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Poverty gains ‘precarious’

A woman and her son wash dishes on the side of a dirt road at Srah Chak commune in Phnom Penh’s Daun Penh district
A woman and her son wash dishes on the side of a dirt road at Srah Chak commune in Phnom Penh’s Daun Penh district last year. Hong Menea

Poverty gains ‘precarious’

Cambodia's poverty rate fell dramatically between 2004 and 2011 – from more than 50 per cent to roughly 20 – but those gains are so precarious that a slight economic shock could send millions plunging back below the poverty line, according to a World Bank study released yesterday.

Though the number of people living in poverty – which the World Bank defined in its study as not being able to afford a basic basket of goods costing 5,326 riel per day – went from 6.8 million in 2004 to just three million in 2011, the loss of even a couple thousand riel per day would threaten the financial stability of most Cambodians.

“The average household in 2004 is comparable to the poorest household in 2011,” notes the World Bank study, which a spokesman for the international development institution said was based on the most recent accurate data available.

“But the majority of households that escaped poverty did so only by a small margin – they are highly vulnerable to falling back into poverty,” it adds. “For example, in 2011, a small shock of CR 1,200 per day (about $0.30) or the cost of two small water bottles from a street vendor in Phnom Penh) would cause Cambodia’s poverty rate to double.”

The report credits a number of factors with the drastic reduction in poverty, including improved infrastructure and minimum wages for garment workers, though Deputy Prime Minister Keat Chhon, speaking at the report’s release, credited “the strong and firm commitment of the Royal Government of Cambodia”.

“The stable macroeconomic … growth in Cambodia through a prudent macroeconomic policy, together with an attractive investment policy and favourable free trade, have significantly contributed to poverty reduction,” he added.

In the report’s telling, however, the biggest factor in reducing poverty between 2004 and 2011 was a sharp increase in the price of rice. But, the report warns, such “key drivers of poverty reduction are likely to stall”.

“Increases in the price of rice had a positive impact – both in improving households’ welfare and in reducing poverty – but it is not likely to continue,” the report states. “Therefore, public policies should not rely on continued increases in the rice prices for further poverty reduction.”

In addition to continuing to better its infrastructure, Cambodia should focus on developing its human capital through investments in expanding public education and healthcare, the World Bank report says.

However David Pred, managing director of Inclusive Development International, said yesterday that the World Bank’s conclusions didn’t match what he had seen in the field.

“Certainly, we haven’t seen a decline in poverty. We’ve seen a massive increase in poverty among a portion of the population that have been affected by land grabbing,” Pred said.

“People who depend on land and natural resources are no longer self-sufficient,” he continued. “People who used to be able to grow food now have to buy it, and I wonder if this report is taking that into consideration.”

Though Pred acknowledged that he had not yet seen the report himself, he took issue with its definition of poverty.

“It’s just outrageous to say that people earning 5,000 riel a day aren’t in poverty,” he said. “I would like to see some World Bank staffers survive on 5,000 riel a day.”

Converting a substantial portion of the population from self-sufficient farmers to wage slaves in the interest of promoting industrial-scale agriculture had had a terrible impact on tens of thousands of families’ livelihoods, Pred said.

Though promoting broader access to healthcare and education would have a positive impact on families’ quality of life, he continued, their importance paled in comparison to access to farmland and natural resources like fisheries, “which has largely disappeared to the development model that the World Bank and Asian Development Bank have sold to Cambodia”.

“I would say that reports like this are precisely aimed at distracting people from the harmful development model that the World Bank and other development partners have been promoting.”

A previous version of this article incorrectly quoted David Pred as saying the World Bank had "forced" a development model on Cambodia. In fact, Pred said the bank had "sold" the model to Cambodia.

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