Second Urban Poverty Project (UPP 2) / (Cr. 3658/Ln. 4664-Ind)
• Additional Financing For Second Urban Poverty Project (Cr 3658-1-Ind)
• Third Urban Poverty Project (UPP 3) / (Cr. 4063/Ln.4779-Ind)
Supervision Mission
Aide Memoire
March 26 – April 26, 2008
Table of Contents
I. Introduction
II. Urban Poverty Program
III. Projects Progress Summary
IV. Common Program Issues
• General
• Program Management
• Consultants Contract Management
• Procurement
• Financial Management
• Environment and Land Acquisition
• Capacity Building
• Monitoring
• Evaluation
• Better Governance Action Plan
• Community Preparation
• Kelurahan Grant Utilization
• Infrastructure
• Revolving Funds
• Social Funds
• Progress at Local Government
V. Specific Findings of Projects
• UPP 2 / AF
• UPP 3
VI. PAPG (Poverty Alleviation Partnership Grants)
VII. Advanced Programs
VIII. Summary of Follow-up Actions
Annexes :
Annex 1 Performance Indicators of UPP2/AF and UPP3
Annex 2 Financial Management
Annex 3 List of kota/kabupaten and kelurahans visited
Annex 4 List of mission participants
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INDONESIA
URBAN POVERTY PROGRAMME
March 26 – April 26, 2008
Aide Memoire
I. INTRODUCTION
1. A supervision mission of the Urban Poverty Project (UPP 2 and 3), including Additional
Financing for the Second Urban Poverty Project (UPP 2), was carried out from March 26 to April
26, 2008. The mission officially began with a kick-off meeting in Jakarta on March 26, 2008.
During the mission, meetings and discussions were held with staff from Ministry of Public Works
(Dep. PU), the Project Management Unit (PMU), the National Planning Agency (Bappenas), the
Ministry of Finance (Depkeu), the Ministry of Home Affairs, and the Coordinating Ministry of
Social Welfare (Menko Kesra). The mission discussed project implementation with OCs,
facilitators, and communities. During field supervision the mission also visited 13 Local
governments and 46 urban wards (kelurahans). In addition, the mission conducted
teleconferences with 6 facilitators, 5 BKMs and 3 OCs. The Bank team would like to express its
gratitude to the Government of Indonesia (GOI) and PMU for organizing and participating in this
mission. A list of mission members is attached as Annex 4.
2. The main objective of this mission is to review overall projects progress at Central
Government, Local Government, and kelurahan levels, with special emphasis on progress of
community preparation and utilization of kelurahan grants, Satker/PPK and firm support,
progress at the kota/kabupaten levels, PAPG performance, and overall project management. The
review was conducted at the program level i.e. encompassing all projects, as well as specific
project level.
3. This aide memoire outlines progress achieved, outstanding issues and proposed actions
for the remainder of the program. Its contents will be discussed with the Government at a wrapup
meeting on April 23,
2008. The aide memoire
is
divided into a main
text that highlights
various issues common to all projects and as well as summary of the progress of each project. The
Annexes contain more detailed review of each project.
II. URBAN POVERTY PROGRAMME
4. Overall performance of the Urban Poverty Program is moderately satisfactory (see Table
1 for details). Following the August 2007 approval of US$135.5 million additional financing to
UPP 2 to support the National Poverty Alleviation Program (PNPM-Program Nasional
Pemberdayaan Masyarakat), UPP now covers 7245 kelurahans. The total funding originally
allocated under UPP2 including UPP2 Additional Financing and UPP3 was US$ 374.2. Because
of exchange rate fluctuations, the funding allocated is now US$ 413 Million, whereby 70% has
been disbursed as of March 2008. The overall output of the project is satisfactory and generally
been met, except very few indicators. However, there is significant variation of performance
3
between regions and between various consultants. Details of the output of the program are
provided in the Annex 1
Table 1 - Performance of UPP
UPP2 UPP3 UPP AF
Progress S S S
Procurement S S S
Financial Management MS MS MS
Environment and Social
Safeguards
S S S
Capacity Buildding MS MS MS
Monitoring MS S MS
Evaluation MS NA MU
Infrastructure MS MS MS
Revolving Funds MS MS -
Social Funds MS MS MS
Community Preparation S S S
Overall MS S MS
5. Extension of Consultants. The program is now facing critical transitional period as the
current UPP2’s NMC and OCs contract will end by May 2008, and new NMC and OCs will be
selected. The selection of these consultants is in process. It is estimated that the new consultants
will only be mobilized by August 2008. Therefore time extension of the current consultants’
contracts for the period of June-August 2008 is urgently required, otherwise it will create
significant vacuum in the management. This extension must be done through amendment of their
contracts, using the balance of the funds remaining in their respective contracts. It was agreed
during wrap-up meeting that the contract amendment will be sent to the Bank by May 16, 2008.
PMU will ensure that the firms inform about this extension to their personnel before May 15,
2008.
III. PROJECTS PROGRESS SUMMARY
6. Urban Poverty Project 2 (Cr 3658/Ln 4664-IND) / UPP2-Additional Financing
(Credit No- 3658-1-IND). Overall, UPP 2 including UPP 2 Additional Financing is rated
moderately satisfactory. Except PAPG, mostly performance indicators are met or exceeded. The
original UPP2 fund was US$ 100 Million. Because of exchange rate fluctuations, the fund is now
equal to US$121, whereby 96% of it has been disbursed as of March 2008. The UPP 2 Additional
Financing funds, as a supplement to UPP2 to support PNPM in 2007, was available since
September 20007. The original amount was US$ 135.5. Up to March 2007, about 55% (US$ 81
million) was disbursed to finance kelurahan grants, facilitators, consultants and capacity building.
7. In total, about US$ 120 million have been disbursed to kelurahans from UPP2 and UPP2
Additional Financing as block grants. From the UPP2 Additional Financing itself, about US$ 81
million has been disbursed as block grants to 5500 kelurahans from November to December
2007. The MIS (management information system) shows about 150,000 units of infrastructure,
73,100 economic, and 26,200 social proposals have been approved and financed by these US$
120 million.
4
8. So far, the utilization of UPP 2 Additional Financing has followed the agreement in the
previous Aide Memoire, of which no more than 10% of kelurahan grants be used for social
funds, and no more than 20% of kelurahan grants be used for revolving funds. In addition, only
BKMs with a return rate (RR) above 80% should be allowed to activate the revolving fund. The
kelurahan grants from UPP 2 Additional Financing have been mainly utilized for infrastructure
(more than 85%). The remaining was used for social activities (about 10%) and revolving funds
(5%). The revolving funds only happened in old kelurahans having a repayment rate of 80% or
more for additional capital. Details of these outputs are provided in Annex 1.
9. The PAPG component remains moderately unsatisfactory. Although there have been
some improvements, they are not sufficient. The Government has disbursed PAPG funds to 46
cities that have not yet properly followed the project manuals and have not been agreed by the
Bank. The total amount which has been disbursed is US$ 4.6 Million US$. This is a serious
violation and the Team request that reimbursement of the PAPG be differed, until the systemic
problems for this violation is determined and rectified. The Bank is extremely concerned with this
violation. No additional funds should be allocated for PAPG component until there is a firm
decision of the Government through a letter from DGHS, steps that will be taken and discipline of
rules will be established. It was agreed that the letter will be sent to the Bank by May 9, 2008.
10. Urban Poverty Project 3 (Cr 4063/Ln 4779-IND). Overall implementation progress of
UPP 3 is satisfactory. Performance indicators show that most of the output has been achieved or
is being achieved. The project is operating in 1726 targeted kelurahans. The original credit/loan
was US$ 138.7 Million, and due to exchange rate fluctuations, it is now US$ 144 Million. The
disbursement status is 63%. About US$ 46 million kelurahans grants have been disbursed to
kelurahans and about 15,000 infrastructure, 9,000 social and 25,000 economic proposals have
been funded.
11. Following the introduction of PNPM 2007, 697 additional kelurahans have been added in
UPP 3 locations. The progress in new kelurahans is at the stage of utilization of first tranche
kelurahan grants. The usage of funding was also mainly for infrastructure.
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Table 2 - Disbursement of Kelurahan Grants
# Kel # Kel disbursed M US$
UPP 2
50.07
Tranche 1 (20%) 2059 2058 10.02
Tranche 2 (50%) 2059 2057 25.04
Tranche 3 (30%) 2059 2055 15.01
UPP2 Additional Financing 81.0
Old Kelurahan 62.8
Tranche 1 (40%) 2671 2605 26.2
Tranche 2 (60%) 2671 2459 36.6
New Kelurahan 18.2
Tranche 1 (20%) 2848 2806 18.2
UPP 3
46.4
Tranche 1 (20%) 1726 1604 10.1
Tranche 2 (50%) 1473 1455 22.7
Tranche 3 (30%) 1473 1448 13.6
Source : NMC (National Management Consultant)
IV. COMMON PROGRAM ISSUES.
General
12. Readiness of Provincial DIPA. The DIPA allocation for provinces remains problematic
both for FY 2007 and 2008. For FY 2007 carryover DIPA PMU needs to ensure the revision is
completed by May 31, 2008. This has caused significant problems because it is related to the
payment of BLM, BOP facilitators and fixed cost training for community. For FY 2008, in some
provinces, the DIPA allocation is also insufficient to meet the required expenditure. PMU needs
to also revise this budget, as not to repeat the same problem in FY 2007. This revision has also to
be completed by May 31, 2008
13. DG Circulation Letter for FY 2008. As the project is entering the utilization of budget
from FY 2008, whereby the disbursement of kelurahan grants will be administered by Satker of
kota/kabupaten, the circulation letter (SE) from DG of Treasury (MoF) must be available soon.
This will also provide clarity for disbursement of the remaining 80% kelurahan grants for new
kelurahans of PNPM 2007. The SE is expected to be available soon after PNPM Urban 2008
funds are effective.
14. Local Government Co-sharing provision. Most Local Governments have committed to
provide 50% co-sharing for kelurahans having poor families less than 35%. However, not all of
them have released the required funds. PMU must ensure that these funds are made available
before May 30, 2008. PMU is requested to report its status to the Bank.
15. Cost-sharing Arrangements. There is some confusion in the local government about the
cost sharing arrangements. The Cost sharing for the kelurahan grants from the Local Government
6
is supposed to be disbursed at the 2
nd
tranche of kelurahan grants (50%) in FY 2008. However, in
some Local Governments the co-sharing has been transferred from their FY 2007 budget, with
the understanding that local government must provide 50% of every tranche. As a result,
kelurahans have received and utilized 30% of kelurahan grants (20% from APBN loan and 10%
from APBD as co-sharing), instead of 20% as requested in the guidelines. The mission requested
more clarity on the proportion of both APBD and APBN loans for the next disbursements. A
clarification letter must be issued from the Executing Agency to all satkers and KPPN by May 9,
2008.
Program Management
16. The urban wing of the PNPM is growing, and practically, the project is now covering
almost all of the urban areas in Indonesia. The overall program management is not yet fully in
place, despite the restructuring made. The relationship between NMCs and quality control of the
program remains a challenge. At the Government level significant strengthening is required. The
program is very large, fast disbursing, and affects a large number of the population which
requires management that is full time and pro-active. Due to recent reorganization, the MPW is in
the process of assigning a new PMU. As mentioned in section II.5, there is an urgent need to
strengthen the overall program management. This is a fast disbursing project with very high
fiduciary risks requiring a high level of discipline, very strong communication lines, dedication,
and a vision to bring the program to a higher level of operation. As it currently stands, the overall
management is yet to meet this demand. The case of PAPG release to 46 local governments with
prior approval is a good example of weak control. The PMU needs to be strengthened with
additional dedicated and proactive staff with good access to the decision makers. The contract
management team also needs to be strengthened by competent staff. It is critical that there are
staff dedicated to PNPM related programmes (kelurahans Grants) and advance programmes such
as PAPG. The mission is seeking detailed steps and timeframe from DGHS on this matter with
clear deadlines. DGHS will send a letter to the Bank before May 15, 2008.
17. Team Consolidation. Because of its nature, the challenge of the program is to ensure
that all teams are well consolidated and operate in a clear command line. The biggest challenge of
the program has always been flow of communication and information, and most importantly
access to decisions. This has deteriorated in the last few months, despite expansion of project
implementation speed and coverage. There are several tools that were agreed before as part of the
PNPM appraisal that needs to be urgently revived:
• Weekly meeting between PMU/Satkers and Team leaders of NMC. This has stopped in
several months resulting in significant miscommunication. The meetings should be revived
starting May, 2008.
• Monthly meeting between PMU/Satker and the Bank team on follow up of aide-memoires
starting May, 2008.
• Quarterly meeting with all TLs of OCs and national satkers.
• The effective use of Website for dissemination of various messages and learning and two
way communication. The forum is open for free exchange of views and capture various
opinions
• SMS broadcasting for various critical messages.
• Contract payment monitoring through website
18. Satker (Project Manager). The team is concerned with the performance of some
satkers, such as in Central Kalimantan, West Kalimantan, North Sulawesi, and South Sumatera.
The orientation thus far provided appears to be insufficient. This has created problems on the
7
ground such as delay in payments of facilitators’ salary, fixed cost training and others. This is a
systemic problem that needs a systemic solution. PMU needs to conduct regular training and
orientation for the new satkers. Director of PBL with support from PMU and NMCs will improve
monitoring the work of satkers, and offer help when a problem arises.
19. Kota/Kabupaten Satker for FY 2008. In FY 2008 the satkers will be at the local level.
This is a big step in decentralizing management to the local government. Although this shift has
some advantages, it posts a serious challenge for management. The proposal for the name of
satker has to come from more than 200 local governments. They need to be trained and
monitored. Their capacity need to be developed. The mission is seeking PMU to have a clear
strategy for managing these satkers. Furthermore, the satkers need to be appointed by May 30,
2008. The mission seeks confirmation from Tim Pengendali to inform the local government of
the importance of meeting this deadline.
20. Standard Operation Procedure (SOP) for Satker. The draft SOP for Provincial and
District Satkers have been prepared by PMT, together with NMC. The draft needs to be further
refined, incorporating various issues found during this supervision and should be completed by
May 15, 2008. An SOP for National Satker will be also created and to be completed by May 30,
2008
Consultants’ Contract Management
Individual Consultants
21. Facilitator. As the end of facilitators’ contract is approaching (May 31, 2008), the
PMU/National Satker needs to issue a letter to all Provincial Satker about extension of facilitators
until December 2008. The team was informed during wrap-up meeting that the letter was already
sent on April 16, 2008 and followed-up with SMS broadcasting on May 2, 2008.
22. Changes of Facilitators. There have been changes of facilitators without any handover
notes signed by the old and new facilitators and the korkot, as agreed in the previous Aide
Memoire. PMT has not yet provided the requested standard format for handover, as found in
some OCs, such as OC 1, 2, 13, OC Central Java, OC 16 (UPP2) and OC 13 (UPP3). As it was
agreed, the format should include Financial Management (FM) conditions and BKM performance
indicators. PMU must pay special attention to this issue. PMU will send a letter to Satkers
informing that they should not process payment of the new and old facilitators until they have
received the handover notes as attachment to the payment request. This letter should be issued by
May 15, 2008.
23. Facilitators for PNPM Urban 2008. Because the facilitators recruitment for PNPM
Urban 2008 is ongoing, PMU needs to ensure that all OCs follow the guidelines provided by the
Advisory team. The existing team members should remain, as they change the configuration from
5:7 to 5:9. It is critical for the purpose of continuity and accountability. There is a case in Aceh,
for example, where these guidelines have been followed, resulting in rotation of existing
facilitators across the team. It was informed during the wrap-up meeting that the recruitment of
facilitators have been completed. Advisory team has rechecked and ensured that the guidelines
are properly followed by all OCs.
24. Tax Charge. Although payment of PPH tax is the individual responsibility of each
consultant, in order to receive their next month’s salary, some satkers or KPPN still require
consultants to attach a letter from the tax office explaining they have paid the tax. The mission
8
requested PMU to facilitate this issue to ensure that there will be no delay of salary payment of
faskels/ascot/korkot because of unclarity on tax payment, such as found in East Java, Lampung,
and Bengkulu.
Consulting Firms
25. Contract Amendment for NMCs and OCs. Because of the possible delay in the
mobilization of the news consultants, the Government needs to ensure that there is no vacuum of
management consultants. The government proposes to fill the gap through some minor time
extension (2 or 3 months) of the existing consultants. To accommodate the extension of NMC
UPP2 and OCs consultants during the transition period of June-August 2008, PMU must submit
to the Bank: (i) the calculation of remaining contract value and need assessment for the extension
work before April 23, 2008, (2) draft contract amendment; and (3) the TOR and draft contract
of UPP3 by May 16, 2008.
26. Consultant Staff Performance Evaluation. The SOP of consultant staff performance
evaluation has been prepared by PMT and approved by the Bank. PMT
must distribute and ensure
application of the SOP by NMCs and OCs for their staff evaluation, by May 15, 2008.
27. Firm Performance Evaluation. The Consulting firms contracted for NMC, OCs and EC
need to be evaluated on a regular basis. Although such exercises have been conducted in the last
few years, a more systematic approach is required. The PMU has committed to (i) establish an
objective evaluation system, with a clear performance indicators, for measuring the performance
of firms; (ii) undertake quarterly monitoring on the performance of firms; (iii) take appropriate
punitive action if the performance is not satisfactory; (iv) utilize the record of firms consultant as
consideration for future selections. The system has to be established and operational by May 30,
2008.
28. Contract Monitoring. The team is pleased with the progress on contract monitoring. The
instrument of monitoring is established and operating well. The data updating is regular and
accurate. The PMT has fulfilled its duty to send monthly and quarter reports and update web
based contract on a regular basis. Twenty-two provincial satkers have fulfilled their duty to
update the invoice of individual consultants. The provincial satkers which have not updated the
invoice are: West Sumatera, South Kalimantan, West and Central Sulawesi, Gorontalo, Bali,
NTB, Lampung. The PMU need to send reminder letter to these satkers before May 15, 2008.
29. Payment of Consultants. The payment monitoring shows that most of the firms
experience 3 – 4 months delay in claiming invoices. This is a declining performance, after
relatively on-time payment in the previous year. This is an unacceptable practice, as it will cause
problems in the field when the cash flows of the firms are weak in some instances, and raise
various fiduciary risks. The Satker need to send a reminder letter to the related firms, not later
than May 15, 2008.
30. Consultant Contract Disclosure in the OC, NMC, City Coordinator Offices. The
team is disappointed with the progress of this matter, because in most visited korkot offices, it
has not been disclosed. The project director is responsible to ensure the placement of this
information as it is stated in the matrix accountability. At the Korkot level the TL must ensure
that all information related to payment of facilitators is available. The team requests Satker to
postpone the salary payment of team leader of NMC and OC and city coordinators until there
is evidence that the contract has been disclosed. This sanction will be started since salary
payment of May 2008.
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31. Pre-Checking Firm Invoices. The duty of pre-checking invoices is handled by National
Management Consultant (NMC), since the abolishment of RM. The team found out the checking
mechanism by NMC does not meet the required standard of checking and verification. This is
because the duty of NMC is limited only to sign the verification form without having access to
the invoices. The team urges the National Satker to ensure the checking and verification by NMC
meets the standard, not later than May 30, 2008.
32. Post-Checking Firm Invoices. A dedicated staff at national level is required to conduct
regular, detailed random checking of firm invoice reports. The team is informed that this activity
has never been realized. The mission requests the National Satker to ensure that this activity takes
place and the report is copied to the Bank, not later than May 30, 2008.
33. Firm Support to OCs. The mission is disappointed with the support provided by some of
the firms. This is particular in OC 1, 3, 5, 13, 16, Banten and West Java of UPP2. The assistant of
City Coordinator has never received budget support for random checking. This is a critical issue
that needs to be resolved. The firms claimed that they are not fully clear about the budget
arrangement. The critical issue is why such matters were not brought earlier to the attention of
PMU. The NMC should have brought these matters to the PMU as early as possible. The National
Satker needs to send letter to the firms, with a copy to the Bank, clarifying this issue by May 15,
2008. Of particular concern is OC 5 where firm support is very weak. The PMU should clarify to
the firm and send “surat peringatan” to them.
Procurement
34. Overall Progres. The team finds that procurement management is satisfactory. Overall the
Government has followed the procedures set up under the loan agreement. There are some rating
variations in the type of procurement activities:
• The hiring of facilitators by the Satker is rated satisfactory. All facilitators are hired in a
timely manner using the agreed contract documents.
• The procurement under community grants is rated moderately satisfactory.. The team is
concerned with the poor quality of some deliverables. In some, the community proposals
do not include proper technical specifications and thus the quality of outputs still has yet
to meet standards. In the case of civil works, they have generally met the standard
technical codes as defined by the Government (through the Ministry of Public Works).
The contract agreement between community and BKM for social grant is not entirely in
place.
• The procurement of consultant is rated moderately satisfactory. Although in most cases
NMC and OCs were recruited on time, the team is concerned with the one year delay of
an evaluation consultant.
Regarding BPKP’s findings on procurement post-review, the Bank will send a separate later to
PMU on outcome of the review, not later than April 30, 2008.
35. Changes of Team Leader. The Bank was informed during the supervision mission, that
there will be a change in key position of NMC UPP 3 in May 2008. Meanwhile, the contract of
NMC UPP 3 will end only in August 2008, with the possible extension subject to the satisfactory
performance. The firm, PT Amythas, has apparently initiated this change, as the Team leader was
included in technical proposal in other project. This is regrettable, in the context of risk it
imposed to the PNPM program. The Bank is in the position to discourage any interruption during
the transition period which leads to the significant degradation of consultancy performance. A
10
letter will be sent to the Bank from DG of Human Settlements clarifying this issue by before May
15, 2008.
Financial Management
36. The FM team focused on financial management at BKM and UPK level; and also use of
financial records performance tools by facilitators and consultant firms. FM also reviewed FMR
submission and disbursement status of the projects. The ratings given are based on the result of
the supervision mission. Overall, the mission has rated the financial management in UPP2 and
UPP 3 as moderately satisfactory.
37. Loan 4664-IND / Credit 3658-IND / Credit 36581-IND. Total amount disbursed as of
April 22, 2008 was $198,358,607.52 (73.9% of total loan/credit). The outstanding Special
Account balance as of March’30, 2008 was $24,708,162.30. The total expenditures for the project
were USD 155.29 million, represented 60.40% of UPP2 allocated loan/credit. The last application
submitted by the project covered the Financial Management Report for the reporting period of
December 31, 2007 accounted for expenditures during the previous quarter was $72,873,387.18;
additional advance requested was USD 1,500,000.00. The FMR was only submitted on April 7,
2008. The mission urges the PSSU to expedite submission of the Financial Management Report
in due course.
LN.4664-IND
Total
Second UPP
Disb
Ratio
CR.3658-IND
Disb
Ratio
Disb
Ratio Cat Category Description
Allocated Disbursed Allocated Disbursed Disbursed
USD USD USD Equiv USD Equiv USD Equiv
1A
KELURAHAN GRANT - 66,500,485.77 54,354,742.41 - 54,354,742.41 -
1-B KELURAHAN GRANT - 4,240,410.60 - - - -
2 POVERTY ALLEV GRANTS 17,200,000.00 13,476,653.79 - - 205,407.10 - 13,682,060.89 -
3 CONSULT SERV - A/D 11,200,000.00 11,767,726.29 - 20,827,319.04 21,401,676.34 - 33,169,402.63 -
5 UNALLOCATED 805,000.00 - - - - - - -
DA Designated Account - 5,619.92 - - 15,156,298.81 - 15,161,918.73 -
FEF FRONT END FEE 295,000.00 295,000.00 - - - - 295,000.00 -
Totals 29,500,000.00 25,545,000.00 86.6% 91,568,215.41 91,118,124.66 99.5% 116,663,124.66 96.4%
Additional Financing
CR.36581-IND
Disb
Ratio Cat Category Description
Allocated Disbursed
USD Equiv USD Equiv
1A
KELURAHAN GRANT 93,042,497.70 438,060.33 -
1-B KELURAHAN GRANT - - -
2 POVERTY ALLEV GRANTS - - -
3 CONSULT SERV - A/D 54,139,195.80 614,999.31 -
5 UNALLOCATED - - -
D
A Designated Account - 80,642,423.22 -
FEF FRONT END FEE - - -
Totals 147,181,693.50 81,695,482.86 55.5%
38. Loan 4779-IND / Credit 4063-IND. Total amount disbursed as of Aprill 22, 2008 was
$92,091,888.06 (63.4% of total loan/credit). The outstanding Special Account balance as of
March’30, 2008 was $61.88. The total expenditures for the project were USD 67.49 million,
represented 48.94% of UPP 3 allocated loan/credit. The last application submitted by the project
covered the Financial Management Report for the reporting period of December 31, 2007
accounted for expenditures during the previous quarter was $13,217,266.83; additional advance
requested was USD 17,000,000.00. The FMR was only submitted on April 3, 2008. The mission
urges the PSSU to expedite submission of the Financial Management Report in due course.
11
THIRD UPP
LN.4779-IND CR.4063-IND
Cat Category Description
Disb
Ratio
Disb
Ratio
Allocated Disbursed Allocated Disbursed Disbursed
USD USD USD Equiv USD Equiv USD Equiv
1 KELURAHAN GRANTS 25,100,000.00 12,818,024.12 61,469,518.00 50,328,852.05 63,146,876.17 -
2 POVERTY ALLEV. GRANT 30,900,000.00 1,381,695.70 16,435,700.00 9,887,076.85 11,268,772.55 -
3 CONSULTANTS SERVICES 8,300,000.00 11,014,031.18 - - 11,014,031.18 -
5 UNALLOCATED 2,663,500.00 - - - - -
D
A Designated Account - 917,042.65 - 5,408,665.51 6,325,708.16 -
FEF FRONT END FEE 336,500.00 336,500.00 336,500.00 -
Totals
67,300,000.00 26,467,293.65 39.3% 77,905,218.00 65,624,594.41 84.2% 92,091,888.06 63.4%
39. Interim Financial Report. The team noted that PMU has not submitted quarterly interim
financial reports (IFR/FMR) on time. This issue was raised in the last supervision mission in
August 2007, but yet the project submitted the reports after the due date. The team recommends
that PMU should submit the IFR within 45 days after the quarter ends.
40. Facilitators performance. The team noted use of financial management performance
indicators to review and monitor financial records at BKM and UPK level and reports submitted
to national management consultant on a monthly basis. Delays in reporting to NMC and
inconsistencies compared to actual condition at BKM and UPK level are still noted. In some
locations, a copy of performance evaluation form was not available at BKM and UPK.
Weaknesses were found, especially in timely transaction records, adequate supporting documents
and balance of cash in hand. A lot of findings also noted in old locations that received Additional
Financing. These locations need attention from the consultant to strengthen (especially) UPK,
since UPK have been established for sometime during implementation of UPP 1.1 and 1.2. The
team recommended that for monthly review of financial records done by facilitators, city level
consultant and OC, financial management performance indicators results should be shared and
discussed with BKM and UPK. A copy of the form should be kept by BKM and UPK for their
records to ensure that they know improvements that need to be done. A Reminder letter from
NMC to all level of consultants on this issue should be sent by May 15, 2008. The mission
recommends that PMU exercises agreed mechanisms in the SOP for consultants who have poor
performance. It is expected findings in Landak will have been completely followed up by May
15, 2008
41. Financial Management Performance of BKM/UPK. Regardless of high marks given by
facilitators, the mission still noted similar weaknesses in financial records especially in old
location. Consultants should be reminded that they also need to explain to BKM and UPK
regarding their marks and any improvement that they have to do to get higher marks. The team
recommends that the project should use the result of financial management performance
assessment to analyze the problem at all levels. Strengthening UPK should be done especially at
old location, since they are going to receive more funds for revolving loans from Additional
Financing. Unless there are some improvements in UPK financial management performance,
revolving loan from additional financing should not be given to problematic UPKs.
42. Training/Coaching for UPK. Findings in old locations (UPP 1) that now received
Additional Financing showed weaknesses within the project that need to be improved. This needs
immediate attention before block grant for revolving fund disbursed to UPK. At present, the
community has just received tranche 1 of grant (no revolving fund yet) and disbursed to new
BKM. It is expected that by the time UPK received the revolving fund, they already received
adequate training/coaching regarding UPK financial records, in accordance to SOP.
Total
Disb
12
Ratio
43. Project External Audit. PMU has followed up findings of FY 2006 audit by BPKP for
both projects and submitted the follow up documents to BPKP by their letter dated 28 December
2007. The Bank has sent an acknowledgement letter to the PMU and advised that the Bank has
received the documents and requested BPKP to ensure that all findings have been followed up
properly.
Environment & Land Acquisition
44. Overall. In terms of environmental management, the project is rated satisfactory and in
terms of resettlement, it is rated satisfactory.
45. Environmental Safeguards. The team visited Kota Bandar Lampung and noted that in
this city, it is common that KSMs built wells with the BLM funding, as drinking water
availability from the existing city water supply system is limited and unreliable. There are two
types of wells: deep wells (more than 50 m depth) and shallow wells (less than 50 m depth). In
general, physically the water quality looks drinkable; however, the team suggested that the KSMs
carry out water quality tests, to ensure that it is safe for drinking. The TA infrastructure of the OC
XI should facilitate the KSMs in getting their water quality tests and agreed that the laboratory
costs can be included in the BLM, as required in the SOP for infrastructure.
46. In the case for the deep wells, the Bank suggested to the OC XI team leader to seek
guidance and information from the “Dinas Geologi dan Pertambangan” or relevant agencies on
the requirements of using deep groundwater. The information on such requirements should be
socialized to the BKMs and KSMs, and if a permit is required to use deep groundwater. The
Senior Facilitators should facilitate the KSMs in getting such a permit. The team also suggested
the OC XI produce and distribute a socialization material for deep ground water use and the costs
of the printing can be included in the consultant contract.
From visit to OC V, the following are other environmental issues that facilitators need to pay
attention to and take necessary action during implementation (construction and postconstruction).
Their regular reports need to incorporate these recommendations.
• Water quality. Water quality test for drinking water needs to be taken once the provision
is available, especially for bore/well water. BKM and relevant Lurah need to get
assistance from Dinas Kesehatan in getting the water quality reading and apply
recommended advises from the Dinas as necessary. In OC 5 Tomohon, the team learnt
that some of constructed well had never done water quality test. The team recommends to
to conduct the regular reading twice a year (rainy and dry seasons). The team discussed
with the BKMs and agreed that the regular water quality test will be funded from their
O&M ‘iuran’. The summary of results will be reported by facilitator and flag them into
their regular reporting.
• Toilets (“jamban keluarga”). In OC 5 Tomohon, the team found out that some of toilets
were built on the up-stream of villagers dug well. Technical facilitators need to provide
technical assistance on how to choose locations for either dug wells or toilets.
• Access roads and drainage. Ditches need to be maintained regularly (clear vegetation
from shoulder so water can flow into the drain/ditch) and ensure the top edge of drain
should be lower than the shoulder of the road otherwise the water cannot flow into the
roadside drain, and this can cause flood the road and shoulder and damage them by
washing out the surface.
• Technical assistance. Facilitators need to get some advises from local Dinas PU on
technical specifications of the proposed infrastructure, especially on design drawing, etc
13
to meet MPW standard, including safeguard standards. Standard operating procedures
from Cipta Karya, Bina Marga and Pengairan can be easily obtained as well.
47. Land Acquisition/Resettlement. The team observed that “surat hibahs” are included in
all proposals of the visited KSMs. Most of them have complete signatures, but a few still need to
collect missing signatures from the required stakeholders. “Hibah” or donation in Kota Bandar
Lampung could mean two things:,donation from a householder who has his or her own land, or
from a householder who has occupied the PT KAI’s land to the community for the sub-project. It
came to the team’s attention that most of the sub-projects visited are built on the PT KAI’s
(railway company) land that have been occupied for more than 20 years by the communities. The
Mayor has issued a Letter allowing the BKMs to build public infrastructure on the PT KAI’s
land. The team suggests that the OC XI meets the local representative office of PT KAI and seeks
their advice for the cases whereby their land is used for the community infrastructure
.
48. Consolidated Report. OC XI does not have a consolidated report on the extent to which
land acquisition/donation has taken place in its region. This may be also the case in other areas.
The standard format for the consolidated report has not been received by the OC XI. The Bank
strongly advised the NMC to distribute the revised standard format of the report to all OCs of
UPP-2 and UPP-3 and request them to fill it in and upload the information into the MIS. OC XI
has been given the format and will prepare the report by end of May 2008. NMC should look at
this report and any inputs from the OC XI to improve or adjust the format should be considered.
49. TKPK (Coordination Team at Kota Level). The Bank noted that Bandar lampung is a
unique municipality whereby there is quite a significant amount of PT KAI land and high
potential demand for deep ground water. There is a need for coordination with relevant agencies
that have authority and competency in these two aspects. The Bank suggested that to improve
coordination and avoid problems in the future, the members of TKPK should include PT KAI and
“Dinas Geologi and Pertambangan” or other relevant agencies. This suggestion should also apply
for other municipalities as needed. For instance, municipalities in Kalimantan, whereby many
KSMs are using timber for community roads, the TKPK should include “Dinas Kehutanan.
Capacity Building
50. General status. Overall rating for capacity building is moderately satisfactory. All training
needed for consultants and facilitators to implement the project cycle of UPP has been conducted,
however the quality varied from one OC to others. At the community level a lot of training was
late due to late disbursement of fixed cost funds for training from SNVT to Facilitators Teams.
Almost all socialization activities at various levels and media have been conducted, however in
some locations the media were delivered late and the quality of both the training and quality of
socialization in general have been decreasing, especially in the basic principle of UPP; concept of
BKM, voluntarism, facilitation technique on book keeping, construction, etc. Quality control on
training and socialization is weak, since the capacity building unit was very busy with training
activities and bidding materials preparation rather than focusing on capacity building quality
control. The team also noted several issues encountered on the fields as described in the following
paragraph:
51. Fixed cost, In UPP2, on average less than 69% of fixed cost for community training has
been disbursed and utilized, only three OCs 6, 7, 8 and 9 disbursed 100% and the worst is OC
DIY only 9.36%. In UPP3, on average 65% of fixed cost for training has been disbursed and
utilized. Clear mechanism for fixed cost disbursement must be incorporated in the SOP and
socialized to all related Satkers and PPK by May 30, 2008.
14
52. Additional training, financial integration and synchronization, Some training activities
in UPP 2 & 3, such as household economy and disaster management were not yet conducted
because the modules were not ready and many capacity building activities at community level
were conducted not in pace with the project cycles. The team urges NMC to develop training
modules on household economy and disaster management and distribute to all OCs and develop
mechanisms to synchronize all training activities with project cycles by May 15, 2008.
53. Training for new replacement facilitators, TAs and for community at old location. The
team noted that training for facilitators and TAs to fill the gap of facilitators/TAs was not
budgeted by OCs’ firm and there was misunderstanding on the training for new cycled of BKMs
in old locations of UPP2 resulting in no training for new BKMs. Moreover, in UPP3 old BKMs
did not get refresher training because the fund was not available. The team requests PMU to solve
the financial problems for training with OCs’ firm and Satkers and provide clear guidance by
May 30, 2008. In addition it is important that a mechanism be developed, and provision be made,
to ensure that any new facilitators recruited for replacement will receive basic training. This
should be part of overall training strategy. One option would be to have a monthly regional
training session to accommodate training of new facilitators.
54. Coaching on “media warga” has been conducted but in practice the allocated fund to
develop “media warga” was not effectively used. This field findings indicate that “media warga”
was not generally practiced in the kelurahan. In addition, socialization media were produced but
not all were distributed in time. The skill of facilitator team using socialization media is still
weak, and in many cases the media has been distributed without sufficient explanation. The team
urges all OCs to review their socialization strategies, develop step by step action plans to
intensify socialization at community level, and submit them to NMC and PMU, with a copy to the
Bank before May 30, 2008.
55. Capacity building at city level. Capacity building activities at city level has not been
carried out well in most OCs, since the OCs were burdened by monitoring of utilization of
kelurahan grant. Mass media activities, CLC (City Learning Center) and BKM Forum are carried
out with slow progress. Series training for KBPs are behind schedule. Quality of implementation
needs to be improved, while the OCs have carried out the activities simply to fulfill the target
without concerning quality. The team request all OCs to develop a step by step action plan to
improve the quality of capacity building and to catch up all capacity building activities that left
behind schedule and submit them to NMC and PMU, with copy to the Bank before May 30, 2008
56. Capacity building at national level. The team found that the training and socialization
team in NMCs is burdened by their non-main job activities, such as being involved in the
preparation team of PNPM Urban 2008, PNPM congress, and serial official journeys to the UPP’s
area. Those activities are taking most of their time. Consequently, their main job has been
neglected. Further, PMT is not working properly to coordinate and support NMCs. In
socialization, the activity at national level using national mass media has discontinued since
overlap with national-wide mass media activities by Menko kesra. Production of serial of best
practices books is delayed. For PNPM Urban 2008, the team recommends that the PMU should
formulate organization structure of capacity building at national level through provincial level.
Proposed organization structure should be formulated no later than May 30, 2008.
57. Guidelines. The Bank has approved the general guidelines for UPP PNPM 2007 and the
guidelines have been distributed to the facilitators and BKMs. However, some OCs have received
only a copy of the document instead of the original printed one. The team notes that many new
15
improvements on the UPP PNPM were not followed by technical guidelines, such as
establishment of BKM forum at kecamatan level, establishment of supervisory board to oversight
financial management of BLM, revolving small scale group infrastructure, etc. For PNPM 2008,
the team requests the PMU to ensure that all existing technical guidelines will be reviewed,
simplified, and incorporaed with all new improvement. They should be ready by May 30, 2008.
Monitoring
58. Overall monitoring. Overall monitoring of the program through Management Information
System (MIS), Quick Status (QS), spot check monitoring, and the project’s website is
moderately satisfactory. The mission was pleased to note that the record of SMS-based
complaints has been published in the website, so that it can strengthen the monitoring of the
program. MIS and QS were available and provided the required information, but it couldn’t cope
with the speed of extension of the program as the additional financing was launched. Spot-check
monitoring by NMC and OCs was implemented but many of the spot checks were delayed. For
UPP2 Additional Financing, PMT was late in providing the MIS application, especially on
kelurahan grants. Meanwhile, many OCs did not complete the data properly and NMC was not be
able to ensure that data was timely collected by OCs. In some cases, NMC relied on data that was
manually collected, rather than from MIS, such as data of PJM Pronangkis and disbursement of
kelurahan grants. This is unacceptable. PMU must ensure that no parallel system is available
beside MIS.
59. Glossary of MIS. The team would like to emphasize that the agreed glossary of MIS
must be strictly followed. PMT cannot make any changes to the glossary without approval from
PMU and the Bank.
60. SOP of MIS. The team found that poor utilization of SOP of MIS, mostly by OCs, has
hampered the reliability of data. Using different applications while the main application was still
in the revision stage, data submission from facilitator to Asmandat, not to Korkot, are example
practices that are not in line with SOP.
61. The usage of MIS data for Monitoring and Evaluation. The team urges all UPP
stakeholders to use the MIS data that is available on the project’s website for monitoring and
evaluating the overall projects. The usage of the MIS data could build the needs and
responsibility to provide reliable and timely data collection. By using the same source of
information from the website, this could give the same output and monitoring of the data quality
itself.
62. Sanction for Firms. It was found that many OCs have not properly completed the MIS.
For example, data about BKM and disbursement of kelurahan grants. Data about disbursement of
kelurahan grants was only 50% are fulfilled in MIS as of March 31, 2008. Sanction for firms that
are absence or delay in providing data for MIS must be more strictly applied. The NMC must
review the performance of each firm in meeting the MIS and provide recommendations to
PMU/Satker by May 20, 2008.
63. Outsourcing for MIS, QS, and Complaint Handling Management. The role of
Management Information System (MIS) and Quick Status (QS) for monitoring of the overall
project had taken place, until its scope is broadened into PNPM with the larger number of
coverage areas and several types of different facilitations that need to be accommodated in the
current system. Unfortunately, the current system cannot accommodate these requirements
quickly. It was agreed during the team meeting that to anticipate PNPM 2008, the program will
16
use a new application for MIS, QS, as well as complaint handling management with systemic
grand design, customized and integrated system, through outsourcing. The new development of
new application should be parallel with data collection using the current ones, until the new
system is completely running, which will be in mid July 2008. The team requested PMU to send
the proposal to the Bank before May 9, 2008.
64. Spot check monitoring. Implementation of spot check monitoring is implemented in all
OCs, but is still problematic. In UPP3, the spot checks in NMC and OCs have been better
managed, more timely implemented, and reported. But in UPP2, implementation of spot checks
in UPP-PNPM kelurahans has been delayed, and both NMC and OCs are not be able to provide
good quality of report. In UPP2, it is unclear whether the minimum target sample that had to be
checked by OCs was achieved. Support of the firms for the implementation of spot checks is still
poor in many OCs, such as in OC Banten, West Java, OC 16, OC 1, and OC 5 of UPP2. The
NMC of UPP 2 and 3 must report the status of spot checks (Uji petik) by all OCs before May 15,
2008, for further cross-checking of the invoices.
65. UPP Project Website. Although still functioning, the function of the UPP project
website is as one of the project tools for dissemination of information is becoming less effective.
Some changes on the website make it is less attractive, not easily accessed and the information is
not fully updated. The usage of the UPP website by local stakeholders is also not optimal. The
team recommends the following action:
• Put the Project’ website address in all upcoming worldwide printed media and the usage
of the website in the community as well as local governments.
• Optimize the usage of the website in UPP stakeholders by using the website for
presentation to local governments, activate ‘forum’ to do consultations among
stakeholders, and upload all information on the website.
• PMT to closely monitor the implementation of internet access in all OCs’ office to
support the usage of the project’ website as well as MIS data.
• PMT to conduct some reviews and revisions in order to be a more user friendly and
informative website, before May 15, 2008. However, it must be noticed that any changes
on website must be approved by PMU and The Bank.
66. SMS Broadcasting. The system to disseminate the information to all UPP stakeholders
through SMS has been established since early January 2008. But it is not well functioning due to
the delay of PMT to deliver the SOP / mechanism to run the system. The database of all
stakeholders is ready, but it needs regular updates from KMPs, especially on BKM’ information.
The regular updates should come together with the MIS data each month, and the SMS
broadcasting should be completely functioning by April 30, 2008. At the beginning, the team
recommends to use sms broadcasting to inform the national SMS number for complaints. There
are many needs for these facilities considering the current problem emerging from the miscommunication
and flow
of
information.
Evaluation
67.
Evaluation Task Force. The team is pleased to learn that since March 2008, the PMU
has assigned a special task force to oversee the quality of evaluation, side by side with the Bank.
The Bank expects this task force to facilitate some agendas related to evaluation works. They are:
1) together with EC and advisory, hold regular meetings on evaluation results as feed-back for
project design and implementation and 2) involve universities in monitoring EC’s deliverables.
The Bank requests the task force to start working on these agendas by June 15, 2008.
17
68. Delay in EC-UPP AF mobilization. The team is disappointed with the delay in the
mobilization of evaluation consultant. In the initial procurement plan, these packages should have
been mobilized in April 2007, although the mobilization plan was revised to be in October 2007.
Up to today, the EC has not yet mobilized. This means the EC has experienced a delay for one
year. The team urges PMU to give serious attention to these packages and requires the EC to be
mobilized not later than May 15, 2008.
69. Evaluation Progress of EC (LSPK). The EC completed the final round of UPP2 Impact
Evaluation study last January, 2008. WB received the data on March 13, 2008. Overall the data
quality is good. It only needs user guidance, additional labels on the data, and some changes on
data format to make the data friendly use.
70. Unlike data performance above, the performance of analytical work by EC is poor.
Through series discussions attended by EC, GOI, and WB; EC team shows their difficulties to
translate the proposal into an analytical frame of report and to combine PAD requirement into the
analytical frame, and analyze the findings. The final report was also delayed. The Bank has not
received any outcome of the impact study yet.
71. The EC needs strong assistance for analytical work, if a good final report of UPP 2 is
required. GOI need to postpone the deadline of analytical work, without additional payment in
order to get an acceptable report. Also, GOI must alert the EC about the delay of delivery. So far,
the revision of final data and final report of UPP2 Impact Study has not been delivered.
Better Governance Action Plan (BGAP)
72. Complaint Handling Unit (PPM). As of March 31, 2008, the complaint handling unit
for both UPP 2 & 3 has recorded 14,093 complaints with 99.2% being resolved and less than 1%
is still in process. Not all records are problems; the complaints include queries, suggestions and
criticisms. The real complaints are about 10,8%, of which 96.2% of them have been resolved.
The team finds the usage of PPM both in OC and community level is not fully optimal. The
Complaints are still seen as negative perceptions, not as positive inputs and the awareness of the
community to the project. The team recommends the following actions to be implemented by
May 15, 2008: (1) Review the coaching material on PPM to the community. The material is not
only enable the community to solve the problems, but also to raise the issues in the community
regarding the implementation of the project, and (2) OC to conduct regular updates of PPM
application, to record all complaints and ensure all complaints are being followed up. Other
actions needed are : (1) PMT to review the PPM application and to minimize the ‘others’
category in order to sharpen the analysis of the complaint handling. It should be followed in
coaching material to all TA monev in OCs. This should be done by June 30, 2008; and (2) PMT
to have clearer mechanisms of the complaint handling and to be more responsive to all the
complaints received.
73. PPM adjustment toward Corruption Mapping Area. The BGAP of PNPM 2008 has
identified key areas which the risk corruption in UPP might be located. They are: Procurement of
Consultant, Project Management, and Community Participation. The existing PPM of UPP has
done very well in reducing the risk of corruption in the area of project management and
community participation. The potential risk of corruption in procurement of consultant has not yet
well articulated well in the category of complaint. Therefore, PMU needs to allow: (1) PPM team
to rearrange the complaint category by putting procurement of consultant as one of the main
feature of complaint handling (2) procurement committee to socialize publicly UPP complaint
18
mechanism together with shortlist announcement and socialize specifically to bidder through
RFP.
74. PPM Data. The team finds the data gap between funds returned and cases resolved. It
shows that 96.2% of cases are resolved but only about 60 % of funds have been returned. In line
with that, the team finds out in some reported cases, the cases are categorized as resolved, but in
fact the money has not yet been returned. The case is also not being handled by the police The
PPM guideline states that the cases are categorized as resolved if the fund misuse has returned or
the case is being handled by the police. The team urges PMT/PPM to send a letter to OCs to
revise PPM data recorded, based on the above understanding and ensure that the nominal of misused
funds are clearly
reported
by
May
15,2008.
75.
Misuse of Fund Reported. As of March 31, 2008, the PPM has recorded 324 issues of
fund misuse, of which 93.2 % are resolved. The reported case of misuse fund is mostly on the
petty corruption cases at the community level. The mode of corruption at the community level is
in the range of US$ 100 – US$ 1,000. The common type of reported misuse cases are: quality of
infrastructure is lower than the agreed specification; head of community group keeps the
installment from the members, the revolving fund manager falsifies the book keeping, the number
of training participants is less than stated in the agreed proposal, illegal taxing of social funds
given to the vulnerable groups, and inappropriate honorarium for BKM
76. Improvement of Corruption Monitoring. Up to now, the monitoring system of UPPPNPM
has been able to record the number
of fund-misused
cases and its amount. However,
the
value
is recorded
manually. Also, not all
misuse
funds
reported by
BPKP (State Auditor) are
recorded
in PPM record. To improve
the mechanism
of
corruption
monitoring
in
UPP-PNPM, by
May
15, 2008, the PMU is to ensure:
• The coordination meetings between PPM and BPKP representative are set up on a regular
basis. These meetings aim to update the findings and follow up reported cases.
• OC to conduct regular updates in PPM application, to record all findings on misuse fund
both resolved or still in process, and ensure all the findings are being followed up. There
should be sanction to OC who did not conduct such actions, as there are some indications
that they have no transparencies on this matter.
• Revision of the application, especially on category ‘Misuse of Funds’ by adding the
amount of fund misused, the amount of funds returned, and funds outstanding. This kind
of application can help the project to monitor the allegation of corruption issues.
77. Indicated Corruption Cases. During the supervision mission, from 40 visited villages /
urban wards, the team discovered two corruption cases. The first took place in Kayawu village,
North Sulawesi (OC 5 UPP 2). The bookkeeping indicates a missing revolving fund to the
amount of Rp 150,000. Furthermore, there was also an unidentified fund in bookkeeping to the
amount of Rp 7,650,000. The fund is claimed to have been disbursed to two self help groups
(KSM). However, the team could not find related supporting documents. The team urges OC 5 to
investigate this case and facilitate to resolve the case, before May 15, 2008.
78. Another case of corruption occurred in Jelimpo Village, West Kalimantan (OC 1 UPP 2).
The secretary of BKM embezzled kelurahan grant amounted Rp 60 million. This case occurred
because of some procedural violations They are: (i) city coordinator and facilitator were not
informed on fund withdrawal by BKM and secretariat; (ii) 14 days lag between fund withdrawal
from BKM accounts and fund handover to the community; (iii) PPM function is not well
understood by community; (iv) information boards are not well utilized. The mission
recommends several actions should be taken by OC, not later by May 15, 2008: (i) should report
19
this case to PPM; (ii) should investigate this case immediately and, based on findings, take
necessary action to rectify this situation; (iii) The cash should be returned to BKM and (iv) if the
allegations are founded, the culprit must be sanctioned. If they are members of BKM, they should
be removed prior to any further disbursement in this village.
Community Preparation
79. Community Development Plan (PJM Pronangkis). CDP had been prepared in all
kelurahans visited. In new kelurahans, CDPs have a three year life cycle. However, in some old
kelurahans, the review process of PJM Pronangkis only resulted in two years or one year time
horizon, depending on the remaining years of the PJM, such as found in Kab. Kendal, Central
Java. The quality of PJM Pronangkis varies. Most have addressed the MDGs agenda, but there
are also programs in the PJMs that are created based on proposal and priority of RTs, rather than
those programs that will have significant impact to kelurahans at large. As a result, the activities
implemented are minimum in scale. Some of PJM Pronangkis are still BLM oriented, such as
found in Kab. Kendal. Understanding of BKM on PJM Pronangkis still needs to be improved.
Bazaar of PJM Pronangkis in general has not been implemented. Most PJMs have been declared
as PJM Pronangkis of the respective kelurahans by the Head of Village, except in Kota Blitar,
East Java. The NMC is requested to check and ensure that such findings are followed-up OCs.
NMC has to report to PMU and copy to the Bank the status of follow-up on May 15, 2008.
80. BKM. BKMs in new kelurahans have been elected. In general the election process of
BKM members has followed the guidelines. However, the MIS shows that about 24% kelurahans
have not met the requested performance of minimum 30% adults participated in BKM election
process. On average more than 20% of BKM members elected are woman. In existing UPP
kelurahans, BKMs have been reelected, but the MIS also shows that about 50% kelurahans have
not met the target. The team requests clarification from NMC by May 15, 2008 and the next
tranche utilization of kelurahan grants in those kelurahans must be hold until this issue is settled.
NMC In general, the team found good quality of BKM members. They have good spirit and
motivation to help the poor in their kelurahan and are committed to working for the poor. The
team requested continued refreshing of basic UPP concepts such as volunteerism, universal
values, etc on a regular basis.
81. Transparency. Transparency in kelurahans is still an issue. Although all BKMs prepared
the financial management report, only 50% of them have published in five strategic places on a
monthly basis. This is an issue of understanding, supervision and control from the higher level of
management i.e. Askorkot, Korkot, TL and NMC. This publication is one out of the 11 indicators
to measure the performance of financial management in BKM. The NMC must establish a
strategy to enforce this requirement by May 9, 2008, starting with coaching of the facilitator on
this need. The training component of BKM also needs to address this matter effectively.
Kelurahan Grant Utilization
82. In generall utilization of the 1
st
tranche kelurahan grants has met the requirements as
mentioned in the guidelines and agreed in the previous Aide Memoire, such as the quality of
CDP, BKM, BKM’s secretary, and UPK. However, the team found that MIS has not been
completed to show that kelurahans have met some performance indicators like participation of
adults in BKM members election process, CDP, and funding disbursement. The team requests the
NMC to ensure that the disbursement of subsequent tranches must be based on completion of the
data in MIS, including data about realisation of the 1
st
tranche. It must be also ensured that the
financial and implementation report of activities have been completed.
20
83. Targeting is generally effective. This is also confirmed by various studies conducted.
However, in several instances, some beneficiaries are not those on the list of the poor from
poverty mapping (PS). This is because either a lack of understanding of BKM on utilization of PS
on selecting beneficiaries, or unreliability of PS data. The continuous coaching for BKMs must
include the improvement of BKM’s understanding of targeting and PS data.
In case there is a
requirement to add or withdraw names of poor from the list, it must follow the guidelines. It is
better to have an annual schedule of updating PS data as it will be easier for BKM to monitor the
results of the program.
Infrastructure
84. Performance. In general, infrastructure condition is rated moderately satisfactory.
Construction quality in most visited sample infrastructure has improved significantly. Water
supply, concrete roads, paved pathway/alley, drainages, public latrines, small bridges and box
culverts have been built with sufficient quality, meeting the MPW standard. The infrastructures
are built appropriately, based on the community development plan (PJM Pronangkis) and mostly
located in poor community areas. They are well utilized by the community and directly benefit
the poor. However, as small-scale community infrastructure, the constructions were built in
scattered locations, small volume with small investment or incompletely designed, such as roads
without drainage and public washing area without integrated waste water duct (red. SPAL). The
team recommends NMCs and OCs facilitate the community to formulate integrated infrastructure
plan as part of community development plan (PJM Pronangkis) in order to provide better
infrastructure access and improve settlement quality, particularly for the poor. This must be
applied for all future infrastructure. For this to happen the infrastructure specialist must
communicate this to all technical facilitators as soon as possible.
85. Revolving infrastructure funds. The team is pleased that there are innovative
mechanisms in Central Java to carry out revolving infrastructure funds, such as revolving home
loans for the poor and rotating infrastructure funds inter sub-villages. The team recommends
NMCs to collect the revolving infrastructure funds stories as best practices and regurlarly put
those onto web-site starting May 30, 2008. Also, PMT should formulate revolving infrastructure
funds as input for ND’s (Neighborhood Development) concept by May 16, 2008.
86. Need to simplify infrastructure documents. Although infrastructure documents,
including infrastructure bookkeeping have been provided by community in the field, the
community struggles with these. Community has to prepare documents, from infrastructure
proposal (including simple DED and budget), monitoring sheets, through final accountability
report as lengthy complicated format. Community does not understand well the concept behind
the format, such as safeguard form, community procurement form, and recording of community
contribution form. Additionally, the facilitator team has facilitated community in a short period.
The team urges PMT to simplify infrastructure documents that are made by community by May
9, 2008 and disseminate to all OCs no later than May 15, 2008. The OC has to ensure that the
simple documents will be coached to the facilitator team by June 15, 2008.
87. Community contribution. Community participation through community contribution in
infrastructure activities is pretty goodl. In total, about 30% has been contributed by the
community. Community contribution is mostly manpower, but also includes time, material, food,
cash, trees, and land. However, the contribution is not recorded well in MIS, both in the planning
and realization part. The team urges OCs to ensure the community contribution is recorded in
MIS accurately by May 20, 2008.
21
88. Certification of infrastructure. Certification of infrastructure has been carried out in
UPP 3, but not yet happened in UPP 2. The objective of certification is to ensure infrastructure
quality is suitable to MPW standards and the participatory process. The certification tools assess
construction process, physical quality by simple site-verification, community participation
(including women participation), transparency and accountability through bookkeeping.
Certification should be carried out by facilitators for finished infrastructure. Certification is a
requirement for community accountability final reports (LPJ = Laporan pertanggungjawaban).
NMC must ensure that that all finished infrastructure is certified.
89. Need improvement on facilitation process. Facilitation processes on infrastructure
activities by facilitator team, infrastructure askot (assistant city coordinator), and OC need to be
improved. The OC has to ensure overall facilitation process is closely followed, including quality
of infrastructure, community contribution, community procurement, community contract,
operation and maintenance group, safeguarding issues, price checking, random checking, and
socialization of infrastructure. The OC should have a special strategy for community that has
complicated infrastructure, long dispersed area, remote area or kelurahan with a large number of
constructions.
Revolving Loan Fund (RLF)
90. Overall Performance. Overall revolving loan fund performance is still weak. By the end
of February 2008 only about 1008 BKMs (49% of UPP2), 565 BKMs (23% of UPP 1) and 1251
BKMs (85% of UPP 3) had met good performance criteria of RLF. The weak performing areas of
UPP 2 are still concentrated in Kalimantan and Sulawesi (OC 1, OC 2, OC 3, OC 4, OC 5, 6,
7,10). The mission notes that facilitation of problematic RLF areas from consultant at all levels is
still not effective. Local government involvement and facilitator capacity on RLF recovery
program is also still very weak. Best practice information available on the website is not used for
capacity building of facilitators. A list of recommendations to improve RLF performance was
submitted to PMU in January 2008. However, the mission found this information was not
clarified in the field. The mission requests PMU to ensure that NMC take real action as
recommended, develop and implement strategy to recollect delinquent loans in problematic areas
and closely monitor progress of RLF performance.
91. Recovery of Fund. In several visited kelurahans, the mission notes that there is
willingness from communities to pay and that poor repayment rate is mostly due to weak
management system of UPK, unclear loan and saving policy applied, ineffective socialization of
RLF program and its scheme, and weak facilitation, control and monitoring from consultant.
NMC has to facilitate this condition by preparing RLF recovery guidance that include:
• Local government involvement from city until kelurahan level.
• Improvement of UPK management system that includes: loan policy that highlights the
importance of repayment records to receive the next loan, simple credit analysis, a clear
loan and saving scheme, transparency mechanism.
• Socialization of new UPK management system to communities, especially to
clients/target clients.
• Socialization of RLF recovery program through a simple campaign by well trained
volunteers
• Examples/alternative of technical RLF recovery strategy
• Availability of RLF recovery best practice.
22
These materials must be available on May 15, 2008, NMC has to ensure its delivery to
facilitators, and closely monitor the progress of RLF recovery.
92. Best Practice. There are more than 2.500 kelurahan in all UPP 1,2 and 3 that met good
performance criteria. There is a very large number of BKMs that can provide lessons, in order to
improve facilitator capacity for RLF facilitation. From September, 2007 till March 2008, only 8
best practices were published on the website and the mission notes that in some area this best
practice is not even delivered to the facilitator. The team requires NMC to prepare minimal five
best practice of RLF each month and make sure that this material is delivered to the facilitator.
93. Revolving loan fund restriction. It was agreed with the Government that allocation of
funds to RLF in all kelurahan of PNPM 2008 will be limited to those kelurahan that meet new
satisfactory performance criteria (LAR,PAR, CCr and ROI). NMC has to implement the new
indicators to all RLF kelurahan. The mission requested NMC to prepare mapping of all kelurahan
with new indicators by May 15, 2008. The mission also requested a deadline of May 15, 2008 to
prepare exit strategy guidance for non performing revolving funds which includes transfer of
revolving fund to infrastructure activities.
Social Funds
94. Several social programs identified from the MIS are: aid for widows and the elderly and
scholarships. The target group for social activities matches with the poor list (PS2). The team
observes improvement on understanding of consultants and facilitators on sustainability of social
activities. However, many of those are still in the form of charity activities, without putting it in
the larger context of sustainability poverty alleviation actions. Some facilitators and mostly
BKMs did not know about best practices of social activities. The community development
facilitator (CD Facilitator) is accountable to ensure that the future programs created by
communities are sustainable. Again the issue of disseminations and flow of information and
learning is not effective.
Progress at Local Government
95. Response of Local Government to PNPM. The team notices good response from local
governments to implement UPP PNPM. In many cases the local governments are ready for BOP
allocation for 2007/2008 implementation and co-sharing for the kelurahan grants. However, the
mechanism for channeling co-sharing is still unclear and in many cases Local Governments are
not well informed about day to day activities of UPP PNPM and the trend of PNPM in the future.
Regarding the hand over of UPP in the rural areas to KDP, most Local Governments are not
aware and have completely no idea on how the transfer will be going on and what will be
expected from them. Most local governments are not aware that UPP PNPM has very good web
based MIS, therefore none of them take over the management of web based MIS and use it as an
important source in the decision making process. The PMU needs to send an official letter
accompanied with a simple SOP to re-inform Local Governments about the mechanism and
timing when it is disbursed, so that Local Governments can better prepare co-sharing funds as
soon as possible. The team also request PMU to order all OCs to hand over the MIS management
and train them to operate and manage the MIS.
96. Handover of Villages from KDP and UPP. The PMU needs to organize the handover
between UPP and KDP by May 16, 2008. This is critical because the confusion on the ground is
serious. This handover must be handled carefully because the BKM in the KDP villages is still
exist and operating. Tim Pengendali must set up a road map on this handover.
23
V. Specific Findings of Projects
UPP 2 / AF
97. Performance of consultants. In general, performance of OC 1, 3, and 5 of UPP 2 is
weak. Utilization of kelurahan grant, capacity building for facilitator and facilitation process to
community have not been carried out and monitored well. In OC 5, as of February 2008 report,
repayment rate of revolving fund is low: just getting 13% for RR> 80% and 32% for RR>90%.
Some infrastructures have been built in incomplete design and private infrastructure has been
built without definite beneficiaries names in the proposal. Firms have less commitment to
support the activities in the field. New replacement facilitators were mobilized without sufficient
knowledge on UPP concept. Additionally, the OC has no clear strategy and planning to carry out
the activities. In OC 1 & 3, it has also been influenced by high turn over of facilitators. However,
in OC 5, women participate well. Women have participated actively in planning, implementing
and monitoring activities. The team recommends the PMU to give more attention to these OCs to
improve their performance.
UPP 3
98. Quality Control. The team finds that the overall quality control of NMC UPP 3 is in
place, mainly in the RLF, infrastructure, and monitoring areas. The team finds that the new
indicators of RLF, such as PAR, LAR, CCr, and ROI have been transmitted well up to facilitators
level, even is most OCs, the RLF map with new indicators has been produced. The same quality
also goes to the area of Infrastructure. All infrastructure materials are completely distributed to
the field and there are two ways communication between NMC and OCS. The monitoring is also
under control. However, NMC should be more proactive and improve its control in capacity
building area.
99. Turnover of Facilitators. The team finds out that the turnover of the facilitators is high
in some OCs in UPP 3, such as OC 11 and 13. The reasons are: special problematic issues (such
as in Kab Tanggamus OC 11, involving 25 facilitators), resigning with or without notice, and also
moving to other areas as the opening of PNPM facilitators recruitment. The turn-over caused
major problems, as the OCs should recruit new facilitators in the middle of project cycles, and
most of them are working without basic training. It is because there is no additional budget to
conduct basic trainings for new facilitators, neither in Satker nor management. To eliminate the
problems, the team requires OC to provide basic training to new facilitators, and there should be
handover of the task to the facilitators’ team. A nation-wide strategy must be adopted as
mentioned in paragraph 53.
100. Local Government of East Kalimantan. From several supervisions, the team observes
that local government of East Kalimantan has a great potential to work with. The team was
informed that Bontang LG provides one of their officer to accompany a facilitator team and
Samarinda LG intends to finance a study tour of BKMs in its area. However, the team was also
informed in the previous supervision, that some chances to work with LG were missed by OCs.
The NMC and OC should give more attention to build the relationship between UPP and LG of
East Kalimantan. The success story of this collaboration can be developed as a model in the
future for entire UPP stakeholders.
24
VI. Poverty Alleviation Partnership Grant (PAPG)
101. Progress. In principle no new kota/kabupatens have been selected from the last mission
in September 2007. The participating kota/kabupatens of PAPG is now 42. In total about U$ 13
Million has been disbursed to these 42 kota/kabupatens. The Bank has continued to hold the
approval of new kota/kabupatens as the last mission found un-satisfactory performance of PAPG.
102. Performance of PAPG. Overall, the implementation of PAPG is still moderately
unsatisfactory. The team noticed some follow-up issues mentioned in the previous Aide
Memoire such as coaching for facilitators, PAPG task force and MIS. Also, the enthusiasm of the
local government is obviously very encouraging. However, the PMU control over PAPG
implementation remains weak. The team was extremely concerned to find disbursement of PAPG
funds to 45 kota/kabupaten. The Bank is still looking for clarification for its source of financing.
This is an unacceptable practice and the Bank will not be willing to proceed with this program
until there is confirmation that such a case will not be repeated. Meanwhile, no replenishment of
these expenses should take place until the Bank receives full justifications for their inclusion and
whether they have met all conditions for participation in PAPG.
103. Cost of PAPG. It is clear that the proposal will exceed the allocated budget for PAPG.
The total allocation for PAPG from UPP2 and UPP3 is US$ 48.1 Million. For the selected 42
kota/kabupatens the allocation is US$ 31 Million (for three years). The proposed 46
kota/kabupatens will cost about another US$ 30 Million. This has not yet taken into account the
opportunities for kota/kabupatens in Sumatera and the Eastern part of Indonesia to participate in
PAPG. There is a proposal from the Government to re-allocate some of the Kelurahan grant funds
to PAPG. In principle, the Bank believes that strengthening the PAPG program will add to the
likeliness of sustainability, and thus would support the idea. However, this is only possible if
PAPG performs satisfactorily i.e: (a) MIS is complete and accurate, (b) LG provides funds for
coaching and guidelines, (c) PAPG task force is formed consisting of 30% women, (d) BKMs
involved in PAPG are “empowered BKM” (BKM berdaya) and they are audited, (e) PAPG
activities are selected from Kelurahan CDP and Kota/Kabupaten Plan for Poverty Alleviation (f)
Proposals and report of PAKEM consisting of components funded by PAPG, APBD, as well as
community contribution, and audited by an auditor independent before proceeding to the
subsequent PAPG funds, (g) Carry out Inter-kelurahan activities, (h) Co-sharing APBD and
community contribution equal to 50% of total cost and can be proven, (i) certification of quality
infrastructure funded by PAPG as well as APBD, and (j) POKJA prepare annual reports including
best practices
104. Best Practice of PAPG. Implementation of PAPG in Kabupaten Kendal should be
considered as best practice that serves as the benchmark for other kota/kabupatens. Partnership
between stakeholders at kota/kabupatens, as well as between BKMs and Dinases, were
materialized in form of Pokja PAKET (PAPG task force at kota/kabupaten level) as well as
PAKEM at kelurahan level (partnership committee). The team found high spirits and dedication
of PAPG task force. They were able to make the local government channel their co-sharing for
PAPG through block grants to PAKEM’s account. This resulted in good collaboration between
BKM and Dinas in PAKEM during planning, implementation, and reporting the activities.
Furthermore, this collaboration has resulted in bigger investment that allows PAKEM to build a
larger scale of infrastructure will have significant impact to the poor in kelurahans. Majority
infrastructure built (village roads) has good quality and has received a significant amount of
community contributions. It is clear that Local Government gain significant added value from the
efficiency triggered through partnership with BKM. In this case, further follow-up is to focus
25
more on inter-kelurahan activities. This is to involve more Dinases so that more Dinases can learn
and benefit from PAPG while maintaining the disbursement of APBD as block grants to
PAKEM’s account, and to only involve BKMs that are considered as having good performance.
The team also recommends similar APBD funding arrangement should be applied in other
selected kota/kabupatens starting FY. 2009.
105. General practices of PAPG. In contrast, the implementation of PAPG in Kota Bogor
and Kota Tomohon was still similar to those findings mentioned in the previous aide memoire
whereby PAPG in kota/kabupaten was proposed after selected kota/kabupaten were in process or
already fixed the program and budget allocated for kelurahans. Thus the idea of PAPG creating
other collaborative activities in kelurahans did materialize. PAKEM is dominated by BKM
members that only manages and responsible for activities funded by PAPG and not for APBD’s
part. In most cases, the quality of infrastructures funded by PAPG funds is better than those
funded by APBD at comparable cost. The team was concerned that no documents were available
to prove that Local Government have fully realized their commitment. Even in Kota Bogor, there
is a case whereby BKM did not understand about PAKEM and could not show the infrastructure
that had been built by their counterpart. In another case, the team found a beneficiary of house
rehabilitation did not receive APBD funds as committed in the proposal. The team noticed that
this issue has not been properly followed-up since last mission. Therefore, the Executing Agency
needs to issue a letter that requests the Local Government to provide documents that can prove
the realization of APBD. This must be included in the final report of PAKEM (LPJ) that is to be
audited. The utilization of the subsequent funds of PAPG (second year or third year) must depend
on completion of this document.
106. PAPG Guidelines. There were different versions of guidelines used by different
Kota/Kabupaten visited. Some kota/kabupatens are still using the old guidelines, such as in
Kabupaten Kendal and Kabupaten Bogor. It shows that NMC has not been able to make sure that
the latest guidelines are available in the field. The mission urges the NMC to recheck and report
the status of guidelines distribution by May 9, 2008.
107. MIS of PAPG. The team noticed some improvements on monitoring of PAPG
implementation by NMC, such as through MIS, spot check or daily monitoring. The report of
PAPG implementation during FY 2006 has also been completed. However, more improvements
are needed in terms of data completion and accuracy of the MIS. The team would like to receive a
monthly update on the status of PAPG MIS of 42 selected kota/kabupatens and this must become
a reference by NMC to recommend the next disbursement of funding to kota/kabupatens.
108. Community Awareness Indicator. The team reminds the Government that one indicator
of PAPG is awareness of community about PAPG, and so far community in general did not know
about PAPG. Transparency of PAPG funds was also weak, no information of PAPG was
published in kelurahans. The NMC must ensure that this will be properly followed up.
109. PAKEMs’ reports. The team found that not all kota/kabupaten have received the latest
format for PAKEM financial report. The team requested NMC to check distribution of financial
format, and also status of financial audit on PAKEM’s and POKJA’s report.
110. Lessons Learned of PAPG. The team noticed a few lessons learned of PAPG and
replication have been published in the UPP website but still less than it was expected. The team
was concerned with slow initiative of OCs to follow-up this, even though this was agreed in the
previous aide memoire. The team requested PMU to pay attention on this and ensure that at least
26
one biweekly article be sent by OCs to be published on the website and disseminated to Pokja and
PAKEM.
VII . Advanced Program
111. ND (Neighborhood Development), GOI is now preparing about 20 locations for new
development namely ND (Neighborhood Development), The Bank issued a no objection letter on
April 4, 2008 for the guidelines with some revisions and requests PMU to send the final version
to the Bank. The team requests PMU to send a list of prospective locations to the Bank for the no
objection letter before it can be implemented.
112. Linkage with other similar programs. MPW is currently also embarking similar
neighborhood development programmes (CSP) in more than 200 villages/kelurahans in Aceh and
Yogjakarta. Close collaboration must take place between these two teams and share their learning
between the programs.
27
VIII. Summary of Follow-Up Actions
Para Issue Follow-up Action Deadline Agency
II Urban Poverty Program
5
Extension of
Consultants
To complete time extension of the current
consultants’ contracts for the period of June-August
2008
PMU to ensure that the firms inform about this
extension to their personnel
III. PROJECTS PROGRESS SUMMARY
9
PAPG
The DG of Human Settlements will send a letter to
the Bank clarifying the disbursement of PAPG funds
May 9,
2008
IV. COMMON PROGRAM ISSUES
12
Readiness of
Provincial DIPA
To complete the DIPA revision
13
DG Circulation
Letter for FY
2008
14
Local
Government Cosharing
provision
15
Cost-sharing
Arrangements
16
Program
Management
17
Team
Consolidation
18
Satker (Project
Manager)
The circulation letter is expected to be available Soon after
PNPM
Urban
2008
funds
effective
To ensure that these funds are made available and
report its status
To issue a clarification letter to all Provincial Satkers
and KPPN
• To strengthen PMU with additional dedicated
and proactive staff with good access to the
decision makers
• To strengthen contract management team by
competent staff.
To ensure:
• Weekly meeting between PMU/Satkers and
Team leaders of NMC. This has stopped in
several months resulting in significant
miscommunication. The meetings should be
revived
• Monthly meeting between PMU/Satker and the
Bank team on follow up of aide-memoires
• Quarterly meeting with all TLs of OCs and
national satkers.
• The effective use of Website for dissemination
of various messages and learning and two way
communication,. The forum is open
for free
exchange of views and capture various opinion
• SMS broadcasting for various critical
messages.
• Contract payment monitoring through website
• To conduct regular training and orientation for the
new satkers.
• Director of PBL with support from PMU and
NMCs will improve monitoring the work of
satkers, and offer help when a problem arises
May 16,
2008.
May 15,
2008
May 31,
2008
May 30,
2008
May 9,
2008.
May 15,
2008
May,
2008
May 15,
2008
Continue
19
Kota/Kabupaten
To have a clear strategy for managing these satkers May 30, PMU
PMU
PMU
PMU
PMU
PMU
PMU
Executing
Agency
DGHS
PMU
Satkers
TL PMT
/NMC
DGHS
28
Para Issue Follow-up Action Deadline Agency
Satker for FY
2008
and the satkers need to be appointed 2008
To inform the local government of the importance of
meeting this deadline of Satker’s appointment
i
20
SOP Satker
• The SOP for provincial and district Satker should
be completed
• To create SOP for national satker
21
Facilitator
To issue a letter to all Provincial Satker about
extension of facilitators until December 2008
22
Changes of
Facilitators
To send a letter to Provincial Satker that they should
not process payment of the new and old facilitators
until they have received the handover notes as
attachment to the payment request.
24
Tax Charge
To facilitate this issue to ensure that there will be no
25
Contract
Amendment for
NMCs and OCs
delay of salary payment of faskels/ascot/korkot
because of unclarity on tax payment
To submit to the Bank:
• the calculation of remaining contract value and
need assessment for the extension work
To submit to the Bank:
• draft contract amendment; and
• the TOR and draft contract of UPP3
26
Consultant Staff
Performance
Evaluation.
27
Firm
Performance
Evaluation
28
Contract
Monitoring
29
Payment of
Consultants
30
Consultant
Contract
Disclosure in the
OC, NMC, City
Coordinator
Offices
31
Pre-Checking
Firm Invoices
32
Post-Checking
Firm Invoices
May 30,
2008
May 15,
2008
May 30,
2008
May 15,
2008
May 15,
2008
May 30,
2008
April 28,
2008
May 16,
2008
To distribute and ensure application of the SOP by
NMCs and OCs for their staff evaluation
To (i) establish an objective evaluation system, with
an clear performance indicators, for measuring the
performance of firms; (ii) undertake quarterly
monitoring on the performance of firms; (iii) take
appropriate punitive action if the performance is not
satisfactory; (iv) utilize the record of firms consultant
as consideration for future selections. The system has
to be established and operational
To send reminder letter to provincial satkers who
have not fulfilled their duty to update the invoice of
individual consultants.
To send a reminder letter to the related firms May 15,
2008
To postpone the salary payment of TL OC and
NMC and city coordinators until there is
evidence that the contract has been disclosed.
To ensure the checking and verification by NMC
meets the standard
To ensure that this activity takes place and the report
is copied to the Bank
May 15,
2008
May 30,
2008
May 15,
2008
June,
2008
May 30,
2008
May 30,
2008
Tim
Pengendal
PMT
NMC
PMU
National
Satker
PMU
PMU
PMU
PMU
PMT
PMU
PMU
Satker
National
Satker
National
Satker
National
Satker
29
Para Issue Follow-up Action Deadline Agency
33
Firm Support to
OCs
To send letter to the firms, with a copy to the Bank,
clarifying this issue
35
Changes of Team
Leader
39
Interim Financial
Report
40
Facilitators
performance
To send a letter to the Bank clarifying the changes of
team leader of UPP 3
To submit the IFR within 45 days after the quarter
ends
To send a reminder letter to all level of consultants
that financial management performance indicators
results should be shared and discussed with BKM
and UPK and a copy of the form should be kept by
BKM and UPK
• To exercise agreed mechanisms in the SOP for
consultants who have poor performance
41
Financial
Management
Performance of
BKM/UPK
• To follow up findings in Landak
To strengthen UPK at old location and revolving
loan from additional financing should not be given to
problematic UPKs.
42
To ensure by the time UPK received the revolving
fund, they already received adequate
training/coaching regarding UPK financial records,
in accordance to SOP.
45
Environmental
Safeguards
To facilitate the KSMs in getting their water quality
tests and agreed that the laboratory costs can be
included in the BLM
46
• To produce and distribute socialization material
on deep ground water use.
47
Land
Acquisition/Resett
lement
48
Consolidated
Report
• To conduct regular water quality test twice a year
that funded by community contribution through
“iuran”. The result will be reported by facilitator
and flag them into their regular reporting.
• To provide appropriate technical assistance on
how to choose locations for either dug wells or
toilets.
• To ensure that ditches will be maintained
regularly (clear vegetation from shoulder so water
can flow into the drain/ditch) and ensure the top
edge of drain should be lower than the shoulder of
the road otherwise the water cannot flow into the
roadside drain.
• To ensure that facilitator get appropriate coaching
on environmental safeguard.
To meet with the local representative office of PT
KAI and seek their advice for the cases whereby
their land is used for the community infrastructure.
To distribute the revised standard format of the
report to all OCs of UPP-2 and UPP-3
To ensure that OCs fill the format in and upload the
information into the MIS
49
TKPK
To improve coordination and avoid problems in the
future, the members of TKPK should include PT
May 15,
2008
May 15,
2008
National
Satker
PMU
Continues PMU
May 15,
2008
May 15,
2008
May 15,
2008
May 15,
2008
May 15,
2008
May 15,
2008
May 15,
2008
May 9,
2008
May 27,
2008
May 15,
2008
NMC
PMU
PMU
PMU
OC 11
UPP 3
OC 11
UPP 3
OC 11
UPP 3
NMC
PMU
30
Para Issue Follow-up Action Deadline Agency
KAI and “Dinas Geologi and Pertambangan” or
other relevant agencies
Capacity Building
51
Fixed cost
To incorporate clear mechanism for fixed cost
52
Additional
training, financial
integration and
synchronization
53
Training for new
replacement
facilitators, TAs
and for
community at old
location
54
Coaching on
disbursement in the SOP and socialized to all related
Satkers and PPK
To develop training modules on household economy
and disaster management and distribute to all OCs
and develop mechanisms to synchronize all training
activities with project cycles
• To solve the financial problems for training with
OCs’ firm and Satkers and provide clear guidance
• To ensure that any new facilitators recruited for
replacement will receive basic training. This
should be part of overall training strategy.
“media warga”
To review their socialization strategies, develop step
by step action plans to intensify socialization at
community level, and submit them to NMC and
PMU, with a copy to the Bank
55
Capacity building
at city level
56
Capacity building
at national level
To develop a step by step action plan to improve the
quality of capacity building at city level catch up all
capacity building activities left behind schedule and
submit them to NMC and PMU, with copy to the
Bank
To formulate organization structure of capacity
building at national level through provincial level
57
Guidelines
To ensure that all existing technical guidelines will
be reviewed, simplified, and incorporaed with all
new improvement
Monitoring
58
Overall
To ensure that no parallel system is available beside
MIS
May 30,
2008
59
Glossary of MIS
Not to make any changes to the glossary without
approval from PMU and the Bank.
62
Sanction for
Firms
63
Outsourcing for
MIS, QS, and
Complaint
Handling
Management
64
Spot check
monitoring
65
UPP Project
Website
To review the performance of each firm in meeting
the MIS by, as their contract will be terminated by
May 30, 2008
To send the proposal to the Bank before April 30,
2008
To report the status of spot checks (Uji petik) by all
OCs for further cross-checking of the invoices.
• Put the Project’ website address in all
upcoming worldwide printed media and the
usage of the website in the community as well
as local governments.
• Optimize the usage of the website in UPP
stakeholders by using the website for
presentation to local governments, activate
‘forum’ to do consultations among
stakeholders, and upload all information on the
May 30,
2008
May 15,
2008
May 30,
2008
May 30,
2008
May 30,
2008
May 30,
2008
May 30,
2008
PMU
NMC
PMU
all OCs
all OCs
PMU
PMU
PMU
Continue PMT
May 20,
2008
May 9,
2008
May 15,
2008
May 15,
2008
Continue
NMC
PMU
UPP 3
PMT
31
Para Issue Follow-up Action Deadline Agency
website.
66
SMS
Broadcasting
Evaluation
67
Evaluation Task
• PMT to closely monitor the implementation of
internet access in all KMWs’ office to support
the usage of the project’ website as well as MIS
data.
• PMT to conduct some reviews and revisions in
order to be a more user friendly and
informative website, before April 30, 2008.
However, it must be noticed that any changes
on website must be approved by PMU and The
Bank.
To deliver the SOP / mechanism to run the system April 30,
2008
Force
• Together with EC and advisory, hold regular
68
Delay in EC-UPP
AF mobilization
69
Evaluation
Progress of EC
(LSPK)
meetings on evaluation results as feed-back for
project design and implementation and;
• Involve universities in monitoring EC’s
deliverables
To give serious attention to these packages and
requires the EC to be mobilized
To postpone the deadline of analytical work, without
additional payment in order to get an acceptable
report
alert the EC about the delay of delivery
Better Governance Action Plan (BGAP) Monitoring
72
Complaint
Handling Unit
(PPM).
73
PPM adjustment
toward
Corruption
Mapping Area
• To review the coaching material on PPM to the
community. The material is not only enable the
community to solve the problems, but also to
raise the issues in the community regarding the
implementation of the project.
• To conduct regular updates of PPM application,
to record all complaints and ensure all complaints
are being followed up.
• To review the PPM application and to minimize
the ‘others’ category in order to sharpen the
analysis of the complaint handling. It should be
followed in coaching material to all TA Monev in
KMWs.
• To have clearer mechanisms of the complaint
handling and to be more responsive to all the
complaints received.
To allow: (1) PPM team to rearrange the complaint
category by putting procurement of consultant as one
of the main feature of complaint handling (2)
procurement committee to socialize publicly UPP
complaint mechanism together with shortlist
announcement and socialize specifically to bidder
through RFP.
74
PPM Data
To send a letter to OCs to revise PPM data recorded,
based on the above understanding and ensure that the
nominal of mis-used funds are clearly reported by
May 15,
2008
May 15,
2008
June 15,
2008
May 15,
2008
June 15,
2008
May 15
2008
May 15,
2008
June 30,
2008
For
PNPM
Urban
2008
May 15,
2008
May 15,
2008
,
PMT
Evaluatio
n task
force
PMU /
National
Satkers
PMU /
National
Satkers
PMT
OC
PMU
PMT/PP
M
32
Para Issue Follow-up Action Deadline Agency
76
Improvement of
Corruption
Monitoring.
77
Indicated
Corruption Cases
• To conduct coordination meetings between
PPM and BPKP representative are set up on a
regular basis.
• To conduct regular updates in PPM application,
to record all findings on misuse fund both
resolved or still in process, and ensure all the
findings are being followed up.
• Revision of the application, especially on
category ‘Misuse of Funds’ by adding the
amount of fund misused, the amount of funds
returned, and funds outstanding. This kind of
application can help the project to monitor the
allegation of corruption issues
To investigate this case and facilitate to resolve the
case
78
• To report this case to PPM;
79
CDP (PJM
Pronangkis)
• To investigate this case immediately and, based
on findings, take necessary action to rectify this
situation;
• To return cash to BKM
• If the allegations are founded, the culprit must be
sanctioned. If they are members of BKM, they
should be removed prior to any further
disbursement in this village
To check and ensure that all findings on CDP are
properly followed-up by OCs. The status of followup
is to be
reported
to PMU and
the
Bank
80
BKM
• To clarify the status of BKM election and to hold
the disbursement of kelurahan grants until this
issue is settled
• To continue refreshing of basic UPP concepts
such as volunteerism, universal values, etc
81
Transparency
To establish a strategy to enforce this requirement,
starting with coaching of the facilitator on this need.
The training component of BKM also needs to
address this matter effectively
82
Utilization of
kelurahan grants
To ensure that the disbursement of subsequent
tranches must be based on completion of the data in
MIS, including data about realization of the 1
tranche. It must be also ensured that the financial and
implementation report of activities have been
completed.
83
Targeting
To recheck the effectiveness of PS data and BKM
have an annual schedule of updating PS data as it
will be easier for BKM to monitor the results of the
program. The status of follow-up is to be reported to
PMU and the Bank
Infrastructure
84
Performance
To facilitate the community to formulate integrated
infrastructure plan as part of community
development plan (PJM Pronangkis) in order to
provide better infrastructure access and improve
settlement quality, particularly for the poor.
st
May 15,
2008
May 15,
2008
May 15,
2008
May 15,
2008
May 15,
2008
On a
regular
basis
May 9,
2008
May 30,
2008
May 30,
2008
May 30,
2008
PMU
OC
OC 5 of
UPP 2
OC 1 of
UPP 2
NMC
OCs
NMC
NMC/
OCs
OCs
NMCs
and OCs
33
Para Issue Follow-up Action Deadline Agency
85
Revolving
infrastructure
funds
To collect the revolving infrastructure funds stories
as best practices and regurlarly put those onto website
To formulate revolving infrastructure funds as input
for ND’s (Neighborhood Development) concept
86
Need to simplify
infrastructure
documents
87
Community
contribution.
88
Certification of
infrastructure
89
Need
improvement on
facilitation
process
Revolving Loan Fund (RLF)
90
Overall
• To simplify infrastructure documents that are
made by community
• To disseminate to all OCs
• The OC has to ensure that the simple documents
will be coached to the facilitator team
To ensure the community contribution is recorded in
MIS accurately
To ensure that that all finished infrastructure is
certified
To have a special strategy for community that has
complicated infrastructure, long dispersed area,
remote area or kelurahan with a large number of
constructions.
Performance
To ensure that NMC take real action as
recommended, develop and implement strategy to
recollect delinquent loans in problematic areas and
closely monitor progress of RLF performance.
91
Recovery of Fund
To ensure these materials must be available and
nsure its delivery to facilitators, and closely monitor
the progress of RLF recovery.
92
Best Practice
To prepare minimal five best practice of RLF and
make sure that this material is delivered to the
facilitator.
93
Revolving loan
fund restriction
To prepare mapping of all kelurahans with new
indicators
94
Social Funds
To ensure that the future programs created by
communities are sustainable. The status of follow-up
is to be reported to PMU and the Bank
Local Government
95
Response of Local
Government to
PNPM
To send an official letter accompanied with a simple
SOP to re-inform Local Governments about the
mechanism and timing when it is disbursed, so that
Local Governments can better prepare co-sharing
funds
96
To organize the handover between UPP and KDP May 16,
200
V. Specific Findings of Projects
UPP 2 / AF
97
Performance of
consultants
To give more attention to OC 1, 3, and 5 of UPP 2 to
improve their performance. The status of follow-up
is to be reported to PMU and the Bank
UPP 3
98
Quality Control
To be more proactive and improve its control in
May 30,,
2008
May 30,,
2008
May 9,
2008
May 15,
2008
June 15,
2008.
May 20,
2008
May 20,
2008
May 30,
2008
May 15,
2008
May 15,
2008
Each
month
May 15,
2008
May 30,
2008
NMCs
PMT
PMT
NMC
OCs
OCs
NMC
NMC
PMU
NMC
NMC
NMC
CD
Facilitator
ASAP PMU
May 15,
2008
capacity building area. The status of follow-up is to
ASAP NMC
PMU
PMU
34
Para Issue Follow-up Action Deadline Agency
be reported to PMU and the Bank
99
Turnover of
Facilitators.
100
Local
Government of
East Kalimantan
VI. PAPG
102
Performance of
To provide basic training to new facilitators, and
there should be handover of the task to the
facilitators’ team. A nation-wide strategy must be
adopted as mentioned in paragraph 53. The status of
follow-up is to be reported to PMU and the Bank
To give more attention to build the relationship
between UPP and LG of East Kalimantan. The
success story of this collaboration can be developed
as a model in the future for entire UPP stakeholders.
The status of follow-up is to be reported to PMU and
the Bank
PAPG
To ensure that no replenishment of these expenses
should take place until the Bank receives full
justifications for their inclusion and whether they
have met all conditions for participation in PAPG
103
Cost of PAPG
To ensure PAPG performs satisfactorily i.e: (a) MIS
is complete and accurate, (b) LG provides funds for
coaching and guidelines, (c) PAPG task force is
formed consisting of 30% women, (d) BKMs
involved in PAPG are “empowered BKM” (BKM
berdaya) and they are audited, (e) PAPG activities
are selected from Kelurahan CDP and
Kota/Kabupaten Plan for Poverty Alleviation (f)
Proposals and report of PAKEM consisting of
components funded by PAPG, APBD, as well as
community contribution, and audited by an auditor
independent before proceeding to the subsequent
PAPG funds, (g) Carry out Inter-kelurahan activities,
(h) Co-sharing APBD and community contribution
equal to 50% of total cost and can be proven, (i)
certification of quality infrastructure funded by
PAPG as well as APBD, and (j) POKJA prepare
annual reports including best practices
104
Best practice of
PAPG
105
General practices
of PAPG
To involve more Dinases so that more Dinases can
learn and benefit from PAPG while maintaining the
disbursement of APBD as block grants to PAKEM’s
account, and to only involve BKMs that are
considered as having good performance. The status
of follow-up is to be reported to PMU and the Bank
To issue a letter that requests the Local Government
to provide documents that can prove the realization
of APBD. This must be included in the final report of
PAKEM (LPJ) that is to be audited. The utilization
of the subsequent funds of PAPG (second year or
third year) must depend on completion of this
document.
106
PAPG Guidelines
To recheck and report the status of the guidelines
distribution in the field
107
MIS of PAPG
To send monthly update on the status of PAPG MIS
of 42 selected kota/kabupatens and this must become
a reference to recommend the next disbursement of
funding to kota/kabupatens
May 30,
2008
May 15,
2008
May 15,
2008
May 30,
2008
May 15,
2008
May 15,
2008
May 9,
2008
May 20,
2008
OC
NMC
OC
PMT
NMC
PMU
Executing
Agency
NMC
NMC
35
Para Issue Follow-up Action Deadline Agency
108
Community
Awareness
Indicator
To improve community awareness on PAPG and
transparency of the funds. The status of follow-up is
to be reported to PMU and the Bank
109
PAKEMs’ reports
To check distribution of financial format, and also
status of financial audit on PAKEM’s and POKJA’s
report.
110
Lessons Learned
of PAPG
To pay attention on this and ensure that at least one
biweekly article be sent by OCs to be published on
the website and disseminated to Pokja and PAKEM.
May 15,
2008
May 15,
2008
May 15,
2008
NMC
NMC
NMC
36
No Issue Follow-up Action Deadline Agency
VII . Advanced Program
111
ND
(Neighborhood
Development)
112
Linkage with
other similar
programs
To send a list of prospective locations to the Bank for
the no objection letter before it could be implemented
To create collaboration with similar ND programs in
Aceh and Yogyakarta
May 30,
2008
May 15,
2008
PMU
PMU
37
Annex 1 - UPP Results Monitoring and Key Performance Indicators
Status Data of March 31, 2008
InstrumentINDICATORS
Achievement
UPP 3 Reguler
PNPM -
Existing Kel
PNPM - New Kel National
Year 4 / 2007 Year 5 / 2008
(7,273 Kel) (7,273 Kel)
1 30% of poor households in 7273 Kelurahans
receive benefits and improved services from
UPP -PMPM
30% 81.37% 45.11% 69.94% 71.12% MIS
(a) 20% of revolving fund recipients have
increased their income level
20% not yet due not yet due not yet due not yet due Survey
(b) Infrastructure built is 20% cheaper than
those built by government & meet the needs of
the community (in line with CDP) in 80%
(5,818) participating kelurahans
5,818 Kel not yet due not yet due not yet due not yet due Survey
(c)The provision of the grant assistance
continuous in 35% (2,545) of participating
kelurahans
2,545 Kel not yet due not yet due not yet due not yet due MIS, Survey
(d) 80% of beneficiaries are satisfied with
improved services
80% not yet due not yet due not yet due not yet due Survey
2 At least 70% (5,092) of the BKMs formed are
reprtesentatives, effective, and operate in a
participatory manner
5,092 Kel not yet due not yet due not yet due not yet due MIS, Survey
3 30% of local governments (78) provide their
own resources for project monitoring,
partnership, channeling program to support
78 not yet due not yet due not yet due not yet due MIS, Survey
4 Central government establishes a long term
financial framework for its poverty reducing
program
100% not yet due not yet due not yet due not yet due -
a (1) % of population that has participated in
community discussions during implementation
of UPP-PNPM
30% 30% 9.57% 8.50% 11.47% 9.90% MIS
(2) % of female and vulnarable groups
participating
30% 30% 38.05% 35.84% 42.65% 39.47% MIS
b Number of community cadres / volunteers per
Kelurahan
25 25 40 33 53 43 MIS
c % of the kelurahan population aware of the
project and its objectives
25% not yet due not yet due not yet due not yet due Survey
d (1) % of the adult population voting in BKM
elections at the neighborhood level
30% 30% 34.76% 23.23% 33.15% 29.26% MIS
2% 2% 2.19% - 1.81% 1.90% MIS
(2) % of the adult population voting in the final
(3) % of women elected as BKM members 20% 20% 22.37% 14.46% 28.22% 22.49% MIS
e (1) % of kelurahan with CDPs completed and
ratified
95% 95% 99.93% 59.83% 90.43% 81.05% MIS
(2) % of CDPs implemented 25% 12.35% 16.42% 0.45% 9.42% MIS
OUTCOME INDICATORS
INTERMEDIATE RESULTS INDICATORS
stage of BKM election
No
Annex 1 - UPP Results Monitoring and Key Performance Indicators
Status Data of March 31, 2008
No InstrumentINDICATORS
Achievement
UPP 3 Reguler
PNPM -
Existing Kel
PNPM - New Kel National
25% not yet due not yet due not yet due not yet due Survey
40% 64.29% 56.79% 23.13% 42.15% MIS
Year 4 / 2007 Year 5 / 2008
(7,273 Kel) (7,273 Kel)
(3) % of the kelurahan population aware of CDP
f % BKM forum formed as a percentage of
participating local governments
a (1) % of poor families benefiting from
infrastructure development
35% 65.26% 40.05% 66.69% 55.92% MIS
(2) % of infrastructure works that are evaluated
as high quality
70% not yet due not yet due not yet due not yet due Survey
b (1) % of poor families with access to revolving
fund
15% 29.83% 45.40% Not yet due 40.35% MIS
(2) % of female revolving fund recipients 30% 44.99% 47.63% Not yet due 47.00% MIS
2)
c % of BKMs with repayment rates over 90%
70%
78% 27%
Not yet due
33%
MIS
d (1) % of poor families receiving grants 10% to be completed to be completed to be completed to be completed MIS
(2) % of female grant recipients 30% to be completed to be completed to be completed to be completed MIS
e % of female in community groups (KSM) 30% 36.80% 35.34% 29.62% 35.70% MIS
10% not yet due not yet due not yet due not yet due MIS
f % of BKMs receiving financial assistance from
other agencies
a # of PAPG cities selected 30
---42
MIS
b % of local government staff aware of PAPG in
PAPG cities
30%
--not
yet due
Survey
c # of PAPG selection communities formed 30
---42
MIS
d # of PAPG sub projects completed per city 40
---33
MIS
e % of local governments co-financing in PAPG
25%
---46%
MIS
f % of poor among direct beneficiaries of
services provided under PAPG/percent poor in
city population
1.6
--not
yet due
Survey
30%
--not
yet due
Survey
100%
--not
yet due
-
g % of kelurahan population aware of PAPG in
PAPG cities
h Central government issues a policy paper for
long term poverty reduction
a % of targeted areas receiving technical support
90% 90% 99.93% 101.00% 98.00% 99.00% MIS
90% 90% 92.29% 91.40% N/A 91.85% MIS
40% Not yet due 60.65% Not yet due 60.65% MIS
Component Two
Component Three
Component Four
b % of Ocs providing timely, accurate data
through MIS
c % of BKMs with completed annual financial
audits
Note : Most activities are still ongoing in Kelurahans
ANNEX 2 : FINANCIAL MANAGEMENT
As part of Supervision Mission of the projects, FM team visited some BKM and UPK in several
provinces from 31 March to 9 April 2008.
The team focused on financial management at BKM and UPK level; and also used financial
records performance tools by facilitators and consultant firms. FM also reviewed FMR
submission and disbursement status of the projects.
The ratings given are based on the result of the supervision mission. Overall, the team has rated
the financial management in UPP2, Additional Financing, and UPP 3 as moderately satisfactory.
Interim Financial Report
The team noted that PMU has not submitted quarterly interim financial report (IFR/FMR) on
time. IFR for Q4 2007 for both projects were received on April 7 and 9, 2008 (about 7 weeks
delayed – due date was February 15, 2008). This issue has been raised in the last supervision
mission in August 2007, but yet the project submitted the reports after the due date. The team
reiterates the previous recommendation that PMU should submit the IFR within 45 days after the
quarter ends.
Backlog for UPP 2 reported in Q4 2007 IFR totalled Rp 2.49 billion or equivalent to
approximately USD277,500. This consists of PAPG transactions that have not yet been resolved
since December 2006 amounted to Rp 2.49 billion and consultant service transaction in
December 2007 amounted to Rp3.7 million.
Backlog for UPP 3 reported in Q4 2007 IFR totalled Rp 3.72 billion or equivalent to
approximately USD 403,669. This amount consists of Kelurahan grants (USD 11,909), PAPG
(USD 365,452) and consultant service (USD 25,308) transactions, aged varied from 5 months to
12 months.
The team recommends that the project should work closely with MoF to resolve this backlog. It is
expected that this balance will be settled before submission of the next FMR which is due on May
15, 2008. Otherwise, the amount should be refunded to the Bank.
Facilitators Performance
The team noted that in locations visited, field facilitators, consultants at city level and regional
oversight consultants have used financial management performance indicators to review and
monitor financial records of BKM secretariat and UPK. Summary of FM performance indicators
were compiled by consultants at city level to be submitted to regional oversight consultants
(OCs), which in turn reported these to national management consultant (NMC). Monthly report
usually submitted to NMC by OCs about 15 days after month ends. To ensure the quality of
facilitator assessment, random sampling by City coordinator assistant and FM TA of OCs should
be done on monthly basis.
In this mission, it is noted that random sampling has been conducted, although some BKM and
UPK still have not understood the purpose of such assessment done by consultants. In Banda
Aceh, during the visit no copy of performance evaluation form found in BKM and UPK, though
they confirmed visits done by TA. High turnover of facilitator that assisted BKM/UPK in
financial records is still noted, especially in Landak. This contributed to findings in
administration of BKM and UPK visited. A lot of findings also noted in old locations that
received Additional Financing. These locations need attention from the consultant to strengthen
(especially) UPK, since UPK have been established for sometime during implementation of UPP
1.1 and 1.2. The team recommended that for monthly review of financial records done by
facilitators, city level consultanst and OC, financial management performance indicators results
should be shared and discussed with BKM and UPK. A copy of the form should be kept by BKM
and UPK for their record, to ensure that they know which improvement need to be done. A
reminder letter from NMC to all levels of consultants on this issue should be sent by May 15,
2008
The team recommends that PMU exercises agreed mechanisms in the SOP for consultants who
have poor performance. It is expected findings in Landak have been completely followed up by
May 15, 2008
Financial Management Performance of BKM/UPK
Some improvements in financial records were noted in Banda Aceh area compared to previous
supervision mission. Regardless of high marks given by facilitators, in general, the team still
noted similar weaknesses in financial records especially in old location (More details about the
findings are available in Transactions Review section). In certain places, BKM and UPK did not
keep any copy of assessment form, due to lack of understanding regarding the performance
measurement or due to facilitators not giving any copy. It is expected by using this tool
consultants at all level will be able to map financial management problems and develop a
mechanism to resolve them. Consultants should be reminded that they also need to explain to
BKM and UPK regarding their marks and any improvement that they have to do to get higher
marks. The team recommends that the project should use the result of financial management
performance assessment to analyze the problem at all levels. Strengthening UPK should be done
especially at the old location since they are going to receive more funds for revolving loan from
Additional Financing. Unless there are some improvements in UPK financial management
performance, revolving loans from additional financing should not be given to problematic
UPKs.
Project External Audit
PMU has followed up findings of FY 2006 audit by BPKP for both projects and submitted the
follow up documents to BPKP by their letter dated 28 December 2007 (received by the Bank in
January 2008). The Bank has sent an acknowledgement letter to the PMU and advised that the
Bank has received the documents and requested BPKP to ensure that all findings have been
followed up properly.
During supervision mission, BPKP has commenced their audit on the projects for FY 2007. The
team reminds the project that audit report of FY 2007 should be submitted to the Bank by June
30, 2008.
Transaction Review
The team reviewed some sample of payment verification and documentation in BKM and UPK
levels. In general, the team found that BKM and UPK have adequate internal control systems,
except in Banda Aceh where the team found that BKM secretariat was also responsible for UPK
records and received payment from KSMs (no segregation of duty) and repayment received from
KSMs was not deposited to bank account. Weaknesses noted in transaction evidence such as
incomplete recipient signatures, inadequate supporting documents in KSM accountability reports,
incorrect classification of fixed assets, fixed assets register have not been prepared, incorrect
timing of records, delay of transactions record and reporting (mostly delay by or less than one
month) and photocopied receipts found in certain BKMs and UPKs. Financial documents were
available, maintained in the BKM/UPK offices except for findings noted below.
Findings in old locations (UPP 1) that now received Additional Financing showed weaknesses
within the project that needs to be improved. This needs immediate attention before block grant
for revolving fund disbursed to UPK. At present, the community has just received tranche 1 of
grant (no revolving fund yet) and disbursed to new BKM. It is expected that by the time UPK
received the revolving fund, they already receive adequate training/coaching regarding UPK
financial records, in accordance to SOP.
The team recommends the project to conduct refreshing training/coaching to field facilitator in
regards to having good financial management system in place, especially for old locations that
received additional financing.
A summary of the findings from the sample shows in the table 1.
Table 1
Transactions review findings
Kelurahan/Kota Loan Finding Notes
Sinei/Sragen UPP 2/Additional
Desa
Bandung/Sragen
Plumbungan/Sra
gen
Financing UPP 2
- Cash on hand totaling to Rp 17.76 million as of 31 Mach 08
Additional
Financing UPP 2
for about a week, due to bad planning
- Standardized form of Bukti Kas Masuk and Kas Keluar as
per SOP has not been used (No signature of the BKM
coordinator)
- Cash opname procedures conducted by facilitator have not
yet been documented as required by SOP
- Cash opname procedures conducted by facilitator have not
yet been documented as required by SOP
- Revolving loan has not been distributed to KSMs
UPP 2 - Bank Book and Saving Book has not been updated since
April 2007
- Standardized form of Bukti Kas Masuk and Kas Keluar as
per SOP has not been used (No signature of the BKM
coordinator)
- Transactions recorded were not supported with adequate
supporting documents (Allowances in Feb and March to
monthly meeting participants and expenses for BKM yearly
annual meeting totaling Rp 2.36 million)
- BKM did not plan their fund well, causing them to borrow
money from a third party to finance their BOP
Perumnas Way
Kandis/Bandar
UPP 3/Additional
Financing UPP 2
- Cash opname conducted has not been documented
- New facilitator has not yet received the basic coaching
Kelurahan/Kota Loan Finding Notes
Lampung - BKM did not plan their fund well, causing them to borrow
Kupang
Raya/Bandar
Lampung
Kelapa
Tiga/Bandar
Lampung
money from a third party to finance their BOP
- Revolving loan has not been distributed to KSMs
UPP 3 - Delay in recording of Books as the position of BKM
Secretary was vacant for few weeks in February 2008
- Standardised form of Bukti Kas Masuk and Kas Keluar as
per SOP has not been used (No signature of the BKM
coordinator)
- New BKM has not received the basic coaching
- Cash opname conducted has not been documented
UPP 3 - Cash opname conducted has not been documented
- Incorrect calculation of Repayment Rate in February 2008
- UPK still needs further coaching (encountered difficulties in
differentiating between realized and real balance, incorrect
classification of the timing for the bad debts)
- UPK cash on hand as of 3 April 08 was Rp 2.24 million
Hilir
Kantor/Landak
UPP2/Additional
Financing
Engkadu/
Landak
Amboyo Selatan/
Landak
Angan
Tembawang/Lan
dak
Tanjung
Hulu/Pontianak
Dalam
Bugis/Pontianak
Parit
Mayor/Pontianak
Teluk Lerong
Ulu/Samarinda
UPP2/Additional
Financing
Additional
Financing
UPP2/Additional
Financing
UPP2/Additional
Financing
UPP2/Additional
Financing
UPP2/Additional
Financing
- Financial report was prepared by one of BKM member not
by BKM secretary or UPK
- Delay in record keeping
- Delay in financial report of social activities
- Inadequate supporting documents for some transactions
- Financial report was not published on information board
- PAPG report was not available because the bank account of
PAPG is not at community level but at local government
level
- Delay in record keeping
- Delay in financial report of social activities
- Inadequate supporting documents for some transactions
- Financial report was not published on information board
- Financial report was not prepared by BKM secretary or
UPK
- Delay in record keeping
- Delay in financial report of social activities
- Inadequate supporting documents for some transactions
- Financial report was not published on information board
- Delay in record keeping
- Delay in financial report of social activities
- Financial report was not published on information board
- Financial report on information board was not updated
- Tranche 1 of additional financing was on hold because
financial review of previous BKM had not been finished
yet.
- Financial report was not published on information board
- Inadequate supporting documents for some transactions
- Financial report on information board was not updated
UPP3 - Delay in record keeping
- Delay in financial report of infrastructure and social
activities
Baqa/Samarinda UPP3 - Delay in record keeping (no complete financial report of
BKM and UPK for Jan, Feb & March 2008)
- Financial report was not published in information board
Kelurahan/Kota Loan Finding Notes
Blitar/Kota
Blitar
Additional
Financing UPP2
Sanan
Wetan/Kota
Blitar
Additional
Financing UPP2
- Some supporting documents for KSM report were
photocopied (not original receipts)
- Financial records were not updated
- Reference numbers in vouchers were not tied up to financial
records
- Facilitator did not give a copy of performance evaluation
form to BKM secretariat
Sentul/Kota
Blitar
Additional
Financing UPP2
Srengat/Kab.
Blitar
- Copy of performance evaluation forms from facilitator were
not filed properly by BKM secretariat
UPP2 - Financial records were not updated
- Incorrect entry in the financial records, transaction in
January 2008 was recorded as transaction in February 2008
- Bank statement was not up to date
- Interest rate for revolving loan was 1%
- Cash received has not yet been recorded in the incoming
cash record, although it was received about 7 days ago.
- UPK bank book was not prepared although UPK had
opened their own account
- Kartu pinjaman was not updated – although the transactions
had been taking place for about a year
- Revolving loan agreement was not completed with
signatures of BKM coordinator and copy of borrower’s ID
Desa
Jelegong/Kab.
Bandung
UPP 2 Additional
financing
- BKM Cash book has not been updated (Transactions in
March 2008 have not been recorded).
- Copy of performance evaluation was not available at BKM
- Delay in report submission by KSM, due to time limitation
and difficulties faced by KSM in filled in the forms.
- No follow up action has been done for independent audit
findings regarding revolving loan problem.
Desa Soreang/
Kab. Bandung
Additional
Financing (UPP
1.1)
Desa Pangauban/
Kab. Bandung
Additional
Financing (UPP
1.1)
- BKM handed fund to KSM without reviewing whether
previous term had been accounted for
- New loan agreement for rescheduled revolving loan was not
signed by BKM coordinator
- No hand-over of administration and financial records from
old BKM to new BKM, especially on Non Performing Loan
records
- No installment received from rescheduled revolving loan
since January 2008
- No target of BKM work plan on revolving loan prepared by
facilitator
- Performance evaluation reported by facilitator did not
reflect actual condition
- UPK has not opened their own bank account
- No handover of administration and financial records from
old BKM to new BKM, especially on Non Performing Loan
records
- No installment received from rescheduled revolving loan
since January 2008
- No target of BKM work plan on revolving loan prepared by
facilitator
- Performance evaluation reported by facilitator did not
reflect actual condition
- UPK has not opened their own bank account
- Only tranche I of BLM that has been implemented,
Kelurahan/Kota Loan Finding Notes
therefore this BKM was not recommended by OC to
received next tranche
- According to FY 2006 audit report, non performing loan
amounted to Rp155million (117 members)
Kelurahan
Muara Sari/Kab.
Bogor
Kel.Cikaret
/Kab. Bogor
Additional
Financing (UPP
1.2)
Additional
Financing (UPP
1.1)
- Accountability report for PAPG implementation for tranche
I was not completed with adequate supporting documents.
Reports still used old format and need to be verified
- From 10 people allocated to receive housing grant from
PAPG, only 4 people reported in accountability report
received the grant
- BKM did not know location of PAPG implementation
financed by APBD
- Only 50% of revolving loan recipients were community
identified by community self survey
- Accountability report for PAPG implementation for tranche
I was not completed with adequate supporting documents.
Reports still used old format and need to be verified
- Only 50% of revolving loan recipients were community
identified by community self survey
- Rescheduling has been done for non performing loan, but
repayment rate is still low
- Audit for FY 2007 has not been conducted yet
Desa.Kebumen/
Kab. Kendal
Additional
Financing
- Financial records were not complete, due to inactive BKM
secretariat and UPK
- Need special attention for housing grant in form of
revolving grant totaling Rp12.84 million with 1% interest
rate
- Performance evaluation for book keeping has not been done
by facilitator yet
- Performance evaluation done did not reflect the actual
condition
- A lot of receipts and payment vouchers were not signed by
BKM and recipients
- Filing has not been properly done
Sukaramai/Band
a Aceh
UPP3 - BKM and UPK use same bank account (specimen included
Beurawe/Banda
Aceh
BKM coordinator, BKM Secretariat and UPK)
- BKM did not prepare fixed assets register
- For social activity, accountability reports were not
completed with beneficiaries receipts/signatures
- Copy of financial management performance evaluation form
was not available at BKM and UPK
UPP3 - Copy of financial management performance evaluation form
was not available at BKM and UPK
- BKM did not prepare fixed assets register
- Weaknesses noted in KSM reports for infrastructure (no
receipts from supplier for material bought, incomplete
supporting documents for labor)
- Inadequate supporting documents for rehabilitation of BKM
secretariat office totaling Rp3 million – receipt signed by
UPL
- Amount of cash in hand could not be verified as BKM and
UPK is not available during the visit
- Sample of revolving loan agreement reviewed were not
completed with BKM coordinator signature
Kelurahan/Kota Loan Finding Notes
Ceurih/Banda
Aceh
UPP3 - Copy of financial management performance evaluation form
was not available at BKM and UPK
- No segregations of duty - BKM secretariat also responsible
for bookkeeping of UPK and held repayment money
received from KSMs (They advised that they will separate
this in the near future)
- Delay in financial records
- For social activity, accountability reports were not
completed with beneficiaries receipts/signatures
- In one of the monthly financial reports, fixed assets
purchased for the month were Rp1,278,000, but according
to cash book only Rp303,000 can be included as fixed
assets. Facilitator needs to review the records to ensure that
transactions classification is correct.
- UPK has not opened a bank account
- UPK cash in hand is above Rp1 million
- According to cash book, UPK cash in hand balance as of 31
March 2008 was Rp6,272,000, but based on cash opname
done during the team visit, the actual balance was
Rp6,077,000
- Financial records is incomplete (Balance sheets for UPK has
not been prepared)
ANNEX 3 : LIST OF KOTA/KABUPATENS AND KELURAHANS VISITED
UPP OC Kota/Kabupaten Kecamatan Kelurahan/Desa
Soreang Sauyuman
UPP 1 Propinsi Jawa Barat
UPP 1 Propinsi Jawa
Tengah
Kab.Bandung
Jelegong
Soreang
Suka Negara
Ketapang Pangauban
Muara Sari
Kota Bogor Bogor Selatan
Cikaret
Kab.Kendal
Rawo Sari Desa Gempol Sewu
Sukorejo Desa Kebumen
Kota Kendal Candiroto
Hilir Kantor
Engkadu
Amboyo Selatan
UPP 2 I Kab. Landak Ngabang
UPP 2 II Kota Pontianak Pontianak Timur
UPP 2 III Kab.Palangkaraya
UPP 2 V Kab Tomohon
UPP 2 XI Kab Sukabumi
Surade
UPP 2 XIV Kab.Sragen
UPP 2 XVI
Kota Blitar
Bukit Batu
Angan Tembawang
Tanjung Hulu
Dalam Bugis
Parit Mayor
Bukit Tunggal
Sei Gohong
Banturung
Jekan Raya Palangka
Walian Tomohon Selatan
Lahendong
Kakaskasen 3
Tomohon Utara
Kayawu
Cisaat Selajambe
Kedaleman
Sirnasari
Sragen Kel.Sine
Ngerampal Desa Bandung
Karang Malang Kel.Plumbung
Sanan Wetan Sanan Wetan
Kepanjen Kidul Sentul
Sukorejo Blitar
Kab.Blitar Srengat Srengat
Tanjung Senang Kel Perum Way Kandis
UPP 3 XI Bandar Lampung
Teluk Betung Utara Kel.Kupang Raya
Tanjung Karang Pusat Kel.Kelapa Tiga
Kec.Sungai Kujang Kel.Teluk Lerong
Kel Sungai Kelendang
UPP 3 XIII Kota Samarinda
UPP 3 XV Kota Ambon
Samarinda Seberang
Kel Baqa
Batu Merah
Rijali
Sirimau
Honipopu
Halong Teluk Ambon Baguala
Passo
Nusaniwe Waihaong
ANNEX 4 : LIST OF MISSION PARTICIPANTS
No UPP OC Kota/Kab Date Team Members & Institution
1
2
3
4
UPP 2 Jabar
UPP 2 Jabar
UPP 2 Jateng
UPP 2 1
KabBandung
Kab Bogor
Kab Kendal
Kab Landak
5 UPP 2 2 KotaPontianak
6 UPP 2 4 KotaPalangkaraya
7 UPP 2 5 KotaTomohon
31 Mar –1 Apr 08
1 - 2
April 08
3 - 4
April 08
31 Mar –
2 Apr 08
2 - 4
April 08
2 - 4
April 08
7 - 9
April 08
Bappenas Hedi M Idris
Ministry of Public Works Suksesno
Ministry of Home Affairs Bambang Wiratmo
World Bank
Evi Hermirasari
Djumadi Achmad
NMC Dikdik
Ministry of Public Works Suksesno
Ministry of Home Affairs Bambang Wiratmo
World Bank
Evi Hermirasari
Djumadi Achmad
NMC Irfan
Ministry of Public Works Amin Sapriyoga
Ministry of Home Affairs Adolfina Katemba
Ministry of Finance Else
World Bank
Evi Hermirasari
Djumadi Achmad
NMC Saraswati
Ministry of Public Works Arifin, Wisit
Ministry of Home Affairs
Palimbong
Pongtuluran
World Bank
NMC Irzal
Ministry of Public Works
Parwoto Sugianto
Lilis Suharti
Arifin Azis
Wisit BS
Irjen CK Sulastin
Ministry of Home Affairs Palimbong P
World Bank Lilis Suharti
NMC Irzal
Bappenas Karim
Ministry of Public Works
Ifiantara Nasution,
Krisna
Ministry of Home Affairs Rochim
Ministry of Finance Eko
World Bank Parwoto
NMC Catur Wahyudi
Bappenas Leroy S. Uguy
Ministry of Public Works Wisit Budi
Irjen CK Sulastin
Ministry of Home Affairs
Palimbong Pongtuluran
Ministry of Finance Dodi, Fajar, Fahmi
World Bank Kumala Sari Djumadi Achmad
NMC Iroh Rohayati
8 UPP 2 11 Kab 31 Mar –
Bappenas Karim
No UPP OC Kota/Kab Date Team Members & Institution
Ministry of Public Works Yekti Widodo
Sukabumi 2 Apr 08 9 UPP 2 14 Kab. Sragen 31 Mar –2 Apr 08
10 UPP 2 16 Kota Blitar 7 - 9
April 08 11 12 13
UPP 3 11
UPP 3 13
UPP 3 14
Bandar
Lampung
Kota Samarinda
Kota Ambon
2 - 4 April 08
7 - 9 April 08
7 - 9 April 08
Ministry of Home Affairs Adolfina Katemba
World Bank Yulia Herawati
NMC Firdaus
Ministry of Public Works Arif Widodo
Ministry of Home Affairs
World Bank
Yuli Safitri
Grace Ariesta
NMC Kusdarminto
Bappenas Novi Susanto
Ministry of Public Works Amir Sapriyoga
Ministry of Finance Lenny
World Bank
Evi Hermirasari
Christina I Donna
NMC Sutadi
Ministry of Public Works M Dradjat
Ministry of Home Affairs Haryo Sasongko
Ministry of Finance
Norma, Purwanto,
Bilson Sirait
World Bank
Yuli Safitri
Grace Ariesta
NMC Kartika
Ministry of Public Works Parmonangan
Irjen CK Moh. Rizal
Ministry of Finance Rizki
Ministry of Home Affairs Yusuf
World Bank
Yuli Safitri
Lilis Suharti
NMC Sujahri
Bappenas
Endah
Murniningtyas
Ministry of Public Works
Chandra
Situmorang
Ministry of Home Affairs Adolfina Katemba
World Bank George Soraya
NMC Tommy Rizki
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