Facing poor infrastructure and systemic inefficiencies, many developing countries struggle to improve the utilization of social services by their citizens. Following the success of Conditional Cash Transfer (CCT) programs such as Mexico’s PROGRESA (now called Oportunidades)—which delivered cash payments to poor families conditional on schooling and regular healthcare visits—many countries have implemented CCT programs in the hopes of both increasing family income and stimulating demand for maternal and child health services and education. However, interventions that focus on increasing demand for social services may be inappropriate in some developing countries where adequate health and education services are not in place for beneficiaries to use. In such environments, programs that directly address both the supply- and demand-side constraints may be more appropriate.
In 2007, J-PAL affiliate Benjamin Olken, along with Junko Onishi and Susan Wong, worked with the Government of Indonesia's Ministry of Home Affairs to evaluate the effectiveness of Generasi, a program that provided communities with an annual block grant to improve the coverage of health and education services. In some randomly selected communities, a portion of the subsequent year’s grant was allocated based on their relative performance on 12 health, nutrition, and education indicators. The Generasi program thus takes the idea of performance incentives from CCTs and applies it to the community level, but gives communities the flexibility to address supply and demand constraints as they see fit. Researchers found that health indicators improved more for incentivized communities than for non-incentivized communities, particularly in less developed provinces, but found no effect of incentives on education. In total, between 50–75 percent of the impact of the block grant program on health indicators can be attributed to the performance incentives. For more about this project, see the related evaluation page.
Development of Project Generasi
Generasi piggybacked on the Kecamatan Development Program (KDP)/PNPM, a community-driven development program that was already in place in Indonesia since 1998. When the Government of Indonesia decided in 2007 to move from an unconditional cash transfer scheme to a conditional transfer scheme, they opted to try two different approaches. The first was a household CCT approach proven successful in Mexico and other countries. The other was an incentivized community block grant program. Unlike in Mexico, it was not clear that Indonesia had the administrative capacity or adequate supply-side services to make an individual CCT program work in certain areas of the country. Generasi thus provides a unique example of how an established national community program can be adapted to address education and health targets using a community approach. Building the evaluation into the design of the program also facilitated government involvement at all stages of the evaluation, and a much faster scale-up of the pilot.
Scaled Up Project: Generasi Plus
Drawing on the evaluation findings, the Government of Indonesia decided to continue the program and move exclusively to incentivized community block grants in 2010. The Government of Indonesia also expanded its annual funding for the program from US$15 million in 2011 to US$40 million in 2012. With additional funding support from the Australian Government and the World Bank, Generasi reaches 6.7 million women and children in approximately 5,400 villages each year.
In 2011, the US Government’s Millennium Challenge Corporation (MCC) signed a US$600 million compact with the Government of Indonesia to fund projects to reduce poverty. Quoting the results of the Generasi evaluation, MCC has pledged over US$130 million of the compact to support the next phase of Generasi, including revising the program to further target stunting and nutrition outcomes, which were identified as priorities by the Government of Indonesia.1 The revised program, known as Generasi Plus, reinforces the community incentives system originally piloted under the Generasi program, and adds performance incentives for individual service providers to ensure that the supply of health services will meet communities’ demand. An evaluation component will focus on measuring household level impacts, as well as the effect of incentives for communities and health workers.
1 Millennium Challenge Corporation. “Notice of Entering into a Compact with the Republic of Indonesia.” The Federal Register: The Daily Journal of the United States Government. November 29, 2011. http://www.federalregister.gov/articles/2011/11/29/2011-30706/notice-of-...