Workflow

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Activity Cycle

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Management

The Ministry of Home Affairs, Department of Community Development, manages KDP, and teams of facilitators and consultants from the village to the national level provide technical support and training. Government coordination teams representing various ministries also assist with KDP at the national, provincial, and district levels.

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Financing Profile

KDP is supported through a mix of loans from the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA), grants, and counterpart government funds. KDP’s financial structure is very attractive to the Government of Indonesia. Because it is poverty targeted, the project receives large amounts of concessional financing through IDA, nearly 50 percent of Indonesia’s IDA allocation during KDP2.

a) The KDP1 Supplemental Credit covered additional years for KDP areas.
b) Figures include MDF Aceh and linked donor funding as follows: Aceh KDP: US$79.0 million; KDP Nias: 50.0 million; Aceh Post Conflict: US$30 million; and MDF KDP-BRR: US$65.0 million.
c) Figures for KDP3b with Additional Financing are projections. Government contribution includes approximately US$360 million from 2007 national budget and US$100 million projected from local district government budgets.

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Distribution of Funds

KDP provides funds directly from the national level to village collective accounts at the Kecamatan level. Villagers then use these funds as grants for productive infrastructure, loans to existing groups for working capital, or social investments in education and health. Each financial transfer downwards is matched by a document flow upwards to promote precise tracking.

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1. High rates of return - In an independent economic evaluation, weighted internal rates of return for KDP infrastructure ranged from 39 to 68 percent. In most cases, these very large benefits resulted from either entirely new economic activities that were made possible by KDP infrastructure, or suppressed/latent production capacity that was finally able to be channeled to local markets.
   
2. Significant cost savings - KDP village infrastructure built through KDP methods cost significantly less – on average 56 percent less – than equivalent work built through government and Ministry contracts.
   
3. Expanded business opportunities and employment
   • 39 million workdays have been generated through short-term employment on labor-intensive infrastructure works.
   • Opening up of businesses and transport services due to new roads, bridges, and piers.
   • 751,500 loan beneficiaries and entrepreneurs participating in KDP credit & business activities.
     
4. Pro-poor targeting – As indicated in economic studies, KDP has been successful in targeting and assisting the poorest kecamatan in the country.
   
5. Improving local governance - Establishment of a model for participatory planning and financing.
   • Indonesians in 34,200 villages across the country participate in a democratic, participatory process of planning and decision-making regarding the allocation of public development funds.
   • About 60 percent of all participants in the KDP planning meetings are from the poorest groups in their village, and 70 percent of the workforce for KDP infrastructure construction comes from the poorest groups.
   • Participation of women in KDP meetings and activities ranges from 26 to 45 percent.
   • Community contributions average 17 percent nationwide with wide provincial variation.
   • High government commitment and buy-in with 40 percent of districts in KDP2 providing matching grants to KDP. All districts in KDP3 provide contributions from their own budgets.
   • Government accountability and the role of civil society are strengthened. NGOs and journalists in KDP provinces act as civil society watchdogs to monitor independently KDP activities. Since the program began, there have been over 1,260 media reports broadcast or published regarding KDP.
     
6. Low rates of corruption - Independent audits of KDP performed by Moores Rowland found that less than 1 percent of village subprojects showed deviations.

Sample of KDP Infrastructure Implementation below:

Village Road
Before	After
Drainage
Before	After
More Infrastructure progress pictures (1.8 mb PDF)

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Monitoring and Oversight of Activities and Funds

KDP works in a high-risk environment and it is important to maintain strict controls and monitoring systems to ensure that funds are used for the intended purposes. KDP maintains the following oversight mechanisms:

• Community Participatory Monitoring – The most effective means of monitoring is through beneficiary communities who elect a monitoring committee to oversee project implementation and finances. Committee members check on prices, quotations, supply of goods, benefits to the community, financial book-keeping and progress of infrastructure implementation. The implementation team also reports to the communities twice in “accountability meetings” regarding project progress and finances. KDP requires project information to be posted on village information boards.
  
• Government Oversight – KDP funds are public funds, and government authorities have a responsibility to ensure that KDP is proceeding according to its principles and procedures and that the funds are being used appropriately. All government officials involved with KDP (local parliaments, provincial and district coordination teams, district heads, sub-district heads, project managers at Kecamatan level/PjOK) have a duty to monitor KDP.
  
• Consultant Oversight – Monitoring project activities is also the shared responsibility of KDP consultants and facilitators. Consultants at the national, regional, district, and sub-district levels, and village facilitators all share responsibility for monitoring KDP activities. Consultants make regular visits to project sites to provide technical assistance and supervision.
  
• Grievance and Complaints Resolution Mechanism – Communities can direct their questions or complaints to KDP facilitators, government staff, NGOs or send inquiries directly to a PO Box. KDP maintains a Complaints Handling Unit at the national and regional levels to record and follow up on inquiries and complaints.
  
• Independent Civil Society Monitoring – Indonesian civil society groups such as NGOs and journalists provide independent monitoring of KDP. KDP maintains a contract with a competitively selected NGO in each province to monitor regularly KDP activities and report monthly on progress. Journalists are also invited to monitor the program and publish or broadcast their findings.
  
• Financial Reviews and Audits - Three parties conduct regular financial inspections and/or audits of KDP:

1. BPKP (Badan Pengawas Keuangan dan Pembangunan), the official government audit agency. Each year BPKP audits KDP activities on a five percent sample. In 2004, BPKP conducted audits in 22 provinces, 62 districts, 190 sub-districts, and 593 villages.
2. NMC Financial Supervision and Training Unit. KDP maintains an internal seven-person unit for financial supervision and training. The Unit conducts financial reviews and more importantly, provides on-the job training for Kecamatan Financial Units (UPKs), Village Implementation Teams (TPK) and loan groups. In total, BPKP and NMC financial audits generally cover 30 percent of all KDP sub-districts.
3. World Bank Supervision Missions and Audits. The World Bank, together with the NMC and Government undertake semi-annual missions. These supervisions are very helpful in identifying management issues and evaluating the progress of the program at the central level and in the field. The Bank also contracts an external independent firm to audit all Bank projects, including KDP.

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Resources

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