Department-Consortium CSR, Corporate Forum for Community Development (CFCD), Community Learning Communication Learning Forum, Oil and Gas Body (BP Migas); Banking sectors like: BRI, BNI, Bank Mandiri, BPR, Bank Daerah, as well as Cooperative Union, Universities, Regional Water Company (PDAM), Industrial and Trade Service Union (Perindagkop), Pawnshop Forum, and others.


The GFDRR aim is to increase awareness and the ability of community together with local governments, in anticipating disaster risk that integrated into the Wards/Villages development plan. This development plan is therefore to be as part of Medium-Term Program (PJM) and Annual Plan (Renta) for poverty reduction program (Pronangkis). Currently there are four locations of GFDRR activities namely: the Padang, Bandar Lampung, Surabaya and Menado Cities. The focus of GFDRR activities, is adjusted by specific potential disasters that might be occured in the each respective cities.Mr. Mohamad Nuryani as a SHG/KSM leader who has women bags making business. In the year 2010, he received the first loans from PNPM Urban amount of Rp. 500.000. As he is a good record for loan repayment,then received for the 2nd loan amount of Rp. 1.000.000 for additional working capital. After PNPM Facilitation through “ Bangun Sejahtera VCC/BKM” Peusar Ward – Tangerang District,

Global Facility of Disaster Reduction and Recovery (GFDRR)

Banten Province, he can expand his business and 3 persons recruited as his labour. In The year 2012 this SHG/KSM was selected to participate in Sustainable Livelihood Program, he can increase the volume of products up to 24 dozen per month as before only 10 to 15 dozen per month. He also can market the products outside the City and also to the Metropolitan City – Jakarta. He hope together with another members of SHG/KSM will get some skills trainings for improving quality of products to meet the market demand nationally as well as internationally.

The lesson learnt gained from the PNPM program , he can as a leader in small group, building sense of solidarity among SHG/KSM members, building trust each other and could support the other members business.


The Islamic Microfinance is a revolving fund management program with shari’a system. Islamic system as another alternative of the conventional system which has been implemented by the Financial Management Unit of the VCC to manage revolving funds of the community assisted by the PNPM Urban. Those community belongs to the SHGs/KSM for supporting to increase their incomes.In the implementation of PNPM Urban - ICDD Phase II, it has been targeted for a pilot in three provinces, where in each province will be implemented in 5 Wards of one City/District. The pilot project is expected to be a trigger and get a better model to be applied to other locations. The aim is to improve access to financial services for the poor in a sustainable manner by using shari’a system. Its guiding principle is adhered to the management and overall service using shari’a system; effective and efficient services; simple, fair, empowering and accountable.

Islamic Microfinance - Pilot Project

PROGRESS IMPLEMENTATIONThe Islamic Microfinance was introduced to the district / city that are interested to apply the revolving funds with shari’a system. There are 3 cities that ready to manage the shari’a system, they are City of Pariaman - West Sumatra Province; City of Bogor - West Java Province and City of South Tangerang - Banten.The Islamic Microfinance starts in 5 villages per city that are willing to change the conventional financial system into the system of shari’a as a pilot PNPM Urban - ICDD.

In practice, the loan / financing is given to individual who are organized in a group called Self-Help Groups (SHGs). The SHG/KSM serve as a mechanism to strengthen the capacity of its members through regular weekly meetings, including as a guarantor of loan /financing through the mechanism of joint liability (tanggung renteng).


The development of services in five villages of one city/district since it’s start from Oktober 2014 up to March 2015 as set out in the following table:


CITY WARD PORTFOLIO at RISK (PAR)

AS PER-MARCH 2015

PARIAMAN CITY

CUBADAK AI SELATAN 0%

0%

SIKAPAK BARAT 79%

SIKAPAK TIMUR 37%

NAREAH I 0%

BALAI NAREH 8%

TOTAL 15%

SOUTH TANGERANG CITY, BANTEN

PONDOK BENDA 100%

0%

JURANGMANGU BARAT 16%

PONDOK BETUNG 10%

PONDOK KACANG TIMUR 98%

BUARAN 0%

TOTAL 25%

Total

BOGOR , WEST JAVA

PASIRMULYA 0.00% 3.02

0% 6

SEMPLAKak 59.6 4.29%

SINDANGSARI 0.00%

CIBULUH 2.91%

CIPARIGI 1.85%%

PAR IN TOTAL AT 15 WARDS 13.09%

Activities Location


Community Cycle


JL. Pattimura No.20, Kebayoran Baru Jakarta Selatan, Indonesia - 12110

MINISTRY OF PUBLIC WORK AND HOUSINGREPUBLIC OF INDONESIA

PROJECT OFFICE

E-mail: [email protected] Handling SMS: 0817 148048

Jl. Penjernihan 1 No. 19 F, Pejompongan Jakarta Pusat, Indonesia - 10210www.p2kp.org

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