Asian Development Bank Support for Decentralization in Indonesia

Date: July 2010
Type: Evaluation Reports
Country:
Subject:
Evaluation; Environment; Finance
Series: Special Evaluation Studies

Description

Background

Decentralization is a broad area, and this special evaluation study focuses on ADB support for facilitating the decentralization process, as well as support intended to strengthen regional (provincial, district and municipal) governments and institutions in Indonesia. An assessment was also made of current good international decentralization practice.

Overall assessment

Irrespective of the urgent need for assistance, interventions taking place during periods of rapid economic, political, and administrative transitions face the risk of becoming irrelevant and ineffective, with short-lived outputs and unsustainable outcomes. In terms of ADB performance, this has meant finding a difficult balance between the need to ensure the effectiveness and efficacy of deploying scarce TA resources, and the need to support important policy processes during a period characterized by risk and uncertainty. ADB responded promptly to a rapidly changing situation, but the very nature of the situation precluded detailed analyses and programming. Subsequent support has attempted, with some success, to provide a sound policy framework for decentralization. This support might have been more effective and sustainable if backed by more TA designed to develop the capacity of decentralized institutions to improve systems and procedures, rather than TA focused on the training of individuals. The overall rating is partly satisfactory.

ADB performance has been affected by the lack of staff at the Indonesia Resident Mission with deep knowledge of decentralization. Additional capacity is needed to design and guide the various loans and TA provided. Although the resident mission is actively involved in decentralization projects from the design of the terms of reference to implementation, the perception of some senior government officials expressed to the independent evaluation mission is that the resident mission is a conduit to ADB headquarters, with key decisions being taken in Manila. This perception could be addressed if capacity were to be increased. ADB and other agencies have invested heavily in capacity development, but results have sometimes been disappointing. A less ambitious approach could have been adopted given the complexities of the decentralization program. Performance has also been affected by poor disbursement as a result of serious procurement issues in the case of some loans.

Lessons

Key lessons identified include the need for:

  • increasing the number of professional staff based in the resident mission for the analysis and management of projects and programs;
  • being consistent in terms of substantive focus (which should be agreed with government) and delivery instruments;
  • speeding up the process of getting from the identification of a defined need to project implementation;
  • prioritizing efforts to optimize coordination and policy dialogue with government and other development partners; and
  • ensuring that sufficient resources are committed to the analysis and dialogue required for project design and preparation.

Recommendations

  • Continue support for developing the policy framework for decentralization with project- and program-based support, complemented by more decentralized assistance, such as support for institution building, at local levels.
  • Continue addressing government priorities for decentralization by focusing ADB’s interventions on past successes (in public financial management reform and capacity development) and support further improvement of the coordinated decentralization framework.
  • Further deepen coordination with other development partners (including the donor working group and other forums) in supporting government decentralization activities.

Contents

  • Executive Summary
  • I. Introduction and Background
  • II. Development Context and Government Priorities
  • III. ADB Strategies for Decentralization Assistance
  • IV. Strategy Assessment
  • V. Performance
  • VI. Conclusions, Lessons, and Recommendations
  • Appendixes