Social Enterprise and Village Development

Directorate General of Rural Development

Ministry of Village, Disadvantaged Area and Transmigration of Indonesia

OUTLINE

Social Enterprise and Poverty

Social Enterprise in Indonesia

Village Own Enterprise and Poverty in Village

Village Fund Governance

Social Enterprise and Poverty

• Poverty and inequality is a shared responsibility between government, private and community.

• There are gaps in service delivery from government that affect to public goods, such as social, educational, and health services, high unemployment rates contributed to weak social cohesion and poverty

• Inequality shows that local problems cannot be efficiently and effectively tackled by public or government

• Social Enterprises provide an innovative approach and are effective as poverty reduction (UNDP, 2008)

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

16.5815.42

14.1513.33

12.49 11.96 11.66 11.37 11.47 11.25 10.96 11.22 11.13 10.86 10.7 10.64

Poverty in Indonesia (%)

Cont…• The Role of Social Enterprise to Reduce Poverty

(Sirjabat, 2015):

Access to Financial Resources

• Grameen Bank in Bangladesh play an important role to reduce poverty

Social Innovation

•Kiva Foundation success using social innovation to help the poor in US . They build connections between individuals with technology and internet to drive micro financing network

People Empowerment

•Empowerment is a significant aspect of social entrepreneurships because social entrepreneurs have limited access to resources when addressing social problems.

Job Creation

• Social enterprise create jobs and integrate the poor into available jobs outside the competitive labor market

Social Enterprise

Economics Opportunity

Poverty Reduction

Social Enterprise in Indonesia

• 3 Categories of Social Enterprise in Indonesia (UNDP, 2016)

Un-fundable

Potential to be Funded

Investment Ready

There are NGOs and Small BusinessEstimated about 70% of total companies

Companies that led by strong foundersEstimated about 20% of total companies

Estimated about 10% of total companies

Cont…• Sector domination of social

enterprise in Indonesia (UNDP, 2016):

Agriculture

(55%)

Financial Services

(20%)

Healthcare

(10%)

Education

(10%)

Fishery/Aquaculture

(5%)

Technology Based

(Growing number)

• Maturity of social enterprise in Indonesia (UNDP, 2016):

Young social

enterprises

80%

Product market fit

70%

Early-stage

Growingnumber

Cont…

• In Indonesia, social entrepreneurs are growing rapidly, many people belief that social entrepreneurship can solve social problems (Utomo, 2014).

• Basic concepts of social entrepreneurship, such as innovation, opportunity-oriented (opportunity seeker), visionary, etc. to be implemented within the framework of social activities in this companies (Firdaus, 2014)

Firdaus, 2014

Benefit of Village Own Enterprise (BUMDesa) and Poverty Reduction in Village

Village Own Enterprises

Job creation

Support of innovation for village product

increasing of community

income

Increasingvalue add for

village product

Empowermentcommunity Social

Enterprise Aspect

Poverty Reduction

NATURAL RESOURCES MANAGEMNET

Managing and utilizing natural resources in the village, as a form of embodiment of the constitution that Natural Resources is controlled and managed for the greatest prosperity of the people

PROCESSED ECONOMY BASED ON LOCAL RESOURCES

Processing innovation is developed in every product managed by BUMDesa so that added value can be generated and not out of the village economic circle

DISTRIBUTION NETWORK

BUMDes is expected to become a distributor of products produced by the Village, shorten supply chain

FINANCE SECTOR

The limited range of Banking to target all villages in Indonesia is an opportunity for BUMDesa to mobilize the financial sector and equity capital for the community. Through this sector Productivity of rural communities can be improved

PUBLIC SERVICES

Public service sectors such as Education, Health or transportation can be a strategic business opportunity BUMDesa in the effort welfare of the village community widely

Priority Sector of Village Own Enterprises (BUMDesa)

Village Own Enterprise Coorporates

There are 196 Village own Enterprise Corporate in Sumatra, Java and Bali, Borneo and Sulawesi

Measuring the Success of Village Own Enterprises

•Economy Aspect•Revenue•Profit•Capital•Market share

•Social Aspect• Job Creation• Community

Accessibility for:• Finance access• Public services

access, such as health facility, education, etc

• Community Empowerment

Village Own Enterprises and Cooperative

• Village Own enterprise is more inclusive than cooperative:• Cooperative is a democratic economic institution that benefits its

members both at the village and wider levels

• Village Own enterprise is a democratic economic institutions that benefit all village community

BUMDesa

• Benefit oriented• Village potential

management

Cooperative

• Profit oriented for the member

• Fund member management

No membership, more prioritize benefit for village community, social entrepreneurship approach

there are membership, prioritizing profit to be shared on members, business approach

FISCAL POLICY FOR THE VILLAGE

2015

Rp 20,7 billion

(for 74.093 village)

2016

Rp 46,9 billion

(for 74.754 village)

2017

Rp 60 billion

(for 74.910 village)

Fiscal Policy for The Village

Village FundRealization 201582,72%

Realization 201697,65%

Village Fund GovernanceUtilization of Village Funds using Empowerment approach

Village funds are used to strengthen village literacy on development

Village Fund for Strengthening Human Resources Capacity

Strengthening community participation in monitoring, as well as paralegals

Involving legal institutions in village development literacy through village funds

The definitive designation of the Village Fund monitoring authority

COMMUNITY EMPOWERMENT THROUGH VILLAGE FUNDS

CommunityFasilitator

EXPECTED ACHIEVMENTS

INCREASING CAPACITY & CAPABILITY OF VILLAGE PEOPLE

INCREASING INNOVATION, AWARENESS AND PARTICIPATION OF

VILLAGE COMMUNITIES IN DEVELOPMENT

OPTIMIZING UTILIZATION OF SUSTAINABLE ASSETS OF VILLAGES

Village Fund

The rise of MUSDES activities and community participation from planning to execution of development

Budget transparency becomes a new necessity as part of the accountability of village governance

Self-help and mutual assistance are increasing, since all programs must be run on a self-managed basis

The cost of development becomes very cheap because it is done by the villagers in the spirit of enthusiasm without sacrificing quality

The emergence of various efforts to strengthen the capacity of citizens and sustainable empowerment with local cultural and knowledge base

Village Fund Achievements for 2 Years

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5

VILLAGE FUND FOR VILLAGE OWN ENTERPRISES

TRAINING SKILL AND ENTREPRENEURSHIP

CAPITAL

DEVELOPMENT OF TOOLS AND PRODUCTION FACILITIES

Village Development

To improve the welfare of the village community and the quality of human life and poverty alleviation

EmpowernmentCommunity

to increase the capacity and capability of the village community by utilizing its own resources and resources so that the village can support itself independently.

should consider Village typology

Sumber: Permendesa No. 21/2015 tentang Penetapan Prioritas Penggunaan Dana Desa Tahun 2016

VILLAGE FUND MONITORING

Socialization of village funding

schemes

Kemenkeu

Training and consultation on village financial management

BPKP

Strengthening the capacity of villages in the framework of village

governance (good governance)

Kemendagri

Capacity building of village facilitators in village financial

management

Kemendesa

Development of Village Finance & Simple Application guidelines

(Siskeudes)

BPKP

Synchronization between RPJMDes with RKPDes and

APBDes

Masyarakat Desa

Provide input / input to the community and village government related to the

allocation of village funds

Pendamping Desa

Ensure community participation and control in every stage of planning, implementation,

and monitoring of the budget

Pendamping Desa

Supervision of the process of using village funds in accordance with the provisions of

regulations and legislation

Pendamping Desa dan Masy. Desa

Complaints about the use of village funds through the complaint center and the handling of the problem (crisis center Kemendes PDTT) atau

website LAPOR!!!Kantor Sekretariat PresidenMasyarakat Desa

Ensure processes related to the functions and duties of Kemendagri, Kemendesa PDTT, Kemenkeu, Local Government and Village

Governance to manage the village funds wellItjen Masing-masing Kementerian , BPKP dan APIP

investigate the misuse of village funds to realize transparent and accountable village fund

managementKPK

To enforce the law to perpetrators who abuse village funds

Kepolisian RI dan Kejaksaan Tinggi MANAGEMENT OF TRANSPARENT AND

ACCOUNTABLE VILLAGES FUND

Mitigasi

Perencanaan

Pelaksanaan

Monev

Tindak lanjut

TAHAPAN :

UNIVERSITY ROLE FOR VILLAGE FUND

Coaching or training the village apparatus in the management of village funds

Devotion to the village community in terms of development and empowerment through village funds

Facilitator in the use of village funds that are more transparent and accountable

Academics from the university can provide training and guidance on how to manage village funds effectively for development and empowerment

One of the academics responsibility is the dedication to society, in this case do the devotion to the village community

Assist villagers in managing village funds to be accountable and transparent