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					           MDTFTANS: Support for Poor and Disadvantaged Areas Project
                              In Aceh and Nias
                            Technical Overview

Background to the proposed project

The purpose of the proposed SPADA project is to provide a mechanism by which participatory
planning procedures can be incorporated into district government-decision making. The project
will deliver significant quantities of economic infrastructure and improved social services to
recovering areas, and it will allow for an extended public discussion of long term recovery
planning across Aceh.

Although SPADA Aceh is intended to support the BRR‘s reconstruction plan for the tsunami
areas of Aceh, the project is also closely linked to a large program of World Bank support to
Indonesia‘s 100 poorest kabupaten that was prepared in 2004 and negotiated in early 2005. The
purpose of this project is to build on the participatory processes put in place through the national
Kecamatan Development Project and other successful community development projects but to
align bottom-up planning procedures with the newly empowered district governments of

SPADA‘s design solves three particularly challenging problems for supporters of local level
development management. First, while community development projects such as KDP are fine
for building small-scale infrastructure such as farm roads, primary schools, and simple irrigation
systems, they are not suitable for projects that require more technical input or long-term network
planning, such as larger, secondary infrastructure, teacher training, or health diagnostics. Second,
for local projects to be sustainable, they must fit into local government planning and budget
support. Aceh‘s reconstruction for the moment is benefiting from the large-scale donor presence,
but for the longer term development will be planned and managed by district governments
empowered by Indonesia‘s decentralization laws. Third, while community development projects
have a good track record of delivering high quality infrastructure and services to villages, all too
often the economic environment that they work in remains highly distorted in ways that block
local trade and growth among the poor.

SPADA‘s design, therefore, is intended to eventually supersede KDP by anchoring bottom-up
planning in local government institutions. The project design addresses all three problems
identified above. It provides a link so that community and kecamatan proposals that are too large
or complex for KDP have a mechanism so that they can feed into kabupaten decision making.
SPADA also provides a strong role for local government agencies both by making local
governments chair the decision-making body that reviews proposals and by providing incentives
for technical agencies to collaborate with kecamatan representatives. Third, SPADA provides
both analytical work on local trade distortions and a large investment component to help local
governments rehabilitate or upgrade basic productive infrastructure.

Because virtually all of the poor kabupaten where SPADA works in Indonesia are also
characterized by high levels of local conflict, SPADA‘s design includes a number of activities
intended to promote peace-building, reconciliation, and local re-development. Preparation of this
concept note included close attention to developing a program of post conflict activities that could
support the government‘s efforts to provide a post-MOU re-development program for the areas of
Aceh affected not just by the tsunami, but also by conflict.

Even before the tsunami, SPADA was already programmed to launch preparation in five of the
poorest districts. Following the tsunami and the establishment of the BRR, the government
accelerated SPADA‘s launch preparation. Indonesia‘s national parliament (DPR) reviewed the
overall SPADA project in early September, 2005, and proposed that the project be expanded to
cover all 17 kabupaten, including two kabupaten in Nias. The Government has also asked that
SPADA‘s programs for post-conflict reintegration and development be substantially strengthened
for Aceh. These include damage and vulnerability assessments, practical training to help local
governments mediate conflict successfully, and strengthened conflict monitoring and evaluation.

The BRR‘s the medium-term strategy for the reconstruction and rehabilitation of Aceh Nias is
based on four main priorities: (a) Strengthen local government; (b) Institutionalize participatory
planning; (c) Promote MDG achievement in Aceh and Nias; and (d) Support institutions for
social justice and community rebuilding. .

SPADA‘s design fits with the BRR reconstruction program and intended to support BRR‘s exit
strategy in 2009. BRR‘s 2005 assessment of the current status of reconstruction showed that:

       Remaining resources should be predominantly used for reconstruction and development
        broadly defined, at the community level and at the district/provincial level.
        Reconstruction and development should be closely matched with capacity-building
        efforts for local governments (through a ―learning by doing‖ approach) and community
        participation for enhanced governance to prepare for the BRR‘s exit in 2009.

       Though the initial focus will be on the areas most heavily damaged by the tsunami and
        earthquake (with a particular focus on Nias), infrastructure support and related capacity-
        building should be gradually extended to other districts of Aceh with less severe tsunami-
        related damage but where years of conflict, internal displacement caused by the natural
        disasters, and associated poverty have also damaged basic infrastructure or prevented
        adequate development of infrastructure conducive to the further economic development
        necessary for a sustainable peace.

Donor coordination

         In a large, comprehensive project such as this one, ensuring that project activities do not
replicate or contradict similar programs supported by other donors is key. SPADA is using a
number of mechanisms to minimize overlap, maximize coordination with donors and government
agencies, and identify opportunities to work cooperatively with other programs that are
contributing to Aceh and Nias recovery. The following sections summarize the general strategy.

        Inter-donor preparation -- Preparation of this project concept note involved participants
from several donor agencies. They included USAID, AusAid, DFID, UNDP and the International
Finance Corporation (IFC). A primary purpose of their participation was to provide them with a
hands-on overview of the entire project so that they can assess where convergence or overlap
would be most likely to occur. But an equally important purpose was for them to identify existing
successful donor funded projects that could be extended to SPADA-Aceh/Nias. The project
appraisal team included representatives from the major donor agencies.

        The second major mechanism to support donor coordination is the proposed planning
process that defines the project. Because SPADA is based in the Bappeda, it sits at the center of
where donor coordination should happen. SPADA contracting and activities are nearly all located
within the kabupaten itself, which means that project activities do not face the normal problems

of higher level contract commitments that cannot be changed. If a different donor already has an
operating program in place, the kabupaten can re-allocate SPADA funds to other priority

        The third major mechanism lies in the domain of the project‘s transparency policy. Donor
duplication and double dipping often takes place because information is missing, whether
deliberately or simply because information is not easy to come by. SPADA Aceh builds on
KDP‘s experience to promote broad-based information sharing. Because SPADA is coordinated
through each district‘s planning board, proposals coming to the district forum can be discussed in
a multistakeholder forum before final decisions are made by the representatives.

Technical Structure of SPADA Aceh

Component A: District Grants (US$ 12.76 million). The purpose of the district grants is to
support larger or more technical proposals emerging from the subdistrict planning process that
also contribute to reconstruction, cooperation, and development. Projects are selected by the
district development forum on a quarterly basis using criteria that include demonstrable broad-
based benefits, cost and local contribution, and their technical and financial feasibility. Projects
that benefit more than one subdistrict are favored by the scoring system, but there is no absolute
rule requiring this. For the first two years of the project, the maximum size of an individual
proposal is US$50,000 (a procedure was developed for its operational manual to allow exceptions
in special cases). Subdistricts are encouraged to partner their proposals with line agency or NGO
funding. Thirty percent of the district grant is reserved to support quality improvements in health
and education. Both sectors have developed pre-defined positive lists of eligible activities.
Results from the quarterly meetings are published in local newspapers and are fed back to the
subdistricts through the facilitation teams.

The project is budgeted to cover all 17 kabupaten in Aceh and, after detailed assessment during
the appraisal the government proposed to add the two kabupatens in Nias. District grant amounts
begin at an aggregate of Rps. 3.0 billion (approx. US$300,000) in the project's first year. Each
year an independent audit commissioned by the national management unit under TOR acceptable
to BRR reviews the physical and financial performance of the grants. Satisfactory performance
allows the size of the district grant to increase by an additional billion rupiah, up to a maximum
of 8.0 billion rupiah in the project's final year. Districts receiving a qualified audit are demoted to
Rps. 1 billion until the qualifications have been lifted. Districts that do not fix the problems after
a reasonable period will be dropped from the program. Final preparation and appraisal for this
proposal will verify the budget amounts and also explore options for counterpart fund
contribution sin the project‘s later years.

Projects that are approved by the forum are passed over to the Project Implementing Unit. This
management unit includes a privately contracted engineer and a procurement specialist as well as
relevant members of the district line agencies. Project proponents must form a three-person
project implementation team per approved proposal to supervise project implementation and to
provide accountability reports to the PMU and the sponsoring forum. These teams are made up of
representatives of the project's proponent and a technical specialist. The PMU reviews the
detailed project proposal, cost estimate, implementation procedures, and implementation team
before tendering the contract. Project implementation is independently monitored by a monitoring
unit attached to the district forum, and by local NGOs that are contracted for that purpose.

Component B: Capacity Development (US$ 2.93 million). SPADA is working in districts and
subdistricts of extremely low capacity. They require a substantial investment in improving the

capacity of local stakeholders. SPADA's tackles capacity questions through a combination of
training, practical exercises, professional technical support, and by developing learning networks.
It is expected that, as defined below, SPADA will partner with pre-existing donor programs such
as USAID‘s Local Government Support Project. Additional technical capacity support provided
to local governments and the communities through SPADA include health and education
diagnostics, support for the private sector forums, and training district legislators in public
expenditure analysis and formulation. At the local level, SPADA will work closely with the
AusAid program of support to kecamatan governments. The project will also fund support to the
provincial government, particularly for monitoring progress on improving local investment

Project preparation has identified a potential mechanism by which local governments can screen
capacity programs already underway in Aceh that are funded by other donors. Rather than launch
and develop entirely new programs, SPADA could then approach a donor to amend its program
to cover SPADA areas. The technical mechanisms for such an approach are relatively simple; the
challenge is finding the appropriate fiscal transfer system, which would have to be ready prior to
appraisal. However, such a system would be very desirable. It would make capacity work entirely
demand-driven, and it would be an excellent way to coordinate the many donor capacity
programs already operating in Aceh.

This component also includes several activities related to reintegration and dispute resolution
whose purpose is to improve SPADA quality control and to develop institutional means for
resolving disputes that arise during reconstruction. Smaller pilot programs that work to develop
community-based reconciliation activities, youth employment and other incentives to promote
nonviolent dialogue, and pilot work on community-based land mapping for dispute resolution
will be launched in the project's second and third operational year.

Component C: Implementation Support ($ 8.14 million) -- SPADA includes three major types
of implementation support. The different levels of government are backed by a technical
assistance structure that includes a national management team, an oversight and monitoring unit
in each province, and a multi sectoral support team in each participating district. Linked to this
management structure is an internationally recruited procurement agent, who will manage
procurement during the project's startup period and gradually hand over procurement functions to
local counterparts who complete a certification and internship program. The second consists of
the technically specialized services needed to carry out baseline inventories, investment climate
surveys, and needs assessments, and to deliver the educational and health services. The third type
of implementation support covers programs for information dissemination, including radio and
public awareness programs that address issues related to reconciliation.

Component D: Monitoring, Evaluation, and Studies ($0.41 million). SPADA requires a
sophisticated system for monitoring and evaluation (see Annex 2 for more detail). Project
managers need to know in more than casual ways whether the project is on course and whether
interventions are having their desired effect. But more than in most project designs, policy makers
also need to know more about how to deal effectively with conflict and recovery. The core of this
component is a package of quantitative and qualitative baseline and intermediate surveys and case
analyses that can track impacts due to project interventions. This category also includes programs
for conflict resolution that show promise but should be piloted on a two or three province scale
before expanding across the conflict regions, such as community land mapping or options for
community based trauma recovery. $0.2 million is budgeted for independent audits that will
begin in the project‘s second year.

                                 Summary of SPADA M&E Activities

    Monitoring activities
    Community participatory monitoring and evaluation
    Regular field supervision and monthly progress reporting by project staff, MIS
    Independent monitoring by civil society groups including public expenditure reviews by NGOs
    Health and education monitoring
    Case Studies
    Grievance/Complaints resolution process
    Evaluation Activities
    Impact study – qualitative and quantitative HH survey
    Technical/sectoral studies (EIRR, facility and user surveys, etc)
    Private sector development assessment tools (also for monitoring purposes)
    Conflict incidence mapping
    Vulnerable population impact assessments
    Training tracer impact assessments
    Supervision missions
    Financial audits

Institutional and Implementation Arrangements

All components of SPADA support the same bottom-up facilitated planning process to identify
and prioritize perceived reconstruction needs. Subdistrict and district decision forums will
identify these in the form of results (i.e. children vaccinated, bridges rebuilt, etc). There are,
however, different ways to respond to these needs once they are identified. For simple
infrastructure, grants given directly to communities are sufficient for small works and simple
services. For health and education services, communities may be clear about the results they
want, but specialized advice and oversight will be needed to help identify the activities which
would bring about those results. For bigger subprojects that benefit larger groups, proposals must
receive a technical verification before they are contracted out to qualified contractors.

SPADA's planning and implementation framework are built around Indonesia's formal bottom-up
planning process. That is, all of the planning and decision making units -- village councils, inter-
village fora, district planning boards etc -- are part of Indonesia's formal administration.
However, under SPADA, each level is enriched with various mechanisms intended to provide
additional participation and technical support to planning and implementation. These are
explained below.

National Government. BRR will be the executing agency for SPADA, but implementation will
be through the Ministry of Disadvantaged Areas. The Ministry will issue the General Guideline
(Pedoman Umum) and an Operational Manual (Juklak) for the project. Both have been reviewed
by IDA and will be issued before effectiveness. To provide policy advice, solve implementation
bottlenecks, and ensure that results from SPADA are monitored and fed back into policy, the
Ministry of Disadvantaged Areas will also chair a coordinating committee that includes the
Ministries of Home Affairs, Bappenas, and Finance.

Province. BRR will form a coordination committee that is responsible for overall project
supervision, technical oversight, and evaluation. This function will eventually move to the
provincial planning board (Bappeda). All SPADA funds are recorded in the provincial books, but

they do not enter provincial accounts, proceeding directly from BRR to the districts or

District. The policy and decision-making body for SPADA at the district level is the district
planning committee. This body is made of representatives selected from each subdistrict forum,
and is chaired by the head of the district planning board. Nonvoting representatives from NGOs,
the private sector, and citizen groups are invited. Each planning committee is supported by a
project secretariate that synthesizes the technical inputs provided by the sectoral assessments, and
also manages detailed designs and contracting (Figure 1 provides an overview of the overall
implementation design ). Once designs are finished, subprojects are contracted out through
project implementation teams made of the relevant executing agency and the project proponent,
supported by the procurement advisory team.

Figure 1: Primary Implementation Group

                                PROVINCIAL                   CENTRAL
                                 PROVINCIAL                   CENTRAL
                                 GOVERMENT                  GOVERNMENT

                                                                                   FUNDING BANK
                                             PROVINCIAL OR                          FUNDING BANK
                                              PROVINCIAL OR
                                                DISTRICT                                P.A.

                                             P M U DISTRICT
                                              P M U DISTRICT                                 SUBDISTRICT
            NGO PROJECT                                    Monitoring
             NGO PROJECT                                                     PROJECT
             MONITORING                                                    VERIFICATIO
                                                                              N TEAM
                                                                               N TEAM

                                    PP I T          IT
                                                  PP I T            IT
                                                                  PP I T

                                                                                            Project Proposals

                                  Project        Project         Project

                                   Primary Implementation Group

Subdistrict Fora (FAD). Also known as Forum Antar Desa, or FAD, are made of the elected
representatives from each village council, plus a number of respected leaders who are selected in
the beginning of the planning cycle. In Aceh, KDP now covers every kecamatan in the province;
along with a number of NGOs, kecamatans are receiving an intensive program in capacity
development. For KDP, each subdistrict is supported by an experienced consultant who
disseminates project rules, provides basic training in book-keeping and financial management,
and helps implement the referral system that passes proposals from the subdistrict to the district.
KDP will collaborate with the SPADA team to transparently select the kabupaten representatives
and to ensure that proposals too large for KDP are referred upwards to the kabupaten board.

Private sector involvement. To provide a mechanism for introducing private sector priorities
into the planning cycle, SPADA facilitators will form subdistrict and district business focus
groups using a methodology developed and tested during project preparation. Based on focus
group discussions, business fora propose public economic activities, goods and regulatory
reforms that would remove constraints on investment. Proposals are submitted to the subdistrict

fora (―FAD‖ in the diagram), where they are evaluated using the same criteria as everyone else's
proposal (contribution to rebuilding and reconciliation, poverty benefits etc) Proposals likely to
be too large for subdistricts are passed up to the district business fora for approval and
prioritization. (Regulatory reforms proposed by the business forum go to the district parliament
and Bupati). Figure 2 describes this process. The selected projects are then verified by the district
technical verification team, which is supported by experienced private sector engineers and
procurement specialists.

Finalized proposals can then be cosponsored through a subdistrict fora SPADA grant, or else
forwarded to other funding sources available in the district or province. All contracting and cost
information is shared with the business forum, which must form its own project oversight team as
part of project implementation for its proposals which are approved.

                                 Figure 2: Private Sector Proposal Process

                                                                SPADA District Forum

                                                                Business Forum
                                                                 Business Forum
                                                                                                            approved large projects
                                                                                                             to be competed at DF

                                                             large projects to be
                                FAD                        competed at BusForum                      FAD
                                 FAD                                                                  FAD

                    FAD = intervillage forum                                                                 -
                                                                                                   FAD = intervillage forum

                                                                                                    proposed small projects
            proposed small projects
                                                                                                    to be competed at FAD
            to be competed at FAD

                                               Sub -district                      Sub -district
                                                Sub -district                      Sub -district
                                                  FGD                                FGD
                                                    FGD                                FGD

Education -- Sub-district education and health working groups will be established (or
strengthened if already existing). The role of these bodies is to prioritize the needs and provide
technical recommendations to the decision-making forums at the respective levels. Sub-district
and district decision-making forums are shared with other SPADA components. These decision-
making forums will receive recommendations and technical support from the sub-district
education working group and district school board during their deliberations over which
proposals to fund.

The sub-district education and health working groups will compile proposals and prioritize them
based on needs. This working group will also create sub-district education and health proposals
that addresses issues proposed by multiple schools or clinics and which could be combined as one
proposal to achieve economies of scale and resource pooling (e.g. teacher or midwife training,
etc). Prior to the decision-making subdistrict meeting, verification teams will review all
proposals. District verification teams will verify sub-district proposals, and a team from the
province will verify proposals going to the district (see Figure 3).

Most health proposals will require technical support. In these cases contracts will be awarded to
NGOs, private professionals, etc. The implementation team will include at least one local
government sectoral official. Contracts will be signed by the implementation team and held by
the procurement unit at the respective levels. Grants can also be used to provide incentive
payments to government providers, but government agencies cannot be contracted to provide
services for which they are already paid. The sub-district education and health working groups

and the district education and health committees will serve as an advisory body when the
implementation teams need technical advice.

                  Figure 3: Implementation Design for Education and Health


                                          Health Technical Team

                 District                             District forum

                            District Health Committee                     District School Board

                                                   Inter -Village Forum

                             Health Working Group                             Education
                                                                             Working Group

                       Needs Identification team
                  Village                             Village Council
                                                                           School Committee

Current Status of Project Preparation

         Documents that were reviewed by the appraisal team include:

    a)   Project fund flow mechanism
    b)   Operational Manuals
    c)   TOR and tender documents for technical assistance
    d)   TOR for procurement and financial management advisers
    e)   Procurement plan
    f)   Summary budgets
    g)   Anti-corruption action plan
    h)   Monitoring and Evaluation framework
    i)   Environmental and Social Impact mitigation framework
    j)   Financial management risk assessment and mitigation plan

        SPADA preparation in Aceh began in June, 2005. Preparation activities included
mapping of social economic situation, social tension/conflict, resources (material, human
capacity, CSOs , NGOs etc..) and local government capacity assessments. Preparation also
mapped out donor funded district governance support programs.

       Project appraisal conducted on May 22nd – 27th, 2006 verified the project‘s institutional
and fiduciary design, evaluated the readiness of local government and other stakeholders, and
completed economic analysis. Five areas proposed by MDTF for appraisal review were:

    (a)     SPADA coverage areas – Appraisal confirmed BRR‘s request for SPADA coverage
            of all Aceh and Nias kabupaten. MDTF subsequently confirmed that based on BRRs
            policy decision of June, 2006 that all of Aceh qualified as affected areas, the
            appraised scope of the project was acceptable.

    (b)     Governance capacity programs – Rather than design and tender an entirely new
            program for local government capacity work, SPADA will collaborate with the
            already active, successful Local Governance Support Program (LGSP), which is
            managed by USAID. LGSP will expand their coverage to SPADA districts and
            sectors. The fund flow option for doing this is through a free-standing grant to the
            USAID contractor.

    (c)     Institutional management – Appraisal confirmed that BRR will be the executing
            agency for SPADA Aceh/Nias. For disbursing block grants, BRR will release funds
            to the districts directly from the KPKN khusus. For technical assistance contracts,
            BRR will transfer funds to the Ministry of Disadvantaged Areas, which holds the TA
            contracts for the national SPADA program. Oversight will be through a national
            coordinating committee chaired by BRR and including all agencies participating in
            SPADA. Appraisal also confirmed that these arrangements are acceptable to
            Bappenas, MOF, and Ministry of Disadvantaged Areas.

    (d)     Vulnerable groups – Appraisal confirmed the gender action program, which will
            work in tandem with other Acehnese gender programs supported by BRR and DSF.
            DFID is co-financing SPADA with an approximately $11 million grant to support
            post conflict and livelihood activities, of which some 60% support vulnerable groups.

    (e)     Financing plan —Appraisal confirmed the detailed budget structure and financing
            plan for the project. MDTF will provide $25 million and BRR $14.5 million. MDTF
            support is frontloaded. Local government funds are expected to become increasingly
            available in the project‘s outer years as sources such as special autonomy funds,
            revenue sharing funds, DAU, and emergency funds provided from the national

                                                                         Annex 1

     MDTFTANS: Support for Poor and Disadvantaged Areas Project (SPADA)
                             In Aceh and Nias
                        Monitoring and Evaluation

1.     Introduction

       A solid monitoring and evaluation (M&E) system is vital to allow project managers and
others to assess whether a project is being implemented as planned and to evaluate project
outcomes and impact. SPADA works in diverse poverty and post-conflict situations ranging
from large-scale natural disasters to areas of ethnic and religious strife. The context poses
unique challenges not only to capture and document local dynamics but also to monitor and
evaluate the effects of SPADA interventions on them. A more informed understanding of what
affects the root causes and levels of socially caused poverty, as well as what works in post-
conflict restoration – based upon solid M&E data - can help ensure that project interventions
build community resilience.

         In Aceh and Nias, a larger and comprehensive project such SPADA challenged is not
just to ensure that project activities do not replicate or contradict similar programs supported by
other donors but also how to have a single comprehensive M & E frame work that can be use .
During the project appraisal the donors agreed that SPADA have a single comprehensive M & E
frame work that can be used overall SPADA activities co-financing by donors.

2. SPADA Monitoring and Evaluation Framework

The SPADA M&E system will serve several purposes:

                Monitoring activities will allow a range of stakeholders, including project
                 managers, participating communities and leaders, to track progress and assess
                 whether the Project is being implemented as planned and take corrective action
                 as necessary.
                The evaluation component will assess the outcomes and impact of the project.
                 Did the project reach its stated objectives?
                Information collected during the course of the Project will attempt to answer
                 several research questions and hypotheses related to Project interventions and
                 its objectives. The project tests some important and fundamental hypotheses
                 related to the nexus of conflict and reconciliation, poverty reduction, and
                 empowerment of the poor.

The development of the SPADA M&E framework is premised on several important lessons
learned from community-driven development and post-conflict projects around the world:

                Using a mix of methodologies can improve the robustness and credibility of
                 findings. Findings can then be cross-checked or triangulated to compare results.
                 The SPADA M&E system will use both quantitative and qualitative methods
                 for collecting data. In addition, the Project will gather information from a
                 variety of sources. Project implementers as well as independent, external parties
                 such as NGOs will conduct monitoring.

               M&E findings must feed into management decisions and the redesign or
                adjustment of project interventions. To do so, the information gathered must be
                timely and reliable. The Project must make a substantial commitment and time
                investment to ensure that reporting systems work effectively and that Project
                managers and stakeholders use the findings constructively. For example, the
                Indonesian Kecamatan Development Program (KDP) had to counter a mindset
                among field consultants that reporting problems would reflect badly upon their
                individual performance and there was little incentive to act as ―whistle-
                blowers‖. In order for the M&E system to work, managers must send a clear
                message regarding the importance of and expectations for reporting.
               The Project Management Information System (MIS) must strike a balance
                between methodological rigor and the practicalities of project
                implementation and local capabilities. Field consultants and government
                officials are often busy with project implementation and pay less attention to
                regular reporting. Project reporting formats must be kept simple yet also
                capture key project performance information that will be useful for M&E
                purposes. In addition, local capabilities are often limited in terms of reporting
                skills and data analysis, so these skills must be enhanced over time. This is
                especially true of post-conflict areas where statistical data collection may not
                have occurred recently due to the insecurity and data management capabilities
                may range from low to non-existent. Impact evaluations using experimental or
                quasi-experimental designs require substantial external technical and
                specialized assistance.

3. Key Hypotheses and Research Questions for SPADA

Will SPADA interventions lead to its intended outcomes? The only way of answering this
question is to collect data and evidence on SPADA implementation and its effects in the field.
The appropriateness and effectiveness of project interventions must be tested, not just asserted.
Credible and objective data will provide sound evidence to influence project decisions and
eventually policy formulation.

SPADA will explore several key research questions:

               How effective are SPADA interventions at improving welfare and reaching
                poor and marginalized groups?
               How can local governments build effective mechanisms for interaction between
                district level planning for service delivery and community demand, especially
                for health and education services? What can be learned from the SPADA pilots
                regarding new ways of providing and managing service provision and involving
                beneficiaries in health and education?
               How can government, the business community and NGOs work together to
                create a stronger enabling environment for private sector development?
               Do SPADA activities contribute to building greater trust within the
                communities and between the communities and government institutions?
               What strategies are the most effective to support a transition to longer term
                development in recovering post-conflict areas?

4. Key Performance Indicators

The key outcome performance indicators for SPADA are:

               Improved access to cost-effective, quality infrastructure (EIRR>20%) through
                participatory planning processes in the 17 project kabupaten
               Quality and level of community participation in various project activities
                throughout the planning, decision-making and implementation cycle
               Increased use of alternative dispute resolution and legal mechanisms to resolve
                disputes peacefully
               % increase in new business registrations
               Improvements in health outcomes:
               Improvements in education outcomes:
               Increase in people‘s sense of security in their areas
               Creation or reform of government and local level institutions for handling

(See Annex One, for list of output performance indicators)

5. SPADA M&E Activities

The SPADA system builds upon several effective M&E mechanisms developed for KDP1 and 2

                     Community participatory monitoring and evaluation – In each project
                      site, communities will form committees to monitor and evaluate project
                      activities. Communities become the ―question-makers‖ and end users of
                      the information, rather than just the respondents and subjects of
                      household surveys. For the community development grants, communities
                      will monitor the process of community planning, decision-making,
                      contracting, procurement, and implementation. For the education and
                      health components, village-level committees will be formed specifically
                      to monitor the education and health activities. These committees could be
                      parents-teachers associations, school committees, community boards,
                      health unit management committees or other elected organizations who
                      will monitor project activities, provide feedback on service delivery, and
                      act as liaisons with the broader community.
                     Regular field supervision and monthly progress reporting conducted
                      by field staff and government officials. SPADA staff will report on
                      project progress at monthly coordination meetings at the district level (see
                      separate section on SPADA reporting).
                     Establishment of a management information system to capture key
                      quantitative information and indicators related to the monitoring of
                      outputs and performance, as well as personnel, financial and program
                     Independent monitoring by civil society groups such as provincial
                      NGOs and journalists. These civil society groups will report upon project
                      performance as well as conduct local budget expenditure reviews.
                     Grievance/complaints resolution process - The Project will establish
                      complaints/suggestion boxes at the village, kecamatan, district and

                      national levels. Complaints will also be collected from field reports and
                      supervision missions. Government staff and consultants at the district
                      level will first discuss the complaints during the monthly meetings and
                      agree upon a course of action. Project staff then follow up on each
                      individual case and national and district level staff monitor case
                     Technical and sectoral studies – The Project will undertake several
                      studies to measure economic internal rates of return and cost benefit. For
                      infrastructure projects, the Project will hire independent auditors and
                      evaluators to conduct a facilities quality check. The quality of
                      environmental management and mitigation will also be monitored through
                      free-standing reviews. Study findings will be widely circulated through
                      publications and workshops, and they will feed into Project decisions
                      regarding potential redesigns, procedures, operations, and management.
                     Financial review and audits by an internal project financial team as well
                      as the World Bank and the government audit agency, BPKP. In KDP1,
                      these parties audited 30 percent of all kecamatan accounts. In SPADA,
                      all district and kecamatan level funds will be audited along with a
                      representative sample of villages.

These M&E activities are ongoing for KDP and they will be extended and adapted for SPADA
sites. In addition, the SPADA M&E system builds upon research work and several
methodologies developed and pilot-tested during the project preparation phase:

6. Situation Analysis

A comprehensive situation analysis will be completed for each project district during the
SPADA preparation phase. The first 12 kabupaten are already completed and have been
provided to BRR, HIC, and to IOM. The situation analysis proceeds in two stages: first,
SPADA field consultants undertake consultations and data collection at the province and district
levels. The second phase involves interviews and data collection at the kecamatan and village
levels. During both stages the consultants use techniques such as key informant interviews,
focus group discussions, direct observation and document review, including local media reports
of violence.

This information provides a useful picture of the situation in each district as well as some
baseline aggregate information about the project areas. Some of these variables will be tracked
through project implementation and used to triangulate information from other data collection

7. Project Impact Study - Quantitative Household Survey and Qualitative Research

Findings from the situation analysis will feed into more in-depth qualitative research and the
development of a household survey to measure impact across several variables. The qualitative
aspect of this impact study work will capitalize upon many of the instruments and
methodologies developed extensively under the KDP and Community Conflict Negotiation
Study. The qualitative research will also feed into the design of the quantitative survey. The
survey design will employ a double-difference methodology (before-after, treatment and
control) At the beginning of the project, the Project will commission a baseline household
survey in treatment and control areas. A separate study will be undertaken to examine the
feasibility of identifying suitable control/comparison areas in the conflict zones as well as the

sample size. The impact study – both qualitative research and quantitative survey - will be
repeated at mid-term and project completion to measure project impact.

The household questionnaire will examine several variables:

                Household welfare/poverty targeting
                Access to, satisfaction with, and utilization of basic services including education
                 and health
                Community participation, voice, representation
                Social capital issues: group dynamics, trust and solidarity, collective action,
                 social cohesion and inclusion, etc.
                Private sector development and obstacles faced
                Development priorities and common problems at the village level
                Village governance and accountability (includes issues of transparency,
                 relations with government and elected authorities, etc.)
                Legal assistance, alternative dispute resolution, and conflict management
                Attitudes towards peace and violence

                           Table 1: Draft Design of Household Survey`
    The survey topics and questions will be finalized after results from the situation analysis and
    qualitative research phases are analyzed.

 Topics                     Research Questions to be Addressed         Survey Modules
 Poverty targeting          Has SPADA been effective at                    HH characteristics
                            poverty targeting (reaching the                Consumption modules
                            poorest and marginalized groups                   (Susenas)
                            such as women/widows)?
Access to and quality of    Is there improved delivery and                    Use of services
health and education        utilization of health and education               Satisfaction levels
services                    services in project areas?                        Indicators on health
                                                                               and education
                                                                               outcomes (for health,
                                                                               the modules will be the
                                                                               same or comparable to
                                                                               the quant. HH survey
Private sector              What are the obstacles to private                 Obstacles to business
development                 sector development? Has SPADA                     Solutions for
                            activities improved the business                   improving business
                            environment?                                       climate
Common problems at          What are the common problems at                   Village development
village level               the village level? What are the                    priorities and problems
                            community‘s development
Village level governance    How are decisions made at the village             Leadership
                            level? How are leaders chosen? How                Decision-making
                            are they held accountable? What is the            Accountability and
                            role of BPDs? Contacts with                        transparency
                            government officials?                             Role of elected bodies
                                                                               and government

Building reconciliation   Is the Project able to help communities            Groups/networks
and social capital        manage conflict more constructively?               Trust and
                          Which interventions work best and                   Solidarity
                          under what sets of conditions and types            Collective action
                          of conflict?                                        and cooperation
                          Do SPADA activities build greater                  Information and
                          trust within the community and                      communications
                          between the community and                          Social cohesion and
                          government institutions (including                  inclusion
                          police and military)?
Dispute and conflict       What mechanisms/forums currently                  Dispute & conflict
resolution                 exist at the village level to settle               resolution
                           disputes?                                          mechanisms
                          How effective are they?                            Access to legal
                          Do the forums and civic mechanisms                  assistance
                          developed under SPADA increase the
                          chances of non-violent resolution of
 Attitudes towards         What are villagers‘ attitudes and                 Attitudes, practices –
 peace, conflict and       experiences with violence, crime,                  violence, peace,
 violence                  conflict and peace?                                conflict,
                                                                              discrimination, etc.

8. Case Studies

SPADA provides a rich backdrop for case studies and in-depth qualitative research. The
Project‘s M&E system will capture not only the ―tangibles‖ of the project, i.e., kilometers of
road built, peace forums held, etc. but perhaps more importantly in post-conflict environments,
qualitative methodologies will be used to capture more fully the ―intangibles‖ related to process,
building trust, prejudice, beliefs and other less quantifiable characteristics.

Using qualitative research and case study techniques is particularly suitable for capturing
community perspectives and the questions of ―how‖ and ―why‖ of particular events and
processes related to the conflict as it affects post-tsunami recovery. Perspectives on prejudice,
violence, trust, security and other potentially sensitive topics are best discussed through less
structured interview techniques. Conflicts generally have long histories and intricate pathways,
and these stories are more fully captured through in-depth, informal interviews and open-ended
questions. This methodology allows people to describe their experiences in their own words.
Interviewers also have the flexibility to pursue unanticipated lines of inquiry and probe deeper
into specific issues. Furthermore, in cases of incremental change and capacity building such as
SPADA activities with female-headed households, these gradual, sometimes nuanced changes in
confidence, attitude and skills are best explored through open dialogue and observation. Case
studies and qualitative research will be able to capture and document these processes more

In addition, using a mix of quantitative and qualitative methodologies from different sources
allows for triangulation and will improve the robustness of M&E findings. Results can then be
compared among a variety of sources.

Examples of potential case studies and research topics include:

     Assessments and research for private sector development – The Project plans several
      studies to examine aspects of private sector and economic development. These include:
      assessments of the local regulatory environment, with annual updates; transport costs and
      road taxes; the local structure of credit availability, the size and structure of the informal
      economy, and various infrastructure sector reviews. The formulation of some of these
      assessments will be participatory and involve government and private sector
      representatives to formulate the themes and discussion questions.
     Alternative dispute resolution mechanisms – What mechanisms are effective at
      resolving disputes at the community level? How do mechanisms which involve
      government officials compare to more traditional leader type of interventions? How
      participatory are these interventions and what are the advantages and limitations to such
      mechanisms? These studies will be carried out in tandem with the legal
      assistance/alternative dispute resolution pilot program.
     Role of women in post-disaster and post-conflict environments – There has been little
      research on the role of women in conflict and post-conflict situations in Indonesia. What
      has been the impact of the conflict on women‘s roles and responsibilities in the household
      and society in general? What roles if any have women played in peace building? These
      could be preventing as well as provoking conflict. Researchers will also undertake
      separate, but related panel case studies focusing on female headed households in three
      provinces and what impact, if any, have SPADA activities made in their lives.
     Forums for cooperation and reconciliation – SPADA will convene community
      members and local officials to work together through the community grants component.
      What types of activities are successful in building linkages and cooperation? What is the
      role of religious and adapt organizations? How should these forums be organized and
      who should be represented at these forums?
     Best practice case studies – Lessons learned and successful practices will be
      documented so that project stakeholders in other areas will benefit from the experience.
      For example, cases where utilization or coverage for health and education has improved
      markedly, or where there is effective community involvement in managing schools or
      health services, will be documented. Innovative channels for communicating peace
      messages or socializing SPADA will also be recorded. The Project provides fertile
      ground for several research activities.
     Implications for human development policy analysis – Based upon the Project‘s
      experiments in health and education assistance, one can examine what type of local
      policy options will foster innovation and accountability in the delivery of essential
      services. What policies will support equal access to services, and improved attention to
      results in the form of human development?

9. Private Sector Development Assessment Tools

The SPADA private sector team has developed a private sector and investment climate
assessment tool, adapted from the standard survey instrument of World Bank‘s Investment
Climate Unit. The assessment tool covers topics such as investment constraints, infrastructure
and services, financing, labor and workforce issues, business – government relations, conflict
resolution and legal environment, crime, and capacity and innovation.

Assessments will be repeated every year to measure progress in improving the business
environment and increases in private sector investment and development. Key performance
indicators are: the number and type of business regulations improved; barriers removed; and
increases in new business registrations. Using a participatory approach, stakeholders will help
to formulate questions for inclusion in the periodic assessments to ensure relevance of the
topics. The Private Sector Forums involving government, business and NGOs, will be held
regularly to obtain feedback from the different parties.

This component includes several studies to assess the local regulatory environment, with annual
updates, as well as special thematic studies as mentioned earlier. The Forum will serve as a
useful venue to present study findings and design appropriate follow up action.

10.   Health and Education Monitoring and Evaluation

 During SPADA‘s preparation, a pilot community-based health survey was conducted in
Kotarawaringin District, Central Kalimantan. his pilot survey tested a combined quantitative and
qualitative methodology aimed at identifying the level of services people receive, felt needs by
the villagers, and gaps in services. The methodology consisted of four components: (1) a
district-wide health facility review to estimate the level of services they provide; (2) application
of the participatory hygiene and sanitation transformation tools (as used by the Bank water and
sanitation group); (3) a simple household survey at the village level in three sub-districts; and
(4) village analyses and consultations. The responses to the household questionnaire were
summarized by the field workers in the villages, and discussed with villagers in a focus group
format, using visual tools. The purpose of this third component was to identify the underlining
causes of the health indicators found through the first two components and discuss villagers'
views and their understandings of the problems. One of the lessons learned about the
methodology during the pilot phase was that the instruments need to be kept extremely simple
plus technical assistance will be needed to analyze the data and improve skills. During SPADA
implementation, the health survey findings will be presented, along with other relevant health
information, to the kecamatan and district forums to enable them to make informed decisions in
deciding the use of the SPADA funds. These component activities will be repeated as part of
the monitoring exercise.

Community-based groups such as school management committees, community boards, and
health center management committees will assist with monitoring of the health and education
activities and their results during implementation.

The measurement of health and education outcomes such as increased use of public/private
services, increases in immunization rates and professionally-assisted birth deliveries, and
improvements in school attendance and competency level rates will be measured through
various means, within treatment and comparison areas. For health, the project will commission
facility, user, and household surveys as well as special studies (similar to the methodology
described above). To measure education outcomes, the project will use school examination and
attendance reports, facility and household surveys. Of particular importance will be to track
outcome differences resulting from experiments in contracting mechanisms (e.g., supporting
government service delivery, contracting NGOs and the private sector).

11. Mapping Conflict Incidence

One of the most difficult variables to measure will be the incidence and impacts of violent
conflict. However, improving conflict monitoring is critical so that BRR and donors can design

mitigation strategies that prevent the gains from the recovery program from being lost. SPADA
will use a methodology used by the WB and UNDP elsewhere in Indonesia that is based upon
collecting and collating local newspaper articles to map incidence and impact of conflict over
time and area. Information regarding conflict types, impact, and groups involved is collected,
entered into a database, and analyzed for trends. With technical assistance, the Project will
attempt to develop the skills of local governments to collect data and statistics on conflict in
order to build a simple type of early warning system. Assistance will be needed to help local
governments develop the methodology, categorize the information in ways that make it useful,
and analyze conflict trends within the data.

12.   Measuring SPADA Training and Capacity Building Interventions

The Project includes training activities to build the capacity of various stakeholders. SPADA
will train village councils, community project teams, women‘s groups, local NGOs, village
paralegals and government and community groups in alternative dispute resolution. The table
below illustrates some of the major training interventions.

                          Table 2: SPADA Training Interventions

Project Component        Trainees                     Competencies/Skill Areas to be Developed
Community                Female Heads-of-             Leadership and gender awareness training,
development grants       Household                    small business development
                         Village councils and         Financial management, project supervision,
                         community project teams      procurement, gender awareness training
                         Provincial NGOs              Independent monitoring techniques, public
                                                      expenditure tracking
Legal assistance         Village paralegals &         Legal education
                         community groups
                         NGOs & journalists           Court procedures
                         involved in court
                         Village forums, leaders,     Conflict mediation and dispute resolution
                         local government officials   techniques
Education and            District department staff    District and kecamatan level health planning
Health                                                and budgeting, MCH in-service training,
                         Health workers, teachers,    Community service planning, management
                         community                    and monitoring, Puskesmas team training on
                                                      facility management
Conflict mapping         Local government staff       Newspaper analysis and data management

Too often, development projects only measure the inputs and outputs of training, despite
investing considerable human and financial resources for capacity building. Typically, projects
only track the number of workshops held, number of people trained, popularity of the training,
etc. However there is little information as to whether or not the training made any medium or
long-term difference in job performance or services provided by the organization. To assess the
effectiveness and impact of the SPADA training interventions, the Project will use special
―tracer‖ methodologies to monitor over time a sample of the trainee groups from training
intervention to future changes in behavior and performance. The project will use pre- and post-
training questionnaires and follow-up surveys to assess changes in knowledge, attitude and
performance at periodic intervals.

                                 Figure 11.1: Measuring Training Impact

                      Assumptions re: changes due to         How to measure?
                          training interventions

                                  Training intervention     Direct Observation of
                                        provided            training
                                                            Training reports - #/type
                                                            trainee, topics covered

                Changes in knowledge, skills & attitudes.
                 What did they learn from the training?
                 Did their attitudes change because of        Pre- and post-training
                  the training? Do they think they can            questionnaire
                           apply the learning?

                                                               3-6 months after training
                          Changes in behavior.                    Direct observation
                  Did they use and apply the knowledge      Follow-up survey/ questionnaire
                  and new skills? Did this help improve              with trainee
                        their performance? How?

                                                                One year after training
                            Improvement in services and
                                   performance.               Follow-up questionnaire &
                             Has the performance of the         interviews with trainee,
                              organization improved?        supervisor, clients, third parties.

13.   Regular Field Reporting and MIS

SPADA field staff will report monthly to the district and central levels. The reports will vary
depending upon field position but will generally include information on:

               Activities completed during the past month and plans for the following month
               Status of activities in the project cycle according to project component
               Description of infrastructure, economic and social activities (by component)
               Financial information
               Level of community participation in activities (broken down by gender, ethnic
                and religious groups)
               Information dissemination and transparency
               Training and activities with village councils and other local institutions
               Coordination work with Government Coordination Teams, Parliaments and any
                other government agencies
               Coordination with NGOs, journalists or other civil society groups
               Status of complaints/grievance resolution
               Problems encountered and proposed solutions

               Any other issues
               Attachments – reporting forms, photos, complaints received, etc.

All data will be gender-disaggregated and give an ethnic/religious breakdown of beneficiaries
when relevant. Key indicators will be tracked through field reporting formats and entered into
the project MIS at the district and national levels.

A critical element of SPADA reporting and project management will be monthly coordination
meetings at the local level. SPADA staff will hold regular meetings with the district and
provincial level crises committees as well as the district parliaments to review progress to date
and address management issues. These coordination meetings at the local levels ensure that
monitoring information is fed into the management and decision-making loop.

                              Summary of SPADA M&E Activities
Monitoring activities
Community participatory monitoring and evaluation
Regular field supervision and monthly progress reporting by project staff, MIS
Independent monitoring by civil society groups including public expenditure reviews by
Health and education monitoring
Case Studies
Grievance/Complaints resolution process
Evaluation Activities
Impact study – qualitative and quantitative HH survey
Technical/sectoral studies (EIRR, facility and user surveys, etc)
Private sector development assessment tools (also for monitoring purposes)
Conflict incidence mapping
Training tracer impact assessments
Supervision missions
Financial audits

                                                                    LOGICAL FRAMEWORK
                                                                                                                                        June 21, 2006

No.          Design Summary                      Indicators and Targets                                                Assumptions and Risks
 1.   Goals -
      To improve the social and economic      % increase in HH expenditures/         Susenas, economic, health       Security in the areas remains
      welfare of the people living in Aceh   welfare                                 and education data for Aceh     stable.
      and Nias.                                                                       and Nias
                                              % increase in GDP growth in Aceh                                       Private sector investments are
                                             province                                                                forthcoming in the province.
                                              % increase in literacy rates, infant    
                                             mortality rates and maternal
                                             mortality rates. *

 2.   Purposes                                                                         
      To strengthen governance, promote       Improved access to cost-effective,      SPADA progress reports,       Conflict does not erupt in these
      growth, and improve service            high quality rural infrastructure        MIS, supervision missions,      areas again which would
      delivery in the provinces of Aceh      (EIRR>20%) in 17 districts of Aceh       economic analyses, GDS2         prevent or delay project
      and Nias.                              and 2 districts in Nias.                survey, statistics on private   implementation.
                                                                                      sector investments, case
                                                                                      studies, health and
                                                                                      education sectoral studies 

                                             Service delivery improved in the      Susenas, BRR, SPAN    Effective coordination takes
                                            areas of health and education:                                  place amongst the multiple
                                            - % decrease in children aged 7-12                              development players in these
                                            not in primary school, 5% in Aceh,                              various sectors.
                                            11% in Nias in 2005.
                                            - % decrease in children aged 13-15
                                            not attending jr. secondary, 13% in
                                            Aceh, 29% in Nias in 2005.
                                            - % birth delivery by medical
                                            personnel increases *
                                            - % immunization coverage
                                            increases. *

                                             >80% of rural districts using         
                                            participatory planning processes for
                                            budgeting and financing
                                            development activities

                                             % increase in new business            
3.   Outputs                                                                        
     Component A: District Grants                                                   
     A.1 Infrastructure, economic,           #/type/dimensions of subprojects     Project MIS, financial   Local governments are willing
     health, education, and social          proposed and funded in all 19          data                     to support the program,
     activities related to reconciliation   districts                                                      including the eventual hiring of
     and development are funded at the                                                                      local teachers and health
     district level.                                                                                        workers.
                                             >75% of district grants disbursed    Technical audit
                                            for each project cycle.
                                             >70% district infrastructure
                                            classified as "satisfactory" to

Component B: Capacity                                                                             There is adequate technical
Development                                                                                        capacity at the local level.
B.1. Education and health activities    #/type of education/health            Project MIS. GDS2
are implemented which focus upon       activities implemented.
improving the overall quality of
services and are demand-
responsive to the needs of Acehnese.

                                        >65% of respondents satisfied with
                                       the health and education services
                                       provided through SPADA. 

B.2. Private sector growth is          19 district business forums are                          Government demonstrates a
supported.                             established and functioning.                               strong commitment to
                                                                                                   addressing obstacles to private
                                                                                                   sector development
                                        Investment promotion for x large-      
                                       scale agriculture or other projects.

B.3. Needs of vulnerable groups         300 SPADA facilitators, NGO
affected by the tsunami and conflict   staff, local government officials and
are addressed.                         youth are trained in conflict
                                       mediation, leadership and civic
                                        >2,000 vulnerable women, IDPs,
                                       and ex-combatants provided
                                       technical assistance and financial
                                       support to rebuild their lives.

B.4. Districts strengthen their         17 districts receive training in
financial management and               proper financial management and
procurement skills                     procurement.

     Component C: Implementation
     C.1. Government implementation           > 80 % of Government and           Project reports, contracts   Procurement contracts are not
     structure, procurement and              consultant teams at all levels are                                delayed.
     technical assistance for the project    recruited and functioning.                                       Project is able to hire qualified
     are established and functioning.                                                                          staff from Aceh.

     Component D: Monitoring,
     Evaluation, and Studies
     D.1 M&E and complaints system is         >60% complaints resolved.         Project MIS, studies
     established, functioning, and used to
     improve project performance.
     D.2 Studies are conducted and           > 80% of M&E and study
     findings used to inform the policy      findings are used in the project
     and implementation of the project.      decision-making process

4.   Activities
     4.1 Recruit provincial and district
     teams, companies and NGOs
     4.2 Provide training to staff
     4.3 Begin socialization at district
     levels and below
     4.4 Form FAD, PSD forums,
     education and health working
     4.5 Undertake rapid needs
     appraisals, prioritize needs
     4.6 Proposal preparation and
     4.7 For dstrict activities, prepare
     bidding and procurement of

         4.8 Disburse funds for district
         4.9 Begin district project
         4.10 Provide quality control and
         techical support
         4.11 Monitor implementation
         4.12 Conduct local assessments of
         subprojects and evaluation
         4.13 Undertake maintenance
    5.   Inputs
         Financing: MDF Total Grant of US$25 million                      DFID Grant: Total US$11 m

         Component A: District Grants: $17.0 million                      Supporting Access to Justice: US$ 2 million
         Component B: Capacity Development: US$ 2.5 million               Private Sector Growth: US$1.5 million
         Component C: Implementation Support: US$5.0 million              Vulnerable Groups: US$6.6 million
         Component D: Monitoring, Evaluation Studies ($0.5 million)       Local Government Cap Building: US$0.2 million
         Community contributions in-kind and financial resources          M&E: US$0.7 million

*        Note data for post-Tsunami, 2005 Susenas is not yet available.

                                                                     Annex 2


I.      Explanation of the Anti Corruption Plan


The Bank and other donors have carried out a great deal of analytical work on the subject of
Indonesian corruption, and the general diagnostic is widely shared across the development
community. Lack of effective sanctions combined with weakly developed procedures for
public accountability, have created a culture of impunity where the temptations are great and
the risks are few.

Working in disadvantaged areas carries with it high even higher fiduciary risks. There can be
unique opportunities for rent-seeking, such as the emergence of black markets, local
scarcities, threats of violence, and very poor book-keeping. As with disaster relief, waves of
poorly designed and badly supervised ‗emergency assistance‘ can create further opportunities
for abuse.

Corruption can waste large amounts of resources, undermine the credibility of the
government and its development partners, and contribute to widespread social unrest – one of
the key problems that SPADA trying to solve. Preventing corruption in SPADA is therefore a
difficult but important element.

SPADA and anti-corruption

The tsunami and disadvantaged areas covered by this project pose a particular challenge to
anti-corruption programming. The formal mechanisms for combating corruption often do not
operate in many of these areas. Audit controls may be moribund. Even mechanisms such as
computerized book-keeping may be difficult to maintain.

A brief review of the SPADA AC Plan follows.

What are the key elements of the Anti Corruption Plan?

      Some of the most important aspects of the anti corruption action plan can be
summarized into the six key elements that follow. Underpinning each of these
elements is the careful consultative process that ensures participation and

A) Enhanced Disclosure Provisions and Transparency. The program will adopt a formal
disclosure policy and set of procedures, simplify disclosed materials and make them readily
available, particularly at the district level and below. Salient information will be made
publically accessible by a range of means, including public meetings and notice boards.
Specific disclosure measures will include, but not be limited to:

       Public disclosure of all grant awards, annual procurement plans and schedules (and
        their updates), bidding documents and requests for proposals.
       Disclosure to all bidders of the summary of the evaluation and comparison of bids,
        proposals, offers, and quotations, after the successful bidder is notified.
       Disclosure of all annual audit reports.
       Stakeholder/end-user oversight, with representatives involved in planning and
        implementation, and frequent accountability meetings that are open to the general
       Monitoring by NGOs, the press, and university student networks funded through the

B) Civil Society Oversight. The program recognizes that greater oversight by civil society
is likely to reduce the risk of corruption and misuse of power. The program involves a high
degree of formal participation by community groups, the private sector, and traditional/adat
and religious leaders, through the monitoring of the projects/end results, witnessing the
results from tender committee, and the evaluation of the quality of delivery procured

Multi-stakeholder forums, and vested interest groups such as business forums and school
committees will be directly involved in the decision making and monitoring processes. At the
same time, there is also an inherent danger of conflict of interests, since (in effect) these local
entities will often be beneficiaries to contracts awarded to local businesses or contractors.
Therefore special care will have to be taken to ensure broad, open participation of all
interested parties in decision-making, planning and monitoring of implementation.

Existing NGOs and other civil society organizations will be involved in a variety of ways,
inter alia: i) through participation in workshops and planning/accountability meetings; ii) as
key resource persons for the development of plans where possible; iii) as witnesses of tender
committees; iv) as evaluators on an ad-hoc basis; and v) as training providers in particular
skill areas.

Routine national and district level accountability meetings, widely publicized and open to the
general public, will be held to ensure that salient information will be made public. Attendance
of key civil society groups will be requested at these meetings. The minutes of the meetings
will be sent to the nearest NGO forum (usually at the province level) as well as to the heads
of the government and Bank supervision teams. Routine information concerning
expenditures, progress, problems and solutions will be provided on a monthly basis to the
local press.

C) Mitigating Collusion, Fraud & Nepotism. Opportunity for collusion and fraud exist in
any project. However, many of the possible risks can be mitigated as a result of the SPADA
project design. Transparent and well-advertised procurement under the project, combined
with appropriate oversight, should reduce corruption opportunities in procurement practices.
Additional auditing and procurement procedures are proposed, such as strengthened oversight
and capacity building. Technical Assistance in the areas of procurement (e.g. procurement
consultants) and financial management will be provided to each location.

At the central level, there will be a committee to regularly evaluate the performance of the
consultants who are hired under the Project. This committee will make their results available
to the relevant technical parties, including the BRR and IDA.

Cases of collusion, fraud and nepotism will be reported directly to the attorney general office,
as the authorized agency mandated under the Indonesian law. In the case of collusion, fraud
and nepotism within the community, the cases will first be reported, discussed, and decided at
the community meeting prior to their submission to the attorney general office. Experience in
similar projects indicates that many risks can be mitigated by the threat and use of
appropriate, community-based sanctions such as those used under KDP I and II. SPADA
aims to adopt many of these approaches to problem solving and dispute resolution.
Substantiated allegations involving corruption will be reported to the appropriate authorities.

District level procurement capacity is often lacking. SPADA‘s fast launch will be supported
by a procurement agent provided through a grant from DFID whose purpose is to provide
short-term procurement training and oversight. Though SPADA will provide training and
other forms of capacity development to strengthen procurement practices, the main practical
activity will be to delegate most procurement to agencies that propose the activities – in each
case assisted by the project‘s procurement consultant. Final review of bids remains the
responsibility of the government agencies, though SPADA will insist on the process being
witnessed by at least two independent members of civil society and two representatives of the
affected communities. The procurement consultants and the PMU will ensure that the results
of all tenders are published.

In the past, district level contract management has often been of very poor quality. Works
often go uninspected, and failure to deliver the quantities or quality contracted for is
widespread. Experience from KDP, however, shows that local level implementation and
monitoring committees can produce significant changes. Involving more entities in the
process will make collusion more difficult. In SPADA, members of the related forum will be
part of district/subdistrict project implementation oversight teams whose job is to record all
deliveries and make monthly reports to the forums and to the PMU. Performance based
contracts will be used wherever possible.

The project will also provide assistance to participating schools and clinics by making price
lists available and creating direct linkages to a wider list of suppliers of generic supplies and
training. This assistance, combined with procedural help from procurement consultants,
should widen the purchasing scope and capacity of schools. This is particularly important in
SPADA areas, where there is a distinct shortage of well-stocked retail outlets and information
is often difficult to obtain. Clustering to allow bulk purchasing is an option that health and
education committees may need to consider.

D) Mitigation of fraud and forgery risks. BRR and IDA will be provided with drafts of
all key documents such as budget information, the project manual, budget circular letter, and
list of project management staff prior to negotiations. During implementation, transparency of
the project processes will make fraud more difficult to hide than in many previous projects.
Groups using funds at all levels will have to hold accountability meetings where members of
the general public will have a right to pose questions concerning all transactions. The project
seeks to strengthen governance, accountability and transparency through support for the
national (BPKP) and regional auditor (Bawasda). Audit reports will be made public.
Inspections of the end results of activities will include physical audits and special evaluations
of training outcomes to ensure that funds are being used effectively. Members of the district
level forum, including non-government members, and members of the local parliament, will
have a right to inspect all documents. To avoid key, original documents and receipts from

being lost, these must not be removed from the relevant offices during the lifespan of the

E) Complaints Handling Mechanism. Complaint handling procedures as currently defined
in the Keppres 80/2003 will be strictly followed by also assigning authorized officials to be
responsible for maintaining a database of complaints and the follow up actions. While the
program is designed to encourage local complaint resolution through formal channels as well
as public pressure, in some cases local elites might misuse power and program activities. For
these cases, an alternative system will be established through a feedback mechanism at the
national level. Pilot programs will also be designed to train local paralegals and NGOs who
can act on some of the complaints made by villagers. A special unit designated for handling
of complaints will be made available at each level. The complaint handling unit will
investigate and facilitate the resolution of complaints and problems. The database of
complaints, follow-up actions being taken, and sanctions applied will be publicized to
increase participants‘ involvement and increase the likelihood of their lodging protests,
thereby raising the social costs of misuse of funds. Complaints will be acted upon in a
professional and timely fashion, and without risk of reprisal to 'whistleblowers'. The
complaint handling mechanism will provide wider access for the communities so that they
can easily raise and monitor complaints. For example, the project will establish national and
province level addresses for mail complaints, and these and other contact details will be
posted in the project information boards.

F) Sanctions & Remedies. Clear sanctions and remedies are important final steps in the
effort to fight corruption. Communities are encouraged to impose reasonable sanctions on
citizens who abuse the power that has been entrusted to them. There is an increasing wealth
of anecdotal evidence suggesting that such sanctions can be more easily applied and more
effective than protracted legal proceedings, especially in smaller cases of corruption. The
project does not endorse vigilantism or extreme community sanctions, but in many cases the
communities will be able to reach amicable resolutions without resorting to the slow and
over-burdened legal system. That said, formal sanctions may also be applied were allegations
involving corruption can be substantiated. For example, any official (government, non-
government, etc.), community members, or private sector entity participating in the project
can be prosecuted if sufficient evidence is available, and such cases will be referred to the
appropriate authorities. In all procurement contracts, evidence of corruption, collusion or
nepotism will result in termination of the relevant contract, possibly with additional penalties
imposed (such as fines, blacklisting, etc.) in accordance with Bank and Government
regulations. Transfer of funds from the project Special Account will be suspended in cases
where significant misuse of funds is suspected. At a larger scale, entire districts may be
excluded from participation if misuse of funds is suspected to occur widely. Information
regarding successful cases, where lessons are learned and funds are retrieved, will be widely

The need for intensive supervision and appropriate reactions to reports.

There are many inherent dangers in working in disadvantaged areas. Supervision must be
frequent and intensive, with an action-orientated approach designed to reduce dangers and
improve project design as much as possible. Project staff may be under extreme pressure to
abuse their positions of power, so it is important that missions are seen to be consistently
comprehensive, fair and robust. Whistleblowers may face greater risks in such areas than
elsewhere, and supervision teams must be careful to not to compromise informants. Joint
Government/Bank supervision missions should be held as often as possible, but BRR and the

Bank should also field smaller, more ad hoc missions to cover specific areas of concern. All
incoming reposts of corruption must be appropriately investigated.

II. Corruption Mapping Matrix

Limiting the occurrence of corruption in this Project starts with identifying potential risk
areas – this is called corruption mapping. This mapping will be repeated at least every six
months as the project progresses and lessons are learned.

  Corruption Mapping         Level of             Opportunity for Corruption                                           Mitigation Action
         Area                 Risk
Capacity of the Pimpro and   MEDIUM      Non independent judgment of the consultant           - Independent professionals (Procurement Consultant) included as
Tender/Evaluation            (Central)   evaluation process. The decisions tend to bias       part of the consultants‘ proposal evaluation team
Committee                                towards consultants as ―instructed‖ by the higher    - Capacity building for all actors involved in procurement, including
                                         level officials or other parties.                    certification of staff in accordance with Keppres 80/2003
                                                                                              - Civil Society Representatives oversee the process
                                                                                              - End users (Community Representatives) observe the process
                                                                                              - Development of Project Management Manual to streamline all
                                                                                              procedures and sanction/complaint handling mechanism
Proposal evaluation          MEDIUM      -Delay in evaluation process that would benefit      - The Procurement Plan, with detailed timeline, will be binding in
                                         exclusive consultants                                the Legal Agreement, and will set as the basis for any procurement
                                         - Proposals are rejected due to reasons unrelated    actions.
                                         to the capacity of consultants in carrying out of    - The Bank would declare misprocurement for any unjustified
                                         the contracts/services                               extension of validity of proposals
                                         - Significantly high technical scores allocated to   - QCBS procedures with budget ceiling will be followed
                                         the ―preferred‖ consultants such that no other       - The estimated budget for each contract package will be based on
                                         consultants can effectively beat their proposals     actual experience
                                         regardless of the prices, which could result to
                                         significantly high prices
                                         - False information about the information
                                         provided by the consultants
Award of Contract            MEDIUM      - The committee may call the prospective winner      - The TOR will be designed to be quite rigid, with clear deliverables
                                         and negotiate the contract amount                    wherever possible
                                         - Collusion and nepotism in awarding the contract    - Mandatory disclosure of contract awards
Quality of delivered         MEDIUM      - The delivered services are of lower quality than   -Involvement of civil society oversight and supervisory consultants
services                                 the ones specified in the TOR, and the officials     in the inspection of the delivered services
                                         may take kickback through the difference             - Enhanced complaint handling mechanism
                                         - Significant changes of key staff or consultants    - Involvement of community groups in monitoring the quality of the
                                         - Intentionally low quality of supervision of        consultants‘ deliverables
                                         contracts, and kickback from the consultants         - Enforce reward punishment system as defined in Keppres 80/2003
Procurement Planning,        MEDIUM      Risk of kickback, and budget markup                  Mandatory review by the Bank of Procurement Planning, and
including the one for the                                                                     disclosure of Procurement Plan in public domain, including
sub projects                                                                                  disclosing the contract amount

Overall Procurement           MEDIUM   Risk of kickback, collusive practices to ―award‖     - Enhanced disclosure, complaint handling, and sanctions as defined
                                       the contract to ―preferred‖ consultants, and lower   in Keppres 80/2003
                                       quality of services                                  - Enhanced capacity for the officials involved in procurement
                                                                                            decision, including hiring of consultants
                                                                                            - Enhanced control system (internal and external) including
                                                                                            involvement of professional members of civil society in the
                                                                                            procurement decision actions
                                                                                            - Development of Project Manuals
                                                                                            - Tighten Bank supervision
The final list staff with     MEDIUM   - Risk of insufficient staff capacity.                - The criteria and performance indicators of Project Manager,
their (i) experiences in                                                                     Treasurer, planning staff, procurement staff, financial staff etc..
handling donor financing                                                                     Staffing requirements agreed by the Bank have been incorporated in
project and (ii) history of                                                                  the Operations Manual and will be used as the basis of the annual
project management and or                                                                    performance review of the relevant staff
treasury training taken                                                                      - Requirement of Manual as guidelines for project implementation.
                                                                                            - Requirement of Government Project Management, Treasury and
                                                                                              staff training agreed by the Bank.
Audit Report Publication      MEDIUM   Risk of unavailability of information on the         The implementing agency will (and the World Bank can) make
                                       progress and result of project implementation        publicly available promptly after receipt of final audit reports
                                       (including misuse, collusive and nepotism            prepared in accordance with the loan/credit agreement, and all
                                       practice if any).                                    formal response of the government

Local Accountability          MEDIUM   Lack of local experience may result in               The project design includes oversight and supervision to minimize
Mechanisms                             communities missing cases of abuse.                  risks, especially at the kecamatan level and below, including, inter

                                                                                               Community groups will meet regularly to make collective
                                                                                                decisions on strategic issues, and to review the UPK‘s accounts
                                                                                                regarding the use of funds. The groups will also hold annual
                                                                                                meetings with the community to account for activities.

                                                                                                Financial reports and records will be audited each year by local
                                                                                                accountants. Audit results will be reported to the community at

                                                                                               the end-of-year accountability meetings. Ideally, each group
                                                                                               should be visited at least twice per annum by supervisory team.

                                                                                               In order to enhance the quality of consultants‘ supervision
                                                                                               under the project, facilitators are required to regularly check the
                                                                                               community groups and UPK books. They will also need to sign
                                                                                               and file a ―representation statement‖ regularly, confirming that
                                                                                               they have checked the books and found them satisfactory.
                                                                                               Random checks will be made on the facilitators‘ statements. A
                                                                                               mechanism for checking and applying sanctions will be
                                                                                               developed for those filing false statements (sanctions may
                                                                                               include job dismissal).
Limited dissemination of      LOW     Information is kept limited to certain circulation   Socialization will be through meetings, workshops and focus group
information related to the            or group of people only such that non qualified      discussions at each level. It will include a campaign through
Program                               proposals could be expected                          newspapers and radio programs. The strategy is geared towards
                                                                                           making communities aware of the project‘s goals, its rules and
                                                                                           regulations. These are aimed to ensure that stakeholders know what
                                                                                           their roles and responsibilities are, and how to hold each other
                                                                                           accountable for their actions.
Selection of community        LOW     Non transparent process of selecting                 The selection process of group members will be conducted through a
group reps/members                    representatives/group members which result to        transparent and fair election process, with full participation from the
                                      low integrity                                        members of the community
Channeling of funds          MEDIUM   Kick backs for the government officials              Most of the project funds either go directly to communities, (i.e. to
                                                                                           the inter-village accounts) or through the collective district forum
                                                                                           accounts. Highly transparent processes are controlled by
                                                                                           community/civil society representatives assisted by project staff.

                                                                                           The procedures, size and criteria for defining grants, eligibility
                                                                                           criteria for beneficiaries, and conditions for drawdown are all
                                                                                           simplified and defined upfront to ensure that stakeholders can
                                                                                           understand them easily. In some cases the drawdown of funds will
                                                                                           be linked to performance rather than other inputs. Since communities
                                                                                           know what they should be receiving, it should be harder for officials
                                                                                           to engage in rent seeking.

Implementation of the sub       MEDIUM         Misuse of funds by the communities, sector      Groups receiving funds are required to prepare and submit reports on
project investments                            committees or fora.                             progress and their use of project resources.

                                                                                               All financial information is made public and displayed at the village,
                                                                                               subdistrict and district levels. Minutes of meetings, monthly
                                                                                               financial status, bad debtors, and names and amounts of funded
                                                                                               proposals are posted on signboards that are displayed in public
                                                                                               places. Discretion of actors is limited by setting rules that all
                                                                                               financial transactions require at least three signatures, two from the
                                                                                               elected representatives (e.g. UPK head and community
                                                                                               representative) and one from the project staff. For most purchases
                                                                                               the project requires the communities/committees to conduct a limited
                                                                                               bid procedure whereby quotations must be read out in public. For
                                                                                               smaller purchases, shopping must be carried out by two persons who
                                                                                               will endeavor to seek quotations from at least three local suppliers.

                                                                                               Finances will be audited each year by local accountants. Audit
                                                                                               results will be reported to the community at the end-of-year public
                                                                                               accountability meetings at each level.

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