December 21, 2006—Before the 2004 tsunami, Aceh was one of Indonesia’s most neglected and isolated regions. Several decades of conflict in the province brought isolation and despair to its people. It is now home to the largest reconstruction effort in the developing world.
For the first time in three decades, Aceh is at peace, and maintaining this stability is key to its economic recovery. The 2005 peace agreement between the government of Indonesia and the Free Aceh movement has been strengthened through the first-ever local elections which were held in Aceh on December 11.
Up to $8 billion––of which $5.8 billion is already allocated—is expected to be spent on reconstruction by 2009, representing about 1500 projects by more than 300 institutions. Reconstruction never happens quickly but already the effort is starting to show results in Aceh. Most medical facilities have been rebuilt and almost all children are back in school. While slow, the effort to rebuild roads, bridges and other infrastructure is progressing. Community-driven development has proven superior to top-down reconstruction, particularly in housing. Acehnese communities have a very strong sense of belonging together and almost all communities wanted to participate in key decisions that affect their future. “By using our existing network of community-driven development projects––already covering over 40,000 villages in Indonesia––we found a fast and effective means to deliver assistance,” says Andrew Steer, country director for the World Bank in Indonesia. So far, community-driven housing reconstruction has proven to be of higher quality, more cost-effective and in most cases even faster than other methods of providing housing. One of the key lessons is that good information and communication are the secret for successful reconstruction. Keeping track of the progress of reconstruction––who is doing what and where––is essential to coordinating an effective response. So is informing the local people about what to expect, when. One innovative approach supported by the Bank is the Ceureumen Newsweekly, a regular newspaper that provides vital information on reconstruction. The Bank was present in Aceh before the tsunami, supporting the Indonesian Government in the community-driven Kecamatan Development Program (KDP), now covering all 6,500 villages in Aceh and Nias. Soon after the tsunami, the Bank made an assessment of the damage, which remains the blueprint for the reconstruction. When a special reconstruction agency was established, the Bank provided support for institutional building. And when donor money started to pour in, the Bank helped set up and manage the Multi-Donor Fund which has brought together US$655 million in grant funding from 15 donor countries and international agencies. These resources have been used to provide tsunami victims with housing, schools, clinics, basic infrastructure, waste management, port reconstruction, and environmental protection. Most projects involve communities to ensure oversight and ownership and include programs to support the new peace. Tracking the Money An important aspect of the Bank’s work is providing technical assistance at many levels. With 50 to 60 national and international experts working on a variety of programs and providing technical support to the Badan Rekonstruksi dan Rehabilitasi––the Indonesian Reconstruction and Rehabilitation Agency, the World Bank has one of the largest offices in Aceh. John Victor Bottini, the Bank’s resident representative in Aceh, is planning for the long haul as several new projects, such as Support for Poor and Disadvantaged Areas (SPADA) will continue the work of community-driven development in conflict-affected and other areas once the reconstruction programs end.
Since the tsunami, a small World Bank team, consisting mainly of national staff, has been tracking the money. The team provides quarterly updates on the reconstruction process and has become the main reservoir of financial information on the reconstruction program. “The secret of a successful tracking system,” said Wolfgang Fengler, Task Team Leader of the Reconstruction Finance work, “is a dedicated team of data analysts, systematic follow-up with key players, and a robust methodology. These elements are much more important than sophisticated IT systems, which were actually counter-productive in the case of Aceh.” Fengler’s team recently launched the Aceh Public Expenditure Review, which will help the Government monitor and analyze public budgeting, reconstruction, and local government performance. The review found that while project implementation has accelerated, significant gaps remain in some sectors and regions. A Fiscally Strong Province With the Indonesian Decentralization Laws of 2001, decision-making authority has devolved from Jakarta to the 400-odd local governments across the country. Aceh, a province with substantial natural resources, has been one of the main beneficiaries of decentralization. Despite being one of Indonesia’s fiscally strongest provinces, poverty levels have remained unchanged at 30 percent, according to the review. These findings will feed in to future policy making. With the new Law on Governance of Aceh, signed in July 2006, resources are expected to increase and stay strong for the next two decades.
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