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Report No.: AB5631

Project Name

Aceh-Nias Livelihoods and Economy Development Program (LDEP)




Public administration- Transportation (34%);Public administration- Agriculture, fishing and forestry (28%);Crops (20%);Roads and highways (16%);Public administration- Information and communications (2%)

Project ID




Implementing Agency

State Ministry of Disadvantage Area Development (KPDT)

Jl. Abdul Muis No. 7



Tel: (62-21) 350-0334

Environment Category

[ ] A [B ] B [] C [ ] FI [ ] TBD (to be determined)

Date PID Prepared

April 1, 2010

Estimated Date of Appraisal Authorization

November 9, 2009

Estimated Date of Board Approval

September 30, 2008

  1. Key development issues and rationale for Bank involvement

  1. Nias Reconstruction. The December 2004 tsunami and subsequent March 2005 earthquake caused severe damage to the island of Nias, totaling US$392 million, equivalent to 108 percent of the island’s gross regional domestic product (GRDP). Over 13,000 houses were destroyed, and transportation infrastructure was badly damaged (12 ports destroyed, over 1,000 km of roads were impassable).

  1. The Government of Indonesia’s (GoI) Agency for Reconstruction and Rehabilitation in Aceh and Nias (BRR), together with local and provincial government, donors and NGOs made significant progress rebuilding damaged assets and restoring the local economy. The transport network is in better condition than before the disaster, and is the key building block for continued economic recovery.

  1. Post-BRR and Low-Capacity Context in Nias. The BRR’s mandate ended on April 2009, so now local and provincial government continue the reconstruction agenda. The current capacity of the district civil service in Nias is low by country standards and within the Province of North Sumatra. Unlike Aceh, Nias will not benefit from special autonomy funds – and Nias still receives the lowest per capita central government allocations in the province and roughly half the national average.1 Given the severe capacity constraints, continued support to local government and directly to communities is required to ensure the reconstruction agenda continues. The recent ‘split’ of the district of Nias into three kabupatens and one kota will add to capacity constraints – now there are five districts in Nias Islands, three newly formed, with a diluted civil service.

  1. Economic and social indicators in Nias are among the lowest in North Sumatra, and lag nationally. Nias’s poverty rate (32%) is double the national average (16%). Health and education indicators are also low. Only 15 percent of households in Nias and 8 percent in Nias Selatan have access to clean water. Connection rates to the PLN grid in Nias (33 percent) and Nias Selatan (25 percent) are the lowest in North Sumatra (70 percent), and less than half the national average (65 percent). Contributing factors include, i.) Nias’s remote location, ii.) restricted markets and information access, iii.) weak local government capacity, iv.) low-levels of public investment, and v.) poor access to services.

  1. Nias is a rural society dependent on subsistence farming, which accounts for 42 percent of the Gross Regional Domestic Product (GRDP) and employs 87 percent of the workforce (compared to 45 percent of the labor force nationally). The major crops by planted area are rubber (60,000 ha), coconut (60,000 ha), rice (27,000 ha), and cocoa (7,000 ha). Farming is by smallholders, and the unavailability of large tracts of land precludes larger plantation practices for crops like oil palm or other estate crops.

  1. Agriculture yields are low for all crops in Nias relative to comparable benchmarks. Average rice yields (2.5 t/ha) are half of the national average. Cocoa productivity is on par with the low national average of about 0.8t/ha caused by insect attack (Cocoa pod borer), little or no fertilizer input on poor soils, and very poor genetic stock with almost universal use of unselected local seedlings. Post harvest grading to remove pod borer affected bean or to ferment the best quality bean are inadequate. Rubber productivity (0.6 t/ha) is particularly poor compared to yields of 1.5t/ha achieved in plantation culture on Sumatra. Further, deliberate post-harvest adulteration of latex (with rocks, soil vegetation and water) is widespread in an attempt to increase marketed weight, but actually results in price discounts of up to 30%. Livestock production (pigs, poultry) is popular, particularly among women, but capital is a constraint, as is poor knowledge of disease, parasite control, and improved feeding strategies.

  1. There is considerable scope (through training and improved rural access) to improve productivity and incomes of smallholder farmers. The average farm size (1.5 ha) is still adequate to achieve reasonable livelihoods if yields and quality can be improved. There are an estimated 100,000 farms in Nias, and field observations show that there are large areas of idle land on these smallholder farms that could potentially be used for new planting of rubber and cocoa.

  1. Nias’s poor rural access remains a key development bottleneck creating significant market and production inefficiencies, and limiting access to health, education, and other social services. The majority of the population lives in remote and disbursed settlements, without access by 4-wheeled vehicles. Road network conditions are made worse by the extreme climatic conditions (260 days of rain, 2,600 mm annually), which turn unsealed roads into mud trails passable only by foot for the majority of the year. The BRR completed major portions of the network, but access remains severely restricted.

  1. Proposed objective(s)

  1. The project development objective (PDO) is to facilitate post-disaster economic recovery and poverty alleviation by improving the ability of the Government to work with poor rural households in Nias to identify, develop and sustain livelihood opportunities.

Component 1: Livelihood Groups and Institutional Empowerment ($1.95 million)

  1. Preliminary description

  1. The objective of this component is to empower beneficiaries (livelihood groups and district government) to improve their capacity to acquire the technical, social, organizational, financial, management and marketing skills for livelihoods development activities. Most of the activities involve training and group facilitation, and include:

  1. Training for Agriculture Livelihoods Groups: in social, technical, marketing, and financial aspects of livelihood development for up to 50 mixed gender groups (up to 40 households per group) for agricultural development. These groups would, preferably, be located mainly in the poorest and most isolated villages and would participate in farming systems development involving rubber improvement cocoa rehabilitation and replanting, plus livestock breeding activities for income improvement and manure supply, handling and application. About 25 individual consultants (agriculture extension technical experts) would be fielded, with each consultant assigned to a cluster of 2 groups. They would also provide both training and physical and financial monitoring for Component 3. The Individual consultants/facilitators are specialized in group formation/organization and would be recruited at an early stage to accelerate program socialization and group formation before the mobilization of the primary consultancy firm. In addition the individual field-based consultants will also support the monitoring and evaluation of the groups’ progress, and be an initial point of contacts for communities to lodge and resolve complaints.

    1. Training for Women’s Livelihoods Groups: in social, technical, marketing, and financial aspects of livelihood development for up to 50 women groups (up to 40 households per group). Women’s groups are specifically included because they offer an opportunity to develop a wider range of livelihood opportunities in addition to primary production (retail, processing, marketing, business skills transfer). In addition, cultural factors favor a more focused training for women’s groups in order for them to overcome any social constraints to mixing with males. A wider diversity of opportunities will in turn enhance resilience of incomes against economic and disaster related stress.

    1. About 10 consultants/ technical coordinators would be hired to work with women’s groups (under similar terms of reference to mixed groups), each assigned to organize and train a cluster of 5 groups. The consultant technical coordinators will have skills in organization and livelihoods development, with an emphasis on agriculture. A menu of options for livelihood activities will be provided to the groups – the technical consultant coordinators may draw on the expertise and pooled resources from the consultant team to address selected activities where they as individuals may not be subject matter specialist. The field-based technical coordinators will also support monitoring and evaluation, and be an initial point of contacts for communities for lodging and resolving complaints.

    1. Training and Equipment for Local Government Agriculture Services staff to facilitate further involvement for activities beyond the project life. The component will provide assistance to Kabupaten Governments in the implementation of an agricultural support services program to the rice, livestock, and tree crops sub-sectors under Component 2. The assistance will involve training in program development and management, selection of target areas, balancing activities to improve gender equity, and coordination of supply of foundation and commercial rice seeds and appropriate fertilizer. It would also assist with livestock vaccination.

Component 2: Agricultural and Other Livelihoods Improvement ($4.60 million)

  1. Component 2 would finance implementation of program activities (set-up throughout Component 1) utilizing small group block grants and technical support services. This component has two sub-components related to the implementation of: (i.) agriculture and women’s livelihoods groups’ activities, and (iii.) support to local government agriculture services.

Sub-component 1. Implementation of Agriculture and Women’s Livelihoods Group Activities

  1. This sub-component will implement activities in (i.) 50 agriculture livelihoods groups and (ii.) 50 women’s livelihoods groups – each group composed of 40 households. This component addresses the issue of low productivity and poor post harvest processing and market prices (for rubber, cocoa, rice, and livestock), and is focused on livelihood improvement goals, rather than area targets for replanting. The component will provide support to groups for marketing, on and off Nias.

  1. Each livelihood group (agriculture or women’s groups) would apply for a small grant (US$2,500: disbursed in two tranches) used against menu of activities in value added through cocoa, rubber, and livestock improvements (other livelihoods are included). The aim is to promote ownership of the activities and the use of farming systems approaches to facilitate sustainable agriculture practices through mixed crop/livestock systems. Small livelihood groups would also be used to address both the low social status of women on Nias and their ability to develop innovative income generation activities involving both production and value added. There should also be less risk of elite capture in such groups.

  1. The emphasis and use of the block grant is to complement training activities to improve knowledge and practices; and not as focused on the process of group formation, community governance, and administration of the block-grant, as are other Community Driven Development (CDD) platforms. Modeled after the Oxfam livelihoods program (successfully implemented in Nias) – the project uses a ‘farmer-field school approach’ with block grants to supply inputs to enhance training activities. The formation of livelihood groups through the project is expected to increase the exchange of knowledge and ideas within the community, improve social networks (for growers, sellers, and buyers), increase economies of scale for input purchases and post-harvest handling – as well as have spillover demonstration affects to individuals outside of the established groups. Meeting the development objectives does not require the long-term sustainability of the farmer or women’s groups. Project beneficiaries may choose to adopt and continue with the benefits acquired from group activities (and are expected to), but the training will also ensure beneficiaries develop appropriate skills to improve individual livelihoods.

Sub-component 2. Support to Local Government Agriculture Services.

  1. This sub-component will strengthen the agricultural support services of the Kabupaten Government to; (i.) develop improved rice food security, (ii.) develop skills in nursery management for tree crops, (iii.) improve agriculture diversification, and (iv.) strengthen support service (e.g. veterinary medicine supply via small cold chains, marketing linkages, etc). All activities will be supported by Nias-LEDP consultants, and material support (purchased of seeds, equipment, supplies, etc) is provided by the central level PMU (project funds are not on the local government budget).

  1. The primary activity is a rice intensification and improvement program through the local government, supporting Kelompok Tani (lead farmers). Consultants will support the technical and logistics tasks of supplying foundation seed of high-yield varieties and fertilizer inputs. The fresh seed developed in the first year would be distributed to rice-producing households in the second year, along with a ‘trial bag’ of NPK 15:15:15 and urea fertilizer to expose farmers to the benefits available from fertilizer. A total of 10,000 ha, and approximately 10,000 farmers in 50 villages would benefit from improved seed over 2 years. The emphasis would be on selecting poorer farmers who would not otherwise have access to the benefits of soil amelioration, which the inputs would provide.

  1. Other sub-component activities include training (supported by consultants) and material support to establish district managed tree crop nurseries. Other sub-component activities would be used to develop opportunities to support livestock and crop activities where there was no private sector supplier, or where village level services could be developed (e.g. village vets, community tree crop nurseries) and to improve timeliness of supply. Given the growth in participatory extension, support would also be provided to Dinas staff to provide information on sources of advice and services outside government as in the Farmer Empowerment Through Agricultural Technology and information (FEATI) (ongoing to 2012).

  1. In addition, Sub-component 2 includes budget ($150,000) for the PMU to support special studies, trainings, activities, etc (each activity limited to $50,000). These activities will address ad-hoc program needs (for activities supporting livelihoods not addressed through other components) arising during program implementation.

Component 3: Management, Monitoring and Evaluation ($1.65 million)

  1. The objective of this component is to develop management and technical capacity for implementation of livelihoods programs on Nias within the Kabupaten and Kecamatans, as well as with KPDT. A consultant team will provide the necessary project implementation and management, livelihood support as follows:

  1. Program Management to support the Program Management Unit (PMU) and Program Steering Committees (PSCs). The majority of consultant resources will be field-based with core expertise supporting i.) monitoring and evaluation, ii.) financial management, iii.) safeguards, iv.) quality assurance, v.) procurement, vi.) adherence to the anti-corruption action plan, and vii.) program reporting.

  1. Livelihoods Support will provide the necessary technical consultants at district and village levels, with dual roles in group strengthening through technical assistance under components 1 and 2. The Monitoring and Evaluation team would be responsible for the elaboration of the baseline survey, monitoring surveys and impact evaluation as a project completion report, prior to project closure.

  1. Consultants will work under a Project Management Unit (PMU), which is considered appropriate due to the low capacity of existing local government management, technical and financial systems

  1. Safeguard policies that might apply

Expected to trigger OP/BP 4.01, 4,10, and 4.12.

  1. Tentative financing





Indonesia - Multi-donor TF for Aceh and North Sumatra




  1. Contact point

Contact: Khairy Al-Jamal

Title: Sr. Infrastructure Specialist

Tel: +62 (21)5299 3413

Fax: +62 (21)5299 3111


Location: Jakarta, Indonesia (IBRD)

1 Nias and Nias Selatan’s per-capita transfers from central government in 2006 (Rp 497,000 and 295,000 respectively) are the lowest in North Sumatra (Rp702,000) and below the national average (772,000). From, Managing Resources to Build Back and Create a Better Future for Nias: Nias Public Expenditure Analysis 2007. World Bank.

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