Following the devastating tsunami on December 26, 2004, the World Bank announced an immediate grant of US$25 million for Indonesia. As the generous outpouring of international support reached substantial portions, the Bank brought together 15 donors and now pools over US$673 in the Multi Donor Fund for Aceh and Nias (MDF), which was constituted in February, 2005.

Multi-Donor Fund for Aceh and Nias (MDF)  
The US$673 million Multi Donor Fund for Aceh and Nias is a partnership of the international community, the Indonesian Government and civil society to support the recovery of Aceh and Nias. It contributes to the recovery process by providing grants for quality investments that are based on good practice, stakeholder participation and coordination with others. In doing so, the Multi Donor Fund seeks to reduce poverty, (re)build capacity, support good governance and enhance sustainable development.

The Fund pools the resources of 15 donors: the European Commission, the Netherlands, the United Kingdom, World Bank, Sweden, Denmark, Norway, Germany, Canada, Belgium, Finland, Asian Development Bank, United States of America, New Zealand and Ireland.

Results of Multi Donor Fund Support

• Community Recovery
  Five Multi Donor Fund projects valued at US$222 million support communities throughout Aceh and Nias to rebuild community infrastructure and housing with participatory methods.
  
  

  Description	Numbers
  Houses rebuilt and repaired	9,563
  Under construction, under repair	5,626
  Planned for Nias	5,000
  Extensive network of facilitators reaching all villages in Aceh and Nias in number of people	13,000
  Km of roads rebuilt	2,529
  Bridges rebuilt	825
  School buildings reconstructed	247
  Irrigation and drainage units built	1,075
  Water units built	1,148
  Sanitation units built	1,302
  Health posts reconstructed	43
  Scholarships to individuals, the total valued at US$368,800	8,649
  Micro-credits to individuals, the total valued at US$341,000	3,685
  Short lerm labor days generated through MDF projects	Over 11 million
  Number of parcels adjudicated	169,088
  Land titles registered in the land book	122,900
  Land titles distributed	104,551
  Status as of Sept 30, 2007

  
  
• Infrastructure and Transport
  The Multi Donor Funds portfolio addresses critical gaps in infrastructure and transport through support to emergency needs and long-term reconstruction. The portfolio of 6 projects is valued at US$176.44 million of MDF funds. Achievements to date include:
  
  

  Description	Numbers
  Delivery of reconstruction goods in metric tons by sea	98,185
  Port facilities designed on the west coast of Aceh/Nias	5
  First flood valves installed to protect Banda Aceh from flooding	11
  Km of road between Lamno-Calang kept open through maintenance works	85
  District-level roads rebuilt in km	43
  Status as of Sept 30, 2007

In March 2007, many infrastructure investments of the MDF were still in the preparation phase for tendering the works to contractors, such as national, provincial and district roads, ports reconstruction, pumping stations and the flood valve systems of Banda Aceh city. Works will start in the second half of 2007.

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Sustaining the Environment  
To date, the Multi Donor Fund is the largest contributor to promote environmentally sustainable development in Aceh and Nias with almost US$42 million in two projects, the Tsunami Recovery Waste Management Program and the Aceh Forest and Environment Project.

The Aceh Forest and Environment Project pursues the establishment of a multi-stakeholder governance framework to help protect Aceh’s valuable forest resources from damage caused by the timber needs for reconstruction. At 2.3 million ha, the ecosystem of Leuser and Ulu Masen are the largest contiguous forest area in Southeast Asia. Project activities include ongoi ng monitoring of forest status and training of forest monitoring teams, reporting of illegal activities to the relevant agencies, reforestation of 670ha of forests; support to environmentally sound spatial planning at Province and District level for the future protection of forest and water resources. The project also supported the setting up of the Aceh Timber Information Center and the Provincial Government in its environmental policies.

More details can be found on: www.multidonorfund.org

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The KDP and Urban Poverty Program (UPP) programs are implemented by a network of 1,450 facilitators who work in 6,500 villages assisting communities throughout Aceh and Nias to identify, implement and monitor their own development projects. This human network provides valuable information feedback and coordination on the ground for the government and several major aid organizations working on the reconstruction effort. The success of the community driven development approach to reconstruction has encouraged the Government of Indonesia to adopt the same model for reconstruction of houses in Yogyakarta and central Java following the earthquake on May 27, 2006.

Grants for Protecting Widows, Children and Vulnerable Societies  
A US$7.8 million emergency grant from the Japan Social Development Fund (JSDF) targets support for widows, vulnerable children and returning refugees to conflict and disaster areas. The grant also finances a community radio initiative to respond to information needs in tsunami-hit areas. These programs are being executed through local non government organizations (NGOs) and the KDP project.

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A GAM Reintegration Needs Assessment was published in March 2006 and helped provide the basis for programming decisions of the Government's Aceh Reintegration Agency (BRA). Incidents of extortion by various parties threaten the peace process and the progress of reconstruction. Trained surveyors accompanying trucks across the main Aceh supply routes have already identified the checkpoints between Banda Aceh and Medan where illicit payments are demanded.

The Bank has also conducted an  Aceh-wide village assessment, which maps infrastructure damaged by the tsunami and by conflict, IDP flows, access to information, levels of social cohesion and tensions, village needs, and the quality of educational infrastructure. Livelihoods opportunities for former combatants, the impact of conflict on tsunami aid and development-related conflicts, and evaluation of community-based reintegration programming.

The World Bank is one of a handful of international organizations that has been working on development programs in Aceh prior to the signing of the Helsinki peace accord. Following the August 15, 2005 accord, the Bank, together with other donors are working closely with ex-GAM and Government representatives, the Aceh Monitoring Mission to strengthen several aspects of the peace process:

• Support to the Aceh Reintegration Agency (BRA): the Bank, through the Conflict and Development Team is assisting BRA to develop a medium to long-term reintegration strategy and provides peace building and reintegration policy advice as a member of FORBES.
• Building Constituencies for Sustainable Peace : The Bank has an active program supporting local organizations conducting reintegration programming, and conducting activities aimed at creating an enabling environment in which peace can prosper. Projects include training former combatants in photography and writing, local socialization activities, and utilizing community radio networks for peace.
• Improving project capacity to work in a post-conflict context:   Work includes developing conflict mediation training for project facilitators and providing assistance to the task teams for tsunami reconstruction projects to ensure conflict sensitivity.
• DFID Grant for Support to SPADA Aceh and Nias: DFID (UK Department for International Development) is providing a grant of GBP six million (approximately US$ 11,700,000) to strengthen the ability of the core SPADA project mechanism to respond to conflict and to provide satellite activities to support post-conflict reintegration in Aceh.
  
  

  DFID Grant Component	Allocation (US$)
  Supporting access to justice	2,300,000
  Improving regulatory environments for private sector growth	1,500,000
  Addressing needs of vulnerable groups affected by tsunami and conflict	6,459,826
  Enhanced supervision	400,000
  Monitoring and evaluation	500,000
  Analytical work for post-conflict development	300,000
  Total DFID grant	11,693,700

• Activities targeting vulnerable groups: The World Bank Conflict and Development team manages a series of activities that address the needs of vulnerable groups and including them in development processes. Some activities link directly to the core SPADA model, while others are aimed at enhancing the context in which SPADA operates by helping to ensure that peace is sustainable. The activities included workshop on the future of sustainable economic development in Aceh, conflict resolution and mediation training, and two as below:
  
  • 2nd Phase of the Direct Health and Psychosocial Assistance Program (DHPAP II) : DHPAP provides intensive general and medical health care for villages in Aceh affected by years of conflict, and enhances the capacity of the formal health system to systematically identify and treat patients with mental health illnesses in 50 villages in 10 high conflict sub-districts.
  • Empowering Women in Aceh: This activity aims to increase women’s participation in local decision-making processes and public life to ensure that women’s priorities are reflected in local government policies. The activity also strengthens gender justice in communities across four districts in Aceh by training Syariah Court judges and village-level marriage registrars in a way which deepens their understanding of gender in Islam.

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Summary of disbursements of World Bank and other MDF projects in Aceh & Nias

As of November 30, 2007

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Economic Development Financing Facilities (EDFF)
The EDFF project is a facility funded by a grant from the MDF in the amount of US$50 million. It consists of two components-- the first is a financing facility (US$44.5 million) and the second component will facilitate and strengthen the operation of the GoA’s project management capacity.

The project will finance initiatives to promote sustainable economic growth and job creation, in line with the GoA's (Government of Aceh) RPJMD (Rencana Pembangunan Jangka Menengah Daerah). To achieve this, the project will seek sub-projects that contribute toward the following development objectives, identified by the GoA as key for sustainable economic development in Aceh:

• Development of job-creating, market-driven enterprises engaged in value-add processing and manufacturing, especially in agriculture and fisheries;
• Sustainable improvement of production quality and value in agriculture, fisheries and estate crops that contributes to alleviation of poverty;
• Increase in international trade, especially direct exports; and
• Increase in domestic and foreign investment in Aceh.

These development objectives will be achieved through the following intermediate outcomes: (i) Improving the business environment: a better enabling environment for private sector development and investment; (ii) Private sector support: support to improving the productivity of the private sector, farmers and fishermen; and (iii) Public infrastructure: financing of economic infrastructure necessary for business development and job creation. The beneficiaries of sub-projects will be either directly or indirectly the people and communities of Aceh. As a result of the defined beneficiary pool, the proponents of sub-projects will not be individuals. The focus of the project is on sustainable and equitable economic development. The project, while a sizable amount, is very small when measured against the economic development challenges and needs of Aceh and as such will serve as a starting point and demonstration of what can be done.

An important byproduct of the project will be the building of capacity at BAPPEDA, the Development and Planning Agency of Aceh . BAPPEDA, with the assistance of an international consultant firm, will learn through hands on experience how to evaluate, select and monitor the implementation of sub-projects to support long term economic development. This is particularly important in light of the large amount of resources available to the provincial government and the recent decision to allocate the Special Autonomy Fund on a programmatic basis between the provincial and district governments. The experience gained under the project will better position the GoA to further its economic development agenda through its own resources.

The following key performance outcome indicators will allow the GoA and other stakeholders to assess progress toward achieving results in the development outcomes mentioned above:

• Number of clearly identified business constraints that were successfully alleviated in Aceh
• Employment generated in enterprises supported by the facility
• Number of users of public infrastructure financed by the project
• Success rate of subprojects financed by the project
  
  

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