Project Generasi: Conditional Community Block Grants in Indonesia
Following the success of conditional cash transfer projects (CCTs) like PROGRESA, which delivered transfers to poor families in rural Mexico conditional upon schooling or regular healthcare visits, many countries have implemented similar programs in the hopes of increasing family income and stimulating demand for social services. CCT programs, including PROGRESA, have sought to stimulate demand for maternal and child health services and education in part by increasing poor families’ liquid capital. However, such demand-side interventions may be inappropriate in contexts where beneficiaries do not have adequate access to health and education services. Thus, researchers are investigating new strategies, such as block grants, that utilize the same ideas of using incentives to improve the effectiveness of health and education.
In 2005, the Indonesian government implemented a cash transfer program, known as the Unconditional Cash Transfer (UCT) Program, to 15.5 million poor and near poor households, in the hope of protecting them from oil price hikes. Cash transfer programs are a means of giving cash to poor households, easing their liquidity constraint and making it easier for them to weather economic shocks. Although the government considers the UCT program to be a success, it has decided that in the future transfers should be linked to improving the social welfare of the poor, by making grants conditional upon certain behaviors.
In 2007, the government began a pilot program to test a new approach to improving health and education: incentivized community-based block grants. Under the program, known as Generasi, over 1,600 villages received an annual block grant, which each village could allocate to any activity that supported one of 12 indicators of health and education service delivery (such as prenatal and postnatal care, childbirth assisted by trained personnel, immunizations, school enrollment and school attendance). To give communities incentives to focus on the most effective policies, the government bases the size of the village’s Generasi block grant for the subsequent year partly on the village’s performance on each of the 12 targeted health and education indicators. The Generasi program thereby takes the idea of performance incentives from CCTs and applies it in a way that allows communities the flexibility to address supply constraints, demand constraints or some combination.
The Government of Indonesia selected 300 Indonesian subdistricts for researchers to evaluate, testing the effectiveness of the annual block grants to improve service coverage and usage of basic health and education services. Of these, 100 will be enrolled in Generasi and given an annual block grant proportional to the number of households in the village. Villages can use these grants to improve the coverage of specified health and education services in their community. When villages re-apply in subsequent years, the size of the block grant will depend in part on past performance relative to other villages in the same subdistrict, providing an incentive for villages to use the funds efficiently.
The evaluation will compare this incentivized transfer program to two alternatives each implemented in half of the remaining 200 subdisticts: a non-incentivized block grant model, which will be an identical program but villages will receive the same amount of money in the second year regardless of village performance, and a comparison group whose villages will receive no transfers.
A series of evaluation surveys will be conducted to assess whether provision of aid is more effective when it is made conditional on performance. The evaluation surveys will also measure whether communities are able to collectively work out solutions to improve physical and financial accesses to services and solve small-scale supply problems, and how the incentive structure alters the type of investments chosen by communities.
Results forthcoming.
