Poverty Engagement, Knowledge & Action

Transcription

1 Poverty Engagement, Knowledge & Action Program Proposal Prepared for submission to the PNPM Support Facility (PSF) A joint effort of the PSF Steering Committee and World Bank Office Jakarta November 2008 W o r k i n g t o g e t h e r t o r e d u c e p o v e r t y, p r o m o t e p r o p o o r g r o w t h a n d i m p r o v e s o c i a l p r o t e c t i o n f o r t h e p o o r a n d v u l n e r a b l e i n I n d o n e s i a a r t a

2 A. Summary Program Title Poverty Engagement, Knowledge and Action Program Program Timeframe 4 years, Rationale Program Description Execution of Program Activities Funding Structure Poverty reduction is the highest development priority of the Government of Indonesia. The National Community Empowerment Program or Program Nasional Pemberdayaan Masyarakat Mandiri (PNPM-Mandiri) is a flagship program of the Government to help realize national poverty reduction targets. The programmatic focus of PNPM can benefit from a program of activities that provide an analytical overview of poverty and strategic inputs to help steer programmatic direction. This proposal outlines a four-year program to support the Government of Indonesia s efforts to reduce poverty, promote pro-poor growth and improve the social protection for vulnerable groups. The program consists of four platforms of activities designed to: i) strengthen poverty and social protection programs, ii) deepen analysis of poverty and vulnerability, iii) build technical capacity and know-how, and iv) stimulate policy dialogue and provide inputs to policy-makers. The program places a strong focus on enhancing the capacity of government agencies and local think tanks both through stand-alone projects and integrated across all platform activities to use poverty analysis as a basis for action in promoting equitable growth. Proposed program activities will fall under the direction of the PNPM Support Facility (PSF) Steering Committee. It will ensure that program activities are in-line with the development agenda of the Government and coordinated with donor and governmental programs. A portion of the activities will be Bank-executed and others will be recipient-executed. The PSF Poverty Team will execute the Bank activities. Recipient activities will be executed by the National Development Planning Agency (Bappenas) Poverty Directorate; Coordinating Ministry of Social Welfare (Menko Kesra); Central Bureau of Statistics (BPS); local governments; and local think tanks. Donor contributions to the PNPM Support Facility (PSF) Trust Fund will support the program. The PSF Steering Committee will provide overall supervision of the Trust Fund. Several donors have already signaled their interest in providing additional funds to the PSF Trust Fund to specifically support this program. Estimated Budget US$ 9,156,171 Task Team Leader Vivi Alatas Page 2 of 18

3 B. Context Indonesia has shown solid progress in its economic development and poverty reduction since the financial crisis a decade ago. Despite a slowing global economy, Indonesia s economic growth accelerated to a 10-year high of 6.3 percent in Real GDP has been growing at 5-6 percent annually since Indonesia, as a result, has emerged as a middle-income country. This economic growth has benefited the poor. The poverty rate has fallen by about one percentage point per year since 2003, reached 17.8 percent in 2006, and fell further to 15.4 percent in While Indonesia s progress has been impressive, there are still causes for concern with the pace of poverty reduction and the extent of vulnerability. Many households are clustered just above the national poverty line. These non-poor households are highly vulnerable to expenditure shocks, which can drive them into poverty. Weak creation of non-agricultural and formal jobs has exacerbated the slowdown in poverty reduction. Public services remain inadequate for a middle-income economy. Specific areas that warrant concern are: The movement of workers out of agriculture into high-value non-agricultural jobs has slowed from 2.1 percentage points per year during down to 0.2 percentage points per year during Similarly, over the same periods, formal job growth expanded at 1.5 percentage points per year before the crisis, and stagnated at 0.4 percentage points per year during Both trends have shown recent signs of improvement, but still have recovered to pre-crisis levels. Low transition rates from primary to secondary school among the poor. Among 16 to 18 year-olds from the poorest quintile only 55 percent completed junior secondary. High malnutrition and maternal mortality rates. A quarter of children below the age of five are malnourished in Indonesia. Indonesia s maternal mortality rate is three times that of Vietnam Inadequate access to safe water and sanitation. Around 50 percent of the rural poor do not have access to safe water. 80 percent do not have access to septic tanks. Inequality is increasing and disparities between regions remain high. From the early 1980s up to the crisis, the Gini ratio for consumption stayed at around 33 percent. Inequality decreased during the crisis, reaching a Gini consumption ratio of 31.7 percent in In recent years, the Gini ratio has increased to approximately 35 percent. Wide regional differences characterize Indonesia. For example, the poverty rate in Jakarta is 4.6 percent, in stark contrast to a rate of 50.5 percent in remote areas in Papua. Services, too, are unequally distributed across regions, with an undersupply of facilities in remote areas. The Government of Indonesia has responded to the challenge of reducing poverty and improving social security. The national medium term plan (RPJM) includes poverty reduction as a core pillar and President Susilo Bambang Yudhoyono has repeatedly declared poverty reduction as the highest development priority. This has resulted in an increase in the allocation of public funds for social spending. For example, health budget allocations have increased from 2.7 percent of the national budget in 2001 to over 4.1 percent in 2008 and local governments are now spending twice the resources allocated for Similarly, education spending is on the rise and the 2008 budget allocation equals 15 percent of the total budget. However, given that public services remain inadequate for a middle-income country, more public funding for development is still needed. The increased availability of development funds has supported an expansion in the scope and scale of poverty reduction programs. The Government is increasing its investment in its National Community Empowerment Program (PNPM), a consolidation of over 50 community-driven development (CDD) programs that will have full national coverage by International donor agencies in cooperation with the World Bank have supported the Government in the expansion of CDD. The Government, in collaboration with donor agencies and the World Bank also created the PNPM Support Facility (PSF), designed to support and facilitate the harmonization and decentralization of the PNPM program. Page 3 of 18

4 The Government has also been investing in a range of social assistance programs, the building blocks for a social protection framework. To compensate the poor for rising fuel prices in 2005, Indonesia introduced an unconditional cash transfer program. The program reached approximately 19.1 million households, giving a flat rate benefit of about 15 percent of the poverty line. After the experience with the unconditional program, the government pilot a cash transfer program for around 700,000 poor households, conditional on families obtaining preventive basic health and nutrition services, and sending their children to school. In addition, the Government has invested in a range of social assistance programs that target the poor such as ASKESKIN, BOS and BKSP. These programs have become the building blocks of a basic social protection framework as mandated by the National Social Security System Law (No. 40/2004). The World Bank has been working closely with government agencies in designing and assessing these programs to support the Government s commitment to further reducing poverty and improving social protection. C. Rationale Poverty reduction is the highest development priority of the Government of Indonesia. The National Community Empowerment Program or Program Nasional Pemberdayaan Masyarakat Mandiri (PNPM- Mandiri) is one of the main poverty reduction programs of the Government. Proposed activities complement the programmatic focus of PNPM in three ways: i) by providing tools, transferring skills and providing inputs that directly support improved targeting and delivery of poverty reduction programs currently implemented by PNPM; ii) expanding the scope of the PNPM agenda to encompass social protection agenda for the poor and vulnerable, and; iii) providing an analytical overview of poverty and strategic inputs for programmatic direction. The Government of Indonesia faces many serious challenges that threaten the success of on-going efforts to reduce poverty. These difficulties include: Shocks could quickly erode hard-won achievements in poverty reduction. The current global financial crisis threatens to reverse much of the gains in economic growth that have been achieved over the past decade. At the same time, the volatile trend of fuel, food and other commodity prices remains a risk that threatens both the economy and the welfare of consumers. While domestic rice prices have not risen significantly, international rice prices are now double the domestic price and increasing sharply. This directly affects poor and low-income households as they spend threequarters of their household budgets on fuel and food. The Government requires the analytical skills to be able to better anticipate these risks and, when necessary, respond quickly with programs that target households at risk. Inequality is growing and disparities in poverty are widening. Indonesia s substantial growth since the economic crisis has not been matched by a comparable reduction in poverty. Nor has economic growth been translated equitably across the various target groups or regions. The national poverty headcount index hides wide disparities in poverty incidence rates across the country. A Papuan is almost four times more likely to be poor than someone in Kalimantan, the richest island. Job creation in the formal sector has been sluggish. Poor performance in generation of nonagricultural and formal sector jobs is one of the reasons for the slow-down in poverty reduction. Over 40 percent of Indonesia s labor force still works in low-productivity, agricultural activities. Five discouraging trends in the labor market increasingly jobless growth (that is, economic growth without growth of higher-value non-agricultural jobs), a high degree of informality, stagnant wage growth, and high youth unemployment disproportionately burden the poor. The Government s ambition to increase the scope and coverage of poverty and social protection programs places extra strains on the capacity of existing institutions responsible for delivering. The PSF has identified capacity constraints as a major challenge to the implementation of PNPM programs. Local governments, too, are facing new and expanding challenges to effectively deal combat poverty and Page 4 of 18

5 vulnerability in their unique environments. Disparities exist across local governments in their capacity to analyze these conditions, and plan and budget for appropriate responses. At the same time, there are few independent institutions that the Government can partner with in assessing programs and conducting research to understand the causes of poverty and anticipate the effects of shocks. Local government institutions and think tanks require capacity enhancement so that they can better deliver their mandates to reduce poverty. Continuous engagement between the Government of Indonesia, donor community and the World Bank has led to significant changes in recent years. Working towards national poverty reduction goals, and improving equity and inclusiveness across regions, remains a top priority in the on-going partnership between these institutions as seen in the creation of the PNPM Support Facility (PSF). D. Objectives and Strategies The overall purpose of the program is to support the Government s efforts to reduce poverty, promote more pro-poor growth and improve the social protection of vulnerable groups in Indonesia. The program is designed to support the poverty reduction agenda of PNPM and extend its scope to include complementary work on pro-poor growth and social protection. The program consists of portfolio of activities organized into four platforms: (i) (ii) (iii) (iv) Strengthening poverty and social protection programming Deepening analysis of pro-poor growth, poverty and vulnerability Building technical capacity and know-how Stimulating policy dialogue and providing inputs to policy-makers The following five strategic approaches will guide the design and implementation of the proposed portfolio of activities for each platform: Sustainability Partnership Approach Client Driven The program, across all platforms, focuses on enhancing the skills and knowledge of counterparts in government agencies and local think tanks. Capacity building is achieved through stand-alone projects and is also integrated into project activities. There is also a focus on influencing mediumterm development policies to promote pro-poor growth and support continuation of poverty reduction and social protection programs. The proposed program is based on a history of continuous partnership between the Government of Indonesia, the Indopov Team (previously) and the Poverty Team (most recently), which has been actively supported by international donor agencies. Under the overall direction of the PSF Steering Committee, the proposed PSF Poverty program joins the Government with international agencies under a common partnership structure. Proposed program activities will be jointly implemented by teams including staff from the National Development Planning Agency (Bappenas), the Central Bureau of Statistics (BPS), a new PSF Poverty Team and, in some cases, government line agencies and local think tanks. The program supports the departmental agendas of Bappenas and BPS, which have identified areas where additional assistance is needed. The platforms are flexible so that they can continue to be responsive to emerging needs flagged by government agencies. Activities will support current and future government programs and policies. The government-led PSF Steering Committee will ensure that the national poverty reduction mandate drives the program, and direct donor and World Bank engagement to this end. Page 5 of 18

6 Donor Harmonization Knowledge Accumulation This is a program under the PNPM Support Facility (PSF), which offers a mechanism through which the Government, contributing donor agencies and the World Bank can align strategies and steer the program agenda. The PSF Steering Committee will oversee the program and a Poverty Advisory Committee will support implementation both groups include government, donor and World Bank representatives to ensure harmonization. The program will build on research and diagnostic work that has already carried out by the Government, local think tanks and the World Bank. Knowledge-sharing activities will be integrated into program activities, including disseminating program findings and results across the government and among donor agencies. E. Platform Descriptions The program consists of four platforms that are designed to reinforce each other. Platform One focuses on strengthening government programs that are responsive to the needs of the poor and vulnerable. Platform Two builds the knowledge foundation of policy makers who are responsible for developing propoor economic growth policies, and designing and implementing poverty and social protection programming. Platform Three builds the capacities of government agencies and local institutions in these areas of work. Finally, Platform Four ensures on-going responsive support to the government to create short and medium-term policies based on the experiences and knowledge generated through this program. Each platform is described in detail below. Platform One: Strengthening poverty & social protection programming Purpose To improve poverty and social protection programs that target vulnerable individuals and groups. Rationale While much has been achieved to reduce poverty in Indonesia, around half of all Indonesian remain poor. This estimation takes both income and non-income (e.g., malnutrition, maternal mortality, access to safe water) indications of poverty into account. At the same time, there are significant regional disparities across the country and within provinces and districts. The Government has responded to this challenge by investing in a range of programs targeting poor and vulnerable households including community-driven development programs under PNPM, unconditional and conditional cash transfer programs and other assistance programs implemented through line-ministries. Much remains to be learned about what works, what does not work, and how to improve these programs. The Government has made a commitment to institutionalizing program assessments and continues to seek technical assistance in monitoring and evaluating poverty programs from the World Bank through PNPM/PSF. Page 6 of 18

7 Scope The program will provide technical assistance to government agencies to improve the capacity of units responsible for the implementation of poverty and social protection programs. Activities will aim to: a. Support innovations in design. This will include: experiments with alternative approaches (such as methods for targeting poor households), designing of pilot programs, and ensuring planned programs are impact evaluation ready are some activities that will be delivered through this Platform. b. Strengthen program implementation and management. Support will be provided to government agencies to improve monitoring of program activities, addressing implementation problems, and improving public awareness. c. Assess program impact. Assistance will encompass designing and implementing impact assessments, conducting rapid assessments, developing and testing management information systems, and strengthening monitoring and evaluation activities. Activities under this platform will be designed to strengthen the capacity relevant partner institutions. The mode of execution will be determined by the relative strengths and needs of partners, but will focus on providing technical inputs and creating integrated team to carry out a joint program of action. Partner Institutions The Directorate of Poverty and the Directorate of Social Protection in Bappenas will lead activities in this platform. Implementation teams will consist of staff from the directorate and the PSF Poverty Team. The team will work with the Coordinating Ministry of Social Welfare (Menko Kesra) and line ministries responsible for the implementation of poverty and social programs including the Ministry for Social Affairs (Depsos), Ministry of Health (Depkes) and the Ministry of National Education (MoNE). The team will also work with BPS on data collection and analysis. Example Activities Platform activities will include, but are not limited to: Providing technical assistance and support to the PKH Steering Committee; assist in creating accountability mechanisms, performing spot checks, conducting verification missions and carrying out assessments. Conducting assessments and impact evaluations of key poverty and social protection programs. Piloting and testing innovations in poverty and social protection programming. Conduct randomized evaluations to quantify the inclusion and exclusion errors of various targeting approaches. Organizing trainings in program design, implementation, preparedness for impact assessments. Preparing and disseminating evaluation reports with recommendations for programmatic improvements. Poverty and social protection programs that will be supported include, but are not limited to: Community-driven development programs under PNPM, including the Kecamatan Development Program (KDP) and the Urban Poverty Program (UPP). Program Keluarga Harapan (PKH), a cash transfer program for poor households conditional on health and education activities. Bantuan Langsung Tunai (BLT), a conditional cash transfer. Page 7 of 18

8 Beras Miskin (RASKIN), delivering subsidized rice to poor households. Assistance programs targeting the elderly, the disabled and informal sector workers. Other programs as requested by the Government. Platform Two: Deepening analysis of inclusive economic growth, poverty and vulnerability Purpose To deepen analysis on key issues related to poverty and vulnerability in Indonesia, contributing to improvements in policies supporting inclusive growth, and reducing poverty and vulnerability. Rationale Indonesia is rapidly undergoing changes. It has emerged as a middle-income country with an economy that is increasingly globalized. At the same time it has decentralized fiscal and administrative powers to local governments. Its policy landscape is quickly shifting with the introduction of reforms and initiatives to promote pro-poor growth and tackle vulnerability. These changes raise many questions and introduce new challenges to our understanding of the factors that promotes pro-poor growth and development, and the factors that inhibits it. Policy makers require: research that draws learning from recent experiences to inform future directions; analysis that covers new and emerging issues; and experiments that test new approaches to challenging problems. Scope The program will carry out original research projects and conduct experiments that aim to understand the causes of poverty and vulnerability, and both the barriers and the pathways to pro-poor growth. Research will be geared towards supporting policy formulation. Research approaches will focus on: i) Identifying knowledge gaps. Research will be conducted in areas where little or no quantitative analysis has been applied and where policy questions are most pressing. ii) Learning from past experiences. Using the wealth of data available in Indonesia, there is much scope for assessing the poverty impact of past interventions and new phenomena. iii) Sharing lessons learned from international cases. The World Bank s global network can draw on research from other developing and middle-income countries. iv) Introducing analytical rigor. Researchers will use analytical methods and tools, subject to careful internal scrutiny, to increase confidence in the accuracy of the research findings. The platform research agenda will be developed in close cooperation between the Poverty Team and government agencies, specifically Bappenas and BPS. Research updates will be regularly provided throughout implementation. Page 8 of 18

9 Partner Institutions Bappenas will take the lead in coordinating research activities with BPS and the PSF Poverty Team. The research agenda and design will be agreed to jointly. Research implementation teams will include staff from each agency, depending on the subject matter and areas of expertise. Implementation teams will also draw in external researcher consultants, local think tanks and university-based research facilities to assist in carrying out research projects. The program will select several local sister institutions to join in carrying out quantitative research. Universities with poverty studies programs, supported by Bappenas (this currently includes seven universities, but will be expanded in the future) will be priority institutions for consideration. Twinning technical training with hands-on experience and coaching will build the capacity of these institutions so that they can become service providers for government commissioned studies and assessments in the future. The capacity of partner institutions in quantitative analysis will be enhanced through a learning by doing approach in this platform, while training is general quantitative analysis skills for the purpose of building institutional capacity will be covered under Platform Three. Example Activities Platform activities will include, but are not limited to: Organizing joint workshops with government agencies and think tanks to identify research agendas. Designing and conducting identified research projects; contracting consultants, think tanks, and other research organizations to carry out research projects. Organizing workshops to review and verify research findings. Producing policy notes and reports. Disseminating research findings and recommendations Support the formulation of pro-poor policies. Examples of research projects include, but are not limited to: a. Understanding the binding constraints towards pro-poor growth by analyzing microeconomic, macroeconomic and market impediments, and examining pathways that have been successful in achieving pro-poor growth. b. Examining regional disparities in poverty and vulnerability by examining changes in three aspects of economic topography: the density of economic activity, the distance between economic agents and markets, and divisions due to natural, cultural and policy-related barriers. c. Modeling poverty projections and the poverty impact of macroeconomic and microeconomic shocks, interventions and policies (in collaboration with PREM Macroeconomic Team). d. Studies related to the improvement of data quality and measurement accuracy. Platform Three: Building technical capacity and know-how Purpose To build institutional capacity and know-how carrying out program impact assessments, improving data quality, conducting poverty research and defining propoor economic policies. Page 9 of 18

10 Rationale Demands on local institutions for analytical and evaluation skills are rapidly increasing. The domestic and global policy contexts are becoming more complex, requiring heightened skills for policy analysis. At the same time, the government both launching and scaling-up poverty and social protection programs. Institutions, namely government agencies and think tanks, need a higher level of technical skills in order to meet these growing challenges. There is a need to strengthen existing research institutions by enhancing their quantitative skills so that can implement research projects and evaluations commissioned by the government and donor agencies. There are stark variations in poverty and vulnerability across Indonesia, calling a one-size fits all approach to programming into question. Decentralized governments face challenges in understanding the nature of poverty and binding constraints in reducing poverty in their local contexts. However, they often lack the necessary tools and skills to analyze poverty and develop programs tailored to meet their particular needs. Finally, abilities to make informed policies and measure progress to national targets in reducing poverty and vulnerability depend on the timely availability of accurate and reliable statistics. As data users are becoming more sophisticated they are demanding improvements in the quality and range of data available. Government agencies and offices responsible for data collection and analysis require improved capacities to meet this demand, especially in decentralized offices. Scope Activities will target national and local institutions to strengthen their capacity in carrying out a range of activities that support program design, implementation and assessment. Technical skills will be transferred so that they can be applied to a range of program and projects as determined by aims of the institutions themselves. Activities in this platform will aim to: a. Providing poverty and program assessment tools. Tools will be developed based on methodologies used for program evaluations and assessments. Trainings will be provided in the use of these tools, both in the design of evaluation-ready programs as well as the implementation of poverty assessment and program impact evaluations. b. Transferring technical and management skills. Identifying capacity gaps in partner institutions and providing expert assistance in these areas. c. Strengthening systems and feedback mechanisms to improve data quality. Government agencies, BPS in particular, and the PSF Poverty Team will collaborate to ensure that quality data is available for monitoring the Government s progress to achievement of the RPJM. d. Assisting policy makers to formulate policies based on data. Activities will support a culture of evidence-based policy making, using data (available and generated through program activities) and evaluation findings to inform policy reform and formulation. Partner Institutions Bappenas will be the lead agency for coordination on activities in this platform. Partners for activities in this platform consist of three groups: Central government agencies. Bappenas and BPS will identify skills and capabilities needed in order to meet their business needs, and work with the Poverty Team in developing strategies to strengthen key directorates. National research institutions and think tanks. Sister institutions that assist in implementing research activities under Platform Two will also receive technical Page 10 of 18

11 training and coaching in quantitative analysis methodologies to build their institutional capacity for research. Local governments and research institutions. Prioritized partners will be local governments districts and cities that have been working with Bappenas in propoor planning and budgeting districts will be priority partners. This currently consists of 20 districts and cities, but is expected to expand in the future. Local universities and research groups established in these districts and cities will be considered and assessed as potential partners. Example Activities Platform activities will include, but are not limited to: Creating appropriate tools for quantitative assessments and research. Conduct trainings in the use of tools and research methodologies, including trainings in poverty and social impact analysis (PSIA). Organize training in the use of software designed for quantitative analysis (e.g. STATA). Providing hands-on coaching and support to partner institutions applying tools and methodologies. Assisting in the development of operational, technical and administrative policies, procedures and standards; assisting in change management. Supporting institutionalization of quality management and stakeholder feedback mechanisms in BPS (e.g., quality assurance guidelines, technical advisory groups for social statistics). Building in-service training delivery capabilities, including developing training materials and modules for statistics and survey methodologies. Providing technical assistance and training on process analysis, bottleneck identification, and resource allocation. Offering technical assistance and training on dissemination and communication strategies to improve data accessibility. Providing training and/or coaching for staff responsible for policy development in using evidence-based approaches to policy-making. Platform Four: Stimulating policy dialogue and providing inputs to policy-makers Purpose To stimulate pro-poor policy dialogue and provide the Government with inputs for diagnosing and planning processes. Rationale The Government of Indonesia is preparing the medium-term development plan (Rencana Pembangunan Jangka Menengah, RPJM) for Line ministries feeding into the RPJM formulation process require forums for dialogue and inputs for policy-making. The Government also requires input to inform the preparation government strategies such as the development of pro-poor economic policies and a comprehensive social assistance program. In addition to planned processes, the Government often must respond to unplanned events including external shocks (e.g., rising fuel and food prices) and disasters. Rapid assessments and analysis is needed in these cases so that the Government and donor agencies can respond quickly, especially for the poor who may be more Page 11 of 18

12 vulnerable to shocks. There is a wealth of knowledge available from World Bank offices around the world, providing best practices and lessons learned from other developing and middleincome countries. This expands the depth of analysis available to government agencies when preparing interventions to both planned and unplanned events. Scope Engagement and interaction with government agencies in order to support internal dialogue, awareness raising and policy response. Activities will aim to: a. Provide analytical inputs for short and medium-term planning. The program will generate inputs designed to contribute to the formulation of the medium-term development plan (RPJM) and short-term plans and strategies. b. Respond to ad hoc requests for data and analysis. In-time inputs will assist government agencies in reacting to unplanned events. Activities will be demand-driven and in response to requests from government agencies. c. Stimulate discussion and debate within the Government. Intra-government dialogue on topics related to poverty and vulnerability will increase awareness of poverty issues and promote action towards meeting national poverty goals. Partner Institutions Bappenas will flag areas where inputs and dialogue are needed to further the Government s agenda. They will also take the lead in defining inputs needed for medium-term planning and coordinate the involvement of other government agencies. Demand for in-time inputs will be generated from a range of government agencies. Activities will be implemented by sub-teams assigned to respond to identified needs, consisting of staff from government agencies and the Poverty Team. Example Activities Platform activities will include, but are not limited to: Preparing policy briefings on topics that feed into RPJM and annual work plan preparation processes. Organizing dialogue series with a wide range of government agencies on topics feeding into the RPJM and annual work plans. Write brief policy notes on poverty and social impact analyses of proposed government policies and programs. Carrying out in-time research and writing policy briefs for government agencies based on research findings. Holding face-to-face government meetings to share and discuss in-time research findings and policy notes. Conducting seminar series, discussion workshops and informational meetings on topics flagged by the Government. Disseminating reports and presentations through a range of media outlets, including the PNPM website. Page 12 of 18

13 F. Program Outcomes and Indicators Overall program outcomes and indicators are listed below. Annual results frameworks including results and indicators will be prepared by the implementation team, and reviewed and approved through the governance structure. Outcomes Key Outcome Indicators Improvements in the design and implementation of program and policies supporting poverty reduction, pro-poor growth and social protection. Targeting performance for poverty programs is improved in terms of accuracy and efficiency. Assistance provided through public programming is more effectively and efficiently channeled to the poor and vulnerable. Research and analysis on key issues related to poverty and vulnerability is generated and supports government policy-making. Units responsible for impact assessments, data quality and poverty research have the key capabilities needed to meet Bappenas and BPS business agendas. A broader range of providers is available to provide high-quality quantitative research services to the Government. Quality data from BPS is more easily accessible to user-groups. Government partnering units demonstrate improved capacity by designing and completing assessments of major government poverty and social protection programs. Bappenas and BPS have selected a targeting methodology that maximizes accuracy and efficiency, based on research findings. A single, unified database identifying poor households is created for use by government departments and agencies implementing poverty reduction programs. Recommendations generated from program assessments inform the design and implementation of subsequent program cycles. Research reports are prepared and publicly released on a variety of topics such as targeting and binding constraints to pro-poor growth. Government policy decisions are informed by findings from research and experiments. Local think tanks are able to apply learned technical skills to design and implement research projects and assessments for the Government. Enhanced capacity in key government units to design and implement assessments of poverty and social protection programs. Local governments have the capacity to apply designed tools and produce local poverty assessments. Local governments can use poverty assessments in developing local plans and budgets that mitigate the causes of vulnerability. Improved quantitative analytical skills in the research units of local think tanks. Improved data quality systems and feedback mechanisms are instituted in partner departments. Central responses to planned and unplanned events are supported by analysis and evidence-based. Published results of the poverty dialogue inform the RPJM. Data and policy analysis is generated and made available to government agencies, in direct response to identified business needs. Timely provision of policy memos and briefs to unplanned and ad hoc events that demand policy responses. Page 13 of 18

14 G. Sustainability A strong focus on capacity building is built into the program so that the Government and partner agencies are better placed to fulfill their mandates for poverty reduction and social protection. The program will complement a results-oriented approach with an emphasis on continuous engagement and capacity building. The focus on continuous engagement and capacity building will build on the combination of skills, abilities, trust and relationship that the PSF Poverty Team has garnered to more effectively engage with the client. This engagement will be centered on relevant activities that are the current business priorities for the Government such as RPJM preparation, local poverty strategizing and planning, conducting quantitative program assessments. The program will also focus on building the capacity of local think tanks so that they can provide independent research and analysis services to the government in the future. This increases the range of agencies interacting with the government on policies related to poverty and pro-poor growth, reducing reliance on the World Bank for high-quality analysis. Engagement Strategy The program will adopt a variety of strategies to engage on activities that are real and relevant so learning and knowledge transfer can be done while on-the-job and techniques can be applied directly. Collaborative teamwork and coaching will be available to support applied learning. Four modes of engagement will provide support to both individuals and institutions. Each project will incorporate one or more of the following strategies to transfer knowledge and capacity to the partner agencies so that they are in a better position to deliver results towards their own institutional and business plans. The four modes of engagement include: 1. Partnering and supporting teamwork. Government-led units will embed technical expert into the team to provide a specific sets of skills needed to deliver a time-bound project. The expert will work as a member of the team, working together to achieve a common purpose. Joint workplans and regular team meetings will undergird the teamwork approach. 2. Coaching and facilitating learning. When skills are needed for the regular business and ongoing work of a unit, the program will provide technical assistance that provides hand-in-hand coaching to carry out shared objectives. The program will also help facilitate learning by offering training and linking units to alternative sources of knowledge (e.g., linking to worldwide experts and research through the World Bank s international knowledge network). This approach will be used across all Platforms. 3. Offering targeted advisory assistance. Where institutional and individual capacity is already high, the above two strategies may not be appropriate. In these cases, institutions may only require on-call support or assistance in reviewing and providing inputs. Government agencies will identify technical gaps and propose appropriate assistance from the program. 4. Enabling institutions by providing tools and mechanisms. Projects will also focus on creating appropriate tools and mechanisms (e.g., poverty assessment tools) that can be used by national and local government agencies in the future. Tools will be tailored to their level of competence and can be modified to fit their particular institutional needs. Other modes of engagement, suiting partner agency needs, will be explored and discussed with government counterparts and partner institutions. Page 14 of 18

15 H. Risk and Mitigation Measures Risks Risk Mitigation Strategic Fit: A change in government in the 2009 elections will re-adjust national priorities away from poverty reduction Risk level: Low Donor Financing: Donors may delay their participation in PNPM or contribute more or less to the Trust Fund than expected. Risk level: Medium Government Financing: Budget-related problems within the Government may cause implementation delays, as has been the case with some other trust funds. Risk level: Medium Government Ownership: The PFS Poverty Team program does not fit the priorities or needs of the Government. Risk level: Low Capacity Transfer: Government project partners may not absorb capacity through planned activities or may not apply their new skills after project completion. Risk level: Medium Capacity Transfer: Bank-hired personnel may substitute for civil servants, increasing dependency and not building sustainable capacity. Risk level: Medium Poverty is high on the national agenda and is likely to remain so. Bappenas is currently co-organizing a dialogue series on poverty with the Poverty Team in order prepare the poverty component of the RPJM, which will covers the program period. The program is part of PNPM, a key government institution that will span consecutive governments, ensuring continued work on poverty and social protection. The program will also work with local governments that are autonomous and have addressed poverty in their RPJMDs. Bappenas and the World Bank will continue to engage with donors and update them regularly on the progress of activities under this program. The scope of activities will be reviewed and adjusted annually by the PSF steering committee and the Poverty Team based on the level of funding secured. The number of activities will gradually increase as donors support PNPM and confirm their contributions. The risk can be partially mitigated by working closely with government agencies to encourage good fiscal planning. When not possible, the program should maintain sufficient flexibility to re-designated high priority activities as Bank executed when necessary for the sake of expediency. Proposed activities will be under the overall direction of the Government-led PSF Steering Committee. Continuous engagement with government agencies will ensure relevance. World Bank Country Partnership Strategy is aligned with Government priorities, minimizing risk of parallel strategies. Mitigate this risk by identifying champions in government agencies who are likely to promote and pursue a shared poverty agenda. The program will build on long-standing institutional cooperation with key leadership in Bappenas and BPS, who are in a position to ensure that civil servants participating in capacity building activities will be more likely to have future opportunities to exercise skills gained through project activities. Consultant TORs will include activities and performance indicators for capacity building to ensure that their involvement does not simply substitute for civil servant functions. Agree on roles and responsibilities with government counterparts during planning stages to ensure that they are active in project implementation. Page 15 of 18

16 I. Fund Structure and Governance Support for this program will be channeled through PNPM resource envelope. The purpose of this funding arrangement is to ensure that the analytical advice and recommendations generated by this program on poverty reduction trends and strategies can best benefit PNPM programmatic work. Relying on a single resource envelope that is led by the Government will help facilitate donor harmonization and program coordination. The specific funding mechanism through which the program will be funded will be discussed during later preparation stages with the PSF Steering Committee. Similarly, the specific PSF window/s through which funding will be channeled will be determined at later design stages. PFS Steering Committee The Steering Committee will be responsible for overall supervision of the Trust Fund. The Steering Committee consists of senior representatives from the Government of Indonesia, the World Bank and contributors to the Trust Fund. Bappenas) and World Bank representatives will co-chair the committee. The PSF Steering Committee is requested to support the program by: i) Providing strategic guidance for the overall program and ensuring that program objectives are inline with government priorities and plan (e.g., RPJM and RKP). ii) Ensuring overall coordination with other government and donor programs. iii) Approving annual program workplans and budgets. iv) Reviewing program progress to date, achievement of objectives and disbursements to date. Poverty Working Group A Poverty Working Group will be established to provide more regular oversight of the program and to provide high level advice to the PSF Steering Committee. It will work closely with the PSF Poverty Team leader. The Working Group will consist of; selected technical experts; a representative from the office of the Deputy for Poverty, Manpower and SME of Bappenas; a representative from the Coordinating Ministry of Social Welfare (Menko Kesra); a nominated representative of the PSF Steering Committee from the Government of Indonesia; a nominated representative of the PSF Steering Committee from the donor community, and; the Lead Economist of the World Bank s Poverty Reduction and Economic Management (PREM) team. The committee will meet semi-annually, but more frequently if needed. The Working Group will work more closely with the PSF Poverty Team by: i) Reviewing specific projects and activities to ensure consistency with overall program objectives and priorities as determined by the PSF Steering Committee. ii) Providing advice to the program implementation team. iii) Assisting in resolving problems that arise during the course of implementation. Accountability and Reporting Official reporting will be through the annual PSF narrative report and quarterly financial reporting. In addition, the PSF Poverty Team will prepare semi-annual progress reports for both the PSF Steering Committee and the Advisory Committee. The report will detail activities and achievement to date, disbursements to date, projected activities and disbursements for the next period, and flagged issues for resolution. The team will also prepare a presentation for the annual program review by the PSF Steering Committee highlighting achievements, lessons learned, and upcoming plans. Other donors and government agencies may be invited to join these reviews depending on mutual concerns, shared issues for discussion and interest in contributing to the Trust Fund. Page 16 of 18

17 J. Budget Estimate Indicative line-item budgets for the proposed program are presented below. Costing of individual projects and activities, based on actual funds secured, will be included in annual budgets submitted to the PSF Steering Committee for approval. Budget by Platform Category and Item Platform One Platform Two Platform Three Platform Four Total (US$) A. Bank Execution Short-term consultant fees 240, , , ,000 Contractual services 400, , ,000-1,000,000 Extended-term consultants 216, , , ,161 1,963,417 Temporary staff costs 11,138 11,138 37,128 14,851 74,256 Staff costs 287, , , ,173 2,018,498 Travel expenses 8,000-40,000 32,000 80,000 Equipment costs 55,000 55,000 55,000 5,000 20,000 Media and workshop costs ,000 80, ,000 Total Bank Executed 1,218,045 2,095, , ,185 6,356,171 B. Recipient Execution Support to PKH Steering Committee 1,000, ,000,000 Capacity building activities (trainings, workshops) Experiments to improve data and program designs , ,000 1,000, ,000,000 Total Recipient Executed 2,000, ,000-2,800,000 C. Total 3,218,045 2,095,916 2,959, , ,171 Page 17 of 18

18 Human and Bank Resources The team will consist of an estimated 10 individuals. Team members will have strong technical capacities in a range of areas including: microeconomics, statistics, public policy, capacity development, and social protection. Team members will be both national and international. Allocation of team human resources will depend on agreed program priorities but are estimated as follows: 1.6 full-time equivalents (FTE) for Platform One; 3.9 FTE for Platform Two; 2.9 FTE for Platform Three, and; 1.6 FTE for Platform Four. 1 The Task Team Leader and the Lead Economist of the Poverty Reduction and Economic Management (PREM) unit will provide day-to-day management and technical support to the team. The Bank will also provide additional resources needed for team operations, including: office space, operating equipment and supplies, administrative assistance, and accounting services. In additional the team will have access to technical support from various PREM teams when needed. 1 Note: Actual allocation of human resources will depend on resources available and project needs based on priorities agreed by the PSF Steering Committee. Page 18 of 18