Livelihoods - Private Enterprise Partnership for Aceh and Nias

Background

The tsunami disaster caused extraordinary losses of life, businesses, homes, private belongings, crops, livestock, tools, legal documents and cash assets to over 50% of the Acehnese population (75 per cent of whom were rural dwellers). These impacts have spread across the province to unaffected communities as a result of loss of markets, trade, food supply and diversion of resources to affected areas.

The considerable loss of livelihoods is further complicated by the ongoing conflict, inequity between revenues from natural resources (forestry, oil and gas), the population's dependence on subsistence agriculture and fisheries, and inequitable credit and trade mechanisms. Furthermore, 78 per cent of the expected losses were largely borne by the private sector in the form of assets and revenues contributing to the livelihoods of affected communities (fisheries, agriculture, housing, transport facilities and commerce), exacerbating the direct effect on livelihoods.

Description

The Private Enterprise Partnership for Aceh and Nias (PEP-Aceh/Nias) is a collaborative partnership between the Australian Government and the International Finance Corporation (the private sector development arm of the World Bank).

The project promotes a more competitive, vibrant and robust Small Medium Enterprise sector that will make a tangible and sustainable impact in terms of economic growth, employment creation and poverty alleviation.

The Private Enterprise Partnership Aceh/Nias works across four complementary areas, namely:

1. Strengthening the climate for business in Aceh, particularly Small Medium Enterprises (SMEs).

   PEP Aceh/Nias works closely with the World Bank Group’s Foreign Investment Advisory Service (FIAS) in order to help design and implement a planned program of assistance on business climate reform.

   Expected outcomes include a viable set of investment laws, and supporting local systems, to maximise Aceh's opportunities to attract and realise investment.

2. Sustainable access to finance for local businesses, particularly SMEs.

The program focuses on areas such as building capacity of selected microfinance institutions (MFIs), assisting the restructuring of outstanding loans and linking them into local financing opportunities, establishing a small online credit bureau for MFIs, using the Customer Online Information Network model already developed by IFC-PENSA.

3. Supporting the development of productive economic sectors.

PEP Aceh/Nias focuses on market analysis supply chains and probable Market opportunities.

4. Building the capacity of BRR to coordinate economic growth.

PEP Aceh/Nias provides targeted support to the business and economy team, particularly around donor program coordination and investor support.

Achievements/outcomes to date

Improving the Investment and Business Environment

• Working with FIAS, BRR and BPKPMD to draft a robust investment law and to develop a framework for economic improvement.
• Establishment of an Investor Outreach Office to provide investment support services, hosting 'the business gathering', and developing an Investment Policy Statement for Aceh.

Restoring Livelihoods

• Information session on handicrafts workshop in December 2005 attended by 100 Acehnese (40 of whom were women).
• Workshop for handicraft producers/retailers attended by 36 people (half of whom were women) and eight attendees trained as trainers.
• Completed and distributed a masterplan and logframe to guide the development of the fisheries sector, designed programs for shrimp farming, seaweed production and agribusiness.
• Launched an online booking system for Acehnese hotels and guest houses (www.aceh-hotels.com).

Increasing Access to Finance

• Multi-stakeholders workshop on Challenges in Financing Small Medium Enterprises in December 2005.

Developing Local Business Services

• Nearly 500 people in Aceh and Nias have participated in an IFC pilot training program (consulting skills, financial management and PC skills for business). Of these, over 100 local business service providers work with small businesses and 35 percent of participants are women). Graduates have been hired by some organizations.
• Launched the Young Entrepreneurs' Startup (YES!) Program in Nias, Banda Aceh, Lhokseumawe and Meulaboh.
• Provided business planning training to 200 entrepreneurs and small businesses owners, followed by a competition with six winners receiving up to A$1,000 in seed capital and ongoing advisory support.

This page was last updated on 25 January 2007

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