Country Context

Strategic Analysis of Current Situation

Economic Growth and Poverty Reduction | Education
Health | Social Protection | Governance
Causal Analysis of Main Development Problems |  Conclusions

Country Context

With the formulation of its Rectangular Strategy, and the National Strategic Development Plan (NSDP), the Royal Government of Cambodia (RGC) has taken firm ownership of the national development agenda. The RGC has put in place mechanisms designed to coordinate external assistance and enhance its effectiveness in pursuing its four priority areas: enhancement of the agriculture sector; further rehabilitation and construction of physical infrastructure; private sector development and employment generation; and capacity building and human resource development; with good governance at the centre of the strategy as a prerequisite to sustainable development.

Cambodia has enjoyed a period of robust economic growth, growing at an average of 6 percent from 1993 to 2003, and 11.1 percent for 2004-2007, relying mostly on garment exports, and the tourism and construction industries, while maintaining low inflation (below 6 percent per annum) and a stable exchange rate. High economic growth, generated in urban areas, has reduced overall poverty rates at the national level dramatically from 47 percent in 1993 to 30 percent in 2007. Recent global events have, however, resulted in a substantial downward revision of all growth estimates, changed to -1 percent for 2009 and approximately 3 percent for 2010, highlighting Cambodia’s relatively narrow economic base and its vulnerability to external events.

Eighty percent of Cambodia’s 13.4 million people live in rural areas; however, the trend of urbanisation is increasing. Approximately half the population is under 20 years of age, and with close to 250,000 youth entering the workforce each year, the youth are moving to the cities to seek jobs. This presents both opportunities in terms of an abundant youthful workforce, and challenges in relation to increased migration, changed aspirations and exposure to various risks.

Progress in the national development agenda is affected by deeply rooted hierarchical relationships that underlie governance processes, continued prevalence of traditional gender norms, low levels of trust and social cohesion resulting from decades of trauma and difficulties in the realisation of their economic, social, civil and political rights by all rights holders.

Strategic Analysis of Current Situation

Economic Growth and Poverty Reduction | Education | Health | Social Protection | Governance
Causal Analysis of Main Development Problems |  Conclusions

Economic Growth and Poverty Reduction

While poverty has decreased substantially over the last 10 years, the benefits of growth have not been equitably distributed, resulting in increased inequality in the country: a third of the population still lives below the poverty line and approximately 12 percent face hunger and food insecurity. The recent economic downturn has resulted in substantial job losses, which have mainly affected the garment, tourism, and construction sectors in urban areas. Combined with increased food and gas prices, the downturn is already causing reversals of the recent gains in poverty reduction, straining the country’s ability to achieve its CMDG targets of reducing overall poverty levels to 19.5 percent by 2015.

Diversification in industry and services is a must, but accelerating poverty reduction in Cambodia is largely about improving the rural and urban informal economy, and the RGC is now turning with increased urgency to agriculture as a source of sustained growth and livelihood enhancement. While there is immense potential in agriculture, a number of challenges must be overcome to diversify the economy and increase investment in agriculture. In addition to technical barriers in agriculture, these challenges include: diversifying the economy and increasing investment in agriculture; addressing the issue of land ownership and land titling; an unfavourable business climate; low levels of skills in the workforce; limited access to productive employment opportunities and decent work; inadequacy of the existing vocational training options; supply constraints and technical barriers to trade; low levels of climate change awareness and disaster preparedness; limited access to water and sanitation; and the absence of a productive safety net which would shield the rural poor from shocks and encourage entrepreneurship and risk taking. Assistance to the urban informal economy should target: micro credit, vocational training and skill improvement; safety and work place improvement; improved access to water and sanitation in communities; and protection of land tenure security. Specific strategies are also required to address the potentially destabilising youth unemployment issue, gender disparities in access to economic opportunities, increasing risks of trafficking and HIV infection.

Education

Significant progress has been made in key education indicators in recent years, including raising the national Primary Net Enrolment Rate (NER) to 94.4 while closing the geographical and gender gaps, doubling the Lower Secondary NER and improving the national youth literacy rate. The current challenges in education include closing the remaining gap in primary enrolment, the high proportion of over-age children in primary education, low completion rates, low levels of early childhood education, low levels of parent and community participation in education, low quality of education, and issues of the relevance of education.

Health

Significant progress has also been made in key health indicators between 2000 and 2005: infant and under five mortality rates have almost reached their CMDG targets; immunisation rates and feeding practices are steadily improving; antenatal care from trained health personnel has increased substantially; access to improved water supplies is on target; innovative financial schemes have been developed to protect the poor from the costs of public sector user fees; the number of casualties from mines and unexploded ordnance has decreased considerably; and the HIV prevalence rate was brought down to 0.9 percent in 2006. Areas of concern include the high maternal and neonatal mortality ratios, child malnutrition and the reach of health services to rural communities.

The key challenges faced by the Health Sector relate to human resource management, service delivery, financing, governance, epidemiological transition and occupational health and safety. An additional challenge is maintaining the gains made in HIV prevention and address the risks of a second wave epidemic due to behaviours among groups at particular risk of HIV infection. Significant inequities also persist between rural and urban areas, across provinces and among people with different educational levels and economic status. Lack of access to health services plays a major role in maintaining or furthering poverty.

Social Protection

The formal and informal social safety nets which could help the poor, both in rural and urban areas, and the vulnerable manage risks and encourage a degree of productive risk-taking remain weak. The RGC’s limited financial resources have been allocated to support civil service pensions, veterans’ benefits and vocational education, and the support of NGOs and donors have been relied upon to fill the gaps in reaching the poor and vulnerable.

Given Cambodia’s high poverty rates and limited financial resources, it is a priority for the country to focus on developing a sound safety net system as the first stage in the long-term task of establishing an effective and affordable social protection system. Helping households manage the potential impoverishing effects of health expenses, diversifying sources of income and improving labour market opportunities in rural areas, particularly for the large proportion of young people entering the workforce, and protecting Cambodia’s children and youth, are priority areas.

Governance

While elections are now peaceful and technically free and fair, improvement is still needed in meeting International standards, the strengthening of legislative and judicial functions is also necessary. There is no culture or institutionalised mechanisms for participation of civil society in decision-making and civil society itself still lacks the capacity to reach out to and represent local constituencies in a coherent way.

The decentralization process has provided opportunities for increased participation; decision-making and experience in leadership roles for both men and women at the local level and is beginning to open up democratic space at that level. The recent promulgation of the Organic Law is also expected to accelerate the process of deconcentration and help provide the local level with the necessary technical support and services to take greater responsibility for managing local affairs. However, a greater effort is necessary to empower the local governments to better plan and govern their territories.

Reform processes in Public Administration and Financial Management have shown some progress, but the quality and efficiency of public service remains a challenge because of the complexity of reform, lack of capacity and traditional structures which underlie the governance system.

While the RGC’s legal and judicial reform programme has received strong donor support, the ability of the courts to provide citizens with a system for realisation of their rights is still limited.

Causal Analysis of Main Development Problems

Analysis of causal factors and relationships in the areas described above reveals that further progress in achieving national development goals and maintaining international commitments is constrained by a number of interrelated factors. From the duty bearer side, these factors include low staff motivation, budget limitations and leakage of resources, patronage relationships and the absence of mechanisms for participation and accountability. From a rights holder perspective, the factors include a lack of access to services; inequitable distribution of available services; low utilisation of services due to high access costs to households; limited productive employment opportunities and decent work due to an unskilled workforce; poor investment climate and technical barriers to trade; the absence of an effective safety net that would allow the poor to take risks in improving their productivity; and the depletion of natural resources and landlessness, which lock the poor in a vicious circle of poverty. Their effective participation in decisions that affect their lives is constrained by their lack of capacity and low awareness of rights, low trust and social cohesion, fear of participation, and gender norms that both prevent women from speaking up and cause others to put a lower priority on the fulfilment of their rights.

Conclusions

From the foregoing analysis, it appears that key issues to be addressed in the UNDAF development process include: economic revitalisation and growth for large scale productive employment and decent work creation, in both the rural and urban economies; the development of a sustainable safety net system and improved vocational options that would shield the poor from shocks and stimulate their entrepreneurship; enhancing the institutionalisation of constructive dialogue between rights holders and duty bearers to achieve improved equitable and quality service delivery, especially in the social areas; strong attention to redressing gender imbalances in all sectors; more effective capacity development processes; a frank dialogue about patronage, the rule of law and respect for human rights; and contributing to more coherent development cooperation in support of the national agenda.