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Completion Report

Project Number: 29456 Loan Number: 1583 November 2008

Indonesia: Rural Income Generation Project

CURRENCY EQUIVALENTS

Currency Unit – Rupiah

At Appraisal At Project Completion (14 October 1997) (30 June 2008)

Rp1.00 = $0.00028 $0.00011 $1.00 = Rp 3,520 Rp 9,234

ABBREVIATIONS

AAET – Agency for Agricultural Education and Training AAHRD – Agency for Agricultural Human Resources Development ADB – Asian Development Bank AO – account officer BAPPENAS – Badan Perencanaan Pembangunan Nasional (National

Development Planning Agency) BPS – Badan Pusat Statistik (Bureau of Statistics) BRI – Bank Rakyat Indonesia FEW – field extension worker GBP – group business plan IFAD – International Fund for Agricultural Development MIS – management information system M&E – monitoring and evaluation MOA – Ministry of Agriculture MOF – Ministry of Finance MTR – midterm review NAD – Nanggroe Aceh Darussalam province NGO nongovernment organization OCR – ordinary capital resources O&M operation and management P4K – Proyek Peningkatan Pendapatan Petani Kecil ((Income

Generating Project for Marginal Farmers and the Landless) PCR – project completion report PIU – project implementation unit PRA – participatory rural appraisal PSC – project steering committee RIGP – rural income generation project SDR – special drawing rights SHG – self-help group SUSENAS Survei Sosial Ekonomi Nasional (National Socioeconomic

Survey TOR – terms of reference TOT training of trainers UNOPS – United Nations Office of Project Services

NOTES (i) Until 2000, the fiscal year (FY) of the Government ended on 31 March. Since

2001, the fiscal year has been the same as the calendar year.

(ii) In this report, "$" refers to US dollars.

Vice President C. Lawrence Greenwood, Jr., Operations 2 Director General A. Thapan, Southeast Asia Department (SERD) Director U. Malik, Agriculture, Environment, and Natural Resources Division,

SERD Team leader M. Drilon, Natural Resources Economist, SERD Team member L. Enjaynes, Associate Operations Analyst, SERD

CONTENTS Page

BASIC DATA i

MAP vii

I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 1

A. Relevance of Design and Formulation 1 B. Project Outputs 2 C. Project Costs 4 D. Disbursements 4 E. Project Schedule 5 F. Implementation Arrangements 5 G. Conditions and Covenants 6 H. Consultant Recruitment and Procurement 6 I. Performance of Consultants, Contractors and Suppliers 7 J. Performance of the Borrower and the Executing Agency 8 K. Performance of the Asian Development Bank 9

III. EVALUATION OF PERFORMANCE 9 A. Relevance 9 B. Effectiveness in Achieving Outcome 10 C. Efficiency in Achieving Outcome and Outputs 11 D. Preliminary Assessment of Sustainability 12 E. Impact 12

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 14 A. Overall Assessment 14 B. Lessons Learned 14 C. Recommendations 15

APPENDIXES 1. Design and Monitoring Framework 17 2. Status of Physical Accomplishment of Project Outputs 40 3. SHG Formation by Classification 45 4. Credit Disbursement and Repayment, Original 12 Provinces 47 5. Amount of Grants Disbursed to SHGs, Tsunami-Affected Areas 53 6. Summary of Training Programs Conducted 54 7. Summary of Project Costs 58 8. Project Organizational Chart 63 9. Status of Compliance with Loan Covenants 64 10. Summary of Consulting Services 70 11. List of Equipment and Vehicles Procured 72 12. Financial and Economic Analyses 73 13 Replication of RIGP/P4K Methodology by District Governments 80 14 Number of SHGs by Type of Group Business as of December 2005 83 15 Number of SHGs That Were Merged as Associations or Cooperatives 84 as of December 2005 16 Project Overall Assessment 85

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BASIC DATA

A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agencies 6. Amount of Loan 7. Project Completion Report Number

INO 1583 and 8172 Rural Income Generation Ministry of Finance Agency for Agricultural Human Resource Development Bank Rakyat Indonesia US$49.281 million (ADB Loan) SDR15.403 million($20.283 million) (IFAD Loan) PCR: INO 1080

B. Loan Data 1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Approval – ADB Loan – IFAD Loan 4. Date of Loan Agreement – Between ADB & Borrower – Between IFAD & Borrower 5. Date of Cofinancing Agreement 6. Date of Loan Effectiveness – In ADB Loan Agreement – Actual – Number of Extensions – In IFAD Loan Agreement – Actual – Number of Extensions 7. Closing Date – In Loan Agreement (ADB Loan) – Actual – Number of Extensions – In Loan Agreement (IFAD Loan) – Actual – Number of Extensions

19 June 1997 10 July 1997 23 October 1997 24 October 1997 25 November 1997 21 January 1998 18 December 1997 21 January 1998 13 July 1999 18 March 1998 18 June 1998 2 21 April 1998 9 July 1998 1 30 September 2005 14 November 2008 1 30 September 2005 - 1

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8. Terms of Loan ADB Loan – Interest Rate – Maturity – Grace Period IFAD Loan (458-ID) – Interest Rate – Maturity – Grace Period IFAD Loan (675-ID) – Service Fee – Maturity – Grace Period 9. Terms of Relending – Interest Rate – Maturity – Grace Period – Second-Step Borrower

Pool-based variable lending rate for US$ 25 years 7 years SDR15.208 million ½ of the variable reference rate 2 years - SDR5.075 million 0.75% 30 years 1 year 20 years 5 years Bank Rakyat Indonesia

10. Disbursements

a. Dates

Initial Disbursement Final Disbursement Time Interval

Loan 1583 28 August 1998 17 May 2007 104.5 months Loan 8172 14 September 1998 28 August 2007 107.5 months Effective Date Original Closing Date Time Interval

Loan 1583 18 June 1998 30 September 2005 87.4 months Loan 8172 8 July 1998 30 September 2005 86.75 months b. Amount ($’000)

Loan 1583

Category

Original

Allocation

Last Revised

Allocation

Amount Cancelled

(Reallocated)a

Amount

Disbursed

Undisbursed

Balanceb 1 Microfinance Services 30,400 20,065 10,335 19,461 604 2 Equipment and Materials 2,000 570 1,430 553 17 3 Training and Studies 12,700 8,340 4,360 7,016 1,324 4A International Consultants 740 770 (30) 607 163 4B Local Consultants 1,660 650 1,010 528 122 5A Salaries and Wages 2,200 680 1,520 601 79 5B Operations and Maintenance 3,800 3,760 40 4,083 (323) 6 Vehicles 4,200 2,400 1,800 2,181 219 7 Interest During Construction 18,000 12,110 5,890 12,110 0

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8 Unallocated 2,900 508 2,392 0 508 9 Tsunami Assistance 0 2,950 (2,950) 2,141 809 Total 78,600 52,804 25,797 49,281 3,522 a There were three partial cancellations: $6,350,000 in 1998; $10,000,000 in 2000; $9,446,900 in 2004. b Cancelled in May 2008.

11. Local Costs (Financed) Loan 1583: - Amount $11.958 million - Percent of Local Costs 24.26% - Percent of Total Cost 40.1%

Loan 8172 (IFAD 458/679-ID) (SDR’000)

Category

Original

Allocation

Last Revised

Allocation

Amount Cancelled

(Reallocated)

Amount

Disbursed

Undisbursed

Balance 1 Microfinance Services 11,070 11,142 (72) 11,075 ( 67) 2 Equipment and Materials 400 200 200 122 78 3 Training and Studies 2,340 1,758 582 1,670 88 4A International Consultants 1,200 1,100 100 882 218 4B Local Consultants 270 2,350 (2,080) 408 1,942 5A Salaries and Wages 600 400 200 164 236 5B Operations and Maintenance 670 1,300 (630) 1,082 218 6 Unallocated 1,700 0 1,700 0 0 Total 18,250 18,250 0 15,403 2,847

Loan 8172 (IFAD 458/679-ID) ($’000)

Category

Original

Allocation

Last Revised

Allocation

Amount Cancelled

(Reallocated)

Amount

Disbursed

Undisbursed

Balance 1 Microfinance Services 15,113 14,497 616 14,329 168 2 Equipment and Materials 546 293 253 168 125 3 Training and Studies 3,180 2,488 692 2,346 142 4A International Consultants 1,638 1,481 157 1,129 352 4B Local Consultants 369 3,684 (3,315) 549 3,135 5A Salaries and Wages 819 607 212 227 380 5B Operations and Maintenance 915 1,888 (973) 1,535 353 6 Unallocated 2,320 0 2,320 0 0 Total 24,900 24,938 (38) 20,283 4,655

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Loan 8172 (IFAD 458/679-ID):

- Amount $19.154 million - Percent of Local Costs 28.68% - Percent of Total Cost 94.43% C. Project Data

1. Project Cost ($ million) Cost Appraisal Estimate Actual

Foreign Exchange Cost 28,900 18,990 Local Currency Cost 108,000 66,795 Total 136,900 85,785

2. Financing Plan ($ million) Cost Appraisal Estimate Actual Implementation Costs Borrower Financed 25,100 14,330 ADB Financed 60,600 37,171 IFAD Financed 24,900 20,283 BRI Financed 8,300 1,891 Subtotal 119,000 73,675 IDC Costs Borrower Financed 0 0 ADB Financed 18,000 12,110 IFAD Financed 0 0 BRI Financed 0 0 Subtotal 18,000 12,110

Total 136,900 85,785

ADB = Asian Development Bank, BRI = Bank Rakyat Indonesia, IFAD = International Fund for Agricultural Development, IDC = interest during construction.

3. Cost Breakdown by Project Component ($’000)

Component Appraisal Estimate Actual Self-Help Group Development 40,100 23,600 Microfinance Services 55,200 35,681 Institutionalization and Building Management Capacity 13,900 12,253 Contingencies 9,700 0 Interest During Construction 18,000 12,110 Tsunami Assistance 0 2,141 Total 136,900 85,785

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4. Project Schedule

Item Actual Consulting Services Contract with National Consultants (First) 12 Apr 1999 Contract with International Consultants 7 Oct 1999 Contract with National Consultants (Last) 28 Aug 2000 Equipment and Supplies First Procurement 4 Jan 1999 Last Procurement 27 Mar 2007 Vehicles First Procurement 12 Feb 1999 Last Procurement 12 Oct 2004 Other Milestones (1) First Release of Funds (Microfinance Services) 1 Nov 1998 (2) Loan Disbursement & Contract Award Suspension 16 Mar 2001 (3) Lifting of Loan Disbursement Suspension 21 Apr 2001 (4) Start of Government Decentralization Jan 2000 (5) Completion of Government Decentralization Dec 2000 (6) Reallocation of ADB Loan for Tsunami Assistance 11 Apr 2005 (7) First Extension of Loan Closing Date 11 Apr 2005 (8) Partial Loan Cancellations (ADB Loan) First 16 Jul 1998 Second 31 Oct 2008

Third 30 Jan 2004 Fourth 5 May 2008 (9) Final Cancellation of Undisbursed Balance 5 May 2008

5. Project Performance Report Ratings

Ratings Implementation Period

Development Objectives

Implementation Progress

From 1 January to 31 December 1998 S S From 1 January to 31 December 1999 S S From 1 January to 31 December 2000 S S From 1 January to 31 December 2001 S S From 1 January to 31 December 2002 S S From 1 January to 31 December 2003 S S From 1 January to 31 December 2004 S S From 1 January to 31 December 2005 S S From 1 January to 31 December 2006 S S

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D. Data on Asian Development Bank Missions

Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Membersa

Fact-Finding* 17 Mar–4 Apr 1997 3 57 a, d, e Appraisal* 19 Jun–10 Jul 1997 4 77 a, b, g, i Consultation 2–28 Sep 1997 2 4 a, g Inception 13–27 Apr 1998 4 60 a, c,h Special Loan Administration* 30 Jun–16 Jul 1998 1 16 a Review 1* 7–23 Apr 1999 2 34 a, h Review 2* 7–24 August 2000 2 16 a, h Mid-term* 6–22 Nov 2001 3 39 c, f, h Review 3 1–12 Apr 2002 1 12 a Review 4* 1–15 Dec 2003 4 49 a c, k, h Review 5 29 Nov–10 Dec 2004 2 24 a, h Review 6* 5–26 Jan 2005 1 22 a Review 7 18 Jan–2 Feb 2006 2 16 a, h Review 8 18–28 Jul 2006 1 11 a Project Completion Review *,b 22 May–3 Jun 2008 4 51 a, h, j, k

a a = economist, b = counsel, c = engineer, d = programs officer, e = credit specialist, f = project specialist, g = economist (social sectors) h = project analyst, i = finance specialist (staff consultant), j = economist (staff consultant), k = social development specialist (staff consultant).

b The Mission comprised Maria Lourdes Drilon, natural resources specialist and mission leader; Lorna Enjaynes, associate operations analyst; and staff consultants Corazon Aragon (economist/financial specialist) and Ma. Linnea Tanchuling, (social development specialist).

* with IFAD representative/s

I. PROJECT DESCRIPTION

1. On 25 November 1997, the Asian Development Bank (ADB) approved a $78.6 million loan to the Government of Indonesia from its ordinary capital resources (OCR) to finance the the Project.1 On 21 January 1998, the International Fund for Agricultural Development (IFAD) provided SDR18.25 million ($24.9 million) for the same Project. Both loans were administered by ADB, in accordance with a memorandum of agreement signed on 13 July 1999. The Project’s main objective was to develop sustainable and participatory systems to help about 800,000 poor families improve their livelihoods and well-being, become self-reliant, and lift themselves above the poverty line. This was to be achieved by forming and training self-help groups (SHGs), leading to the formulation of group business plans (GBPs). After approval, the business plans were to provide the basis for small loans. 2. To attain its objectives, the Project had three interlinked components, namely: (i) SHG development, (ii) microfinance services, and (iii) building and institutionalizing management capacity. The Project covered 126 districts in 12 provinces—West Java, Central Java, East Java, Bali, West Nusa Tenggara, Yogyakarta, Bengkulu, Riau, Lampung, South Sumatra, South Sulawesi, and South Kalimantan. In March and April 2005, ADB and IFAD approved the expansion of the Project’s geographical coverage to include six districts in two tsunami-affected provinces, Nanggroe Aceh Darussalam (NAD) and North Sumatra.2 The non-credit components in items (i) and (iii) were implemented by the Agency for Agricultural Human Resource Development (AAHRD) of the Ministry of Agriculture (MOA).3 The credit component in item (ii) was implemented by Bank Rakyat Indonesia (BRI).

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

3. The Project was relevant at appraisal and remains consistent with ADB’s strategic development objectives of generating employment opportunities, raising per capita incomes, improving living standards, and reducing the number of people living below the poverty line.4 The Project had the same objective of poverty reduction through the creation of new income-generating activities with the use of microfinance services. The Project’s basic philosophy—that people can be helped to rise from poverty through education and training that is supported by access to microfinance—reflects ADB’s emphasis on the key factor of human development in raising Indonesia’s productivity and overall economic efficiency. The Project remains relevant to the Government’s current programs and strategies, which aim to reduce poverty by creating income-generating projects through the use of microcredit.

1 The Project refers to the Rural Income Generation/P4K Phase III Project. P4K is the acronym of Proyek

Peningkatan Pendapatan Petani Kechil (Income Generating Project for Marginal Farmers and the Landless), a poverty reduction project financed by IFAD, United Nations Development Programme , and the Netherlands, on which ADB’s proposed project was based.

2 The earthquake measuring 9.0 magnitude of the Richter scale struck the western end of Sumatra on 26 December 2004. The epicenter was 155 miles southeast of the provincial capital of Banda Aceh and 200 miles west of Medan, Sumatra. This earthquake triggered a series of devastating tsunamis along the coasts of the Indian Ocean, killing more than 225,000 people in 11 countries and inundating coastal communities with waves up to 30 meters high. It was one of the deadliest natural disasters in history. Indonesia, Sri Lanka, India, and Thailand were hardest hit.

3 New name of Agency for Agricultural Agency and Training (AAET) after the government reorganization in 2000. 4 ADB. 1997. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to

Indonesia for the Rural Income Generation Project. Manila (RRP: INO 29456).

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4. Options for financial intermediation were carefully reviewed during project formulation and interviews conducted with several banks and other financial institutions, particularly in preparation of the feasibility study.5 Extensive discussions were held between BRI, the Ministry of Finance (MOF), AAHRD, and ADB to improve BRI’s procedures for appraising loan requests and delivering credit. The project design also gave special consideration to the needs of women borrowers and to measures that would enhance their participation. The Project’s relationship to other antipoverty projects and programs was also considered. During the selection of less-developed villages in the districts, various government agencies at the district level participated for the purpose of coordination. 5. The major weakness of the Project’s design framework was the failure to set baseline data for poverty incidence and mean household income in the SHGs in the 12 provinces. The resulting lack of quantitative targets at project appraisal for impact indicators like percentage of poverty reduction and changes in household incomes made it difficult to realistically assess whether the project goals and objectives were met. 6. During the implementation period, changes were made to enhance the relevance of the project design by (i) increasing the number of SHG members per group to support a more rapid accumulation of group savings and formation of a group common fund; (ii) conducting a validation and evaluation exercise in 2002 to determine the number of active SHGs benefiting from the Project, prune inactive SHGs without outstanding credit, and focus on the strengthening of the remaining groups instead of forming new ones; and (iii) adopting the use of the participatory rural appraisal (PRA) methodology in 2003 in targeting poor project beneficiaries. To help the Government respond to the tsunami disaster, the project area was expanded to include parts of the affected provinces of NAD and North Sumatra. B. Project Outputs

7. A project framework comparing the target outputs at the time of appraisal with actual achievements is shown in Appendix 1.

1. Self-Help Group Development Component

8. This SHG component aimed to strengthen targeting procedures to reach poor households and enhance the formation of beneficiaries into mutually compatible and relatively homogeneous social and income groups. This was achieved through an improved community selection procedure, rigorous application of a revised eligibility survey, and participatory group formation procedures. The Project formed 66,500 SHGs, including groups from the earlier P4K project in the original 12 provinces. The total number of SHGs formed accounted for 90% of the 74,000 target groups (Appendix 2). 9. As of December 2005, 58,118 SHGs had been formed since the validation exercise in 2002 (Appendix 3). Of this total, 44,945, or 77%, were active—including 814 in category A, or active; 12,369 in category B, or sufficient, and 31,762 in category C, or less active. Another 9,131, or 15.7%, were inactive. About 18,197 SHGs (31.3%) consisted wholly of women, 32,705 (56.3%) had mixed gender membership, while the remaining 7,216 (12.4%) consisted of men only. The total SHG membership was 646,681—255,709 men (39.54%) and 390,972 women

5 ADB. 1996. Technical Assistance to Indonesia for the Rural Income Generation Project. Manila. This technical

assistance, co-financed by ADB and the Food and Agriculture Organization Investment Center led to the initiating of a policy dialogue for the P4K.

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(60.46%). After the midterm review (MTR), each field extension worker (FEW) covered an average of 12 SHGs, compared with the target of 40 SHGS at project appraisal. With a lower FEW–SHG ratio, the FEWs were able to devote more time to providing skills development training to SHGs and helping them prepare group business plans. 10. Assessment of SHG financial activities showed that 23,557 SHGs (41%) had group savings but only 8,386 (14%) had utilized their savings, compared with the target of 90%. Only 13,962 SHGs (24%) had graduated, meaning that these groups either (i) have shown strong self-reliance or (ii) have already availed of six or more consecutive and increasing group loans from BRI (Appendix 3). 11. The Project met the target of forming and providing assistance to 552 SHGs in six districts in the two tsunami-affected provinces as of December 2006 (Appendix 2). Of this total, 373 SHGs (67.6%) were in NAD and 179 (32.4%) in North Sumatra. Only 183 SHGs (33.2%) were formed using the PRA approach (Appendix 3).

2. Component 12. This microfinance services component was envisaged to provide microfinance services to SHGs to mobilize their savings and improve their access to credit and complement other group activities supporting their livelihoods and microenterprises. As of December 2005, the Project facilitated the preparation of 161,529 GBPs in the original 12 provinces, against a target of 120,680, or an achievement of 133.8% (Appendix 2). The total credit received by the SHGs amounted to Rp1.326 trillion for 161,529 GBPs approved, against a target of Rp360 billion. The total loans outstanding amounted to Rp218.365 billion for 33,409 GBPs and total loan principal payments reached approximately Rp1.108 trillion (128,120 GBPs). Compared with the overall credit disbursed from the start of the Project, the total amount of credit arrears as of December 2005 was 5.24%, representing approximately 13% of the total approved GBPs (Appendix 4). As of March 2008, the total credit arrears rose to Rp89.71 billion (5.52%). Of this amount, BRI had written off bad debts of Rp59.60 billion. The remaining Rp30.11 billion is scheduled for write-off in 2009. 13. As of December 2006, the total grants disbursed to tsunami-affected areas, covering 552 SHGs in the four districts of Kota Bandah Aceh, Pidie, Aceh Barat, and Aceh Besar in Nanggroe Aceh Darussalam province and the two districts of Nias and Nias Selatan in North Sumatra, amounted to Rp18.526 billion (Appendix 5).

3. Building and Institutionalizing Management Capacity

14. The Project conducted courses for SHGs beginning in 1998 on group business planning, group business management, organization and management, participatory rapid appraisal, loan and savings mobilization, microenterprise development, entrepreneurship, and household management. Project personnel, such as the FEWS and FEW coordinators, were given basic and refresher training on P4K training and RIGP methodology, the PRA method in SHG formation, and strengthening the capacity of SHGs. Seven training of trainers (TOTs) sessions on microfinance institutions and on management information system (MIS) were also conducted for 250 participants (Appendix 6). The Project facilitated the conduct of one TOT session for a refresher course on RIGP methodology for 24 participants, as well as 13 TOT sessions on the formation of SHGs using the PRA methodology for 56 provincial and field project personnel. In addition, 149 BRI account officers (AOs) also underwent refresher training on the RIGP

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methodology. Gender awareness was included in the project design for the training of management and project staff specifically to focus on the needs of women. C. Project Costs

15. The total cost, including contingencies and interest during construction, was estimated at the equivalent of $136.9 million at appraisal. The estimated cost consisted of $28.9 million in foreign exchange cost, representing 21% of the total cost, and $108 million in local currency cost, representing the other 79%. The actual project cost was $85.785 million, or 63% of the appraised cost. The actual foreign exchange cost was $18.99 million, or 62% of the appraised cost. Appendix 7 compares appraised and actual project costs and financing plans. 16. The loans from both ADB and IFAD were used to finance the credit activities implemented by BRI and the non-credit activities implemented by AAHRD. The financing plan at appraisal consisted of an ADB loan of $78.6 million and an IFAD loan of SDR18.25 million, totaling an equivalent of $24.9 million, to finance 100% of the Project’s foreign exchange costs and 76% of the total costs. The remaining local currency requirements were to be provided by BRI and the Government. Of the actual funding, $69.564 million, or 81% of the total project cost, came from the ADB and IFAD loans, and $1.891 million, or 2%, came from BRI. The Government provided $14,330, or 17%. D. Disbursements

17. Disbursements under the ADB and IFAD loans began on 28 August 1998 and 11 September 1998, respectively, with initial advances of $2.0 million from ADB and $1.0 million from IFAD to the imprest fund account. Against this, payments for expenditures not exceeding $50,000 were drawn. The establishment of the imprest fund account helped AAHRD expedite payment of minor expenditures, since payments were made mainly through the imprest fund advances, although consulting services were paid directly by ADB. The fund was replenished and liquidated in accordance with ADB’s Loan Disbursement Handbook and arrangements acceptable to the ADB. The auditor's report indicates that adequate supporting documentation was maintained with regard to the use of funds under the imprest account. Few weaknesses were noted in the internal control and they were immediately addressed by the executing agency. 18. Disbursement of funds and approval of new contracts were suspended in March 2001 upon reported allegations of corruption by project officials.6 The suspension was temporarily lifted in March 2001 and disbursements resumed in April 2001. The case was closed and the suspension was permanently lifted in May 2002 after AAHRD clarified the issue and took actions satisfactory to ADB with regard to the irregularities. 19. The Project utilized $49.28 million of the total ADB loan after four progressive cancellations of $29.3 million from 1998 to May 2008.7 Hence, overall utilization of the ADB loan was only 63% of both the appraisal and actual costs. In January 2005, a loan reallocation of $2.95 million was made to support the tsunami victims in the provinces of NAD and North Sumatra. AAHRD has still an advance outstanding in the amount of US$5,986.31, and 6 The decision to suspend disbursements and award of new contracts was based on the admission of a consulting

firm on making payments to some project officials administering the Project. 7 Includes the final cancellation of $3.5 million from the ADB funds in May 2008. Earlier cancellations amounting to

$$25.797 million were due to savings resulting from the devaluation of the Rupiah since 1997 and the consequent reduction in local currency costs in US dollar terms.

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US$59,973.20 under Loan Nos. 1583-INO and IFAD Loan 458/675-ID (8172-INO) must be refunded before ADB can close the Loan Account. E. Project Schedule

20. The ADB and IFAD loan agreements became effective on 18 June 1998 and 9 July 1998, respectively, with a loan closing of 30 September 2005. In March 2005, following the December 2004 tsunami disaster, ADB approved the use of surplus loan proceeds for tsunami emergency assistance and the extension of the loan closing date to 31 December 2006. Likewise, in April 2005, IFAD extended the loan closing date to 30 June 2007 due to the inclusion of the tsunami-affected areas (para. 2). This allowed AAHRD to gradually phase out project activities and formulate and implement an exit strategy. Project activities in the original 12 provinces were completed on 31 December 2005. 21. On 16 February 2005, the Government, ADB, and IFAD agreed to expand credit assistance to cover the tsunami-affected areas in NAD and North Sumatra. However, the release of grants to SHGs was delayed in these provinces because of a government transition in 2005 to a unified budgetary system. The 2005 budget became accessible only in October 2005. F. Implementation Arrangements

22. As mentioned in para. 2, the executing agencies for the Project were the AAHRD and the BRI. AAHRD was mainly responsible for (i) field and management staff training; (ii) beneficiary selection; (iii) SHG formation and capacity building; and (iii) monitoring, development, implementation, and maintenance of the management information, evaluation, and impact assessment systems. BRI was in charge of providing microfinance services to SHGs and supporting graduated households and groups in availing of other credit facilities. A national project steering committee composed of representatives from AAHRD, BRI, and MOF, and chaired by the National Development Planning Agency (BAPPENAS), was established 3.5 years after project startup to provide overall supervision of the Project. Appendix 8 shows the organizational setup of the Project. 23. The overall responsibility for project management rested with the project management office based in Jakarta and the project implementation units (PIUs) based in the provinces. Implementation activities were situated at the districts and subdistricts. This arrangement created several problems in terms of administrative workload because each PIU had to cover a wide area, ranging from 4 to 24 districts. Decision making was delayed due to the large wide project coverage and planning tended to be top-down, which resulted in a relatively low sense of ownership among the project beneficiaries. 24. This weakness was compounded by the effects of laws implementing the Government’s decentralization and regional autonomy policy in mid-2000. Greater authority was given to the regions to determine their own needs and institutional structures. The most notable impact was the dissolution of the regional offices of the MOA, which prompted the shifting of the management responsibility of the Project to the provincial agricultural service. At the districts, most of the agricultural information and extension centers were also transformed. Because of these changes, there were movements of project staff, particularly in the districts. Many FEWs were transferred outside of the Project. This meant an expansion of the area coverage per remaining FEW and decreased the time each spent facilitating SHG activities. In 2001, with the exception of the central office in Jakarta, most of the project staff were spending only 30–40% of

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their time on the Project. After decentralization, AAHRD had limited influence over local governments. This resulted in difficulties exercising direct financial control and supervision over the FEWs at the districts. Moreover, BRI assigned only one AO to each district. The AOs were responsible at the same time for other BRI credit programs and services. The inadequate number and insufficient supervision of the FEWs and AOs were identified as the causes of the longer processing time for loan applications and the high number of arrears during the first three years of project implementation. 25. To address this matter, the MTR in 2002 recommended to AAHRD that it undertake the following measures: (i) assign domestic consultants at the districts; (ii) engage local non-government institutions (NGOs) and field liaison officers as AOs of BRI to sustain the SHGs and disseminate project information to local authorities; (iii) seek agreements from district governments to ensure that trained FEWs would not be moved out of the Project, (iv) devise an incentive structure for FEWs; (v) establish the provincial and district steering committees or revitalize the then existing forums on poverty alleviation as the steering committees to ensure integration of the Project with the overall provincial and district poverty reduction efforts and foster commitments to assume responsibility of local governments in sustaining the SHGs. At project completion, many of the provinces and districts had already established their steering committees but their authority and responsibilities varied considerably. 26. Overall, the measures adopted at the recommendation of the MTR and monitoring missions to address the issues on implementation arrangements enabled AAHRD and BRI to deliver their outputs satisfactorily. G. Conditions and Covenants

27. The conditions and covenants stipulated for the Project were realistic and relevant. The Government’s compliance with the loan covenants was satisfactory (Appendix 9). In particular, the compliance with the submission of the audited project accounts and the establishment of the PIUs at the central office, provinces, and districts were satisfactory. Major compliance difficulties arose in the delayed establishment of an operating project monitoring and evaluation (M&E) system and a management information system (MIS). This was due to the early termination of the international M&E consultants and the delayed establishment of the project steering committee at the central office. In addition, the periodic review of the onlending interest rate of subloans from BRI to SHGs was not carried out because of government concerns about the added financial burden of a possible onlending rate increase on the final beneficiaries. H. Consultant Recruitment and Procurement

28. The services of consultants were utilized in project management, MIS, M&E, microenterprise development, and project impact assessment, training of field staff and SHGs, and training approaches to poverty reduction and rural credit. The ADB-financed individual local consultants were selected and engaged by AAHRD in accordance with the provisions of the Guidelines on the Use of Consultants by the Asian Development Bank (April 1979, as amended from time to time) and procedures outlined in the Loan Agreement.8 The internationally recruited consultant financed from IFAD loan proceeds was selected by AAHRD and engaged in accordance with the Management Services Agreement entered into between AAHRD and the 8 A list of candidates, together with their qualifications and a draft contract, were furnished to ADB for approval

before the selection of consultants. After the contract was signed, ADB was furnished a copy of the evaluation of the candidates and a brief justification for the selection, together with three copies of the contract. Any substantial amendment of the contract was submitted to ADB for prior approval before its execution.

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United Nations Office for Project Services (UNOPS). NGOs were recruited through local competitive bidding procedure using two-envelope system. The volume of consultant recruitment created additional workload for AAHRD in terms of contracts administration, reporting, and monitoring and evaluation of consultants’ performance. 29. Only 78 person-months of international consulting services were utilized, compared with the appraisal estimate of 126 person-months (Appendix 10). This was due to the early termination of the services of the international consulting firm that provided the services of the MIS and M&E consultants. The services of these consultants were thus prematurely concluded, resulting in 34 person-months of unutilized budget under UNOPS, of which 18 person-months were used to engage an M&E specialist, empowerment specialist, and impact assessment specialist to fast-track the formulation and development of assessment and evaluation systems. 30. Out of 1,238 person-months of local consulting services allocated at appraisal, only 716 person-months were used. The utilization was also low because instead of hiring consultants for the position as business and credit specialists, majority of the provincial development managers working in local government offices assumed the responsibilities of business and credit specialists. Out of the remaining 622 person-months, 532 person-months were utilized for the district positions to adequately address the implications of the decentralization policies and improve assistance to SHGs. Appendix 10 shows a comparison of the appraised requirements for consulting services with actual utilization. 31. Twenty six NGOs were engaged in June 2003 on a short-term basis to assist in SHG capacity building in the original target provinces. However, the recruitment of NGOs to facilitate social empowerment and capacity building of tsunami-affected households in NAD and North Sumatra was cancelled due to the delayed availability of the 2005 budget. Moreover, given the number of assistance projects in the area funded by partner donors in coordination with other local NGOs, AAHRD had difficulty identifying suitable NGOs to implement the Project. To avoid further delays on the government proposal, the capacity-building and social support activities in these two provinces were carried out using existing administrative and delivery mechanisms, under the close supervision and support from AAHRD, reinforcing the administrative structures when needed. 32. Procurement of all equipment and vehicles was through limited international bidding, in accordance with the provisions of the Guidelines for Procurement under Asian Development Bank Loans (revised in January 1994, as amended from time to time). A summary of the equipment and vehicles procured is in Appendix 11. I. Performance of Consultants, Contractors, and Suppliers

33. The early termination of the contracts of the international consultants for MIS and M&E, compounded by the organizational concerns and limitations experienced by the executing agency, resulted in several project setbacks. Most notable was the delay in the development of the Project’s impact measurement system, MIS, and the project benefit monitoring and evaluation system. The delay resulted in difficulty monitoring the qualitative changes that resulted from the project interventions from 1999 to 2003. During the first 4 years of project implementation, the quantitative achievements related to the first component—the number of SHGs formed—and the second component—the number of loans disbursed, number of GDPs submitted and approved, and number of loans repaid—were largely monitored.

8

34. One problem identified during the MTR with regard to the design of the M&E system was the setting of targets at project start-up without a great deal of participation of the districts. This situation was rectified by conducting a new target-setting exercise aimed at the districts. 35. The MTR also noted that, in general, consulting services were utilized effectively since most of the actual activities in SHG capacity building and microfinance development were implemented at the district level. The performance of international and local consultants was assessed as less than satisfactory since the consultants either did not give importance to their terms of reference (TOR). Thus, the MTR recommended recruitment of a local consulting firm to be based at the district level, using local competitive bidding procedures acceptable to ADB and IFAD and in accordance with the loan agreements. 36. With the modifications made in the staffing of domestic and international consultants and the timely adjustments in project methodology, the performance of the new consultants hired by the Project was generally acceptable since most of the physical targets were accomplished satisfactorily and a majority of the district governments had sustained the Project after completion. The AAHRD was able to implement an improved project impact assessment design to include non-income indicators. It was undertaken in 2005. As of the project completion date, the MIS and M&E systems were operational in 126 districts. However, the economic and social empowerment and the income-generating capacity of the SHGs’ livelihood activities could have been optimized if a majority of the consultants had been deployed in the districts where most of the activities took place as soon as implementation began. 37. The performance of the contractors and suppliers was satisfactory. No major problems were experienced with the supply, delivery, or performance of any of the equipment, materials, or vehicles procured under the Project. J. Performance of the Borrower and the Executing Agencies

38. The overall performance of the executing agencies was satisfactory in achieving project targets, albeit with some delays during the initial years due to a host of factors, some of which were beyond their control. These factors included the transition from a centralized to regional autonomy and devolution of responsibilities to district governments, the inadequacy of trained field personnel to cover the wide project areas, and the early termination of the services of the international consultants, as discussed in para. 29. The executing agencies were able to make timely adjustments to adequately address these issues. In the case of project implementation in NAD and North Sumatra, the Government was quick in addressing the issue on NGOs, as discussed in para. 31. 39. When implementation began, the methodology was largely determined by the executing agencies, with little or no participation from the direct beneficiaries. But the PRA methodology introduced midstream enabled the executing agencies to develop skills in participatory strategies and bottom-up approaches in project planning and implementation. The AAHRD was able to strengthen its focus on SHG development and capacity building when it implemented the validation exercise in 2002, in response to the MTR recommendations explained in paras. 6 and 9. 40. BRI, on the other hand, was able to achieve 100% of its physical target in providing microfinance services. It was able to fully utilize the project credit line and used the repayment reflows for financing new loans. This indicates an efficient use of project funds whereby the allocation for credit had been revolved more than three times. From 1999 to 2005, 17% of the

9

58,118 SHGs were able to avail of loans at least three times from BRI under the Project’s credit facility (Appendix 2). At project completion, a memorandum of understanding between BRI and 27 district governments was signed under which the former would continue lending to SHGs until the end of 2007, utilizing the project repayments. A separate memorandum of understanding was also being finalized for 36 district governments. 41. Overall, the performance of the Government and the executing agencies is rated as satisfactory. K. Performance of the Asian Development Bank

42. ADB’s performance on project monitoring was satisfactory despite the frequent changes in ADB administration units. Project implementation was monitored through regular review missions and frequent consultations and briefings with MOF, MOA, and BRI. ADB staff spent adequate time reviewing physical progress and resolving implementation issues with AHHRD and BRI staff. The recommendations of review missions were implemented by the Government and proved effective in resolving implementation issues. ADB loan review missions continually tracked potential loan savings, which, after consultation with MOF, were cancelled, providing substantial savings to the executing agencies. ADB approved ADB- and IFAD-financed contracts and fund disbursements promptly. ADB and IFAD also showed flexibility and quick response in providing assistance to tsunami victims by promptly reallocating funds and revising the terms of the loan agreement with regard to the IFAD loan. Training opportunities on project implementation were also provided by ADB to MOF and the executing agencies. The trainees found these effective and timely. 43. As IFAD’s cooperating institution, ADB effectively implemented the IFAD loan according to the memorandum of agreement between ADB and IFAD. Likewise, IFAD released funds to MOF as soon as ADB approved the relevant withdrawal applications. However, towards the end of the Project, coordination between ADB and IFAD weakened, as demonstrated by IFAD’s delay in providing ADB with the revised Loan Agreement between IFAD and MOF. This resulted in ADB’s delay in processing withdrawal applications. Apparently, there was no continuity between the successive IFAD officers who handled the financial aspects of the loan. This has caused ADB and IFAD difficulties in the reconciliation of accounts, including the amount to be refunded by MOF to IFAD. While IFAD had finally confirmed ADB’s calculation, the administrative burden could have been avoided had there been a prompt sharing of information and documents with ADB and no change in the IFAD officer administering the IFAD loan. 44. Overall, the executing agency expressed satisfaction with the performance of ADB.

III. EVALUATION OF PERFORMANCE

A. Relevance

45. The Project is rated relevant during appraisal and at the time of completion in terms of its alignment with the Government’s strategies and programs aimed at reducing poverty through such efforts as the creation of income-generating projects through the use of microfinance9. With its objective of reducing poverty through the creation of new income-generating projects, the Project was also in line with ADB’s sectoral strategy for the agriculture sector in Indonesia at

9 Government of Indonesia. 1993/94–1998/9. Sixth Five-Year Development Plan or REPELITA VI; 2004–2009,

Medium-term Development Plan.

10

the time of appraisal and continued to conform to ADB strategies for poverty reduction at completion. 46. The Project was envisaged during appraisal as being different from others involving credit schemes because it would adopt participatory approaches and emphasize the provision of direct support to build and institutionalize the capacities of the poor to engage in sustainable livelihoods and attain self-reliance. However, during the first half of project implementation, SHGs were established based primarily on credit demand rather than on affinity and common interests of the members. As a result, many of these SHGs became inactive when they were no longer eligible to avail of a second loan after failing to repay their initial loans to BRI. To address this weakness, a moratorium in the formation of new SHGs was implemented while a validation exercise was conducted to determine the actual number of active SHGs. A considerable number of inactive SHGs were pruned from the Project. The PRA methodology adopted in 2003 was used to identify more appropriate poor household beneficiaries. The project focus was placed on improving the quality of the validated SHGs through the implementation of an empowerment plan. Membership in SHGs was also expanded to increase the members’ capital fund. Consultants were fielded in the districts themselves to supervise the socialization and mobilization work of FEWs and AOs and promptly address problems encountered during project implementation. With these measures, the performance of the executing agencies in achieving both the quantitative and qualitative targets improved significantly. Despite the shortcomings, the Government considers the Project one of the successful national projects using the participatory approach. B. Effectiveness in Achieving Outcome

47. The Project is assessed as effective in meeting most of its objectives and outcomes. The project framework called for the Project to enable participating households to achieve sustainable incomes above the poverty line and thereby reduce poverty in 12 provinces. However, performance targets after project completion could not be assessed due to lack of baseline data. An impact assessment survey was conducted by Bureau of Statistics (BPS) in 2002 without the benefit of a baseline data. In 2005, BPS conducted another survey to track the changes in the income and socioeconomic welfare of participating households for comparison against the 2002 midterm project survey results. The findings are presented in the project framework in Appendix 1. It is difficult to ascertain the extent to which the Project succeeded in contributing to poverty reduction because the original project framework did not clearly state targets relating to this goal—e.g., by how much poverty incidence was expected to be reduced and how many poor households would benefit. Nonetheless, the executing agencies’ reports and the BPS 2005 project completion survey (before loan extension) indicated the following:

(i) The Project directly benefited about 650,000 poor families or 3 million people—81% of 800,000 target poor families—through capacity building, savings mobilization, and access to credit from BRI.

(ii) Reduction in poverty incidence was evident in 10 of 12 target provinces. In these provinces, the proportion of poor SHG members’ households decreased from 22.5% in 2002 to 15.7% in 2005.

(iii) The number of SHG members with monthly incomes of less than Rp500,000 decreased sharply from 13.9% in 2002 to 1.5% in 2005, while those with monthly incomes greater than Rp500,000 increased from 30.1% to 43.1%.

48. The Project did not achieve its target of forming 74,000 SHGs. By 2002, about 66,500 SHGs had been formed. This included groups from the earlier P4K project in the original 12

11

provinces. These groups accounted for 90% of the 74,000 target groups. As described in para. 9, the number dropped significantly to only 58,118 in 2005, or 79% of the target, after inactive SHGs were weeded out in the 2002 validation exercise. However, the Project succeeded in facilitating economic and social empowerment of poor women through the provision of access to financial capital from formal credit institutions, group formation, and capacity building in livelihood development. Women made up 60.46% of the total membership of the SHGs, compared with the target of 60%. C. Efficiency in Achieving Outcome and Outputs

49. The Project is assessed overall as cost-efficient because it attained most of the target outputs without exceeding the total project cost. The financial and economic internal rates of return for the whole Project, however, could not be carried out due to the following reasons: (i) financial data on the status of all SHG microenterprises and their members was lacking because AAHRD only gathered financial data on a selective basis; (ii) district governments did not monitor the financial performance of all SHGs’ business investments; and (iii) a realistic forecast on the number of microenterprises and the composition by business type was not possible because these are determined by market forces. Information on the number of SHGs that failed or succeeded in their business enterprises was therefore lacking at completion and continues to be insufficient now. 50. In view of these data limitations, the PCR team merely conducted a profitability analysis of 10 sample microenterprises of SHGs monitored by AAHRD, using the methodology adopted at project appraisal. Based on monthly net income, a small restaurant business (Rp3,766,500) was the most profitable, followed by a banana chips enterprise (Rp1,459,183), a crispy chips business (Rp1,071,918), and a catering business (RP801,500) (Appendix Table A12.1). However, the highest returns to family labor per person-day were generated by lontar leaf mat weaving (Rp300,236), followed by a sweet snack food business (Rp162,579), the catering business (Rp78,767), and the banana chips enterprise (Rp74,770). It should be noted that the evaluation of these 10 microenterprises does not provide a representative sample by which to measure the financial viability of the whole project. 51. The team also undertook a benefit-cost analysis of the 10 microenterprises, using the methodology adopted at project appraisal. As shown in Appendix Table A12.2, all the microenterprise models exhibit attractive benefit-cost ratios—i.e., greater than1.00. The microenterprise projects that yielded very high benefit-cost ratios are a horticulture business (3.30), the sweet snack food business (2.72), a small restaurant business (2.02), the crispy chips business (1.94), and the banana chips business (1.83). Considering that the production cycles of these microenterprise models are short, the total impact of these investments is expected to be high. 52. Except for the catering business, results of the sensitivity analysis show that all the microenterprise models evaluated remain economically viable even with a 10% decrease in gross benefits or a 10% increase in total cost (Appendix Table A12.3). The decrease in gross revenues is the most important factor affecting the economic viability of the microenterprises, as evident from lower benefit-cost ratios obtained from a 10% decrease in gross benefits as compared with the ratio resulting from the same percentage increase in total cost. 53. The analysis above does not mean that all the microenterprises were financially and economically viable in all the project areas. Several factors can affect financial performance, including lack of available market outlets, high prices of inputs, adverse weather, input supply shortages, local economic difficulties, and a lack of business acumen among the SHG members

12

D. Preliminary Assessment of Sustainability

54. By project completion, 105 district governments had mainstreamed and supported the Project, using their own resources and budgets and formed steering committees to provide guidance in implementing and managing activities (Appendix 13). Among the different approaches adopted by the district governments in mainstreaming the Project were: (i) acting as the microfinance institution and managing direct lending activities; and (ii) offering interest rates lower than the prevailing commercial rates. These approaches were not in line with the spirit of the Project, which aimed to promote borrowing by SHGs from financial institutions on commercial terms. AAHRD had difficulty enforcing certain guidelines and procedures because it did not have direct authority over the district governments. This limitation could have been addressed by a detailed exit strategy plan mandated by an executive order from the Government. 55. BRI made efforts to achieve sustainability. It entered into a memorandum of understanding with the national and district governments to continue providing credit services until December 2007 and it implemented innovative new commercial credit programs, such as the credit for small business and the rural business credit programs. These programs required no collateral and provided incentives to borrowers to pay on time. The PCR Mission noted that these credit schemes were acceptable to the SHGs and showed signs of sustainability. BRI data indicates that the SHGs that demonstrated good repayment performance during project implementation have accessed commercial loan products. After the Project, 4,357 SHGs availed of Rp55.67 billion in loans from BRI’s credit programs on commercial terms. 56. Linking the microlivelihood activities of the SHGs to markets could contribute to a project’s economic sustainability. This requires the development of quality business plans that adequately assess the local business environment, conduct financial analysis, include an allowance for risks, and are guided by timely, relevant market information. During the PCR mission, it was noted that most of the GBPs were of poor quality. This could be partly attributed to the FEWs’ lack of business development skills, coupled with the absence of a business-oriented extension service for the SHGs. This weakness could have been minimized had the district governments formalized arrangements with the local chamber of commerce or the Ministry of Industry and Trade for sharing market information or linking SHGs to potential buyers. Further, newly hired FEWs should have been provided formal training on the PRA methodology and technical aspects of business development planning and implementation. 57. The Project is likely to be sustainable, with the continued efforts by the AAHRD to strengthen its assistance to SHGs through strong collaboration with the MOA’s directorate-general for agricultural processing and marketing, in terms of provision of post-harvest equipment and market information and facilitating market linkages between the SHGs and potential buyers, and the continued technical, logistical and financial support of the district governments. E. Impact

58. In the absence of baseline data at start-up on poverty incidence in the 12 provinces and the failure to state a target for poverty reduction in the design framework, it is difficult to assess the Project’s impact on poverty reduction. Although the BPS surveys showed reduction in poverty incidence and increases in SHG household income levels from 2002 to 2005, there is no indication of whether these successes were sustained because the district governments

13

have not yet conducted ex post impact evaluation surveys. Nevertheless, the Project has brought about positive economic, social and institutional impacts in terms of the following:

(i) Diversity of Livelihood Sources of Income for Both Men and Women Beneficiaries. The initial and subsequent loans extended to group members until 2005, as well as profit shares in the form of dividends, have allowed them to accumulate capital that could be used to invest or reinvest in income-generating activities. Data provided by AHHRD shows that, among others things, 15,486, or 27%, of the 58,118 SHGs invested their loans from BRI in the trading of non-agricultural products, 23% in livestock production, 18% in trading of agricultural products and/or inputs, 6% in food processing, and 5% in agricultural crop production. (Appendix 14).

(ii) Savings Mobilization. The Project has inculcated the habit of saving among the poor in project villages. As of December 2005, 31,859 SHGs had savings deposits in banks while 26,100 SHGs had group savings (Appendix 2). The SHGs mobilized Rp25.3 billion in savings. Of the group savings, Rp19.4 billion, or 77%, were in the form of deposits in the local branches of BRI, while the remaining Rp5.9 billion were kept with the SHGs. Part of this last amount was being utilized to carry out internal lending activities within the groups.

(iii) Enhanced Physical, Human, and Social Assets of the Poor. The Project facilitated an increase in productive assets, such as tools and equipment acquired through savings from microenterprises and support from district governments. The improvement in household income, which increased by up to 40% compared with before the Project, and in the purchasing power of the poor resulted in improved household welfare—including access to better nutrition, health care services, and medication. The additional income derived from the Project also covered the costs of educating children and home improvements.

(iv) Culture of Group Activity and Collective Responsibility. The members of the SHGs, associations, and microfinance institutions demonstrated high rates of commitment and participation. SHG members’ participation in group-managed livelihood activities supported community cohesiveness and access to financial services and developed entrepreneurship and healthy competition among members.

(v) Bankability of the Poor. The extent of bankability varied among provinces and districts, depending on the quality of group leadership, the strength of the extension services, the quality of the partnerships between AAHRD, BRI, and the target groups, and market linkages. Overall, the Project was also successful in encouraging the SHGs to develop business proposals, achieving 140% of the project target. The Project also proved that poor women are as bankable and creditworthy as their male counterparts. This was evident from the fact that the districts and provinces that had the least arrears or none at all were also those where the majority of the groups were women-only SHGs, associations, or microfinance institutions.

(vi) Gender Empowerment. Compared with men-only and mixed gender groups, all-women groups generally demonstrated good credit standing and repayment records. Women were trained informally on the job and, in the process, became good financial managers and marketing officers. In a majority of the groups, including mixed SHGs where both women and men were members, they were the treasurers and the secretaries. Women reported that the Project had addressed their immediate needs for economic survival and economic

14

independence, enhanced their status in the community, and increased their self-confidence.

(vii) Strengthened Institutions. The capacities of AHRRD, BRI, and district governments to execute and implement the Project was enhanced. The resulting skills in participatory strategies and the bottom-up approach to planning and implementation are transferable across development investment programs. Moreover, as a result of the project, BRI was able to develop innovative financial products for the poor.

(viii) Access to Commercial Loans. BRI data indicate that SHGs that demonstrated good repayment performance during project implementation have accessed commercial loan products. After the Project, 4,357 SHGs (7.5%) availed of loans amounting to Rp55.67 billion from BRI’s other credit programs on commercial terms.

(ix) Growth of Microfinance Associations. By the end of the Project in 2005, 29,422 SHGs (51%) had formed 1,496 associations and 1,018 SHGs had merged to form 205 cooperatives (Appendix 15). The newly established associations provided financial services to their members, including savings mobilization and credit for economic and emergency purposes. The non-bankable members who failed to repay their BRI loans and non-members are able to access credit from these microfinance associations.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

59. The overall performance of the Project is rated successful. It was relevant to the Government’s and ADB’s thrust on poverty reduction at appraisal and continues to be relevant after project completion. The Project was effective in meeting most of the targets indicated in its project framework. In addition, as a result of its involvement in the Project, BRI developed innovative financial products for the poor. The changes made during implementation—i.e., the validation and pruning of SHGs and the introduction of the PRA methodology—improved project outcomes. B. Lessons Learned

60. A number of lessons were learned through this Project:

(i) Baseline data on impact indicators must be included in the project framework during project design or before the beginning of the project to facilitate quantitative measurement of project impacts at project completion. It is impossible to determine the change in a given performance indicator at the end of a project without having indicated the status of that indicator at the beginning. Baseline surveys conducted prior to project implementation or immediately after the start of project implementation are important in generating benchmark information that will serve as the basis for comparing future changes in the impact or performance indicators at project completion or several years after project completion. Aside from the performance baseline data, a well-designed project framework should include quantitative performance targets, complete with specified time frames, particularly for project goals and purposes or objectives. Unfortunately, the baseline data on poverty incidence in the project sites that could have served as a basis for comparison at project completion was lacking. It

15

was also impossible when the Project ended to evaluate the extent to which the Project’s goal of reducing poverty was reached because no quantitative target had been set to indicate how much poverty incidence was expected to be reduced. These shortcomings were a constraint on the assessment of the Project’s poverty impact.

(ii) The shift to the PRA methodology for group formation led to better targeting of poor project beneficiaries. The PRA methodology instilled a strong identification with the Project in the beneficiaries and was instrumental in raising the awareness of the SHG members of their situation. In identifying eligible poor households during the initial years of implementation, the Project relied mainly on information provided by the districts that was in most cases unreliable or out of date. As a result, the selection of poor fisherfolk and farmers deviated from the guidelines because those included as SHG members included small traders whose per capita incomes was over the poverty threshold.

(iii) SHGs that have remained strong and active were those formed based on affinity and common interests rather than solely on credit demand.

(iv) Despite the financial and social benefits that members may enjoy from joining a group, unless the SHGs or the associations provide members with specific, value-adding services—such as joint marketing, the benefits of bulk purchase of production inputs, or loans and savings—the SHG will not be sustainable in the long run. The organization is not likely to be sustained unless members derive other mutual benefits from self-help activities.

(v) The preparation of sound business plans requires a wide range of specific skills in market and financial analysis that need to be developed within the cadre of FEWs and, probably, within the BRI staff as well.

(vi) For SHG loans, one loan size does not fit all. Loan size has to be flexible to accommodate the specific capital investment needs of a wide range of production activities.

(vii) Successful implementation of income-generating activities by the SHGs, including small businesses, shows that, with external support services such as credit, training, and extension and marketing assistance, the poor can undertake commercial activities.

(viii) Strong coordination between ADB and IFAD in the conduct of joint review and monitoring missions, as well as in the exchange of project reports and documents, is critical in minimizing problems related to financial administration.

C. Recommendations

1. Project Related

61. Future Monitoring. The district governments should continue to monitor project activities after completion, with regard to the financial performance of the SHGs’ business enterprises, the support services and other forms of technical assistance that they need, the credit access and loan repayment rate of the SHGs, and the impact of credit and various forms of assistance provided by the district governments and other agencies on the SHGs’ households, using both quantitative and qualitative impact indicators. It is recommended that participatory monitoring and evaluation should be employed by involving the SHG beneficiaries themselves. Participatory monitoring of the SHGs’ business progress, using simple and appropriate formats, would be useful in assisting the FEWs and the project management office in each district to regularly evaluate the business outcomes. Such financial data can facilitate the identification of required technical and market assistance for speedy improvements of the

16

businesses of the SHGs and their members. The financial statements of the SHGs should be regularly uploaded into each district government’s database. 62. Covenants. The loan covenants in the loan agreement were appropriate and should be maintained. 63. Further Action or Follow-Up. A study of success stories and failures of selected SHGs should be commissioned to measure the extent of the contribution of microcredit activities to improving household welfare, to identify the factors that affect the profitability of SHGs’ microenterprises, and to determine the factors that constrain or help the SHGs in repaying their loans on time. 64. The district governments should finance formal training of newly hired FEWs in the use of the participatory approach and the project, with the staff of AAHRD serving as resource persons. 65. Timing of the Project Performance Evaluation Report. It is proposed that an ex-post evaluation of the impact of the Project should be carried out at least 5 years after project completion. This will allow more time for microenterprise projects with long gestation periods to create significant impacts on the project beneficiaries. It is also proposed that an assessment of the environmental impacts of the microenterprise projects should be included as part of the project performance evaluation report that ADB will carry out later on.

2. General

66. For future microfinance projects, the following actions are recommended:

(i) Include in the project design the conduct of socioeconomic surveys to generate quantitative and qualitative baseline data on the socioeconomic status of project and non-project beneficiaries to ensure that a comprehensive assessment of project impacts can be made after project completion. A budget item for the conduct of such baseline surveys should be included as part of total project cost.

(ii) BRI and other banks extending microcredit to the poor should offer loan of varying sizes, depending on the capital requirement of the proposed business.

(iii) More in-depth training on business plan preparation should be provided for the FEWs and the SHGs, focusing on the market and financial aspects. It would be useful in the preparation of quality business plans to provide up-to-date market information—product prices, for example, and lists of potential market outlets—to SHGs. This could be done by the Ministry of Industry and Trade, the MOA’s directorate-general for agricultural processing and marketing, and other market information providers.

(iv) Intensive consultation should be carried between the district governments and the target beneficiaries during project planning, preparation, and implementation to ensure proper identification of the poor beneficiaries and setting of targets for project progress at the district level.

(v) Coordination between development partners should be strengthened for cofinanced projects by (a) strictly adhering to their areas of cooperation, as stipulated in the memorandum of understanding (para. 42); (b) planning joint review missions far in advance to ensure participation of both partner donors; and (c) holding quarterly meetings either at the headquarters of either partner—in this case, ADB or IFAD—to discuss project-related issues and the mechanics of conducting the joint review missions.

Appendix 1 17

DESIGN AND MONITORING FRAMEWORK

Design Summary Performance

Indicators at Project Appraisal

Data Source & Reporting

Mechanism Assumptions / Risks Revised Performance

Indicators PCR Evaluation of Accomplishments

1. Goal (Impact) Poverty reduction in rural areas 2. Objective (Outcome) Sustainable and participatory program for increasing income made

Poverty reduced in 12 provinces Families joining the program achieve sustainable incomes

SUSENAS SUSENAS Project Completion Report

No adverse macroeconomic developments Strong government Support

In the absence of baseline data on poverty incidence in the 12 provinces at the start of the Project and the failure to state in the project design framework the target reduction in poverty incidence after project completion, it is difficult to assess the impact of the Project on poverty reduction. The BPS surveys conducted during the project implementation period show that poverty was reduced in 10 out of 12 provinces. In these provinces, the proportion of poor SHG member households decreased from 22.5% in 2002 to 15.7% in 2005. Although the BPS surveys showed reduction in poverty incidence from 2002 to 2005, there is no indication of whether this success was sustained because the district governments have not yet conducted ex post impact evaluation surveys. Due to the failure to state at Project appraisal the target increase in income levels of

18 Appendix 1






operational

above the poverty line About 800,000 poor families improved their livelihood and well-being on a sustainable basis

SHG members households after project completion, it is difficult to assess the impact of the Project on SHG members household income levels. The BPS surveys conducted in 2002 and 2005 only tracked the changes in income levels from the midterm to the project completion dates. Results of the BPS surveys revealed that the number of SHG members with monthly income less than the Rp500,000 poverty line decreased sharply from 13.9% in 2002 to 1.5% in 2005, while those with monthly income greater than Rp500,000 increased from 30.1% to 43.1%. Although the BPS surveys showed improvement in income levels from 2002 to 2005, there is no indication of whether such increases in income levels have been sustained since the district governments have not yet conducted ex post impact evaluation surveys. Underachieved target; The Project directly benefited about 650,000 poor families or 3 million people (81% of target) through capacity building, savings

Appendix 1 19






Component 1: Self-help Group (SHG Development) 1. Well-targeted groups a. Transparent selection from district to village level

MIS/quarterly reports

There are sufficient poor families in selected locations, and sufficient women are eligible and interested.

mobilization, and access to credit from BRI. About 15,486, or 27%, of the 58,118 SHGs invested their loans from BRI in trading of non-agricultural products, 23% in livestock production, 18% in trading of agricultural products and/or inputs, 6% in food processing, and 5% in agricultural crop production. Sustainable incomes were not achieved in some enterprise projects due to marketing problems, high prices of inputs, adverse weather, and input supply shortages, among other factors. Initially, the Project based the selection of poor beneficiaries on an annual per capita income equivalent to the value of 320 kilograms of rice, using the average price in each province. In identifying eligible poor households during the early years of project implementation, the Project mainly relied on information provided by the

20 Appendix 1






b. Tight or improved selection of individuals under the poverty line b.1. Development of

SHGs

Selection procedure agreed upon followed Minimum of 74,000 SHGs formed 60% of new groups all female in composition

MIS/quarterly reports

552 SHGs in six districts tsunami- affected provinces Availability of technical guidance in forming and strengthening SHGs

districts, which in most cases was unreliable or out of date. As a result, the selection of poor fisherfolk and farmers deviated from the guidelines because small traders with per capita incomes above the poverty threshold were included as SHG members. Starting in 2003, the Project strengthened its targeting procedure to reach poor households by adopting the Participatory Rapid Appraisal (PRA) methodology. Underachieved target: The Project formed 66,500 SHGs in the original 12 provinces, including groups from the earlier P4K project. This total accounted for 90% of the 74,000 target groups. Target achieved 100%; 552 SHGs were formed in six districts in tsunami-affected provinces. No quantitative target set. A total of 6,500 handbooks on SHG formation and strengthening were distributed by the Project. Overachieved target: women comprised 60.46%

Appendix 1 21






b.2 Development of

sustainable SHGs

About two out of three, 67%, of the total number of SHGs formed were active. At least 60% of the total number of SHGs were in categories A and B, based on the results of the validation exercise. At least 90% of the total number of SHGs used cooperative savings.

of the total number of SHG members. The total number of SHG members was 646,681, 390,972 of whom were women. Overachieved target: The Project conducted a validation and evaluation exercise in 2002 to determine the number of active SHGs benefiting from the Project, pruned inactive ones with no outstanding credit, and focused on the strengthening of remaining groups instead of forming new ones. As of December 2005, the total number of SHGs, after the validation exercise, was 58,118. Of this total, 44,945 SHGs, or 77%, were active—i.e., category A or active, 814; category B or sufficient, 12,369; and category C or less active, 31,762. Only 23% of the total number of SHGs were in categories A and B Underachieved target: About 23,557 SHGs (41%) had group savings but only 8,386 SHGs (14%) had already utilized their

22 Appendix 1






b.3. Development of SHG

associations and cooperatives

b.4. Graduated SHGs

from RIGP 2. Good FEW/SHG support system

1 FEW for 40 groups

MIS

Reasonable number of FEWs assigned. Transport availability encourages female FEW participation.

At least 60% of the total number of SHGs formed availed themselves of credit from BRI at least three times from 1999 to 2004. 10% of the total number of SHGs were formed into SHG associations or cooperatives (each association consists of at least 5 SHGs) Policy and criteria in classifying graduated SHGs formulated

savings, compared with the target of 90%. Underachieved target; 19,743 SHGs (34%) availed of BRI loans between 1999 to 2004 Overachieved target; At the end of the Project, 29,422 SHGs (51%) formed 1,496 associations and 1,018 SHGs (1.8%) merged to form 205 cooperatives, which engaged in microfinance services. The criteria used in classifying graduated SHGs were as follows: (i) have shown are active (categories A, B and C); and (ii) have already availed themselves of six or more consecutive, increasing group loans from BRI. Only 13,962 SHGs (24%) have graduated. Overachieved target: Each field extension worker (FEW) covered 12 SHGs compared to the target of 40 SHGs per FEW at project appraisal; 25% of the FEWs were women

Appendix 1 23






a. Train FEWs in RIGP methodology

Training to be set in line with project expansion

Quarterly report on training

100% of RIGP personnel (FEWs, FEW coordinators, and project staff at the district level) underwent training on RIGP methodology. 100% of RIGP personnel (FEWs, FEW coordinators and project staff at the district level) underwent refresher training on RIGP methodology 50% of RIGP personnel (FEWs, FEW coordinators and project staff at the district level) underwent Training on SHG Formation using the PRA methodology 100% of RIGP personnel (FEWs, FEW coordinators and project staff at the district level) underwent training on SHG strengthening 100% of the provincial trainer teams underwent training of trainers

Underachieved target: About 3,372 (74%) RIGP personnel (FEWs, FEW coordinators, and project staff at the district level) underwent training on RIGP methodology Underachieved target: About 4,477 (95%) RIGP personnel (FEWs, FEW coordinators and project staff at the district level) underwent refresher training on RIGP methodology Overachieved target; A total of 350 (98%) RIGP personnel (FEWs, FEW coordinators and project staff at the district level) underwent training on SHG formation using the PRA methodology 100% achieved target; 100% of RIGP personnel (FEWs, FEW coordinators and project staff at the district level) underwent training on SHG strengthening 100% achieved target: 100% of the provincial trainer teams underwent training of trainers; seven batches of training of trainers on microfinance

24 Appendix 1






b. Implement incentive system for FEWs

System effective

Percentage of FEW reports received on time; groups formed; loans made quarterly report.

Guidelines on the provision of incentives to RIGP personnel formulated 10% of the RIGP personnel received yearly incentive since 2003, based on their work performance.

institutions for 220 project staff at the provincial and district levels; one batch of training of trainers on Management Information System (MIS) for 30 project staff at the provincial and district levels; one batch of refresher training of trainers for 24 RIGP personnel (human resource development personnel and trainers); and 13 batches on training of trainers on SHG formation using the PRA methodology for 56 RIGP personnel (provincial and field staff) Calculation of Incentives were only based on SHG validation and evaluation results in 2003 as well as on work performance of FEWs in 2004 Overachieved target: 13%, or more than 600 RIGP personnel (FEWs, FEW coordinators and project staff at the district level), received incentives in 2003, while 24%, or 1,200 RIGP personnel (FEWs, FEW coordinators and project staff at the district level and operators) received incentives in 2004.

Appendix 1 25






c. Provide transport for FEWs d. Assist in good SHG formation

Transport not a constraint on FEWs Potential beneficiaries identified and prepared

Number of vehicles available Number of households surveyed

Timely procurement

75% of FEWs, 50% of FEW coordinators, and 25% of project staff at the district level provided with motorcycles to be used for project implementation activities 24–36 units of vehicles distributed in 12 provinces covered by the Project (2 to 3 units per province) for the provincial management staff Project management at the national level provided with 9 vehicles Interested communities identified as potential target areas Potential target beneficiaries to become members of SHGs identified

2,337 FEWs, FEW coordinators, and project staff at the district level and account officers were provided with motorcycles. Achieved target: About 27 units of four-wheel vehicles were distributed in 12 provinces for the provincial management staff. Overachieved target: Project management at the national level were provided with 10 vehicles (7 units of four-wheel vehicles and 3 units of two-wheel vehicles). Residents in poor communities to be members of SHGs were identified using district level data during early years of project implementation and the PRA method, starting in 2003. Initial problems were encountered in the selection of poor villages to be covered by the Project because of non-adherence by some field extension personnel to the poverty

26 Appendix 1






e. Assist in skills development and self-reliance f. Assist with business plans and loan applications

Training needs identified and met Groups receiving sufficient support to prepare good business plans

Number of loans processed

Graduated groups are able to access mainstream services

100% of the SHGs trained in capacity building and strengthening and skills development (bookkeeping, accounting, technical aspects in crop/livestock/aquaculture production, processing, improved post-harvest practices, packaging and marketing) 100% of the SHGs prepared their first group business plans

criterion in site selection. Some field extension personnel gave priority to: (a) the small business potential of the village; (b) accessibility of the area; and (c) the fact that the village was either under their supervision or within the programs implemented by the districts or by their mother agencies. Thus, some villages that were chosen to be covered by the Project were semi-urban villages with very high levels of well-being and very good infrastructure facilities. Achieved target: 100% of SHGs were trained using seven modules that included 24 subjects on SHG strengthening and technical and entrepreneurial skills development. Achieved target: Within 6 months after SHGs were formed, all were able to prepare their group business plans with the

Appendix 1 27






3. Appropriate graduation policies a. Assess the needs of groups approaching graduation from RIGP b. Establish clear linkages with other credit and support systems

Annual review at province level of the number, needs, and prospects of graduating groups. Support for groups graduating from RIGP includes assistance in

Semiannual reports Midterm review Number of groups joining other schemes

Procedures followed

100% of the SHGs prepared group business plans for succeeding loans without assistance from other parties. 120,680 group business plans prepared

help of the FEWS and avail of loans from BRI at least once. Underachieved target: SHGs that were able to avail of BRI loans more than twice (about 42%) were able to prepare their group business plans without assistance from other parties. Most of the SHGs still relied on the FEWS to provide assistance in preparing their group business plans. Overachieved target: The Project facilitated the preparation of 161,529 group business plans in the original 12 provinces against a target of 120,680, which represents an achievement of 133.8%. However, the group business plans were of poor quality since the financial and marketing viability of the projects, as well as risk factors, were not considered. Handbooks on the Guidelines for the Graduation of SHGs have

28 Appendix 1






4. Good cooperation between executing agencies

contacting other schemes Agreement on procedures for regular consultation at all levels

BRI–AAET MOU signed Government decree issued

BRI commitment Good business plans

20,000 SHGs accessed credit facilities from other sources of credit at commercial or market interest rates aside from the RIGP-BRI credit scheme

been circulated. Information on the financial services of other banks or financial Institutions. including new commercial loans offered by BRI and other financing sources, was disseminated to the SHGs. Underachieved target: SHGs that demonstrated good repayment performance were able to avail of commercial loan products. After the Project, 4,357 SHGs availed of loans from BRI’s other credit programs on commercial terms amounting to Rp55.67 billion. Cooperation between AAHRD (formerly AAET) and BRI was good at all levels, from national to district. Policies and guidelines on the RIGP-microfinance services were formulated. BRI and MOA signed a memorandum of understanding (MOU) on the requirements in extending microfinance services and the loan payment procedure.

Appendix 1 29






Component 2: Microfinance Services 1. Approvals and disbursement mechanisms accessible a. BRI outpost staff trained in RIGP methodology

7 days approval At least 2 AOs per branch trained

Average time to disbursement within agreed upon parameters; MIS AAET and BRI training records

14 days loan processing duration, starting from the date of loan application. 2 AOs or Field Liaison Officers (FLOs) trained on RIGP Methodology 1–2 AOs per BRI branch attended refresher training on RIGP methodology

Varied among districts. During the early years of project implementation, there was a large variation in the time required to process credit applications by BRI, ranging from 2 weeks (14 days) to more than 6 months. This was mainly due to the fact that there was only one AO assigned to each district. The AOs were also responsible for other BRI credit programs. Since each AO served more than 1,000–2,000 SHGs per district, all the AO could do was approve the group business plans, limiting assessment to the adequacy of documents submitted to the paper requirements. 35 FLOs were trained on RIGP Methodology. 100% achieved target: 149 AOs attended refresher training on RIGP methodology. A total of 149 AOs were deployed in 129 BRI branch offices. AOs usually spent 30–40% to RIGP activities.

30 Appendix 1






b. Transport and necessary equipment available 2. Credit line available

BRI branches with mobile offices in Project areas $55 million credit line established

BRI report, visual inspection

1 computer set (computer + printer) and 1 motorcycle provided per BRI branch Rp360 billion total credit received by SHGs 80% of the SHGs have accessed their BRI loans once. 60% of the SHGs have accessed their BRI loans twice. 50% of the SHGs have accessed their BRI loans three times.

100% achieved target; All AOs in BRI branches were provided with computers, printers, and motorcycles. Overachieved target: The total credit received by the SHGs amounted to Rp1.326 trillion (against a target of Rp360 billion) for 161,529 GBPs approved. BRI was able to achieve 100% of its physical target in providing microfinance services. It was able to fully utilize the project credit line and used the repayment reflows for financing new loans. This indicates an efficient use of project funds where the allocation for credit had been revolved more than three times. The estimated repayment rate was 5.24%. Overachieved target: 47,341 SHGs (81%) accessed credit once. Underachieved target: 33,810 SHGs (58%) accessed credit twice. Underachieved target: 19,744 SHGs (34%) accessed credit three times.

Appendix 1 31






a. Establish margins for BRI

Profitable but efficient financial intermediation

Project documentation

Agreed upon interest rate allows reasonable margins for cost of funds plus operations (no subsidies).

50% of the SHGs were able to apply for BRI loans without assistance from outside parties 100% of the SHGs formed were saving.

No available data, but most SHGs applied for BRI loans with the help of the FEWs who facilitated the submission of the loan applications to the BRI Account Officer Achieved target: 100% of the SHGs had savings because it was a requirement of the Project. As of December 2005, 31,859 SHGs had a savings deposit in the bank, while 26,100 SHGs had group savings. The SHGs mobilized savings amounting to Rp25.3 billion. Of the group savings, Rp19.4 billion, or 77%, were in the form of deposits in the local branches of BRI, while the remaining Rp5.9 billion were kept with the SHGs and were being partly utilized to carry out internal lending activities within the groups. Given the wide bank spread, or the difference between the interest rate charged by BRI from SHG-borrowers (22.5% per year) and the interest, including the insurance, it had to pay the Government (6% interest rate + 2.7–3.4% insurance per year), the

32 Appendix 1






b. Agree on interest rate, loan period, and repayment by SHGs 3. Good cooperation between implementing agencies

Interest rate set Loan period flexible Liaison officer with AAET appointed at national level

Joint AAET–BRI agreement Semiannual reports

Cost of funds plus cost of delivery and reasonable profit is less than informal village credit rates. Liaison officer has too many other responsibilities

MOU established between the AAHRD (formerly AAET), BRI, and other participating institutions Coordination meeting held at the provincial and district levels once a month and at the national level every 3 months

operation of BRI was supposed to be profitable. However, at the end of the Project, the total credit arrears amounted to Rp218.365 billion for 33,409 GBPs and this rose to Rp89.71 billion as of March 2008. Of this amount, BRI has already written off bad debts of Rp59.60 billion and plans to write off Rp30.11 billion in 2009. As agreed upon by AAHRD (formerly AAET) and BRI, the interest rate was set at 22.5% per annum. Loan period was flexible. Loan payment could be done every month, 3 months, 6 months, or 12 months, depending on the cash income projected in the group business plan. Each SHG can secure a loan ranging from 1 to 6 times. A MOU was executed between AAHRD and BRI to establish good cooperation between the two implementing agencies. Coordination meeting was conducted at the provincial and district levels once a month and at the national level at least 3 times per year. Initially, Project

Appendix 1 33






4. Provision of incentive System for AOs Component 3: Institutionalization of Management Capacity 1. PIUs established and operational at national and provincial levels 2. RIGP is institutionalized in MOA/AAET 3. Management skills a. Devise and implement management training modules

PIU in each relevant province a. Appropriate instructions, directions and decrees issued b. Establishment of an RIGP budget line National, provincial, and district managers trained in project implementation

Semiannual report Issued instructions, directive or decrees Copy of annual budget Semiannual reports

Good quality managers are appointed in national, provincial and district PIUs No significant change in Government policies on poverty eradication Consultants recruited and engaged early in the Project

More than 36 AOs given an incentive to go on study tour One national, 12 provincial, and 126 district PIUs established Seven modules consisting of 24 training materials and SHG strengthening for project implementers (national, provincial, and district managers) conducted

Steering Committee at national level seldom met. More than 36 AOs with good working performance went on overseas study tours as an incentive. 100% achievement of targets: one national, 13 provincial, and 126 district PIUs were established. The number of provinces increased from 12 to 13. RIGP was Institutionalized in AAHRD (formerly AAET). AAHRD issued cooperation decree, RIGP implementation guidance, technical guidance and letters of instruction. Annual RIGP budget determined every third coordination meeting. 100% completion of all target training activities, as shown in Appendix 6.

34 Appendix 1






b. Expose managers to different functioning poverty reduction approaches 4. MIS functions a. Revise and improve existing system

National, provincial RIGP staff trained and given a chance to visit other programs MIS outputs identified for management and other users

MIS reports to senior managers and individual reports on visits undertaken Semiannual reports Report to management on MIS establishment

Effective people are assigned Hardware, software, and staff are available

Project management analysis training implemented and training plan designed Training materials for project management and MIS personnel prepared All project management personnel underwent training on basic management skills Implementation guidelines regarding changes in the MIS prepared and disseminated Monthly, quarterly, semi-annual, and annual progress reports, as well as financial statements, were prepared and disseminated on time to senior management. MIS database regularly updated at all levels

National, provincial, and RIGP staff were trained and given a chance to visit other programs. The MIS system was operational in 126 districts. MIS outputs were identified for project management and different users. Guidelines on MIS revisions were prepared. Since June 2004, monthly reporting system was through the use of the Internet. However, the Internet system of several districts was not functioning properly.

Appendix 1 35






b. Establish regular procedures for transmitting MIS outcomes to senior management c. Incorporate into MIS outcomes of M&E and impact assessment 5. M&E functions a. Design and implement M&E procedures

Monthly report MIS responsive to specific needs/requests Management aware of all project aspects Timely and effective M&E reports disseminated and used

Semi-annual reports Semi-annual reports Field trips and Administration Missions

Management is able to make effective use of MIS output. Good internal project coordination FEW reports are supplied on time

Receipt of progress reports by senior management was timely. MIS database was updated regularly at all levels during project implementation period. New data compiled under the SHG validation exercise was added to the MIS and were at the same time used as baseline data for the M&E system. As of December 2005, the MIS database on 23,557 SHGs (41%) was already entered in the RIGP computer at the central office of AAHRD. Outcomes of M&E and impact assessment survey results were incorporated into the MIS to enhance the awareness of project management of all project aspects. The M&E system designed was improved and became operational after deploying a new M&E consultant. Initially, there was a delay in the design of the M&E system due to the early termination of the international M&E consultant. The delay resulted in the difficulty in determining and monitoring qualitative changes as a

36 Appendix 1






b. Train relevant staff in M&E and associated data collection 6. Impact Assessment a. Establish impacts to be monitored

Sufficient trained staff Limited number of verifiable benefits identified

Records of training undertaken Project reports, MIS

Capable staff are available Chosen indicators reflect household welfare

All project personnel involved in MIS and monitoring and evaluation activities trained on basic MIS and participatory monitoring and evaluation

result of project interventions during the early years of its existence (1999–2003). 100% achievement of target: 135 MIS project personnel at the district and subdistrict levels attended the training for computer operators, the training on MIS program, or the training on MIS. A total of 830 project personnel attended either the workshop on monitoring and evaluation or the training on planning, monitoring and evaluation. The impact assessment system was operational. Initially, the problem encountered in the design of the M&E system was that the project targets were set at the start of the Project without a great deal of participation of the districts. This situation was rectified by conducting a new target-setting exercise aimed at the district level. During the first four years, the quantitative achievements of the Project related to the first component (i.e., number of SHGs formed) and the second component (i.e. number of loans

Appendix 1 37






b. Establish cost effective sampling procedures for monitoring impacts c. Establish capacity for impact assessment in AAET d. Good cooperation between executing agencies

Panel survey procedures under SUSENAS established National and provincial staff trained in the analysis of SUSENAS and Project data for impact assessment Regular meetings at national level (at a minimum every 3 months)

Procedure manuals, analysis of outputs Training reports BMI reports Records of meetings Interagency communications

National and provincial staff members are trained in the analysis of SUSENAS and project data for impact assessment Joint AAET–BRI MOU establishes effective working procedures

Guidelines in the assessment, monitoring, and evaluation of SHGs completed and disseminated

disbursed, number of GDPs submitted and approved, number of loans repaid) were largely monitored. To assess the impact of the Project, evaluation surveys were conducted on income and non-income impact variables. The Biro Pusat Statistik (BPS) conducted the impact assessment studies in 2002 and 2005 and designed the panel survey procedures. A total of 830 project personnel attended either the workshop on monitoring and evaluation or the training on planning, monitoring and evaluation. Guidelines in the assessment, monitoring, and evaluation of SHGs were completed and disseminated Coordination meeting was conducted at the national level at least three times per year.

38 Appendix 1

Activities At Appraisal Accomplishment At Appraisal At Completion 1. SHG Development - Consultancy and support from individuals, firms, and NGOs for SHG development, SHG training, SHG handbooks, equipment, and materials - FEW support funds for training, incentives, and allowances, travel, and supervision of FEWS - Graduation support 2. Microfinance Services Only the credit line is funded under this component.

Mostly achieved. Although 26 NGOs were contracted from 2002 to 2004 to assist in SHG development and social empowerment in the original provinces covered by the Project, the contracting of NGOs in tsunami-affected provinces was cancelled due to the delayed release of the 2005 budget and the difficulty in finding qualified NGOs Substantially achieved Substantially achieved in providing graduation support, but only 24% of the SHGs graduated. Substantially achieved. BRI was able to fully utilize the project credit line and used the repayment reflows for

In Million $ (includes contingencies)

Subtotal - 47.5 Consultancy - 4.1 Training - 19.3 Handbooks, etc. - 0.6 Equipment and Materials - 0.6 Training - 5.6 Incentives - 1.2 Motorcycles - 6.8 O&M - 5.4 Travel and - 1.6 supervision Mktg. exchange - 0.7 Coordination & Networking - 1.6 Subtotal - 55.2 Credit line - 55.2

In Million $ (Excludes contingencies)

Subtotal - 40.1 Subtotal - 55.2

In Million $ Subtotal - 23.600 Subtotal - 35.681

Appendix 1 39

Activities At Appraisal Accomplishment At Appraisal At Completion 3. Institutionalization of Management Capacity This component provides management support in the form of staff training, management of advisors and experts, provision of transportation, equipment, and materials, and funds for coordination and supervision including travel and allowances.

financing new loans. Substantially achieved. Project management offices in Jakarta and in 13 provinces were established and operational. Courses for project officers were held every year from 1998. Manuals were published as a guide to project officers in project implementation, MIS, M&E, and impact assessment (IA) systems. Procurement of basic office equipment was completed. A total of 78 person-months of international and 718 person-months of domestic consulting services had been completed, compared with the target of 126 and 1,238 person-months, respectively.

Subtotal - 15.9 Staff training - 2.7 Consultancy - 2.4 Equipment and - 1.5 Materials Handbooks - 0.7 Evaluation - 0.8 Vehicles - 0.3 O&M - 2.4 Allowances, travel, Coordination - 5.1

Subtotal - 13.9

Subtotal - 12.253

AAET = Agency for Agricultural Education and Training; AAHRD =Agency for Agricultural Human Resource Development; AOs = account officers; BPS = Biro Pusat Statistik; BRI = Bank Rakyat Indonesia; FEWs = field extension workers; M&E = monitoring and evaluation; MIS = management information system; MOA = Ministry of Agriculture; NGOs = nongovernment Organizations; O&M = operation and management; P4K = Proyek Peningkatan Pendapatan Petani Kecil (Income Generating Project for Marginal Farmers and the Landless); PIUs = project implementation units; RIGP = rural income generation project; SHG = self-help group, SUSENAS = Survei Sosial Ekonomi Nasional (National Socioeconomic Survey) Source: ADB. 1997. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Indonesia for the Rural Income Generation Project. Manila (RRP: INO 29456).

40

Appendix 2

STATUS OF PHYSICAL ACCOMPLISHMENT OF PROJECT OUTPUTS

Table A2.1: Status of Physical Accomplishment of Project Outputs, Original 12 Provinces as of December 2005

Output Indicator

West Java

Central Java

Yogyakarta

East Java

Bali

West Nusa Tenggara

Riau

I. SELF HELP GROUPS (SHG)

FORMATION 1. Men’s 2. Women’s 3. Mixed

Total SHGs Based on Gender % Women’s Groups

1,697 2,276 5,856 9,829 23.16

.1,292 3,923 7,456

12,671 30.96

293 613

1,361 2,267 27.04

1,847 5,032 9,160

16,039 31.37

1,045 1,569

690 3,304 47.49

164 2,695 4,130 6,89

38.56

92 354 502 948

37.34 II. DEPOSIT 1. Total SHGs with Bank

Savings SHG Deposits in the Bank ( Rp ) Average Deposit/SHG

2. Total SHGs with Group Savings

SHG Deposits in Group ( Rp ) Average Deposit/SHG

506 316,713,986

625,917

5,457

478,351,000 78,496

11,099 5,778,148,000

485,599

7,123

1,643,413,000 230.719

2,119 664,404,767

313,546

1,311

211,599,500 161,403

3,146 4,683,094,025

1,488,587

8.757

1.735.381.000 198.171

3,838 1,86,904.169

485,124

1,554

148,018,830 95,250

6,906 3,039,425,000

440,114

1,539

652,937,000 424,261

118 182,854,746

1,549,616

386

58,443,750 15,1,409

III. GROUP BUSINESS PLAN

AND CREDIT 1. Group Business Plan (GBP)

Prepared by SHGs Loans Made by BRI

2. Credit a. Total Credit Received by SHG

(Rp) b. Numbers of GBP

Repayment from SHGs (Rp) c. SHGs Who have Outstanding

Credit Credit Outstanding (Rp)

d. SHGs Who Have Credit Arrears Credit Arrears (Rp) % arrears from credit disbursed % arrears from credit outstanding % arrears from Amount Due

23,369 23,369

205,093,662,000

16,879

169,222,226,000 6,490

35,871,436,000

472 16,694,17,000

8.14 46.54 8.98

42,579 42,579

336,906,951,000

34,321

280.393.381.000 8,258

56,513,570,000

4,712 14,315,615,000

4.25 25.33 4.86

6,774 6,774

60,094,125,000

5.567

50.949.942.000 1,207

9,145,183,000

544 1,716,307,000

2.86 18.77 3.26

38,854 38,854

348,160,587,000

30,473

280,726,053,000 8,381

59,434,534,000

5,241 19,554,632,000

5.62 32.90 6.34

10,299 10,299

103,102,725,000

8,736

82,364,863,000 1,563

20,737,862,000

623 4,829,401,000

4.68 23.29 5.54

22,162 22,162

126,540,391,000

17,966

110,100,390,000 4,196

16,440,001,000

3,514 8,064,312,000

6.37 49.05 6.82

2,.594 2,594

19,831,175,000

2,197

16,407,601,000 397

3,323,574,000

64 66,628,000

0.35 2.75 0.40

Appendix 2 41


Output Indicator

West Java

Central Java

Yogyakarta

East Java

Bali

West Nusa Tenggara

Riau

3 .SHGs Who have Received Credit

a. Once b. Twice c. Three times d. Four times e. Five times f. Six times g. Seven times

4. Other Assistance SHGs Who Received Assistance

From Other Sources 1. Grant : Total SHGs

Amount of credit/assistance 2. Revolving Fund: Total SHGs Amount of credit/assistance 3. Credit: Total SHGs Amount of credit/assistance

7,706 2,799 2,284 1,386

725 250 142 120

132 92,774,000

381 807,110,000

375 343,890,000

10,090

2,613 2,863 2,077 1,329

455 275 478

102 456,776,000

59 272,700,000

231 595,106,000

1,949

193 487 504 309 169 122 165

3 6,000,000

14 63,600,000

26 63,900,000

13,519

4,180 4,192 2,612 1,229

534 402 370

103 110,645,000

40 71,357,000

38 110,257,950

2,135

373 383 407 382 184 146 260

45 40,414,000

45 75,658,500

23 65,000,000

6,637 1,150 2,016 2,043

757 291 177 203

36 56,000,000

38 80,000,000

854 359 305 126 45 14 3 2

68 374,940,000

128 215,850,000

IV. GROUPS ASSOCIATIONS

1. Total Number of Associations 2. Number of Groups

123 361

464 9,958

66 2,187

422 14,927

154 728

89 542

60 149

V. COOPERATIVES FORMATION

1. Total Number of Cooperatives 2. Number of SHGs that Became a

Cooperative Member 3. Total Members of Cooperatives

63

5,2488

22

39 1,442

16

2,395

22

1,976

10

83 1,132

59

857 9,917

7

39 351

42

Appendix 2


Output Indicator

South Sumatra

Bengkulu

Lampung

South

Kalimantan

South

Sulawesi

Total

I. SELF HELP GROUPS (SHG) FORMATION 1 Men’s 2. Women’s 3. Mixed Total SHGs Based on Gender % Women’s Groups

150 370 495

1,015 36.45

254 462 357

1,073 43.06

240 295 347 882

33.45

95 298 368 761

39.16

47 310

1,983 2,340 13.25

7,216 18,197 32,705 58,118

31.31 II. DEPOSIT 1. Total SHGs with Bank Savings SHG Deposits in the Bank ( Rp ) Average Deposit/SHG 2. Total SHGs with Group Savings SHG Deposits in Group ( Rp ) Average Deposit/SHG

935 29,644,325

314,058 348

53,769,038 154,509

997 825,894,136

828,379 919

437,075,650 475,599

156 529,395,937

3,395,937 114

439,593,729 3,856,085

635 163,881,809

258,082 187

5,383,500 28,790

604 1,087,687,526

1,767,695 405

56,329,032 39,084

31,859 19,407,048,427

609,154 28,100

5,870,295,329 208,907

III. GROUP BUSINESS PLAN AND CREDIT 1. Group Business Plan (GBP)

.Prepared by SHGs Loans Made by BRI

2. Credit a..Total Credit Received by SHG (Rp)

b. Numbers of GBP Repayment from SHGs (Rp)

c. SHGs Who have Outstanding Credit Credit Outstanding (Rp) d. SHGs Who Have Credit Arrears Credit Arrears (Rp) % arrears from credit disbursed % arrears from credit outstanding % arrears from Amount Due

1,952 1,952

12,357,459,000

1,523 10,562,759,000

429

1,794,700,000 347

801,506,000 6.49 4.6

7.05

1,477 1,477

12,322,194,000

1,172 10,026,548,000

305

2,295,646,000 133

307,309,000 0

13.39 2.97

1,702 1,702

13,828,600,000

1,296 11,591,796,000

406

2,236,804,000 299

1,017,910,000 7.36

45.51 8.07

2,355 2,355

14,919,400,000

2,025 13,115,374,000

330

1,804,026 128

340,136,000 2.28

18.85 2.53

7,412 7,412

74,113,166,000

5,965 64,445,459,000

,1,447

9,567,707,000 624

1,798,648,000 2.43

18.60 2.72

161,529 161,529

1,326,270,435,000

128,120 1,107,905,392,000

33,409

218,365,043,000 20,971

69,506,514,000 5.24

31.83 5.90

Appendix 2 43


Output Indicator

South

Sumatra

Bengkulu

Lampung

South

Kalimantan

South

Sulawesi

Total

3. SHGs Who have Received Credit

a. Once b. Twice c. Three times d. Four times e. Five times f. Six times g. Seven times

4. Other Assistance SHGs Who Received Assistance

From Other Sources 1. Grant : Total SHGs

Amount of credit/assistance 2. Revolving Fund: Total SHGs Amount of credit/assistance 3. Credit: Total SHGs Amount of credit/assistance

601 339 230 22 8 1 1

99 253,998,000

616 329 168 90 23 5 1

15 54,000,000

708 340 251 65 52

13 8,100,000

21 23,025,000

16 44,006,000

633 229 212 120 54 14 4

1,893 627 675 403 144 23 10 1

47,341 13,531 14,066

9,855 5,057 1,940 1,283 1,609

580 1,397,647,000

596 1,369,450,500

775 1,518,009,950

IV. GROUPS ASSOCIATIONS 1. Total Number of Associations 2. Number of SHG Groups

27 117

46 180

22 101

13 51

30 141

1,496 29,422

V. COOPERATIVES FORMATION 1. Total Number of Cooperatives 2. Number of SHGs that Became a Cooperative Member 3. Total Members of Cooperatives

1

5

93

205

1,018

22,454 BRI = Bank Rakyat Indonesia; GBP = Group Business Plan; SHGs = Self Help Groups Source: MOA-AAHRD Project Completion Report

44

Appendix 2

Table A2.2: Status of Physical Accomplishment of Project Outputs, Tsunami-Affected Areas as of December 2006

Project Target

Output Indicator

2005 2006

Accomplishment

Total SHGs 410 142 552 GBPs Prepared 410 142 552 Grant Disbursed (Rp) 14,976,000 3,550,000 18,526,000GBP = Group Business Plan; SHGs = Self Help Groups Source: MOA-AAHRD Project Completion Report

Appendix 3

45

SHG FORMATION BY CLASSIFICATION

Table A3.1: Number of Active and Inactive SHGs after Validation Exercise

Category

No. of SHGs

Formed Using PRA

Total No. of SHGs

No. of SHGs

Graduated

Province

A B C D O* RIau 19 287 608 9 5 20 948 49South Sumatra 11 120 713 83 80 8 1,015 Bengkulu 75 497 446 14 41 1,073 45Lampung 30 375 411 24 17 25 882 West Java 67 1,487 6,675 1,330 9 261 9,829 117Central Java 140 2,081 6,557 2,245 978 670 12,671 5,955D.I Yogyakarta 119 890 1,092 89 60 17 2,267 99East Java 278 4,150 9,020 1,115 524 952 16,039 7,507Bali 40 1,213 1,766 242 2 41 3,304 95West Nusa Tenggara 17 605 2,570 3,795 2 6,989 95South Kalimantan 5 108 588 49 2 9 761 South Sulawesi 3 556 1,316 136 174 145 2,340 Total 814 12,369 31,762 9,131 1,892 2,150 58,118 13,962

PRA = Participatory Rural Appraisal; SHGs = Self Help Groups Source: MOA-AAHRD Project Completion Report

Table A3.2: Number of SHG Members by Gender, Original 12 Provinces

SHG Members

Province

Male Female Total West Java & Banten 55,597 60,712 16,309Central Java 47,315 85,501 132,816DI Yogyakarta 11,895 14,970 26,865East Java 79,900 119,348 199,248Bali 16,891 21,686 38,577West Nusa Tenggara 16,250 44,852 61,102Riau 2,835 5,786 8,621South Sumatra 3,413 5,593 9,006Bengkulu 4,913 6,830 11,743Lampung 4,801 4,788 9,589South Kalimantan 2,444 4,370 6,814South Sulawesi 9,455 16,536 25,991Total 255,709 390,972 646,681

SHGs = Self Help Groups Source: MOA-AAHRD Project Completion Report

Appendix 3

46

Table A3.3: Number of SHGs Formed by Province/District, Tsunami-Affected Areas

Province/District

No. of SHGs Formed Using

PRA

No. of SHGs Formed Using

Non-PRA

Total No. of SHGs Formed

NAD Province a. Kota Banda Aceh 105 105b. Pidie 105 105c. Aceh Barat 105 105d. Aceh Besar 58 58Subtotal 58 315 373 North Sumatra Province a. Nias 85 54 139b. Nias Selatan 40 40Subtotal 125 54 179Total 183 369 532

NAD = Nanggroe Aceh Darussalam; SHGs = Self Help Groups Source: MOA-AAHRD Project Completion Report

Appendix 4 47

CREDIT DISBURSEMENT AND REPAYMENT PERFORMANCE, ORIGINAL 12 PROVINCES

Table A4.1: Credit Disbursement and Repayment Performance of SHGs by Region/District as of December 2005

Region/ Branch

Credit Ceiling Credit Disbursed Repaid Loans Outstanding Loans

Arrears

(BRI Office) Rp

(million) No. of SHGs

Rp (million) Principal Interest

No. of SHGs

Rp (million) Principal % % Interest

Rp (million)

No. of SHGs

Rp (million)

of Col 8

of Col 4

No. of SHGs

Rp (million)

1 2 3 4 5 6 7 8 = 4 - 5 9 10 11 12 13 14

Padang

Bangkinang 1,804 1,581 10,650 9,343 954 206 1,306 32 9 1 0.09 9 945 Pekanbaru 1,030 488 3,898 3,375 273 102 523 29 50 10 1.27 22 5 Rengat 816 525 4,284 3,689 457 89 594 3 8 1 0.18 3 1 Sub Total 3,650 2,594 18,831 16,408 1,685 397 2,424 64 67 3 0.35 34 950

Palembang Argamakmur 1,098 431 3,809 2,997 377 81 813 30 40 5 1.06 11 2 Bengkulu 717 348 3,548 2,992 278 92 556 47 132 24 3.71 27 11 Curup 802 449 2,930 2,237 316 92 693 28 55 8 1.89 1 1, Kotabumi 700 259 2,331 1,665 193 96 666 68 162 24 6.96 36 16 Metro 1,500 790 6,446 5,484 589 162 962 127 602 63 9.34 79 45 Manna 200 249 2,035 1,801 41 40 235 28 80 34 3.93 21 8 Muara Enim 928 342 3,313 2,364 169 113 949 80 378 40 11.42 71 41 Tanjung Karang 850 472 3,588 3,214 385 107 374 70 155 41 4.33 36 8 Palembang Rivai 160 512 2,620 2,549 1,010 53 71 53 71 100 2.70 41 5 Pringsewu 302 181 1,463 1,229 172 41 234 34 98 42 6.71 26 8 Sekayu 1,127 496 4,176 3,703 511 87 473 39 51 11 1.23 8 1 Kayuagung 330 602 2,248 1,947 243 176 301 175 301 100 13.39 130 18

Sub Total 8,714 5,131 38,508

32,181 4,285 1,140 6,327 779 2,127 34 5.52 487 165

Jakarta Bogor 590 459 2,547 1,970 229 167 577 150 311 54 12.22 105 24 Bekasi 460 226 1,744 1,327 115 81 417 63 249 60 14.26 80 28 Tangerang 430 84 1,192 948 85 81 250 81 250 100 21.02 81 21

48 Appendix 4

Region/ Branch


Arrears

(BRI Office) Rp



No. of SHGs


Rp (million)

No. of SHGs

Rp (million)

of Col 8

of Col 4

No. of SHGs

Rp (million)

1 2 3 4 5 6 7 8 = 4 - 5 9 10 11 12 13 14

Pandeglang 1,050 653 3,603 3,358 672 98 245 96 242 99 6.73 65 11 Rangkasbitung 903 378 3,903 3,453 451 102 450 85 286 63 7.32 9 3 Serang 1,070 506 3,871 2,986 388 209 885 209 885 100 22.87 168 77

Sub Total 4,503 2,306 16,860

14,042 1,940 738 2,825 684 2,224 79 13.19 508 164

Bandung Banjar 1,404 861 8,631 7,474 865 179 1,158 96 349 30 4.05 45 28

Ciamis 4,942 1,897 24,201

20,191 1,757 479 4,009 378 2,355 59 9.73 351 268 Cianjur 1,006 432 3,111 2,234 251 167 877 154 455 52 14.61 102 46 Cibadak 2,148 1,272 14,749 12,710 1,465 262 2,039 149 305 15 2.07 141 20 Cimahi 75 222 1,082 1,059 122 18 23 18 23 100 2.15 15 1 Cirebon 1,725 591 6,057 5,021 310 424 1,036 180 454 44 7.49 119 48 Indramayu 1,626 968 7,341,596 6,097 665 253 1,244 108 212 17 2.89 70 16 Garut 2,704 1,991 12,749 10,044 1,235 641 2,705 506 1,143 42 8.97 377 122 Kuningan 5,327 2,087 23,461 18,776 1,943 442 4,685 327 2,444 52 10.42 119 146 Karawang 792 717 4,011 3,446 359 277 565 274 531 94 13.24 232 83 Majalaya 786 908 5,146 4,508 1,586 242 638 171 532 83 10.34 107 19 Majalengka 5,895 2,151 22,155 16,531 175 539 5,624 245 1,101 20 4.97 88 51 Purwakarta 397 323 2,872 2,600 320 50 272 40 88 32 3.07 30 9 Sukabumi 1,423 983 7,906 6,569 782 225 1,337 188 842 63 10.65 164 83 Sumedang 2,586 1,598 14,859 12,614 2,016 324 2,246 170 568 25 3.82 107 49 Subang 3,141 2,719 18,021 15,129 1,775 594 2,892 420 1,395 48 7.74 313 113 Tasik Malaya 1,875 1,343 11,881 10,177 698 636 1,704 634 1,672 98 14.07 277 149 Sub Total 37,852 21,063 188,234 155,180 16,324 5,752 33,054 4,058 14,470 44 7.69 2,657 1,251

Semarang Batang 1,126 1,741 9,442 8,405 961 271 1,037 179 374 36 3.96 129 26 Blora 4,315 2,768 18,539 14,416 973 536 4,123 277 930 23 5.02 22 3 Brebes 1,035 433 4,346 3,444 322 128 903 95 417 46 9.60 76 39

Appendix 4 49

Region/ Branch


Arrears

(BRI Office) Rp



No. of SHGs


Rp (million)

No. of SHGs

Rp (million)

of Col 8

of Col 4

No. of SHGs

Rp (million)

1 2 3 4 5 6 7 8 = 4 - 5 9 10 11 12 13 14

Bumiayu 4,019 1,415 19,413 15,841 1,745 331 3,571 190 695 19 3.58 152 63 Cepu 1,529 842 6,885 5,366 804 203 1,519 134 666 44 9.67 40 15 Demak 1,086 1,062 6,515 5,593 520 168 923 226 708 77 10.87 137 54 Jepara 3,890 2,340 26,639 22,803 2,477 526 3,836 295 803 21 3.01 156 58 Kudus 1,150 987 8,548 7,395 958 184 1,153 142 535 46 6.26 94 47 Pati 2,195 1,374 9,425 7,467 1,033 340 1,959 235 690 35 7.32 164 78 Pemalang 660 934 9,892 9,226 1,107 200 665 168 477 72 4.83 127 40 Purwodadi 3,456 3,307 25,628 22,344 3,502 392 3,284 270 1,173 36 4.58 152 72 Rembang 4,250 1,834 16,787 12,771 3,704 469 4,016 339 1,600 40 9.53 277 169 Tegal 1,663 1,487 11,761 10,247 10,124 347 1,514 234 460 30 3.91 149 43 Sub Total 30,372 20,524 173,820 145,318 28,229 4,095 28,502 2,784 9,529 33 5.48 1,675 708

Yogyakarta Boyolali 4,400 1,891 20,419 15,385 2,763 346 5,034 101 717 14 3.51 54 47 Cilacap 1,900 811 7,533 6,029 1,388 219 1,504 106 289, 19 3.84 91 25 Karanganyar 3,200 2,699 15,833 13,520 1,295 519 2,313 347 883 38 5.58 240 92 Purbalingga 6,500 2,670 26,924 22,244 2,442 553 4,680 168 394 8 1.46 109 38 Sragen 3,128 1,500 11,822 9,706 2,708 377 2,115 200 239 11 2.02 58 11 Temanggung 2,458 1,167 12,176 9,634 1,155 268 2,542 56 154 6 1.27 39 20 Wonogiri 2,075 1,303 10,238 8,732 1,440 259 1,506 133 291 19 2.85 41 16 Ajibarang 970 655 4,448 3,660 727 132 788 75 146 19 3.29 54 17 Bantul 2,550 1,384 13,564 11,517 1,270 220 2,047 68 92 4 0.68 31 7 Banjarnegara 970 1,284 5,516 5,113 593 143 403 58 52 13 0.95 30 4 Kebumen 2,300 1,872 9,914 8,173 1,022 309 1,741 106 136 8 1.38 61 10 Magelang 2,800 1,870 12,618 11,179 751 316 1,439 259 872 61 6.91 144 57 Purwokerto 1,600 1,295 7,109 6,153 727 179 956 93 95 10 1.33 49 7 Purworejo 2,400 2,145 11,905 10,200 455 348 1,705 148 215 13 1.80 60 16 Sleman 4,800 2,970 26,809 22,794 3,57 534 4,016 197 539 13 2.01 109 67

50 Appendix 4

Region/ Branch


Arrears

(BRI Office) Rp



No. of SHGs


Rp (million)

No. of SHGs

Rp (million)

of Col 8

of Col 4

No. of SHGs

Rp (million)

1 2 3 4 5 6 7 8 = 4 - 5 9 10 11 12 13 14

Wates 2,710 1,399 11,476 9,141 865 319 2,335 207 869 37 7.57 155 84 Wonosari 2,316 1,021 8,245 7,497 936 134 749 72 216 29 2.62 31 15 Wonosobo 1,650 893 6,633 5,347 685 195 1,285 78 303 24 4.57 62 13 Sub Total 48,726 28,829 223,181 186,025 24,795 5,370 37,157 2,472 6,503 18 2.91 1,418 546

Surabaya Banyuwangi 3,100 1,024 9,096 6,528 654 378 2,568 318 1,781 69 19.578 238 199 Blitar 3,500 1,995 17,923 15,375 1,818 364 2,548 234 932 37 5.20 128 74 Bojonegoro 1,400 710 5,330 4,168 886 195 1,162 87 170 15 3.20 40 11 Bondowoso 925 654 3,384 2,605 177 244 779 213 428 55 12.64 144 27 Gresik 1,500 1,000 10,141 8,578 1,147 218 1,563 113 218 14 2.15 43 15 Jember 2,115 1,066 10,928 9,427 1,277 241 1,501 215 1,065 71 9.74 142 80 Jombang 2,275 2,241 16,550 15,568 1,924 284 983 225 664 68 4.01 183 63 Kediri 5,250 1,079 15,770 11,612 1,510 270 4,158 130 1,143 27 7.24 73 111 Lamongan 2,500 1,708 12,470 10,955 2,318 262 1,515 71 147 10 1.18 40 3 Lumajang 2,395 1,479 12,944 11,516 1,341 477 1,429 433 1,024 72 7.91 109 38 Madiun 3,450 1,447 13,163 10,424 2,597 180 2,739 74 685 25 5.21 75 67 Magetan 7,900 2,615 31,717 24,187 3,008 673 7,530 393 2,245 30 7.08 230 232 Malang Kawi 300 68 693 608 70 7 85 3 20 23 2.86 1 0.3 Martadinata 1,750 1,402 12,222 11,608 1,282 180 615 133 380 62 3.11 95 34 Mojokerto 5,748 2,855 32,227 26,926 3,441 586 5,301 269 1,178 22 3.65 195 81 Ngawi 6,529 2,499 30,028 23,633 4,134 605 6,395 212 968 15 3.22 117 91 Nganjuk 3,100 2,581 16,602 13,501 2,274 522 3,101 354 799 26 4.81 280 74 Pacitan 3,057 2,454 19,586 17,459 2,027 328 2,127 203 801 38 4.09 107 49 Pasuruan 825 630 4,539 3,773 422 153 765 77 107 14 2.36 38 8 Ponorogo 1,975 1,904 17,731 15,800 2,015 283 1,931 228 1,126 58 6.35 109 78 Probolinggo 1,150 496 4,048 3,440 377 148 608 127 302 50 7.46 105 33 Situbondo 2,800 1,119 11,361 9,262 791 318 2,100 269 1,179 56 10.38 208 107,

Appendix 4 51

Region/ Branch


Arrears

(BRI Office) Rp



No. of SHGs


Rp (million)

No. of SHGs

Rp (million)

of Col 8

of Col 4

No. of SHGs

Rp (million)

1 2 3 4 5 6 7 8 = 4 - 5 9 10 11 12 13 14

Trenggalek 2,125 1,665 7,466 5,768 766 448 1,697 296 600 35 8.04 215 109 Tuban 700 277 2,578 2,163 311 74 414 26 34 8 1.33 9 5 Tulung Agung 5,760 3,886 29,664 23,842 6,509 943 5,822 538 1,556 27 5.25 309 139 Sub Total 72,129 38,854 348,161 288,726 43,075 8,381 59,435 5,241 19,555 33 5.62 3,233 1,728

Denpasar Amlapura 2,000 1,009 8,624 6,869 1,076 155 1,755 40 143 8 1.65 33 13 Bangli 5,203 1,580 17,903 13,561 3,258 265 4,342 115 1,358 31 7.58 65 169 Denpasar 1,800 573 6,587 5,410 970 61 1,177 14 146 12 2.22 7 10 Gianyar 2,951 840 8,305 6,268 857 200 2,037 128 885 43 10.66 34 47 Semarapura 1,993 888 7,575 6,708 1,078 98 867 40 216 25 2.86 35 31 Negara 4,500 1,656 18,258 13,857 3,187 304 4,400 42 154 4 0.84 11 9 Singaraja 4,105 2,275 20,081 17,997 3,891 234 2,083 176 1,370 66 6.82 46 183 Tabanan 4,177 1,478 15,771 11,695 2,822 246 4,076 68 557 14 3.53 57 61 Dompu 2,790 1,868 13,2801 11,502 2,587 531 1,778 482 1,064 60 8.01 240 103 Mataram 3,495 4,582 22,155 19,627 2,004 925 2528 907 2,284 90 10.31 549 206 Praya 2,433 4,055 17,857 16,381 1,872 481 1,476 315 462 31 2.59 223 35 Raba Bima 5,383 3,916 21,626 18,200 2,184 625 3,426 487 1,474 43 6.82 1,130 403 Selong 5,855 6,161 39,539 34,356 3,331 1,152 5,183 915 1,601 31 4.05 475 116 Sumbawa

Besar 3,060 1,580 12,083 10,035 7,051 482 2,048 408 1,179 58 9.76 103 34 Sub Total 49,743 32,461 229,643 192,465 36,169 5,759 37,178 4,137 12,894 35 5.61 3,008 1,420

Banjarmasin Amuntai 617 788 5,063 4,649 503 99 414 66 168 41 3.32 51 13 Barabai 738 765 4,776 4,143 524 105 633 29 54 9 1.13 26 5 Kandangan 144 143 684 583 70 21 101 - - - 0.00 - - Martapura 342 277 1,304 1,248 142 8 56 - - - 0.00 - - Pleihari 542 216 2,020 1,611 188 56 408 8 32 8 1.60 6 3 Rantau 297 166 1,073 881 108 41 192 25 85 44 7.97 17 8

52 Appendix 4

Region/ Branch


Arrears

(BRI Office) Rp



No. of SHGs


Rp (million)

No. of SHGs

Rp (million)

of Col 8

of Col 4

No. of SHGs

Rp (million)

1 2 3 4 5 6 7 8 = 4 - 5 9 10 11 12 13 14

Sub Total 2,680 2,355

14,919

13,115 1,536 330

1,804 128 340 19

2.28 100 30

Makassar Barru 603 171 3,176, 2,627 294 84 550 17 26 5 0.82 13 2 Bantaeng 723 374 4,094 3,446 241 76 647 20 62 10 1.51 14 6 Bulukumba 1,349 496 6,040 4,924 545 136 1,116 25 53 5 0.88 16 5 Maros 1,494 1,123 7,955 6,771 2,285 253 1,184 211 752 64 9.46 146 55 Takalar 2,348 2,292 19,787 18,076 7,941 277 1,711 128 372 22 1.88 89 30 Jeneponto 949 383 3,751 2,963 346 121 788 49 114 15 3.05 15 2 Sungguminasa 2,435 1,216 13,547 11,836 1,339 264 1,711 105 238 14 1.76 52 21 Sinjai 1,773 755 9,440 8,460 1,389 119 980 40 118 12 1.25 24 10 Pangkep 1,413 602 6,323 5,343 513 117 980 29 62 6 0.98 18 5

Subtotal 13,088 7,412 74,113

64,445 14,894 1,447 9,668 624 1,799 19 2.43 387 136

Total

271,458 161,529

1,326,270

1,107,905 172,930 33,409

218,372 20,971 69,507 32 5.24

13,507 7,098 Rp = Rupiah; SHG = Self-Help Group Source: BRI Head Office

Appendix 5

53

AMOUNT OF GRANTS DISBURSED TO SHGs, TSUNAMI-AFFECTED AREAS

Province/District

Total No. of SHGs

Total GBPs

Amount of Grant Disbursed (Rp ‘000)

NAD Province a. Kota Banda Aceh 105 105 3,810,000b. Pidie 105 105 3,750,000c. Aceh Barat 105 105 4,200,000d. Aceh Besar 58 58 1.450,000

Subtotal 373 373 13,210,000 North Sumatra Province a. Nias 139 139 4,272,000b. Nias Selatan 40 40 1,044,000

Subtotal 179 179 5,316,000Total 552 552 18,526,000

54 Appendix 6

SUMMARY OF TRAINING PROGRAMS CONDUCTED

Table A6.1: Training Programs Implemented in Original 12 Provinces and in Jakarta, Indonesia

Location

Types of Training

Training Duration (Days)

Type of Participants

Number of

Participants

1. Jakarta

1. Training on Strengthening of Institutionalization for P4K Staff 2. Appreciation of Financial Management of Foreign Aid ( Group 1) 3. Appreciation of Branch Managers/ BRI AOs 4. Appreciation of Financial Management of Foreign Aid (Group 2) 5. Training of Financial Officers of Bank Partner 6. Workshop on SHG Empowerment

5 5 5 5 5 5

Provincial Staff Treasurers of Associations BRI AOs Treasurers of Associations Provincial Staff, District Project Officers, FEWs Provincial Officers

30 30 64 30 32 36

2. West Java and Banten

1. Strengthening of SHG Capacity for FEWs 2. Techniques of Business Development for SHGs 3. Refresher Course on the Development of Institutionalization of

SHG Associations for P4K Staff 4. Skills Development Course for SHG

10 5 5

FEWs SHGs District Project Officers, Coordinators, FEW Coordinators, and FEWs

150 150 90

3. Central Java 1. Basics of the P4K Methodology for FEWs (2 groups)

2. Empowerment of SHGs for staff (4 groups) 3. Refresher Course on Institutional Development for Staff (5

groups) 4. Training for SHG Managers (3 groups) 5. Training of SHG Association Management for FEWs (10 groups)

5 5 5 5 5

FEWs, District Project Officers, and FEW Coordinators FEWs District Project Officer, FEW Coordinator, and FEWs SHG Manager FEWs

60

120 150

90 200

4. D.I. Yogyakarta 1. Basics of Guidance for Staff and Guiding FEWs 2. Refresher Course on Institutional Development (Group1) 3. Management for SHG Association Managers (Group 1)

5 5 5

District Project Officers, FEWs, BRI AOs, and P4K Provincial Officers Guiding FEWs for SHG Associations Managers of SHG Associations

30

60 60

5. East Java 1. Workshop Problem Solving at the Province Level (2 groups) 2. Workshop Problem Solving at the Regency Level (43 groups) 3. Workshop Problem Solving at the Sub District Level (43 groups) 4. Workshop/Financial Administration for Financial Supervisors 5. Workshop for Private FEWs (2 groups) 6. Workshop on SHG Validation (2 groups)

7. Workshop/Training on Management for SHG Board Associations

(4 groups) 8. Basic Training for Private FEWs

4 3 2 4 2 2 4 6

Regency Management FEWs Community leaders, village leaders Financial supervisors, finance staff Private FEWs District Project Officers-MIS, computer operator SHG Managers Independent FEWs

75 1,500 3,600

30 117 48

140

30

Appendix 6 55

Location

Types of Training



Number of

Participants

9. PRA Training (2 groups) 10. Training of Computer Operators (2 groups) 11. 12. Training on Business Management for SHGs (2 groups) 13. Training on Production Management for SHG Managers

(2 groups) 14. Training on Institutional Development for FEWs (3 groups) 15. Training for SHG Associations(150 groups) 16. PRA for Forming New SHG Associations (175 activities)

6 6 6 6 2 3

FEWs Operator computer, District Project Officer-MIS SHG Associations SHG Managers District Project Officers, FEWs SHG Associations

60 50

60 60

90 1,500

6. Bali 1. Basic Training for P4K staff at the Provincial level 2. Training on Application of the P4K MIS Program 3. Education and Training on Gender Streamlining 4. Refresher Training on Institution Building 5. Training on Development for SHG Associations

6 4 9 4 6

FEWs, District Project Officer, P4K District staff District Project Officer, MIS District Computer. Operator FEW, village officials, village cadres, farmers FEWs SHG Management

30

30

30 30 60

7. West Nusa Tenggara

1. SHG Development based on PRA Methodology 2. Refresher Course on P4K Methodology for Group 1 Staff 3. Refresher Training on Institution Building

6

15 10

FEW, FEW Coordinator, and District Project Officer FEW Coordinators and District Project Officers FEWs

30

90 60

8. Riau 1. Refresher Course for FEW Coordinators 2. Refresher Course for FEWs 3. Basics of Extension for Independent FEWs 4. Appreciation of Financial Administration of Foreign Aid Projects 5. Workshop for SHGs’ Product Marketing 6. Meeting for Task Discussion, Groups 1 and 2 7. Meeting for Task Discussion, Groups 3 and 4

8. Training of Institutional Development

5 5 5 3 4 3 3 5

District Project Officers, FEW Coordinators FEWs, FEW Coordinators Independent FEWs District Project Officers District Project Officers, FEWs ,and SHGs FEWs District Project Officers, AOs, FEW Coordinators, Data Managers SHG Association Managers

20 21 30 15 30 120 68

60

9. South Sumatra

1. Refresher Course for Guiding Staff (4 groups) 2. Refresher Training Course on Institutionalization

5 1

FEWs and Independent FEWs District Project Officers, FEW Coordinators

132 30

10. Bengkuku 1. Coordination Meeting at the Provincial level

2. Workshop on Planning & Evaluation, Sub-District. Level (6 groups)

3. Workshop on Planning & Evaluation District level (6 groups)

1 2 2

FEWs, District Officers, Provincial Officers, AOs SHGs SHGs, FEWs, District Officers, AOs, Provincial

72

650

150

56 Appendix 6

Location

Types of Training



Number of

Participants

4. Training on P4K Methodology Development for FEWs 5. Training on P4K Motivation Development for FEWs 6. Training on SHGs’ Skills Development 7. Training on Institutional Development

5 5 2 5

Government FEWs FEWs SHG Managers SHGs’ Association Managers

75 75 400 30

11. Lampung

1. Refresher Course on Institutionalization Development 2. Motivation for Staff/Supervisors of Group 1 3. Motivation for Staff/Supervisors of Group 2

4. Motivation for Staff/Supervisors of Group 3 5. Motivation for Staff/Supervisors of Group 4 6. Motivation for Staff/Supervisors of Group 5

5 3 3 3 3 3

FEWs, FEW Coordinators Subdistrict Heads District Project Officers, Few Coordinators, FEWs FEWS District Project Officers, FEWs FEWs

30 30 30

25 29 27

12. South Kalimantan

1. Refresher Course for P4K Facilitators, Group 1


3. Training on Management Information System (MIS)

4. Refresher Course on SHG Associations Development



7. Refresher Course for SHG Leaders

7 7 7 7 7 7 7

District Project Officers, FEW Coordinators, FEWs District Project Officers, FEW Coordinators, FEWs District Project Officers, MIS, Computer Operators District Project Officers, FEWs Coordinators, FEWs District Project Officers, FEW Coordinators, FEWs District Project Officers, FEW Coordinators, FEWs SHG Leaders

30

30

15

30

30

30

30

13. South Sulawesi

1. Training on Institutionalization for SHG Managers 2. Training on PRA/SHG Development

3. Training on Entrepreneurship for SHG Managers 4. Training of SHGs on Product Quality Improvement 5. Refresher Course for FEWs

5 5 5 3 5

SHG Association Managers District Project Officers, FEW Coordinators, FEWs SHG Managers SHG Managers FEWs

30 20

30 270 60

AO = account officer; BRI = Bank Rakyat Indonesia; FEW = field extension worker; MIS = management information system; P4K = Proyek Peningkatan Pendapatan Petani Kecil (Income Generating Project for Marginal Farmers and the Landless), SHG = self-help group Source: Agency for Agricultural Human Resource Development

Appendix 6 57

Table A6.2: Training Programs Conducted in Jakarta, NAD, and North Sumatra, Indonesia.

Province

Types of Training

Number of Batches

Number of Participants

Duration (Days)

Jakarta

1. Training on Entrepreneurship Development for

Project Officers 2. Training on Microfinance 3. Training on Planning and Monitoring &

Evaluation 4. Training on Management Information System

(MIS) 5. Training Course on Entrepreneurship

Development for SHGs

3 1 1 1 4

30 30 30 40 30

5 5 5 5 5

Nanggroe Aceh Darussalam

1. Basic Training for P4K Field Extension Workers 2. Training Course on Leadership at Sub-District

Level 3. PRA Training/SHG Development 4. Strengthening of SHG Capacity Course 5. SHGs’ Skills Development Course

2 1 300 packages 300 packages 300 packages

30 30

5 5

North Sumatra

1. Basic Training for P4K Field Extension Workers 2. Training Course on Leadership at Sub-District

Level 3. PRA Training/SHG Development 4. Strengthening of SHG Capacity Course 5. SHGs’ Skills Development Course

2 1 150 packages 206 packages 206 packages

30 30

5 5

MIS = management information system; P4K = Proyek Peningkatan Pendapatan Petani Kecil (Income Generating Project for Marginal Farmers and the Landless); PRA = participatory rural appraisal; SHG = self-help group Source: Agency for Agricultural Human Resource Development

Appendix 7

58

SUMMARY OF PROJECT COSTS

Table A7.1: Project Costs by Component and Financing Plan ($'000)

At Appraisal Actual

Component Foreign

ExchangeLocal

Currency Total Foreign

Exchange Local

Currency Total

A. Project Cost

1 Self Help Group Development 6,900

33,300

40,200

2,509

21,091

23,600

2 Microfinance Services -

55,200

55,200

-

35,681

35,681

3 Institutionalization and Building 2,600

11,300

13,900

4,183

8,070

12,253

Management Capacity

4 Tsunami Assistance 188

1,953

2,141

Total Base Costs 9,500

99,800

109,300

6,880

66,795

73,675

Contingencies 1,400

8,200

9,600

Interest During Construction 18,000

18,000

12,110

12,110

Total 28,900

108,000

136,900

18,990

66,795

85,785

B. Financing Plan

1 Asian Development Bank 26,300

52,300

78,600

17,861

31,420

49,281

2 International Fund for 2,600

22,300

24,900

1,129

19,154

20,283

Agricultural Development

3 Bank Rakyat Indonesia 8,300

8,300

1,891

1,891

4 Government 25,100

25,100

14,330

14,330

Total 28,900

108,000

136,900

18,990

66,795

85,785

Source: Asian Development Bank estimates.

Appendix 7 59

Table A7.2: Expenditure Accounts by Financier ($ '000)

ADB IFAD BRI

Item Foreign

Exchange Local


Exchange Local


Exchange Local

Currency

Total

Microfinance Services

19,461

19,461

14,329

14,329

1,891

1,891 Equipment and Materials

233

320

553

168

168

Training and Studies

666

6,350

7,016

2,346

2,346

Consulting Services:

607

607

1,129

1,129 International Consultants


528

528

549

549 National Consultants

Incremental Costs:

601

601

227

227 Salaries and Wages Incremental Costs: O&M

2,447

1,636

4,083

1,535

1,535

Vehicles

1,610

571

2,181

Interest During

12,110

12,110 Construction

Tsunami Assistance

188

1,953

2,141

Total

17,861

31,420

49,281

1,129

19,154

20,283

1,891

1,891 ADB = Asian Development Bank; BRI = Bank Rakyat Indonesia; IFAD = International Fund for Agricultural Development; O&M = operation and maintenance Source: Asian Development Bank

60 Appendix 7

Table A7.3: Expenditure Accounts by Financier ($ '000)

Government Total

Item Foreign

Exchange Local


Exchange Local

Currency Total Microfinance Services Equipment and Materials

721

233

954

Training and Studies

11,336

11,336

32,034

12,002

44,036


1,736

1,736 International Consultants


2,994

2,994

2,994

2,994 National Consultants Incremental Costs: Salaries and Wages Incremental Costs: O&M

5,618

2,447

8,065

Vehicles

2,181

1,610

3,791 Interest During Construction

12,110

12,110

Tsunami Assistance

2,141

188

2,329

Total

14,330

14,330

18,990

66,795

85,785 O&M = Operation and Maintenance

Source: Asian Development Bank estimates.

Appendix 7 61

Table A7.4: Project Costs by Financier ($ '000)

ADB IFAD BRI

Item Foreign

Exchange Local


Exchange Local


Exchange Local

Currency Total

Self Help Group 2,509 7,241

9,750 2,514

2,514

Microfinance Services 19,461

19,461 14,329

14,329 1,891

1,891 Institutionalization and Building Management Capacity 3,054 2,765

5,819 1,129 2,311

3,440

Tsunami Assistance 188 1,953

2,141

Total Base Costs 5,751 31,420

37,171 1,129 19,154

20,283 1,891

1,891

Contingencies Interest During Construction 12,110

12,110

Total Project Cost 17,861 31,420

49,281 1,129 19,154

20,283 1,891

1,891 ADB = Asian Development Bank; BRI = Bank Rakyat Indonesia; IFAD = International Fund for Agricultural Development Source: Asian Development Bank estimates.

62 Appendix 7

Table A7.5: Project Costs by Financier ($ '000)

Government Total

Item Foreign

Exchange Local


Exchange Local

Currency Total

Self Help Group

11,336

11,336

34,936

13,845

48,781 Microfinance Services - - Institutionalization and Building Management Capacity

2,994

2,994

15,247

7,177

22,424

Tsunami Assistance

2,141

188

2,329

Total Base Costs

14,330

14,330

6,880

66,795

73,675

Contingencies Interest During Construction

12,110

12,110

Total Project Cost

14,330

14,330

18,990

66,795

85,785 - Not funded by the local government Source: Asian Development Bank estimates.

Appendix 8

63

PROJECT ORGANIZATIONAL CHART

MOABRI

ATCProv. Off. BRI

DPOBRI Branch Off

Central Level

Provincial Level

District Level

MOABRI

ATCProv. Off. BRI

DPOBRI Branch Off

Central Level

Provincial Level

District Level

National Project Manager

Second Project AssistantOperational & Coord. of Field

Assistant Team Division

First Project AssistantAdmin. & Financial Division

Third Project AssistantPlanning & Money Division

Admin. &Finance

Secretary &Public

Relation

BudgetPlanning Operational Field

AssistanceResearch &

Development

MIS &Monitoring &Evaluation

ConsultantTreasurer

SteeringCommittee

RIGP Technical Team

Field Assistant Team

Executive Secretary of AAHRD

Head of AAHRD

National Project Manager

Second Project AssistantOperational & Coord. of Field

Assistant Team Division

First Project AssistantAdmin. & Financial Division

Third Project AssistantPlanning & Money Division

Admin. &Finance

Secretary &Public

Relation

BudgetPlanning

Admin. &Finance

Secretary &Public

Relation

BudgetPlanning Operational Field

AssistanceResearch &

Development

MIS &Monitoring &Evaluation

ConsultantTreasurer

SteeringCommittee

RIGP Technical Team

Field Assistant Team

Executive Secretary of AAHRD

Head of AAHRD

RIGP ORGANIZATIONAL CHART

AAHRD = Agency for Agricultural Human Resource Development; ATC = Account Training Coordinator; BRI = Bank Rakyat Indonesia; DPO = District Project Officer; MIS = Management Information System; MOA = Ministry of Agriculture; RIGP = Rural Income Generation Project

Appendix 9

64

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenants

Reference in Loan Agreement

Status of Compliance

A. PROJECT EXECUTING AGENCY 1. As Project Executing Agency for Parts A and C,

AAHRD shall be responsible for field and management of low-income families, promotion of SHG formation and business election, SHG skills training, support for sub loan application and business plans, and assisting BRI in monitoring sub loan repayments.

Schedule 6, para.1

Complied with

2. As Project Executing Agency for Part B, BRI shall be

responsible for receipt of SHG savings, for sub loan appraisal, disbursement and repayment, and for providing support for graduating SHGs and families to avail for other credit. Facilities.

Schedule 6, para.2

Complied with

3. The Project Executing Agency shall cooperate closely

in the implementation of the Project in accordance with the terms of the Memorandum of Understanding dated 29 August 1997, setting out in detail the respective roles and responsibilities of AAHRD and BRI. To ensure such coordination at the field level, representatives of AAHRD and BRI shall meet monthly at the provincial, district, and sub district levels to review the implementation of the project.

Schedule 6, para.2

Complied with. AAHRD and BRI monitored and worked together as a task force team to avoid the increase in credit arrears (as a percentage of outstanding sub-loan amounts), which reached 31.83% at the national level at the end of the Project.

Project Implementation Units 4. Within one month after the Effective Date, A central

Rural Income Generation Project Implementation Unit (RIGP-IU) shall be established under the supervision of the Director General of AAHRD to oversee and coordinate Project Implementation at the national level. The RIGP-IU shall be headed by a National Project Manager with qualifications and experiences acceptable to the Bank, who shall be appointed within one month after effective date.

Schedule 6, para.4(a)

Complied with. RIGP-IU was established in Jakarta with a National Project Manager on April 1, 1998, which was two months before the actual ADB loan effectiveness date (June 18,1998).

5. Within three months after the Effective Date, AAHRD

shall established a provincial Project Implementation Unit (PIU) in each of the 12 provinces participating in the Project to provide operational management, and shall appoint a Provincial Project Manager with the necessary qualifications and experience for each PIU. To ensure effective Project implementation, the borrower shall enable the Provincial Project Managers who have served under P4K Phase II to remain in such positions under the project at the discretion of the senior project management and AAHRD.

Schedule 6, para.4(b)

Complied with. Provincial PIUs in now 13 provinces were established with its own 13 provincial project managers on April 1, 2008, which was two months before the actual ADB loan effectiveness date (June 18, 1998).

Appendix 9

65

Covenants

Reference in Loan

Agreement


District Project Officers 6. Within one month prior to commencement of the

Project activities in a district, MOA shall appoint a District Project Officer with the necessary qualification and experience to supervise project implementation in such district.

Schedule 6, para.5

Complied with through the establishment of the RIGP-PIU at the district level on April 1, 1998, which was two months before the actual ADB loan effectiveness date June 18, 1998). District Project Officers were appointed.

Project Management Staff 7. The borrower and BRI shall ensure that as adequate

number of full-time staff, with sufficient qualifications and experience, are appointed to serve in Project management at the national, provincial and district levels, and that the necessary financial resources are made available to the Project as required. The Borrower shall take due account of the importance of maintaining continuity, particularly with regard to experience staff, during the transition from P4K Phase II to the Project. In addition, the Borrower shall also give priority to women in the appointment of new project staff, and in particular, FEWs.

Schedule 6, para.6

Complied with. Most provincial staff are working full-time while FEWs and AOs are working on part-time basis. About 20% of the staff members were women.

Project Steering Committee 8 Within three months after Effective Date, the Borrower

shall establish a Project Steering Committee (PSC) to be chaired by BAPPENAS and including representatives from AAHRD, BRI and the Ministry of Finance. The PSC shall have an overall supervisory role in the implementation of the Project and provide liaison with the other government agencies concerned.

Schedule 6, para.7

Complied with, but delayed. PSC at the national level chaired by Bappenas to oversee Project implementation and liaise with other concerned parties was officially established only on 26 January 2001 or 3.5 years after the Project started and monthly meetings were occasional.. The overall responsibility for Project management was under the central and provincial levels while its implementation was at the district and sub-district levels. Weaknesses of this arrangement had been identified as: i) wide area for provincial agencies, ranging from 4 to 24 districts; (ii) a high administration workload; iii) delays in the decision making process; iv) top-down planning; and v) a relatively low sense of ownership. To address these problems, PSCs at the provincial and district levels, in consultation with the local government, were also formed. During the implementation period, AAHRD expanded the PSC membership with another Directorate General involved with MOA.

Appendix 9

66

Covenants

Reference in Loan

Agreement


Fielding of Consultants 9. The services of consultants shall be utilized in

carrying out the Project, with regard to (a) project management; (b) management information systems, monitoring and evaluation, micro-enterprise development, and project impact assessment; (c) training of field staff and SHGs; (d) use of statistics in poverty reduction; (e) institutional networking and coordination; (f) training in approaches to poverty reduction; and (g) rural credit. Consultants under (b) shall be provided by internationally-recruited consultants who shall be financed under the IFAD Loan Agreement in accordance with the Management Services Agreement entered into between the Borrower and the UNOPs.

Schedule 6, para.6

Complied with.

B. MICROFINANCE SERVICES Sub loans 10. BRI shall on lend the proceeds of the ADB and IFAD

loans to SHGs under BRI’s standard loan documentation. The initial lending rate from BRI to SHGs shall be 22.15 percent per annum. Except as the borrower, BRI and the Bank may otherwise agree, the relending interest rate under the Subsidiary Loan Agreement and the on lending interest rate on sub loans to SHGs shall be reviewed every six months and adjusted as necessary by agreement among the Borrower, the project Executing Agencies, the Bank and IFAD. Sub loans to SHGs may have terms of 6 to 12 months as appropriate. The principal and interest shall normally be repaid in equal monthly installment, although there may be exceptions for some micro-enterprises (such as livestock fattening) involving longer installment periods .BRI shall use the funds received from the repayment of sub loans to SHGs under the Project, subject to the repayment amounts due under the Subsidiary Loan Agreements

Schedule 6, para. 8

Partly complied with. Interest rates remained the same at 22.15% per annum since the beginning. Interest rates were not revised because of government concerns on the effect of the possible increase in the interest spread on the final beneficiaries. Reflows from the loan repayments were used for credit or re-lending.

Business Plans 11. The FEWs shall assist the SHGs to prepare business

plans as part of the sub loan application and submit them to the BRI branch concerned for review and approval. Such business plans shall be commercially and financially viable and environment friendly. AAHRD and BRI shall provide on going advice, training and support to SHGs, including those which have already received sub loans.

Schedule 6, para.9

Complied with

Appendix 9

67

Covenants

Reference in Loan

Agreement


Environmental Guidelines 12. AAHRD and BRI shall ensure that all activities

funded under the project comply with the Borrower’s applicable environmental guidelines.

Schedule 6, para.10

Complied with

Impact Assessment System 13. AAHRD shall develop, operate and maintain a

Project Impact Assessment System, in consultation with the Bank, to address three issues: (I) changes in the welfare of the participating household, (ii) changes in the welfare of residents in affected villages, and (iii) how much of this change in welfare can be attributed to the Project. The assessment shall cover , among other things: (I) household

Schedule 6, para.11

Complied with. The Impact Assessment (IA) System was operational. Surveys on income and non-income impacts were conducted and the data were processed and analyzed

income changes and the affect on consumption; (ii) gender specific nutritional achievements (iii) gender specific children’s school enrollment rates; (iv) employment and wages; (v) survival rates of elderly; and (vi) overall and gender specific children’s time allocation among educational and income generating activities. Such evaluation shall also focus on the gender participation of SHGs participants and how gender composition of such participants influences measures of performance such as sub loan repayment rates, food and non-food expenditure growth and differences in household expenditure patterns.

Monitoring and Evaluation System 14. AAHRD shall develop, operate and maintain a

Project Monitoring and Evaluation (M&E) System, in consultation with the Bank, to manage data and produce information for SHGs, FEWs BRI, and Project management at the district, provincial and central government levels. The M&E System shall provide a regular procedure for comparing the actual implementation of the Project activities within the time frame specified against the agreed implementation schedule. Monitoring subsystems shall collect data on SHG formation and development, sub loan disbursement and savings networking with other institutions, SHGs graduation and subsequent activities among others

Schedule 6, para.12

Complied with. The MIS and M&E systems were operational. New data compiled under the SHG validation exercise were added to the MIS and were at the same time used as baseline data for the M&E system. For sub loans, BRI established a sound system on recording lending and collection activities that could provide immediate status on credit.

15. M&E training shall be provided for all levels from the

SHGs through the FEWs, BRI account officers and DPOs, to the national level. The format for M&E reporting shall be designed and agreed upon with the major project stakeholder at the commencement of the Project as well as the frequency of the reporting.

Schedule 6, para. 13

Complied with

Appendix 9

68

Covenants

Reference in Loan

Agreement


MID TERM REVIEW 16. A mid term review of the project shall be jointly

conducted by the Borrower, BRI, the Bank and IFAD during the fourth year of the Project implementation to consider the efficacy of the Project design, including its objectives, scope, methodology and implementation arrangements, and the impact on the beneficiaries and to recommend such changes as may be required. The midterm review shall consider the possibility of ( a) expanding the Project into area into provinces which have successful pilot activities, and (b) the incorporation of the project into a National Program for poverty eradication

Schedule 6, para. 14

Complied with

SEMI- ANNUAL PROGRESS REPORT 17. AAHRD and BRI shall furnish to the Bank semi-

annual reports on the carrying out of he Project and on the operation and management of Project facilities.

Article IV, Section 4.07 (b); Project Agreement, Section 2,06(b) Loan

Complied with

Other Government Programs 18. The Borrower and BRI shall cooperate closely in

monitoring the impact on the Project of other government programs (including other credit schemes) and shall ensure that appropriate actions were taken to avoid duplication o other negative consequences

Schedule 6, para. 15(a))

Complied with. Other credit schemes implemented by BRI and local governments were monitored.

Others 19. The Borrower shall keep the Bank and IFAD advised

of any proposed institutional organization changes which may affect the Project, particularly in respect, to the assignments of FEWs.

Schedule 6, para. 15(b))

Complied with

20. If any subsequent amendment of the procurement

contract is proposed after its execution, the proposed changes shall be submitted to ADB for prior approval

Ref: Guidelines for Procurement Under Asian Development Bank Loans (November 2004), Section 4.04 (d) and Schedule 5, Section 2 ( c ) of the Amended and Restated Loan Agreement

Complied with

21. Promptly after physical completion of the Project,

BRI shall prepare and furnish to the Bank a Project Completion Report.

Loan Agreement, Section 4.07 (b); Project Agreement Section 2.06(b) Loan

Complied with

Appendix 9

69

Covenants

Reference in Loan

Agreement


22. BRI shall maintain separate accounts for the Project;

(ii) have such accounts and related financial statement audited annually; and (iii) furnish to the bank not later than nine months after close of the fiscal year certified copies of such audited accounts and financial statement and report of the auditor, all in English language.

Loan Agreement, Section 4.07 (b); Project Agreement, Section 2.08(b) Loan)

Complied with

AAHRD = Agency for Agriculture Human Resources Development; AOs = Account Officers; BAPPENAS = Badan Perencanaan Pembangunan Nasional (National Development Planning Agency; BRI = Bank Rakyat Indonesia; FEWs = Field extension workers; IFAD = International Fund for Agricultural Development; MOA = Ministry of Agriculture; MIS = Management Information System; M&E = Monitoring and Evaluation; PIU = Project Implementation Unit ; P4K = Proyek Peningkatan Pendapatan Petani Kecil (income Generating Project for Marginal Farmers and the Landless); PSC = Project Steering Committee; RIGP–IU = Rural Income Generation Project–Implementation Unit; SHGs; Self-Help Groups; UNOPs = United Nations Office of Project Services Sources: Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Indonesia for the Rural Income Generation Project. and MOA-AHHRD Project Completion Report

Appendix 10

70

SUMMARY OF CONSULTING SERVICES

Number of Person-

Months

Position

Per Schedule

Per Contract

Location

Date of Contract

Date of

Completion

International Management Specialist MIS Specialist M&E Specialist Micro- Enterprise Specialist Impact Assessment Specialist

36 36 27 12 15

36 36 27

National National National National National

October 1999 October 1999 October 1999 October 1999 October 1999

Nov. 2002 April 2002 July 2002

August 2002

National Program Development HRD Specialist MIS Specialist Institutional & Community Specialist Micro-Enterprise Specialist Credit & Banking Specialist

48 48 48 48 48

48 48 48 24 24

National National National National National

March 1999 March 1999 March 1999 May 1999 May 1999

March 2003 March 2003 March 2003 April 2001 April 2001

Provincial Development Business Field Business Specialist Field Business Specialist Field Business Specialist Field Business Specialist Field Business Specialist Field Business Specialist Field Business Specialist Field Business Specialist Field Business Specialist

30 30

30 30 30 30 30 30

30

30 30

30 30 30 30 30 30

30

Bali West Nusa Tenggara

Central Java Yogyakarta

Riau South Sumatra

East Java South

Sulawesi South

Kalimantan

May 1999 May 1999

May 1999 July 1999 July 1999 July 1999 July 1999

January 2000

January 2000

Sept. 2001 Sept. 2001

Sept. 2001

January 2002 January 2002 January 2002 January 2002

July 2002

July 2002

Provincial Rural Credit Rural Credit Specialist Rural Credit Specialist Rural Credit Specialist Rural Credit Specialist Rural Credit Specialist Rural Credit Specialist Rural Credit Specialist

24

24 24 24 24 24

24

24

24 24 24 24 24

24

West Nusa Tenggara &

Bali Central Java West Java East Java

South Sumatra South

Sulawesi Central Java

March 1999

March 1999 March 1999 March 1999 July 1999

January 2000

January 2000

March 2001

March 2001 March 2001 March 2001 July 2001

January 2002

January 2002

Special Management Provincial Management Specialist Provincial Management Specialist Provincial Management Specialist

36 36 36

36 30 30

West Java Central Java

East Java

July 1999 December 1999 December 1999

July 2002 July 2002 July 2002

Province Provincial Management Specialist Provincial Management Specialist Provincial Management Specialist

12 12 12

12 12 12

East Java Central Java Yogyakarta

January 2000 January 2000

January 2001 January 2001 January 2001

Appendix 10

71

Number of Person-

Months

Position

Per Schedule

Per Contract

Location

Date of Contract

Date of

Completion

National National Management Specialist

7

National

March 2000

September 2000

Technical Support Programming/ Development. Application Specialist Networking Specialist Website Specialist

6

6 6

30

6 19

National

National National

January 2000

January 2000 January 2000

October 2005

July 2000 October 2000

HRD = Human Resource Development; MIS = Management Information System; M&E = Monitoring and Evaluation Source: MOA-AAHRD PCR

Appendix 11

72

LIST OF EQUIPMENT AND VEHICLES PROCURED

Number Procured By Year

Item

1998/ 1999

1999/ 2000

2000 2001 2002 2003 2004 2005 2006

Total

Procured

Target

1. Vehicles a. 4 Wheel Vehicle b. 2 Wheel Vehicle 2. Computer and Printer 3. Modem 4. Manual Typewriter 5. Wireless 6. Bookcase 7. OHP 8. Facsimile

195

60

12

325

180

152 340

77

282

8

650

23

260

2 6

22

14

450

39 252

360

27

3

4

3

360

335

16

12

3

50

37

2,725

306

155 612

122 540

3 22

34

2,675

290

290 645

135 540 136 135

OHP = Overhead Projector Source: MOA-AAHRD Project Completion Report

Appendix 12

73

FINANCIAL AND ECONOMIC ANALYSES

A. Financial Analysis 1. Financial analysis was conducted for 10 microenterprises financed through Bank Rakyat Indonesia (BRI) loans accessed by Self-Help Groups (SHG) members in order to determine the profitability of these microenterprises. The analysis was based on financial data provided by selected SHGs to the Agency for Agriculture Human Resources Development (AAHRD). Financial analysis of these microenterprises was patterned after the simple cash-flow analysis adopted at project appraisal, which used returns to labor as a measure of business profitability. The financial internal rate of return of each microenterprise project was not estimated due to a lack of data on the fixed capital investment of each business enterprise. 2. The sources of operating capital were BRI loans and equity capital. It was assumed that the SHG members were second-time borrowers. This assumption was based on the BRI report that most of the 47,341 SHG borrowers as of December 2005 were second-time borrowers. Hence, the largest loan they could avail themselves of was Rp1,000,000 at an annual interest rate of 22.15%. To determine the opportunity cost of equity capital, the prevailing commercial time-deposit rate of 11 percent in 2005 was assumed in the analysis. 3. Results of the financial analysis show positive gross margins, net income, and returns to labor per person day for all the microenterprise models (Appendix Table A12.1). These results show that investments in these microenterprises are financially attractive. Based on a monthly net income, the small restaurant business (Rp3,766,500) was the most profitable, followed by the banana chips enterprise (Rp1,459,183), the crispy chips business (Rp1,071,918), and the catering business (Rp801,500). However, lontar leaf mat weaving generated the highest returns to family labor per person-day (Rp300,236), followed by a sweet snack food business (Rp162,579), the catering business (Rp78,767), and the banana chips enterprise (Rp74,770). In all instances, the SHG member borrowers were able to meet their debt service obligations, as was evident from their positive net cash flows or savings. 4. This analysis, however, does not mean that all the microenterprises in this Project were financially viable. Factors like a lack of available market outlets, high prices of inputs, adverse weather, input supply shortages, local economic difficulties, and a lack of business acumen among SHG members can adversely affect the financial performance of microenterprises. B. Economic and Sensitivity Analyses 5. The economic internal rate of return of the Project based on an aggregation of the different microenterprises was not computed due to the following reasons: (i) the AAHRD gathered financial data from selected SHGs only so there was a lack of data on the financial status of all the microenterprises in the project areas, (ii) the district governments do not currently monitor the financial performance of all the SHGs’ business investments, and (iii) the number of micro-enterprises and their composition by business type cannot be forecast with confidence since these are determined by market forces. No economic internal rate of return was estimated because of a lack of data on fixed capital investment of each business enterprise. Using the methodology applied in the project appraisal, benefit-cost analysis of 10 microenterprises was, however, undertaken. Interest payments were excluded in the economic

74 Appendix 12

Table A12.1: Financial Costs and Benefits of Selected SHG Micro-enterprises

Riau West Java

Central Java

Item Kampar Kota Pekanbaru Subang Magelang Purworejo

Type of business Small restaurant Cassava chips Horticulture Banana chips

Crispy chips Catering

Bamboo weaving

Business cycle Monthly Monthly Semi annually Monthly Monthly Monthly Monthly Ownership Member Member Member Member Member Member Member SHG type Women Women Women Women Women Women Male A. Gross Income (Rp)

Gross income from micro-enterprise/cycle 7,500,000 800,000 7,800,000 3,250,000 2,250,000 9,000,000 1,800,000B. Variable Costs (Rp): 1. Purchases of inputs/raw materials/stocks 1,500,000 300,000 1,250,000 1,250,000 795,000 7,650,000 875,000 2. Hired labor 150,000 3. Promotion/sales/transportation 20,000 240,000 4. Miscellaneous costs 260,000 20,000 33,750 5. Interest on BRI loan 18,500 6,290 111,000 18,500 15,332 18,500 16,188 Total Variable Costs (B) 1,778,500 346,290 1,601,000 1,268,500 844,082 7,818,500 891,188C. Fixed Costs (Rp): 1. Land/building/vehicle rental 200,000 - - 20,000 100,000 2. Depreciation of equipment/tools/machinery 255,000 24,000 125,000 22,357 14,000 130,000 13,183 3. Imputed cost of family labor 1,500,000 100,000 750,000 500,000 300,000 150,000 336,000 Total Fixed Costs (C) 1,955,000 124,000 875,000 522,357 334,000 380,000 349,183D. Total Cost (B+C), Rp 3,733,500 470,290 2,476,000 1,790,857 1,178,082 8,198,500 1,240,371E. Gross Margin (A-B), Rp 5,721,500 453,710 6,199,000 1,981,500 1,405,918 1,181,500 908,812F. Net Income (A-D), Rp 3,766,500 329,710 5,324,000 1,459,143 1,071,918 801,500 559,629G. Family Labor Requirementa (person-days) 150 10 75 50 30 15 34H. Returns to Family Labor Per Person Day (E-H), Rp per person-day 38,143 45,371 82,653 39,630 46,864 78,767 26,730I. Benefit-Cost Ratio (A/D) 2.01 1.70 3.15 1.81 1.91 1.10 1.45J. SHG Member's Household Income, Rp 3,793,300 365,710 5,336,356 1,491,143 1,108,560 864,167 577,159 Profit from micro-enterprise 3,766,500 329,710 5,324,000 1,459,143 1,071,918 801,500 559,629 Other sources of Income 26,800 36,000 12,356 32,000 36,642 62,667 17,530 Total Household Income 3,793,300 365,710 5,336,356 1,491,143 1,108,560 864,167 577,159K. SHG Member's Household Expenditure, Rp 1,525,000 55,000 1,850,000 736,667 5,000 10,000 6,000L. Debt Serviceb, Rp 101,833 34,623 610,998 101,833 84,395 101,833 89,105M. Net Cash Flow or Savings (K-L-M), Rp 2,166,467 276,087 2,875,358 652,643 1,019,165 752,334 482,054aAll labor provided by the family members except for catering business in Magelang where 15 person-days are provided by hired labor in addition to family labor b Includes monthly/semi-annual loan principal payment and interest on loan Source of basic data: MOA-AAHRD PCR

Appendix 12 75

Table A12.2: Financial Costs and Benefits of Selected SHG Micro-enterprises

East Java South Sulawesi

Item Probolinggo Gresik Takalar Type of business Sweet snack food Crispy chips Lontar leaf mat weaving Business cycle Monthly Monthly Monthly Ownership Member Member Member SHG type Women Women Women A. Gross Income (Rp) Gross income from micro-enterprise/cycle 975,000 1,600,000 370,000B. Variable Costs (Rp): 1. Purchases of inputs/raw materials/stocks 318,800 690,000 37,000 2. Promotion/sales/transportation 30,000 3. Miscellaneous costs 4. Interest on BRI loan 5,883 12,765 1,240 Total Variable Costs (B) 324,683 702,765 68,240C. Fixed Costs (Rp): 1. Land/building/vehicle rental 2. Depreciation of equipment/tools/machinery 13,333 1,525 3. Imputed cost of family labor 40,000 120,000 140,000 Total Fixed Costs (C) 40,000 133,333 141,525D. Total Cost (B+C), Rp 364,683 836,098 209,765E. Gross Margin (A-B), Rp 650,317 897,235 301,760F. Net Income (A-D), Rp 610,317 763,902 160,235G. Family Labor Requirement (person-days) 4 12 12H. Returns to Family Labor Per Person Day (E-H), Rp per person-day 162,579 74,770 300,236I. Benefit-Cost Ratio (A/D) 2.67 1.91 1.76J. SHG Member's Household Income, Rp 1,610,317 1,540,569 180,000 Profit from micro-enterprise 610,317 763,902 160,235 Other sources of Income 1,000,000 776,667 300,000 Total Household Income 1,610,317 1,540,569 460,235K. SHG Member's Household Expenditure, Rp 535,780 685,332 180,000L. Debt Serviceb, Rp 32,450 70,265 6,823M. Net Cash Flow or Savings (J-K-L), Rp 1,042,087 784,972 273,412aAll labor provided by the family members b Includes monthly/semi-annual loan principal payment and interest on loan Source of basic data: MOA-AAHRD PCR

Appendix 12

76

analysis since these are transfer payments. All local currency costs were economic values following their financial values except for unskilled labor in microenterprise projects whose wages were adjusted by a conversion factor or shadow wage factor of 0.80. 6. As shown in Appendix Table A12.2, using base assumptions, all the microenterprise models exhibit attractive benefit-cost ratios (i.e., greater than 1.00). The horticulture business generated the highest benefit-cost ratio of 3.30. It was followed by the sweet snack food business (2.72), the small restaurant business (2.02), the crispy chips business (1.94), and the banana chips business (1.83). Considering that the production cycles of these microenterprise models are short, the total impact of these investments is expected to be high. 7. Sensitivity analysis was conducted to ascertain the effects of potential changes in gross revenue and cost fluctuations on the benefit-cost ratios of the microenterprise models. The following risk scenarios were evaluated: a 10% decrease in gross revenue, and a 10% increase in total cost. Except for the catering business, results of the sensitivity analysis show that all the microenterprise models evaluated remain economically viable even with a 10% increase in total cost or a 10% decrease in gross benefits (Appendix Table A12.3). Nine of the 10 microenterprises evaluated are able to maintain benefit-cost ratios that are greater than 1. The decrease in gross revenues is the most important factor affecting the economic viability of the microenterprises, as evident from lower benefit-cost ratios obtained from a 10% decrease in gross benefits when compared with the ratio produced by the same percentage increase in total cost. 8. Considering the data limitations mentioned earlier, it should be noted that the evaluation of the 10 microenterprises is not a representative sample by which to measure the financial and economic viability of the whole project.

Appendix 12 77

Table A12.3: Results of Economic Benefit-Cost Analysis of Selected SHG Microenterprises

Riau West Java

CentraL Java Item Kampar Kota Pekanbaru Subang Magelang Kab. Purworejo

Type of business Small restaurant Cassava

chips Horticulture Banana chips Crispy chips Catering Bamboo weaving Business cycle Monthly Monthly Semi annually Monthly Monthly Monthly Monthly

Gross Income (Rp) 7,500,000 800,000 7,800,000 3,250,000 2,250,000 9,000,000 1,800,000 Total Costa (Rp) 3,715,000 464,000 2,365,000 1,772,357 1,162,750 8,180,000 1,224,183 Benefit-Cost Ratio 2.02 1.72 3.30 1.83 1.94 1.10 1.47aExcludes interest on loan while the imputed cost of family labor was adjusted using a shadow wage factor of 0.80. Source of basic data: MOA-AAHRD PCR

78 Appendix 12

Table A12.4: Results of Economic Benefit-Cost Analysis of Selected SHG Microenterprises

East Java South Sulawesi Item Probolinggo Gresik Takalar

Type of business Sweet snack food Crispy chips Lontar leaf mat weaving Business cycle Monthly Monthly Monthly Gross Benefit (Rp) 975,000 1,600,000 370,000 Total Cost a (Rp) 358,800 823,333 208,525 Benefit-Cost Ratio 2.72 1.94 1.77

aExcludes interest on loan while the imputed cost of family labor was adjusted using a shadow wage factor of 0.80 Source of basic data: MOA-AAHRD PCR

Appendix 12

79

Table A12.5: Sensitivity Analysis of Microenterprise Benefit-Cost Ratios

Recalculated Benefit-Cost Ratios Type of Micro-

enterprise

Base Benefit-Cost

Ratio

Increase in Total Cost

By 10%

Decrease in Gross

Revenue by 10%

Small restaurant 2.02 1.84 1.82 Cassava chips 1.72 1.57 1.55 Horticulture 3.30 3.00 2.97 Banana chips 1.83 1.67 1.65 Crispy chips 1.94 1.76 1.74 Catering 1.10 1.00 0.99 Bamboo weaving 1.47 1.34 1.32 Sweet snack food 2.72 2.47 2.45 Crispy chips 1.94 1.77 1.75 Palm leaf mat weaving 1.77 1.61 1.60

Source of basic data: MOA-AAHRD PCR

Appendix 13

80

REPLICATION OF RIGP/P4K METHODOLOGY BY DISTRICT GOVERNMENTS.

Local Government Support

Name of Province/ District Starting Year

Budget Allocateda

(Rp)

Steering Committee Organized

RIAU Kampar Rokan Hulu Indagiri Hulu Pekanbaru

2000 2002 2003 2001

7,652,000,000 243,101,000 110,000,000 191,500,000

Established

Established 8,196,601,000 SOUTH SUMATRA Musi Banyuasin Ogan Komering Ilir Muara Enim Kodya Palembang

2002

145,000,000

Established

Established

145,000,000 LAMPUNG South Lampung North Lampung Central Lampung East Lampung Tanggmus Bandar Lampung Metro

2004 2002 2003 2003 2004

2002

175,000,000 690,000,000 330,000,000 458,000,000 40,000,000

659,000,000

Established Established Established Established Established Established

2,352,000,000 WEST JAVA Serang Pandeglang Lebak Tangerang Bogor Sukabumi Cianjur Bekasi Karawang Purwakarta Sumedang Subang Bandung Garut Tasikmalaya Ciamis Cirebon Kuningan Indarmayu Majalengka

2001 2004

- -

2003 1999 2001 2000

- 2003

- 2002 1998 2001

- 2004 2004 2000 2001 2003

241,000,000 540,000,000

- -

55,470,000 50,000,000 22,500,000

165,000,000 -

57,000,000 -

1,125,000,000 210,000,000 630,000,000

- 40,000,000 12,300,000

6,700,000,000 93,500,000 25,000,000

Established Established

- - - -


- Established

- Established Established

- - - -

Established Established Established

9,966,770,000

Appendix 13

81

REPLICATION OF RIGP/P4K METHODOLOGY BY DISTRICT GOVERNMENT



Budget Allocateda

(Rp)


CENTRAL JAVA Demak Tegal Batang Grobogan Kudus Brebes Pati Pemalang Jepara Rembang Blora Banyumas Cilacap Purbalingga Banjarnegara Magelang Purworejo Kebumen Sragen Temanggung Wonosobo Wonogiri Boyolali Karanganyar

2001 2001 2000

2004 2001

2000

2004 2004

2001 2004 2002 2002 2003 2004 2004

2000 2000

2,350,000,000 518,500,000

1,608,257,000

500,000,000 2,000,000,000

225,000,000

42,500,000 90,000,000

827,165,000

300,000 244,937,000 40,000,000

150,000,000 200,000,000 150,000,000

51,000,000 30,000,000

Established Established Established Established Established Established Established Established Established Established Established Established Established Established Established Established Established Established Established Established Established Established Established Established

9,027,659,000 D. I. YOGYAKARTA Bantul Sleman Gunungkidul Kulonorogo

Established Established Established Established

0 BALI Buleleng Membrana Gianyar Karangasem Klungkung Bangl Badung Tabanan Denpasar

2001

2002 2001 2001

189,028,000

5,000,000 105,000,000 50,000,000

Established

Established Established Established Established

349,028,000 WEST NUSA TENGGARA West Lombok Central Lombok East Lombok Bima Sumbawa Dompu Mataram

2004

2002 2003

2000 2000

255,400,000

1,400,000,000

80,000,000

55,000,000 52,000,000

Established Established Established Established Established Established Established

1,842,400,000

Appendix 13

82

REPLICATION OF RIGP/P4K METHODOLOGY BY DISTRICT GOVERNMENT



Budget Allocateda

(Rp)


EAST JAVA Gresik Mojokerto Jombang Bondowoso Pasuruan Situbondo Probolinggo Banyuwang Kedir Jember Trenggalek Malang Lumajang Tulunggagung Nganjuk Madium Blitar Ngawi Tuban Magetan Ponorogo Bojonegoro Pacitan Lamongan

2002 2001

2004

2003

2002 2002

1,024,000,000 236,000,000

50,000,000

90,000,000

1,361,000,000 330,000,000


Established


Established

Established

Established Established Established

3,091,000,000 SOUTH KALIMANTAN South Hulu Sungai Central Hulu Sungal North Hulu Sungai Tanah Laut Banjar Tapin

2004

2003

25,000,000

85,000,000

110,000,000 SOUTHE SULAWESI Takalar Maros Jeneponto Pangkep Gawa Barru Sinjai Bulukumba Bantaeng

2002 2001 2004

33,400,000 115,100,000 11,112,500

Established

b Established

b b b b b

159,612,500 TOTAL 35,240,070,500

P4K = Proyek Peningkatan Pendapatan Petani Kecil (Indonesian term for Rural Income Generation Project); RIGP = Rural Income Generation Project a For group capacity building and microfinance services b In process Source: MOA-AAHRD

Appendix 14 83

NUMBER OF SHGs BY TYPE OF GROUP BUSINESS AS OF DECEMBER 2005

Type of Business

West Java

Central

Java

DI

Yogyakarta

East Java

Bali

West Nusa

Tenggara

Riau

South

Sumatra

Bengkulu

Lampung

South

Kalimantan

South

Sulawesi

Total

Agriculture:

Food Crops 264 590 93 1,132 53 190 172 107 135 70 12 18 2,836 Estate Crops 6 28 0 21 6 1 0 4 6 0 4 1 77 Livestock 1,633 1,950 997 5,317 2,528 145 30 64 419 199 89 64 13,435 Fisheries 228 92 69 301 18 48 28 33 44 27 9 62 959 Post-Harvest Agric. Product

727

597

173

582

57

119

58

0

126

82

32

54

2,607

Agricultural Production

0 2 0 0 0 0 1 0 0 0 0 1 4

Agricultural Services

84 18 18 107 13 37 9 0 6 0 0 1 293

Agricultural Trading

1,281 1,157 172 945 125 5,499 296 456 96 241 172 232 10,672

Non- Agriculture

Trading 3,407 4,369 280 5,152 37 4 223 144 90 149 162 1,469 15,486 Services 82 111 21 150 4 364 21 15 3 7 4 116 898 Production 1,115 649 195 1,020 322 65 24 82 12 65 87 59 3,695 Others 1,002 3,108 249 1,312 141 517 86 110 136 42 190 263 7,156 Total 9,829 12,671 2,267 16,039 3,304 6,989 948 1,015 1,073 882 761 2,340 58,118

0 means no SHG borrowed in the business enterprise SHGs = Self Help Groups Source: MOA-AAHRD Project Completion Report

Appendix 15

84

NUMBER OF SHGs THAT WERE MERGED INTO AN ASSOCIATION OR COOPERATIVE AS OF DECEMBER 2005

Province

No. of SHG Associations

No. of SHG

Cooperatives RIau 660South Sumatra 27 0Bengkulu 46 0Lampung 22 0West Java 123 0Central Java 464 18D.I Yogyakarta 66 0East Java 422 0Bali 154 10South Sulawesi 30 0South Kalimantan 13 0West Nusa Tenggara 69 7Total 1,496 35

0 means no SHG cooperative formed in the province SHGs = Self Help Groups Source: MOA-AHRRD Project Completion Report

Appendix 16

85

PROJECT OVERALL ASSESSMENT

Criterion Weight Assessment Score Weighted Rating

Relevance 20% Highly Relevant 3 0.6 Effectiveness 30% Effective 2 0.6

Efficiency 30% Efficient 2 0.6

Sustainability 20% Likely 2 0.4

Overall Assessment Successful 2.2

Highly Successful: Overall weighted average is greater than or equal to 2.7 Successful: Overall weighted average is greater than or equal to 1.6 and less than 2.7 Partly Successful: Overall weighted average is greater than or equal to 0.8 and less than 1.6 Unsuccessful: Overall weighted average is less than 0.8 Source: ADB Operations Evaluation Department, 2006. Guidelines for Preparing Performance Evaluation Reports

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