Aid Effectiveness in Cambodia

Executive Summary

Development assistance contributes significantly to the development process of Cambodia. After the first General Election in 1993, there have been at least 35 official donors and hundreds of civil society organizations that have provided development aid to Cambodia in various sectors and development areas.

During the last decade, total development assistance to Cambodia amounted to about US$5.5 billion. Cambodia obtained, on average, development assistance of around US$600 million a year during the last five years, of which about 10 percent is provided by non-governmental organizations (NGOs). The main sector destinations included government and administration, health, transportation, education, and rural development.

The large amount of official development assistance (ODA) has been disbursed for technical cooperation (TC). TC represents about half of the total ODA during 1998-2006, while country programmable aid (CPA) accounts for around 40 percent. The impact of TC has become a wider debate for all stakeholders on aid effectiveness to Cambodia. TC has been criticized for being mostly supply-driven and poorly coordinated, and it provides less capacity development than capacity substitution.

It has been noted that the role of non-traditional donors, especially China, and some private donors has been more important in Cambodia. China is the largest donor giving concessional loans to Cambodia. While some criticize that China provides ODA with less attention to development results, such as poverty reduction, China nevertheless contributes to some development areas, particularly the transportation and energy sector, and government-related activities. China has also shared the amount of ODA it planned to give to Cambodia for 2007-2009 during the first Cambodia Development Cooperation Forum (CDCF) and also provided some information to the Cambodian ODA Database. Private donors’ participation in the policy-making process has been increasing. However, their voice has limited influence on the government’s decision making. In general, NGOs cannot lobby the government without intervention and assistance from external/official development partners.

Aid delivery to Cambodia is characterized by a highly de-concentrated environment. Aid to Cambodia is highly fragmented in both in the aggregate and in particular sectors, especially health and education. Due to a large number of donors, the Royal Government of Cambodia (RGC) has to spend a lot of time on meeting and reporting. The costs of aid fragmentation in Cambodia include the establishment of about 100 parallel project implementation units, the existence of 400 donor missions, reviews, and studies per year, and the provision of duplicated technical cooperation and funding. In general, the RGC has to work with various bilateral and multilateral donors to ensure effective and efficient aid coordination.

In addition to aid fragmentation, the delivery of development aid to Cambodia remains volatile although it has been improved during the last five years. Financing remains unpredictable, and the amounts provided are not adequate to the sector’s funding needs. Pledges of ODA disbursements, including the Multi-Year Indicative Financing Framework (MYIFF), are only indicative. In many cases, committed funding is rarely released on time. On the other hand, development partners also criticize the government’s poor financial management system which contributes to the volatility in aid delivery.

To ensure effectiveness of aid, the RGC has strengthened aid coordination and management. Technical working groups (TWGs) have been established in 19 sectors and thematic areas. The RGC committed to exercising full ownership and leadership over its development policies and development actions. More importantly, an online ODA database has been developed and put into operation over the last three years that allows the government and development partners to have better access to information to support their coordination, planning, implementation, and reporting.

Aid is not effective unless it is used to generate greater impact on development results in alignment with the National Strategic Development Plan. Increased effectiveness requires more effort and stronger commitments and willingness from both the RGC and development partners. There are some key challenges with which they need to cope. These include using programme-based approaches, strengthening TWGs, promoting the role of civil society organizations, improving government systems (particularly public financial management), and finally strengthening of information on aid delivery and management.