I am currently working as a consultant in KOMPAK – Community Development at Abt JTA, funding by the Australian Government in collaboration with Poverty Reduction Directorate, Ministry of National Development Planning Republic of Indonesia (BAPPENAS) What I do is designing, piloting, implementing and evaluating a policy (program) specifically to reduce poverty and inequality. What program? here it is…….
Indonesia, the fourth most populous country in the world, has witnessed significant poverty reduction in last two decades, but poverty rates still remain stubbornly high. In order to ensure future equitable outcomes and to accelerate poverty reduction, Government of Indonesia has developed a new comprehensive strategy – Pengembangan Penghidupan Berkelanjutan (P2B) – to connect poor and very poor Indonesians to new economic opportunities. P2B builds on the long running community empowerment program – Program Nasional Pemberdayaan Masyarakat (PNPM) – that started 14 years ago, and follows the principles of participation.
P2B is an overall livelihoods approach with five key components: 1) community-based micro-loans and capacity building program (PKKPM) and supporting productive infrastructure (PKKPM-PiE); 2) group-based cash grants and training(Kube-PKH); 3) productivity enhancement for fisheries communities; 4) labor market linkages for vulnerable youth; and 5) strengthening and increasing the productivity of micro-enterprises and co-operatives.
A key pillar of P2B’s poverty reduction strategy is Peningkatan Kesejahteraan Keluarga Berbasis Pemberdayaan Masyarakat (PKKPM), which builds on the long history of successes and failures of community-based agriculture, and micro-loans programs in Indonesia. It is implemented by Kementerian Desa, PDT, dan Transmigrasi (Ministry of Villages-MoV) and is the first program that links both demand (community, and poor households) and supply side (local governments, technical ministries, NGOs, and private sector) of various aspects of livelihoods. Its approach is consistent with the nascent (but growing) body of global evidence that multi-sectoral community-based livelihoods programs can lead to poverty reduction, enhance skills, reduce market failures and eventually improve incomes.
PKKPM aims to gradually expand the economic options available to the poor, assisting them to move from insecure poverty to economic independence, with a combination of institutional, financial and technical support using the principles of participation. It intends to achieve this objective through two broad concepts: social empowerment and economic empowerment.
The initial part of the program focuses on developing, empowering and building self-managed grassroots institutions of the poor, creating an institutional platform for the poor, which also becomes a platform for ‘social empowerment’. This platform is used as a means to augment poor peoples’ voice and capacity to engage with the range of public institutions (especially under the new village law) and officials interacting with the poor, enhancing their ability to take advantage of local livelihoods opportunities, and to demand other services and meet other needs.
The institutional development also follows the principle of aggregation, networking small groups, and community-based organizations, thereby enabling greater bargaining power, aggregation of demand and becoming a platform for economic empowerment. The rural poor at the ‘Bottom of the Pyramid’ also provide a large, untapped potential market for products and services, as well as a source of quality goods and labor for the private sector and civil society organizations
To summarize, PKKPM aims to enable poor people with the skills, organizations and voice to participate in and capture the benefits of the growth taking place in the dynamic Indonesian context, helping communities to help themselves to address both prevailing government and to make markets work for them. It is envisioned that this would catalyze entrepreneurship activities enhancing the livelihoods of poor and poorest households. Eventually, the self-employed rural poor in Indonesia should be able to grow their micro-businesses, gain a bigger share of the rural economy, and be economically and socially empowered.
PKKPM: Key Activities
PKKPM is a multi-step program implemented by MoV with several inter-linked activities and stakeholders. The program envisions that it will be integrated at the last-level of local government to ensure long-term sustainability. To achieve this objective, the implementation starts with apprising the local governments of PKKPM’s objective and its approach to poverty reduction, which is shortly followed by a mapping of economic potential of the target areas. These initial steps engage the local government to enable customization according to their local context.
Following the economic potential mapping, the communities are socialized (or informed) about the program, and the interested households in geographical proximity are mobilized to form women-only savings and loans groups (called KPB – groups have to be smaller than 20 households). Form 2015 onwards, only bottom 40 percent households that are part of the unified database can join the program.
Immediately after groups are formed, facilitators and cadres encourage households to save, and inter-loan these savings to build trust amongst each other. The beneficiaries are then provided three rounds of training – group management, financial management and micro-entrepreneurship. After these trainings, facilitators assist the beneficiaries to prepare an individual and group business plans, which are then aggregated at the KPB level.
Groups that prepare appropriate business plans, have been active for six months and have met certain eligibility criteria  can apply for group cash grants (for training only) and group loans (for productive assets and other business needs).  After households have accessed loans and grants, these households also have the option to enroll in one of the many sectoral programs provided by the various ministries under P2B (fisheries, labour, etc.) or other government programs.  As the groups and communities mature, more advance business groups with similar business interests will be created from the members of savings groups, eventually forming a large social network.  Furthermore, there is additional funds allocated to the communities and local government for community-based economically productive inter-village infrastructure to complement the household-level activities.
Please see also our video Kami Kuat Karena Bersama dan Kami Siap Bekerja dan Berkarya !
 The existing government-run micro-loan program (RLF) has no focus on institution building and the groups that are formed are not very functional groups. PKKPM intends to rectify that by increasing its focus on appropriate functioning of groups.  PKKPM is also giving a small demand-driven skills grant so that households are not reluctant to access training needed to improve their business productivity. total expenditure per households shall not exceed IDR 5 million or approximately US$390  P2B is gradually building its menu of technical training such as agriculture, fisheries, formal sector linkages training program etc. These training modules will help poor assist households to move up the production curve and in some instances move to a different production curve. In some cases, these households will also diversify their livelihoods away from agriculture to other occupations  It is intended that this social network will accelerate the diffusion of technical knowledge and good practices