REPUBLIC OF INDONESIA

COASTAL COMMUNITY DEVELOPMENT PROJECT

CCDP
PRE-INCEPTION MISSION
Aide Memoire between Government of Indonesia and the Pre-Inception
Mission
4 April – 15th April 2011
th

Mission Context
1. The Aide Memoire presents initial ideas developed by the joint MMAF and
IFAD team over the past two weeks for the design of a new project – the Costal
Community Development Project (CCDP). The Aide Memoire aims to: (i) give a clear
understanding of the basic parameters, concepts and structure of the project;
(ii) provide a sound foundation for the ongoing design of the project; (iii) facilitate the
drafting of a concept note for IFAD management by the pre-inception mission team,
and (iv) facilitate the preparation of material by the Government prior to the inception
mission planned for early July 2011. The design ideas presented are based on the
draft project design document prepared for IFAD by the Directorate of Coastal
Community Empowerment and Enterprise Development, Directorate General Marine,
Coasts and Small Islands of the Ministry of Marine Affairs and Fisheries (MMAF).
2. The objective of the IFAD pre-inception mission1, according to its terms of
reference (TOR), is to jointly initiate the design process for a new investment project
with MMAF. The TOR requires that the design is aligned with ‘country-owned
development and sectoral priorities’ and complies ‘with IFAD’s procedures and
policies’.
3. Included in the TOR is the requirement for the mission to address four issues
– each presented with the mission’s responses:
• Reduction in the IFAD allocation to the project from USD 50 million to USD 32
million >> the Government in the opening meeting presented a revised
proposal which reduced the project financing to USD 32 million and refocused
the project on eastern Indonesia, while maintaining two districts in western
Indonesia (Serdang Bedagai and Medan City).
• The graduation of Indonesia from IFAD’s ‘intermediate financing terms’ to
‘ordinary financing terms’ >> the Government has presented a request for the
continuation of intermediate terms for this project as one of two projects
(SOLID and CCDP) submitted to IFAD for financing. A response is awaited
from IFAD management but has not been received during the pre-inception
mission.
• The broad geographical coverage of the project – comprising 21 provinces
and 27 districts – spread across the whole of the country, bearing in mind
IFAD’s strategic focus on eastern Indonesia and the potential complexity of
managing a project with such a broad geographic spread >> with the revision
of the project reflecting the reduced IFAD allocation, the number of provinces

1
The pre-inception team comprised: Howard Johnson, IFAD Team Leader; Sophie Brown,
Economist; and Anissa Lucky, IFAD Country Presence Officer. It worked jointly with a team
from government headed by Sapta Putra Ginting, MMAF.

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 was reduced to 11 and districts to 15. The emphasis is now primarily eastern
Indonesia with two districts in western Indonesia to maintain the national
status of the project.
• The broad set of project activities and need to explore opportunities to refine
the project conceptual framework and promote synergies among the activities
>> the nature and scope of each of the project investment elements/sub-
components has been discussed along with the relationship among them and
a series of ideas developed that are presented later in the Aide Memoire. The
evolving project design will address this issue.
4. During its two weeks in-country, the mission held initial meetings in Jakarta
with key Government officials and stakeholders prior to visits to three proposed
project districts – Makassar and Pangkep in South Sulawesi and Badung in Bali.
During these visits the mission was hosted by the provincial office, district officials,
BPSPL (Centre of Coastal Resource Development) responsible for marine affairs
and fisheries, and Bappeda (Planning Agency in province and district level). Working
sessions were held with other government officers, and projects active in the sector.
The team also visited a number of coastal communities in the proposed project
districts. On returning to Jakarta, further sessions were held with MMAF, Bappenas,
Ministry of Finance, donor agencies and a number of stakeholders. The mission
would like to thank all the officers of MMAF, Bappenas and Ministry of Finance that
worked with the mission and gave so generously of their time, and to thank in
particular Dr. Sapta Putra Ginting who was with the mission during the whole period
and guided it in its work and in the development of the project concept.

Constraints, Opportunities and Lessons Learned

5. The project will need to address a number of key constraints affecting poor
coastal communities and capitalize on opportunities available. An initial assessment
has identified the following:
Constraints
• Limitations in capacity of government extension and technical services, which
is exacerbated by frequent turnover of extension officers resulting from
government’s promotion policy in the districts; related to this is the difficulties
to contract qualified extension workers with experience in community
empowerment in coastal communities
• A wide geographical spread and large number of districts could result in high
project management costs and dispersed project impact, depending on
transport systems and access
• Risk of overexploitation of the coastal and small island areas adjacent to the
project’s communities
• The affects of climate change is a major factor in the coastal communities and
in particular for the small island communities
• Limited access to the types of financing, and to the financial services, that
coastal communities need to improve their livelihoods
• The poor quality of marine2 products reaching markets depresses
fisher/aquaculture returns. This is primarily due to inadequate
infrastructure/post harvest handling facilities and constraints along the value
chain

2
‘marine’ refers to capture fisheries, aquaculture, seaweed and other marine products

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 • Poor access to clean water and sanitation affects both health and livelihoods
as well as having an impacting on the quality of marine products marketed
• Remoteness and difficulty of access for a large portion of poor coastal and
small island communities hinders their ability to participate in market driven
activities and thus to improve their livelihoods
• Cultural norms can constrain the participation of women in project activities
particularly in more traditional eastern districts.
Opportunities
• A viable approach for coastal resource management, based on community-
focused initiatives and co-management, has been developed and is being
replicated under differing environments in diverse parts of the country
• The implementation of a number of government programmes has
demonstrated that community empowerment can be used as a basis for
sustainable development in poor coastal communities; ongoing community
commitment and motivation provide an important basis for selecting
communities with which to work
• Government’s commitment to decentralization and community-driven
development facilitates decision making, allocation of resources and
interaction with communities
• Experience in developing alternative means of income generation in coastal
communities, such as seaweed production, provides alternatives for improving
the livelihoods in poor coastal communities where marine resources are over
stretched
• As many development projects in the sector have concentrated on specific
eco-systems – reef management, mangrove regeneration, etc. – there is an
opportunity to bring these experiences together within one project to the
advantage of coastal communities.
6. Lessons Learned. Experience assembled from a series of marine projects
and other development interventions, some of which is highlighted in IFAD strategic
framework document for Indonesia (COSOP), provide some useful lessons for the
design of a new projects such as CCDP:
• Empowering the poor should not be seen as an end in itself but rather a
means to facilitate other activities that can increase their income
• It is important to place the community at the centre of development initiatives
• While using group structures in community empowerment projects is
important, it is necessary to build the capacity of these groups for sustainability
• Mainstreaming gender is an important part of development projects that
requires special attention and effective mechanisms for success
• Income generating activities need to aligned with the value chain and market
demand to ensure sustainability
• Capacity building of local institutions is a prerequisite for sustainability in
demand-driven community development projects
• It is necessary to ensure the selection of appropriate project sites if a project
such as CCDP is to be successfully replicated
• Successful co-management in general requires: full community trust and
ownership, agreed rules and norms of functioning, and a balanced incentive
structure to ensure cooperation of all partners
• Savings mobilisation is an important stepping-stone before groups and
individuals can access credit from MFIs and the formal banking sector

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 • Government and NGOs/academic institution/service providers can work
together successfully, but it requires adjustment on both sides and intensive
and regular training of personnel
• It is necessary to attune the development within the capacity and
social/cultural context of each community, capitalizing on traditional knowledge
and taking account of customary rights, and in terms of management,
organizations and resources

Interpretation and Development of the Project Concept

7. This section of the Aide Memoire presents observations and comments on
the key elements that make up the design of the project. A common understanding
on these elements is an important basis for the ongoing design process.
8. Project Rationale. There are two main reasons why the project has been
proposed by the Ministry for financing: (i) coastal and small island communities are
poor and often among the poorest communities in the country; this applies to both
coastal and small island communities in remote areas as well as locations in more
readily accessible areas; and (ii) through their participation in previous programmes,
a number of coastal and small island communities have demonstrated their
motivation and commitment to improve their economic position, undertake
development activities and continue these activities at the end of the programme.
9. Project Goal and Objective. The project goal and objective, which will provide
the starting point for the project’s logframe and results framework, are:
• Goal: to sustainably improve livelihoods in poor coastal and small island
communities
• Development Objective: to develop environmentally sustainable, marine-
based economic activities in a representative cross-section of coastal and
small island communities in 15 districts.
10. Guiding Principles for Design. Presented below are the key principles that
guide the design of the project. Some were presented in the MMAF draft project
design document, others have been developed subsequently by the joint
MMAF/IFAD design team:
• Focus on potentially active marginal coastal and small island communities.
This is an important defining statement, as it captures the concepts of both
‘active’ and ‘margin’ – each of which is central to the project. It refers to
those poor are willing to improve themselves when given the opportunities
and means. It does not imply the poorest of the poor.
• Community empowerment, stakeholder participation and equalization.
This is the key concept in the design of the project and is central to the
project’s implementation and decision making process. It is in line with
government policy and builds on the experience gained in the PEMP
(Coastal Community Economic Empowerment Programme) and PNPM
(Programme Nasional Pemberdayaan Masyarakat) programmes. It
combines three of the principles presented in the draft project design
document. Equalization is an important part of the process and has
implications for inclusion of the more vulnerable segments of the
communities in project activities that focus primarily on the ‘active poor’.
Community empowerment also enables the project to integrate different
approaches which have been dealt with separately in recent projects –
consistent with the concept of ‘integrated coastal management’.

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 • Transparency. This is interpreted in terms of activities being ‘open,
accountable and verifiable’ – essential elements in project implementation.
• Decentralized management. The project is a national project, with funds
borrowed at the central level and made available to the districts. Districts
however will be responsible for management and implementation
• Promoting value added of marine production. A strong market focus is
necessary. In particular, the nature of market demand, the need for
communities to provide the quality, quantities and goods demanded by the
markets.
• Environmentally friendly and sustainable. Project interventions will
concentrate on sustainable management of marine resources and
emphasize the balancing of the ‘characteristic of the natural environment
with economic development’ – i.e. maximizing a community’s return from
the sustainable use of its marine resources. The aim would be to build on
the experience of COREMAP and other projects such as MCRMP (Marine
Coastal Resource Management Project), PLPBM (Pengelolaan
Lingkungan Pesisir Berbasis Masyarakat – Environmental Management
based on the Community Empowerment), PEMP and PNPM.
• Gender Equality. The translation of this principle into concrete and
monitorable actions will be an important challenge for the project design
team particularly in eastern Indonesia which requires special attention on
the participation of women in the project decision and activities.
• National in scope but with the primary focus on eastern Indonesia. This is
linked both to IFAD’s mandate and the fact that the levels of poverty are
higher in eastern provinces.
• Pro-Poor, Pro-Job, Pro-Growth and Pro-Environment. In line with
government’s key marine/fisheries directive: Pro-Poor, through social and
economic empowerment; Pro-Job, optimizing access to jobs and
employment; Pro-Growth, community development through transformation
of economic activities, infrastructure, industrialization, and modernization;
and Pro-Environment, resource management and climate change,
mitigation and adaptation.
11. Project Scope and Definition of Project Area. Following the reduction in IFAD
financing to USD 32 million, the number of project districts was reduced from 27 to
15. The new set of districts fall within 11 provinces all of which come within eastern
Indonesia, except for two districts in the Province of North Sumatera. See the table
attached to the Aide Memoire for the full list. The selection is understood to be based
on a number of criteria including: (i) poverty level of the selected communities,
(ii) demonstrated motivation by the communities to development, (iii) marine
production potential, (iv) commitment by the districts and successful implementation
of previous programmes, (v) necessity to include islands in each location in, and
(vi) in line with the priorities outlined in the Minapolitan strategic framework. A high
portion of the selected districts (40%) are ‘city districts’. It will be important to
understand the dynamics of poor fishing communities within such a context. It will
also be important to compile the detailed assessment used in selecting the districts
(and coastal communities), including the weighting and results to understand how the
criteria above were applied and how the locations rank in poverty terms among the
districts in each province. This will not only facilitate the design process but will also
be important in justifying the selection of districts when questions are asked by
districts that have not been included. An important aspect in the selection of districts
is replication and the ability to scale up project activities once the project terminates.

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Another side of this is the necessary flexibility required to manage the ‘splitting of
districts’ pemekaran wilayah, that is selected villages continue to be included in the
project.
12. Project Approach. The core of the project – what has sometimes been
referred to as the ‘soul’ of the project – is community empowerment. This is the
driving force behind the project and determines how the project will be implemented
as well as how communities will work with the project. However, it must be seen in
combination with the economic activities to be financed and delivered through this
mechanism. Even though community empowerment will bring concrete benefits to
the members of the coastal communities by enabling them to help themselves, it is
the range of other investment activities that will result in the greatest impact on
household incomes and livelihoods. This second element of the project approach
could be captured by the term value addition. It comprises the range of investment
initiatives that would enable the communities, and in particular groups within these
communities, to undertake marine-based income generating activities. It also
includes investment initiatives to manage, conserve, rehabilitate and improve the
production potential of the marine environment of the communities, which in turn
leads to value adding activities. A key element is the value chain3 from fish catch, or
aquaculture and seaweed harvest, to the final market, and the optimization of the
communities’ use of the value chain to increase their return per unit of effort and
investment. Another aspect of value addition is investment in economic infrastructure
– ‘economic’ in both direct and indirect terms. For example, investment in a jetty or a
cold store or a point of first sale market would be considered as direct economic
infrastructure investment. While investment in clean water and sanitation would be
indirect. Clean water and sanitation are both critical to improving the quality of the
fish and other marine products marketed, as well as a priority social need in many
communities. It is critical that community empowerment processes emphasize
investment activities with an economic return.
13. Other elements inherent in the project approach include: (i) the structure of
and synergies among the project’s investment components and activities;
(ii) geographical scope and project areas; (iii) phasing in, scaling up, phasing out and
replication, and (iv) targeting strategy, both in terms of poverty targeting and gender
balancing. Each of these will be developed as the project design evolves. At this
early stage of project design, the points can be made:
• Structure of Investment Components – based on discussions among the
design team, the three investment components proposed in the MMAF draft
project design document have been modified. The new structure places more
attention on community empowerment by making it a separate and pivotal
component, and groups investment activities that facilitate income generation
into a second component. The modified structure is presented below.
• Geographical scope and project areas – as mentioned previously, the project
will focus primarily on eastern Indonesia with the districts selected intended to
represent a broad cross-section of the districts in the country. This would
encourage replication of project activities in other areas. The key factors in the
selection of the participating project coastal communities will be poverty and

3
‘Value chain’ refers to the systems for handling and processing marine, fisheries and
aquaculture based commodities from initial catch/harvest to the final market.with the goal of
increasing the return to the fishers, aquaculture operators and other producers of marine,
fisheries and aquaculture products.

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 demonstrated motivation – both prerequisites in choosing the participating
villages.
• Phasing in, scaling up, phasing out and replication – this element of the project
approach will be developed as the design evolves. However, it will be
necessary to determine the basis for replication as it will also be a key factor in
selection of the project districts. Because of the decentralized nature of project
management and execution, project operations in all districts will start at the
same time. However, the induction of communities is step-wise, with three
villages in the first year, three in the second and three in the third in each
selected district.
• Targeting strategy. This is another important element of project design. The
structure and implementation processes will need to demonstrate how the
project will ensure the participation of the poor and vulnerable segments of the
population, as well as how both women and men will participate in
planning/decision making, implementation and monitoring and evaluation of
the project.
14. Investment Components. The proposed structure of investment components
and sub-components is as follows:
• Component 1 – Community Empowerment. This component builds on
PEMP and PNPM and will adopt many of their processes and approaches,
primarily working through groups and associations within the communities.
It will adopt a sustainable village development approach while stressing
marine-based economic development. In addition, it will build capacity
within the communities to take control of their own development and
facilitate access to technical and financial support both from government
and the private sector. This process would be supported by an institution at
the district level, P3MP4, which would backstop the process and help
facilitate the continuation of activities after the project terminates.
• Component 2 – Marine-based Economic Development
o Coastal Resource Management. This sub-component is the same as
that presented in the draft project design document. Activities include:
participatory assessment and community mapping of coastal
resources; preparation of coastal resources management plans;
establishment and maintenance of conservation areas; rehabilitation
of damaged coastal and small island ecosystems; activities to address
destructive fishing activities and over exploitation, among others.
o Marine Resources-based Value Addition Initiatives. The sub-
component comprises all investment activities that enable groups to
undertake marine-based income generating activities. It includes the
block grants that were presented under the previous sub-components,
‘Development of Alternative Livelihoods’, and, ‘Micro-Business
Revitalization’ and the associated village revolving funds. In addition, it
would include related and supporting initiatives such as facilitating
access to financial services and technology transfer directly
responsive to marine5-based micro-enterprise development. Using a
value chain approach, it would include, for example, support for

4
Centre of Coastal Community Empowerment and Services
5
‘Marine’ here refers to fisheries and aquaculture products as well as marine ones.

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 improvements in the fish handling and preservation on boats (and
possibly some production support such as boats, motors and gear),
development of small-scale aquaculture, fish processing and
preservation, seaweed and sea salt production, local small-scale boat
service and repair, application of appropriate technology, and
initiatives to facilitate access loans and other financing. The exact
activities/investments in each village will be determined through the
participatory demand assessment that forms part of the community
empowerment process.
o Value Chain Development and Marketing. The sub-component will
combine a number of activities including: ongoing assessment of
market demand locally and externally, support to improve
efficiency/competition of small-scale traders, facilitation of market
linkages by bringing together traders and coastal enterprise groups
(such as the current ‘clinic business’ initiative of the Ministry), and
improvement in market information to the villages.
o Microfinance support. Management and technical support to improve
the efficiency of community cooperative-based financial service
organizations and facilitation to increase communities’ access to
finance from the formal banking system.
o Technology Innovation. A sub-component to pilot and promote new
ideas and techniques linked for example to improvements in
production, quality and value addition, resource management,
community-based savings and financial services, and marketing of
marine products from the communities.
• Component 3 – Small Scale Economic Infrastructure6. The infrastructure
to be financed under this component would be decided following a
community-based participatory assessment. The infrastructure selected
would have a demonstrated public good and benefit most the community.
The village would have to demonstrate how the selected infrastructure
would contribute to the ability of the community to improve its economy
and directly or indirectly support the value adding/income generating
activities financed under the project. It is foreseen that the majority of the
investment would be in market-linked infrastructure such as storing and
handling facilities, market facilities, jetties and walkways, solar cells,
information centres, aquaculture water distribution systems and possibly
small bridges and other small-scale infrastructure to facilitate access.
Investment in clean water and sanitation would also be included.
• Component 4 – Institutional Capacity Building
o Technical and Institutional Support and Capacity Building. This sub-
component comprises the activities necessary to ensure that the
investment activities in the first three components have the needed
technical and institutional support. It combines training and capacity
building of government extension services with contracted support
from NGOs and the private sector. The main focus would be on the
district and sub-district levels but training support would also be

6
Small-scale economic infrastructure refers to infrastructure that is generally undertaken
within the communities with a major part of the work done by the communities themselves
with external technical support as required

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 provided at the provincial and national levels. A key consideration
would be the ongoing provision and sustainability of the technical
support to the coastal villages.
o Project Management. The financing provided under this sub-
component would cover the costs of administering and implementing
the project at the different levels.
15. Project Costs. An indication of the costs of the different components was
developed by the Ministry for the larger project which was based on a different
component break down. A new costing will not be undertaken at this stage, but rather
will be done during the inception mission.
16. Project Implementation Arrangements. The draft project design document
spells out in detail how the project would be managed. The key principle is that it
would be managed as part of regular government implementation processes using
government staff and expertise – some part time, some full time. However, it would
be supplemented by long and short term project-dedicated experts who would be
contracted to work with the project. The proposed implementation arrangements
begin in the village with the chief and sub-chief and involve selection of village
motivators, community groups and extension workers. At the district level, a project
implementation unit within the Marine Affairs and Fisheries district agency combining
government staff and contracted experts would have the direct responsibility for
managing the project. The provincial level would be responsible for coordination,
technical guidance, monitoring and oversight and the regional level (BPSPL and/or
other technical line agencies of MMAF) would provide technical advice and expert
support. At the central level under the Directorate General of Marine, Coasts and
Small Islands, a project management office would be established within the
Directorate General Marine, Coasts and Small Islands, supported by contracted
experts.

Way Forward/Next Steps

17. This is the first step in the design of the project, in fact it could be termed a
step prior to the formal project design process. It will be followed by the following
steps:

Early July 2011 Project inception mission

September 2011 Project detailed design/formulation mission

First quarter 2012 Project appraisal mission

September 2012 Presentation to IFAD Executive Board

Late 2012/early 2013 Loan effectiveness/start of project implementation

18. Prior to the arrival of the project inception mission, it is proposed that the
following be prepared by the Ministry:
• Project Location Analysis. The detailed evaluation process for selection of the
project districts presenting the criteria, weighting and scoring; as part of this
evaluation. It is necessary to provide an assessment of the poverty status of
the selected districts compared to other districts in the selected provinces, and
the villages compared to the other villages in the district.

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 • Coastal Community and District Fact Sheets. A fact sheet for each of the
districts selected including the following information:
• By district: population of the district, sub-districts within the district and
coastal and small island communities, portion of the population below the
poverty line for each: district, coastal sub-districts and coastal and small
island villages.
• By the selected coastal villages, information for each including:
population of village; number of fishers, aquaculture operators, seaweed
farmers, others involved in marine production; numbers of village based
traders/market intermediaries; fish, aquaculture and other marine
production and amounts/portions marketed; number of boats with and
without motors; market infrastructure (storage, jetties, ice plants, markets,
fishing gear shops, marine workshops); road access; water sources; type
of sanitation; portion of the population below the poverty line.
• Costed Development Module (e.g. a village). A presentation of the basic
project development module and what it constitutes, the costs involved in
developing it, and the expected returns/benefits.
• Coastal Community and District projects. A listing of all current and recently
closed projects:
• By district: all coastal development, empowerment or marine
fisheries/aquaculture projects. This would include corporate CSR projects
where relevant.
• By selected coastal village: all current and recent projects, with detailed
information on the project in which they previously performed
successfully.
• Project Area Maps. One map showing each of the provinces and districts and
a second set of maps for each district showing the location of the selected
coastal villages.

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Signed by the parties named below on 15th April 2011 in Jakarta, Indonesia
For the Government of Indonesia:

Sri Yanti JS Dewo BJ. Putranto

Director of Marine and Fisheries Director of Multilateral Foreign Funding
Bappenas, Republic of Indonesia Bappenas, Republic of Indonesia

Rahmat Waluyanto Ferrianto H. S. Djais

Director General of Debt Management, Director of Coastal Community
Empowerment and Enterprise Development
Ministry of Finance, Republic of Indonesia
DG of Marine, Coastal and Small Islands

For International Fund for Agricultural

Development:

Howard N. Johnson
IFAD Pre-Inception Mission
Team Leader

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 Attachment 1. Proposed Project Locations

Province District

1 Merauke
Papua
2 Yapen

3 South East Maluku

Maluku
4 Ambon City

5 North Maluku Ternate City

6 North Sulawesi Bitung City

7 Gorontalo North Gorontalo

8 Parepare
South Sulawesi
9 Makassar City

10 West Nusa Tenggara West Lombok

11 East Nusa Tenggara Kupang City

12 West Kalimantan Kubu Raya

13 Bali Badung

14 Serdang Bedagai
North Sumatera (western Indonesia)
15 Medan City

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