PNPM Support Facility

1. PNPM Support Facility Portfolio Presentation February 10, 2011

2. Table of Contents PNPM Implementation Strategic Direction Disbursements Staffing PSF Projects and Activities Overview Annual Report

3. Action taken clears the way to resume PNPM IV preparation and processing of AF PNPM Implementation

4. Discussion Note circulated Proposed focus on: Integration of various CDD programs within “Cluster 2”; Adjustment of the core PNPM model to different kinds of poverty across Indonesia’s diverse regions; Continued efficiency gains; Bringing the social capital created through PNPM to bear to strengthen the downward accountability of local government; S trengthening the “handshake” between PNPM and sector service delivery. TNP2K rescheduled workshop. Tentative date March 9 (to be confirmed) Strategic Direction

5. Disbursements • Total donor pledges: US$155.8m (Multi-donor TF - $91.1m; USAID TF $64.7m) • Allocated to specific projects: US$90.3m • 21 projects $52m recipient executed; $38m PSF executed. • New proposals, including approved Disaster Mgmt Support: US$101.1m • Available resources: US $97.5m • Financing gap: US$3.5m • Cumulative disbursements at December 31, 2010 were US$36m • Projected disbursements for remainder of 2012: over US$90m

6. Staffing • Reconstitution of sr. leadership in PSF • Natasha Hayward • Replacement for Vic Bottini identified • Recruitment for key positions • FM, LG, Green, Peduli • No contracts beyond 31 December 2012

7. PNPM Generasi Objective: Villagers in PNPM Rural locations benefit from improved socio-economic and local governance conditions. Specific focus on MDGs: to reduce poverty, maternal mortality, and child mortality, and to ensure universal coverage of basic education. Financials: Total Commitments: US$14.5m; Total Disbursements: $13m; 2010 Disbursements: $11.2m 2010 Progress: • Expansion into 48 additional target kecamatanin NTB • Produced preliminary draft of impact evaluation report (final report Feb 2011). Findings include: • 12 percent reduction in long-term child malnutrition • Increase in coverage of maternal and child health services offered at village health posts • 47 percent increase in number of children receiving supplementary feeding • 32 percent of pregnant mothers receiving iron pills • Making grants conditional upon performance improves program performance in health • Greatest impacts in areas with low baseline health and education indicators 2011 Foci: • Further scale-up– GoI has requested PSF financing to expand Generasi into 90 new sub-districts with low baseline health and education coverage in Gorontalo, NTT, Maluku, Sulbar, Sulut, Jabar • Collaboration with health, education, and watsan sectors—to leverage Generasi’sdemand-side incentives to strengthen supply-side responses. May entail revisions to Generasi’sindicators. • Engagement with TNP2K on social protection– to develop shared policy around cash transfer programs. Involves coordinating geographic targeting and operational modalities with PKH. • Further integration within PNPM Rural; capacity support for PMD and program facilitators

8. Green PNPM Objective: Rural communities in target locations benefit from improved natural resource management (NRM) practices and use of renewable energy. Financials: Total Commitments: US$38.6m; Total Disbursements: $9.3m; 2010 Disbursements: $9.3m 2010 Progress: • Full expansion into 45 additional target kecamatan within 4 provinces on Sumatra • 1,500+ ‘green sub-projects’ selected by communities using the 2008, 2009, and 2010 Green PNPM block grants • 86 micro-hydro power (MHP) facilities under implementation, projected to provide electricity to 10,000+ rural households 2011 Foci: • Increased emphasis on impact evaluation – quality of sub-project implementation, MHP economic/social impact, return on investment, model for ‘performance based’ block grant disbursements • Further operational/technical integration with PNPM-Rural, related GOI sector initiatives, and international donor environmental programs • Promotion of broader range of RE technology eligible for community investments • Capacity building and training for local government officials in NRM planning, disaster preparedness and climate change adaptation • Geographic expansion of MHP component into Papua and West Papua

9. PNPM Mandiri Revolving Loan Fund (RLF) Capacity-Building and Sustainability Project Objective: To contribute to poverty reduction initiatives within the target communities by building the management capability and institutional sustainability of the PNPM RLFs. Financials for Phase 1: Total Commitments: US$4.2m; Total Disbursements: $0.3m; 2010 Disbursements: $0.3m 2010 Progress: • Socialization for stakeholders of PNPM Mandiri Rural in Semarang, Purwokerto, Solo and Yogyakarta. • Preliminary results from first phase of need assessment of RLF operation in Central Java and Yogyakarta. • Set up working group for stakeholders of RLF 2011 Challenges and Foci: • Geographic Expansion - two off-Java provinces (West Sumatra and Nusa Tenggara Timur (NTT)) • Project Expansion - to RLF operation under PNPM Urban • Complete need assessment of RLF operation – PNPM Rural and PNPM Urban • Clarify Legal Issues under RLF operation in PNPM – the Project will clarify legal ownership and other legal issues related to RLF in PNPM • Capacity building and training - the Project will develop and conduct a customized program of capacity building for RLF operation in Central Java and Yogyakarta Request for approval to JMC Meeting: • Geographical expansion to West Sumatra and NTT, • Project expansion ( include RLF operations under PNPM Urban, i.eUPK assessment for Urban )

10. Local Government Capacity Development Objective: Enhanced Local Development Processes Through Making Planning And Service Delivery More Pro-Poor And Responsive To Community Needs Financials: Total Commitments: $1.4m; Total Disbursements: $0.2m 2010 Disbursements: $0.2m 2010 Progress: • Launch of stock taking study, documenting best practices , capacity gaps and policy actions among local governments in 8 jurisdictions • Recommendations for policy reforms to mainstream CDD approaches for development planning, procurement reforms and the draft village law • First batch of training-of-trainers of selected GoI officials (national and provincial level) in pro-poor planning and budgeting (P3B). 2011 Foci: • Policy notes on how PNPM/CDD can be integrated into local government and contribute to local governments’ ability to better provide public services and be held to account, with recommendations for Phase 2 • Deployment of P3B trainees, and developing further ToT packages for LG staff. • Preparation of Phase 2 and implementation of activities/projects • Launch of LSP FasilitatorPemberdayaan Masyarakat, and training program

11. PNPM Peduli Objective: Reach marginalized groups not benefitted by PNPM through on-granting to Civil Society Organizations (CSOs) Financials: Total Commitments: US$ 4.2m; Total Disbursements: $50 ths; 2010: $50 ths Accomplishments to date: • Design of model and structure • Design of operational manual • Launch of competitive bid for Technical Support Group (TSG) • Selection of 3 Executing Organizations: - Kemitraan: Grant-making organization, 10 CSO partners in 10 provinces - Association for Community Empowerment: Grant-making organization, 12 CSO partners in 9 provinces - NU-Lakpesdam: Mass-based Islamic organization with local branches, 30 branches in 12 provinces 2011 Foci: • Start project implementation : • Support to 22 local CSO partners and 30 branches implementing projects reaching the most marginalized. • Benefitting more than 40,000 marginalized men, women and children. • From 28 types of marginalized groups. • In 23 provinces. • Across more than 10 thematic areas.

12. Monitoring and Evaluation Objective: To provide stakeholders with empirical data regarding the results and impact of PNPM-Mandiri, research in greater depth regarding special topics of concern to PNPM, and enhance the ability of Indonesian social science research organizations to conduct M&E and special studies. Financials: Total Commitments: US$6m Total Disbursements: $3.2m 2010 Disbursement: $2.5 m 2010 Progress, completed: • PNPM Impact Evaluation* • PNPM-Generasi Impact Evaluation* • PNPM Governance Study* • PNPM Facilitation Study* • PNPM Disadvantaged and Marginalized Groups Study • Village Resources and Rural Infrastructure Study *Presentation completed, finalized draft and publication pending. Note: A workshop is planned for stakeholders to discuss the findings of the Governance, Marginalized and PNPM-rural studies. 2011 Planned Activities • Infrastructure Census • PEKKA Impact Evaluation Baseline • Revolving Loan Fund Impact Evaluation Baseline • Community Management of Development Portfolio • Mapping of Community- Local Government Relationships for Social Accountability • Incidence of Benefit Study • PNPM RESPEK evaluation • PNPM Village Development Planning EIRR, Cost Effectiveness • Capacity building strategy for Indonesian Research Institutions

13. PNPM-Rural Impact Evaluation: Key Findings Period under evaluation: Late 2007- Late 2009/2010 Sample size: 6135 households in 300 kecamatan (150 treatment, 150 control). Quantitative Qualitative In general consistent with findings of Quantitative Component. PNPM-Rural creates participation, transparency and accountability within the program but this does not spill over into other village development activities. Elite both inside formal government and informal traditional structures are not influenced and are not incentivized to adopt PNPM approaches. In contrast to household-targeted programs (BLT, RASKIN etc.) PNPM-Rural is not viewed as a poverty program, but rather as for the community. Projects selected by the community are not always in line with needs of poor households particularly in areas with good existing infrastructure. • Summary: Similar to KDP2 evaluation except consumption impacts stronger for all households rather than limited to the poor. • Consumption: Overall PNPM-Rural areas saw consumption increase by 5% more than control areas. Stronger impacts among the poor and in poor areas. • Poverty: PNPM-Rural households saw chances of escaping poverty increase by ~2-3 % more than control areas. • Access to Health Services: Strong impacts across the sample. • Education: No impact on enrollment, dropout or transition (SD to SMP), • Empowerment and Social Capital: No conclusive pattern of impacts. • Marginalized and Disadvantage Groups: Impacts on benefits limited.

14. Study on Urban Poverty and Process Evaluation of the Urban Program Objectives: This work will have the following three objectives: (1) to understand the characteristics of urban poverty in Indonesia today and any emerging trends; (2) to review urban poverty programs in Indonesia to assess the extent to which they address the needs of the urban poor; and (3) to undertake a process evaluation of the PNPM-Urban program which examines internal efficiency, documents good practice, distills lessons learned, and identifies options for program reform that could increase its effectiveness. Financials: Total Commitments: US$ 0.6m; Total Disbursements: $4 ths; 2010 Disbursements: $4 ths 2010 Progress: • Development of Terms of Reference (TORs) and full scope of work; • RFP for TORs • Selection and contracting of Rand Corporation for TOR on Urban Poverty and Program Review; inception report due 2/7/2011 • Finalizing selection of firm for TOR on the Process Evaluation 2011 Foci: • Finalization of firm selection for TOR on process evaluation, dependent on quality / cost of proposal and link to Urban poverty and program review work. • Stakeholders launch workshop to be held in Spring 2011 (likely March both TORs are under contract) • Launch of field work in approximately 20 communities; selection criteria and detailed methodology under development

15. Training of Inspektorat Kota/Kabupaten in PNPM Mandiri Perkotaan FY 2010-2011 Objective: To improve fiduciary control in PNPM MandiriPerkotaan through building the capacity of Local Government Auditors (Inspektorat Kota/Kabupaten) Financials: Total Commitments: US$0.3; Total Disbursements: $0; 2010 Disbursements: $0 2010 Progress: • Signing a Memorandum of Understanding (MOU) among DG of Human Settlement of MPW, Inspectorate General of MPW, Inspectorate General of MoHA, and Deputy of BPKP to support training and involvement of Local Government Auditors in audit • Commitment of the Inspectorate General of Public Works to provide IDR 1.8 Billion (USD 200,000) for the trained Local Government Auditors conducting audit. • Completion of the training manual and modules 2011 Foci: • Complete training by March 2011 • Ensure trained Local Government Auditors are capable to conduct audit in their kota/kabupatens • Support sustainability of training and audit by Local Government Auditors for next years

16. Integrated Management Information System (MIS) for PNPM Mandiri –SIMPADU (Phase 2) Objective: To enable select GOI institutions (national, regional, and sectoral) to more effectively monitor and plan interventions designed to reduce poverty throughout Indonesia. The enhanced SIMPADU PNPM will be complemented with improved operating procedures and capacity building training at all levels to ensure the quality and verification of data collection, storage, and reporting. Financials: Total Commitments: US$1m; Total Disbursements: $0; 2010 Disbursements: $0 2010 Progress: • Financial management Assessment and procurement plans completed. • Procurement is being finalized and grant agreement expected to be signed w/World Bank before end-February 2011. 2011 Foci: • Improve current SIMPADU PNPM analytical capabilities and data accuracy. • Develop a PNPM MIS roadmap consisting of a thorough needs assessment at all levels and detailed plans for integrating SIMPADU PNPM with other MIS at national and local government institutions (5 pilot provinces), software/hardware procurement and installation, development of Standard Operating Procedures (SOP) for collecting, verifying, storing, and reporting programmatic and financial data, and training of GOI staff.

17. 2010 Annual Report Delivery: End of Quarter 1 (March 31, 2011) Outline: • Message for the Chair and Co-chair • PSF Management a. Structure b. 2010 Highlights c. Systemic Issues (e.g., systems, disbursements) d. Strategic Directions • Core Programs a. PNPM Rural b. PNPM Urban c. PNPM RISE d. RIS PNPM and PPIP e. PNPM P2DTK • PSF Projects • Looking Forward pipeline and big-ticket activities • Want to Know More (layout and intro to new website) http://pnpm-psf.ning.com/ • Technical Annexes a. Financial Statements b. Summaries of key analytical work

18. Additional PSF Projects

19. Community Facilitator Development System Objective: To prepare master trainers for facilitator training and to finalize improvements to PNPM training modules; standardize competencies and certification for community facilitators; and establish a master database for certified facilitators. Financials: Total Commitments: US$0.9m; Total Disbursements: $0.9m; 2010 Disbursements: $0.9 2010 Progress: • At project completion (Nov.. 2010), the project exceeded its target of training 600 master trainers – 660 master trainers were trained. • A database with detailed information on PNPM facilitators was established. • Progress on the certification progress was limited. 2011 Foci: • Submitting proposal to the JMC in the future to establish an institution for certification of community facilitators (LSP). The proposal would also include a refresher program for certified facilitators.

20. PNPM Communication Objective: to build capacity of key stakeholders for enhancing community-based monitoring and disseminating information using different formats and approaches Financials: Total Commitments: US$2.5m; Total Disbursements: $1.3m; 2010 Disbursements: $0.9m 2010 Progress: • Interactive programs that promote community-based monitoring done through 149 community radio and 12 radio talk shows on 141 private stations across Indonesia • 24 advertisements about financial management issues in national and local media that increase awareness of local governments and communities to actively monitor PNPM implementation • Partnership establishment between 62 local journalists and 61 implementers from 31 provinces that produced news features, PSA and articles equivalent to $150,000 • Knowledge sharing through field visits done by 4 countries: Mongolia, Kenya, Haiti and Timor Leste • 5 national learning events to share lesson learned, raise awareness and discuss strategy • Regular media monitoring on 32 local and 17 national mass media 2011 Foci: • Strengthening collaboration between implementers and media & NGOs at local level • Improving local communication channels for people to access information and voice their needs • Supporting Kemkominfoin its role as communication coordinator for PNPM • Supporting access to information on complaints raised within PNPM and settlement complaint issues and case reports

21. Delivering Services to Poor Communities Objective: The program is designed to improve the quality of public service delivery and financial management at the local government level by piloting a performance based incentive system to improve their ability to deliver poverty services and improve their M&E systems. Financials: Total Commitments: US$0.9m; Total Disbursements: $0.6m; 2010 Disbursements: $0.3m 2010 Accomplishments: • Provision of TA to the six pilot Local Governments (LGs) in identifying problems and issues in delivering public services • Formulation of medium term strategies to improve public service delivery, particularly in health and education sector • Gender review in Gorontalo and Papua • Close coordination with AusAID for implementation of AIPD activities 2011 Foci: • Provide TA to LGs to implement the agreed activities identified in medium term strategies • Study on the effectiveness of LG planning and budget allocation for public services • Study on LG Governance and accountability • Gender study in Papua and Gorontalo

22. PNPM URBAN SUPERVISION AND MONITORING Objective: To ensure full supervisory coverage of Urban PNPM-Mandiri programs and provide special advice input for integration of newly introduced Pamsimas (PNPM penguatan) into PNPM Financials: Total Commitments: US$0.5m; Total Disbursements: $0.2m; 2010 Disbursements: $0.2m 2010 Progress: • Mobilization of staff FM and MIS staff • Mobilization of special support for the conceptualization of the PNPM sectoral program (neighborhood upgrading) • Additional visit of 50 extra villages • Strengthened MIS system including SP2D online 2011 Foci: • Strengthening the evaluation component of the PNPM Urban • Advancing the system to support the poorest areas through the Neighborhood Development (ND) program

23. Poverty Engagement, Knowledge & Action Objective: To reduce poverty, promote pro-poor growth and improve the social protection for vulnerable groups by: strengthening programs, deepening analysis, building technical capacity and “know-how,” and stimulating policy dialogue. Financials: Total Commitments: $2m; Total Disbursements: $1.7m; 2010 Disbursements: $1.4m 2010 Progress: • Conditional cash transfer (PKH) reform roadmap based on findings from implementation spot check and draft impact evaluation; assessment of unconditional transfers (BLT). • Comprehensive assessment of the targeting effectiveness of current household-based programs in Indonesia, and a workplan for the establishment of a national targeting system. • Flagship “Indonesia Jobs Report” providing a comprehensive, empirical analysis of Indonesian’s labor market. • Government and universities trained in using an expanded localized dashboard data analysis system (ADePT Indonesia) for poverty and social protection policy analysis. • Technical assistance for BPS in preparing for its institutional reform process (STATCAP-CERDAS, 2011-2014) and reform of survey instruments including Susenas. 2011 Foci: • Completion of the Social Assistance Public Expenditure Review, including program review policy notes for each of the six major social assistance programs. • Dissemination of the Indonesia Jobs Report and follow-up policy dialogue. • Continued technical assistance for Susenas reform and data dissemination improvements.

24. Supervision and Monitoring Objective: National wide support for implementation to mitigating risks and maintaining quality and efficiency particularly on technical quality, fiduciary controls and mitigates against the misuse of funds and resolution of cases when they occur. Financials: Total Commitments: US$6m; Total Disbursements: $2.7m; 2010 Disbursements: $1.4m 2010 Progress: • Field supervision covered total 23 provinces, 141 kabupatens, 378 kecamatans, focused on fiduciary control, technical reviews including engineering, education, health and community procurement and systemic problems • Supervision focus on fiduciary control & oversight mitigates against the misuse of funds and resolution of cases covered 125 kabupatens of 141 kabupatens, 302 kecamatans of 378 kecamatans • Updates data on progress record of corrective actions of systemic problems, contribute to Aide Memoires, Implementation Status Reports and Grant Monitoring Performance 2011 Foci : • Supervision coverage remote areas – lack of information , high risk security and safety • Promote integration of supervision & oversight with related GOI and consultants at National and Regional levels • LG to take corrective actions to improve programs implementation • Taking Governor and Bupatifor supervision and monitoring of PSF portfolio programs • Exchange learning and cross visit supervision - Local government, NGOs, CSOs and Journalist

25. Operations Support Objective: To provide operational and administrative services to the PSF to sustain an effective framework to implement PNPM Mandiri. Financials: Total Commitments: US$5.3m; Total Disbursements: $2.9m; 2010 Disbursements: $1.3m 2010 Activities: • Supported all functions related to the Technical Secretariat, including support to preparation of project proposals and preparation of Technical Committee and JMC meetings. • Prepared (amendments to) administrative and grant agreements. • Oversaw financial management of the PSF Trust Fund, and quarterly reporting of the Trust Fund. • Supported coordination and management of the PSF. 2011 Foci: To sustain the PSF, with continued emphasis on strengthening fiduciary systems and reporting.

26. Financial Management Objective: To support PNPM Mandiri programs in ensuring that funds are used for purposes intended within through sound and robust fiduciaries. 2010 Accomplishments: • Supervision to 20 Provinces, 84 Districts, 192 sub-districts. 1 province (SE Sulawesi), 3 districts (in NTT & West Kalimantan) and 10 sub-districts (in 7 provinces) were suspended due to frauds identified. • Of IDR 6.8 Trillion disbursed, IDR 4.2 Trillion (62%) has been reimbursed to date by WB, and 134 SP2Ds amounted IDR 84.7billion were rejected due to problems/frauds yet unresolved. • Clear backlog of SP2D documentation for 2010 from >30% in Sept 2010 became <10% in Dec 2010. • Publish complaints summary on local newspaper in 6 provinces and complaints detail information on PNPM Rural website since August 2010. • Implement new SMS gateway, web form & email gateway for complaints since mid of October 2010, more than 800 complaints already received via SMS and web in addition to 1049 fraud cases • Develop new SOP for complaints handling and a web-based Complaint Handling System. • MoU for involvement of auditor of InspektoratKabupaten between PMD, MOHA Itjen, and BPKP signed in Aug 2010, ToT has been completed in Nov 2010. Training for local auditors will be held in Feb 2011. 2011 Foci: • Increased emphasis on transparency and accountability – reasonableness of unit cost & volume of material, information to public on financial, financial reporting, MIS. • Integrated Supervision & Monitoring – supervision on all programs at a location, joint supervision with other task teams. • Disbursement – FY 2010 balance (carried over) plus FY 2011 new budget. • Anti corruption – trend of bigger amount of fraud cases, anti corruption awareness for all key actors • Capacity building and training for community team and consultants in fiduciary and anti corruption

27. Gender Objective: To ensure mainstreaming of gender equality in PNPM projects to support the achievement of women’s empowerment and poverty reduction. 2010 Accomplishments: • Coordination and technical inputs provided to PNPM projects. • Empowering women through women specific projects that link to PNPM, including: • Women Headed-Households/PEKKA: 8 provinces, extended to 9 new provinces (2010), 1.275 cadres, 11.195 people from 484 women’s groups in 345 villages. • Female Migrant Workers. Began in April 2010, in KabupatenBanyuwangi, Cilacap, and Indramayu. Focus on 1) institutional strengthening for CBOs, 2) opening access to financial services and 3) development of dialogues and public campaigns on safe migration. • Papuan Women Empowerment (PAWE). Province of Papua and West Papua in 12 Kabupatens. 2 TOT on need assessment for 50 assessor/motivators. The project is now being evaluated for more engagement with PNPM Respek. • Survey on Female Engineer Facilitators in PNPM Rural (457 facilitators). The results of analysis have been presented and the report is now being prepared. 2011 Foci: • Supporting further the integration of fwomen empowerment approaches into PNPM programs. • Strengthening coordination for gender works among key stakeholders.