World Bank Supports Ongoing National Program to Improve Living Conditions of Indonesia’s Urban Poor

November 20, 2012

National Program for Community Empowerment in Urban Areas (PNPM-Urban) for 2012-2015 provides block grants and builds capacity to improve living conditions and strengthen local governance

WASHINGTON, November 20, 2012 – Pockets of Indonesia’s urban poor are expected to benefit from improved access to infrastructure, social, and economic services through the National Program for Community Empowerment (PNPM Mandiri) in Urban Areas for 2012-2015, which will be supported by a newly approved World Bank loan of $266 million. PNPM Mandiri, Indonesia’s largest community-driven poverty reduction program, works nationwide to provide funds to poor rural and urban poor communities so they can invest in their own development priorities. The national program will provide $266 million to PNPM-Urban for 2012-2015, bringing the total value of the program to $500 million.

Despite Indonesia’s economic resilience towards the Asian crisis and the recent global economic crisis, urban poverty remains a serious problem. Approximately 110 million Indonesians or half of all households live clustered around the national poverty line of $21 per month, and are highly vulnerable to falling back into poverty. Moreover, inequality has increased over the last decade: the Gini coefficient has increased from 31.7 in 1999 to 35 in 2009, and is higher in urban than in rural areas.

“Over the last 12 years, the World Bank has partnered with the Indonesian government to better understand the evolving urban landscape and deliver a community driven development program that can accommodate the needs of the urban poor,” says Stefan Koeberle, World Bank Country Director for Indonesia. “PNPM-Urban 2012-2015 builds on the success and lessons learned from previous programs to reduce urban poverty, and will help the Indonesian government provide block grants and build capacity to improve living conditions and strengthen local governance.”

The block grants provided under PNPM-Urban 2012-2015 will allow kelurahans or wards to execute the sub-projects identified in the community development plans. In terms of building capacity, the World Bank will fund the cost of facilitators to carry out social intermediation activities, training, workshops, and produce socialization materials and publications.

“Over the years, PNPM-Urban programs have proven quite successful in strengthening community participation, building capacity, improving governance and also improving the quality of living conditions of the urban poor in efficient manner,” says George Soraya, Lead Municipal Engineer for the World Bank in Indonesia and team leader for the PNPM-Urban 2012-2015 operation. “Moving forward, we will work with the Indonesian government to improve the participation of women and marginal groups such as the very poor; strengthen the quality of facilitators and governance of the program; and ensure that planning processes are better aligned with the local government budgeting processes.”

Since its inception, the Indonesian government’s urban poverty reduction program has financed over 31,100 km of small roads, 8,800 km of drainage, rehabilitation of 126,800 houses of the poorest, 164,800 units of solid waste and sanitation facilities, and 9,450 health facilities. 


Media Contacts
In Washington
Chisako Fukuda
Tel : (1-202) 473-9424
In Jakarta
Randy Salim
Tel : (62-21) 5299-3259
In Washington (Broadcast)
Natalia Cieslik
Tel : (202) 458-9369