Indonesia - Third Kecamatan Development (Phase 2) Project

 Document of The World Bank Report No: ICR1453 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-47100 IBRD-77500 IBRD-47710 IBRD-77670 IDA-38060 IDA-40450 IDA-40451 TF-55051 TF-55900 TF-57097 TF-56890 TF-90488 TF-90850 TF-90912 TF-90976 TF-90977 TF-91171 TF-92115) ON LOANS IN THE AMOUNT OF US$124.6 MILLION AND CREDITS IN THE AMOUNT OF SDR 165.2 MILLION (US$257.8 MILLION EQUIVALENT) TO THE REPUBLIC OF INDONESIA FOR A THIRD KECAMATAN DEVELOPMENT PROJECT SECOND PHASE June 30, 2011 Sustainable Development Department East Asia and Pacific Region    CURRENCY EQUIVALENTS (Exchange Rate Effective June 7, 2011) Currency Unit = Indonesian Rupiah IDR 1,000 = US$0.12 US$1 = IDR 8,508 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AusAID Australian Agency for International Development Bappenas National Development Planning Agency BPD Village Council (not elected) CDD Community Driven Development CIDA Canadian International Development Agency DFID Department for International Development FK(T) (Technical) Kecamatan Facilitator FM Financial Management FY Fiscal Year GoI Government of Indonesia ICR Implementation Completion Report JSDF Japan Social Development Fund KDP Kecamatan Development Program Kecamatan Sub-district (containing on average 20 to 25 villages) M&E Monitoring and Evaluation MAD Inter-village forum MIS Management Information System MOHA Ministry of Home Affairs MTR Mid-Term Review NMC National Management Consultant NGO Non-Government Organization O&M Operation and Maintenance PAD Project Appraisal Document PDO Project Development Objective PJOK Local Project Manager PMD Community Development Directorate-General MOHA PMU Project Management Unit PNPM National Community Empowerment Program SPP Women Savings and Loan Susenas National Expenditure Survey TKP Implementation Coordination Team UPK Activity & Financial Management Unit (at Kecamatan Level)    Vice President: James W. Adams Country Director: Stefan Koeberle Sector Manager: Franz Drees-Gross Project Team Leader: SentotS. Satria ICR Team Leader: SentotS. Satria  INDONESIA THIRD KECAMATAN DEVELOPMENT PROJECT SECOND PHASE     CONTENTS Data Sheet A. Basic Information……………………………………………………………...…...i B. Key Dates…………………………………………………………………………..i C. Ratings Summary……………………………………………………..………...….ii D. Sector and Theme Codes……………………………………….……...…....…......ii E. Bank Staff…………………………………………………………………....…....iii F. Results Framework Analysis……………………………………………………...iii G. Ratings of Project Performance in ISRs………………………………….....….….v H. Restructuring………………………………………………..........………….…… .v I. Disbursement Graph……………………………………………………………….vi 1. Project Context, Development Objectives and Design ............................................... 2 2. Key Factors Affecting Implementation and Outcomes .............................................. 8 3. Assessment of Outcomes ............................................................................................ 2 4. Assessment of Risk to Development Outcome........................................................... 7 5. Assessment of Bank and Borrower Performance ....................................................... 8 6. Lessons Learned ....................................................................................................... 20 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 22 Annex 1. Project Costs and Financing .......................................................................... 23 Annex 2. Outputs by Component ................................................................................. 24 Annex 3. Economic and Financial Analysis ................................................................. 28 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 29 Annex 5. Beneficiary Survey Results ........................................................................... 32 Annex 6. Stakeholder Workshop Report and Results................................................... 33 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 35 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 45 Annex 9. List of Supporting Documents ...................................................................... 46 Annex 10. Summary of Trust Funds Linked to KDP-3 ................................................ 48 MAP IBRD No. 38278       A. Basic Information Kecamatan Country: Indonesia Project Name: Development Project 3B IBRD-47710,IBRD- 77670,IDA- 40450,IDA-40451,TF- Project ID: P092019 L/C/TF Number(s): 56890,TF-90488,TF- 90850,TF-90912,TF- 90976,TF-90977,TF-9 ICR Date: 06/30/2011 ICR Type: Core ICR REPUBLIC OF Lending Instrument: SIL Borrower: INDONESIA Original Total USD 160.00M Disbursed Amount: USD 288.36M Commitment: Revised Amount: USD 283.00M Environmental Category: B Implementing Agencies: Ministry of Home Affairs CARE International Indonesia Kelola Foundation Operation Wallacea Trust PEKKA University of Cendrawasih Wild Life Conservation Society (WCS) Cofinanciers and Other External Partners: Department for International Development UK (DFID) Japan Social Development Fund Australian Agency for International Development (AusAID) Canadian International Development Agency (CIDA) B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 12/08/2004 Effectiveness: 12/13/2005 12/13/2005 Appraisal: 12/07/2004 Restructuring(s): Approval: 03/24/2005 Mid-term Review: 06/15/2007 06/09/2007 Closing: 12/31/2008 12/31/2009 i C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Moderately Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Irrigation and drainage 20 20 Primary education 15 15 Roads and highways 20 20 Sub-national government administration 25 25 Water supply 20 20 Theme Code (as % of total Bank financing) Decentralization 23 23 Participation and civic engagement 22 22 Rural policies and institutions 22 22 Rural services and infrastructure 11 11 Social safety nets 22 22 ii E. Bank Staff Positions At ICR At Approval Vice President: James W. Adams Jemal-ud-din Kassum Country Director: Stefan G. Koeberle Andrew D. Steer Sector Manager: Franz R. Drees-Gross Maria Teresa Serra Project Team Leader: Sentot Surya Satria Scott E. Guggenheim ICR Team Leader: Sentot Surya Satria ICR Primary Author: Sentot Surya Satria Heinrich K. Unger F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) KDP3 has the overall development objectives of reducing poverty and improving local level governance in rural Indonesia. Revised Project Development Objectives (as approved by original approving authority) Restructuring of Credit 38060 (part of KDP-3a) added another specific development objective: (iv) reconstruction of communities in areas affected by natural disasters. This additional specific DO was also included in KDP-3B and the associated AF. (a) PDO Indicator(s) Original Target Formally Actual Value Values Revised Achieved at Indicator Baseline Value (from approval Target Completion or documents) Values Target Years Improved HH expenditure rates and improved access to economic and social Indicator 1 : services in 2,000 poor kecamatan Value quantitative or 0 3% 5-10% (HH exp) Qualitative) Date achieved 06/02/2003 12/31/2008 12/31/2009 A 2010 impact evaluation study found that real household consumption gains Comments were 5-10% higher in KDP/PNPM areas when compared to control areas. The (incl. % same study also showed that there is a 6-8% greater likelihood in KDP/PNPM achievement) (compared with control areas) Indicator 2 : EIRRs for major infrastructure types Value quantitative or 0 > 30% > 30% Qualitative) Date achieved 06/02/2003 12/31/2008 12/31/2009 Comments Although no recent evaluation has been done, a 2005 study showed that typical iii (incl. % KDP-type infrastructure achieved EIRRs well over 30% (an average of 53%). achievement) Nothing significant has changed since 2005 in the way projects have been selected, prioritized, planned Indicator 3 : > 80 % satisfaction level from beneficiaries regarding improved services Value quantitative or 0 >80% 91-92% Qualitative) Date achieved 06/02/2003 12/31/2008 12/31/2009 A 2005/2006 evaluation of a sample of 234 villages showed an average Comments satisfaction rate of 91% for the quality (function) and 92% satisfaction with the (incl. % benefits derived from the newly built infrastructure. Nothing has changed since achievement) 2005 in the way projects (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values Achieved at Indicator Baseline Value Revised (from approval Completion or Target Values documents) Target Years Indicator 1 : 1. Percent of poor and women involved in planning, execution and maintenance. Value women 28 to 44% (quantitative 0. 40 % average for poor or Qualitative) 63% Date achieved 01/13/2005 12/31/2008 12/31/2009 The percentage of women participating in village meetings ranged from 28 to Comments 44%. Attendance was above 40% in the early stages of the project but dropped (incl. % off significantly during the later stages, such as for the O&M meeting. There was achievement) no separate record Indicator 2 : 2. Percent of agreed works completed Value (quantitative 0 85 % 100% or Qualitative) Date achieved 01/13/2005 12/31/2008 12/31/2009 Comments (incl. % 100% of the block grants were disbursed achievement) Indicator 3 : 3. Percent infrastructure reviewed technically as "good" and "excellent" Value (quantitative 0 70 % 55% or Qualitative) Date achieved 01/13/2005 12/31/2008 12/31/2009 Comments The 2005 evaluation of infrastructure quality found a rate of 55% for "good" and (incl. % "excellent" but when the percentage rated "sufficient" was added the overall rate achievement) becomes 70%. Indicator 4 : 4. Percent of villages with O & committees formed Value (quantitative 0 75 % 100% or Qualitative) iv Date achieved 01/13/2005 12/31/2008 12/31/2009 Comments (incl. % achievement) Indicator 5 : 5. Minimum 200 UPKs retaining > Rp 100 million in financial reserves Value (quantitative 0 N/A 76% or Qualitative) Date achieved 01/13/2005 12/31/2008 12/31/2009 Comments M&E showed that 76% of all UPKs were rated sustainable based on the (incl. % adequacy of their financial reserves, their earning potential, the repayment rates achievement) of their customers, and the quality of their management. G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 06/29/2005 Satisfactory Satisfactory 0.00 2 12/27/2005 Satisfactory Satisfactory 0.40 3 09/29/2006 Satisfactory Satisfactory 35.40 4 11/07/2006 Satisfactory Satisfactory 35.40 5 05/15/2008 Satisfactory Satisfactory 248.82 6 06/30/2009 Satisfactory Satisfactory 286.97 H. Restructuring (if any) Not Applicable v I. Disbursement Profile   vi Preamble In June 2003, the Board of the World Bank formally approved the disbursement of US$249.8 million through the KDP-3 loan and credit program. However, following the Board’s approval, the Indonesian parliament tabled major revisions to the country's decentralization laws. Had the tabled revisions come into effect, sub-national projects, including KDP-3, could not have been implemented by government agencies. Because of the uncertainty created by the tabled revisions, KDP-3 was divided into two separate loans/projects. Initially, the project was scaled back and redefined as KDP-3A. A proposal for this new, scaled-back program was sent to the Bank’s Board, where it was passed on a no- objection basis in May 2004 as a loan and credit scheme involving the equivalent of US$91 million. This sum was sufficient to provide funding for one year, enough to continue field operations while the contentious laws were being debated in parliament. Following the election of a new president and a new parliament in August 2004, the risk of major revisions to the decentralization laws receded. Given these new circumstances, the government determined to proceed to scale up the project. Loan and credit funds totaling the equivalent of US$160 million were approved in March 2005. Despite this restructuring of KDP-3, there were no changes in the development objectives, project components, or implementation structure defined in the original KDP-3 project originally approved by the Bank’s Board in June 2003. In April 2006, the Government announced its intention to establish a national anti- poverty program. One component of the proposed program was the “National Program for Community Empowerment