With this loan and grant IFAD supports the National Programme for Community Empowerment (PNPM) and contributes to the realization of the government’s development goals of reducing poverty in rural areas and improving governance at the local level. The aims of the government programme are:

• to promote greater participation of rural people in development, and to promote improved governance and more effective poverty reduction programmes
• to develop a policy agenda for poverty reduction and to develop the institutional capacities required for that agenda

About half of the rural people who will benefit from the programme nationwide live under the poverty line or are at risk of falling below it. As its contribution to the government’s efforts to reduce rural poverty, IFAD will support agricultural development in 8 districts and 28 rural subdistricts in Papua and West Papua. The two provinces have largely indigenous and ethnic populations.

IFAD will provide investment resources to support productive proposals developed by communities through a participatory planning process. Communities will carry out most programme activities and will monitor progress at the village level. Local communities and community-based organizations, including tribal groups, will participate in implementing the programme, working together with programme staff, NGOs and private-sector service providers, and government ministries and agencies.

IFAD funds will help develop the government’s capacity for policy analysis and formulation of pro-poor policies and approaches. Investments will finance:

• block grants, facilitation and training
• support for implementation and technical assistance
• support for programme management

Activities under the programme include improvement of rural infrastructure, market infrastructure, water supply and irrigation systems, and improvement of access to vital services in rural areas.

The programme will enable local communities to use block grants to invest in public goods that will improve rural livelihoods through crop and livestock development, market linkages and value chain development.  A major benefit promises to be the impact on rural households’ expenditure and creation of local employment.