Indonesia - Second National Program for Community Empowerment in Urban Areas Project

Page 1 INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC4935 Date ISDS Prepared/Updated: 02/25/2010 I. BASIC INFORMATION A. Basic Project Data Country: Indonesia Project ID: P118113 Project Name: Second National Program for Community Empowerment in Urban Areas II Task Team Leader: George Soraya Estimated Appraisal Date: February 8, 2010 Estimated Board Date: March 30, 2010 Managing Unit: EASIS Lending Instrument: Specific Investment Loan Sector: Other social services (25%);General water, sanitation and flood protection sector (20%);Health (20%);General transportation sector (20%);Sub-national government administration (15%) Theme: Access to urban services and housing (45%);Participation and civic engagement (25%);Other urban development (15%);Municipal governance and institution building (15%) IBRD Amount (US$m.): 95.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: Borrower 50.00 Financing Gap 55.00 105.00 B. Project Objectives [from section 2 of PCN] The project (PNPM-Urban II) is a continuation and expansion of the on-going PNPM-Urban I and Additional Financing (AF) projects. The overall project#s objective and components will remain the same with the ongoing PNPM-urban I, i.e., to reduce poverty by promoting community participation in development planning and management. Specifically, the project development objective is to benefit the urban poor by improving services and infrastructure identified and delivered in a more effective and participatory manner, and strengthening the community organization as well as capacity of the local government to work with the poor community through scaling up of a sustainable national program for poverty reduction. The project promotes improved local governance in planning, implementing and operating the services and infrastructure. This is being achieved through: (a) the formation and Page 2 institutionalization of elected representative organizations that are accountable to communities; (b) provision of grants to communities directly and transparently to finance an open menu of poverty alleviation activities; and (c) enhancing the capacity of central and local governments to partner with community organizations in service provision. C. Project Description [from section 3 of PCN] In 2006, the Government of Indonesia launched a national program for poverty reduction. A pillar of this program is the National Community Empowerment Program or PNPM, which is the Government of Indonesia#s (GOI) operational umbrella for all poverty programs which use a community empowerment approach. The program was built primarily upon the successful experience with the Bank funded KDPs and UPPs. Since then, there have been two windows of PNPM program implemented by the GOI, i.e. PNPM rural and PNPM urban. Today PNPM has nationwide coverage in all rural villages (57,266) and urban wards (=kelurahans, nearly 13,000) in Indonesia. The ongoing PNPM-Urban I and PNPM additional financing cover 11,126 kelurahans. The project is planning to cover 9,556 of the existing kelurahans with activities focusing at strengthening the capacity of the community and local government and improving the design of the block grants (see below, project components) The core design of the program follows closely its predecessor PNPM-Urban I and AF. The proposed project will continue to support (a) community and local government capacity building; (b) kelurahan block grants, (c) implementation support and technical assistance, and (d) Contigency for Disaster Risk Response. Project Component Component 1: Community and Local Government Capacity Building ($27 million + $3 million GFDRR co-financing). The locally elected BKMs have been successful in carrying out their role of assisting and guiding community members with (i) project awareness building; (ii) developing Community Development Plans (CDPs); and (iii) channeling kelurahan grant funds for local infrastructure investments, training, and micro-financed income generating activities. This component will primarily carry out two activities: (i) finance the cost of facilitators to carry out social intermediation activities and community training and in supporting BKMs; and (ii) finance training and capacity building of local government (lurah and Bappeda) to strengthen their support to PNPM. Component 2: Kelurahan Grants ($60 million). This component supports block grants to kelurahans # the value of which depends on the size of the population and disbursements. Typical activities for this component fall into three categories: (a) tertiary infrastructure investments pre-identified by the community in the CDP; (b) BKM managed revolving loan funds provided to the poor for income generating activities and who typically do not have access to other lending sources; and (c) provision of social assistance, including training, to the poorest and most vulnerable in the community. Under this activity the project will continue to be provide funds to existing kelurahans that have only received one or two grant allocations thus far. Rather than an open menu of activities, the grants will only be disbursed against an eligible set of activities, focused primarily on infrastructure services. In term of the revolving loan funds (RLF), as in the past, up to 30% of block grants can be allocated towards the RLF for kelurahans receiving grants for the first time, and only up to 20% for existing RLFs that have a repayment Page 3 rate of at least 90%. For #advanced# BKMs, at least 20% of block grants will have to be used toward programs that leverage funding from other sectoral programs, to promote channeling; in addition, these BKMs will need to identify activities in coordination with the city#s investment plans (rather than in isolation or these broader plans) Component 3: Implementation and Technical Assistance ($8 million + 2 million GFDRR financing). This component will finance the following activities: (i) Project Management and Technical Assistance, (ii)M&E Capacity Building, (iii)Independent Evaluation, and (iv)New measures for accountability and transparency. Component 4: Contingency for Disaster Risk Response ($0). Due to the high risk of catastrophic events in Indonesia, a provisional zero dollar component will be added under this project that will allow for rapid reallocation of the loan during an emergency, under streamlined procurement and disbursement procedures. Other Supplemental Poverty Alleviation Programs. In addition to the core PNPM urban- projects, the overall PNPM program of the Government include various supplemental programs in urban areas that evolved based on the platform of the UPP process with the intention of furthering the impact of poverty alleviation intervention efforts under the PNPM Framework. These supplemental programs include the following: (i)PAPG, The Poverty Alleviation Partnership Grant fund (PAPG) encourages partnerships between local governments and communities and attempt to institutionalize a consultative process between the two for future activities undertaken by local governments using their own funds. It finances poverty alleviation activities that are too big to be financed by the kelurahan grants, or that require local government involvement (e.g. networked infrastructure); and that cover more than one kelurahan. About 100 Local Governments have been selected to participate in the PAPG. Selected cities will be eligible to receive amounts ranging from a total of US$450,000 to 750,000 over three years. PAPG implementation begins on third year in order to give cities a chance to familiarize themselves with the BKMs and to develop the RPAS (Regional Poverty Alleviation Strategy). Financing of PAPG comes from UPP2, UPP3, Local Government, and community contribution. (ii)Neighborhood Upgrading Schemes (NUS). The NUS were initiated on a pilot basis in UPP3 and in the Java Reconstruction Fund housing project to improve the living conditions in the poorest communities within the framework of the Community Development Plans. NUS differ from traditional community investments (that are more dispersed) in its focus on a geographic area of the ward, in which a combination of improvements was undertaken # similar to block redevelopment. NUS starts with the preparation a detailed Community Settlement Plan (CSP) and is followed by implementation of priority investments (which requires funding from the city government) to upgrade the living conditions of the area. The program initially started with 18 pilots, and the Government is now keen on expanding the NUS to 200 additional kelurahans that demonstrate good performance under the PNPM Program. Financing for the additional NUS projects is expected to come from savings from various on-going PNPM programs (including the on-going World Bank financed PNPM-Urban project), ADB projects and government financing. Page 4 (iii)Housing projects. For areas affected by natural disaster, supplemental settlement recovery program has been added, although is based on UPP design, has specific purpose and objective. So far the program has operated in Aceh, Yogjakarta, and now West Sumatra. In most cases the supports are aimed at the poorest victims. (iv)Disaster Risk Reduction (DRR). The Global Facility for Disaster Reduction and Recovery (GFDRR) is providing a $5 million grant to the Ministry of Public Works in support of raising community awareness for disaster risk reduction and mainstreaming resilience into investments financed under the project. This program will support PNPM-Urban II by focusing on activities related to preparedness and risk mitigation, including: (i) development and delivery of an in- depth training module for facilitators on mainstreaming DRM into CDPs; (ii) recruitment and financing of engineers to oversee project preparation and implementation to ensure appropriate standards; (iii) public awareness-raising campaigns; and (iv) training activities for local government (lurah and Bappeda) in cooperation with BPBD (Disaster Management Authority at Local level). There are several ongoing DRM activities in Indonesia, including the GFDRR- supported Climate Resilient Cities program, and coordination activities will be pursued. D. Project location (if known) The PNPM-Urban II will cover nearly 4,140 urban wards in 137 urban local governments in 19 provinces, which includes those under PNPM-Urban I and AF, and UPP-2 Additional Financing. Salient physical characteristics relevant to safeguard analysis are activities financed under Component 2, i.e. Kelurahan Block Grants. Typical activities for this component fall into three categories: (a) small scale infrastructure investments pre-identified by the community; (b) BKM managed revolving loan funds provided to the poor for income generating activities and who typically do not have access to other lending sources; and (c) provision of social assistance, including training, to the poorest and most vulnerable in the community. Experiences from the UPP series and ongoing PNPM-Urban I and AF confirm that activities financed by the block grants are mostly small-scale physical infrastructure, such as community sanitation, toilet and water supply, tertiary drainage, and tertiary roads, that has limited service area (neighborhoods) within the kelurahan. Similar to the experiences in the previous UPP series and PNPM-Urban I and AF, potential impacts of activities that will be financed under kelurahan grants of the PNPM- Urban II are likely to be site specific, not significant and can be managed locally by the community by adopting good engineering design and construction practices. In terms of land acquisition and resettlement, it is very likely that there will be no significant amount of land acquisition is foreseen for investments of the community infrastructure. Similar to the previous UPP series and ongoing PNPM-Urban I and AF, most of land needed to build small-scale infrastructure are likely contribution from the beneficiaries. Furthermore, as experienced in all UPPs and ongoing PNPM-Urban I and AF, and as all sub-projects under Component 2 are located in the urbanized areas, there will be no IP involved. Although it is unlikely, in the case that the project involves land acquisition and resettlement and affects IP (the project covers Kalimantan and Papua), it will adopt the Land Acquisition and Resettlement Policy Framework and IP Framework that have been adopted by the UPPs and the PNPM-Urban I and AF. These frameworks including the Environmental Guidelines have been elaborated in the project operation manual/technical guidelines. The operation manual and technical guidelines Page 5 will be updated as necessary to accommodate new development as more experiences are taking place. Given the above, the project environmental category will remain B. E. Borrower