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Developing Capacity in Managing Revolving Funds of Rural PNPM Mandiri

April 25, 2010

  • PNPM Mandiri launched a pilot project which aims to improve the capacity and sustainability of revolving loan funds (RLFs) operations under PNPM Mandiri.
  • The pilot project includes a series of activities including RLFs operations assessment, and technical assistance / capacity building, among others

April 25, 2010 - The pilot project, " PNPM Mandiri RLFs Capacity Building and Sustainability Project", will be implemented during the next five years in four provinces in Indonesia; Central Java, Yogyakarta and two provinces outside Indonesia

To socialize and also to obtain inputs from the areas receiving the pilot, workshops were held in four districts/municipalities; Solo, Purwokerto, Semarang for Central Java Province and Yogyakarta Municipality for DI Yogyakarta Province. The workshops were attended by approximately 1000 participants consisting of representatives of the Activity Management Unit (UPK) and Sub-district Facilitators (FK) in these two provinces.

Each workshop was opened by the representative of the provincial or district/municipal working units, representative of the Working Group for PNPM Mandiri Oversight Committee, and also representative of the World Bank.

In the workshop conducted in Yogyakarta on 6 May, 2010, Vivi Yulaswati, the Head of the Sub Directorate of Poverty Reduction, Bappenas (National Development Planning Agency), mentioned that the pilot project is a way developed by the government to ensure the sustainability of the PNPM Mandiri, especially RLFs operation which have offered access to credit for the people in the community who have limited /no access to credit from the formal financial institutions. Such financial assets accumulated under RLFs must be managed properly to accommodate collective needs of the community". She also stressed that the sustainability is an important element in the implementation of the PNPM Mandiri.

Yoko Doi, Financial Specialist, from the World Bank also stated in her presentation that the pilot project focuses on improving the institutional and operational capacity of RLFs operation and supporting system of such operations to ensure the sustainability and to establish possible linkage with formal financial institutions.

Representing the head of the provincial working group, the regional secretary accompanied by  Jonathan Dwidjo Purwanto, Yogyakarta Provincial Coordinator said that most of UPK in Yogyakarta which has managed more than nine thousand business groups has been developed maturely. Hence, the pilot was an excellent initiative for UPK and the community to develop further and to ensure the access to finance for the community. 

Meanwhile, in the discussion session, representatives of UPK and FK who were actively shared i) challenges they faced in managing RLFs, ii) efforts they made to ensure RLFs availability to the Poor Households (RTM), iii) difficulties to offer RLFs to RTM who do not engage productive activities, and iv) issues related legal status of UPK and the ownership of RLFs among other challenges. Participants have also shared good practices / experiences from the fields.

Various challenges and solutions expressed in the workshop from the four districts are then accommodated and will be analyzed further by the team formulating the pilot project.