The Indonesian National Slum Upgrading Project: Facts and Fiction (Part I)

Introduction: the utopia of Indonesia’s 100-0-100 target

In mid 2016, the government of Indonesian President Joko “Jokowi” Widodo announced the utopian goal to provide the entire population with potable water, bring down the number of slums to zero, and provide sanitation to all its citizens by 2019. To achieve the “100-0-100” target the government is currently rolling out KOTAKU (“Cities Without Slums”), an umbrella for the vast number of social and economic development projects that constitute the national poverty alleviation strategy.

An important part of this effort is the National Slum Upgrading Project (NSUP) that we want to introduce in this two-part series of short articles and a more comprehensive report (link). NSUP is a community-driven development (CDD) program that uses a participatory approach to upgrade infrastructure in slum areas, more specifically roads, sanitation, access to clean water, drainage, waste water, and solid waste management. The project has an extensive scope.

The Ministry of Public Works and Housing (PUPR) expects that NSUP is “expected to directly or indirectly benefit 9.7 slum dwellers in 154 cities” and around 6,400 sub-districts (kelurahan) over its 5-year project cycle (2016-2021) (Ministry of Public Works and Housing 2016, 8). To raise the project’s overall capital of $1.7 billion, the government entered in a co-financing arrangement with World Bank and the recently established Asian Infrastructure Investment Bank (AIIB). Before delving into the details of this intricate project and the problems associated with it, it helps to understand a little better the background against which the 100-0-100 target was announced and why it seems utopian.

Background: The poor record of infrastructure development in Indonesia

Despite several decades of strong economic growth, Indonesian development faces a number of hurdles. Among those are infrastructure bottlenecks, weak institutions and policy instability, a poor record of public service provision, low social expenditures, high levels of economic inequality, and a fragile record on poverty alleviation.

To achieve the two of the three 100-(0)-100 targets alone, the government would have to multiply past efforts. Between 2000 and 2015, access to improved water sources rose from 78% to 87% of the population, according to the World Bank’s development indicators. The NSUP project documentation takes an even lower numbers as a basis and speaks of 42% access to a public water supply network and barely a third for a house connections from the public utility company

(World Bank 2016, 1).

Access to improved sanitation is even more problematic and only rose from 47% to 61% in the same period. To achieve the target within the period 2015–2019, local water companies would need to invest $8 billion, increase their urban customer base from 9 to 27.3 million, and install an additional 18.3 million connections (Coucouvinis and Tran-Cong 2016).

At the same time, pressure on urban infrastructure is continuously growing. Approximately 54% of the population live in cities. The National Development Planning Agency (BAPPENAS) expects that share to rise to 67.5% in 2025, with 3.4 million people moving to the cities. Already now about 22% of urban dwellers (~29 million people) live in slums with limited access to basic services. The trend is all the more concerning as around a quarter of the population lives on less than 50% more than the official poverty line. To cope with these problematic trends much greater and better coordinated government efforts will be necessary.

However, fragmented responsibilities, lack of governance capacity and dependence on external project-based funding make coherent policy-making in Indonesia a veritable challenge (Aspinall 2013). Over the last decades, infrastructure in Indonesia has been jalan di tempat (showing no progress). Apart from the geographical challenges the vast archipelago naturally brings with it, a lack of accountability in central-local relations and poor inter-ministerial coordination are major issues (Ray 2014). Maintenance in particular remains a “systemic challenge” (World Bank 2016, 15) which makes many investments unsustainable. In addition, local governments in charge of urban planning and infrastructure development often lack the necessary capacities.

At the same time, government coffers are notoriously empty. Officials woe donors of all kinds, especially World Bank, Asian Development Bank (ADB) and recently AIIB, to move forward following the principle ‘first come, first serve’. Quite in contrast to the large number of development programs in place (Baker 2013), overall social expenditure hovers around a low 1% of GDP which puts Indonesia on the same level as India and Cambodia but far below Thailand and the Philippines (ADB 2013). 

The funding gap for infrastructure is currently at $47 billion annually (ADB 2017). Finance Minister Bambang Brodjonegoro even speaks of more than $450 billion of infrastructure financing needs for the next five years and therefore doubts one MDB alone will be able to carry the burden (Jegarah and Tang 2015). ADB estimates that multilateral development banks provide 2.5% of infrastructure funding in the region, a number that is likely to be higher for Indonesia that has historically been a main borrower at MDBs.

The National Slum Upgrading Project: An overview

For NSUP, World Bank and AIIB together provide 25% (or $433 million) of the budget. The remaining 1.3 billion are provided by the Indonesian government and were budgeted as a high priority program in the National Budget and the National Medium Term Development Plan (2015-2019) (RPJMN). The central and local governments provide funds to roughly equal shares.

In the trilateral arrangement, AIIB merely acts as a co-financier. World Bank, having been engaged in CCD programs in Indonesia since the 1970s, takes on the operational responsibilities, including the provision of an Environmental and Social Management Framework (ESFM).

However, World Banks largely acts from a distance. Given the vast scope of NSUP, government and community actors are in charge of most activities related to planning, implementation and monitoring. NSUP has an intricate organisational structure. A comprehensive account not only goes beyond the scope of this article but also the full report (hyperlink). In ways that will be broken down in more detail in the second part of this article, its mere complexity seems an impediment to program success in itself.

NSUP Project responsibilities

In short, NSUP follows a two-fold approach (World Bank 2016). At the sub-district level, communities have vast responsibilities in planning, implementation, and monitoring processes. They form community organisations (BKM) that are responsible for drafting Community Settlement Plan (CSPs) and Detailed Engineering Designs (DED). These elaborate the kind of infrastructure interventions necessary in the sub-district. The menu from which BKMs can choose is closely confined to improvements of community roads, sanitation, access to clean water, drainage, waste water, and solid waste management.

At the city level, local governments integrate CSPs into city-wide Slum Improvement Action Plans (SIAPs). The idea is to complement improvements of tertiary infrastructure at the community level with additional primary, secondary and connecting infrastructure at the city level to increase sustainability of the former. Also, as will be discussed in more detail in Part II, NSUP’s predecessor programs had suffered from a lack of political commitment which is why now community plans are being linked to the mayors’ wider city agenda.

The main responsibilities under NSUP are divided in three project lines (coordination, implementation, support) along all levels of government (central, provincial, city, sub-district) (see Figure 1). The coordinating and collaborating line establishes task forces at the various levels that include members from the relevant line ministries. BAPPENAS chairs the national task force. The governor and mayor take on this responsibility at the provincial and city level respectively. PUPR is the executing agency in charge of the implementing infrastructure, safeguards and monitoring activities. The supporting line, consisting of community facilitators, urban planners and safeguard specialists, provides planning and administrative assistance to communities, gather monitoring data and smoothen interactions with local governments. Apart from BKMs, communities also form voluntary implementation groups (KSM) that engage in much of the construction work. 

NSUP Program components

Aware of the problems that plague Indonesia’s infrastructure development, around one quarter of World Bank and AIIB funding, in one way or another, is dedicated to capacity building measures. Overall, they provide around three quarters of the respective funding. Under Program Component 1, the government receives policy support to alleviate the mentioned problems of inter-agency coordination in order to strengthen planning capacities for a more integrated approach.

Another indeed critical measure that will receive funding under this component is land right and land tenure policy reform. As confirmed by World Bank’s gap-analysis, Indonesia’s legal framework is wholly inadequate to conform with the ESMF. Particularly concerning is the lack of safeguard provisions for slum-dwellers that hold no formal rights over the land they occupy.

This could have serious consequences as NSUP, unlike its predecessors, also targets illegal settlements. Given its vast scope, NSUP not only has the potential of being the largest community driven slum upgrading program in the world improving the livelihoods of millions of people, but also runs a risk of becoming the largest eviction program of the country unless issues related to the status of illegal settlements are attended to (see in more detail in Part II).

Under Program Component 2 World Bank and AIIB fund almost the entire supporting line of facilitators and urban planners ($78 out of $84 million). Around 200 urban planners and 3,000 community facilitators are hired in order to support BKMs with developing CSPs and DEDs as well as other administrative tasks such as accounting and reporting. This is, in fact, a key activity to guarantee community input as BKMs consist of voluntary and unpaid community members which limits their capacity.

Program Component 3 is concerned with the actual infrastructure development. Naturally this is where the bulk of the money is dedicated to. Out of the total of $1,743 million project capital, $1,578 million are allocated to improving infrastructure for roads, sanitation, clean water, drainage, waste water, solid waste management. 20% of the funds will be spent on health and other social services, another 20% on transportation and the majority of 60% on water, sanitation and flood protection. Approximately two thirds of the funds are dedicated to small-scale tertiary infrastructure improvements at the community-level as identified in the CSPs. For this purpose, every of the around 6,400 sub-districts will receive between $150,000 and $200,000 during the project cycle. The remaining third is dedicated to city level infrastructure.

Program Component 4 also aims at capacity building at the various levels of government, however, with a focus on smoothening the implementation of NSUP. Local government receive assistance with regard to mobilizing finances and supervising the preparation of detailed designs for primary and secondary infrastructure. Also, measures to improve transparency, strengthen accountability, and evaluate project progress will receive funding under this component.

NSUP issues to look at in Part II

After this introduction to the problematic background of infrastructure development in Indonesia and a simplified overview over the organisational structure of NSUP, the follow-up article will focus on a number of issues that will be decisive for the project’s to be successful: Can local governments deliver on the promise for integrated planning?; Is community input guaranteed?; Can the supporting line effectively assist communities?; and will safeguards guarantee that forced evictions can be avoided?

References