PNPM-Rural is one of the programs under PNPM Mandiri, which is the National Program for Community Empowerment by the Government of Indonesia. The program aims to alleviate poverty and improve employment opportunities through community empowerment. Despite the good intention and the mechanism set up for public participation and engagement to monitor the implementation of the program, there are pitfalls identified in the implementation of PNPM-Rural program. The findings in this essay are based on the field research conducted in a couple of districts in Bekasi, West Java.
PNPM-Rural has been implemented in Bekasi, West Java since 2007. The two main programs implemented in the area are women’s microcredit group and infrastructure building. At the beginning of the implementation of PNPM-Rural program, the two projects of microcredit and infrastructure are financed by the PNPM-Rural fund. However, subsequently, the funding for village infrastructure is dependent on the repayment rate of the microcredit groups in the village. If the actual repayment rate for microcredit in a village is below the target repayment rate, then the village will not be receiving the budget allocation for infrastructure. The target repayment rate is set by the villagers themselves in the deliberation meeting, but the minimum rate has to be at the national standard of 80%, although a village can set higher target if it wants to. Tying the repayment rate of microcredit to budget allocation for infrastructure is supposed to incentivize microcredit groups to make regular repayments. However, in reality, many villages from the field research did not manage to obtain the target repayment rate, and therefore did not receive budget allocation for infrastructure. The field research then probed further into the reasons behind this.
Misappropriation of collected payment
When the target repayment rate is not achieved, it means that few microcredit group members have paid their loans, or at least not as much as it should be to reach the target repayment rate. However, research findings suggest that it may also be the case of the swindling of collected payment by the microcredit group leader or by a member of the village management team.
The village management team members are representatives of the villagers elected in the village deliberation meeting. They are responsible for the implementation of PNPM-Rural programs in the village, and they also manage the PNPM-Rural fund. The village management team, however, is not responsible for the collection of repayment from microcredit group. The microcredit group leader is the one responsible for directly depositing the repayment to the district treasurer every month. However, there are cases where the village management team member takes over this role and keeps the money for him or herself.
When such swindling takes place, either by the group leader or by a village management team member, usually the members do not know anything about it until the day they submit another credit proposal and found that their proposal is rejected on the ground that they had not been making enough repayments. When this happens, investigation ensues. If caught, the swindler must return the money taken within three months or face litigation charges.
Inappropriate Microcredit Group and Misuse of Loans
To be eligible for PNPM-Rural funding, a microcredit group must fulfill several criteria, including that it must have existed for at least a year, group members have micro-businesses (such as small stall or warung, catfish farming), and the group has saving and loan activities. In addition, the microcredit provided is supposed to be used to finance the microbusiness as capital. However, research findings suggest that sometimes one or more of these criteria were ignored. However, sometimes members do not have microbusiness and simply use the money for their everyday expenses or children’s school fees. They believe that as long as they can repay the money, then it should not matter how they are using the loan money. Nonetheless, the inappropriate microcredit group and misuse of loan play a role in the lower repayment rate of microcredit loans.
Lack of monitoring
PNPM-Rural program has a monitoring mechanism in it. Local people are elected as representatives of the village to monitor the implementation of PNPM-Rural programs. For example, village cadres are elected people who are tasked to monitor the repayment of microcredit groups. The supervising agency for the district management team is supposed to act as the internal auditor in the district for PNPM-Rural projects. Monitoring is also supposed to be done during deliberation meeting for accountability. However, in reality, not many people attend the deliberation meetings anymore. The people tasked with monitoring are also not doing their job, either they neglect their duty or do it only for formality. One reason for this is because they are not paid to do their job, and as such they have little incentives to do them.
All in all, despite involving the village communities in the implementation and monitoring of PNPM-Rural programs, PNPM-Rural suffered some pitfalls in its implementation in Bekasi. This is primarily because of the high level of bureaucracy, in which there are too many actors involved and too many reports required, and the fact that the local actors see PNPM-Rural as a source of power and money. The local actors can work together, and sometimes even co-opting the external consultant, to derive the resources from PNPM-Rural for their own personal benefits. Thus, public participation without a strong system to support it means nothing much.
This essay is taken from the graduate thesis of Melani, a graduate of School of Government and Public Policy – Indonesia.
Melani. (2014). National Program for Community Empowerment in Rural Areas in Bekasi. Jakarta: Unpublished.