The World Bank's Man in Phnom Penh

The World Bank's Bonaventure Mbida-Essama

Bill Bainbridge interviews Bonaventure Mbida-Essama, Chief of the

World Bank's Cambodia Country Office, and Chair of the Consultative Group.

Can you tell me about your background and how you came to be working in Cambodia?

I'm from Cameroon in West Africa and I trained in the late sixties at Princeton University

as an electrical engineer, then went to Harvard where I got an MBA from the business

school.

I worked in the private sector back home for about seven years as managing director

for a company. After that I joined the World Bank in Washington for ten years, then

I went home and started my own fertilizer and consulting business which I was in

for 13 years.

My firm had a diversified portfolio so I had private companies from Europe, the US

and UK. Then I had international institutions like ILO, UNDP, the World Bank. So

in 1999 the World Bank contacted me saying they needed someone who had a development

background but also experience with government officials at the highest level so

after a lot of negotiations I said yes. It was only supposed to be a short term contract

but then the government was satisfied and the donors were very pleased with what

I had done so they asked me to stay....so a year ago I agreed to sign a three-year

contract.

Would you agree that Cambodia, even in development terms, is a pretty unique case?

My view is that it is a truly unique situation because of a number of factors. Cambodia

has been at war within itself for the better part of three decades. You usually don't

see that and, because of that, they have ignored their infrastructure and their human

resource development or they have simply destroyed them, through mass killings, through

bombs and mines, so you have a very weak institutional base. You also have a huge

number of donors and NGOs who are very active and therefore need to work together

in a coordinated way.

People who work in development here tend to say that coordination is lacking compared

with other developing countries.

I think I may slightly disagree on that because I've worked in Africa; I worked in

the former Soviet Union and I've never seen such an intensive level of coordination

as I have here.

There is such a massive reform agenda; institutional reform, fiscal reform, expenditure

management reform, demobilization, natural resources, land reform. You name it, anything

that can be called social reform you have it here.

Now that doesn't mean that donors see eye to eye necessarily but believe me there

is a determination by all donors to try to coalesce, to make sure that they don't

shoot at each other and that the international community doesn't give mixed signals

to the government. There is the working group mechanism, the CG process, which is

very active and very cohesive, as well as the governance action plan which all the

donors are rallying around.

So how important is aid?

This is a difficult one because there is a lot of debate in the aid and academic

community about the relevance of aid to developing countries. I have seen many studies

written by prominent economists saying that aid has made no difference to economic

development.

I won't go into that debate, but what I would like to say is that we don't know what

would have happened if the road wasn't built, the hospital wasn't there or the school

program wasn't launched. It's almost certain that without external capital then it's

quite likely that some of these things would never happen.

Now granted the progress from this may be below expectations, but you could turn

around and say that without aid the situation [for developing countries] would be

much worse.

In the case of Cambodia it's quite clear that Cambodia doesn't have enough capital

to meet its needs. For example, if a farmer can't get his rice from Ratanakiri to

the market then he can't get any marketable surplus, so there's no cash to pay his

health costs. We know of cases where people have to sell their land or sell their

daughters into prostitution to pay health costs.

So for sure we have to address some minimum requirements; access to education, healthcare,

transportation etcetera. If you don't have the domestic capital to acquire those

things then we know that people would not have the chance to develop.

Whenever the World Bank has a major meeting now it attracts protesters criticizing

it for maintaining first world hegemony rather than resolving the poverty problem.

Yes I would like to address this. First of all it's not just the World Bank, the

W.T.O in Seattle, the G8 in Genoa, when the ADB has its meetings now they also have

demonstrations. These are a sign of the times.

The second point is that those who make these demonstrators are unelected, they have

no mandate. Third I'm not sure that most of them know what poverty is. I'm not sure

that they know what development is. I come from Cameroon which is a poor country

with a GDP per-capita of less than $1000 but just to go to these demonstrations you

really need to be quite well off. I don't think these people have a mandate to say

that the World Bank or the ADB shouldn't build a well in a village to provide drinkable

water.

Now there are a lot of mistakes that have been made I agree. There is no known formula

which is foolproof to know that development will give you a one hundred percent return.

So we should be prepared to recognize that we are all groping, trying to find the

best solution to a very, very complex problem. So instead of trying to be destructive

maybe [the demonstrators] should join hands [with us] and together address the situation.

Are the debts that Cambodia is running up now sustainable?

Cambodia is one of the poorest countries and therefore we don't really make loans,

we make credits which are concessional loans with no interest payments over about

40 years. When you take account of the effects of inflation then Cambodia will repay

barely the principle.

These credits are made after a thorough analysis of the need, the costs and the likely

benefits accruing to Cambodia, in terms of added production or savings or profits.

If we find that it won't generate enough economic benefits then we don't make the

loan.

I would also mention that our loans are for investment purposes, not consumption

and when you invest you expect a return.

But it's a feature of Cambodian corruption that money is misappropriated and spent

on the consumption of range rovers, villas and the like.

That's a good point, but let's be clear: money may be misappropriated but not World

Bank money.

You're confident of that?

To a reasonable degree. Most of the money of the World Bank comes from either the

rich countries as grants or it's borrowed in financial markets from rich countries.

We float bonds in world financial markets and the people who buy those bonds are

hard core capitalists, institutional investors, retirement funds and insurance companies

who are all answerable to their shareholders.

They ask tough questions. They ask for audited balance sheets, they ask how the money

is going to be used and, with the openness of the press, if you have any scandal

in any of our projects it is proliferated everywhere and the next time you go to

the markets to borrow money our cost of borrowing money would go up. Yet we still

have a "triple A" rating and these aren't people who give gifts.

Why I think there is no World Bank money that is misused is because we have very

clear loan agreements with the government, with well defined procedures on how the

money is going to be used. All our credits have to be audited by independent auditing

firms and they have to certify that the money was used for the purpose intended and,

if there's anything wrong, the government has to reimburse the money, that's in the

legal agreement. If we find that the money has been used for a kickback we stop disbursement

and the money has to be paid back, otherwise we cancel the loan and force them to

reimburse.

We haven't run into that kind of situation in Cambodia yet but in many other countries

loans have been stopped.

Under James Wolfenson the bank has changed direction slightly - how has that effected

Cambodia?

The major change that he has brought about is more transparency and inclusiveness,

that's why he brought in the Comprehensive Development Framework.

So he's reached out to NGOs, to civil society, to all the stakeholders and he's reached

out to really hear from the poor in all the countries. One of the first things he

did was take a trip around the world and when he came back he said 'People like us,

people appreciate us but people think that we are insulated and we don't listen'

and he said 'I want that to stop. We have to be close to our customers we are there

for them not for us'.

That applies to Cambodia, if you look at the working group system here, you have

an extraordinary level of involvement from all the stakeholders. When we did our

Country Assistance Strategy in 1999 we had many workshops with the private sector,

the various ministers, the council of ministers, the NGO community just to get their

views.

We had a document in English and Khmer and after the workshops we rewrote it and

we sent it again to seek their views on what they had to tell us. I went from one

organization to another, one ministry to another to literally insist that we would

not adopt the document unless we had in writing their comments and consideration.

Yet the private sector was fairly bitter earlier this year over not being consulted

over the new foreign investment laws.

Well they have some good points but all is not what it appears to be. There were

some mistakes made in the process but it was not because the private sector was not

consulted. The government hired the Foreign Investment Advisory Service, which is

basically a consulting firm within the World Bank.

So the idea was that FIAS would come talk to various people, including the private

sector. Their client was the government and they were to submit their report as a

blueprint to their customer the government which they could then either accept or

reject

The government intended to have consultations with the private sector but for some

reason the process was short circuited so that the initial draft of the FIAS report

was presented to the private sector at the same time as it was presented to the government.

It was perceived as government recommendations, but that was not the case.

So now the government has taken the initiative to consult the private sector and

to seek their views. There have been two or three missions and, through the private

sector forum, there have been extensive exchanges.

So now there is a much more dynamic dialogue going on and in the last two or three

months you haven't heard many recriminations. It was recognized that the process

could have been better explained to the private sector and we've changed the way

this is being managed.

You have a huge number of projects in Cambodia, what are the key ones for the

World Bank?

The motto of the World Bank is very clear - 'Our dream is a World Free of Poverty',

and we mean it. That's why since 1999 the Bank started focusing more specifically

on poverty alleviation strategies.

The priority is therefore on poverty reduction. For the most part, donors and the

NGOs have expressed a lot of enthusiasm for helping the government in trying to come

up with a strategy for poverty reduction. I will urge everyone who is willing to

help in Cambodia, to help the government on this by working at the grassroots level,

the village level, with communities and so on making sure that we know how the poor

feel, what is hurting them, what they need.

We also think that any poverty reduction strategy cannot go without talking about

human resources, and when you talk about human resources you're talking about education.

If you educate a young girl for instance she has a better chance of not dying during

child birth, of not having ten children, she'll have a better nutritional program

for the child. So education is fundamental.

Health, because obviously you cannot go to the field or work if you are not in good

health. I would say these are the two cornerstones.

Then the third priority is that, if you are educated and in good health then, unless

you have a very good environment in which to realize yourself, that is governance,

you can't go anywhere.

If you don't have the proper rule of law, there is no security, there is too much

corruption, when you have a lack of governance it falls disproportionately on the

poor.

Then you need of course rural infrastructure, you need clean water, roads to go to

market, good education facilities. So these are our priorities in the Country Assistance

Strategy and this is where we are going to put the focus. This also reflects what

we were told when we went for consultations with NGOs, private sector and so forth.

And when will demobilization get under way?

The World Bank approved a credit of $18.4 million on August 23rd. The total program

will come to $42 million to be funded by Japan with $10 million, the Dutch with $2

million, Sweden at $2.4 million, the World Food Program another $2 million and the

government for $7.2 million.

I've been informed by the government that the first discharge activities will start

on October 15 in Kampong Chhnang with an official launching ceremony a few days after

that.

So my understanding is that the government will have to demobilize within the current

calendar year about half of the 30,000 soldiers and the balance will be demobilized

in the next dry season around February/March next year.

We learnt a lot from the pilot program. Also the key stumbling block was getting

the finance package in place and now we have all the donors. Most of the issues that

we need to focus on the reintegration package to take into account the vulnerable

groups and so on. All these issues have been thrashed out between the government

and the donors. The government has played a key leadership role with strong partnership

from all the donors.

What will the Cambodian economy look like in the future?

I think there is a recognition within the government of the need to look at growth

strategies. The Ministry of Commerce is playing a key role in that. They've already

done a lot of thinking about being less reliant on the textile industry but it's

too early to tell what will come out of that.

There is a recognition that, with Vietnam gaining most favored nation status and

China entering the WTO and China being more of a pull for foreign investment, it's

possible that this will have a negative impact on the textile industry.

So there is a need to develop a framework to promote investment in other industries,

agro-industries for instance, trying to see what comparative advantage Cambodia has

compared to Taiwan or Thailand

A lot of people attack the structural adjustment or the pushing for macro-economic

development but experience from developed countries shows that if you have a lousy

economic framework you don't get re-elected, the economy goes to the dogs and you

have depression, unemployment and bankruptcies.

When will Cambodia stop needing assistance?

It's difficult to tell. A measure of when that might be is that some countries started

getting loans from the World Bank shortly after the Second World War, like India,

and they're still a major customer. As long as you have development programs you

need development assistance.