Final Evaluation of PKH Distribution via LKD

29 January 2015

The National Team for the Acceleration of Poverty (TNP2K) on 29 January facilitated the workshop "Final Evaluation of Family Hope Programme (PKH) Distribution via Digital Financial Services (LKD)" at the Mercure Hotel, Jakarta. The event followed the implementation of pilot tests on the flow of PKH aid through electronic money and LKD agents in selected locations -- North Jakarta, Cirebon, Pasuruan and Kupang -- on 8-30 October 2014 and with more than 1,300 recipients.

In the workshop’s opening speech, TNP2K’s Executive Secretary, Bambang Widianto said that, "the Indonesian government is currently reforming its targeting and delivery mechanisms for social assistance programmes, so that aid in the future is received by those in most need. As of now, TNP2K is in the process of integrating social assistance schemes into those based around the family unit. One way is to use technology for the distribution of such assistance,” he said.

Widianto explained that the PKH programme involves cash transfers based on a series of conditions related to education and health. For example, at least 80 percent school attendance is required for assistance given every three months. For health, children and pregnant women are required to visit health centres. Currently, 3 million households participate in PKH.

The purpose of distributing social assistance through LKD is to encourage a shift towards the use of non-cash transfers and promote inclusive finance by encouraging the poor to save.

DR. Pungky Purnomo Wibowo, Head of Electronification Programme and Inclusive Finance at Bank Indonesia said distributing aid flows through LKD agents is part of an effort to support Bank Indonesia’s National Non-Cash Movement (GNNT). In addition, this step is also expected to boost public awareness of non-cash banking services for transaction, making them more efficient and effective.

LKD is a service payment and financial services system that uses mobile- or web-based technology and cooperates with third parties (agents). It supports the development of inclusive finance and the effective distribution of government aid to the public (Government-to-People, or G2P). It is hoped that LKD agents will help people who have not yet used formal banking services, especially those living in areas not previously covered by the banking sector (unbanked segment).

Vivi Yulaswati, Director of Protection and Public Welfare at the National Development Planning Agency (BAPPENAS) said the distribution of social assistance promotes financial inclusion because it can encourage economic growth and strengthens the state economy.

The workshop is the result of cooperation between TNP2K and various other institutions, such as Bank Indonesia, BAPPENAS, Ministry of Social Affairs and the Indonesian Telecommunications Regulatory Body.