AID donors must make "radical changes" in the way assistance is managed
according to a report that says most aid programs have been improperly carried out.
The report "The Reality of Aid: 1996" was presented at the Organizations
of Economic Cooperation and Development (OECD) meeting in Paris June 27. M.S. Shivakumar,
of UNDP-CARERE, wrote the Cambodian section.
He maintains that lack of proper sequencing, consistency and sustainability of programs
has resulted in the overlapping of technical assistance (TA), directed at the symptoms
of the problems rather than the causes.
"The current nature of TA support demands a critical re-examination... toward
capacity development and technical cooperation aimed at supporting nationally formulated
sustainable development programs," he said.
Acknowledging that many positive developments had taken place since 1992, he said:
"there is a need for radical change in the way the TA support and resources
He said that the way that aid is presently handled has become unpopular for both
donors and recipients, therefore a new framework of cooperation was needed.
Aid dialogue concentrated on the 'upstream' level between governments, while local
people were left out altogether, he said.
"It is very difficult to make people understand the relevance of external aid,
technical assistance and the presence of expatriates," Shivakumar said. "Dissemination
of information at the grassroots level is very weak. This has led to non-participation
and the misunderstanding on the role of development aid to Cambodia."
"Distribution of aid leaves much to be desired. About ninety percent of foreign
experts are based in Phnom Penh, so their background, orientation, perceptions and
briefings are different."
One key area of concern is the requirement of the World Bank and Asian Development
Bank for 20 percent counterpart funding from the government for projects financed
by loans. For example, the Royal Government had only been able to honor a little
more than $460,000 of the $2.3 million the ADB had committed it to as its part of
one recent loan. The government had to come up with $8.4 million more by the end
of June this year to ensure the projects could proceed on schedule, he said.
The maximum level of loan funding from the two banks was $150 million a year, and
if that amount was lent the government must come up with $30 million, which would
absorb most of the State budget. He suggested that counterpart funding rules should
not be applied to Cambodia for at least five more years.
As the global decline in aid to poor nations continues, another serious challenge
for the Kingdom - which relies heavily on foreign money - is its burden to pay back
its loans, Shivakumar said.
Borrowing may be normal for countries that could mobilize domestic resources and
had export potential, but it may be too harsh for a nation like Cambodia which had
limited capacity to provide public goods and services, he said.
"Cambodia needs technical assistance in the form of grants, not loans. It is
not prepared to pay it back," Shivakumar said.
"Investments in the public sector may be ineffective because trainees, once
qualified, will simply join the private sector or will try to find employment in
donor financed projects," he said.
Shivakumar said that these issues were controversial, however, he insisted that an
honest debate must begin to allow "opportunities for considerable improvement
in aid allocation priorities".