Nisha Agrawal, the outgoing World Bank country manager for Cambodia, says the Kingdom faces a major challenge in making sure economic growth is not achieved by “cannibalizing” the country’s natural resources.
Indian born Nisha Agrawal arrived in Cambodia as country manager for
the World Bank in April 2003 to find herself eventually thrust into the
bank’s biggest ever confrontation with the government of Cambodia over
corruption. The problems culminated in June 2006 in the dramatic ten
month suspension of funds for three World Bank projects. The ban was
lifted in February 2007, but the bank cancelled over $2.5 million in
project funding and the government subsequently was asked to repay the
World Bank $2.9 million. The bank has since hired Crown Agents, a
British company, to handle procurement in their Cambodia projects. At
the end of February, Agrawal will leave the World Bank after 18 years
to go back to India and take the helm of a new NGO, Oxfam India. In an
interview with the Post’s Susan Postlewaite on February 7, the director
discussed the highs and lows of her five-year tenure at the Bank,
which, with a budget of $50 million, is one of Cambodia’s most
influential development partners.
What do you count as the accomplishments of your five years as country manager for Cambodia?
Four things. Firstly we have done a lot of research that has generated
very useful knowledge about what is happening in the Cambodian economy.
Before I came we really didn’t know whether the growth that Cambodia
has seen in the last decade was having an impact on poverty or not. The
Poverty Report was a very important piece of work by the World Bank to
show that growth was actually benefiting poor people and that their
lives were getting better off as a result.
Secondly, a very big thing is helping Cambodia agree on the priorities
for reform and supporting the reforms that are happening.
Third, the way the development community works together has changed
very dramatically and the World Bank has played a key role in bringing
all the donors together around a common agenda. When I came here
everybody had different priorities. We helped put in place a very
elaborate architecture – 18 technical groups which meet and talk
together with the government, with NGOs, with the development partners.
We have quarterly meetings at senior levels of the government to
discuss major policy issues.
Finally, the World Bank has built a very strong and large country
office. When I came we were about five people and now we are 45 and
most of these are Cambodian staff, and very high capacity staff.
What do you leave for your successor? What needs to be done?
During my five years, the economy has almost doubled in size, and
government revenues have almost doubled in size. Foreign investment has
taken off and is now larger than foreign aid for the first time. The
challenge ahead is to ensure there’s also high quality development
going on at the same time as a high growth rate. These would be the
things my successor would focus on. Cambodia after ten years has been
having an impact on poverty but only about one percent of the
population is being lifted out of poverty per year. Vietnam is able to
raise four percent of its population out of poverty each year. The
difference is the emphasis that Vietnam has on agriculture.
The second challenge is how to make sure the growth is not coming at
the cost of just cannibalizing your natural resources. One big choice
the government faces is in the mining sector. How the government
decides to do mining in the future will have a big impact on how
sustainable it will be. These debates should happen very openly and
transparently. Do Cambodians really want to be mining everywhere
including in the national parks, or do they value their national parks?
A second choice is on how to manage the oil and gas revenues. That is a
huge challenge. Suppose there are these large orders of magnitude that
people are talking about. How they are managed would really make or
break this country. If the government doesn’t use those revenues well,
Cambodia could go down a very bad path where the revenues not only kill
off other industry and employment, but corruption levels rise to such a
level that everything else could fall apart.
The World Bank has come under heavy criticism – from The Wall Street
Journal and others – for allowing corruption in its programs in
Cambodia. Are you satisfied that you’ve corrected the problems?
We are making a huge effort to make sure that funds from our own
projects don’t leak. Our projects are implemented by the government and
supervised by us. The biggest problem was in the way procurement was
done and who got the contracts. Because there were systematic problems
in procurement, we are taking a two-track approach to deal with this
issue: in the short-run, all procurement will be done by an independent
procurement agent, while in the medium to long term, we will work with
government to build and strengthen their systems.
Ultimately it should not be just about whether the World Bank money is
leaking or not, but it should be about the country’s own spending. Our
funds in this country are $50 million a year. What we would like to do
is work with the government to improve their procurement and financial
management system in the long run to make sure that the whole
$1.2-billion budget is spent wisely.
In retrospect was your decision to suspend disbursement on three World
Bank projects in 2006 and then to reinstate the funding ten months
later the most effective way to handle the corruption problem?
It was the best way. It was tough on our relationship with the
government because it’s a very drastic measure to take. But once we
have evidence that our funds are leaking, we really have no other
choice but to halt disbursement while we put in place measures to
prevent those kinds of leakages in the future. We wanted to send a very
strong signal in this country that we are not going to tolerate
corruption in our projects and the suspension did that. Many people in
Cambodia felt reassured that the Bank was taking this issue very
seriously, people who had seen that this was happening in our projects but had not really come forward to complain about it.
It was tough with the beneficiaries of these projects. To go out in the provinces and see a project that was actually delivering goods and services to the people – like clean drinking water – was halted was quite tough.
Was the suspension of the three projects a low point or a high point of your tenure?
It was both. It was very tough for our relationship with the government because, unfortunately, most of the evidence that we gathered during our investigations was obtained confidentially and we could not share it with the government, which upset them a lot. That was definitely a low point in our relationship. At the same time, however, corruption does remain a major problem in this country and during that time, many Cambodian people came up to me on the street and said “Thank you for what the World Bank has done and we are glad that at least someone has stood up on this issue.” That was pretty rewarding since no one else had taken quite such a public stance on this issue and put their whole relationship with the government on the line the way that we did.
How much was the leakage?
It is hard to quantify what the leakage was. The problems were that people were interfering with the procurement process and the wrong people were getting the contracts. But the projects were still being delivered and so was their development impact in terms of growth and poverty reduction.
Do you know where the bribes went?
No. We have to rely on people for our investigations, and while they might know, it’s very hard to document who got a bribe, how much money changes hands and so forth.
Could this kind of leakage be happening right now to other development agencies like USAID or ADB?
To the extent that any agency is implementing its programs through the government as the World Bank does, they could be facing similar problems to ours.
Do you believe the draft law on corruption will ever be passed by the National Assembly?
The government has committed to passing it but we don’t know when. It has been a frustratingly long wait. On the other hand, it is not a magic bullet – it is just one of many things that need to be done to fight corruption in this country. Other things are happening – such as public financial management reform – that are reducing corruption in this country, but passing the anti-corruption law would send a strong and visible signal about the government’s intention to tackle corruption. The government has said they are going to pass it after they pass the Penal Code, which is still being written. We would like to hear from them when that would happen.
What have been the highlights of your life here in Phnom Penh?
Even though the work has been challenging, I’ve really enjoyed living here for five years. I think that Phnom Penh is a very charming city. I think this is another area that Cambodians need to pay attention to, to make sure they keep Phnom Penh beautiful. In any case, I have a lot of friends in Cambodia and I will miss them and miss Phnom Penh when I leave for New Delhi next month. But I am sure I will be back for a visit soon.