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Promoting and Sustaining Multi-stakeholders’ Process

To Make Local Governance Works for Poverty Reduction

In Less Developed Region

Case of Nusa Tenggara Barat1

Dr. Astia Dendi2

Following the 1997’s financial crisis, Indonesia embarked on implementing “big bang decentralization policy” devolving massive functions and responsibilities to local governments. Some previous studies revealed that the impacts of decentralization to local governance and development vary considerably among regions. In contrast to numerous recent studies emphasizing the central government’s perspective, this study examined local perspectives and processes to shape a dynamic local governance as an attempt to promote pro-poor and sustainable regional development. We analyzed empirical evidence from Nusa Tenggara Barat province focusing on concept and prospects of Multistakeholders Fora as a local governance instrument to pursue pro-poor local-regional economic development (LRED) policies and programmes. Within this focus we explored following questions: How did the concept of Multi-stakeholder’s Fora evolve in the region?; How did the Fora define priorities for collaborative actions and allocate responsibility sharing?; What roles did the Fora play in making local governance and markets work for the poor?; and What factors are critical to sustaining the Fora? This study uncovered that the Multi-Stakeholder Forum, as it was developed in Nusa Tenggara Barat, was a prospective role model to pursue pro-poor LRED objectives. Furthermore, the study identified factors critical to sustaining the multi-stakeholders’ process and suggested ways to address them applying political economy perspective.

Key Words: Local economic development, local governance, multi-stakeholder

process, political economy, regional development.

1 A paper accepted for oral presentation at the International Conference on “Political Economy of Regional Development, organized by Indonesian Regional Science Association (IRSA) and Agricultural University of Bogor, held in Bogor, 21-23 July, 2009. www.irsa.or.id 2 Correspondence: Dr. Astia Dendi, GTZ Senior Advisor for Regional Development, Good Local Governance/ Decentralization Programme in Nusa Tenggara Barat. Email dendi@gtz.or.id. Fax: +62370626049. Internet www.gtz-decentralization.or.id

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Contextual Issues and Regional Overview

The Indonesian economic development before the 1997’s Asian financial crisis

had not only brought about some notable improvements but also some undesirable

outcomes. For more than two decades, the strong and persistent focus of development

policy in Indonesia on high economic growth had resulted in substantial improvement of

quality of life along with increasing income per capita, reducing poverty and

unemployment. However, there had been little attention to build the capacity of local

government and private as well as civil society institutions in the past. This led to

inefficient and ineffective resource allocation, uncompetitive private sector and

natural resource degradation. Prominent scholars and politicians believed these were

underlying factors, among others, of the recent financial crisis faced by Asian countries

including Indonesia.

Following the 1997’s financial crisis, Indonesia embarked on implementing “big bang

decentralization policy” devolving massive functions and responsibilities to local

governments. The decentralization policy, which began in 2001, has led to the

devolution of authorities to local governments. Thus, theoretically these sub-national

governments have more opportunities and responsibilities to develop their regions

according to local needs and aspirations and in cooperation with civil society

organizations. Within the framework of decentralization, the Indonesian government has

implemented many efforts toward better service delivery, sustainable growth and poverty

reduction. Local governments, being at the front line of service delivery, are the

proponents of the democratic process by involving citizens into the local governance

process. Indeed, a multi-level-approach and cooperation between governmental

representatives, the private economic sector and of civil society are necessary.

However, the implementation of decentralization and governance policies has not

always been a smooth process and significant challenges remain. Some previous

observations (KPPOD and the Asia Foundation 2007; Kerstan et al., 2004; Dendi and

Zaini, 2007) revealed that the impacts of decentralization to local governance and

development vary considerably among regions.

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To address the above mentioned challenges, the degree of coverage and

the quality of selected public services, particularly health, education and local

economic development, should be increased. These call for institutional and

capacity development at all levels, but more insistent at local and regional levels.

The islands of West Nusa Tenggara (NTB) mark the natural point of transition

between the flora and fauna of Western and Eastern Indonesia. The two largest islands

in the province, namely Lombok and Sumbawa, earmark the difference of the northern

part of the province, which is mountainous and lush with trees, with the southern and

eastern parts are arid and covered by savannas.

The province of NTB is home to about 4.2 million people. The majority of the

population is Islamic and originates from the Sasak tribe, predominantly situated on

Lombok island, while the tribes of Bima and Sumbawa are the largest ethenic group on

the island of Sumbawa. The socio-cultural pluralism is also obvious in the use of

language: Sasak, Mbojo,, Samawa, Balinese, Bugis and Javanese languages are used

respectively in daily communication. The plural society can be considered as an

invaluable asset as well as a challenge towards the region’s development.

West Nusa Tenggara’s economic performance is significantly weaker than those of

its neighbouring provinces. Despite its predominantly arid climate, agriculture remains

the backbone of people’s livelihood and of local economic development. Agriculture

contributes nearly one third of the Gross Regional Domestic Product (GRDP). The

regional economy of NTB has been growing moderately with an increase of 5% (BPS,

2007) in recent years.

However, a relatively high percentage of the population, approximately 27.17% in

2006 are living below the poverty line. A more recent official report (BPS, and

BAPPEDA, 2008) revealed a considerable decreasing trend of poverty incidence in

Nusa Tenggara Barat to 24.99% and 23.81% in 2007 and 2008 respectively. Moreover,

unemployment rates in the region remain considerable although sligthly decreasing.

Furthermore, it turns out that, although the Human Development Index (HDI) of NTB

has shown a slight increase during recent years, it remains among the lowest in

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Indonesia. A high level of poverty, unemployment and social inequality coincides with a

high rate of school drop-outs and a high illeteracy rate (16% for men and 29% for

women) which is higher than the national average. Furthermore, more than two thirds of

the illeterate people live in rural areas. In line with poverty rates, malnutrition and infant

mortality levels are rising.

While decentralization in theory offers a vast potential to cope with these problems, in

order to stimulate local and regional economic development and reduce poverty, a

cohesive and operational strategy for local governments and private sector stakeholders

is required. Toward these objectives, the Good Local Governance (GLG) project

supported by GTZ (German Technical Cooperation) and its counterparts at national and

regional level develop a number of governance instruments including the Good

Governance Award, Pro-poor Value Chain Analysis (VCA) and Local Economic

Governance Forum (LEG Forum). More specific objectives and scope of the paper is

explained in the following section.

Objective and Scope of the paper

The paper explores empirical experience on stakeholder’s initiative from Nusa

Tenggara Barat province in designing and fostering pro-poor local and regional

economic development (LRED) approach. The study aimed at understanding concept

and prospects of Multi-stakeholders’ Forum as a local governance instrument to pursue

pro-poor LRED strategy and governance services. Within this focus, following

questions were addressed: How did the concept of Multi-stakeholder’s Fora evolve in

the region?; How did the Fora define priorities for collaborative actions and allocate

responsibility sharing?; What roles did the Fora play in making local governance and

markets work for the poor?; What factors are critical to sustaining the LEG Forum, or in

a broader perspective and What lessons can be learned to promote the approach to

other regions with similar characteristics?

Evolving Perspective on Good Governance

In the framework of decentralization, the notion of good governance has been

continuously debated. However, scholars and policy makers increasingly accept that

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good governance is essential instrument to achieving decentralization objectives. Many

proponents of pro-poor local/ regional economic development approach also share such

perspective. Recently, however, there is a growing number of literatures that adopt or

promote the UNDP’s notion of governance and good governance criteria. UNDP (1997)

describes governance as the exercise of economic, political and administrative authority

to manage a country’s affairs at all levels; it comprises the mechanisms, processes and

institutions through which citizens and groups articulate their interests, exercise their

legal rights, meet their obligations and mediate their difference. Governance, thus, has

three legs (UNDP, 1997), namely economic, political and administrative. Economic governance includes decision making processes that affect a country’s economic activities and its relation with other economies. Economic governance would,

therefore, have far reaching implications to equity, poverty and quality of life. Political

governance is the process of decision making to formulate policy. Administrative

governance is the system of policy implementation. Furthermore, the UNDP’s notion of

governance maintains that governance encompasses not only the state but also the

private sector and civil society organizations3.

Along with the concept of governance, UNDP (1997) emphasizes that core principles

of good governance are participation, transparency and accountability. In addition, good

governance is also effective and equitable and it promotes rule of law. Furthermore,

good governance ensures that priorities setting in political, social and economic

activities are based on broad consensus in society and that the poorest and the most

vulnerable people are heard in decision-making over the allocation of development

resources.

3 UNDP (1997), defines that the state includes political and public sector institutions along with

argument that this definition consistent with its primary interest to focus on how effectively the state serves the needs of its people. Meanwhile, it defines that private sector covers private enterprises (manufacturing, trade, banking, cooperatives and so on) and the informal sector in the marketplace. Civil society encompasses individual and groups (organized or unorganized) interacting socially, politically and economically regulated by formal and informal rules and laws.

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Theoretical and Conceptual Framework to Understand Local Economic Governance Forum

Local Economic Development (LED) and Governance Perspective

Local economic development should not be seen as exclusive, but as an integral part

of regional development. GTZ (Rücker and Trah, 2006) characterized direction and

criteria of local economic development initiative, namely:

- Stimulate growth of local economies and create new job markets,

- Make the best use of available local resources,

- Create space and opportunities to balance supply and demand, and

- Develop new business opportunities.

More recently, however, a group of experts on behalf of GTZ (Grossmann, and

Ellwein et al., 2006:1) defines local and regional economic development as:

“…is a process to mobilize stakeholders from the public and private

sectors as well as from civil society, to become partners in a joint effort to

improve the economy of a defined subnational territory and thus increase

its competitiveness”.

The GTZ’s notion of LRED clearly departs from conventional “stand-alone private

sector development interventions” and pursues multi-stakeholder process. This means,

as these scholars argue, that it is not what we are doing that makes LRED different from

other conventional and blue-print interventions, but how we are doing it.

Meanwhile, UN-Habitat (2005:8) defines local economic development (LED),

“…is a participatory process in which local people from all sectors work together to stimulate local commercial activity resulting in a resilient and sustainable economy. It is a way to help create decent jobs and improve the quality of life for everyone, including the poor and marginalized”.

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The UN-Habitat’s notion of LED is coherence with the pro-poor LED perspective

introduced by GTZ in Nusa Tenggara regions (Kerstan, and Dendi et al., 2004). These

scholars emphasized that pro-poor local economic development (LED) should focus on

achieving three inter-connected goals: (i) creation of economic growth and job markets;

(ii) reduction in the number of poor people, and in turn (iii) realization of sustainable

livelihoods. To achieve these goals, focus is on three strategic dimensions:

attractiveness, resilience and competitiveness of the local economy. These three

dimensions do not exist in isolation, but form an interdependent chain. Thus, all factors

that generate attractiveness and resilience are fundamental to creating competitiveness.

These emerging definitions and strategic frameworks of local and regional economic

development led to the identification of three essential elements of LRED, namely: (i)

Participatory process; (ii) Capacity building at all levels; and (iii) Sustainable utilization of

local potential (resources). In addition, LRED approach emphasizes local control and

ownership. Thus, local and regional economic development partnerships integrate

efforts to stimulate actors, organizations and resources, while developing new

institutions through dialogue and strategic activities.

Local economic development and good governance

In the framework of local economic development, the United Nations Human

Settlements Programme (UN-Habitat, 2005: 19) defines governance as:

“…is the sum of many ways individuals and institutions, public and private, plan and manage the common affairs of a city or other local area. It is a continuing process through which conflicting or diverse interests may be accommodated and cooperative action can be taken. It includes formal institutions as well as informal arrangements and the social capital of citizens”.

The UN-Habitat’s notion of governance emphasizes process, meaning that it focuses

on how these diverse actors with different priorities make decisions, given their

complex relationship. Adequate understanding of formal and informal decision making

process at local/ regional level is critical for promoting multi-stakeholders’ initiative to

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pursue pro-poor local/ regional economic development objectives. In this line of

perspective UN-Habitat (2005) argues that a critical link between good governance

concept and local economic development is the need to establish a business enabling

environment.

Furthermore, UN-Habitat argues that democratic system is necessary but does not

always guarantee a successful local economic development. The foundation for success

is capable institutions at local level. Along these lines of arguments, UN-Habitat (2005:

page 20-21) suggests that strong and appropriate institutions should be established

along with support for institutions and strategies which combines governance and

culture. In addition, a successful LED needs clear decision rules and procedures such as

effective business codes, land-use zones that promote long-term plans rather than

politically expedient, short-term decisions. Moreover, UN-Habitat (2005) suggests that

the political environment must be safe; poor or corrupt economic policies and weak

government systems can negatively affect local economic development by raising risks

and increasing production costs. Without a safe investment environment, local human

and financial capital will migrate away from the local area, and it would be difficult for

the area to attract outside investors. Furthermore, enabling environment should have a

high ease of business entry and efficient regulation-enforcement (Un-Habitat, 2005).

Public choice and new Institutional economic

Since the days of classical political economy, economists have been interested in

issues of individual choice of actors in given institutional settings, namely in decisions

on allocation of resources in markets (Kirchner, 2007). Issues of the institutional setting

as such institutional issues have been touched but have not been analyzed in full detail

(Kirchner, 2007). It has been understood that private property, freedom of contract and a

stable currency have been necessary prerequisites for functioning markets (Kirchner,

2007). Thus, this line of economic perspective emphasizes decision making by market participants as the main topic of economic. Economic could, therefore, be

understood as a branch of general theory of individual choice (Kirchner, 2007).

Furthermore, the notion of individualism has been supported by two fundamental

assumptions namely scarcity of resources and self-interested rational behavior

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(Kirchner, 2007). The notion of methodological individualism combined with these two

fundamental assumptions establish ‘economic paradigm’.

The concept of public choice expands the application of economic paradigm to non-

market institutions, e.g. the state with its voting mechanism and its bureaucratic system

(Kirchner, 2007). Thus, the public choice approach in the analysis of politic and the

state considers voters, political decision makers, bureaucrats and legislators as self-

interested rational decision makers.

Figure 1 presents a conceptual framework to explore and understand a multi-

stakeholders’ interaction in the framework of promotion of pro-poor local and regional

economic development (LRED), and guided by three core principles of good

governance. The framework hypothesizes that self-interested rational actors voluntarily

engage themselves in a multi-stakeholders’ platform for collective learning, collaborative

decision making and responsibility sharing to pursue their shared interest, namely pro-

poor local/ regional economic development (pro-poor LRED) objectives. There has no

consensus been reached on the definition of pro-poor strategy. Nevertheless, in this

paper, the pro-poor concept emphasizes several key principles (Kerstan, and Dendi et

al., 2004): (i) investment in improving the human and social capital of poor people; (ii)

policies and services that result in the widespread and sustainable availability of people's

basic needs (access to food, clean water, housing, health and education); (iii) policies

and services that reduce transaction costs, so giving poor people more opportunities to

obtain employment and/or greater value added from their own enterprises; (iv)

increasing poor people's access to economic resources (capital, land/space, tools of

production, market information, and so on); and (5) environment-friendly development

that conserves or improves ecological function and the capacity of natural resources to

produce.

The term “platform” as I use in this context represents and combines two

fundamental concepts, namely institution and organization respectively. Institutions as

North (1990: 3) defines are the rules of the game in a society or, more formally, are the

humanly devised constraints that shape human interaction. In consequence, North

(1990) argues, institutions structure incentives in human exchange, whether political,

social or economic. Institutional change shapes the way societies evolve through time

and hence is the key to understanding historical change. Institutions include any form of

constraint that human beings devise to shape human interactions; it can be both formal

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constraints such as rules, and informal constraints such as conventions and codes of

behavior (North, 1990). Meanwhile, organizations are group of individuals bound by

some common purpose to achieve objectives (North, 1990: 5); they include political

bodies (political parties, the Senate, a city council, a regulatory agency), economic

bodies (firms, trade unions, family firms, cooperatives), and social bodies (churches,

clubs, athletic associations), and educational bodies (schools, universities, vocational

training centers). In view of these perspectives, a Local Economic Governance Forum

should be understood not only a process (regular events of stakeholders’ dialogues as

many people used to understand it but a systemic organization to pursue certain local/

regional economic development objectives through promoting dialogues and

collaborative actions at local and regional levels.

Figure 1: A conceptual framework of good local economic governance

The attractiveness and competitiveness dimension of a region (an economy) shaped by

many factors which, among others, include the economic structure and enabling

environment as discussed in the previous sections in line with the perspective of UN-

Habitat (2005). Meanwhile, the concept of resilience was adopted from a theory

pioneered by ecologists that see the economy as an ecosystem (ecological nation) that

is striving to maximise the long-term value of limited land resources by developing

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interdependent biological systems (Kerstan et al., 2004). In other words, diversity and

interdependence of species and environments is a key factor in building the long-term

productivity and resilience of a system. Resilience is a dynamic concept. Put simply, the

resilience of an economy refers to the ability of an economy to adapt and recover from

economic and non-economic pressures. In an ever-changing environment, in which

opportunities and risks may appear at any time, each economic unit, be it the household,

company or region, needs to be prepared. For enhancing resiliency of an economy,

therefore, it is necessary to establish cohesive interdependency and collaborative

actions among all stakeholders, foster capacity building at all levels, promote prudent

management and use of natural resources, develop scalable diversity of both products

and markets, and to establish policy that promote equity.

The Local Economic Governance Forum: Evolving concept and some evidence from West Nusa Tenggara

While numerous traditional kind of community institutions have been existing,

establishment of converging institution at community, local and regional levels to

pursue shared objective to improve governance and the provision of public services

related to economic development could be considered as a recent innovative invention

in eastern Indonesia. Policy implementation in the past had not only resulted in

significant improvement in livelihood of the people but also some critical issues

including social inequity and environmental destruction. As well, the vulnerable groups in

society, both in rural and urban areas, failed to have full access to public services and

missed the intended benefits of the past and the ongoing development activities. While

decentralization contains a high potential to cope with these problems, a cohesive

and replicable strategy for local governments and development organizations remains

to be set up. Therefore, instruments and a platform for fostering stakeholders' dialogs,

collective learning and formulation of appropriate policies and programs that reduce

vulnerabilities and poverty are needed. These led some international development

organizations, e.g. the German Agency for Technical Cooperation (GTZ GmbH), local

scholars and civil society leaders to promote stakeholder forum as a means of

addressing these challenges.

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Figure 2: A generic model of LEG Forum membership elements

Figure 2: Typical Local Economic Governance Forum membership

Along with the perspective on role of Stakeholder’s Fora described in the early part of

this section, local stakeholders in some districts/ municipalities established LEG Forum

at district level. A LEG Forum consists of individual with strong interest in fostering pro-

poor local economic development, namely the member of civil society organization,

member of local parliament and non-government organizations, staff of local

governments, member of producer's association as well as local business association.

Theoretically, the Local Economic Governance Forum is an instrument that can be

used by local governments, small and medium-sized enterprises and civil society

organizations in order to improve structures and processes of public service provision. A

better business climate was devised as an immediate result of this concerted effort,

which should finally help alleviate poverty. Qualified intermediary organizations and

eligible local economic development consultants were involved to advise sub-national

governments, legislatives and other relevant stakeholders. This expectedly could result

in the establishment of improved LED stakeholder forums and to an improved quality of

LRED dialogs and networks.

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In practice, the LEG Fora were established through participatory processes.

Typically, it begins with the pioneers' approach to envision the local stakeholders

regarding the need for and possible benefits of a LEG Forum through peer-to-peer

learning or informal communication approach. This is a critical stage of the forum

establishment; but once the local people or community members share the vision, then

the next steps will be more workable. It turned out that the establishment of a LEG

forum was neither a linear process nor it was a blue-print approach; it involved

participatory processes in situation analysis to understand challenges and opportunities,

defining common issues to be addressed (missions and objectives) as well as to agree

on a realistic collaborative actions plan to be implemented toward achieving expected

objectives and impacts. Figure 3 illustrates typical process of LEG Forum

establishment as it was implemented in Bima and Dompu district respectively (Dendi et

al., 2007).

I will refrain from giving explanation that is more detailed on LEG forum

establishment processes, and will proceed with the description of empirical

experience of existed LEG Forums in Nusa Tenggara Barat region.

Figure 3: Typical process of establishment and development of multi-

stakeholders’ LEG dialogues and collaborative action

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In Dompu district (West Nusa Tenggara province), the local stakeholders

established LEG Forum in 2003 within the framework of support to local governance

sponsored by the Deutsche Gesellschaft für Technische Zusammernabeit (GTZ)

GmbH- the German Agency for Technical Cooperation. The role of GTZ was on

conceptualizing the LEG Forum, facilitating the multi-stakeholder process toward

establishing LEG Forum, and developing technical and management capacity of the

forum members. Since then, the LEG forum has been active in local economic

development (LED) processes in the district, ranging from situation analysis, awareness

building among local stakeholders, organizing stakeholders' dialogs or policy debates,

being active in LED planning at district level. Being consistent with pro-poor

development, I recently observed evidence of significant role and contributions of the

LEG Forum in Dompu district to mobilize local resources as well as improve access of

the micro and small enterprises (MSEs) to LED services and to prospective regional

markets. To mention some of the results, the LEG forum in Dompu had made the

establishment of a cooperative unit, namely Koperasi Permata Bahari, for the deprived

sea weed producers in a remote island (Bajo island of Kwangko village) in Dompu a

success and then had helped link the cooperative to a buyer company (seaweed

exporter) in neighboring province (Bali). Access to such regional market allowed the

seaweed producers and small local traders to enjoy higher value-added and become

less vulnerable. Author’s recent interview with the head of Cooperative Union, namely

Syarifudin4, revealed that all cooperative members as well as village traders of

seaweed were able to reap benefits from direct marketing to Bali and from the

international market dynamics. In the early of 2006, the Cooperative Permata Bahari

was only able to supply 10 metric tons of seaweed per month out of 300 metric tons

demanded by a buyer company in Bali (PT. Indonusa Algaemas Prima) at a price

range between Rp. 5,000 to Rp. 6,000 per kilogram depending on quality and price at

international markets. More recently, the normal price of seaweed in Bali market

varied from Rp. 7,500 to Rp. 9,000 per kilogram. The Permata Bahari Cooperative

informed the author recently that during the second semester of 2008, it enjoyed extra

ordinary seaweed price, varied from Rp. 15,000 to Rp. 19,000 per kilogram, due to 4 Personal interview with Syarifuddin at Hotel Grand Legi, Mataram, on 25th of April, 2007. More recent data regarding success story was derived from author’s recent correspondence with Syarifuddin (6 November, 2008) as well as author’s observation and interview with a number of key resource persons from LEG Forum in Dompu and a number of personnel of the district government of Dompu.

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supply deficit in the international market resulting from harvest failure in several other

exporting countries such as Cambodia and the Philippines. Two years after its

establishment, Permata Bahari Cooperative doubled its capacity to supply the need of

Buyer Company in Bali, approximately 25 metric tons of seaweed per month. Even

more, during 2008, Permata Bahari could increase its ability to supply approximately

30 metric tons of seaweed to its buyer company in Bali, of which approximately 60-70

per cent of this quantity was produced by the cooperative members. In addition, it

turned out, that the number of households (of seaweed producers) that joint Permata

Bahari cooperative increased remarkably from 20 households (2004) to 45 households

(2008), out of approximately 200 seaweed producing households in the area. Nearly all

of these seaweed producers, however, had become customers of Permata Bahari

cooperative. In a few coming years, the ability of Permata Bahari cooperative to meet

the demand of the buyer company in Bali seems to increase considerably taking into

account the growing interest of middlemen traders from Dompu district as well as from

outside Dompu, e.g. Bima district and Bima city respectively, to sell seaweed to

Permata Bahari Cooperative.

Indeed, seaweed cultivation in Bajo islands, which administratively belong to

Kwangko village of Dompu district, began in the midst of 1990s, pioneered by a number

of fishermen who found some growing seaweed in the territory of Sumbawa district.

These fishermen took home some planting materials and grew it in their village territory.

Bajo islands shared about 50% of the total population of Kwangko village. Two years

after first seaweed planting in Bajo, nearly all 200 households leaving in these small

islands engaged themselves in growing seaweed and since then seaweed has become

primary income source of these households. However, lack of knowledge and capital

besides weak community’s organization and poor accessibility of the area constrained

them to creating a more economically viable and profitable seaweed production. Some

traders pioneered establishment of seaweed value chain to outside region, particularly

to Bali province. These traders, however, failed to maintain high quality and

economically profitable scale of seaweed supply to buyers in Bali.

In the end of 1990s, before the concept of LEG Forum was developed, GTZ

identified Kwangko as a poor village and included it in pilot areas for poverty reduction

initiative adopting local economic development approach. The end of 1990s signified

the first phase of GTZ interventions in Kwangko during which GTZ recruited a young

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undergraduate scholar and assigned him to work in the village as Village Motivator or

Change Facilitator. In a later stage, GTZ and the district government of Dompu jointly

enhanced community’s commercial initiative by stimulating collaborative action to

establish self-help groups, collective fund and post-harvest handling infrastructure for

seaweed since 2001. In addition, GTZ and the district government of Dompu provided

relevant technical training as well as managerial training for community members in

Kwangko village. Figure 4 summarizes role of involved actors including the LEG

Forum in pursuing pro-poor local economic development (LED) objectives since the

end of 1990s.

The success story in Kwangko village among others, arguably stimulated the LEG

forum and local policy makers to develop and launch mass program of seaweed

production and governance services, namely “Gerakan Darul Muttakin”. The

programme was launched in 2007 in which for its first phase (2007-208) the local

government together with local parliament approved a substantial amount of budget

Figure 4: An example of role sharing in a multi-stakeholder process to pursue pro-poor LRED objectives

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(approximately Rp. 1.5 billion or about 150,000 US dollar) for the provision of training,

inputs such as improved planting materials, infrastructure for post harvest handling,

support market promotion, etc. The Darul Muttakin initiative set a target to engage as

many as 1000 farm-households in producing seaweed toward the end of 2009. It

targeted to increase the production of seaweed by at least 8,000 metric tons in the end

of 2008. Toward the end of 2009, the total increase of production through Darul

Muttakin initiative was targeted to achieve at least 24,000 ton, assuming average

production of 32 ton per hectare per year year. Toward these goals, the district

government of Dompu targeted to extend seaweed cultivation by 250 and 500 hectares

in 2008 and 2009 respectively.

Meanwhile, a LEG Forum in district Bima (West Nusa Tenggara province)

established in 2003 had shown some prospective roles and contributions to pursue pro-

poor local economic development objective through strategic planning. Through a

further desk study (Jefris and Mahman, 2006) combined with selected key informants

interviews we found a pattern of LEG Forum’s role in Bima as presented in Figure 5.

Figure 5: Establishment and role of LEG Forum in Bima district

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Furthermore, this study identified that LED stakeholders in Bima district developed a

thematic Forum for small handicraft and home industry entrepreneurs, namely

FORMAT─Forum Bima Kreatif, in addition to the existed “broad-based LEG Forum”.

Local intermediary organizations, namely CeDES (Center for Development Studies) and

the Regional Council of Handicraft Promotion (DEKRANASDA) played active role in the

establishment of this Forum. In addition, GTZ and its district government counterpart

(the district government of Bima) also shared responsibility to support establishment of

the Forum through Good Local Governance and Decentralization Programme. This

newly established thematic Forum were already played substantial role in organizing

stakeholder’s dialogues and in stimulating collaborative resource allocation for collective

actions together with DEKRANASDA and CeDES. The Forum assisted the local

producers to explore and get access to new market opportunities, particularly for the

case of women-produced handicrafts and seaweed. To mention some examples, the

conceptual support and facilitative role of the LEG Forum (FORMAT), made the

promotion of women-produced small industry products including weaving products,

jewelry products and natural bees honey during the recent Jakarta’s 11th International

Handicraft Trade Fair. (INACRAFT from 22-26 April 2009) a greater success than it was

in the past with a total revenue more than one billion Indonesian rupiah mainly from

direct transaction during the event. In addition, participating producer’s groups in

INACRAFT event had help establish marketing links and even starter transaction

contracts between these producers and some buyer companies5. The LEG Forums

including the FORMAT have been playing active role and contributing substantially

to developing midterm development plan as well as the annual actions plan to

develop local economy and reduce poverty. Furthermore, Forum Bima Kreatif in

collaboration with the Center of Development Study in Bima (CeDES) was

conceptualizing and organizing stakeholders’ dialogues toward establishing inter-

district/ municipal cooperation among Bima city, Bima and Dompu district respectively.

As the Forum and CeDES envisaged, such inter-municipal cooperation should first

focused its attempts to creating a more conducive local/ regional business climate.

Therefore, the first and second round stakeholders’ dialogues set a focus on 5 Author’s interview with Arief Rachman (Executive Director of the Centre of Development Studies-Bima) and H. Nurdin (Head of the Small Industry Forum, namely Forum Bima Kreatif) on 27 April in Mataram on their way home to Bima after their participation in the 11th INACRAFT in Jakarta. See also www.kabarindonesia.com with an article uploaded in the website on 30th of April 2009 entitled “Produk Kerajinan Bima Diminati”.

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developing common understanding on existing regulatory frameworks and their

impacts to local and regional competitiveness. The next stakeholders’ dialogues was

expected to accomplish a regional workshop to present the results of previous

roundtable discussions and explore workable solutions to creating more conducive

business climate and ultimately achieving more pro-poor LRED outcomes.

Meanwhile, the government of Mataram has endorsed the establishment of an LEG

Forum at city level (so-called Tim PEL) with conceptual support from GTZ (through

Decentralization and Good Local Governance program) and the Indonesian National

Development Planning Board (BAPPENAS). The Forum played active role in organizing

dialogs to stimulate collective learning and allocation of resources for collaborative

actions to support pro-poor local economic development initiatives. Influenced by the

LEG Forum, the Municipal Development Planning Board (BAPPEDA) of Mataram in

collaboration with a local Foundation for Community Development (namely STIGMA)

and the Regional Council of Handicraft Promotion (DEKRANASDA) supported a joint

initiative to establish a Women Entrepreneurs Forum (namely Forum Putri

Sangkareang). Furthermore, Forum Putri Sangkareang accomplished an initiative to

establish a women cooperative union involving all forum members as the Board of

Founders. The author identified during 2008 and early 2009 that these initiatives had

considerably enhanced visibility and participation of the marginalized groups in policy

dialogs and access to economic-related local government’s services including

managerial and technical training courses, information on market opportunities and

provision of technical tools and startup capital to eligible micro and small entrepreneurs

among others6. By early 2009, at least 115 women who run micro or small-scale

industry had accomplished a 3-day training course in business planning and

cooperative management, of which approximately half of them were from Mataram

city. The enhanced visibility and participation of these groups in development planning

and policy dialogs, in turn, potentially broaden the opportunity of the poor to gain

benefits (value-added) from participation in LED initiatives.

Furthermore, a series of LED roundtables discussions (multi-stakeholders dialogues)

organized by these LEG Forums and intermediary organizations such as the P2KP 6 Personal communication with Drs. H. M. Ainul Asikin, Msi. (Head of Municipal Development Planning Board of Mataram, Drs. Jana Hamdi (Head of Executive Committee of the Local Economic Development Forum of Mataram city) and Dr. Zainuri (Director of Stigma Foundation) during LED roundtable discussion at SMKN 5 Mataram on 10th of February 2009.

Page | 20

(Research Centre for Population and Development Study of Mataram University) and

STIGMA Foundation among others has led to establishing a Design Clinic─ a capacity

building and value chain promotion institution for pearl-based industry. The Design

Clinic brought together different actors (competent teachers from related vocational

schools, local entrepreneurs, designers, researchers, intermediary and governmental

organizations). As not-for-profit multi-stakeholders service providers, the Design Clinic

was integrated into a state-own vocational school (namely SMKN 5) in Matram city

considering its competency (human resources, training facilities, etc.) and commitment

among others. Such institutional setting showed a distinctive model , which would

enable government and non-government organizations to allocate resources and

responsibility sharing for enhancing pro-poor human resource and value chain

development in the pearl-based industry (pearl-gold-silver products).

Regional Level Initiatives

Pro-poor local/ regional economic development initiatives (LRED) evolved not only at

local but also regional level. Empirical experience involving multi-stakeholders in Dompu

and Bima district arguably induced the initiative to establish a regional forum, namely

FORMULA-Seaweed Governance Forum of Sumbawa Island, to foster more productive,

increased economy of scale, more competitive and fairer seaweed value chain.

The Seaweed Governance Forum prospectively improves the governance of seaweed

value chain and value-added to local producers, business doers along the value chain

and to the region. The recent dialogue held in Dompu district accomplished

establishment of Executive Committee of the Forum which then endorsed by the

Governor of Nusa Tenggara Barat. Furthermore, the stakeholder’s dialogue in Dompu

established the Forum’s priority agendas for 2009-20013. Furthermore, this initiative

stimulated the Board of Integrated Regional Economic Development for Bima region

(on behalf of the provincial government of Nusa Tenggara Barat) to establish a joint

Secretariat involving the Seaweed Governance Forum Committee for improving the

pro-poor governance of seaweed value chain (from production to marketing). It turned

out that the Joint Secretariat was established during early March 20097. Moreover,

along with its priority agenda of 2009-2013, the Executive Committee of Seaweed 7 Author’s interview with Dr. Syahruddin (Executive Director of Seaweed Forum) on 25 March 2009 in Mataram.

Page | 21

Governance Forum was exploring partnership with a number of private companies as

well as state-own companies in the framework of Corporate Social Responsibility (CSR)

of the respective companies. A dynamic process to establish partnership between the

Seaweed Governance Forum and the American mining company operating in the region

(namely PT Newmont Nusa Tenggara Ltd.) was undergoing.

Challenges, Lessons Learned and Some Ways Forward

Although development efforts in Indonesia during the pre 1997's Asian financial

crisis had brought about significant economic development and social changes, it also

produced some undesirable inter-regional disparity, environmental and social impacts.

Nowadays, about 10 years after the financial crisis, poverty and vulnerabilities remains

pressing issues faced by Indonesia, particularly in the eastern region of the country.

The problems are complex, ranging from economic, knowledge and culture to

governance. While these problems call for a comprehensive approach, this paper

focuses on role of stakeholder’s forum as a multi-stakeholder’s platform as an

instrument to foster transparency, dynamic learning and dialogue, and responsibility

in the attempt to reducing vulnerability and poverty at local and regional level

respectively.

The concept of LEG Forum is in line with the decentralization objectives framework

and the notion of good governance; it brought different agents ─self-interested rational

actors ─into a joint platform of LRED. The empirical experience in a number of districts

in NTB region, has demonstrated notable LEG Forum’s contribution to accelerating the

process, broadening the outreach services for the poor and vulnerable groups. Even

more, as the case in Dompu and Bima district respectively, LEG Forum’s involvement

has led to establishment of not only a shorter but also a securer and more profitable

seaweed value chain. This noticeably enabled the vulnerable groups of micro and small

enterprise to enjoy value-added which in the past lay beyond their reach. Furthermore,

many local governments in Nusa Tenggara Barat demonstrated notable interest to

adopt and allocate resources to support such a multi-stakeholder process in fostering

pro-poor local and regional economic development initiative . The LEG Forum, thus,

has a good prospect of replication.

Page | 22

However, transition from government to governance paradigm challenges not only

local governments but also all stakeholders at regional and local level to adapt to and

learn from the new institutional setting and role models. Some policy makers and

business doers were indifferent toward establishing LEG Forum or were reluctant to

allocate resource to support LEG Forum due to their experience with non-performing

NGOs (Non-Governmental Organizations) among others. In addition, strong political

pressure toward implementing agencies at regional and local levels to accomplish their

programmes or to demonstrate changes (outcomes) quickly, frequently threatened

achievement of a broader goal of developing a resilient and sustainable local economy.

A recent case in Kwangko village of Dompu district, as an example, demonstrated that

the rush to reduce poverty incident through provision of quickly deliverable small grant

(financial capital) to the poor people or vulnerable groups of village people threatened

self-reliant activities and the cycle of revolving fund managed by Permata Bahari

cooperative. In contrast to the revolving-fund concept familiar to many people in the

village, receivers of grant need not to return the money to be pooled as collective fund at

group or village level. This was perceived as a “discriminative treatment” by the

cooperative members or customers, and accordingly most of them suspended

repayment of their outstanding loan to cooperative. This endangered continuity of

revolving-fund cycle and would have contra productive implications to economic

development and poverty reduction activities in the village. However, the case was not

unique to Dompu district, but widely shared by many other villages, including in the

urban areas.

Furthermore, this paper revealed evidence that in less developed regional context

an organized civil society (stakeholder's forum) could be an effective instrument that

help release ‘social energy’ of collective learning and actions to pursue pro-poor local or

regional economic development objectives. Based on success stories and obstacles

faced by a number of LEG Forum in the studied area, there are a number of factors

fundamental for establishing and sustaining the stakeholder's forum, namely:

• The experience in Nusa Tenggara Barat demonstrates that Pro-poor LED

initiative that emphasizes opportunity-based solutions rather than problem-

focused solutions works and produce notable pro-poor outputs or outcomes.

• Local initiator or pioneer, e.g. committed personnel of eligible intermediary

Page | 23

organization or local government, is needed to stimulate establishment of LEG

Forum;

• Pro-poor vision and shared interest are essential incentives for the multi-

stakeholders’ Forum for local and regional economic development;

• Good quality learning process among forum members is a good incentive for

sustaining dialogue and collaborative actions; this requires an interactive

learning approach. Experience in Nusa Tenggara revealed that University

lecturer who is familiar with participatory approach in development and local

cultural values or competent personnel of intermediary organizations were

helpful toward this objective;

• Integration of local wisdom (cultural values) and good governance principles

enhance the dynamic of decision making and allocation of responsibility

sharing among local economic development stakeholders;

• In less developed region, persistent commitment of budget support from

local governments or other eligible organizations to enhance outreach

strategy or governance support to the poor people as well as marginalized

groups of micro & small-scale enterprise (in the informal economy) is

needed.

In future, the provincial government agencies should play more active role and take

greater responsibility to enhancing such multi-stakeholder process in LRED. This calls

for political commitment to establish and promote pro-poor budget policy. Furthermore,

the provincial government should take a greater role in establishing horizontal and

vertical networking for LRED initiative, e.g. in the framework of promoting inter-

municipal cooperation. Moreover, local governments and the provincial government of

Nusa Tenggara Barat should help LEG Forums to explore and facilitate establishment

of pro-poor LRED partnership between LEG Forums and state-own and foreign

companies operating in the region through the framework of corporate social

responsibility.

To conclude, the LEG Forum’s role models as implemented in Nusa Tenggara Barat

region, have demonstrated notable outcomes that benefit the poor and vulnerable

Page | 24

groups of the people. There is ample evidence to say that these LEG Forums have help

reduce vulnerability and increase resilience of the poor and the micro-small scale

entrepreneurs along their value chains or in the marketplace. Even more, some

producers’ groups and small traders have enjoyed considerable value-added created

derived from their extended access to marketplaces. However, these Forums would

need longer period to demonstrate their contribution to a larger scale of economy and

higher-level development objectives, namely sustainable economic growth, better

livelihood and equity. In other words, it would be too early and too ambitious to

measure these impacts of the LEG Forums.

Page | 25

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