Indonesia - Third National Program for Community Empowerment in Rural Areas Project

Page 1 INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC4916 Date ISDS Prepared/Updated: 02/24/2010 I. BASIC INFORMATION A. Basic Project Data Country: Indonesia Project ID: P115052 Project Name: Third National Program for Community Empowerment in Rural Areas (PNPM-Rural Task Team Leader: John Victor Bottini Estimated Appraisal Date: February 10, 2010 Estimated Board Date: March 30, 2010 Managing Unit: EASIS Lending Instrument: Specific Investment Loan Sector: Sub-national government administration (25%);Water supply (20%);Irrigation and drainage (20%);Roads and highways (20%);Primary education (15%) Theme: Decentralization (23%);Rural policies and institutions (22%);Participation and civic engagement (22%);Rural services and infrastructure (22%);Social safety nets (11%) IBRD Amount (US$m.): 785.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: Borrower 552.00 552.00 B. Project Objectives [from section 2 of PCN] The project (PNPM-Rural III) is a continuation of the ongoing PNPM-Rural and approved additional financing (PNPM-Rural II). There will be no change to the overarching objectives to reduce poverty and improve socio-economic and local governance conditions for villagers in rural areas. GOI proposes that PNPM-Rural III continue to allow the existing platform to be used for post disaster and crisis recovery. PNPM-Rural is also an effective mechanism for addressing various environmental/ natural and man-made crisis. KDP/PNPM-Rural proved to be a robust tool for addressing post-conflict and post-disaster needs, as seen in Aceh after the 2004 Indian Ocean tsunami and the subsequent Memorandum of Understanding (MOU) that ended thirty years of conflict, and more recently in central and West Java (2006) and in West Sumatra (2009) in the wake of devastating earthquakes. In response to the recent financial crisis, the GOI is looking to PNPM-Rural to Page 2 provide a means to rapidly disburse critical resources in case of a pronounced slowdown in economic growth. C. Project Description [from section 3 of PCN] As a repeater project to the original loan and its additional financing, there will be no change to the basic design of the project. The project will support the continuation of the program to provide block grants to PNPM-Rural#s 4,791 rural sub-districts in 394 districts in all provinces except Jakarta in 2010. The project components will be similar to the ongoing project (with estimated proposed financing from the new loan): (a) Kecamatan Grants ($684.0 million) to deliver block grants to 4,791 sub-districts to support planning, community training and capacity building, and investment in social and economic infrastructure - including the provision of financial capital for women#s savings and loan groups. (b) Facilitation Support ($76.0million) to support sub-district technical and social facilitators and kabupaten facilitators. It also includes activities to strengthen inter village organizations and forums and local government coordination and oversight. (c) Implementation Support and Technical Assistance ($23.0 million) to support implementation oversight, training and technical assistance at the national and provincial levels to manage the program and strengthen the capacity of local governments. Training for facilitators, consultants, and local government officials will include project operations, financial management, safeguards, operations and maintenance. The component also covers the costs of PNPM-Rural#s monitoring and evaluation program. (d) Project Management Support ($2.0 million). PNPM#s special programs, which include pilot projects and government add-ons as well as crisis response activities (natural disasters, conflict, and financial), place several additional demands on normal government budgeting, particularly as the program is operating nationwide. Most of these operational costs will be covered by the Government through their national (APBN) and local budgets (APBD); a minimal amount is financed through the loan. The project will also continue to support four major operational pilots funded through loans and trust funds from several bilateral donors (AusAID, the Netherlands, UK, CIDA, and Danida). The pilots build upon the main PNPM platform and principles of community participatory engagement: (i) PNPM-Generasi, which provides incentivized block grants to achieve education and health outcomes; (ii) Green PNPM to support natural resource management and renewable energy schemes; (iii) Papua RESPEK to support Papua and West Papua#s village development-- locally funded add-on to PNPM; and (iv) Aceh#s locally funded add-on to PNPM, BKPG. D. Project location (if known) PNPM-Rural III will continue to be implemented nationwide and will cover more than 4700 rural sub-districts(which have over 61,000 villages), including some environmentally sensitive Page 3 (forest, coastal, marine) and socially sensitive areas, for example in Papua, in some areas of Kalimantan, and in some of the islands near Sumatra. Salient features relevant to safeguards analysis and mitigation are financed by the project. Typical activities funded by the block grant investment funds under component I of the project are: (i) small- scale infrastructure investments identified and decided on by the community at large, with the involvement of women and vulnerable groups and indigenous persons mandated (project manual#s procedures); (ii) UPK (sub-district management unit) managed revolving funds provided to women#s savings and loan groups for income generating activities; and (iii) social investments, in education and health. The project provides block grants to communities to support sub-district and village level planning processes, including the provision of training and technical inputs to strengthen planning and implementation readiness. Planning includes a simple, community assessment of environmental impact. As a repeater project with similar design and project components, no new safeguard issues are anticipated. Experiences from the ongoing PNPM-Rural and additional financing projects as well as their predecessor, the Kecamatan Development Projects (KDP), indicate that any adverse environment impacts are site specific, very small in scale and can be managed locally by adopting good engineering designs and construction practices. Every location is assisted by an experienced engineer. Furthermore, there have been no significant adverse social impacts registered in either the KDP series of projects or the ongoing PNPM project, including in Papua, Kalimantan, Mentawai, and Nias, to name some of the more sensitive areas, where PNPM has been adapted to reflect unique geographical and cultural conditions. E. Borrower