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Indonesia
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LOAN: INO 32367-01
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Community Empowerment for Rural Development
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Location
The Project covers 12 districts in six provinces (Central Kalimantan, East Kalimantan, South Kalimantan, Central Sulawesi, North Sulawesi and Southeast Sulawesi).
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Sector
Multisector /Multisector
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Initial Listing
18 November 1999
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Most Recent Update
9 February 2007
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Executing Agency(ies)
Ministry of Home Affairs
Directorate General of Rural Community Empowerment
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- Missions
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| TA Fact-Finding |
Loan Fact-Finding |
Pre-Appraisal |
Appraisal |
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21 Mar-14 Apr 2000 |
TBD |
5-26 Jun 2000 |
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Loan Approval Date
19 October 2000
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Estimated Completion Date
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- Cost and Financing Plan (in US$ million)
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| Source |
Foreign Cost |
Local Cost |
Total |
| Bank |
115.00 |
0.00 |
115.00 |
| Cofinancing |
0.00 |
0.00 |
0.00 |
| Borrower |
0.00 |
0.00 |
0.00 |
| Beneficiaries |
0.00 |
0.00 |
0.00 |
| Others |
0.00 |
0.00 |
0.00 |
| Project/Program Cost |
115.00 |
0.00 |
115.00 |
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OCR |
ADF |
Total |
| Loan Amount |
65.00 |
50.00 |
115.00 |
- Description
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The Project is designed to reduce poverty by increasing the incomes of about 425,000 people or 85,000 families. Of these, about 370,000 people, or about 74,000 poor families, are expected to move above the poverty line in 11 districts in six provinces of Indonesia: Central Kalimantan, East Kalimantan, South Kalimantan, Central Sulawesi, North Sulawesi, and Southeast Sulawesi. Community-based savings and loan organizations (CBSLOs) will be formed and trained to support microenterprises and small enterprises, and needed rural infrastructure will be provided to promote rural urban linkages. The Project will revitalize poverty reduction efforts in the rural urban sector by supporting the Government's program to devolve development resources to local governments and strengthening the institutional and human resource capacity necessary to enable rural communities nationwide to plan and manage local development initiatives. About 40 more districts from 20 new provinces will benefit from the institutional and capacity-building program to support the Government decentralization efforts.
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| Strategic Development Objectives |
- Primary
- Poverty Reduction
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- Secondary
- Economic Growth
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- Rationale
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Government's successful poverty reduction program suffered a significant set back due to the recent economic crisis. Although the incidence of poverty has since returned to its pre-crisis level of 18.2 percent, the crisis demonstrated that economic shocks could cause high surges in the incidence of poverty. It also highlighted the need for a long-term strategy based on social inclusion and addressing capability deprivation of the poor to make a significant impact on poverty. Lack of formal financial services and institutional support from districts and urban business communities are particularly common impediments to increasing rural enterprise development. The Project aims to remove these constraints. Past experience indicates that decentralized decision making and devolving resources directly to local government significantly decreases the cost of development implementation and increases the direct benefits of development projects for local communities. From that perspective, the Project is intended to support the Government's renewed efforts since April 1999 to decentralize decision making and devolve development resources to local governments and communities. Two new laws that were passed in 1999 grant autonomy to district and village governments, in effect giving them their own resources with which to plan and manage local development based on local needs. Such decision-making powers underscore the need for adequate institutional capacity to effect the democratic processess of decision making now entrusted to local governments and communities. Under this framework, the Project is aimed at supporting formal and informal training and decision-making processess that would give local communities and government the required institutional capacity to better utilize the resources to be made available to them for poverty reduction and improvement of the quality of life in their communities.
- Objectives and Scope
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The development goal is to increase the real incomes of the poor and in particular, rural communities on the periphery of regional growth centers. The objectives of the Project are to (i) empower rural communities by strengthening their capacity to plan and manage their own development activities, and (ii) support investments, foster rural-urban linkages, and establish rural infrastructure to promote agricultural productivity and off-farm business enterprises.
The Project will have four components. Part A will support (i) an institutional development process to improve community-based planning mechanisms to help local government and village communities plan and implement development programs according to the new decentralization laws, (ii) human resource development to support formal degree training for 1,773 staff of the Directorate General of Rural Community Empowerment (DGRCE) and local governments involved in community development, and (iii) a village grant to support the community training program. Part B will support the establishment of CBSLOs in the targeted areas of Kalimantan and Sulawesi (about 750 village communities) so that the targeted communities would have the capacity to obtain and service loans from financial institutions for microenterprise development. A credit line of $15.0 million from the loan will be provided through regional development banks or Bank Pembangunan Daerah (BPDs). Part C will support the construction of rural infrastructure for the targeted communities to link poor communities to markets. Part D will provide support for project management and monitoring.
- Policy Dialogue
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- Environment Category:
B
- Environment Impact and Mitigation
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- Social Aspects and Remedies
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- Benefits and Beneficiaries
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Part A would strengthen the capacity of rural communities and local government to plan and manage their own development programs. In addition to institution building, Part A would also impact on improving human resources of government support agencies at local, provincial and national levels. Part B would develop about 750 CBOs, representing communities in peripheral areas of regional growth centers. With strategic investments to address the limited rural infrastructure and support services, rural communities would benefit from having new access to markets at urban and growth centers. Credit from the Project would benefit about 35,000 micro- and small-scale enterprises.
- Public Consultation
- Arranged by Bank
- Date for Consultation : Two reconnaissance missions in 1999.
- Groups Consulted : All villages in the project will be consulted plus local government NGOs and the private sector.
- Beneficiary Participation in Formulation
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Consultations with private and public sector institutions, from rural and urban communities and local government at sub-district and district levels, regarding their interest and aspirations, were undertaken during the feasibility study phase. Intensive consultations and public awareness campaigns would be conducted at the beginning and during Project implementation for full direct participation of all stakeholders.
- Beneficiary Participation in Implementation
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- Consulting Services
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About 1,054 person-months of consulting services (236 international, and 818 domestic) for supporting project implementation will be required. Consultants will be engaged in accordance with the ADB Guidelines on the Use of Consultants. Recruitment, training and fielding of local trainers and facilitators will be contracted to qualified nongovernment organizations (NGOs) in accordance with procedures acceptable to ADB.
- Procurement
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Goods and services financed by ADB under the Project will be procured in accordance with ADB's Guidelines for Procurement. Simple and technically non-complicated civil works costing up to $50,000 will be constructed by villagers through community participation in accordance with procedures acceptable to ADB, while relatively complex civil works costing up to $500,000 will be carried out on the local competitive bidding (LCB). Utility vehicles, motorcycles, computers and office equipment will be procured by international shopping or, if valued under $100,000 equivalent, by direct purchase.
- Contacts
- Bank
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Yoshiharu Kobayashi
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Principal Project Specialist (Portfolio Management)
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SLWP
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Tel. No.:
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E-mail:
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ykobayashi@adb.org
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- Executing Agency
- Ministry of Home Affairs
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Contact Person
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Tel. No.
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Fax. No.
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E-mail
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- Directorate General of Rural Community Empowerment
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Contact Person
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Mr. Suratman, Director General
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Tel. No.
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Fax. No.
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(6221) 794-1939/40
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E-mail
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Contact Person
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Tel. No.
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Fax. No.
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E-mail
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