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Analysis II
Last Updated: 02/05/2009
Rethinking the Administration and Delivery of Foreign Aid in Cambodia
Virak Thun

The government of Cambodia has received foreign development aid in abundance for many years, largely contributed by a number of international aid organizations and donor states such as World Bank, Asian Development Bank, International Monetary Fund, Official Development Assistance (ODA), and Japanese as well as Chinese governments.

Unfortunately, this aid has not served as a constructive engine to promote economic growth and development, and has not provided tangible benefits for the targeted population, the poor and the vulnerable, in the country.

This article, therefore, presents some specific reasons for the poor management and ineffective delivery of foreign aid in the nation, and offers some viable and practical mechanisms of how foreign aid should be properly administered and distributed in Cambodian society.


For many years, several challenges have faced Cambodian people. Such challenges have embraced: (1) social aspects—land disputes, widespread human rights violations, low access to health care, gender inequality, and lack of infrastructure development; (2) political aspects such as intimidation against or imprisonment and murder of journalists, editors, and civil society activists; (3) economic aspects including deep-seated corruption and poverty; and (4) environmental aspects: depletion of natural resources, deforestation or illegal logging, pollution, and unclean water as well as poor sanitation. With little doubt, these challenges have impacted on people in every corner of Cambodia, highlighted poor governance on the part of the government and the presence of ineffective law enforcement, and slowed down the development of the country.

Having realized the need for addressing and dealing with the aforementioned challenges, the international donors and foreign aid agencies, namely World Bank, Asian Development Bank, International Monetary Fund, Official Development Assistance (ODA), and Japanese and Chinese governments, have contributed aid (both financial and technical assistance) to the Cambodian government to promote state capacity building, placing great emphasis on governance reforms, social order and equity, political stability, and economic development. As Beech (2007) points out: “… foreign donors — a collection of foreign governments, multinational banks and various U.N. agencies — promised to funnel $689 million of aid to Cambodia, a 15% increase from last year and an amount roughly equivalent to half the nation's annual budget.”

Of this huge amount of money, there were some main international aid suppliers who deserve to be named here.

… [T]he European Union pledged the largest amount at $170.2 million, followed by Japan at $112.2 million, China at $91.5 million, the United States at $48.8 million and 11 U.N. agencies at $64.8 million. The World Bank and the Asian Development Bank pledged $62.6 million and $74.7 million, respectively (Kyodo News International, 2007).

However, it is vital to note that, despite the growing amount of foreign aid to Cambodia, there has not been much in the way of positive change and significant progress in the country. This is due to combination of factors including Cambodia’s heavy reliance on international development assistance, deep-rooted corruption, and inefficiency of the government institutions and organizations. Instead of helping Cambodians, “the vast amount of money flooding the country has created a dependency culture and encouraged political irresponsibility and corruption” (Al Jazeera, 2008). Moreover, aid has provided considerable benefits for only a small group of elites or greedy government officials, and still the poor and the vulnerable have experienced their impoverished living conditions, while having gained little from international assistance. Al Jazeera (2008) further reports that: “after decades of foreign assistance, over a third of Cambodia's population still live below the poverty line.” (In the Cambodian context, the poverty line is equal to one dollar a day.)

Accordingly, the administration and distribution of foreign development aid in Cambodia should be revisited carefully so that the way for development can be paved and the Cambodian people can fully enjoy their lives. 

II. The Importance of and the Need for International Aid in Cambodia

Prior to identifying and examining why foreign aid assistance is vitally important and frequently needed in Cambodia, we should take a moment to review the concept of international aid. A definition for the notion could be: the contribution of financial and technical support of wealthy or developed nations to poor states which are in need of such support. A contribution in the form of grants or loans is expected to help promote sustainable development of the recipient countries. Along the same lines, Cho (1995) defines foreign aid as “… the flow of resources from developed countries to developing countries. Such resources may be in the form of finance or in the form of goods and/or technical services …” (p. 59).

It should also be emphasized that international aid can be channeled through two main ways: (1) bilateral or direct form (donor-to-recipient transfers), and (2) multilateral or indirect form (foreign aid organization-to-recipient transfers). Within these two forms also exists technical assistance, “… the form of the transfer of expert personnel, technicians, scientists, educators, economic advisers and consultants” (Cho, 1995, p. 12). Such assistance is regarded as a crucial tool since human resources with comprehensive knowledge and skills are needed in the early process of paving the way for the development of a country before international financial aid is desirable.

With this definition of international aid in mind, we should now be able to look closely at the importance of and the need for aid in Cambodia. Regardless of the kinds or forms of foreign development aid, aid has the potential to play a constructive role in promoting capacity for law enforcement, legal and judicial reforms, structural change of political and social aspects, and sustainable economic development in the country. Cho (1995) argues that: “aid will supplement scare resources, help to transform the structure of the economy and contribute towards a self-sustaining growing economy” (p. 86).

International development aid also ensures good governance of the nation that “acquires and exercises the authority to provide and manage public goods and services—including both public capacities and public accountabilities” (Global Monitoring Report, 2006, p. 124). In other words, aid has been regarded and distributed as a recipe for assisting Cambodia to generate the liability, transparency, and efficiency of the government ministries and institutions in regard to managing national revenues and expenditures in the public sectors. 

III. Challenges to the Distribution and Management of International Aid in Cambodia among Donor Countries and International Organizations

Donors and international actors have funneled aid to Cambodia with the strong belief that the state will be developed socially, politically, and economically. At the same time, however, they have faced a number of challenges with respect to enhancing the effective distribution and channel of their aid and accomplishing their priority goals. Now, the burning question is why the delivery and supervision of international aid are not viable and why foreign aid does not serve as a developmental instrument to provide tangible benefits for the poor and the vulnerable in Cambodian society.

Firstly, the poor allocation and administration of foreign development aid has derived from the fact that prior to granting aid to Cambodia, the international donors and organizations have not enriched a participatory environment to thoroughly discuss or adequately consult with local communities and non-governmental organizations (NGOs). Not altogether surprisingly, these local stakeholders have been much more aware of the essential and unmet needs of the poor and the vulnerable, and of how to contribute aid directly to them in the real-world context. Therefore, no or little consultation with the local communities and NGOs results in the ineffective distribution of aid that certainly fuels the social exclusion, injustice, and inequality and does not benefit a large segment of the targeted population in the state; “Aid, allocated according to priorities defined by donor agencies without consultation with local authorities and communities, can deepen inequities” (Halle, Switzer, and Winkler, 2004, p. 3).

Furthermore, the donor countries and international organizations have not channeled much of their development aid through the local NGOs operating in Cambodia and working directly and closely with the people at the grassroots level, but rather through the Cambodian government and authorities. Such top-down practices in the providing of aid assistance has not been favorable to serve the purposes of the targeted people, but instead, has encouraged corruption at a national level among the powerful political leaders and high-ranking government officials who have enjoyed exploiting foreign aid with apparent impunity. Crispin (2007), Asia Times Online’s Southeast Asia editor, reports that: “… last year, international corruption monitoring group Transparency International rated Cambodia 151 out of 163 nations it ranked in its global government corruption index” – putting Cambodia in the top fifteen most corrupt governments in the world.

Secondly, since the Cambodian government has neglected and failed to attain its stated promises, and the nation has not witnessed any momentous change despite the continuous influx of foreign aid for the last several years, the donor agencies have admitted that international aid has not been administered and allocated effectively. In spite of having had such a keen awareness of the deficiency in the government’s will to promote the development of institutional and human capacities in the country, and of the misuse and mismanagement of foreign aid, the agencies have not taken any serious actions to put pressure on the government and to make aid conditional in the country – a concrete timeline and framework for when and what the government is expected to do and what should be done to guarantee the accomplishment of the national development goals.

Moreover, it is sad to say that for such a long time the donor countries and international aid organizations have not developed any specific standard criteria or indicators for Cambodia to use as a guideline and reflective analysis of how well the government has been doing to attain a higher level of performance in terms of enhancing social well-being, political stability, and economic prosperity. Great attention has also been drawn to lack of the alignment between the priority goals of the donor community and those of the government, and to the complexity of the community’s strategic procedures and plans that has seemingly discouraged the government to follow and achieve.

Lastly, but importantly, foreign aid coordination and quality have not been strengthened effectively due to the deficiency in communication among the international aid community and between the donor governments and the government of Cambodia. Additionally, there has been a shortage of external audit institutions that should be established by the donor agencies to make sure that public funds are not used more for the administration than for the implementation of the plans or projects, that the funds are adequately and transparently delivered to serve the needy in the targeted areas and sectors in the country, and that the agencies can avoid funding the same projects and programs which will lead to a shameful waste of money. “[T]here has still been a lack of coordinated funding, overlap in projects, and improper sector wide distribution of funding. The funding has not been properly distributed to the appropriate sectors and too much funding has stayed in the large cities …” (Van, 2004).

It is also worth noting that the foreign donors and aid agencies have not founded any independent and non-governmental research institutes in Cambodia to offer effective on-going monitoring and assessment of the implementation of the strategic development plans and the management of the public finance so as to ensure better governance systems of the government ministries in the nation. Consequently, without the existence of such research institutes, there has been lack of studies of economic performance and progress in various sectors, and more noticeably, annual reports on and publications of the transparency of the national budget expenditures as well as the effectiveness of the development plans have not been put in place.   

IV. A Signal for a Realistic Hope and Conclusion

Enhancing the effective allocation and management of foreign development aid in Cambodia successfully is not going to happen overnight. Nevertheless, adopting a structural change of the government institutions and agencies is the fundamental step that we should begin with. With little surprise, the international donor community also plays a critical and functional role in providing the Cambodian people, especially the poor and the vulnerable, with a hope of ensuring poverty alleviation, economic security, and development in the whole country.

To make such a hope realistic and attainable, the community should endeavor to invest a great deal of effort and commitment in promoting the effectiveness and transparency of international aid coordination and distribution by: (1) widely consulting with the local communities and NGOs; (2) funneling more aid through the local NGOs (but not through the Cambodian government institutions and ministries) which have been working so hard to help the needy; (3) motivating and pressuring the government to enact the long-standing anti-corruption law in order to put an end to the exploitation of aid; (4) making aid conditional to the government with the clear and concrete timeline and framework for when and what national strategic goals are expected to be achieved; (5) creating the explicit and detailed performance criteria or indicators to assess how well and effectively the government has been doing to develop socially, politically, and economically; (6) increasing the alignment of the priorities between the donors and the government as well as simplifying the donors’ strategic policies and projects; (7) improving communication among the international aid actors and between the donor governments and the Cambodia government; and (8) founding external audit institutions and non-governmental research centers.

These eight key points have served as a promising guideline to help the donor community capture viable ways of how international development aid is effectively administered and used to contribute real benefits to the targeted population—the poor and the vulnerable—and to develop Cambodia as a whole. If the community fails to implement and enhance any one of the eight points, serious reconsideration of the management and allocation of aid should be undertaken; otherwise, aid is just in vain.    


References

Al Jazeera (2008). Foreign Aid in Cambodia. Retrieved January 19, 2009, from http://english.aljazeera.net/programmes/101east/2008/07/200871613851378258.html

Beech, H. (2007). Cambodia keeps taking, gives little. Retrieved January 19, 2009, from http://www.time.com/time/world/article/0,8599,1636209,00.html

 

Cho, G. (1995). Aid and development. In J. Bale and D. D. Smith (Eds.), Trade, aid and global interdependence (chap. 3, pp. 56-89). London and New York: Routledge.

 

Cho, G. (1995). Trade, aid and global interdependence. In J. Bale and D. D. Smith (Eds.), Trade, aid and global interdependence (chap. 1, pp. 1-26). London and New York: Routledge.

 

Crispin, S. W. (2007). Cambodia's cowboy capitalism. Retrieved January 19, 2009, from http://www.atimes.com/atimes/Southeast_Asia/IG13Ae01.html

 

Global Monitoring Report (2006). Millennium Development Goals: Strengthening mutual accountability, aid, trade, and governance. Washington, DC: World Bank.

 

Halle, M., Switzer, J., and Winkler, S. (2004). Trade, aid and security: Elements of a positive paradigm. Canada: International Institute for Sustainable Development.

 

Kyodo News International (2007). Foreign donors pledge $689 mil. in aid to Cambodia in 2007 and its controversy. Retrieved January 19, 2009, from http://cambodianbrightfuture.blogspot.com/2007/06/foreign-donors-pledge-689-mil-in-aid-to.html

 

Van, T. (2004). International aid and democracy building process: Cambodia. Retrieved January 19, 2009, from http://fletcher.tufts.edu/research/2004/Van-Tooch.pdf

 


Virak Thun is currently an MA student at the United Nations mandated University for Peace, Department of Peace and Conflict Studies, in the major of International Peace Studies (Dual Campus).
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