The Effectiveness of the Implementation of the Village Fund Program for Reducing Poverty in Indonesia's Rural Areas
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The Village Fund Program (VFP) is a central government program that has been implemented since 2015 with a total budget of around IDR 268 trillion (US$ 19.14 billion). This program aims to support community development and community empowerment. The VFP has more impact on development in rural areas, such as improving the standard of living of the village communities through poverty reduction. VFP can minimize the development gap between villages and cities. After approximately 8 years of implementation, there are many comprehensive studies regarding the VFP across the nation. However, the previous research mostly focused on general matters, such as the effect of the VFP on poverty reduction, inequality, and other social problems, without focusing on how to increase the effectiveness of the VFP implementation in rural areas. This study was conducted in North Central Timor Regency, East Nusa Tenggara Province, Indonesia with a total respondent of 303 people in 42 villages across the regency. This study applied quantitative analysis and Exploratory Factor Analysis (EFA). Questionaries (5 Likert scale) were used in collecting data in the village. Therefore, this study proposes to understand the factors that can escalate the effectiveness of implementing the VFP in reducing poverty in Indonesia's rural areas, particularly in North Central Timor Regency, East Nusa Tenggara Province. This paper has implications for central and regional government policy, especially in increasing the efficiency of VFP and poverty reduction. The results of this study indicate that financial support through VFP from the central government and capacity building are the factors that significantly influence the VFP to poverty reduction. By optimizing the financial support factor (the village fund) and increasing capacity building, the village fund program can bring more significant effects on poverty reduction in rural communities across the nation.
Abstract
The Village Fund Program (VFP) is a central government program that has been implemented since 2015 with a total budget of around IDR 268 trillion (US$ 19.14 billion). This program aims to support community development and community empowerment. The VFP has more impact on development in rural areas, such as improving the standard of living of the village communities through poverty reduction. VFP can minimize the development gap between villages and cities. After approximately 8 years of implementation, there are many comprehensive studies regarding the VFP across the nation. However, the previous research mostly focused on general matters, such as the effect of the VFP on poverty reduction, inequality, and other social problems, without focusing on how to increase the effectiveness of the VFP implementation in rural areas. This study was conducted in North Central Timor Regency, East Nusa Tenggara Province, Indonesia with a total respondent of 303 people in 42 villages across the regency. This study applied quantitative analysis and Exploratory Factor Analysis (EFA). Questionaries (5 Likert scale) were used in collecting data in the village. Therefore, this study proposes to understand the factors that can escalate the effectiveness of implementing the VFP in reducing poverty in Indonesia's rural areas, particularly in North Central Timor Regency, East Nusa Tenggara Province. This paper has implications for central and regional government policy, especially in increasing the efficiency of VFP and poverty reduction. The results of this study indicate that financial support through VFP from the central government and capacity building are the factors that significantly influence the VFP to poverty reduction. By optimizing the financial support factor (the village fund) and increasing capacity building, the village fund program can bring more significant effects on poverty reduction in rural communities across the nation.
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