PCR Loan 2575-RIS PNPM -Final for printing and circulationEmpowerment (Program Nasional Pemberdayaan...

Completion Report

Project Number: 38385 Loan Number: 2575-INO September 2014

Indonesia: Rural Infrastructure Support to the PNPM

Mandiri Project II This document is being disclosed to the public in accordance with ADB’s Public Communications

Policy 2011.

CURRENCY EQUIVALENTS

Currency Unit – rupiah (Rp)

At Appraisal At Project Completion (6 October 2009) (30 September 2013)

Rp1.00 = $0.000105 $0.000088 $1.00 = Rp9,555 Rp11,405

ABBREVIATIONS

ADB – Asian Development Bank CDD – community-driven development CIO – community implementing organization DGHS – Directorate General of Human Settlements DPIU – district project implementation unit EIRR – economic internal rate of return GAP – gender action plan KPP – kelompok pengguna dan pemelihara (community group

responsible for operation and maintenance of community infrastructure)

MTPR – medium-term poverty reduction (plan) NGO – nongovernment organization O&M – operation and maintenance PCMU – project coordination and monitoring unit PNPM – Program Nasional Pemberdayaan Masyarakat

(National Program for Community Empowerment) PPIU – provincial project implementation unit RIS PNPM – Rural Infrastructure Support to the PNPM RRP – report and recommendation of the President

NOTE

In this report, “$” refers to US dollars.

Vice-President S. Groff, Operations 2 Director General J. Nugent, Southeast Asia Department (SERD) Director A. Ruthenberg, Indonesia Resident Mission (IRM), SERD Team leader S. Hasanah, Senior Project Officer, IRM, SERD Team member Suzana, Senior Operation Assistant, IRM, SERD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

BASIC DATA i

I. PROJECT DESCRIPTION 1

II. EVALUATION OF DESIGN AND IMPLEMENTATION 2

A. Relevance of Design and Formulation 2

B. Project Outputs 3

C. Project Costs 7

D. Disbursements 7

E. Project Schedule 8

F. Implementation Arrangements 8

G. Conditions and Covenants 8

H. Consultant Recruitment and Procurement 8

I. Performance of Consultants, Contractors, and Suppliers 9

J. Performance of the Borrower and the Executing Agency 9

K. Performance of the Asian Development Bank 10

III. EVALUATION OF PERFORMANCE 10

A. Relevance 10

B. Effectiveness in Achieving Outcome 11

C. Efficiency in Achieving Outcome and Outputs 12

D. Preliminary Assessment of Sustainability 13

E. Impact 13

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 14

A. Overall Assessment 14

B. Lessons 14

C. Recommendations 15

APPENDIXES 1. Design and Monitoring Framework 16 2. Participating Provinces and Districts 24 3. Types of Infrastructure Built 25 4. Gender Action Plan Targets and Achievements 26 5. Project Costs and Financing 38 6. Amounts Allocated, Contracted, and Disbursed by Category 40 7. Funds Flow Mechanism 41 8. Original Schedule Compared to Actual Implementation 42 9. Project Implementation Arrangements 45 10. Status of Compliance with Loan Covenants 48 11. Economic Benefit Reevaluation 60

BASIC DATA A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan 7. Project Completion Report

Number

Indonesia 2575-INO Rural Infrastructure Support to the PNPM Mandiri Project II Republic of Indonesia Directorate General of Human Settlements, Ministry of Public Works Original loan amount: $84,240,000 Actual loan amount: $83,134,598 PCR: INO 1480

B. Loan Data 1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual – Number of Extensions 6. Closing Date – In Loan Agreement – Actual – Number of Extensions 7. Terms of Loan – Interest Rate – Maturity – Grace Period

10 August 2009 18 August 2009 1 October 2009 1 October 2009 12 November 2009 10 December 2009 1 February 2010 1 February 2010 None 30 September 2013 20 February 2014 None London interbank offered rate (LIBOR) + 0.60% 20 years 5 years

8. Disbursements a. Dates Initial Disbursement

15 July 2010

Final Disbursement

19 February 2014

Time Interval

43 months

Effective Date

1 February 2010

Original Closing Date

20 September 2013

Time Interval

43 months

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b. Amount ($’000)

Category or Subloan

Original

Allocation

Last Revised

Allocation

Amount

Canceled

Net Amount

Available

Amount

Disbursed

Undisbursed

Balance

Community development grants for subprojects 75,000.00 76,800.00 0.00 76,800.00 76,188.56 611.44

Project management

- external monitoring

- annual audit

50.00

90.00

50.00

90.00

0.00

0.00

50.00

90.00

38.26

0.00

11.74

90.00

Training and workshops

3,700.00 1,000.00 0.00 1,000.00 924.34 75.66 Consulting services

4,400.00

6,300.00

0.00

6,300.00

5,983.44

316.56

Contingencies 1,000.00 0.00 0.00 0.00 0.00 0.00

Total 84,240.00 84,240.00 0.00 84,240.00 83,134.60 1,105.40 Notes: The undisbursed balance of $1.105 million was canceled when the loan account was closed on 20 February

2014. Figures may not sum precisely because of rounding.

C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost Local Currency Cost Total Note: Project documents did not specify reasons for not including the breakdown of foreign and local costs.

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual

Implementation Costs Borrower Financed 15.99 17.55 Asian Development Bank Financed 84.24 83.13 Other External Financing (Beneficiaries) 7.50 8.03

Subtotal 107.73 108.71

IDC Costs Borrower Financed 5.75 5.50 Asian Development Bank Financed 0.00 0.00 Other External Financing 0.00 0.00

Subtotal

Total

5.75

113.48

5.50

114.21

ADB = Asian Development Bank, IDC = interest during construction.

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3. Cost Breakdown by Project Output ($ million)

Component Appraisal Estimate Actual

Investment Costs 1. Strengthening capacity for community planning

and development 2. Improved village services and infrastructure

through community development grants 3. Improved capacity for project implementation

and monitoring evaluation Total Base Costs

Contingencies Financial charges during implementation

13.00

82.50

10.25

105.75

1.98 5.75

12.60

87.12

8.99

108.71

0.00 5.50

Total 113.48 114.21

4. Project Schedule

Item Appraisal Estimate Actual

Date of contract with consultants National project management consultant Regional project management consultants

South Sumatra

Lampung Jambi and Riau

Impact evaluation study External monitoring and evaluation

Individual consultants Mobilization of community facilitators Mobilization of community implementation organization

Q1 2010

Q1 2010 Q1 2010 Q1 2010

Q4 2011, Q1 2013 Q3 2010, Q1 2011, Q3 2011, Q1 2012,

Q3 2012, Q1 2013

Q2 2010 Q2 2010, Q3 2011

Q2 2010

21 December 2010

23 November 2010 21 December 2010

18 March 2011

11 December 2012 23 November 2012

August 2010 April 2010,

March 2011 Q2 2010

Completion of medium-term poverty reduction plan Release of community development grants

Q3 2010 Q3 2010, Q4 2011

Q4 2010 Q3 2010, Q3 2011

Civil works contract Date of award Q4 2010 Q3 2010 Completion of work Q2 2012 Q3 2012 Gender audits Q1 2011, Q1 2012 Q1 2012 Operation and maintenance (O&M) of facilities built

O&M training for communities Implementation of O&M plans

Monitoring and evaluation Physical and financial audits Monitor and report on physical and financial progress Monitoring by nongovernment organizations

Assess project impacts

Q1 2011, Q1 2012 Q2 2011, Q2 2012

Q1 2011, Q1 2012 Q4 2010, Q4 2011

Q3 2010, Q1 2011, Q3 2011, Q1 2012,

Q3 2012, Q1 2013 Q4 2011, Q1 2013

Q2 2011, Q3 2012 Q1 2011, Q2 2012

Q2 2011, Q2 2012 Q4 2010, Q4 2011

Q3 2012

Q4 2012 Q = quarter.

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5. Project Performance Report Ratings

Implementation Period

Ratings

Development Objectives

Implementation Progress

From 1 February 2010 to 30 September 2013 Satisfactory Satisfactory

D. Data on Asian Development Bank Missions

Name of Mission

Date

No. of Persons

No. of Person-

Days

Specialization

of Membersa

Fact-finding 22 Jun–3 Jul 2009 4 30 a, b, c, d Appraisal 10–18 Aug 2009 4 28 a, b, c, e Inception 17–19 Mar 2010 3 9 a, b, f Review 1 5–23 Nov 2010 3 18 b, f, g Review 2 6 Jun–18 Jul 2011 2 12 b, f Review 3 8 Nov–19 Dec 2011 2 12 b, f Review 4 9–30 Jul 2012 3 16 d, g, h Review 5 28 May–21 Jul 2013 2 12 d, g Special project administration 19–20 Sep 2012 1 2 d Project completion review 14 Mar–5 May 2014 2 15 d, h a

a = poverty reduction specialist, b = senior portfolio management specialist, c = education economist, d = senior project officer, e = senior counsel, f = project officer, g = gender and development advisor, h = principal portfolio management specialist.

I. PROJECT DESCRIPTION

1. The Rural Infrastructure Support to the PNPM (RIS PNPM) Mandiri Project II comprised a part of Indonesia’s core poverty reduction program, the National Program for Community Empowerment (Program Nasional Pemberdayaan Masyarakat, PNPM Mandiri).1 The project was designed as continuation of the first RIS PNPM project, which was completed in 2011.2 Similarly to the first RIS PNPM, the project applied a community-driven development (CDD) approach that empowered communities and strengthened their capacities to prioritize, design, implement, and monitor community-based projects. The project aimed to continue providing community facilitation and development grants similar to those under the previous project. While the first RIS PNPM project provided one cycle of community facilitation and development grants, this project was expected to provide two such grant cycles. Thus, full completion of three cycles of community facilitation and development grants would be achieved.3 2. Even though Indonesia had succeeded in reducing the incidence of poverty to about 14.2% in 2009, about 33 million people remained poor and nearly 50% of Indonesia’s population was categorized as “near poor” and living on less than $2 a day.4 Poverty is particularly high in rural areas, where about two-thirds of Indonesia’s poor people lived. The causes of rural poverty include limited access to such basic services as health, education, safe water and sanitation facilities, capital, and infrastructure. 3. The project was formulated to contribute to poverty reduction, and particularly in rural areas, by providing improved infrastructure. This was in line with the government’s medium-term development plan for 2004–2009, which had emphasized the need to increase investments into infrastructure generally and into rural infrastructure in particular. In line with the PNPM Mandiri objective, the project was meant to reduce poverty and improve local governance of rural communities in the project areas. The expected outcome was improved access to service delivery and basic rural infrastructure for the poor, near poor, and women in the project communities. The project included three outputs: (i) strengthened capacity for community planning and development, (ii) improved village services and infrastructure through community development grants (block grants), and (iii) improved capacity for project implementation and monitoring and evaluation. The design and monitoring framework defining the project’s impact, outcome, output, and performance indicators and targets is in Appendix 1. The executing agency was the Directorate General of Human Settlements (DGHS), Ministry of Public Works. 4. The project targeted to benefit about 1.5 million rural poor living in poor and/or isolated villages lacking basic services and infrastructure. It was implemented in 37 districts within the provinces of Lampung, Jambi, Riau, and South Sumatra. These four provinces were selected because the incidence of rural poverty in these provinces was higher than the national average. The selection of project villages was based on a list of less-developed subdistricts (kecamatan) issued by the Coordinating Ministry of People’s Welfare.5 The project villages were selected based on poverty level data included in the Village Potential Statistics and Inventory of Social

1 Launched in 2007 to reduce poverty by providing direct support for improvements in basic infrastructure and

essential social services for poor rural and urban communities. 2 Loan 2449-INO: Rural Infrastructure Support to the PNPM Mandiri Project.

3 The initial PNPM approach encouraged that villages would receive three cycles of community facilitation and

development grants to meet the poverty reduction targets. 4 ADB. 2009. Report and Recommendation of the President to the Board of Directors on the Proposed Loan to the

Republic of Indonesia for Rural Infrastructure Support to the PNPM Mandiri Project II. Manila. 5 A village is part of a subdistrict.

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Services Program, 2008. The project aimed to support 1,500 poor villages in upgrading basic rural infrastructure by providing two cycles of community development grants. The participating districts are listed in Appendix 2.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

5. The project design and formulation were in accordance with the government’s national medium-term development plan and ADB’s strategy and program for Indonesia. Indonesia’s national medium-term development plan for 2004–2009 gave strategic direction for reducing poverty and achieving the Millennium Development Goals. The national medium-term development plan reflected the emphasis placed on rural infrastructure investments in the National Poverty Reduction Strategy as an important means of reducing poverty and regional disparities by improving access to services and markets while creating jobs and thereby achieving the Millennium Development Goals. To promote further inclusive growth, the government launched a nationwide poverty reduction program (the PNPM Mandiri) with the aim to reduce poverty by promoting community participation in development planning and management, as well as in service delivery. 6. ADB’s strategy for Indonesia as set out in the country strategy and program for 2006–2009 also emphasized the significance of investments in rural infrastructure for reducing poverty, diminishing regional disparities in service delivery, and accelerating Millennium Development Goals achievement. ADB’s experience with community-based projects places it in a strategic position to support the government in scaling up and effectively implementing the PNPM Mandiri. 7. Project preparatory technical assistance was provided during the project design and formulation. During project formulation, ADB cooperated closely with government counterparts from the Ministry of Public Works, the National Development Planning Agency, the Ministry of Finance, and the Coordinating Ministry of People’s Welfare in integrating the project design and implementation arrangements with the PNPM Mandiri. The project supported implementation of the PNPM Mandiri core program.6 The project was formulated to adopt the design, funding modality, and implementation structure of PNPM Mandiri to ensure that the project was fully consistent with the government’s development program and strategies. The adoption of the PNPM structure also ensured strong ownership of the project by the government and thus greatly improved its prospects of achieving the goals of improved service delivery and poverty reduction, and thereby meeting the Millennium Development Goal targets. 8. The project design reflected lessons from other successful CDD projects implemented by other development partners and ADB in Indonesia. In particular, lessons from the first RIS PNPM (i.e., the need to have a stronger system to select and train community facilitators and to increase local governments’ involvement) were incorporated into the project design. During project implementation, the government requested ADB to support a new CDD project,7 which is considered a continuation of that project. No changes in the project design and formulation were

6 The PNPM Mandiri has two tiers: (i) the core program, and (ii) the support program. The core program centered on

promoting community empowerment, establishing and strengthening community implementing organizations, building the capacity of communities to plan and implement projects according to their needs, and providing investment grants for projects. The support program focused on the delivery of specific services to sectors.

7 Urban Sanitation and Rural Infrastructure Support to the PNPM Mandiri (Loan 2768-INO), which was approved on

5 August 2011 and declared effective on 11 November 2011, for $100 million.

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required during implementation. This suggests that the project design and formulation can be considered relevant at appraisal, during implementation, and at completion. B. Project Outputs

1. Strengthened Capacity for Community Planning and Development

9. The project provided assistance to strengthen community participation and the capacity of communities to prioritize, design, implement, manage, and monitor infrastructure projects. Similar to the PNPM Mandiri approach, community facilitators were recruited and deployed to assist communities and build their capacities.8 With assistance from community facilitators, each community (i) received information about the project and the PNPM Mandiri program; (ii) conducted village surveys and poverty mapping; 9 (iii) identified problems, needs, and opportunities; (iv) assessed community implementation capacity and gaps; (v) developed planning mechanisms and decision-making processes; (vi) formulated village medium-term poverty reduction (MTPR) plans; (vii) selected priority investments and developed corresponding community project proposals (annual investment plans), including operation and maintenance (O&M) plans with corresponding costing and budgets; (viii) implemented the selected investments with block grant support and technical guidance; and (ix) implemented O&M plans to ensure sustainability of the completed community investments. 10. The performance indicators for this output are summarized as follows: (i) functioning community implementation organizations (CIOs) established in about 1,500 villages with at least 40% representation of women in each CIO; (ii) at least two separate planning meetings for women conducted in each of the project villages; (iii) MTPR plans formulated in a participatory manner in all project villages, with at least 40% of women participation and 50% of poor residents in planning and/or community meetings (musdes);10 (iv) well-designed investment and implementation plans for community-driven development projects formulated and approved in all project villages; and (v) inter-village meetings conducted to facilitate coordination and identify possible complementarities in infrastructure and service improvements. 11. At project completion, all 1,500 project villages had established CIOs. CIO members were elected by the community members and coordinated the preparation and development of village MTPR plans. Feedback received during the project completion and project review missions suggested that the level of community participation was generally high and MTPR plans were prepared in a participatory manner while identifying community needs to upgrade and construct basic infrastructure that was financed by the project. Community members were engaged and actively participated in the entire planning and decision-making process, as well as in implementing the civil works. Sound poverty mapping exercises and joint identification of

8 Community facilitators were contracted and paid using government-owned resources. On average, a community

facilitator’s salary is equal to a government staff salary at the entry level with a bachelor degree (level IIIA). 9 The objective of poverty mapping is to ensure the inclusion of women, indigenous peoples, and other vulnerable

and marginalized groups within the village. Community facilitators received training on the inclusion of all disadvantaged community groups in empowerment and facilitation processes.

10 At least four musdes were implemented in each community. The first were for the establishment of CIOs and selection of CIO members. The second were aimed at developing the MTPR plan, setting investment priorities, establishing user groups (KPPs), and selecting the KPP members. The third were designed as the starting point of the physical construction. The fourth were conducted after the physical construction was completed. CIOs report to the village residents on the completed work and hand over the management (operation and maintenance of the built facilities) to KPPs. Before the musdes, a socialization meeting was held to inform village residents about the project and their rights, roles, and responsibilities. Achievements related to women’s participation are discussed in subsection B.4 Gender Action Plan.

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problems and needs also took place. Observations suggested that high community participation occurred in villages that had received support from the previous project (RIS PNPM I, completed in 2011).11 It seemed that communities in these villages had been empowered and understood the benefits of active participation during the entire stage of project implementation. 12. There were cases in a few villages, however, where the planning and decision making appeared to be dominated by community facilitators, village heads, or informal leaders. In these villages, a large number of community members were not fully involved in the planning and decision-making process. The village head and informal leaders appeared to be the actual decision makers. In these villages, many community members did not fully understand the purposes and content of the MTPRs. Even though they were not involved during the decision making, community members nevertheless suggested that the facilities built were useful.

2. Improved Village Services and Infrastructure through Community Development Grants

13. Block grants were provided to villages to construct and/or upgrade basic infrastructure as identified in the village MTPR plans. The infrastructure improvement included upgrading or construction of village roads and pathways, bridges and culverts, small piers, village irrigation schemes, water supply and sanitation facilities, and drainage works. The performance indicators (by 2014) are the following: (i) two cycles of block grant investments have been implemented in each of about 1,500 rural villages in the project provinces, addressing community needs (including those of the poor, women, and other marginalized groups); (ii) gender audits completed for all block grant investments in about 1,500 villages; (iii) more than 70% of infrastructure work is evaluated as being of high quality and has functioning O&M arrangements; and (iv) at least 290,000 person-months of immediate employment opportunities generated in the project villages, with at least 30% of that provided to women. 14. A block grant for one cycle was provided to a given community in three installments. Soon after a contract was signed between a CIO and district project manager, the first installment of 40% of the total block grant amount (Rp250 million) was transferred into the community bank account as an advance payment. Subject to certification of progress by the district project manager, the remaining funds were transferred in two additional installments: 40% at the 36% completion point of the civil works, and 20% at the 72% completion point. District governments were required to provide counterpart contributions from their own budgetary resources equal to 5% of the total value of block grants provided to the participating villages within their jurisdictions in order to cover the incremental operating costs of the DPIU and the costs of socializing the project to participating villages. 15. At project completion, 1,495 villages had received two cycles of development grants, while 5 villages received one block grant (the second cycle for these 5 villages was cancelled due to performance issues). After transferring two cycles of block grants, the project had financed the construction and improvement of about 3,280 kilometers (km) of rural roads, 8,697 bridges, 60 boat landings, more than 373 km of drainage canals, 15 km of irrigation canals, 473 domestic water reservoirs, 1,196 shallow wells, 259 deep wells, 35 km of water supply pipelines, and 521 communal sanitation facilities. Details as to the types of infrastructure construction and/or improvement in the four provinces are provided in Appendix 3. 11

In 2010, 1497 villages received support from the RIS PNPM I. These also were included under the RIS PNPM II project. In 2011, 420 new villages were included the second cycle of block grants under RIS PNPM II. Thus, only 1,080 villages covered under RIS PNPM I received a third cycle of block grants. The government suggested that the remaining villages no longer met the village selection criteria to be covered by RIS PNPM II.

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16. About $79.09 million consisting of $76.19 million from loan proceeds and $2.90 million from government counterpart funds were distributed to the 1,500 villages in two cycles for constructing and upgrading basic village infrastructure. The majority of the block grants (about 75.4% of the total investments) were used to finance the construction of transport facilities (roads and bridges and water transport). The second largest investment was into constructing and upgrading drainage networks, which accounted for about 19.0% of the total. Construction of water supply and sanitation facilities ranked third with 4.8% of the total investment costs, while irrigation facilities accounted for only about 0.8% of the total. Based on observations and discussions with community members during project review and project completion review missions, it can be concluded that the majority of the facilities built were priority infrastructure needs as stipulated in the village MTPR plans. 17. All village communities provided contributions in the forms of labor (e.g., for transporting materials from the main street to project sites and land clearing), land for the required facilities,12 food (including during construction works and refreshments at meetings), and other in-kind contributions, estimated to constitute about Rp73.9 billion (about $8.0 million). During construction, community members were employed as workers. About Rp100 million per village, or 40% of the total grant, went to wages for village workers. On average, community members received Rp45,000 (about $5.0) per day for construction work, thereby providing additional income and motivation to participate in civil works. About 303,000 person-months of immediate employment opportunities were generated. Approximately 48% of the workers were from poor families and about 20% were women. Overall, about 3.18 million village residents in the 37 project districts benefitted from the project. 18. Field observations and monitoring reports prepared by DGHS indicated that about 80% of the infrastructure and facilities built were considered to meet national standards for rural infrastructure.13 Perception surveys carried out by DGHS in 201114 suggested the following: (i) 94% of respondents found the quality of infrastructure that was built to be satisfactory, and (ii) 99% of the respondents indicated they found that infrastructure to be beneficial. It was also noted that 94% of women found the infrastructure that was built to be useful. The impact monitoring and evaluation report indicated that more than 80% of the community groups responsible for the operation and maintenance of community infrastructure (Kelompok Pengguna and Pemelihara, KPPs) were functioning as expected. It was noted that there were a few cases where facilities in villages (and particularly roads) already had been damaged 2 years after completion. 15 Although all project villages established user groups that should be responsible for the operation and maintenance of the built facilities, O&M arrangements in these villages were not functioning as expected. The O&M arrangements required that sufficient user charges be collected by KPPs to cover the O&M and that KPPs prepare and implement annual O&M plans and report the O&M implementation to community members. Observations during the project completion review mission and findings of the impact evaluation indicated that in these villages the KPPs were inactive and no user charges were collected.

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The project required limited land acquisition (land donation) but no resettlement of people or reallocation of houses. Findings during project review and project completion review missions, as well as the project monitoring and evaluation reports, indicated that the land acquisitions had no significant impact on productive lands and other productive assets. Safeguards related to land acquisition were built into the community decision-making process.

13 The indicator used a qualitative measure of “high quality,” which was difficult to measure as no definition of “high quality” was provided. Thus, the national standards for rural infrastructure set by the Ministry of Public Works were applied.

14 Monitoring and evaluation and gender audit surveys.

15 Observations suggested that the damage was due to improper use (e.g., overloading).

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3. Improved Capacity for Project Implementation and Monitoring and Evaluation

19. The project supported project management and implementation support at national, provincial, and district levels, including for monitoring and evaluation. Capacity building for monitoring and evaluation and encouraging nongovernment organizations (NGOs) to participate in monitoring and evaluating the project was also included. The performance indicators for this output focused on the establishment of project management units at the central, provincial, and district levels with appropriate staff and sufficient resources; provision of training to project management staff; recruitment of consultants and community facilitators to support project management and implementation; enhancement of the project monitoring and evaluation system; establishment of an effective complaints-handling mechanism; and implementation of a gender action plan. 20. The project coordinating and management unit (PCMU) was established at DGHS. Implementation arrangements were in place at all participating provinces and districts, including provincial project implementation units (PPIUs), district project implementation units (DPIUs), and local steering committees. All PPIU, DPIU, and PCMU staff (more than 130 persons in total) were provided training on project management and implementation. In general, the PCMU, PPIUs, and DPIUs operated with appropriate staff and sufficient resources. 21. Four packages of management consultants were fielded to provide technical, management and capacity development to the PCMU, PPIUs, DPIUs, and community facilitators. Deployed to assist communities during project implementation were 2,088 community facilitators, of which 648 (31%) were women. An NGO was recruited to carry out independent monitoring and evaluation. Results of the NGO monitoring and evaluation indicated that in general the project stakeholders had carried out their tasks and responsibilities in line with the project guidelines while women and the poor had actively participated in and benefitted from project activities. DGHS also recruited consultants to carry out a project impact evaluation. Their report suggested that the project is bringing about such positive impacts as the following: (i) the project contributed to an increase in project community income by 15%, (ii) the provision of roads contributed to a 9% reduction in school dropout rates, and (iii) the provision of water supply and sanitation facilities contributed to reducing the incidence of waterborne diseases by 8%. 22. As of project closing, a proper recording and reporting mechanism for complaints (which should be a part of the monitoring and evaluation system) had not been established. DGHS had established a call center with a telephone number and email address to receive complaints at the central level. That system had not been replicated at provincial and district levels. It was also noted that DGHS had not properly disseminated information about the complaint- and grievance-handling mechanism to project stakeholders. DGHS suggested that complaints were usually handled and settled at community levels, and, since complaints were immediately resolved, no specific reporting was prepared. Instead, they were recorded as part of the project progress reports. It was noted that quarterly progress reports submitted by DGHS reflected issues related to project progress, including problems that affected project implementation.

4. Gender Action Plan

23. The project also included some actions to maximize project benefits to women and the poor. A gender issue related to infrastructure development was inadequate representation of women in decision making and project implementation. A project gender action plan (GAP) was

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prepared to ensure attention would be given to the different needs of men and women and to ensure equal opportunities for both in terms of access to project benefits and participation in community mobilization and facilitation activities. 24. At project completion, more than 10,500 village residents had been selected as CIO members, 3,760 (about 36%) of which were women. Thus, women CIO membership was slightly behind the 40% target. Women’s participation in all stages of project implementation (including socialization and decision-making meetings 1 to 4) was recorded to include 295,279 persons (38% of the total 770,050 participants).16 However, women’s participation in MTPR plan preparation meetings was recorded at 160,374 of 391,156 participants (41%), which exceeded the target of 40%. The participation of village residents considered as poor in various stages of meeting was recorded at 374,244 (about 48.6%, slightly behind the target of 50%). Separate meetings for women were carried out, and mostly these were undertaken as part of village weekly Koran recitation for women (pengajian).17 About 8,000 village residents were selected as members of the KPPs, including about 2,200 women (about 28%). Thus, women’s membership in KPPs is far below their membership in the CIOs. Feedback received during field visits suggested that women hesitated to be KPP members because KPP’s working period is longer than that of the CIOs. Their domestic and family obligations were cited as taking higher priority. 25. The quality of women’s participation was encouraging. The gender audit report prepared by DGHS suggested that about 10% of women participating in planning meetings claimed to be actively involve and leading in decision making. Approximately 67% actively provided inputs during meetings while 23% only attending the meetings without providing inputs. The targets under the project GAP and their comparison with the achievements are in Appendix 4. C. Project Costs

26. At appraisal, the project cost was estimated at $113.5 million. ADB was estimated to contribute 74.2% of the project costs through the provision of an $84.24 million loan from ordinary capital resources. Governments were to contribute about 19.2% and communities and beneficiaries 6.6%. At project completion, the total project cost was slightly higher at $114.20 million. ADB contributed about 72.8% of the total project cost ($83.13 million). Governments contributed about 20.2% ($23.04 million) and communities contributed about 7% of the total ($8 million). The increase in governments’ contribution was due to appreciation of the rupiah, especially against the dollar, during project implementation. This had caused loan proceeds to be insufficient to finance the planned two cycles of community development grants for 1,500 villages. To meet the target, DGHS financed the second cycle of community development grants in 107 villages from government-owned resources while the remaining 1,373 villages were financed from the loan proceeds. By the end of project implementation, the rupiah had depreciated, (again, particularly against the dollar), and therefore about $1.1 million of loan proceeds was cancelled at loan closing. Appendix 5 provides detailed project costs and financing plans. D. Disbursements

27. The loan proceeds were disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time). In view of the successful completion of RIS

16

One person could participate in one or more village meetings. 17

To obtain the views of women who could not attend the Koran recitation, community facilitators usually visited them at their houses, rice fields, or farms.

8

PNPM I, the project adopted the same funds flow mechanism. Its main feature is a simple funds flow arrangement with direct transfer from the project imprest account to CIO accounts. In total, $83.13 million of the loan proceeds were disbursed (i.e., about 98.7% of the total loan amount of $84.24 million). The report and recommendation of the President (RRP, footnote 4) does not provide a disbursement schedule. To facilitate disbursement of the loan proceeds, an imprest account established at the Bank of Indonesia was provided to facilitate disbursement for all project categories. DGHS and the Ministry of Finance managed the imprest account properly. The auditors provided an unqualified opinion on management of the imprest account during the entire project implementation. Communities implemented all of the civil work contracts (averaging $27,500 each). Thus, use of the imprest account helped accelerate disbursement of loan proceeds. The imprest account was established, managed, replenished, and liquidated in accordance with ADB’s Loan Disbursement Handbook. DGHS demonstrated efficiency in managing the imprest account, and no significant issues arose during project implementation in managing that account. Appendix 6 provides details on the disbursement of loan proceeds, while Appendix 7 shows the funds channeling mechanism. E. Project Schedule

28. The project was implemented in line with the project schedule as stated in the RRP. In general, activities indicated in the RRP were completed in accordance with the schedule. Soon after the project was declared effective in February 2010, DGHS began recruiting, training, and mobilizing community facilitators. Implementation of civil works started in August 2010 and was completed in early 2012. Project management consultants were mobilized in late 2010 and early 2011. Thus, the first year of project implementation (first cycle of community development grants) was implemented with support from individual consultants (bridging consultants) financed from government-owned resources. At the national level, the consultant team which had supported the earlier RIS PNPM I was extended to continue support for this project. The national, provincial, and district implementation units were established prior to project effectiveness. Appendix 8 compares the original schedule with actual implementation. F. Implementation Arrangements

29. The implementation arrangements were followed as outlined in the RRP. These arrangements were considered appropriate during the entire project implementation and no major change was required. Appendix 9 details the project implementation arrangements. G. Conditions and Covenants

30. Three of the loan covenants have been complied with only in part and the remaining covenants were complied with fully. Partial compliance reflects the weak roles of the PCMU in strengthening and managing the complaints-handling system (two loan covenants) and frequent delays in submitting quarterly progress reports. The partial compliance with covenants had no significant impact on the overall project implementation. No covenants were modified, suspended, or waived. All financial covenants were complied with. The detailed list of loan covenants and their compliance status are in Appendix 10. H. Consultant Recruitment and Procurement

31. The project engaged national consultants for 2,254 person-months (versus 1,928 person-months estimated at appraisal). These included (i) individual consultants to design and conduct capacity building activities for project stakeholders, (ii) the national project management

9

consultants, (iii) three regional project management consultants, (iv) a team of consultants to carry out the project impact evaluation study, and (v) an NGO for independent monitoring of project activities. The consultants were recruited in accordance with the Guidelines on the Use of Consultants by ADB (2007) without significant delays. The project also engaged community facilitators for about 22,120 person-months that were financed by government funds to support communities in implementing the project. Overall, the provision of consultants and community facilitators was in line with the provisions indicated in project documents. 32. Civil works financed under the village grants were contracted out to CIOs in compliance with ADB Procurement Guidelines (2007) on community participation in procurement. The CIOs procured materials and arranged equipment rental. Participating villages followed the regulation on purchasing goods and services by choosing from among at least three competing suppliers the one offering the lowest price. Civil works for rural infrastructure rehabilitation and expansion were contracted out to a given community based on a contract signed between a CIO and a district project manager and in accordance with the agreed procedures for community participation set out in the procurement plan. Community contracts followed the standard format for such contracts under the overall PNPM Mandiri and included evidence of community facilitation, the design of village infrastructure facilities to be improved under the contract, and a community O&M plan for these facilities. The first two community contracts in each participating province were submitted to ADB for prior approval. I. Performance of Consultants, Contractors, and Suppliers

33. The performance of consultants and community facilitators was generally satisfactory. Consultants and community facilitators provided support and guidance to communities during planning, designing, and implementation of the project. The national project management consultants supported DGHS and the PCMU in overall project implementation and management. The Lampung regional project management consultant supported the Lampung PPIU and 10 DPIUs in Lampung Province. The South Sumatra regional project management consultant supported the South Sumatra PPIU and 11 DPIUs in South Sumatra. The Jambi–Riau regional project management consultant supported the Jambi and Riau PPIUs and 16 DPIUs in Jambi and Riau provinces. Effective community facilitation and empowerment require experienced and qualified community facilitators and good guidance from consultants. The majority of community facilitators engaged under the project performed well, even though there were a few cases where inexperienced community facilitators were also deployed. These inexperienced community facilitators were further equipped with training and guidance from district consultants and DPIUs. Regular coordination meetings at the district and provincial levels, during which community facilitators were able to share experience and learn from one another, proved very useful in strengthening community facilitators’ capacity. During project implementation, the regional project management consultant personnel were changed several times. These changes did not, however, significantly impact on the overall project management. J. Performance of the Borrower and the Executing Agency

34. The performance of the borrower is rated satisfactory. The borrower and DGHS demonstrated strong commitment to a successful project implementation. The provision of counterpart funds was timely and in the amounts required by the project. The timely project implementation and completion was possible because considerable work was completed as scheduled. Decrees and other legal instruments necessary to launch the project were endorsed in all participating provinces and districts on time. DGHS continuously improved project guidelines based on experience from and evaluation of previous projects.

10

35. DGHS was able to manage the project satisfactorily. Findings and agreements from review missions to further improve project implementation were mostly followed up. To address the need for management consultants to support facilitators and communities while the consultants were being recruited, DGHS took the initiative to recruit individual consultants as bridging consultants and these were financed from government-owned resources. DGHS also managed the project imprest account in a satisfactory manner, which contributed to achieving annual contract awards and disbursement projections. No significant issues arose during the community contract process, and the CIOs were able to receive the community development grants without difficulty. The annual project accounts and financial statements were always submitted on time to the independent auditors. The auditors provided unqualified opinions on all annual project financial reports, and at project completion all recommendations from the audits had been followed up. Project monitoring and evaluation by DGHS was insufficient, however, as indicated by, among other things, (i) frequent delay in submitting project progress reports, and (ii) the absence of proper recording and reporting of the complaints-handling mechanism. K. Performance of the Asian Development Bank

36. ADB’s performance was satisfactory. During the implementation period, ADB fielded 10 project administration missions (1 inception, 7 review, and 2 special loan administration missions) for a total of about 135 staff person-days, or about 31 staff person-days per year. The missions mainly comprised project implementation specialists and project officers. The frequency and number of staff-person days per mission appear to have been sufficient for effective supervision. 37. Soon after the project was declared effective in 2010, its administration was delegated to the Indonesia Resident Mission. This move was greatly appreciated by the government and improved overall administration of the project. Resident mission staff provided support and guidance to expedite the recruitment of management consultants, as well as support in resolving issues during implementation. All issues related to project implementation were discussed in detail in memoranda of understanding of the review missions, which were fielded at least twice a year. Resident mission staff also participated actively in the quarterly monitoring meetings coordinated by the National Development Planning Agency, which were directed to helping executing agencies resolve implementation issues. This contributed to the timely project completion. With regard to consultant management, mission staff assisted DGHS in evaluating consultants’ performance and provided advice on remedial actions needed to improve consultant management by DGHS. Consultant management by DGHS was thereby improved.

III. EVALUATION OF PERFORMANCE

A. Relevance

38. Overall, the project remains relevant to the government and ADB, and it is consistent with their policies and priorities for reducing poverty in poor rural areas. No changes in the project scope were required during implementation. The project’s outcome to improve access to service delivery and basic rural infrastructure for the poor, near poor, and women was (i) fully in accordance with the government’s medium-term development plan for 2009–2014 that aims to reduce the poverty rate from 14.2% in 2009 to between 8% and 10% by 2014,18 and (ii) aligned with the government’s leading poverty reduction program, the PNPM Mandiri, which provides

18

The project was formulated in line with the medium-term development plan for 2004–2009. At completion, it was in line with the medium-term development plan for 2009–2014 which had been issued during project implementation.

11

assistance to poor communities nationwide by providing block grants for improving essential social services and basic infrastructure. The project was also consistent with ADB’s 2006–2009 country partnership and strategy for Indonesia, which linked rural poverty with poor social and infrastructure services and a lack of economic opportunities. The project was formulated in a consultative manner. ADB and other development partners supported the government’s flagship poverty reduction program, the PNPM Mandiri program. This helped in sustaining the government’s ownership and commitment to the project. 39. Encouraged by the successful project accomplishments, the government requested that ADB provide additional assistance to improve basic rural infrastructure and urban sanitation facilities under the PNPM program using the CDD approach. In August 2011, a third project contributing to the overall PNPM Mandiri scheme and using CDD was approved for $100 million.19 It was also noted that some local governments have replicated the project while implementing similar initiatives financed by their own resources. In addition to indicating that the project is relevant to the government’s policy and strategy, this also shows that the project’s capacity strengthening component has brought some positive results. B. Effectiveness in Achieving Outcome

40. Overall, the project was effective in achieving the outcome of improved access for the poor, near poor, and women to basic infrastructure services in the project villages. The project has significantly improved access for the poor to nearby markets for trading their farm produce, improved the supply of water for domestic purposes, provided better sanitation facilities, enhanced irrigation facilities, and provided permanent boat landing amenities. Infrastructure improvements have given poor communities easier access to public health facilities and quality education services. At completion, the project had contributed to improved living conditions for about 3.18 million poor people in 1,500 villages by constructing, upgrading, or improving basic rural infrastructure in these villages. Most of the outcome performance indicators were achieved or exceeded. 41. Surveys carried out during project implementation suggested that 94% of the respondents (residents of the project villages) found the quality of infrastructure that was built to be satisfactory, and 99% of the respondents found that infrastructure to be beneficial. The project impact evaluation study also indicated that the improved transport facilities contributed to a 15% increase in the number of women in project villages having prenatal care checkups and a 9% reduction in student (including female student) dropout rates. In villages opting to improve their water supply schemes, the time spent collecting water has been reduced by as much as 50%. The provision of water supply and sanitation facilities and the improved living conditions had boosted community awareness of improved hygiene and sanitation facilities and contributed to reducing the incident of waterborne diseases by 8%. The majority (about 90%) of the MTPR plans prepared under the project were adopted as village medium-term development plans, which district governments use as references in providing budgets to these villages. 42. Targets under output 1 were mostly achieved: (i) CIOs were established in 1,500 villages with about 35% representation of women in each CIO; (ii) two separate planning meetings for women were conducted in each of the project villages, thereby providing opportunities for women to voice their ideas, interests, and needs; (iii) MTPR plans were formulated in a

19

The Urban Sanitation and Rural Infrastructure Support to PNPM Mandiri Project (Loan 2768-INO) provides support to about 600 rural communities for rehabilitating and improving basic infrastructure and to 1,350 poor urban neighborhoods in 34 cities for improving sanitation services.

12

participatory manner in all project villages, with about 41% women’s participation and 49% poor residents’ participation in planning meetings and other community meetings; and (iv) investment and implementation plans for community-driven development projects were formulated and approved in all project villages and most of these were adopted as the official village medium-term planning documents, which will be used for obtaining financial support for villages in the future from district governments or other sources. 43. Targets under output 2 were reached: (i) two cycles of community development grants were distributed to 1,495 villages and were used to finance infrastructure investments in accordance with the needs, priorities, and interests of the communities (including the poor, women, and other marginalized groups); (ii) gender audits were implemented; (iii) more than 80% of the infrastructure that was built was evaluated as meeting the national standards for rural infrastructure and about 80% of the user groups functioned to operate and maintain the infrastructure and facilities that were built; and (iv) about 303,000 person-months of immediate employment opportunities were created. The project fell short on the target of providing 30% of immediate employment opportunities to women, however, as only about 60,600 person-months (20%) were provided to women. 44. In line with targets under output 3, (i) the project management units were established at all levels; (ii) consultants and facilitators were mobilized to support project management and implementation; and (iii) an NGO to carry out project independent monitoring was recruited, as was a consulting firm to conduct a project impact evaluation study. The project was unable to meet the target of involving 30% female staff, however, as only 15% of staff involved in project implementation and management was female. Proper recording and reporting of complaints was not established. C. Efficiency in Achieving Outcome and Outputs

45. In general, the project was rated efficient in attaining the achieved outcome and outputs. The project was implemented mostly on schedule and within the estimated budget. All the required counterpart funds were provided by the borrower, DGHS, and local governments on time and sufficiently. The community, including women and the poor, cooperated actively during all stages of project implementation. 46. The RRP had aimed for the project to have significant impacts on project village economies and to yield an average economic internal rate of return (EIRR) between 28% and 68%. The project impact evaluation suggested that the intended benefits had been achieved. The project generated about 303,000 person-months (or about 25,000 person-years) of short-term employment in the construction of village investments. Overall, the project generated additional income of about $28 million for community members, including women, participating in civil works under the project. As this employment was largely provided in the agricultural off-season, it had particular benefits for reducing unemployment and vulnerability among the poor. There was also evidence to suggest that the increased demand for manual labor had a broader impact in raising the wages of unskilled workers even outside of project activities, thereby contributing further to poverty reduction. 47. In addition to increasing incomes due to primary and secondary employment, rural infrastructure investments had an important role in stimulating village economic activities. Project economic benefits were generated from opening access to markets and reducing transport costs by constructing and upgrading rural roads and bridges; time savings in collecting water and health benefits from village water supply and sanitation investments, and reducing

13

damages and loss of stored farm products due to flooding from improved drainage systems. At project completion, the impact evaluation suggested the project had contributed to increasing project village residents’ income overall by as much as 15%. The project contributed to a 9% reduction in the incidence of waterborne disease. Overall, the project benefitted about 3.18 million village residents in 1,500 project villages. A post-completion evaluation suggested an EIRR of 39.2%.20 That is within the EIRR estimated in the RRP (28%–68%) and above ADB’s benchmark of 12%. The economic reevaluation is in Appendix 11. D. Preliminary Assessment of Sustainability

48. There are significant indications that investments made in project villages are relevant to the communities (as their demand for services provided under the project was high), and thus the upgraded and constructed infrastructure is likely to be sustainable. Most of the infrastructure constructed and upgraded under the project is simple and easy to maintain. O&M arrangements had been included as part of the MTPR plans, and community members were trained to carry out the O&M. It is therefore expected that community members will have sufficient resources and capacity to operate and maintain the facilities. The main risk to sustainability, however, is inadequate attention to the importance of O&M in some villages and limited support from district administrations. Even though at the beginning of project implementation district administrations had signed agreements to provide adequate support to communities during and after project completion, experience indicated that there was always a risk that the agreements would be forgotten, and especially with changes of district officials. DGHS recognized this issue and agreed that, in cooperation with provincial and district governments, continuous monitoring of project investments will be carried out beyond project completion. E. Impact

49. The intended project impact was reduced poverty and improved local governance in the project areas. The project has improved living conditions for about 636,000 households (about 3.18 million village residents) in 1,500 project villages. Construction and upgrading of roads, pathways, and bridges improved the overall business conditions for informal entrepreneurs (including the likes of food-stall owners, small restaurants, and small shops) and farmers. Better roads also provided easier and safer access for residents to their places of work (e.g., rice fields, rubber and palm oil plantations), contributed to reduced transportation costs generally, and improved access to local markets to deliver goods and services and buy products, as well as to schools and health centers. Improving drainage systems contributed to reduced damage and losses from flooding. Additional economic benefits include (i) improved public health status and reduced per capita costs for health care and medical treatment due to greater coverage of sanitation services and improved access to safe drinking water; (ii) greater income-generating opportunities through improved essential infrastructure, and (iii) considerable short-term employment during the construction of village infrastructure. 50. The impact performance indicators were formulated as follows. By 2017, (i) the number of households in project villages living below poverty line should be reduced by 20%, and (ii) satisfaction with local level service delivery and governance should be increased by at least 20%. At project completion in 2013, the impact evaluation report suggested that the project had contributed to increasing project village residents’ income by 15%. At the time the project impact 20

Calculated using a representative sample of three types of village infrastructure investments which comprised the largest investments: (i) rural roads and bridges, (ii) drainage, and (iii) water supply and sanitation. Respectively, these collectively comprised about 75%, 20%, and 5% of village-level investments supported under the project. It was assumed that benefits accrue during an operational lifetime of 10 years.

14

evaluation was prepared, the poverty rate data of the project villages overall had not been updated. However, based on the above finding and the overall PNPM program outcomes and outputs and its efficient execution, as well as the follow-up investments in the project area, the project area can be expected to see significant socioeconomic improvement and thus the 2017 target of reducing households living under the poverty line by at least 20% can be met. 51. Active community participation in the preparation of upgrading and investment plans and construction of infrastructure contributed to strengthening local capacity for community planning and development and good governance. Involvement in the preparation of MTPR plans, annual investment plans, and O&M documents increased village residents’ skills, which can be used in planning, designing, implementing, operating, and maintaining their own projects. Interactions with district officials helped village residents to better understand the development planning and implementation at their own districts. Good networking with district officials was also created, which can be used to channel their interests and ideas to the district administration. The project promoted good governance through (i) transparent planning, procurement, disbursement, and implementation based on jointly agreed procedures; (ii) well-defined institutional arrangements; and (iii) transparent mechanisms for transferring investment funds to community-managed bank accounts. The impact evaluation report suggested that the majority of village residents were satisfied with the service delivery provided by local governments. 52. Project efforts to involve women improved the quality of women’s participation. Most women indicated they were actively involved and provided inputs during community decision-making meetings. Women’s participation in training and memberships in CIOs and user groups improved their capacity to influence decision making, including on how project resources were spent. The gender action plan (GAP) was integral to the project, given that women were intended to be significant beneficiaries, and it contributed to achieving the overall outcome. Through implementing the GAP, the project made it more likely that women would benefit equally from the project. Based on the achievements, the project was rated successful in terms of gender equality results. Overall, the project had positive impacts on the environment and living condition of project villages.21

No issues related to environmental impact were reported.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

53. The project has been implemented as conceived. It is rated successful based on the review of its relevance, effectiveness, efficiency, sustainability, and poverty and gender impacts. B. Lessons

54. The project yielded the following insights for similar, future CDD projects: (i) Inclusive involvement of community members in decision making and implementation of infrastructure projects is needed to ensure ownership and transparency. (ii) Community facilitators and consultants must be well selected so that only qualified and committed personnel are deployed to support communities in the empowerment process and on technical matters. (iii) Sufficient time should be allowed to ensure that all community members understand the CDD approach and will be involved in prioritizing their needs, taking investment decisions, and developing

21

The project’s environmental assessment and review framework was used as guidance on environmental screening for each type of infrastructure or facility. It included environmental assessment checklists to review environmental implications and ensure that there were no adverse impacts.

15

infrastructure proposals. (iv) Project managers (government officials) must understand the value of promoting genuine participation and public trust and be interested, motivated, and capable to do so. Project management training for officials may need to include these aspects.

C. Recommendations

1. Project Related

55. Future monitoring. Establishment of an appropriate project monitoring mechanism, and particularly involving district administration, must be emphasized. Utilizing independent parties (e.g., NGOs) has been proven to improve monitoring mechanisms, and particularly to ensure (i) full participation of women, the poor, and marginalized groups during all village investment phases; and (ii) implementation of transparent accountability procedures and good governance. 56. Covenants. More attention should be given to O&M to ensure sustainability of infrastructure investments. O&M issues must be addressed from a realistic and long-term perspective. Community members require more guidance from district administrations, consultants, and community facilitators to ensure they understand the importance of appropriate O&M arrangements. As consultants and community facilitators will leave the project once it is completed, roles and responsibilities of district administrations related to O&M arrangements after project completion need to be included as covenants in future loans. 57. To ensure the setting of realistic targets, and particularly for the number of female government staff involved in project activities, future projects should consider the actual number of women in the relevant positions. To ensure full participation of women, future projects should include actions to address issues such as (i) holding meetings and other activities at times and places convenient for women in consideration of their family obligations, and (ii) including topics such as women’s role in community activities and decision making and women and men’s joint household obligations and decision making. 58. As community empowerment is a complex process and involves rebalancing of power between citizens and governments as well as between groups within communities, it is recommended that the next project also cover villages under this project. Communities should also be provided opportunities to provide feedback on the performance of consultants and community facilitators. 59. It is recommended that the project performance evaluation report be prepared 2 years after this project completion report.

2. General

60. To broaden the development impact on communities and promote integrated approaches, an increase in the block grant amounts might be considered. Assurances need to be included in project documents, however, to ensure that the works will be simple enough for the communities to implement. 61. The indicators in the design and monitoring framework should be quantitatively measurable. For example, the indicator “high-quality infrastructure” is difficult to measure and tends to be subjective. A more measurable indicator, such as “meeting the national standards for rural infrastructure,” would be more appropriate.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Targets and Indicators

Data Sources and Reporting

Mechanisms Assumptions

and Risks Accomplishment

Impact

Reduced poverty and improved local governance in PNPM Mandiri areas

By 2017:

Number of households in project villages living below poverty line reduced by at least 20% from project baseline. Satisfaction with local level service delivery and governance increased by at least 20% from baseline.

PNPM Mandiri evaluations

PODES village-level and SUSENAS household surveys

Project surveys (Ministry of Home Affairs, MPW)

Subdistrict and district government plans and budgets

Assumption

National and regional government policies continue to support community-driven development. Risk

Natural or financial disasters will impact the project area.

At project completion (2013), the project impact evaluation study suggested that the project had contributed to an increase in income of the project village residents by 15%. Of those project village residents surveyed during the project impact evaluation study, 90% indicated satisfaction with the level of service delivery. Governments at all levels continue to support implementation of the community-driven development approach. This was demonstrated by the provision of new and similar projects also applying the community-driven development approach. During project implementation, no natural or financial disaster occurred. Reports prepared by the executing agencies provided the required data. DGHS also carried out a project impact evaluation of the project impacts.

Outcome

Improved access to service delivery

By 2014:

Poor and women in about 1,500 rural villages in the project

PPMS reports

PODES village-level

Assumptions

Communities are fully committed to the project and have

Better services and village infrastructure had improved the

Appendix 1 17

Design Summary




and Risks Accomplishment and basic rural infrastructure for the poor, near poor, and women in the project communities

provinces benefiting from better service delivery and village infrastructure.

At least 60% of villagers in project villages satisfied with improvements in local roads, drinking water, sanitation, and other basic infrastructure.

At least a 10% increase from the baseline in the number of women in project villages undertaking prenatal care checkups.

At least a 10% increase from baseline in school attendance of girls aged 13–15 years (lower secondary school).

At least 20% reduction from the baseline in time spent collecting water in project villages. At least 50% of households in project villages have increased awareness of sound hygiene and sanitation practices.

Community-

and SUSENAS household surveys

Baseline and follow-up impact evaluation surveys in target project areas (MPW)

Independent NGO M&E reports

PNPM Mandiri MIS and evaluations

Special studies (MPW)

sufficient resources to maintain project investments.

National budget funds are adequate and provided in a timely manner.

living conditions of about 3.18 million village residents, including women and the poor, in 1,500 project villages. Among residents of the project villages, 94% found the quality of the infrastructure built (transport, water and sanitation, irrigation facilities) to be satisfactory, and 99% of them also found that infrastructure to be beneficial. Field observations indicate that improved transport facilities contributed to a 15% increase in the number of women in project villages undertaking prenatal care checkups. Improved transport facilities contributed to a 9% reduction in student dropout rates (including female students).

In villages opting to improve their water supply schemes, the time spent collecting water had been reduced by 50%. The provision of water supply and sanitation facilities had increased community awareness of improved hygiene and sanitation facilities by 80%. Of the MTPR plans

18 Appendix 1

Design Summary




and Risks Accomplishment determined village priorities integrated in subdistrict and district development plans and supported by district government budgets.

prepared under the project, 90% were adopted as village medium-term development plans, which are referenced by district governments in providing budgets to these villages. Community members were targeted in providing contributions totaling about $7.5 million. At project completion, community members had provided $8.03 million for financing the civil works. On this basis, it can be concluded that community members fully supported and were committed to the project. All required government counterpart funds were provided on time. DGHS recruited consultants to carry out a project impact evaluation study. DGHS also recruited an NGO to carry out independent project monitoring. Data from the impact evaluation and independent monitoring were used to evaluate project achievements.

Appendix 1 19

Design Summary




and Risks Accomplishment Outputs

1. Strengthened capacity for community planning and development

By 2014:

Functioning community implementing organizations (CIOs) established in about 1,500 villages, with at least 40% representation of women in each CIO.

At least two separate planning meetings for women conducted in each of about 1,500 villages.

MTPR plans formulated in a participatory manner in about 1,500 villages, with at least 40% women participation and 50% of poor residents in planning meetings.

Well-designed investment and implementation plans for community-driven development projects formulated and approved in each of about 1,500 villages.

Inter-village meetings conducted to facilitate

PPMS reports

Impact evaluation medium-term and final reports

NGO reports

District government plans and budgets

Risks

Prioritization and planning are captured by a few influential community members.

Regional governments fail to participate constructively in project implementation.

CIOs were established and functioned as designed in 1,500 villages. About 35% of the CIO members were women. Separate meetings for women were carried out and mostly were undertaken as part of village weekly Koran recitation for women (pengajian). MTPR plans were prepared in a participatory manner to identify community needs to upgrade and construct basic infrastructure that was financed by the project. Sound poverty mapping exercises and joint identification of problems and needs also took place. Women’s participation during MTPR plan preparation was recorded at 41%. The participation of village residents considered poor was recorded at 48.6%. MTPR plans reflected community needs and priorities. The majority of the MTPR plans were adopted as village planning documents and are used for obtaining financing from district governments. Inter-village

20 Appendix 1

Design Summary




and Risks Accomplishment coordination and identify possible complementarities in infrastructure and service improvements.

meetings were facilitated and complementarities in infrastructure and service improvements were identified (e.g., roads connecting two or more villages were constructed).

2. Improved village services and infrastructure through community development grants

By 2014:

Two cycles of block grant investments (Rp250 million per village per cycle) have been implemented in each of about 1,500 rural villages in the project provinces, addressing community needs (including those of the poor, women, and other marginalized groups).

Gender audits completed for all block grant investments in about 1,500 villages.

More than 70% of infrastructure works are evaluated as being of high quality and have functioning O&M arrangements.

At least 290,000 person-months of immediate employment opportunities generated in the project villages, with at least 30% provided to women.

PPMS reports

Impact evaluation medium-term and final reports

NGO M&E reports

District government plans and budgets

Assumption

Communities have surplus labor and adequate resources to undertake civil works and maintenance of investments.

By 2013:

Two cycles of community development block grants were transferred to 1,495 villages while 5 villages received only 1 grant cycle. The block grants were used to construct and/or upgrade basic rural infrastructure while addressing community needs and priorities specified in the MTPR plans.

Gender audits were completed in all 1,500 project villages.

About 80% of infrastructure works were evaluated as meeting national standards for rural infrastructure.

About 303,000 person-months of immediate employment opportunities were generated by 2013, with about 20% of the employment opportunities provided to women.

3. Improved capacity for project implementation and monitoring

By 2011:

Project management structures established at central, provincial,

PPMS reports

Training and workshop

Assumptions

National, provincial, and district governments allocate

Project management structures were established at the

Appendix 1 21

Design Summary




and Risks Accomplishment and evaluation and district levels, with

at least 30% women staff; about 120 staff have completed initial training and are operating with adequate resources.

About 82 consultants have been recruited, trained and are operational. About 1,070 community facilitators have been recruited, trained and deployed, at least 30% of whom are women.

Detailed annual work plans and personnel schedules have been developed.

1,500 villages have been selected, and community planning processes and community investments are being implemented based on agreed-upon criteria and standards.

Enhanced M&E system has been established and is operational.

Effective complaints-handling mechanism has been established and is operational.

records

Detailed work schedule and budget plans Project management meeting minutes Quarterly and annual progress reports NGO M&E reports

Audit reports Records of complaints-handling unit

M&E records and data

adequate staff and resources for project operating entities.

District government counterpart funds are provided in a timely manner.

A sufficient number of suitable applicants are available for recruitment, training, and deployment as effective village community facilitators.

central, provincial, and district levels. About 15% of the project management units’ staff were female. About 130 project management staff were trained on project management and implementation. Overall, project management units were staffed with appropriate staff and operated with sufficient resources. Management consultants were mobilized for 2,200 person-months. Recruited and trained were 2,088 community facilitators, of which 648 (31%) were female. Project annual work plans were prepared by the project coordinating and monitoring unit. 1,500 villages were selected. Community planning and community investments were implemented following the agreed procedures.

A proper M&E system was generally established and operated. A complaints-handling mechanism was established, but proper recording and reporting were not applied.

22 Appendix 1

Design Summary




and Risks Accomplishment Gender action plan is being implemented.

Independent NGO monitoring and impact evaluation provide external M&E reports assessing project processes and emerging impacts in Q3 2011 (interim) and Q4 2012 (final).

A gender action plan was implemented and monitored regularly. DGHS recruited an NGO and consultant to carry out independent project monitoring and a project impact evaluation study.

Activities with Milestones 1. Strengthened Capacity for Community Planning and Development

1.1 Recruitment and training of community facilitators (Q2 2010) 1.2 Deployment of community facilitators (Q3 2010) 1.3 Socialization campaigns completed in all project villages for

cycle 1 (Q3 2010), and cycle 2 (Q3 2011) 1.4 Community facilitation and planning completed in all project

villages, including separate women’s meetings and poverty mapping In cycle 1 (Q4 2010) and cycle 2 (Q4 2011)

1.5 Selection of investments completed in all project villages for cycle 1 (Q4 2010) and cycle 2 (Q4 2011)

1.6 Inter-village meetings for village-level representatives to support coordination and potential complementarities between investments for cycle 1 (Q4 2010) and cycle 2 (Q4 2011)

1.7 Community investment plans finalized, O&M plans drafted and contracts executed for cycle 1 (Q1 2011) and cycle 2 (Q1 2012)

1.8 Local government capacity building undertaken (Q2 2010 to Q4 2012)

2. Improved Village Services and Infrastructure through Community Development Grants

2.1 Villagers trained to implement village infrastructure plans for cycle 1 (Q4 2010) and cycle 2 (Q4 2011)

2.2 Quality and gender audits undertaken for cycle 1 (Q1 2011) and cycle 2 (Q1 2012)

2.3 Disbursements of first tranche of grants for investments completed for cycle 1 (Q1 2011) and cycle 2 (Q1 2012)

2.4 Disbursements of second tranche of grants for investments completed for cycle 1 (Q2 2011) and cycle 2 (Q2 2012)

2.5 Disbursements of third tranche of grants for investments completed for cycle 1 (Q2 2011) and cycle 2 (Q2 2012)

2.6 Civil works of community investment projects completed for cycle 1 (Q3 2011) and cycle 2 (Q3 2012)

2.7 Community O&M plans for cycle 2 investments finalized for cycle 1 (Q3 2011) and cycle 2 (Q3 2012)

3. Improved Capacity for Project Implementation and Monitoring and Evaluation

3.1 Identify and train national, provincial, and district-level project staff and cross-agency steering committees (Q2 2010 with periodic follow-up capacity building program)

3.2 Mobilize management consultants (Q2 2010) 3.3 Develop annual work plans for the project (Q2 of each year, and

Inputs ADB: $84.2 million Government: $21.8 million Beneficiaries: $7.5 million

Accomplishment

The majority of the activities were completed on time. The loan proceeds disbursed at project completion totaled $83.13 million. The government contribution was $23.05 million, including $5.5 million for interest during implementation. Beneficiary (community) contribution (in-kind) was $8.03 million (for civil works).

Appendix 1 23

updated as needed) 3.4 Undertake regular monitoring of project activities (continuous) 3.5 Reporting on physical and financial progress (every 6 months) 3.6 Spot audits on complaints mechanism (continuous) 3.7 Audits for community investments (continuous from Q4 2010 to

Q4 2012) 3.8 Independent NGO M&E (Q3 2010, Q1 and Q3 2011, Q1 and Q3

2012) 3.9 Impact evaluation (interim and end-of-project reports in Q3 2011

and Q4 2012) ADB = Asian Development Bank, CIO = community implementing organization, DGHS = Directorate General of Human Settlements, M&E = monitoring and evaluation, MIS = management information system, MPW = Ministry of Public Works, MTPR = medium-term poverty reduction, NGO = nongovernment organization, O&M = operation and maintenance, PNPM = Program Nasional Pemberdayaan Masyarakat (National Program for Community Empowerment), PODES = Potensial Desa (Village Potential Statistics), PPMS = project performance management system, Q = quarter, SUSENAS = Survei Sosial Ekonomi Nasional (survey on national social and economy).

24 Appendix 2

PARTICIPATING PROVINCES AND DISTRICTS Villages participating in the Rural Infrastructure Support to the PNPM Mandiri Project II are shown in Table A2 and were chosen according to the following criteria: (i) located within the subdistricts (kecamatan) provided by the Ministry of People’s Welfare; (ii) high rate of poverty incidence (above 20%), based on data issued by the Central Bureau of Statistics (Village Potential Statistics and Inventory of Social Services Program, 2008); and (iii) low level of basic rural infrastructure services.

TABLE A2: PARTICIPATING PROVINCES AND DISTRICTS

Province District Number of

Subdistricts Number of

Villages

Lampung 1. Lampung Selatan 2 10 2. Lampung Tengah 11 77 3. Lampung Timur 4 23 4. Lampung Utara 1 5 5. Mesuji 4 33

6. Pesawaran 4 51 7. Pringsewu 2 14

8. Tanggamus 11 83 9. Tulangbawang 6 36 10. Tulangbawang Barat 5 29

Subtotal 50 361

South Sumatra 1. Banyu Asin 4 37 2. Empat Lawang 3 40

3. Lahat 6 50 4. Muara Enim 12 76 5. Musi Banyuasin 4 25 6. Musi Rawas 8 43 7. Ogan Ilir 5 20 8. Ogan Komering Ilir 2 15 9. Ogan Komering Ulu 4 24 10. Ogan Komering Ulu Selatan 9 47 11. Ogan Komering Ulu Timur 10 47

Subtotal 67 424

Jambi 1. Bungo 2 14 2. Kerinci 6 58 3. Kota Sungai Penuh 4 21 4. Sarolangun 5 36 5. Tanjung Jabung Timur 5 32 6. Tebo 5 32

Subtotal 27 193

Riau 1. Bengkalis 3 13 2. Indragiri Hilir 11 88 3. Indragiri Hulu 9 86 4. Kampar 12 76 5. Kepulauan Meranti 1 5 6. Kuantan Singingi 5 65

7. Pelalawan 6 44 8. Rokan Hilir 6 31 9. Rokan Hulu 10 62 10. Siak 8 52

Subtotal 71 522 Total 215 1,500

Source: Ministry of Public Works. 2013. Project Completion Report: Rural Infrastructure Support to the PNPM Mandiri Project II. Jakarta.

Appendix 3 25

TYPES OF INFRASTRUCTURE BUILT

Type of Infrastructure Unit

Province

Jambi Lampung South

Sumatra Riau Total

Transport Facilities

Rural roads meter 372,318 1,285,858 758,340 863,539 3,280,055

Bridges number 577 2,722 2,518 2,880 8,697

Boat landings number 10 3 24 24 61

Service boat number 0 0 0 1 1 Water Supply and

Sanitation Facilities

Water supply pipes meter 4,406 11,433 19,616 0 35,455

Public taps number 0 3 0 0 3

Deep wells number 45 60 13 141 259

Shallow wells number 27 0 690 479 1,196

Reservoirs number 48 59 16 350 473 Communal sanitation facilities number 76 90 65 290 521

Irrigation Network

Water channels meter 2,087 6,821 3,904 200 13,012

Small dams number 0 3 0 3 6

River improvements meter 404 0 0 2,050 2,454

Drainage

Drains meter 66,072 74,204 113,416 119,605 373,297

Retaining walls meter 2,157 114,343 17,198 3,549 137,246 Source: Ministry of Public Works. 2013. Project Completion Report: Rural Infrastructure Support to the PNPM Mandiri Project II. Jakarta.

26 Appendix 4

GENDER ACTION PLAN TARGETS AND ACHIEVEMENTS A. Project Description

1. The Rural Infrastructure Support to the PNPM Mandiri Project II was expected to reduce poverty and improve local governance of rural communities in the project areas. The expected outcome was improved access to service delivery and basic rural infrastructure for the poor, near poor, and women in the project communities. The project included three outputs: (i) strengthened capacity for community planning and development, (ii) improved village services and infrastructure through community development grants (block grants), and (iii) improved capacity for project implementation and monitoring and evaluation. 2. The project aimed to improve access to service delivery and basic rural infrastructure in 1,500 poor villages. It targeted to benefit about 1.5 million rural poor living in poor and/or isolated villages that lacked basic services and infrastructure. The project was implemented in 37 districts located in the provinces of Lampung, Jambi, Riau, and South Sumatra. It was categorized as Gender Equity Theme (GEN). B. Gender Issues and Gender Action Plan Features

3. The gender issues in providing rural development and infrastructure related to the facts that (i) domestic responsibilities and social cultural stereotypes limit the degree and nature of women’s participation in communal forums and organizations, and (ii) men’s and women’s different access to control over resources and facilities in the community may also limit women’s participation in project activities.

4. Features of the project gender action plan (GAP) included to ensure that (i) women are represented in community implementation organizations (CIOs) with

at least 40% female membership at each CIO, (ii) women have access to planning and budgeting opportunities, (iii) women are key project stakeholders and beneficiaries, (iv) women are encouraged to increase their participation in public forums and

community decision making in both project-specific and other activities, (v) at least 30% of community facilitators are women, (vi) separate women’s meetings are held so that women’s needs are adequately

reflected in village plans, and (vii) a gender audit is completed for each selected community investment to make

sure that it reflects the needs of both men and women. C. Overall Assessment of Gender-Related Results and Achievements

5. The project GAP included 27 required gender measures with gendered indicators and 9 activities with targets. The GAP also required to include women in every activity and to collect sex-disaggregated data. Table A.4 details the project’s gender-related achievements. Overall, 38% of the participants at consultation and socialization meetings were women. That was slightly behind the 40% target specified in the GAP. The 40% target for women’s participation during the preparation of medium-term poverty reduction (MTPR) plans was exceeded, however, as about 41% of participants at MTPR plan preparation meetings were women. This was considered the most important target and one embodying the rationale of community-driven development projects. Separate meetings for women were organized, thereby allowing them to

Appendix 4 27

speak freely about their ideas, opinions, and needs. During these meetings, district project implementation units (DPIUs) supported by community facilitators and district consultants provided information about the project. Thus, women were appropriately informed. Observations during review and project completion review missions suggested that women had sufficient understanding of the project. These also indicated that women were actively involved in project planning and implementation. Women indicated that the training by and encouragement from community facilitators and DPIUs had increased their confidence and self-esteem in speaking during village meetings where men were also present. The gender audit report prepared by DGHS suggested that about 10% of women participating in planning meetings claimed to be actively involved and leading in decision making. About 67% actively provided inputs during meetings while 23% attended the meetings without providing inputs. The active involvement of women in preparation of the village planning documents (MTPR plans) had contributed to the good quality of the MTPR plans by helping to ensure these reflected the needs of the majority of village residents. This had boosted village residents’ acceptance and ownership of the project.

6. The project had also made efforts to encourage women’s participation and involvement in the operation and maintenance (O&M) of those facilities that were built. Of about 8,000 village residents elected as members of the user groups (KPPs), approximately 2,200 were women (28%). This was slightly behind the target of 30%. It was noted that women’s membership in the KPPs is far below that in the CIOs (35%). Feedback received during field visits suggested that women hesitated to be members of KPPs since a KPP’s working period is longer than that of a CIO. The main reason behind this is that women are occupied with domestic and family obligations. The involvement of women, however, had also improved implementation of the O&M arrangements. Many women acted as fee collectors, and their diligence was proven useful particularly in the preparation of KPPs’ financial reports.

7. About 50% of the CIO treasurers were women. Training on bookkeeping provided by the project had also helped them to better manage the project administrative matters, including financial reporting. Women frequently were appointed to such roles under the project. The knowledge was applied in their households, too, so that they were able to better manage their family financial matters. The male CIO members indicated that the involvement of women had helped them to better manage and implement the project. Female CIO members helped male CIO staff to communicate with female village residents, thus improving the project socialization process. The presence of female CIO members at meetings had also encouraged women to attend and become actively involve during those meetings. Because the female CIO members were very good in preparing reports, including financial reports, the male CIO members frequently relied on them during reports preparation.

8. Of the 9 GAP targets, 2 significant and relevant targets were not met. Thus 77% of the activities with targets were substantially achieved. The project was unable to meet the target for 30% of project staff to be women. Total project staff numbered about 130 at all levels, and 20 were women (15%). This reflected the fact that most staff members of those agencies involved in the project were men. The target to provide 30% of employment opportunities to women also was not achieved, as just 20% of those opportunities were allocated to women. Many women were reluctant to do hard construction labor work. The project endeavored to create other employment that did not involve hard labor, but this type of work was much more limited. The project was unable to ensure a balanced representation of men and women in capacity development training. Training on project management and implementation (e.g., bookkeeping, report preparation, operation, and maintenance) was provided by the PCMU and by community facilitators. About 3,500 persons participated in various training, and only about 24% (825) of all training participants were women.

28 Appendix 4

D. Gender Equality Results

1. Benefits, Participation, and Access to Project Resources

9. Improved women and girls’ access to basic infrastructure and services. The roads and other transport facilities built under the project improved village residents’ life in 1,500 villages, including women’s access to nearby markets where they could trade their farm produce. The improved transport facilities also reduced transport costs significantly. Observations suggested that the improved transport facilities had reduced transport costs by as much as 50%. Ultimately, households’ (including women’s) real incomes rose. The cost savings were used for such other expenditures as to pay school fees and for food. The improved transport facilities had also allowed village residents (including women) to be more mobile. The impact report suggested that visits to health centers and other health facilities had grown. The number of pregnant women having prenatal checkups rose by about 15%. The improved transport facilities contributed to an increase in school attendance by students, including female students. This contributed to a 9% reduction in student (including female student) dropout rates.1

10. The provision of water supply and sanitation facilities had helped to reduce the time spent to collect water by as much as 50%.2 As women usually were the ones responsible for collecting water, the reduction in time to collect water had helped them significantly. They could participate more actively in social events held in the village and take care of their children and other family members better. The project had also helped to improved hygiene and sanitation practice at villages. This contributed to an 8% reduction in the incidence of waterborne diseases. This means that village residents also were able to reduce health-related expenses and that women spent less time caring for sick family members.

11. Provision of additional income for men and women through immediate employment opportunities. In addition to increasing income due to the provision of better transport facilities, the project also provided additional income for village residents through immediate employment opportunities at construction sites. Of 303,000 person-months of such employment opportunities generated under the project, about 20% (60,600 person-months) went to women. The total project cost used to finance labor was estimated at $28 million. Thus, the additional income for women from construction-related work was estimated at $5.6 million. 12. The project impact evaluation study suggested that the project contributed to overall increase in income for project village residents by as much as 15%. This is expected to contribute to the project’s intended impact of reducing poverty.

13. Capacity development for men and women. The project provided capacity development opportunities both for men and women. Training was provided to project staff, community members, community facilitators, and consultants. Training for project staff contributed to better project management and implementation, which in the end contributed to the project’s successful implementation. Training for community members significantly increased capacity among village residents. Women were able to apply the skills they obtained from the project in their day-to-day household management. Exposure to project activities, as well as discussions with community facilitators and other project stakeholders, increased the confidence and self-esteem of village residents, including women. Involvement in the

1 The dropout rate fell from 8 out of 100 students to 7 out of 100 students.

2 Before project intervention, the time needed to collect water on average was from 15 to 30 minutes. After the

project intervention, this average decreased to a range of 10 to 15 minutes.

Appendix 4 29

preparation of MTPR plans, annual investment plans, and O&M documents increased village residents’ skills, which can be used in planning, designing, implementing, operating, and maintaining their own projects.

14. Interactions with district officials helped village residents to better understand the development planning and implementation at their own districts. Good networking with district officials was also created, which can be used to channel their interests and ideas to the district administration.

2. Strategic Changes in Gender Relations 15. There was evidence indicating that the project has led to some strategic benefits at the community level. Women were actively involved during the meetings formulating the village planning documents (MTPR plans). Women also suggested that the project activities and efforts had boosted their confidence and self-esteem to speak during village meetings where men were present. It was noted that the level of women’s active participation in planning meetings and leadership in decision making rose relative to that seen in the previous project, which was implemented in the same areas. The active involvement of women in all stages of project implementation, particularly during the planning and design stages, contributed to the village residents’ good acceptance and ownership of the project.

16. A female village resident (Seri Sutanti from Batu Raden village) testifies that the provision of roads from their rubber farms to markets have reduced women’s dependency on men. Before the roads were upgraded, women needed to be helped by their husbands or other male family members to bring rubber to markets. However, they are now able to do so themselves using motorcycles. Another woman (Nurisa, a member of the user group from Pilla village) explained that the provision of water supply facilities has helped her by saving time. Before the project, she had needed to spend about 30 minutes daily to collect water (in one trip). After the project intervention, all she needs to do is to connect her plastic hose to the water tap, so she can do other domestic work, such as cooking, while waiting for her household reservoir to be filled with water.

3. Contribution of Gender Equality Results to Overall Project Outcomes

and Effectiveness

17. The GAP is integral to the project and contributed significantly to the overall project and outcome, especially because women were intended to benefit significantly from the project. By considering gender equality through GAP implementation, the project has ensured that women have improved access to basic rural infrastructure and services and thus improved living conditions. In addition, the project provided employment opportunities for women, which brought additional income for the family. This is expected to contribute to achieving the project’s intended impact of reducing poverty. 18. The training provided under the project and exposure to project activities for both men and women at project villages contributed significantly to achieving the project targets of strengthening community capacity for community planning and development. This contributed to the good quality of community planning documents, which in general reflected the given communities’ (including women’s) needs, interests, and priorities.

30 Appendix 4

19. Training for government staff, and particularly local government staffs, improved their capacities to provide services to women and men. This encouraged some local governments to adopt the community-driven PNPM approach for delivering services to their communities. Gender training also ensured that staffs will be able to provide gender-sensitive services to women. E. Lessons and Recommendation 20. A series of gender-related training events contributed to improving the government staff’s understanding as to the need to involve women in all project stages to meet the project targets. Some shortcomings nevertheless occurred, as described below. 21. The project’s designated gender focal point was in the project coordinating and monitoring unit (PCMU), a task of which was to monitor implementation of the GAP. On a positive note, the PCMU and its consultant team at national level were aware of the gender targets set for the project. However, observations during review missions, including the project completion mission, revealed that the level of awareness and understanding was not the same at the provincial, district, and community levels. For future projects, the PCMU needs to ensure that these gender targets are fully known and understood by provincial and district implementation units, community facilitators, consultants, and community members through systematic awareness-raising activities and trainings. 22. Key challenges were the low involvement of female staff in the project’s management and relatively low provision of employment opportunities to women. The GAP provided targets for 30% female staff involvement in project management and implementation and for 30% of employment opportunities to be provided to women. Although at the central level the target for female staff in the PCMU was achieved, this was not the case at the provincial and district levels. Many DPIUs had no female staff at all. The reason for this was because many local agencies involved in the project did not have female staff, and thus those staff members appointed to the project were mostly male. 23. The project provided opportunities for women to obtain additional income through their involvement in construction. The target was for at least 30% of the job opportunities to be provided to women. Just 20% of the jobs were taken by women, however. Several reasons for this were identified, including that (i) women were reluctant to do hard labor, the implication being that such work was too much for them to handle and only appropriate for men; and (ii) they were occupied with domestic work and thus did not have the chance to participate. For future projects, it may be necessary to consider reserving work that is not hard physical labor (e.g., administrative work, doing inventory, cleaning and/or clearing the infrastructure target locations) for women.

Appendix 4 31

Table A.4: Project Achievements on Gender-Related Targets

Targets Achievements Issues, Challenges, Recommendations

Output 1: Strengthened Capacity for Community Planning and Development Ensure gender balance in all consultation and socialization forums, with a target of 40% women’s participation.

Achieved. Women constituted 295,279 (38%) of the total 770,050 participants in village decision-making meetings, project socialization, and consultation forums.

In some villages, conservative religious interpretations of women’s roles and culture have prevented women from participating in meetings and public forums. Recommendation: Involve religious leaders and other informal leaders during project socialization while highlighting the role of women in community planning and development.

Organize separate consultations with women to ensure that they receive sufficient information about the project and create opportunities for them to voice their opinions, needs, and preferences.

Achieved. Women were well informed about the project and encouraged to participate. With support from community facilitators, CIOs organized separate meetings so that women were able to freely state their opinions, needs, and preferences. In many project villages, the separate meetings were held after the weekly Koran recitation (pengajian).

Carry out social mapping in villages, including to collect sex-disaggregated data.

Partly achieved. Social mapping at villages was included as part of the medium-term poverty reduction (MTPR) plans. Not all villages included sex-disaggregated data into the MTPR plans, however, and particularly not villages included under the first cycle of block grants.

Inexperienced community facilitators were recruited to help communities. The community facilitators’ understanding of the need to collect sex-disaggregated data was limited. Moreover, limited supervision from the individual consultant recruited as the bridging consultant (since the regional consultants were still being recruited) also contributed to this. The disaggregated data were completed during the second cycle of block grants. Training for community facilitators was improved to emphasize the need to collect sex-disaggregated data.

Ensure that vulnerable households, including female-headed households, and constraints to women’s

Achieved. Social mapping at villages was included as part of the MTPR plans. Vulnerable and female-headed households were identified and included in the MTPR plans.

32 Appendix 4


participation, are identified during social mapping. Through community facilitators, guide communities in collecting sex-disaggregated data.

Achieved. Community facilitators supported CIOs to collect sex-disaggregated data.

Review the level and degree of women’s participation in community implementation organizations (CIOs) under the Rural Infrastructure Support to the PNPM Mandiri Project (RIS PNPM) and identify additional actions to enhance women’s participation in CIOs.

Achieved. The level and degree of women’s participation were reviewed and assessed. Women’s memberships in CIOs comprise 36% of the total (3,760 women of 10,500 village residents). Their participation in socialization and decision-making meetings was at 38% (295,279 women of 770,050 participants), and their memberships in user groups were at 28% (2,200 out of 8,000 village residents elected to user groups [KPPs]). About 10% (29,500 of 295,279) of women participating in socialization and decision-making meetings claimed to be actively involved and providing leadership in decision making. About 67% (197,800 of 295,279) actively provided inputs during meetings, while 23% (67,979) only attended the meetings without providing inputs.

Ensure that at least 40% of candidates in elections for CIO members and at least 40% of the elected members (at least two out of five members) of each CIO are women.

Achieved. More than 10,500 village residents were selected as CIO members. Of these, 3,760 were women (about 36%).

Women’s domestic tasks and family obligations were the main reasons for not participating in CIOs. Future projects should actively address this, such as by (i) holding meetings and other activities at times and places convenient for women in consideration of their family obligations; and (ii) including such topics as women’s role in community activities and decision making, as well as women and men’s joint household obligations and decision making.

Conduct at least two separate consultation meetings with women before village-wide meetings to formulate village medium-term poverty reduction (MTPR) plans.

Achieved. Two separate meetings for women were conducted. Women’s participation in MTPR plan preparation was at 41% (160,374 of the total of 391,156 participants). The total number of women participating in the likes of consultations, socialization, and decision-making meetings was 295,279

Appendix 4 33


Ensure at least 40% women participants in consultation forums to formulate village MTPR plans and related annual investment plans.

(38% of the total 770,050 participants).

Ensure that village MTPR plans include specific actions to address the needs of women expressed at the consultations.

Achieved. MTPR plans were prepared in consultation with women. Overall, MTPR plans reflected women’s needs and interests. In feedback received during field visits, women confirmed that their needs and interests had been accommodated appropriately.

Ensure balanced representation by males and females in capacity development activities (e.g., training).

Not Achieved. Training on project management and implementation (e.g., bookkeeping, report preparation, operation and maintenance) was provided by the PCMU as well as by community facilitators. About 3,500 persons participated in various training, and approximately 24% (825) of these were women.

Due to limited budgets, training organized by the PCMU for CIOs was provided for heads of CIOs only, and most of the elected CIO heads were men. Female CIO members were provided with on-the-job training by community facilitators.

Ensure at least 30% women participants in capacity development activities.

Partly Achieved. Most government staff members involved in the project were male, and so the target was not met. Only about 15% of the total participants in capacity building activities were women. At the community level, however, women who were appointed as treasurers of the CIOs (about 750 women or 50% of all CIO treasurers) were all trained.

Provide skills development opportunities for women to improve their capacity to effectively participate in various stages of project implementation.

Achieved. The project facilitated separate meetings for women. During these meetings, community facilitators, consultants, and DPIUs also trained women how to speak in public so that their ideas and interests would be easily understood. The exposure of women to plenary village meetings also increased their skills and confidence to speak up and express their opinions and ideas.

Provide skills development for female members of CIOs.

Achieved. Female members of CIOs were trained together with their male counterparts. About 3,500 persons participated in various training, and about 24% (825) of these were women.

Ensure that women represent at least 30% of all community facilitators.

Achieved. Women accounted for 648 (31%) of the total 2,088 community facilitators.

34 Appendix 4


Output 2: Improved Village Services and Infrastructure through Community Development Grants

Ensure that at least 30% of jobs created by the project are provided to women.

Partly achieved. Only about 20% of the job opportunities created under the project went to women. Of the total 303,000 person-months of immediate employment opportunities generated under the project, about 60,600 person-months were provided to women.

Some women chose not to do hard labor in construction for various reasons. For example, they were (i) occupied with domestic jobs, (ii) generally reluctant to do hard labor, (iii) not allowed by their husbands, or (iv) had other jobs with better pay. The project also created work that did not involve hard labor (e.g., administrative work, such as inventory-taking). However, this type of work was very limited (requiring only 1 to 2 persons per village). Recommendation: Perhaps the 30% target was too high. The same target under the first Rural Infrastructure Support to the PNPM project was not met either. Further study may be needed here.

Ensure equal pay for male and female workers who undertake work of equal value (e.g., construction activities)

Achieved. Male and female workers received equal pay for work of equal value.

Before the release of funds, conduct a gender audit of all village investment plans to ensure they are gender-sensitive.

Achieved. Gender audits were carried out by the project gender specialists (consultants) with support from facilitators and supervision by district administrations. The gender audit reports suggested that, overall, women actively participated in all stages of project implementation and MTPR plans were prepared in a participatory manner that included the involvement of women and the poor. The MTPR plans in general reflected the needs of the communities, including women and the poor.

Ensure active involvement of women in operation and maintenance (O&M) of the completed infrastructure facilities (e.g., development of O&M plan, establishment of unit and/or group that

Achieved. Memberships of the user groups (KPPs) included 28% women (2,200 women of 8,000 village residents). Women were also actively involved in planning and implementing the O&M arrangements.

Appendix 4 35


is responsible for O&M, management of financial resources for O&M). Ensure that at least 30% of villagers responsible for O&M are women.

Almost achieved. Of those community members responsible for O&M (user group members) 28% (2,200 out of 8,000) were women.

Provide relevant O&M information and/or training for women.

Achieved. Both female and male KPP members were provided training on O&M arrangements. About 1,500 KPP heads were trained by the PCMU, of which 10% were women. Other KPP members were provided with on-the-job training organized by community facilitators.

Due to limited budgets only the heads of KPPs were trained by the PCMU.

Output 3: Improved Capacity for Project Implementation and Monitoring and Evaluation Identify one person in the project coordination and monitoring unit (PCMU) and each provincial project implementation unit (PPIU) to be responsible for mainstreaming gender activities into the project.

Partly achieved. The head of the PCMU was appointed as gender focal point at the central level. At each PPIU and DPIU, a gender focal point was also appointed. Since their roles were not clearly specified, however, the gender focal points at the provincial and district levels were not very active.

The PCMU should have included roles and responsibilities of the gender focal points in the project manuals. Coordination between the gender focal points and the consultants’ gender specialists also needed to be included. Training for gender focal points was planned in order to improve their understanding about gender mainstreaming, but the limited project resources did not allow that training’s implementation.

Ensure that at least 30% of PCMU and PPIU staff at all levels are women.

Partly achieved. About 15% of all PCMU, PPIU, and DPIU staff consisted of women (i.e., 20 from total project staff at all levels of about 130).

The appointments to PCMU, PPIU, and DPIU staffs were based on positions at agencies involved in the project. In fact, most of the staff members working in these agencies were men. This contributed to the low participation of women in the project. Future projects should consider actual numbers of women in the relevant positions when setting targets.

Provide equal opportunities for female staff to participate in project-related training.

Achieved. Male and female project staff had equal opportunity to attend project-related training opportunities. Inasmuch as the number of female staff involved in the project was far fewer than that of male staff, however, most

36 Appendix 4


of the project-related training participants were men.

Outline specific tasks to enhance gender equality in the terms of reference of community facilitators.

Achieved. Community facilitators’ roles were clearly described in their terms of reference and project management guidelines. Both community empowerment facilitators and technical facilitators had specific tasks to provide socialization and consultation for women, the poor, and village residents generally in relation to project implementation. In addition, community empowerment facilitators were tasked to assist women, the poor, and village residents to develop project work plans at village level; provide clear understanding for women, the poor, and other village residents related to social and environmental protection; as well as assist and guide women and the poor during village meetings and socialization.

Review all training programs to ensure they are gender-sensitive prior to delivery.

Achieved. Training modules and programs were reviewed by the project gender specialists. A gender and development advisor from the Indonesia Resident Mission also supported the Directorate General of Human Settlements to ensure that training modules and programs were gender sensitive.

Terms of reference for project consultants outline specific tasks to enhance gender equality.

Achieved. A gender specialist was mobilized under all four project management consultants. This specialist’s terms of reference specifically included tasks to ensure gender equality.

Provide gender equality briefing and/or training for consultants and community facilitators to improve their understanding of gender perspectives and to develop their capacity to implement this GAP sufficiently.

Achieved. ADB project staff and the Indonesia Resident Mission’s gender and development advisor acted as resource persons during training and workshops for consultants. The GAP was also reviewed and discussed during all project review missions. Memoranda of understanding included an appendix that specifically discusses the GAP targets and achievements.

Review each annual work plan to ensure gender-related activities are clearly indicated and the progress of these activities is monitored and recorded.

Achieved. GAP targets and achievements were reported in the quarterly progress reports. The gender specialist under the national project management consultant was tasked to monitor the GAP progress at national level and to ensure that the annual project work plan covered gender-related activities.

Appendix 4 37


Collect sex-disaggregated data on stakeholders’ participation in training and community activities (planning, implementation, and O&M) in baseline and completion surveys.

Achieved. Sex-disaggregated data on stakeholder participation in training and all community activities were collected and inputted to the project information and monitoring system.

Provide training for community facilitators in collecting sex-disaggregated data.

Achieved. Training for community facilitators included modules on sex-disaggregated data collection.

Ensure that the sex-disaggregated data that are collected are properly analyzed and the analysis is included in the project progress reports.

Achieved. Sex-disaggregated data were collected and inputted into the project information and monitoring system. Supported by the national consultant, the PCMU analyzed the data and reported them in the quarterly progress reports. However, most of those reports were submitted late to ADB.

Ensure project consultants regularly conduct field visits, review progress in gender mainstreaming, and supervise community facilitators.

Achieved. The gender specialists under the regional management consultants visited villages to train and supervise community facilitators.

ADB = Asian Development Bank, CIO = community implementing organization, DPIU = district project implementation unit, GAP = gender action plan, KPP = kelompok pengguna dan pemelihara (community user group), MTPR = medium-term poverty reduction, O&M = operation and maintenance, PCMU = project coordination and monitoring unit, PNPM = Program Nasional Pemberdayaan Masyarakat (National Program for Community Empowerment), PPIU = provincial project implementation unit. Source: Ministry of Public Works. 2013. Project Completion Report. Jakarta.

38 Appendix 5

PROJECT COSTS AND FINANCING

Table A.5.1: Costs and Financing ($ million)

Item Estimated Cost at

Appraisala

Actual Cost at Completion

b

Investment Costs Community development grants Community facilitation Training and workshops Consulting services Project management Taxes and duties

82.50

9.66 3.70 4.40 4.94 0.55

87.12

8.38 1.48 6.09 4.50 1.14

Base Costs Subtotal 105.75 108.71 Physical Contingency 0.49 0 Price Contingency 1.49 0 Financial Charges during Implementation 5.75 5.50

Total Project Cost 113.48 114.21 a

In October 2009 prices. b

At completion in June 2013. Source: Asian Development Bank estimates.

Notes on the project costs:

1. The cost of community development grants at project completion was higher than that at appraisal. This was due to appreciation of the rupiah against the dollar (para. 26).

2. The cost for consulting services at project completion was higher than at appraisal. This was due to (i) extension of the consultants’ inputs to support implementation of the new project (as bridging consultant while the management consultants were being recruited), (ii) mobilization of new district advisors to improve support to communities and strengthen the supervision of community facilitators, and (iii) appreciation of the rupiah against the dollar (consultant contracts were expressed in rupiahs).

3. To ensure efficiency and effectiveness of training and workshops implementation, some training and workshops were carried out and included under the management consultant contracts. This is why the costs for training and workshops at project completion appear to be less than those at appraisal.

4. The community facilitation (recruitment of community facilitators) was financed using government-owned resources, which were expressed in local currency. The difference between costs for community facilitation estimated at appraisal and project completion was due to exchange rate differences (appreciation of the rupiah against the dollar).

Ap

pe

ndix

5 39

Table A5.2: Detailed Cost Estimates, by Financing Entity

($ million, %)

At Appraisal At Completion

Item Cost

ADB Government Beneficiaries

Cost

ADB Government Beneficiaries

$ % $ % $ % $ % $ % $ %

Community development grants 82.50 75.00 91.0 0.00 0.0 7.5 9.0 87.12 76.19 87.5 2.90 3.3 8.03 9.2

Community facilitation 9.66 0.00 0.0 9.66 100.0 0.00 0.0 8.38 0.00 0.0 8.38 100.0 0.00 0.0

Training and workshops 3.70 3.70 100 0.00 0.0 0.00 0.0 1.48 0.92 62.2 0.56 37.8 0.00 0.0

Consulting services 4.40 4.40 100 0.00 0.0 0.00 0.0 6.09 5.98 98.2 0.11 1.8 0.00 0.0

Project management 4.94 0.14 2.8 4.80 97.17 0.00 0.0 4.50 0.04 0.9 4.46 99.1 0.00 0.0

Taxes and Duties

0.55 0.00 0 0.55 100.0 0.00 0.0 1.14 0.00 0.0 1.14 100.0 0.00 0.0

Total Base Costs Physical contingencies Price contingencies Financial charges during implementation

105.75

0.49 1.49

5.75

83.24

0.25 0.75

0.00

78.7

51.0 50.3

0.0

15.01

0.24 0.74

5.75

14.2

49.0 49.7

100.0

7.50

0.00 0.00

0.00

7.1

0.0 0.0

0.0

108.71

0.00 0.00

5.50

83.13

0.00 0.00

0.00

76.4

0.0 0.0

0.0

17.54

0.00 0.00

5.50

16.1

0.0 0.0

100.0

8.03

0.00 0.00

0.00

7.5

0.0 0.0

0.0

Total 113.48 84.24 74.2 21.74 19.2 7.50 6.6 114.21 83.13 72.8 23.04 20.2 8.03 7.0

ADB = Asian Development Bank. Sources: ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Republic of Indonesia for the Rural Infrastructure Support to the PNPM Mandiri Project II. Manila; and Ministry of Public Works. 2013. Project Completion Report: Rural Infrastructure Support to the PNPM Mandiri Project II. Jakarta.

40

Ap

pe

ndix

6

Amounts Allocated, Contracted, and Disbursed by Category

($)

Amount Allocated

Amount Contracted

Amount Disbursed

Uncontracted Loan Balance

Undisbursed Loan Balance

Number

Category

01 Community Development Grants for Subproject 76,800,000 76,327,763 76,188,558 472,237 611,442

02A Project Management – External Monitoring 50,000 39,746 38,257 10,254 11,743

02B Project Management – Annual Audits 90,000 0 0 90,000 90,000

03 Training and Workshops 1,000,000 982,123 924,344 17,877 75,656

04 Consulting Services 6,300,000 6,141,134 5,983,440 158,866 316,560

05 Contingencies 0 0 0 0 0

Total 84,240,000 83,490,766 83,134,598 749,234 1,105,402

Note: The undisbursed balance of $1,105,402 was cancelled on 20 February 2014, when the loan account was closed.

Appendix 7 41

FUNDS FLOW MECHANISM

Cash flow Document flow

DG = director general, DGHS = Directorate General of Human Settlements, MOF = Ministry of Finance, PCMU = project coordination and monitoring unit. Source: Asian Development Bank.

Regional Treasury Office

Treasurer / Third Party / Community

Bank Account at commercial bank

Operational Bank / Central Bank

Branch Office

Community Implementation Organization

Implementation Unit

Executing Agency

Suppliers of Village Investments

Special Account

District / provincialProvincial Project Implementation Unit

District Project

Works as PCMU

DG Debt

Management, MOF

Bank Indonesia,

Asian Development Bank

Directorate Cash Management,

DG Treasury, MOF DGHS, Ministry of Public

Funds Flow Mechanism

42 Appendix 8

ORIGINAL SCHEDULE COMPARED TO ACTUAL IMPLEMENTATION

Original schedule

Actual implementation 2010 2011 2012 2013

Item Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

A. Strengthened Capacity for Community Planning and Development Cycle 1

a

Recruit community facilitators

Train community facilitators Deploy community facilitators Conduct village socialization

activities

Mobilize CIOs Hold women’s planning meetings Conduct poverty mapping Prepare village MTPR plans Select priority village proposals Hold inter-village meetings for

possible cooperation

Prepare proposals for community

investments

Cycle 2 Recruit community facilitators

Train community facilitators Deploy community facilitators Conduct village socialization

activities

Mobilize CIOs Review village MTPR plans Select priority village proposals Hold inter-village meetings for

possible cooperation

Appendix 8 43

2010 2011 2012 2013

Item Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Prepare proposals for community

investments

B. Improved Village Services and Infrastructure through Community Development Grants Cycle 1 Execute contracts with CIOs Train villagers to implement civil

works

Release block grants Undertake civil works Undertake gender audits Supervise construction and

monitor quality

Provide O&M training and finalize

O&M plans

Implement O&M plans Cycle 2 Execute contracts with CIOs Train villagers to implement civil

works

Release block grants Undertake civil works Undertake gender audits Supervise construction and

monitor quality

Provide O&M training and finalize

O&M plans

Implement O&M plans

C. Improved Capacity for Project Implementation and Monitoring and Evaluation Prepare annual work plan and

budget

Mobilize and train staff for PCMU,

PPIUs, DPIUs, and selected district government staff

44 Appendix 8

2010 2011 2012 2013

Item Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Recruit, orient, and mobilize

management consultants

Conduct baseline studies Monitor community facilitation and

project preparation

Monitor and report on physical

and financial progress

Conduct physical and financial

audits

Conduct spot audits on complaints

mechanism

Monitoring by NGOs Assess project impacts

CIO = community implementation organization, DPIU = district project implementation unit, MTPR = medium-term poverty reduction, NGO = nongovernment organization, O&M = operation and maintenance, PCMU = project coordination and monitoring unit, PPIU = provincial project implementation unit, Q = quarter. a

All reference to cycles in this appendix refers to Rural Infrastructure Support to the PNPM Mandiri Project II (i.e., cycle 1 means the first cycle to be implemented under that project).

Appendix 9 45

PROJECT IMPLEMENTATION ARRANGEMENTS 1. Project management. The Rural Infrastructure Support to the PNPM (RIS PNPM) Mandiri Project II applied the implementation arrangements from the first RIS PNPM, with the Ministry of Public Works through its Directorate General of Human Settlements (DGHS) as the executing agency. At the central level, a project coordinating and monitoring unit (PCMU) was established within DGHS to provide overall management of the project. The PCMU’s responsibilities included to (i) develop and update project implementation guidelines; (ii) create awareness, understanding, and support for the project within the agency and with related ministries, project stakeholders, and public interest groups; (iii) build partnerships with project stakeholders, in particular provincial and district governments; (iv) coordinate activities in accordance with project guidelines; (v) lead the planning and programming, coordination, oversight, and monitoring and evaluation for the project; (vi) lead and coordinate activities related to financial management and financial audit; (vii) develop and implement the capacity building program and training for project staff and stakeholders; (viii) establish and operationalize the project’s complaints and grievances mechanism; (ix) recruit and provide direction to the national and regional management consultants; and (x) report periodically on implementation progress, the resolution status of all grievances lodged under the project, and any allegations of misuse of funds or corruption to DGHS and the PNPM Mandiri Oversight Body. 2. The project also used project implementation units (PIUs) established by the Ministry of Public Works at the provincial, and district levels under the first RIS PNPM. At provincial level, provincial PIUs were established and had the following tasks: (i) implement, monitor, and evaluate the project; (ii) conduct socialization about the project among its staff, members of the provincial coordinating team, and local interest groups; (iii) provide input for village-level project site selection; (iv) coordinate with local stakeholders; (v) recruit community facilitators; (vi) assist the PCMU in implementing capacity building programs for project staff, community facilitators, villagers, and other stakeholders; (vii) coordinate monitoring and reporting activities; (viii) manage the handling of complaints and grievances at the provincial level; (ix) perform financial programming and management at the provincial level; (x) prepare physical and financial progress reports at the provincial level, based on the physical and financial progress reports of the districts, and submit these to the PCMU; and (xi) provide regular reports on implementation progress, the resolution status of all grievances lodged under the project, and any allegations of misuse of funds or corruption to the provincial committee.

3. At the district level, district PIUs were responsible to (i) coordinate and organize project activities within the district; (ii) conduct socialization activities among staff and in project areas, and ensure that policies and targets on women’s equality and pro-poor were disseminated to the project villages; (iii) facilitate implementation of project activities in the project areas; (iv) assist in the formation of community implementing organizations (CIOs); (v) assist the CIOs to coordinate the village leadership and synchronize planning processes to produce common medium-term poverty reduction (MTPR) plans for the project-related activities and for the village; (vi) provide technical assistance to formulate MTPR plans; (vii) oversee physical implementation of the community investments and monitor CIO fund applications and disbursements; (viii) supervise operation and maintenance (O&M) of the completed village-level projects; (ix) provide support to and monitor the outputs of the community facilitators and consultants; (x) help villages to lobby for integration of the MTPR into district development plans and help the CIO to access resources for projects identified in the MTPR that cannot be funded by the project; (xi) ensure openness and ready availability of information on all aspects of the project’s implementation; (xii) maintain technical data and accounting records; (xiii) coordinate

46 Appendix 9

and monitor reporting at the village level; (xiv) conduct investigations of complaints from the community and submit a report to the provincial PIU (PPIU) within 10 days of receipt of any complaint, even if the investigation is ongoing; (xv) prepare financial and physical progress reports based on reports collected from the CIOs and submit these to the PCMU through the PPIU; (xvi) report the results of all activities to the district committee on a regular basis; and (xvii) conduct performance evaluations of community facilitators every 3 months and submit them to the PPIU for review and further action such as additional training, if required. 4. At the community level, the CIO was to (i) conduct social and poverty mapping and community meetings, with at least 50% participation by poor people and 40% participation by women in decision making; (ii) identify poverty reduction constraints and social and infrastructure constraints in the village; (iii) prepare a village investment proposal based on the MTPR plan; (iv) subject to receipt of the notice of approval of the village proposal, open a bank account and enter into a contract for works with the district PIU (DPIU); (v) implement the approved village project-funded activities; (vi) monitor construction works and report progress to the DPIU using the project performance management system; (vii) prepare invoices and manage the cash management system; (viii) hold weekly meetings with the community and provide copies of daily records on village information boards to report physical and financial progress; and (ix) maintain a complaints and grievance recording system, investigate allegations, and report regularly to the PPIU on grievances and findings. Each CIO established a management team for construction and O&M. The management team supervised infrastructure construction activities and related management programs (including O&M). 5. Community facilitators assisted CIOs, the management team, and other village organizers to plan, select, design, and implement the project-related activities. Community facilitators were divided into teams, with each team consisting of two community facilitators (one social development and one technical). One team was assigned to help up to three villages. 6. Project consultants. Consultants provided technical, management, and capacity development support to the PCMU, PPIUs, DPIUs, and facilitators during implementation. The support encompassed project planning, management, and coordination; preparation of feasibility studies and procurement packages; design and construction supervision; contract negotiations and management; financial management and accounting; and institutional and human resources development and training. 7. A national team of management consultants assisted the PCMU, and three regional teams of management consultants covered the following provinces: (i) Lampung, (ii) South Sumatra, and (iii) Jambi and Riau. Each regional team consisted of the following: (i) team leader and project management specialist, (ii) rural infrastructure specialist, (iii) financial management specialist, (iv) social development specialist, (v) gender specialist, (vi) safeguards specialist, (vii) training manager, and (viii) training specialists. Each regional team was also to have district teams with a composition similar to that of the provincial team. Each district team was to cover about four districts. The consultants assisted the central, provincial, and district governments in (i) overseeing community facilitators in empowering communities and ensuring participation in project implementation; (ii) providing technical and managerial support to the PCMU and PIUs; (iii) establishing and implementing a sound financial management and monitoring system; (iv) implementing the complaints-handling mechanism; (v) implementing the project performance management system, which is a part of the monitoring and evaluation framework for the PNPM Mandiri; and (vi) undertaking training of community facilitators and local governments. The project implementation and organization chart is presented below.

Appendix 9 47

PROJECT IMPLEMENTATION AND ORGANIZATION CHART

Central

Province

District

Kecamatan

Village

PNPM = Program Nasional Pemberdayaan Masyarakat (National Program for Community Empowerment). Source: Asian Development Bank.

.

Consultants

District Project

C o m m u n i t y B e n e f i c i a r i e s

Intervillage Meetings

District Project Management

Consultants

Consultants

Ministry of Public Works

Provincial Project Implementation Unit

Provincial PNPM Mandiri Coordinating Team and

Steering Committee

National Project Management

Provincial Project Management

Project Coordination

Village Organizers

Kecamatan Project Implementation Team

Community

Implementation Organization

Community Facilitators

Kecamatan Level

Directorate General of Human Settlements

PNPM Mandiri Oversight Body

Village Apparatus

Implementation Unit

District PNPM Mandiri Coordinating Team and

Steering Committee

and Monitoring Unit

48 Appendix 10

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant

Reference in Loan

Agreement

Status of Compliance The Borrower shall cause the proceeds of the Loan to be applied to the financing of expenditures on the Project in accordance with the provision of this Loan Agreement.

Article III, Section 3.01

Complied with. The loan proceeds were used to finance project expenditures described in the loan agreement, and conditions for use of the loan proceeds were followed.

The Goods, Works, and consulting services and other items of expenditure to be financed out of the proceeds of the Loan and the allocation of amounts of the Loan among different categories of such Goods, Works, and consulting services and other items of expenditure shall be in accordance with provision of Schedule 3 to this Loan Agreement, as such Schedule may be amended from time to time by agreement between Borrower and ADB.

Section 3.02 Complied with. Disbursement procedures, the establishment of an imprest account mechanism, and conditions for withdrawals from the imprest account for block grants were all in accordance with the loan agreement.

Except as ADB may otherwise agree, all Goods, Works, and consulting services to be financed out of the proceeds of the Loan shall be procured in accordance with provision of Schedule 4 to this Loan Agreement. ADB may refuse to finance a contract where Goods, Works or consulting services have not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not satisfactory to ADB.

Section 3.03 Complied with. Procurement of goods, works, and consulting services followed ADB’s procedures and guidelines. Community participation was used in procuring goods and works under the community development block grants.

Except as ADB may otherwise agree, the Borrower shall cause all Goods, Works and consulting services financed out of the loan proceeds shall be used exclusively in carrying out of the Project

Section 3.04 Complied with. No goods, works, or consulting services financed out of the loan proceeds were used for activities other than those of the project.

(a) The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental and rural infrastructure development practices.

(b) In carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 5 to this Loan Agreement.

Article IV, Section 4.01

Complied with.

The Borrower shall make available, promptly as needed, or ensure the availability of, the funds, facilities, services, land and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project and for the operation and maintenance of the Project facilities


Complied with. Community facilitators, which were financed by the government own funds, were mobilized on time and sufficiently. Land was donated by the communities. Counterpart funds and other facilities were generally provided on time. Resources for O&M are the responsibilities of community

Appendix 10 49

Covenant

Reference in Loan

Agreement

Status of Compliance members. In general, sufficient resources have been provided by community members.

(a) In carrying out the Project, the Borrower shall cause competent and qualified consultants, acceptable to ADB, to be employed to an extent and upon terms and conditions satisfactory to the Borrower and ADB.

(b) The Borrower shall cause the Project to be carried

out in accordance with plans, design standards, specifications, work schedules and construction methods acceptable to ADB. The Borrower shall furnish, or cause to be furnished, to ADB, promptly after their operation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request.


(a) Complied with. Consultant recruitment procedures were followed as specified in the loan agreement.

(b) Complied with. The works

implemented by communities followed design standards, specifications, and construction methods prepared by DGHS and which were reviewed and agreed by ADB.

The Borrower shall ensure that activities of its departments and agencies with respect to the carrying out of the Project and operation of the Project facilities are onducted and coordinated in accordance with the sound administrative policies and procedures.


Complied with. Coordination, the reporting system, and administrative procedures were prepared and disseminated to all agencies involved in project implementation. In general, these were followed and implemented.

(a) Borrower shall (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; (iii) furnish to ADB not later than six (6) months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including auditors’ opinion on the use of the Loan proceeds and compliance with the financial covenants as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.


(a) Complied with. Separate project accounts were established and maintained. The Supreme Audit Board (Badan Pemeriksa Keuangan, BPK), the independent auditors accepted by ADB, carried out annual audits on the accounts and related project financial statements. All audit reports were received by ADB on time (30 June), and ADB found the audit reports acceptable. BPK provided unqualified opinions for all the financial statements and project accounts (fiscal years 2010–2013). Findings mostly related to overpayments, procurement-related matters, improper bookkeeping at community organizations, and O&M insufficiencies for

50 Appendix 10

Covenant

Reference in Loan

Agreement

Status of Compliance (b) The Borrower shall enable ADB, upon ADB’s request, to discuss the Borrower’s financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by the Borrower pursuant to Section 4.05(a) hereabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree.

the facilities built. As of project completion, the recommendations of the auditors had been followed up. Management of the imprest accounts by the borrower and DGHS was also audited. The auditors also provided unqualified opinions on the management of imprest accounts.

(b) No request from ADB.

The Borrower shall enable ADB’s representatives to review the Project, and inspect the Goods and Works financed out of the proceeds of the Loan, and any relevant records and documents.


Complied with. ADB review missions were fielded at least twice a year. The inception mission was in March 2010. The first review mission and visits to project villages were in November 2010. The last review mission was fielded during June–July 2013. During the review missions, ADB representatives were able to inspect the goods and works financed from the loan proceeds.

The Borrower shall ensure that the project facilities are operated, maintained and repaired in accordance with sound administrative, financial, engineering, environmental, rural infrastructure development, community participation, and maintenance and operation practices.


Complied with. The infrastructure and facilities were built by communities with active participation from community members, including women and the poor. In general project administration by communities was acceptable. Works were implemented in accordance with the agreed standards and specifications and followed the financial procedures specified in project manuals. Even though there were a few cases of poor maintenance of the built facilities, the majority of

Appendix 10 51

Covenant

Reference in Loan

Agreement

Status of Compliance facilities were properly operated and maintained.

The Borrower shall ensure that MPW through its DGHS is the Project Executing Agency, responsible for the overall technical supervision and execution of the Project and shall establish a project coordination and monitoring unit (the PCMU) which will be responsible for the day-to-day management, coordination and monitoring of the Project activities and will provide administrative and technical support, counterpart staff, documentation and other services that may be required.

Schedule 5, Para. 1

Complied with. The PCMU was established in late 2009. Overall, DGHS and the PCMU carried out their responsibilities and tasks in a satisfactory manner.

The Borrower shall ensure that the existing implementation arrangements for PNPM Mandiri are utilized under the Project, including the Oversight Body, which shall continue to provide direction to and oversight of the entities implementing the Project.

Schedule 5, Para. 2

Complied with. The PNPM procedures were followed and integrated into the project manuals and procedure.

The Borrower shall ensure that the PCMU has sufficient, appropriately qualified staff to undertake the Project execution responsibilities including: (a) creating awareness, understanding and support for the Project among project stakeholders; (b) building partnership with project stakeholders; (c) coordinating activities in accordance with the PNPM Mandiri Guidelines; (d) coordinating activities related to financial management and financial audits; (e) supporting capacity building for Project staff and stakeholders; (f) operationalizing the Project’s complaints and grievance handling mechanism; (g) recruiting and directing consultants; and (h) reporting periodically on implementation, status of grievances lodged under the Project, and any allegations of misuse of funds or corruption, to DGHS and the Oversight Body.

Schedule 5, Para. 3

Partly complied with. The PCMU was able to carry out most of its roles and responsibilities satisfactorily. An exception to this was in operationalizing and reporting of the complaint and grievance handling mechanism. The PCMU did establish a call center as part of the complaints-handling system. It seemed, however, that information about the call center was not properly disseminated to project stakeholders. In case the PCMU received complaints, it followed up the issues and contacted the PPIUs (orally) to let them know and follow up the complaints. PPIUs and DPIUs investigated the complaints and, if possible, settled them. Results of the investigation and remedial actions taken were reported to the PCMU via phone and no further reporting was made. If PPIUs and DPIUs were unable to resolve the issues, PPIUs wrote to the PCMU to request its support. If complaint investigations resulted in project implementation delays, the results of investigations and remedial actions taken were reported in the quarterly progress reports. If complaints

52 Appendix 10

Covenant

Reference in Loan

Agreement

Status of Compliance were considered minor, however, they were not reported in the quarterly progress reports. ADB noted that quarterly progress reports submitted by DGHS reflected issues related to project progress, including problems that affected project implementation. Most complaints were received from community facilitators, who forwarded them to DPIUs. If issues and complaints were settled immediately at the village level, DPIUs neither recorded nor reported them to the higher level. If complaints could not be resolved at the village and/or district level, DPIUs reported to the PPIUs. At project completion, all complaints had been settled. The PCMU confirmed that all complaints received that related to project implementation issues (e.g., low level of community participation, community members dissatisfied for not being elected as CIO members). No complaints related to misuse of funds or corruption were received by PCMU, PPIUs, and DPIUs.

The Borrower shall cause each PPIU to undertake, and have sufficient, appropriately qualified staff to implement the day-to-day Project responsibilities at the provincial level including: (a) implementing, monitoring and evaluating, and building awareness about, and reporting on, relevant Project activities; (b) coordinating monitoring and reporting activities with local stakeholders; (c) recruiting community facilitators; (d) managing complaints and grievance handling and reporting on the status, and any allegations of misuse of funds or corruption, to the relevant provincial committee and to the PCMU; and (e) performing financial programming and management.

Schedule 5, Para. 4

Complied with. PPIUs were established at the four participating provinces and provided with appropriate staff. In general, the PPIUs were able to carry out their roles and responsibilities. In doing so, PPIUs were assisted by regional management consultants.

The Borrower shall ensure that each DPIU undertakes, and has sufficient, appropriately qualified staff to implement the day-to-day Project responsibilities within the Participating District including: (a) coordinating, organizing and facilitating implementation of subproject activities; (b) building awareness about the project and ensuring that

Schedule 5, Para. 5

Complied with. DPIUs were established at all 37 participating districts. Most DPIUs had appropriate staff and were provided with sufficient resources. In general, the DPIUs were able to carry out their roles

Appendix 10 53

Covenant

Reference in Loan

Agreement

Status of Compliance gender and poverty policies and targets are disseminated to the participating villages; (c) providing technical assistance; (d) monitoring CIO funds and supervising O&M; (e) providing support to and monitoring the outputs of community facilitators and consultants; (f) ensuring availability of project related information; (g) maintaining technical data and accounting records; (h) conducting investigations of complaints and submitting a report to the PPIU within 10 days of receipt of any complaint; and (i) preparing progress reports based on CIO reports and conducting 3-monthly performance evaluations of community facilitators and submitting these to the PPIU.

and responsibilities. In doing so, DPIUs were assisted by regional management consultants.

The Borrower shall cause the PPIUs and DPIUs to take all appropriate measures to require CIOs to take responsibility for implementing the Subprojects, including (a) conducting social and poverty mapping and community meetings, with about (i) 50% participation of the poor, and (ii) 40% participation of women, in the decision-making process; (b) identifying poverty reduction constraints and social and infrastructure constraints in the village and introducing appropriate remedial action; (c) supervising and monitoring construction works, managing the cash management system, and reporting progress to the DPIU, (d) holding weekly meetings with the community and providing copies of daily records on village information boards to report progress; (e) maintaining a complaints and grievance recording system, including investigating allegations and reporting lodgment of grievance and findings to the PPIU on a timely basis.

Schedule 5, Para. 6

Complied with. With support from the regional management consultants and community facilitators, the DPIUs and PPIUs helped and supervised CIOs in planning, implementing, operating, and maintaining facilities. All the measures were recorded and reported through the project information system. In general, all the requirements (level of community participation, women’s participation, social mapping, etc.) were met, except that the complaints and grievance recording system was weak. DPIUs, PPIUs, and the PCMU did follow up complaints and took remedial actions, but there was no proper recording and reporting system for complaints and grievances.

The Borrower shall (a) keep ADB informed of, and the Borrower and ADB shall from time to time exchange views on rural infrastructure sector issues, policy reforms and additional reforms that may be considered necessary or desirable, under the PNPM Mandiri; (b) promptly discuss with ADB problems and constraints encountered during implementation of the Project and appropriate measures to overcome or mitigate such problems and constraints; and (c) keep ADB informed of policy discussions with other multilateral or bilateral agencies that have implications for implementation of the Project, and provide ADB with an opportunity to comment on any resulting policy proposals and will take ADB’s view into consideration

Schedule 5, Para. 7

Complied with. (a) No significant changes in

rural infrastructure sector policy occurred during project implementation.

(b) Problems and constraints were discussed in detail during project review missions and other related routine meetings.

(c) No new policy that had impact on project implementation was imposed.

54 Appendix 10

Covenant

Reference in Loan

Agreement

Status of Compliance The Borrower shall ensure that (i) the selection of Participating Villages not previously selected under the first cycle of the RIS PNPM I, is based on criteria agreed with ADB, which include a requirement that only the poorest villages in each participating subdistrict are included, as confirmed to the PCMU by the relevant provincial and district governments; (b) the selection of Subprojects follows the relevant RIS-PNPM guidelines; and (c) DPUI approval of a Subproject is based on criteria including pro-poor nature and immediate utilization potential of investments, availability of land with minimal negative environmental, social or economic impacts, demonstrated cost effectiveness, local execution of projects, and preparation of realistic and affordable O&M plans.

Schedule 5, Para. 8

Complied with. The selection of villages followed the agreed criteria, including poverty rates and levels of infrastructure services.

The Borrower shall ensure that no disbursement shall be authorized by a DPIU unless the proposed works are based on an approved village MTPR plan and a signed Subproject Contract between the relevant COI and DPIU and certification for the relevant Subproject has been issued from the regional project management consultants to the relevant DPIU, and been advised to the relevant CIO and regional treasury officers. The Borrower shall further cause the PPIUs to undertake regular spot-checks to ensure compliance with the requirements of this paragraph.

Schedule 5, Para. 9

Complied with. The disbursement procedures specified in the loan agreement and project manuals were followed. Disbursement to CIOs was based on signed contracts between CIOs and relevant DPIUs. Contracts were prepared based on the MTPR and annual investment plans, which were discussed and agreed by community members during community meetings (musdes).

Without limiting the generality of Section 4.01 of the Loan Agreement, the Borrower shall ensure that (a) all local and foreign currency counterpart financing necessary for the project, including cash advances, are provided as and when due to enable completion of the project activities in the scheduled implementation period; (b) additional counterpart funding is promptly provided for any shortfall of funds or cost overruns; and (c) it requires (i) DGHS to make timely submission of annual budgetary appropriation requests to MOF, and (ii) MOF to ensure prompt disbursement of counterpart funds, including grants from the Project Imprest account to the participating village, in accordance with the disbursement and liquidation procedures and funds flow mechanism as agreed with the ADB and set forth in Appendix 6 to the RRP.

Schedule 5, Para. 10

Complied with. Counterpart funds were provided on time and sufficiently. Disbursement of loan proceeds followed the agreed procedures. No significant issues related to disbursement of funds arose during project implementation.

The Borrower shall cause MPW to: (a) undertake necessary measures to create and sustain a corruption-free environment for activities under the Project; (b) institute, maintain and ensure compliance with internal procedure and controls for activities under the Project, following international best


Complied with. During project socializations, participating villages were requested to sign integrity pacts, which included clauses related to anticorruption. Contracts

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Covenant

Reference in Loan

Agreement

Status of Compliance practices standards for the purpose of preventing corruption, money laundering activities, and financing of terrorist, and shall require all relevant ministries and agencies to refrain from engaging in such activities; (c) where appropriate for the Project, comply with requirements of ADB’s Anticorruption Policy (1998, as amended to date); and (d) where appropriate, ensure that relevant provisions of ADB’s Anticorruption Policy are included in all bidding documents for the Project.

between CIOs and project managers include statements, confirming that the integrity pacts will be followed by CIOs. Furthermore, the project included consulting services contracts. Bidding documents for consulting services (requests for proposals) include anticorruption-related clauses.

The Borrower shall ensure that activities undertaken under the Project shall, to the extent reasonably possible, incorporate the risk mitigation measures and the following good governance features: (a) awareness building of the overall project objectives, and (b) transparent, consistent, and cost-effective subproject planning and implementation through well-defined procedures, guidelines and institutional arrangements, including community sign boards with summaries of plans, progress reports, and financial records and a project website.


Complied with. DGHS established a sufficient M&E system providing broad information on the project villages, community facilitators, consulting teams, disbursements of block grants, and types of infrastructure constructed.

The Borrower shall cause MPW and DGHS to strengthen the existing PNPM Mandiri project complaints and problem management unit to: (a) review and address grievances of project stakeholders in relation to either the Project; any of the service providers, or any person or agency responsible for carrying out the Project, and (b) set the threshold criteria and procedures for handling such grievance, responding to them, notifying stakeholders regarding the chosen mechanism, and reporting to the relevant reporting agency in accordance with the PNPM Mandiri Guidelines on management of complaints and grievance.


Partly complied with. A comprehensive complaints-handling mechanism was not established. DGHS established a call center with telephone number and email address to receive complaints, but there were no call centers at the provincial and district levels. Complaints received were followed up, investigated, and remedial actions were taken. However, there was no proper recording and reporting of the complaints (also refer to Schedule 5, para. 3).

Without limiting the generality of Section 4.05(a) of the Loan Agreement, the Borrower shall ensure that all Project accounts, including financial statements, statements of expenditures, and account records, are audited annually as part of the regular audit of accounts and financial statements. The audit opinion shall include (i) an assessment of the adequacy of accounting and internal control systems relating to Project expenditures and other financial transactions, including the use of the imprest account, (ii) a determination as to whether the Borrower and DGHS have maintained adequate documentation for the imprest account procedures, and (iii) confirmation of compliance with this Loan Agreement’s financial covenants and ADB’s requirements for Project


Complied with. This was discussed in detail in Article IV, Section 4.05 above.

56 Appendix 10

Covenant

Reference in Loan

Agreement

Status of Compliance management. The Borrower shall cause CIOs to maintain accounts in the format specified by the RIS PNPM guidelines, their books and records are open for public inspection, and the summary of the expenditures are posted on a signboard in the relevant participating village


Complied with.

The Borrower undertakes to contract an independent auditor, funded by the project resources, to audit the accounts at the relevant implementation levels in a timely fashion, in the event of a specific complaint made by ADB to the Borrower about the account.


Complied with. ADB accepted the appointment of BPK as independent auditors to audit the project accounts and financial statements.

The Borrower shall cause the Project’s M&E to be conducted with the established M&E framework for PNPM Mandiri, and encompassing the following elements: (a) conduct of baseline and completion surveys for a sample of participating villages by trained staff and community facilitators, (b) participatory monitoring by communities based on self-defined indicators; (c) internal monitoring of inputs, process, and outputs; (d) independent external M&E by third parties; and (e) design and implementation of a high quality impact evaluation framework.


Complied with. (a) Baseline data were included

in the community action plans and MTPR plans and were recorded in the project information system.

(b) Community participation was recorded in the project information system.

(c) With support from consultants, the PCMU carried out internal monitoring.

(d) and (e) Consultants were recruited to carry out M&E and evaluate project impacts.

The Borrower shall cause local NGOs or other civil society organizations located in each of the participating provinces to be engaged to undertake independent monitoring of project activities, with particular emphasis given to assessing participation by and benefits accruing to the very poor and remote households, women and other marginalized groups.


Complied with. An NGO was recruited to undertake independent monitoring in the last year of project implementation.

The Borrower shall cause an independent firm to be contracted to conduct an external and impact evaluation of the Project interventions on poverty, governance and socioeconomic conditions in selected participating villages, as agreed with ADB.


Complied with.

The Borrower shall cause the Project’s M&E activities to encompass the following elements: (a) monitoring of (i) physical and financial progress, as well as the efficiency of subprojects, (ii) the level and adequacy of village member and stakeholders participation in planning and implementing Project activities, (iii) monitoring capacity of CIOs and local governments, and (iv) social, environment, and economic impacts, including establishment of baseline data; (b) collecting gender disaggregated data on stakeholders’ participation in training and planning,


Complied with. All M&E activities were covered.

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Covenant

Reference in Loan

Agreement

Status of Compliance and the accrual of benefits including employment generation; (c) conducting physical and financial audits; and (d) assessing the impact and utilization of the investments. The Borrower shall cause (a) the PCMU to establish and maintain the project performance management system, in accordance with ADB’s requirements, to follow PNPM Mandiri’s Guidelines, to be flexible to adopt remedial action regarding project activities and development impacts, and to be part of the PNPM Mandiri MIS; (b) M&E findings and analysis to be updated on the PNPM Mandiri website on the 15

th

day of every month and incorporated in quarterly project progress reports that the PCMU will prepare within one month of the end of the quarterly reporting period and submit to ADB and the Oversight Body; and (c) the PCMU to prepare, in coordination with the PPIUs and DPIUs, a consolidated project completion report and submit to ADB within six months of project completion.


(a) Complied with. (b) Partly complied with.

Delays in the submission of quarterly progress reports were frequent.

(c) Complied with. The project completion report was received by ADB in January 2014 (6 months after the loan closing date).

In addition to the regular monitoring, the Borrower shall cause: (a) MPW, jointly with ADB to carry out Project reviews at least twice a year; and (b) MPW and the district governments to ensure that their staff conduct regular field visits and join ADB for all Project review missions. The reviews shall assess project impacts, particularly institutional, administrative, organizational, technical, environmental, and social. The Borrower shall also, jointly with ADB, undertake a midterm review to be conducted after two (2) years of project implementation to assess implementation status and take appropriate measures, including modifications of scope and implementation arrangements, and reallocations of loan proceeds, as appropriate, to achieve the Project’s outcomes and impact.


Complied with. Review missions were carried out twice a year. Government officials from DGHS, the National Development Planning Agency, and MOF participated during the review missions. A memorandum of understanding summarizing the findings and agreements reached during each review mission was prepared and used as guidance for subsequent review missions. Review missions assessed all aspects of project implementation, including project progress, issues faced, etc.

The Borrower shall ensure that: (a) subproject proposals are reviewed and assessed in accordance with the project’s EARF which will also prescribe mitigation and monitoring measures; (b) the CIOs are responsible for conducting environmental screening and identifying necessary mitigation measures with relevant technical assistance; (c) community facilitators, PPIUs, DPIUs, and the PCMU are responsible for managing the project’s environmental aspects; and (d) guidelines for community-based civil works and the technical guidelines developed by MPW for PNPM Mandiri are adhered to.


Complied with. Overall, the infrastructure upgrading activities created positive impacts on the environment and improved the living conditions of project villages. The project was categorized as environmental category B. An EARF was prepared and was used as guidance on environmental screening for each type of infrastructure or facility. It included environmental assessment checklists to review

58 Appendix 10

Covenant

Reference in Loan

Agreement

Status of Compliance environmental implications and ensure there were no adverse

impacts. The Borrower shall further ensure that the Works and project facilities are reviewed periodically and assessed for environmental impacts in accordance with the EARF. The Borrower shall further ensure that implementation of the project activities are in accordance with its applicable environmental laws and regulations and ADB’s environmental policy (2002).


Complied with.

The project EARF was used as guidance on environmental screening for each type of infrastructure and facility. It included environmental assessment checklists to review environmental implications and ensure there were no adverse impacts. The environmental screening was prepared as part of community investment plans and contracts. User groups supported and supervised by community facilitators and safeguard specialists (consultants) carried out routine environmental monitoring.

The Borrower shall ensure that (a) the selection criteria for subprojects include provisions to provide that indigenous peoples and other vulnerable groups are part of the capacity-building, planning, implementation, and post-implementation project processes; and (b) minority and marginalized groups are represented on CIOs and CIO representation committees in proportion to their overall population in the community; and will benefit from anticipated project benefits with respect to service delivery, rural infrastructure, training, and construction-related jobs in accordance with ADB’s Policy on Indigenous People (1998).


Complied with. Indigenous people and the rural poor benefitted from the project. They participated in all project stages, including planning and decision making. Minorities and the poor who were members of CIOs also participated in capacity building and other training activities.

The Borrower shall ensure that where applicable, each CIO shall prepare a resettlement plan in accordance with the approved LARF, including endorsement by the resettlement committee at the district level and ADB, disclosure to any person whose living environment and/or livelihood activities have been, or will be adversely impacted from the project activities and uploading on the ADB’s website. The Borrower shall further ensure that all land acquisition and resettlement activities under the Project are implemented in accordance with its applicable laws and regulations, ADB’s Involuntary Resettlement Policy (1995) and the project’s LARF.


No resettlement was required. Required land was donated by community members. Findings during project review and project completion review missions, as well as in project monitoring and evaluation reports, indicated that the land acquisitions have no significant impact on productive lands and other productive assets. Safeguards related to land acquisition were built into the community decision-making process.

The Borrower shall ensure that all reasonable measures are undertaken to ensure that the proportion of women participants in the following project activities is maintained at not less than: (a) 40


Detailed discussions on gender targets and achievements are provided in Appendix 4.

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Covenant

Reference in Loan

Agreement

Status of Compliance percent (i) in training programs at the village level, and (ii) membership of each CIO, and 30 percent for (i) contracted community facilitators and (ii) employment opportunities created under the Project. The Borrower shall further ensure that a gender audit is conducted for each subproject during a period of project implementation to be agreed with ADB. The Borrower shall ensure that the Project is implemented in accordance with the ADB’s Policy on Gender and Development (1998) and the Project’s Gender Action Plan as agreed between the Borrower and ADB. In the event that targets are not being met, DPIUs, PPIUs and PCMU are to report periodically including details of remedial actions being undertaken, the report is submitted to the Oversight Body and ADB.


Detailed discussions on gender targets and achievements are provided in Appendix 4. Progress on the gender action plan was reported in the quarterly progress reports and discussed during project review missions.

ADB = Asian Development Bank, BPK = Badan Pemeriksa Keuangan (Supreme Audit Board), CIO = community implementing organization, DGHS = Directorate General of Human Settlements, DPIU = district project implementation unit, EARF = environmental assessment and review framework, LARF = land acquisition and resettlement framework, M&E = monitoring and evaluation, MIS = management information system, MOF = Ministry of Finance, MPW = Ministry of Public Works, MTPR = medium-term poverty reduction plan, NGO = nongovernment organization, O&M = operation and maintenance, PCMU = project coordination and monitoring unit, PNPM = Program Nasional Pemberdayaan Masyarakat (National Program for Community Empowerment), PPIU = provincial project implementation unit, RIS PNPM = Rural Infrastructure Support to the PNPM.

60 Appendix 11

ECONOMIC BENEFIT REEVALUATION

1. The Rural Infrastructure Support to the PNPM Mandiri Project II supported community-driven development interventions in 1,500 villages. It provided community development block grants, facilitation, and technical support for village-level projects identified and implemented by the communities, including rural roads and bridges, new or improved irrigation systems, and clean water supply and sanitation. Similar to the economic and financial benefits evaluation prepared at appraisal, the economic and financial benefits reevaluation placed particular emphasis on poverty reduction and meeting the needs of marginalized groups. 2. As in the appraisal benefits analysis, this economic and financial reevaluation included benefits in terms of (i) substantial short-term employment generation, (ii) sustained impacts on village economies by improving community-level infrastructure and access to basic services in a highly cost-effective manner, and (iii) broader socioeconomic benefits and contributions to poverty reduction. Based on evaluations of similar projects, the original report and recommendation of the President had expected the project to boost project village residents’ income by 10%–15% and generate an average economic internal rate of return (EIRR) of 28%–68%. A. Increased Short-Term Employment

3. The project progress and evaluation reports indicated that village-level infrastructure projects utilized labor (in particular local manual labor) intensively, the costs for which accounted on average for about 40% of the total block grants (Rp100 million of the total block grant of Rp250 million/village/year). The project generated about 303,000 person-months (or about 25,000 person-years) of short-term employment in constructing village investments. Of that 303,000 person-months of immediate employment opportunities, about 20% (60,600 person-months) were provided to women. Overall, the project generated additional income of about $28 million for community members, including women, participating in civil works under the project. As this employment was provided largely in the agricultural off-season, it had particular benefits for reducing unemployment and vulnerability among the poor. There was also evidence to suggest that increased demand for manual labor had a broader impact in raising the wages of unskilled workers even outside of project activities, thereby contributing further to poverty reduction. B. Medium- and Longer-Term Impacts on Village Economies

4. The project had important and sustained impacts on the village economies. The project impact evaluation reports suggested that, in addition to the increased incomes due to primary and secondary employment, rural infrastructure investments played an important role in stimulating village economic activities. Other project economic benefits were generated from opening access to markets and reducing transport costs by constructing and upgrading rural roads and bridges; time savings in collecting water and health benefits from village water supply and sanitation investments, and reducing damages and loss of stored farm products due to flooding from improved drainage systems. At project completion, the impact evaluation suggested the project had contributed to increasing project village residents’ income overall by as much as 15%. The project benefitted about 3.18 million village residents in 1,500 project villages. C. Improved Environment Conditions 5. At project completion, the impact evaluation study suggested that the project contributed to a 9% reduction in the incidence of waterborne diseases. It was also noted that on average about Rp40,000/person/year was spent on health care costs related to those suffering from waterborne

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diseases. About 630,000 village residents benefitted from improved living conditions (via the construction and/or upgrading of drainage systems and provision of sanitation facilities). Valuing the benefit at Rp45,000 ($3.5)/person/day, this translates to about $2.2 million per year in savings. The first cycle of block grants was distributed in 2010 and physical works were completed in 2011. Thus, it can be concluded that village residents began to enjoy the health-related benefits starting from 2012 (the third year of project implementation). 6. The project also provided water supply facilities which benefitted about 159,000 village residents (about 31,800 households). Before the project intervention, these households generally bought drinking water from vendors and on average about Rp50,000 was spent for drinking water/household. After the project intervention, households need not buy drinking water. They are required to pay a monthly fee of about Rp15,000 for the new water supply facilities, however, and, since the provided water is not yet potable, households boil the water before drinking. Water boiling costs per household were estimated at about Rp5,000. The cost savings for water were thus Rp30,000/month/household and total annual savings about $1.0 million. Observations indicated that households used the time savings from collecting water mostly for non-income generating activities, which benefit was not quantified. The first cycle of block grants, including for the financing of water supply facilities, was distributed in 2010 and physical works were completed in 2011. Thus, it can be concluded that village residents enjoyed benefits from the provision of water supply facilities starting from 2011 (the second year of project implementation). D. Economic Internal Rate of Return 7. Post-completion evaluation was made of a representative sample of three types of village infrastructure investments which constituted the largest investments: (i) rural roads and bridges, (ii) drainage works, and (iii) water supply and sanitation. Respectively, these comprised about 75%, 20%, and 5%, of village-level investments supported under the project. It was assumed that benefits accrue during an operational lifetime of just 10 years. Based upon capital costs of $102.9 million and recurrent costs during project implementation of $11.1 million to cover government wages and other recurrent costs, the recalculated EIRR was 39.2%. That was within the EIRR range estimated in the original report and recommendation of the President (28%–68%).

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