World Bank Boosts Support for Indonesia's National Program for Community Empowerment (PNPM Mandiri)

March 31, 2010

JAKARTA, March 30, 2010 – Communities in over 5,000 rural and urban sub-districts this year are set to benefit from an expansion of Indonesia’s National Program for Community Empowerment (PNPM Mandiri), which will be supported by new World Bank loans worth nearly $935 million. PNPM Mandiri, Indonesia’s largest community-driven poverty reduction program, works nationwide to provide funds to rural and urban poor communities so they can make poverty-reducing investments based on their own plans and management. These loans will support the program’s 2010 aim of providing block grants to 4,800 rural sub-districts in all provinces except Jakarta, as well as 885 urban sub-districts in 19 provinces.

PNPM has managed to change the paradigm of poverty alleviation efforts in Indonesia,” said Joachim von Amsberg, the World Bank’s Country Director for Indonesia. “More than 20 countries have visited and studied this program to be implemented in their own respective countries. Many studies show that PNPM provides higher rates of return, greater transparency and sustainability than traditional top-down approaches to investing in small scale infrastructure and local projects.”

These new loans will be disbursed through the rural and urban arms of the PNPM Mandiri program. On the rural side – under the banner of National Program for Community Empowerment in Rural Areas (PNPM Rural) – $785 million will be targeted towards helping communities improve local level governance and tertiary infrastructure such as clean water and drainage systems, as well as primary education. Similarly on the urban side, a $149.9 million loan for the National Program for Community Empowerment in Urban Areas will go towards strengthening local governance structures, as well as financing projects that help increase access to clean water; mitigate floods; and generally improve access to urban services and housing.

This new financing will help the Indonesian Government build tertiary infrastructure, such as roads for access to markets, health centers, clean water systems and whatever else a local community might decide it needs,” says Victor Bottini, Senior Social Development Specialist, World Bank, Indonesia. The World Bank is happy to provide financing for part of the one billion dollars that will be provided directly to sub-districts throughout Indonesia in 2010 for investments decided on and managed by communities themselves.

One of the most significant physical outcomes of PNPM Mandiri can be seen in village infrastructure. Since evolving from the KDP and UPP programs twelve years ago, the PNPM Rural and Urban programs have helped to build or rehabilitate over 55,000 kilometers of roads, 86,000 housing units, 11,600 clean water supply schemes, 13,300 irrigation schemes, 19,600 community health posts and 9,700 schools.

PNPM Mandiri has also had a big impact on improving development outcomes in the health and education sectors. It also has a a gender strategy which focuses on economic empowerment through job creation and income generation and political empowerment through decision making at the community level. Audits, studies, and in-depth reviews show that the program has been successful in building fiduciary controls that actively involve community oversight, which in turn have helped decrease losses and increase beneficiary satisfaction with the results.


PNPM Support Facility

The World Bank in Indonesia manages a multi donor support facility which provides key technical assistance and strategic oversight for the country’s main poverty alleviation program, the National Community Empowerment Program (PNPM Mandiri), with the aim of making the program a sustainable operation.

The Facility pools together grants provided by the governments of Australia, Denmark, the Netherlands, and United Kingdom to help the Indonesian government achieve its goal of providing block grants under the PNPM Mandiri scheme to all 70,000 villages in the country, at a cost of a billion dollars a year. "

Grant funds provided through the PNPM Support Facility are used primarily for building Indonesian capacity for large-scale poverty reduction. Capacity programs supported by the Facility engage a broad range of Indonesian players, including national and local governments, universities and research centers, civil society organizations and grassroots initiatives. Facility programs for renewable energy help make PNPM Mandiri environmentally sustainable, and the Facility also places a special emphasis on innovative ways to ensure that PNPM Mandiri reaches out to disadvantaged groups across Indonesia.

The PNPM Support Facility was launched on December 12, 2007 in Bali by Indonesian President Susilo Bambang Yudhoyono and World Bank President Robert B. Zoellick.

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