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Billions in aid ineffective

Billions in aid ineffective

A decade of pouring foreign aid into Cambodia has done little to

stem the tide of poverty and hunger or fight pandemic corruption, and donors are

part of the problem.

The 30 major donors whose aid collectively keeps the Cambodian government and economy

afloat are going into their annual Consultative Group meeting with the government

on December 6 with mostly negative messages.

After a decade of pumping $500-600 million of foreign aid per year into Cambodia,

little has been acheived in terms of poverty, public health, corruption, accountability,

governance and jobs, says the World Bank in its briefing paper called "Cambodia

at the crossroads."

Other reports by the US Agency for International Development, the International Monetary

Fund, and the Economic Institute of Cambodia, draw similar conclusions.

The indications from the World Bank report are that public revenues will not improve

significantly for 10-15 years, and the donors may be asked to make greater financial

commitments to prevent the country sliding further into decline.

Some reforms proposed or begun by the government's new Rectangular Strategy are seen

as offering benefits, but not for some time, says the WB's country manager Nisha


The World Bank remains extremely concerned about more people starving, more children

dying of disease, endemic corruption, weak governance, lack of jobs, rape of natural

resources, land-grabbing, and warns that growth could collapse after the garment

industry preferential quotas end December 31.

However, the donors are part of the problem, Agrawal told the Post. "We believe

part of the problem is the ineffective way we donors are providing assistance. Because

of our complicated procedures, the lack of co-ordination, gaps in important areas

and duplications in others, and high volumes of aid coming in the form of technical

assistance, it's not being well used. We need to harmonize what we do collectively

and align our missions with the country's priorities.

"At the next CG meeting, what is less important is the amount of aid and what

is more important is the quality of that aid. How do we deliver at less cost to government

and where does it go?"

The donors are now setting the benchmark issues for the two-day conference. This

involves reviewing progress on the benchmarks set two years ago. (There was no CG

last year due to the absence of an elected government.) The 2002 benchmarks were:

legal and judicial reform, natural resources management, social sectors budgetary

disbursements, and fiscal management and public administration reform. Most of these

are likely to remain on the agenda.

According to those involved in negotiations, there is strong support for this year's

benchmarks to include initiatives to develop agricultural growth, and full disclosure

of information relating to land concessions for economic purposes.

NGOs and civil society organisations are lobbying for a voice at the CG. They will

stage their own public "shadow" CG on November 30. The official CG is closed

to the public. Spokespersons for both LICAHDO and the NGO Forum told the Post that

land-concession for economic purposes had become a major issue and they wanted to

see meaningful action by the government.

On '"capacity buildng", Agrawal said it should be within the capacity of

the government to deliver their own programs. "We believe donors, instead of

trying to teach others, have been doing it for them. They have been substituting

their own people. There are an estimated 800 foreign advisers here, and that is large

by any standards, including African countries." The report said these advisers

cost donors collectively more than the government's total wages bill.

"What country would literally allow foreigners to arrive and take over the running

of the government? Maybe 10 years ago that is what was needed, capacity was so depleted.

Now this is a different Cambodia; if we were to hand over to them they would do it

willingly. Unless the Cambodians take a strong stand and demand to do it themselves,

the donors will not give up. It's a very easy way of providing aid. You just put

in an adviser and you feel like you know what's going on. Government leadership is

the key. The Ministry of Finance and the CDC have taken a very firm line on this,

and we hope to see some action."

She said she was also keen to see the government-initiated budgetary reforms take

root and flourish. "The government has put together a very credible package

of reforms. It is going to take a long time and the message for donors is they have

to be patient and make long term committments where they are required.

"By long term, I mean, to make the budget meaningful will take 10 years. It

has to be done year by year, step by step. It's such a comprehensive program that

10 donors have come together to fund it. This can make a huge difference to public

resource development."

The public financial accounting program will be announced by the PM on the Sunday

night before the CG.

Agrawal said another area "where things are moving relatively well, notwithstanding

some short-term problems, is the overall approach to land management and land distribution.

The Ministry of Land Management plans to give titles to 1 million families over two

years and another million after that, and that will give almost the whole population

a land title.

"Now there is a very bold program to redistribute land to the landless poor.

I'm talking about the unused economic concessions being converted into social concessions.

Some of these are major reforms and will change the way Cambodia develops."

In Cambodia, the fact that in the last decade poverty has not reduced, "means

all of us are doing something not right. It's the collective results of the whole

country program that need to be looked at, not just individual projects. You know

we can build a very nice school, but if you don't pay the teachers well, the pupils

have to pay them bribes every day. Is that project working or not - we don't know.

"The big concern is how to get agriculture growth going. That's the key. Not

enough analysis has been done to understand what are the most binding constraints

for agriculture growth. The danger is that without that analysis there is a knee-jerk

reaction that says: we need to get agriculture growth going, that means we have to

invest in irrigation. But we don't know if that is the constraint. It might be something

as simple as farmers needing to be able to read advisory literature; they might need

adult literacy training rather than formal education. What kind of agriculture is

most suitable for this country, which has relatively large expanses of land relative

to population? "

The WB is supporting a 25,000 in-depth household survey which is being carried out

this calendar year in order to present a detailed picture of the country's poverty

situation for next year's CG.

"What is worrisome in this debate currently is that we're seeing a very simplistic

view about what is needed to restore growth," Agrawal said. "There is this

idea that because we need growth, we therefore need to invest in agriculture and

infrastructure, and not in health and education. That's how it's being viewed and

articulated, and that's a very dangerous idea. What's important is an understanding

of the constraints to growth, and it could very well turn out to be completely different

to what is assumed."

Shyam Bajpai, the Asian Development Bank country director, echos similar sentiments.

"Where Cambodia needs to move in the future to reduce poverty and increase investment

is agriculture," he says. "We have to reduce the cost of doing business.

And we have to stop planning and start doing. We need growth diversification from

garment and tourism. We need to look more carefully at distributional aspects-growth

without distribution of the benefits won't reduce poverty. You can have growth of

6 to 7 percent a year without seeing any decreases in poverty. If there was a large

boost in agriculture, there would be distribution benefits."


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