Indonesia: World Bank Approves $123 Million for Poverty Alleviation & Local Level Governance in Third Kecamatan Development Program

Press Release No:2007/352/EAP

JAKARTA, April 26, 2007 - The World Bank Board today approved the disbursement of a special US$123 million interest-free credit to sustain and expand the activities of the Third Kecamatan Development Program (KDP3), Indonesia's best known community-driven poverty alleviation program.

KDP works nationwide to provide funds to rural communities so they can make poverty-reducing investments based on their own plans and management. From covering 28 villages at its start in 1998, the program now covers 34,000 villages in 30 out of Indonesia's 33 provinces. In the nine years of its existence the Program has generated 55 and a half million workdays resulting in the creation of over 31,000 roads, over 8,000 bridges, over 9,000 sanitation and irrigation units each, 3000 health posts and 5,000 schools.

"Indonesia has changed the paradigm of development by making the poor the drivers, not the recipients, of development activity," said Acting Country Director for Indonesia, Joel Hellman. "International audits and studies show this world class community driven development program provides higher rates of return, greater transparency and sustainability. In fact, this model is also working effectively for sustainable reconstruction in Aceh and elsewhere in Indonesia where natural disasters and conflict have affected poor communities."

In responding to the changing political landscape following decentralization, KDP3 will focus on reducing poverty in several ways: building channels for community participation at the local government level (b) building cost-effective social and economic infrastructure (c) strengthening the capacity of micro-finance institutions to manage funds (d) reconstruction of communities in areas affected by natural disasters.

The KDP3 builds on an existing US$1.45 billion program that has empowered communities to build their own village level infrastructure while improving capacity and providing employment. The funds will be used to scale up the KDP program to cover 36,000 villages in 1,800 districts or more than a half of villages in Indonesia.

The funds are provided by the International Development Agency of the World Bank, which gives concessional credits or interest free loans to the world's poorest nations and poverty reduction programs where repayments are stretched over 35-40 year, with an initial grace period of ten years.

"KDP shows what a rich resource Indonesia has - not just its forests, its minerals, or its energy, but in the villages and hamlets where people yearn to take development forward," says Scott Guggenheim, Social Development Sector Coordinator, World Bank, Indonesia. "KDP gives these communities a chance to show what they can achieve. And in KDP, they achieve a lot. High-quality studies of KDP have showed that corruption is low, participation of women and the poor is high, and the quality of infrastructure impressively good."

The extended program will help KDP incorporate lessons learned from field evaluations, such as the importance of training for facilitators, better systems for managing information, and strengthening the roles played by local governments. Sentot Satria, the World Bank's deputy team leader for the KDP project, noted that "KDP is now entering a new stage of professional standards, where expectations are high and all participants must work even harder than before to make the project a success."

Going forward, the long term sustainability of Indonesia's community driven development programs - now being studied and emulated in several countries including the Philippines, China, Khyrgistan, Azaerbaijan, Afghanistan and other countries that have visited KDP in the past - will also depend on creating a "governance infrastructure that will support community participation in planning, procurement and implementation of development projects under decentralization," said Susan Wong, Senior Monitoring and Evaluations Advisor, World Bank, Indonesia.

Results from the Kecamatan Development Project, 1998 - 2006

Subproject Type
(1998 - 2002)
(2003 - 2005)
Totals including Post Disaster in '06
(1998 - 2006)
16,700 roads
19,000 kms
9,632 roads
11,097 kms
31,288 roads built or upgraded
37.494 kms built or upgraded
3,500 bridges
3,006 bridges
8,433 bridges built or reconstructed
Clean Water Supply
2,800 units
4,378 units
9,245 clean water supply units built
1,300 units
1,604 units
4.290 sanitation units built
5,200 irrig systems
2,126 irrig systems
9,751 irrigation systems built
Public Markets
400 new markets
16 rehabilitated
327 new markets
91 rehabilitated
890 public markets built
159 markets rehabilitated
260 activities
254 activities
690 rural electrification activities
Workdays Generated from Infrastructure Projects
25 million workdays
14 million workdays*
55 and a half million workdays generated from infrastructure projects
Economic Loan Activities (incl. women's loans)
Loan Activities
18,000 economic loan activities
24,931 loan activities
56,146 loan activities
Loan Recipient/Loan group members
280,000 loan recipients
471,554 loan recipients
1,339,942 loan recipients
Education and Health
140 health posts
1,868 health posts
3,002 health posts supported
285 new schools built
190 school rehab
380 individual scholarships
1,046 new schools built
1,159 schools rehab
94,801 individual scholarships
2,927 new schools built
2,205 schools rehabilitated
101,500 individual scholarships

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In Jakarta: Prabha Chandran/Wiwiek Sonda
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