Community Development in Indonesia

Community development projects such as the Kecamatan Development Program (KDP) cannot be understood without seeing them as part of Indonesia’s long-standing efforts to push resources earned from resource rents and elsewhere down to lower levels of the system. KDP itself is an immediate descendant of the Provincial Development Project (PDP), which was launched by USAID while President Wolfowitz was ambassador in Indonesia and continued to the early 1990’s. Many of the current KDP staff, in fact, came to Indonesia through PDP. Other sources of inspiration include the Kampung Improvement Programs, and the early programs to deliver water supply and sanitation in rural areas.

Two factors drive the current generation of community projects. First, Indonesia successfully built up a large network of economic infrastructure such as district roads, ports, etc. Community projects are predicated on the presence of higher level infrastructure. Second, during the krismon, the formal bureaucracy more or less collapsed, just as the country faced not just an economic crisis but also drought and widespread conflict. The community projects sailed more or less peacefully through all of this turbulence; in fact during the worst of the crisis, KDP scaled-up from 2,000 villages to some 34,000 villages, including an expansion in all seven conflict provinces, including Aceh, where it was the only multilateral project operating (in fact thriving!) throughout the entire martial law period.

Donor-funded community development projects in Indonesia now cover more than 40 percent of the country. They can be multi-sectoral or focused on a single sector such as education or livelihoods; and they can be rural or urban. The following projects are part of the Indonesia CDD program or platform.

Recent years have seen a strong convergence on a fairly standard core design:

• Direct block grant transfers to community bank accounts held in state-chartered banks.
• Social facilitators recruited form the private sector or NGOs (rather than civil servants) provide information, promote participation, and train villagers.
• Engineering facilitators oversee technical quality and train villagers; villages directly manage procurement and book-keeping and mandated transparency and extra auditing.

Community projects have been laboratories for delivering better governance

• Popular engagement with local government brings with it less cynicism and more accountability. Participation rates of the poor and women are much, much higher in community projects than in normal development programs.
• Community projects create transparency in development. Special disclosure rules promote oversight by journalists, NGOs, and civil society.
• Their pilots and studies that provide training and legal services to the poor are creating constituencies for using the tools of justice rather than weapons and violence for resolving disputes.
• Community projects pioneered the use of corruption vulnerability mapping and anti-corruption action plans.
• Experiments test different mixes of incentives, sanctions, and threats (featured in the Economist of March, 2006) in reducing corruption.

Community Development Projects have been good investments

More than 20 quantitative and qualitative evaluations have been carried out on the community programs funded by the Bank in Indonesia. Highlights from the representative studies show:

• Rates of return average some 35-50 percent. Costs are on average 56 percent less than the same works built through ministry and government contracting.
• Poverty targeting has been efficient (and can be improved with new statistical tools).
• Infrastructure is of high quality and can easily recover its costs.
• Audits by international auditors find corruption rates less than 3 percent. Implementation quality improves significantly over time; Uptake by local governments is higher than expected.

But there is plenty of room for improvement...

Areas that are generally weak or are proving to be difficult include

• Local governments do not help villagers with recurrent costs. As a result, operations and maintenance vary from satisfactory to inadequate.
• Livelihoods and micro-credit do not work well through this mechanism.
• Mainstreaming through government budgets lowers transparency.
• Villagers do not aggregate their proposals into larger investments.

The Bank will encourage further development of the community-based approach because

• Better governance among Indonesia’s villages and urban settlements is key for stability.
• Communities continue to be the safety nets for the poor.
• Communities demonstrably deliver basic services with more efficiency and lower costs than other methods do.

But there will also be some changes to the design that respond to government requests, such as

• Greater integration into district government planning and service delivery.
• More use of on-budget transfers; more focus on cost-sharing and sustainability.
• Decentralizing management.

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More information:
 Indonesia Kecamatan Development Project (KDP)
 Community Driven Development (CDD)