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About Local Solutions to Poverty

Local Solutions to Poverty (LSP) is a Multi-Donor Trust Fund that’s assisting the government to improve the quality of life of poor and vulnerable Indonesians. Through a community driven development process, empowered citizens develop their own solutions to reduce poverty and inequality.

Previously known as the PNPM Support Facility (PSF), LSP was established in 2007 when the government sought donor assistance to scale up the National Community Empowerment Program (Program Nasional Pemberdayaan Masyarakat, PNPM), its flagship poverty reduction and community empowerment initiative. In 2016, the total value of approved activities stood at $335 million, including two new Joint Management Council (JMC) approved activities for $9 million.

LSP draws on over 16 years of experience working with the government on community driven development by providing analytical and operational support on local solutions to poverty and inequality. Throughout the recent policy transition to the Village Law, the government has continued to seek LSP’s support, including the provision of support for Village Law implementation and analytics support for drafting revised policies and regulations.

In partnership with the Government of Australia and the Millennium Challenge Account-Indonesia, LSP is managed by the World Bank’s Global Practice on Social, Urban, Rural and Resilience and finances technical assistance, analytical and advisory services, as well as operations that support the Government of Indonesia’s implementation of its community-based poverty alleviation platform.

LSP recognizes that poverty is multidimensional and requires the creative engagement of the poor as key actors in poverty reduction. Empowering the poor also requires strengthening government and community institutions to be inclusive and participatory, and ensuring that economic growth is accompanied by a strong commitment to ensure that vulnerable and marginal groups are not left behind.

LSP assists the government to maximize the impact of its key development programs by:

  1. Producing and disseminating high-quality research and analytics, including from ongoing projects, in collaboration with other development partner activities;
  2. Promoting evidence-based policy to reduce poverty and inequality, as it relates to Indonesia’s framework for local government, and by strengthening relevant government data and monitoring and evaluation (M&E) systems;
  3. Financing pilot projects to test and scale up innovations; and
  4. Supporting collaboration, problem solving, and knowledge exchange between relevant actors such as the state and society, central and sub-national governments, and communities.


Across its various project activities, LSP works on the principles of Citizen Engagement and Social Accountability, Community-Driven Development, and Gender and Inclusion.

Citizen Engagement and Social Accountability

Citizens play a critical role in advocating and helping to make public institutions more transparent, accountable and effective. Their contributions to developing innovative solutions to local development challenges are essential.

Social accountability refers to the extent and capacity of citizens to hold the state and service providers accountable and make them responsive to needs of citizens and beneficiaries. While its primary aim is to increase the effectiveness of service delivery, social accountability also strengthens governance and citizen empowerment.

LSP supports increased citizen engagement and social accountability in village government and Basic Service Delivery:

  1. Support to the Village Law seeks to enhance transparency, participation, and accountability in village planning, financial management, project implementation, and monitoring & evaluation, building on 15 years of citizen engagement in large-scale CDD projects (KDP, PNPM).
  2. Generasi improves frontline service delivery by mobilizing communities to participate in implementing and monitoring maternal and early child health and education interventions.
  3. KIAT Guru tests how combinations of community empowerment (via user committees) and performance-based pay can improve the presence and performance of teachers in remote schools.
  4. ECED supports community participation in implementation and monitoring processes through sub-district financial management units (UPK).

Based on the experience in Indonesia, there is increasing recognition that citizen involvement and social accountability are critical for enhancing democratic governance, improving frontline service delivery, and supporting the policy framework, institutions, and systems that guide village development. Citizens’ involvement in social accountability can further strengthen the implementation of large-scale programs, such as the Village Law, and help deliver targeted outcomes in Indonesia. Lessons learned from social accountability experiences can also leverage the scale of current policies to achieve widespread impact.

LSP provides support to institutionalize the principles of community empowerment into core government functions. It also seeks to improve the capacities of government agencies, service providers and communities to implement local development solutions. By making these policies, institutions, and systems more responsive and accountable to citizens, LSP support is designed to improve the poverty and development impact of large government programs and financing, long after LSP programs are completed.

Community-Driven Development

Community-Driven Development (CDD) programs operate on the principles of transparency, participation, local empowerment, demand-responsiveness, greater downward accountability and enhanced local capacity.

Over the past 16 years, the Government of Indonesia has gained significant experience in pioneering and implementing a range of CDD programs through the implementation of LSP and its predecessor programs, including PNPM Mandiri. The government has built on its success with PNPM across the archipelago in strengthening community institutions and their ability to deliver cost-effective infrastructure, and to enhance access to social services and economic opportunities by institutionalizing PNPM’s principles of CDD in the Village Law and mainstreaming them into grassroots development activities.

CDD results in Indonesia have shown that development initiatives tend to be more relevant and effective, producing higher-quality outcomes when the community views its contribution as meaningful and is empowered with a sense of ownership. Therefore, LSP provides support to the government to ensure that communities have the relevant capabilities, technical skills, and knowledge to participate in planning, implementing, and monitoring development priorities that affect them. LSP’s operations and knowledge projects are intended to help the government achieve this outcome.

Gender and Inclusion

The World Bank’s Indonesia Country Gender Action Plan (CGAP) identifies four priority gender gaps and underlying causes:

  1. High maternal mortality rate
  2. Low female labor force participation and high gender wage gap
  3. Low level of women’s participation in public decision making process, and
  4. Legal restrictions that discriminate against women.

LSP acknowledges that no society can develop sustainably without transforming the distribution of opportunities, resources, and choices to give females and males equal opportunities to shape their own lives and contribute to their families and communities. To promote gender equality and to improve the socio-economic standing of women, LSP helps the Government of Indonesia to:

  1. Reduce the maternal mortality rate by helping the government address the low rates of service utilization among pregnant women and new mothers, and poor-quality maternal and infant health services, and providing conditional grants directly to community members and facilitators trained in health and education issues.
  2. Improve nutritional care for mothers and infants by providing block grants and facilitators trained in health issues to communities. These grants are tied to the community’s achievements in terms of defined maternal health and infant nutrition indicators (e.g., monthly infant weighing sessions, the distribution of vitamin supplements, and participation in nutrition classes).
  3. Increase women's participation in village-level decision making processes by ensuring that the principles of gender equality and inclusivity are included in the curriculum for village apparatus training.
  4. Increase women’s access to economic opportunities and financing by supporting Ministry of Villages, Disadvantages Regions and Transmigration with the design of a female entrepreneur pilot project.

More broadly, LSP recognizes that factors other than gender may also confer disadvantages on individuals and groups. LSP strives to improve social and economic access for all individuals and groups. For example, through the ECED project and its teacher training package, LSP has worked towards raising educators’ awareness on supporting children with special needs. One module of the training package focused on how educators can identify children who may require additional support and tailor their instruction approach to meet these needs. It also includes methods to discuss these issues with families, as well as procedures to refer children for additional specialized services. The project’s training approach also encourages teachers to use local languages, practices, and materials in the classroom to empower indigenous communities. Similarly, the KIAT Guru Facilitation Manual mandates free, prior, and informed consultations with indigenous peoples and marginalized groups. Training modules prepared with LSP support for village and district facilitators include topics related to social inclusion.