How regulation provokes co-financing

A smart financing story from Karanganyar Regency, Indonesia, by USDP guest bloggers.

In 2012, Karanganyar Regency in Central Java Province, Indonesia, laid out its sanitation roadmap through the City Sanitation Strategy, locally known as Strategi Sanitasi Kota (SSK). Despite this, after four years of SSK formulation, only 5 out of 17 districts in Karanganyar had achieved Open Defecation Free (ODF) status by the end of 2016.

Last November 2016, the Regent of Karanganyar, Mr. Juliyatmono, boldly declared Karanganyar’s target to reach 100% ODF status by the end of 2017. Specifically formulated for this purpose, the Regent issued the Regent Decree 80/2016 on Movement towards Universal Sanitation Access [1].

However, to pursue ODF status for 12 districts in the span of a year, an alternative financial scheme was required. Relying on the regular Regional Revenue and Expenditure Budget (known as APBD or Anggaran Pendapatan dan Belanja Daerah) simply would not suffice.

In response, throughout 2017, Karanganyar managed to raise substantial funding from various sources to build 5,079 toilets. By 12 November 2017, Karanganyar successfully achieved ODF status, with a ‘safely managed’ access rate of 93%, and a ‘basic access’ rate of 7%.

Public funding sources ranged from Regional Revenue and Expenditure Budget on regent level to Dana Desa [2] on sub-district level, as well as alms fund from state-funded Islamic philanthropy organisation BAZNas [3]. From the private sector, funding was secured from Bank Jateng’s Corporate Social Responsibility (CSR) scheme for toilet construction.

Furthermore, Karanganyar secured the base for CSR partnerships through the release of the Regional Decree for CSR (known as ‘Perda’). This local executive-legislative based regulation introduces binding arrangements, such as regular meetings between Karanganyar’s Water & Sanitation Working Group [4] and potential CSR stakeholders.

Meanwhile, the Regent himself took an active role to socialise Regent Regulation 80/2016 at grassroots level to get support from communities. This activity also encouraged the households , especially for middle-income households, to be more engaged in the programme by constructing their own septic tanks and improved toilet facilities. At the sub-district level, this type of advocacy activity resulted in the allocation of a substantial amount of Dana Desa for toilet constructions.

Securing funding resources substantial to Karanganyar’s achievement of ODF status in 2017 is detailed as follows:

1. Pushing allocation of the regular Regional Revenue and Expenditure Budget for 3,000 toilets built for low-income families in 2017.

2. Persuading Sub-district Heads on the urgency of sanitation, resulting in 2,027 toilets built from a stark increase in Dana Desa allocation.

3. Enticing BAZNas to contribute funds for and construct 52 toilets.

4. Securing CSR scheme from Bank Jateng, amounting at Rp 1.5 billion for toilet constructions.

Afterwards, Karanganyar continued to seek funding for upgrading ‘basic access’ of low-income households to ‘safely managed’. In sum, throughout 2018, Karanganyar managed to reach 2,460 households.

In retrospect, a proactive approach and planning played a great role in formulating and realising such funding schemes.

As championed by the Urban Sanitation Development Program’s (USDP) multi-aspects approach, the Karanganyar Regency experience strongly testifies how regulation effectively gears up potential funding sources towards sanitation development.

Notes:
[1] Known in Indonesia as Peraturan Bupati No. 80/2016 tentang Gerakan Menuju Akses Sanitasi Menyeluruh.
[2] Dana Desa, translated as ‘Sub-district Fund’, is a set of budgets from the National Budget & Expenditure allocated for sub-district governments in order to trigger the development and empowerment of civilians at sub-district level. In the spirit of diminishing inequality across the nation, the amount of fund is allocated proportionately to each area’s demographical conditions.
[3] BAZNas or ‘Badan Amil Zakat Nasional’, translated as ‘Amil Zakat (Alms) National Agency’, is an Islamic organisation responsible for managing the collection and distribution of alms fund national level. Its formation was based on Indonesia’s Presidential Decree No. 8 Year 2001.
[4] Originally known as ‘Pokja AMPL’ or ‘Pokja Sanitasi’, the Working Group consisted of representatives from various departments in Local Government related to Solid Waste Management (SWM) and Faecal Sludge Management (FSM). Depending on local’s obligation, the Working Group sometimes takes care of water management as well. Common members are representatives from the Health Department, Environmental Department, Public Works & Housing Department, Local Secretary, and Regional Planning Agency.

About the Authors: Urban Sanitation Development Program (USDP) 
Klara Virencia is the journalist for Urban Sanitation Development Program-2 (USDP-2). In the spirit of encouraging replication of sanitation best practices throughout Indonesia, Klara shares stories on the digital national sanitation development platform, National Water Supply and Sanitation Information Services (NAWASIS), and the Portal Sanitasi Facebook page.

Mees van Krimpen is a water resources and sanitation management specialist who, since 2010, has been involved in sanitation development in Indonesia: first as co-team leader of the Urban Sanitation Development Program-1 (USDP-1). Since 2016, Mees has been team leader of USDP’s second phase. USDP works with governments in finding solutions to accelerate infrastructure development, and to establish sustainable services delivery by drawing programme lessons for nationwide replication.

Photos: USDP/ Klara Virencia