Due to their work with MADANI the local government’s perception of civil society organizations (CSOs) has improved, has and they have embraced Lakpesdam NU as a trusted development partner.
Community development initiatives play an important role in alleviating poverty and reducing wealth inequality in rural areas. The Indonesian Government enacted the Village Law (UU No.6/2014) to guarantee the allocation of Village Funds (Dana Desa), which help villages finance local development through a customized approach that focuses on their needs and priorities. Village Funds, and the village-owned enterprises (BUMDes) that they are often used to support, have a variety of benefits, such as growing the local economy, including generating new markets and employment opportunities, strengthening the management of village resources, and increasing social welfare.
The district of Sumenep has economic opportunities from its plentiful natural resources, including for oil and gas, clean water, livestock, fisheries, agricultural crops, and tourism. However, due to Sumenep’s relatively remote location and lack of funding, human capital, and infrastructure, village governments in the district have not been able to fully realize the potential of BUMDes.
Despite being a government priority, in 2021 the Sumenep Village Community Empowerment Agency (PMD) reported that only 15 out of 310 BUMDes in the region were categorized as “mature.” The remaining entities were considered to be in the growth, startup, or development phase.
Mohammed Ekoyanto, S.Pd, Director of Lakpesdam NU in Sumenep, stated: “If we want to make the BUMDes successful, we must improve their governance, and ensure that the communities are involved in the oversight and management of the BUMDes.” Mr. Ekoyanto, continued: “It is imperative that we continue to strengthen the multi-stakeholder collaborative governance approach.”
Alongside the MMS Learning Forum, Lakpesdam NU has helped the government to better understand the underlying causes for the poor performance of the BUMDes. Lakpesdam NU utilized a community score card, a type of community-based accountability tool, to identify the challenges facing the BUMDes in Sumenep. The assessments showed several major issues: poor business management, planning, and corporate governance; inadequate human resources management; and low community participation.
As a follow up, the MMS Learning Forum issued a policy brief with recommendations for improvements. They then advocated for greater accountability and transparency in managing the Village Funds that support the BUMDes and promoted a more community-based approach to managing the enterprises. Through these activities, government trust towards civil society increased and the Sumenep Government responded well to the recommendations. It agreed to not only allocate the Village Funds necessary to improve the effectiveness of BUMDes, it also agreed to fund the implementation of the community-based management approach to three more locations.
Anwar Syahroni, Head of the Sumenep Village Community Empowerment (PMD) Office, stated: “We hope that the interventions in the three locations, and the experience and best practices, serve as great examples and inspire changes at BUMDes in other villages.”
This initiative also resulted in the signing of a BUMDes Service Charter, which serves as a joint commitment between villageowned enterprises, a regional development bank, youth and women’s organizations, and members of the community. This charter also serves as a tool to enable citizens to monitor the performance of BUMDes by holding them accountable to the approved service standards. In April 2023, the PMD Office signed an agreement with the MMS Learning Forum to replicate the original program in 10 more villages over two years with government funding. An agencylevel Circular Letter (Surat Edaran) is in development to support the expansion.
In the same month, officials from the Provincial Government of East Java visited Sumenep to observe the impact of MADANI’s initiative. These officials were impressed with Lakpesdam NU and the MMS Learning Forum’s intervention to improve community participation in village fund allocations and the revitalization of the BUMDes using an evidence-based and collaborative approach.
In the past three years, MADANI has seen the legitimacy, accountability, and confidence of Lakpesdam NU grow exponentially. This transformation empowered them to work with the district government and other stakeholders to successfully address the challenge of revitalizing the BUMDes through collaborative governance, community-based advocacy, and locally driven solutions.