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Grant Assistance Report JFPR: INO 39195 November 2005 Proposed Grant Assistance Indonesia: Assistance for Restoration of Microenterprise and Microfinance in Aceh (Financed by the Japan Fund for Poverty Reduction) CURRENCY EQUIVALENTS (as of 17 November 2005) Currency Unit − rupiah (Rp) Rp1.00 = $0.000100 $1.00 Rp10,000 ABBREVIATIONS ADB – Asian Development Bank ARMMA – Assistance for Restoration of Microenterprise and Microfinance in Aceh BPD Aceh – Bank Pembangunan Daerah Aceh (provincial bank) BPR bank perkreditan rakyat (village bank) BPS – Badan Pusat Statistik (Central Agency for Statistics) BRI – Bank Rakyat Indonesia ETESP – Earthquake and Tsunami Emergency Support Project GTZ – Deutsche Gesellschaft für Technische Zusammenarbeit GmbH (German Technical Cooperation) JFPR – Japan Fund for Poverty Reduction MSE – micro and small enterprise NGO – nongovernment organization PAR – portfolio at risk PFI – participating financial institution PMU – project management unit SRC – staff review committee TA – technical assistance USAID – United States Agency for International Development NOTES (i) The fiscal year of the Government of Indonesia ends on 31 December. (ii) In this report, “$” refers to US dollars. Vice President J. Eichenberger, Vice President (Operations 2) Director General S. Akhtar, Director General, Southeast Asia Department Director A. Konishi, Director, Governance, Finance, and Trade Division, Southeast Asia Department Team Leader R. Moyes, Credit Specialist, Southeast Asia Department o o 96 o 00'E 110 00'E 130 00'E o o 10 00'N I N D O N E S I A 10 00'N South China Sea PACIFIC OCEAN I N D O N E S I A PROJECT BRUNEI AREA DARUSSALAM ASSISTANCE FOR RESTORATION OF MALAYSIA MICROENTERPRISE AND HALMAHERA o 0o MICROFINANCE IN ACEH 0 SUMATRA KALIMANTAN SULAWESI BANGKA PAPUA BELITUNG SERAM JAKARTAJ a v a S e a o o SUMBAWA FLORES 6 00'N SABANG 6 00'N o J A V A o 10 00'S BALI 10 00'S TIMOR-LESTE Beureueh SUMBA TIMOR Ulee Lhee Krueng Raya I N D I A N O C E A N Keureuse Peukan Bada Banda Aceh Laweueng o o Batee 110 00'E 130 00'E Lhoknga Indrapuree Padang Tiji Aceh Besar Leupung Seulimeum SIGLI Samalanga LHOK SEUMAWE o Lhoong Beureuneun Keudemane Krueng Geukuh 100 00'E Panjon Labu Meureudu Jounieb JANTHO Keumala Matangkul Lhok Sukon Simpang Ulim BIREUEN Lamno Cot Girek Kota Binjai Pidie Bireuen Keudeunga Tangse North Aceh Idi Cut Idi Rayek Lhok Kruet Rimba Raya Peureulak N West Aceh Geumpang Ronga Ronge Alue Dua Rigaih Alur Pinang Lampahan Buntul Kemumu Lageuen Pondok Baru Simpang Baliq Samar Kilang Calang Teritit Simpang Tiga 0 20 40 60 80 100 TAKENGON Bintang Kuala Langsa Tutut Angkop Pegasing Penaron LANGSA Atu Lintiang East Aceh Tuatang Cut Kilometers Teunom Beutong Isaq Central Aceh Lokop Pasi Uwaq Jernih Kidala Simpang Pungki Jeuram Suwaktimah NANGGROE ACEH DARUSSALAM Benua Raja S Lumut MEULABOH Rikit Gaib T Kuala Tuha Pankalansusu R Trangon Pangkalanbrandan A Tadok Lamainong Besitang I Kuta Nidong TANJUNGPURA T Southeast Aceh Gebang Seumanyam Kuta Bahagia O Tanjung Selatan Susoh Blang Pidie Belawan F Tangan Tangan Genting Labuhandeli M Manggeng Tanah Merah MEDAN E Labuhan Haji South Aceh BINJAI LUBUK PAKAM L KUTACANE A Pancurbatu K Kota Baru A Sawang Babusalam Kula Lang Delitua Tanjungmorawa Samadua Sibolangit TEBINGTINGGI TAPAKTUAN Kota Fajar Mardinding Lawe Sigala-Gala Tanjungtiram Barastagi Perdagangan Teluk Nibung Kandang Pay Papu o PEMATANG RAYA o 3 00'N KABANJAHE 3 00'N Bakongan Seribudolok KISARAN Kotabuluh PEMATANG SIANTAR TANJUNGBALAI Sibige Trumon SIDIKALANG Tigares Simeuleu Kala Kepen Panjaitan Prapat Nasrehe Rundeng Silalahi Lekon Siumat Tanjungmengedar Kutarame Bandarpulau Aceh Singkil Harianboho Pangururan Kampung Air Simeuleu SINABANG Panji Labuhanbilik Lanuhan Bajau Banjara Silaen Subulus Salam Nainggolan Lipat Kajang Hutanabolon BALIGE Sungaitampan Bago Parsoburan Binjohara Tapah SINGKIL Banyak N O R T H S U M A T R A Merbau Lasia Tuka Siborong-borong LABUHANBATU Huta Tinggi Tuangku Babi Sipoholo RANTAUPRAPAT Bangkaru Barus TARUTUNG Aekumbang Garoga Perbuangan KOTAPANDAN Lumbangaraga Kotapinang Onannasang National Capital SIBOLGA Hutagodang Provincial Capital Sipirok Langgapayung Mursala Lumut District Capital Sifahandra Tuhemberua Batangtoru Gunungtua City Government Lahewa PADANGSIDEMPUAN Dima Binanga Subdistrict Capital Afulu GUNUNGSITOLI Batumundan National Road Wunga Hiligeo RIAU Pasarsibuhuan Onolimbu Singkuang o Provincial Road Nias Siabu 0 0o Sirombu Lolowau Railway PANYABUNGAN Tabuyung Tanahbatu Port Hiliotaluwa Muarasoma International/Domestic Airport Tapus River Telukdalam Natal District Boundary Provincial Boundary International Boundary Pini WEST SUMATRA Boundaries are not necessarily authoritative. Telo Tanahmasa o Sigata 96 00'E 100 o 00'E 05-3062 RM JAPAN FUND FOR POVERTY REDUCTION (JFPR) JFPR Grant Proposal I. Basic Data Name of Proposed Activity Assistance for Restoration of Microenterprise and Microfinance in Aceh (ARMMA) Country Indonesia Grant Amount Requested $2,000,000 Project Duration 2 years Regional Grant Yes / No Grant Type Project / Capacity building II. Grant Development Objective(s) and Expected Key Performance Indicators Grant Development Objectives (GDO): The objective of ARMMA is to (i) expand the outreach of microfinance in Aceh by developing microcredit pilot programs that reach down-market to households and microenterprises affected by the tsunami, and that have traditionally found access to formal financial institutions difficult; and (ii) evaluate potential new livelihood activities through applied subsector research. Expected Key Performance Indicators: 1. Four microfinance pilot projects operating within no less than three participating financial institutions (PFIs) within 12 months of project inception, at least two of which follow Syariah principles of Islamic banking 2. Seed capital of $800,000 disbursed to microenterprises through pilot microcredit projects within 24 months, to no less than 1,500 borrowers, with an average loan size of no more than Rp5 million 3. Portfolio at risk (PAR) of no greater than 10% at the close of the project 4. At least two of four pilot schemes at PFIs (i) expand microcredit by more than 100%, with additional funding sources other than the JFPR grant; and (ii) demonstrate the capacity to continue beyond the close of the project 5. At least four potential new livelihood activities are identified by the project and receive funding under ADB’s Earthquake and Tsunami Emergency Support Project (ETESP) III. Grant Categories of Expenditure, Amounts, and Percentage of Expenditures Category Amount of Grant Percentage of Allocated in $ Expenditures Equipment and Supplies 106,400 5 Training, Workshops, Seminars, Audit 129,000 6 Consulting Services 410,000 21 Seed Capital for Pilot Lending Programs 800,000 40 Grant Management 418,000 21 Contingencies 136,600 7 TOTAL 2,000,000 100 2 JAPAN FUND FOR POVERTY REDUCTION JFPR Grant Proposal Background Information A. Other Data Date of Application Submission May 2005 Project Officer Tom Moyes, Credit Specialist Project Officer’s Division, Governance, Finance, and Trade Division (SEGF) E-mail, Phone [email protected] 632 5436 Other Staff Who Will Need Ayumi Konishi, Director, SEGF Access to Edit/Review the Hermie Bustamante, Project Analyst, SEGF Report Agnes Canillas, Administrative Assistant, SEGF Sector Finance Theme Microfinance Targeting Classification Targeted Intervention Was JFPR Seed Money used to Yes No prepare this grant proposal? Have SRC comments been Yes No reflected in the proposal? Name of Associated ADB Earthquake and Tsunami Emergency Support Project (ETESP) Financed Operation(s) Executing Agency Bank Pembangunan Daerah Aceh (BPD Aceh) Aminullah Usman, Managing Director Jln. Tgk. H. Mohd. Daud Beureu-eh No. 24 Banda Aceh Phone: +62 0651 22966; Fax: +62 0651 33784 Grant Implementing Agencies Syiah Kuala University, Faculty of Economics Dr. Said Muhammad, Dean Fakultas Ekonomi Universitas Syiah Kuala Darussalam, Banda Aceh 23111 Phone/Fax: +62 0651 741 0352 E-mail: [email protected] Mercy Corps Sasha Muench, Mikcrofinance Programs Jl. Sultan Mansursyah No. 7 Peunit, Kampung Ateuk, Banda Aceh Phone/Fax: +62 651 21757 Cell: +62 0813 100 80797 E-mail: [email protected] BPD Aceh Syariah Branch Same contact number as above Bank Danamon Syariah Branch Trisiladi Supriyanto, Senior Vice President Syariah Business Directorate Graha Surya Internusa Building, 3rd Floor Jl. HR. Rasuna Said Kav. X – O Kuningan, Jakarta 12950 Phone: +62 21 2551 7198; Fax: +62 21 252 4443 E-mail: [email protected] 3 Village Banks (bank perkreditan rakyats) To be determined B. Details of the Proposed Grant 1. Description of the Components, Monitorable Deliverables/Outcomes, and Implementation Timetable Component A Component Name Microfinance and Livelihood Surveys Cost ($) 261,243 Component Description This component will provide two related services to the project: Microfinance Surveys. Social or poverty studies carried out within the past 5 years will be quickly reviewed for relevance; baseline social surveys of communities will be prepared; and pilot activities, particularly from the customer’s perspective, will be periodically carried out. These studies and baseline and result surveys will be discussed in a series of project seminars to disseminate results and solicit wide stakeholder input into developing microfinance experiments. The project will monitor other microfinance projects or activities and prepare periodic reports on total microfinance activity in Aceh and North Sumatra.