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10. Since the launch of the new partnership paradigm in 2000, significant progress has been made by the Royal Government to streamline and strengthen the aid coordination functions within the Government and to build partnerships with national and international partners. At the same time, the international community has made significant advances in addressing issues concerning harmonization of donor practices and improving aid effectiveness. 11. Since the last CG Meeting for Cambodia held in June 2002 there have been significant developments in both the international arena and within Cambodia to address the aid effectiveness issues. Some examples of major initiatives of the international Community that have been of particular interest for Cambodia, and the in-country actions taken by the Royal Government to streamline and strengthen aid coordination functions, build partnerships with the private sector, civil society and NGOs, and the international development partners and are summarized below. 3.1 DEVELOPMENTS IN THE INTERNATIONAL ARENA 12. In the international community there is now a general consensus that in order to improve aid effectiveness a greater emphasis need to be given to enhancing the ownership of the development process by the recipient countries. The OECD/DAC, the World Bank and the United Nations Development Group have also been collaborating on several joint initiatives to bring greater coherence to ODA supported programs. In November 2002, the Task Force on Harmonization of Donor Practices established by the OECD/DAC completed and published “Good Practices Papers” as guidelines for the management of development cooperation activities by donors. The Royal Government considers the "Good Practices Papers" prepared by the OECD/DAC Task Force on Donor Practices as an important contribution in a move forward on harmonizing donors practices and aligning donor supported activities to recipient country development priorities to improve aid effectiveness. These papers set out guidelines on good donor practices in the following areas:
13. These papers were endorsed at a High Level Forum on Harmonization held in Rome in February 2003. At this meeting the heads of multilateral and bilateral development institutions and representatives of the IMF, other multilateral institutions, and partner countries issued a Declaration that included a comprehensive set of commitments by the development partners to improve harmonization and alignment of ODA supported activities to improve aid effectiveness in order to achieve the Millennium Development Goals. It is now commonly referred to as the Rome Declaration. The Rome Declaration is a commitment by development partners to implement the following activities to enhance harmonization and alignment of ODA supported activities:
14. As the next steps, the Rome Declaration encouraged partner/recipient countries to design country-based action plans for harmonization, agreed with the donor community that set out clear and monitorable proposals to harmonize development assistance using the proposals of the DAC/OECD Task Force and the MDB technical working groups as reference points. In turn, the bilateral and multilateral agencies agreed to take actions to support harmonization at the country level. 15. On behalf of the Royal Government of Cambodia, the Council for the Development of Cambodia (CDC) has actively participated in the work on the preparation of the Good Practices Papers by the OECD/DAC Task Force on Donor Practices established by the OECD/DAC Working Party on aid effectiveness and donor practices. OECD/DAC has now formed a Task Team to monitor progress on harmonization and alignment issues. OECD/DAC has also set up a facility to provide support to in-country efforts on harmonization and alignment issues. 16. Following the Rome meeting, Cambodia was selected as one of the 14 pilot countries to implement the Rome Declaration at the country level. Early in 2004, the Task Team carried out a survey of progress made on harmonization and alignment in the 14 pilot countries. In Cambodia, the process of completing the three part survey questionnaire involved extensive consultations within Government institutions, among donors, and between Government and donors. The major findings of the survey for Cambodia were as follows:
17. There is now also a growing awareness and recognition among development partners that sector and/or program based approaches for ODA programming can not only bring a greater coherence to ODA programming by providing a framework for alignment of donor programs with Government’s priorities, but more importantly, the sector/thematic program also provides a framework for harmonizing donor practices. Over the last few years, a series of resolutions have been adopted by the Council and European Parliament that are aimed at the re-orientation of aid instruments, where appropriate, towards increased use of budget support and sector-wide approaches. To operationalize these resolutions, in February 2003, the European Commission issued detailed "Guidelines for European Commission Support to Sector Programmes". The Royal Government is encouraged by this recent EU initiative. Also, the OECD/DAC “Working Party on Aid Effectiveness and Donor Practices” is at present finalizing a “Good Practices Paper on Providing Harmonized Support to Sector Approaches”. To examine and promote the concept of Program Based Approached (PBA) Japan organized a regional workshop on “Program Based Approaches (PBA)” in June 2004 that was held in Tokyo. 3.2 IN-COUNTRY INITIATIVES 18. Since the launch of Cambodia’s New Development Cooperation Paradigm, the Royal Government has put in place institutional mechanisms and management systems to support aid coordination and management through the Council for the Development of Cambodia. However, in spite of major improvements, the current situation as reflected in the findings of the just completed OECD/DAC survey for Cambodia continues to present challenges to which solutions must be found to improve aid effectives. The current situation is a good illustration of inadequate Government ownership of many projects; “piece-meal” efforts, and insufficient coordination and support by donor agencies for Royal Government’s sectoral/thematic programs; the uncoordinated approaches for capacity development; proliferation of different procurement, disbursements, auditing, and progress monitoring and reporting procedures among agencies; and the use of donor-supported project management units staffed either by expatriates or by nationals who are paid significantly higher salaries than those with comparable qualifications employed in the public sector. 19. Some of the major initiatives of the Royal Government to strengthen its capacity to manage development assistance and to build partnerships withl national and international development partners are described below. Streamline and Strengthen Aid Coordination 20. Soon after the launch of the New Development Cooperation Partnership Paradigm for Cambodia, the Prime Minister appointed CDC/CRDB to be the RGC’s Partnership Focal Point within the Government. As the Partnerships’ Focal Point, CDC/CRDB is responsible for coordinating and mobilizing resources for public investments, and to provide support to ministries/agencies to enable them to effectively manage the process of establishing partnership arrangements with Cambodia’s national and external partners. However, the Lead Responsibility for building sectoral partnerships remains firmly in the hands of each sectoral ministry/agency. The CDC/CRDB is also responsible for expanding the aid management information systems within the Government to ensure that there is a functioning government-wide system to monitor the implementation of development programs, and for coordinating with sectoral ministries on issues related to resource mobilization. 21. An Inter-Ministerial Steering Committee to Strengthen Development Cooperation Partnerships was established in 2001. The purpose was to ensure that key officials are seriously involved in policy decisions and operational actions for capacity development, integration/enhancement of information and monitoring systems, and for assessing progress and identifying issues during the transition to fully functioning development partnerships, covering dimensions such as procedural harmonization, ownership, and capacity indicators. It is headed by the 1st Vice-chairman of CDC. The membership of this Committee includes key officials in-charge of partnership arrangements at the Secretary/Under-Secretary of State level. The Secretary General of the CDC/CRDB also serves as the Secretary General of the Inter-Ministerial Steering Committee. The Committee is supported by a Secretariat, composed of the staff of CDC/CRDB. In addition, Partnership Working Groups in four ministries, Health, Education, Agriculture, and Women and Veteran Affairs have been established. These Groups are being provided technical support by CDC/CRDB to strengthen their aid management systems. 22. Several Working Groups under the CG mechanism to monitor progress on specific policy issues have been in operation since 1999. After extensive discussions over the last year, the Royal Government and the development partners have agreed to restructure these working groups. At the Pre-CG Meeting held on 10 September 2004, Samdech Hun Sen, the Prime Minister endorsed the proposal to create 17 Joint Technical Working Groups at the sectoral/thematic level. To ensure coordination among the 17 joint technical working groups, he also endorsed the proposal to:
23. Since the mid 1990s, a UNDP Support Program located in the Cambodian Rehabilitation and Development Board of the Council for the Development of Cambodia (CDC/CRDB) has been providing policy advisory services and support for capacity development of the CDC/CRDB and to strengthen aid management systems both in CDC/CRDB and in selected ministries. This Program is scheduled to be completed at the end of 2005. Given the expanded scope of the aid coordination, harmonization and alignment issues resulting from recent developments in the international arena and in the country, the Royal Government would begin discussions with development partners in early 2005 to develop a multi-donor Support Program for CDC/CRDB to be financed through a pooled resources arrangement. Government-Private Sector Partnership 24. The Royal Government recognizes that improving the business climate and creating an enabling environment for private sector development are key pre-requisites for fostering growth, creating jobs, reducing poverty and achieving sustainable economic development. To remove the critical bottlenecks impeding the development of the private sector as well as to provide inputs in the processes of administrative and regulatory reforms, a Government-Private Sector Forum was established in December 1999. It has been meeting once every six months and is supported by seven Business-Government Sectoral Working Groups, which meet monthly to identify and recommend actions to resolve sector-specific problems. To further strengthen the key institutional mechanisms to support the implementation of the Rectangular Strategy, at the last Government-Private Sector Forum held on 20 August 2004, Samdech Hun Sen, the Prime Minister announced the formation of a Steering Committee for Private Sector Development. This Committee is chaired by the Sr. Minister and Minister of Economy and Finance, with the Sr. Minister and Minister of Commerce as Deputy Chairman, and the Governor of the National Bank of Cambodia and the Ministers of MIME, MAFF, MPWT and MOT as Members, and the Secretary General of CDC, as its Secretary. The Steering Committee is responsible for carrying out the following tasks:
25. The Steering Committee is supported by the following three Sub-committees: (i) Sub-committee on Investment Climate and Private Participation in Infrastructure (PPI) chaired by Sr. Minister, Minister of Economy and Finance; (ii) Sub-committee on Trade Facilitation chaired by Sr. Minister, Minister of Commerce; and (iii) Sub-committee on SMEs chaired by Minister of Industry, Mines and Energy. The Steering Committee and its three Sub-committees will work closely with the development partners who want to assist Cambodia in developing the private sector, including the WB, ADB, IMF, UNDP, JICA, AUSAID, GTZ, AFD and others, based on a SWAP arrangement for private sector development. Partnerships with Civil Society and NGOs 26. The process of building partnerships with the civil society and the NGOs is now well underway. The adoption of the Commune Administration and Election Laws in 2001 and the successful election of 1,621 Commune/Sangkat (C/S) Councils in February 2002 represent a bold step to move forward Royal Government's efforts to promote more responsive public service delivery and to enhance the participation of the citizens in local socio-economic development to alleviate poverty. The election of the Commune Councils has deepened the foundations of democracy and will accelerate the governance reform process through decentralization. The Royal Government is aware of the immense challenges it faces in formulating and refining the policy and regulatory frameworks, mobilizing sufficient domestic and external financial resources, developing broad awareness of the concepts and principles underlying democratic local governance and building the capacity of both the Commune Councils and government institutions to effectively carry out their responsibilities and mandates. The Royal Government, however, is confident that the momentum it has already achieved will enable it to meet the challenges. Nevertheless, achieving sustainable gains will require time and will depend in large part on the level of partnerships that are build between the various jurisdictional levels within the government; between government and the donor community; and between government, international and national partners, the local Councils, and especially the civil society. 27. The Royal Government is encouraged by the partnerships with NGOs that are developing at provincial level, through the initial capacity building programs, and see this as an important step towards longer-term collaboration. The Commune Councils need ongoing support beyond formal training, and the provinces need to establish and strengthen forums for dialogue with NGOs to promote and guide partnership arrangements. The District Planning Integration process, officially adopted by the Ministry of Planning and reflected in the decentralized regulatory framework, is a particularly strategic feature for negotiating partnerships through the alignment of public sector, NGO and C/S plans focused to respond to expressed local priorities. Government-Donor Partnerships 28. At the last CG Meeting, the Royal Government presented a proposal to establish a Government-Donor Partnership Working Group. This proposal was overwhelmingly endorsed and subsequently the Government-Donor Partnership Working Group was established. In its deliberations the Working Group agreed to begin its work by focusing on problems/issues for which feasible solutions already exist and that can be agreed to and implemented immediately. It was a pragmatic approach that assigned a high priority to picking the readily accessible “low hanging fruits”. Thus, the Working Group began its work by commissioning three studies to collect and analyze the necessary background information and outline feasible solutions to tackle the harmonization issues. The three studies focus on: (i) the capacity building practices of Cambodia's development partners, (ii) practices and lessons learned in the management of development cooperation; and (iii) preparation of national operational guidelines for development cooperation. The first two studies have been completed. Also, the first draft of the third study has been prepared. 29. The first study on the “Capacity Building Practices of Cambodia's Development Partners” was financed and supported by UNDP. The methodology used to carryout the study included personal interviews with donor and government representatives, as well as collection of quantitative data through a questionnaire from multilateral and bilateral partners and NGOs. The survey questionnaire covered five areas that are related to building the individual and institutional capacity and the employment of national and international personnel to support the implementation of the programs and/or to fill capacity gaps. These five areas include: training, operational support, monetary incentives including salary supplements, and the employment of national and international personnel. The study findings are now being discussed by the Council for Administrative Reform with development partners to arrive at a set of recommendations on which there is consensus, and to develop an action plan for their implementation. 30. The study on, "Practices and Lessons Learned in the Management of Development Cooperation: Case Studies in Cambodia", was financed and supported by Japan. This study examined four cases of good practices that included: Sector-focused aid coordination: i. Education -- Sector Wide Approach (SWAp) ii. Health -- Sector Wide Management (SWIM) and Tuberculosis Sub-Sector (TB) Cross-cutting-issue focused aid coordination: iii. Local Governance -- SEILA iv. Public Finance – Technical Cooperation Assistance Program (TCAP). 31. The preparation of the national operational guidelines for the grants component of the ODA, the third study, is financed and supported by UNDP. The guidelines are being prepared in close collaboration with key Government agencies and the development partners under the umbrella of a Sub-Group of the Government-Donor Partnership Working Group (GDPWG). These guidelines cover each stage of the program/project cycle: identification, formulation, implementation, monitoring, review and evaluation of projects. The guidelines take into account the OECD/DAC’s Good Practice papers on harmonizing donor practices for effective aid delivery, UN General Assembly Resolutions, and lessons learned in the management of development cooperation activities in Cambodia. This work on preparing operational guidelines on the grant side has been closely coordinated with the work on the preparation of the Standard Operating Procedures for loan projects. In terms of process, after the guidelines have been endorsed by the Sub-Group of the GDPWG, by the end of 2004, they will be presented for discussion and approval by the Government-Donor Partnership Working Group. After approval by the GDPWG, CDC will submit the guidelines to the Council of Ministers for approval. 32. The findings and recommendations of these studies present both opportunities and challenges for the Royal Government as well as the development partners. They offer opportunities to improve ODA effectiveness through strengthened partnerships to achieve more harmonized practices in program planning, formulation, financing, and the management of the implementation of development cooperation activities. The challenge is to find ways to quickly move forward with the implementation of recommendations on which there is agreement between the Royal Government and the development partners. 33. The Government-Donor Partnership Working Group has also been busy in supporting both the work of the OECD/DAC on examining harmonization and alignment issues in Cambodia's context, and in discussions on the restructuring of the Working Groups under the CG mechanism. As mentioned earlier, several Working Groups under the CG mechanism have existed to monitor progress on specific policy issues since 1999. Before the recent agreement on the restructuring of these working groups, the membership of most these working groups had included donor representatives only. Some of them have operated in an ad hoc manner without an overall framework for their operations. Over the past year, extensive discussions have taken place on how to restructure the working groups in order to enhance aid effectiveness and to bring a greater coherence to ODA supported activities. The Secretary General of CDC/CRDB, as the Chairman of the Government-Donor Partnership Working Group, submitted a proposal to the development partners on the basic principles for restructuring the working groups in October 2003. After extensive discussions an agreement on the basic principles to restructure the working groups was recently reached. These basic principles for restructuring the working groups that were endorsed by Samdech Hun Sen, the Prime Minister at the Pre-CG Meeting held on 10 September 2004 are: First, to strengthen the ownership and leadership of the Royal Government, the joint technical working groups shall be lead by the responsible ministry or agency and will include members from other concerned ministries and the development partners. The appointment of the chairperson of the working group shall be made by the Minister of the ministry/agency that will lead the working group. Based on the experiences of some working groups, the newly appointed chairperson of the working group must have the political will and commitment and willingness to devote his/her time to lead the working group. The development partners will nominate a donor coordinator and an alternate coordinator to ensure donor-donor coordination and continuity of the operations of each working group. Second, each working group must prepare its Terms of References (TORs) that clearly defines its roles and responsibilities. However, to ensure consistency across working groups the TORs of each working group will include the following basic generic elements: i. Each Working Group shall jointly prepare detailed strategies or policies for the sector that is being dealt with by the Group, if they have not been developed so far, ensuring that these strategies or policies are consistent with the Rectangular Strategy. For Working Groups that have already developed the strategies or policies, they should be revised if necessary. ii. After the strategies or policies have been prepared, each Working Group shall develop an Action Plan and identify priorities and modalities of support for the implementation of the Action Plan. The Action Plan shall be considered to be a joint document of the Royal Government and the donor community for monitoring progress by the Working Group. iii. Each Working Group shall be responsible for mobilizing resources needed for the implementation of the agreed Action Plan. If the resources are not enough, both the Government and the donors shall work together to re-prioritize their activities in line with the available resources. iv. Each Working Group shall jointly monitor progress against benchmarks that have been set forth to increase aid effectiveness and to achieve the strategic objectives laid out in the Rectangular Strategy and Cambodia's Millennium Development Goals. 34. Based on these basic principles, the Royal Government and the development partners have agreed to establish seventeen Joint Technical Working Groups at the sectoral/thematic level. At the Pre-CG Meeting held on 10 September 2004, Samdech Hun Sen, the Prime Minister also identified the following urgent tasks that each joint technical working group should complete before the 7th Consultative Group Meeting in December 2004. First, both parties coordinate to finalize the list of members and TORs of the Joint Technical Working Group, as soon as possible. Second, each joint technical working group has to appraise the progress in the nine priority areas for joint monitoring that were agreed to at the 6th Consultative Group meeting held in June 2002 as well as identify any outstanding issues and challenges. The reports of the technical working groups will be consolidated into one document that will be presented at the Consultative Group meeting to be held in December 2004. Third, each technical working group has to develop its action plan and benchmarks for consideration and adoption at the Consultative Group Meeting to be held in December 2004. 35. As part of the restructuring of the working groups, the TORs of the existing Government-Donor Partnership Working Group is being reviewed and revised. A key role of the restructured Partnership Working Group will be to coordinate and facilitate the implementation of the Royal Government's Action Plan on Harmonization and Alignment to implement the Rome Declaration's commitment. As the focal point on harmonization and alignment issues it will continue to provide guidance on overall policy on these issues as well as dealing with implementation/operational issues. The execution of the overall policy and agreed implementation mechanisms will be carried out by the restructured sector/thematic technical working groups. 36. On issues concerning harmonization and alignment of donor activities to improve aid effectiveness, the Government-Donor Partnership Working Group has made important inputs in the work of the OECD/DAC Task Team that is monitoring progress on the implementation of the Rome Declaration’s commitments. The OECD/DAC Task Team carried out a survey on the status of harmonization and alignment practices in 14 countries including Cambodia. This survey consisted of a comprehensive three part questionnaire. After extensive discussions within the Government, among donors, and between Government and donors the questionnaire was completed not only on time but also Cambodia was reported to be the first country to return the completed questionnaires to OECD/DAC. 37. The Royal Government also initiated work on the preparation of RGC Action Plan to implement the Rome Declaration’s commitment, a recommended next step in the Rome Declaration. The formulation of Royal Government's Action Plan to move forward on the implementation of Rome Declaration's commitments to harmonize the practices of the development partners has been a high priority of the Royal Government. With assistance from the UNDP and the World Bank significant progress has been made over the last year. The first workshop to examine the harmonization and alignment issues was held in January 2004, to sensitize Government and donor representatives to the harmonization and alignment issues. Following this workshop, the Royal Government prepared a zero draft of the action plan on harmonization and alignment that was discussed and reviewed by representatives of government institutions and development partners at a second workshop held in June 2004 in Siem Reap. The revised draft incorporating the feedback from the second workshop was discussed and reviewed by an inter-ministerial group at a workshop held in Sihanoukville in August 2004. The draft incorporating changes recommended at the inter-ministerial workshop were discussed and approved at the fourth and final workshop held at CDC on October 26 and 27. This workshop was attended by both Government and donor representatives. The final Royal Government’s Action Plan on Harmonization and Alignment that incorporates the outcome of the discussions at the fourth workshop and has been endorsed by the Council of Ministers is presented as Annex I. 38. The Royal Government is encouraged by the fact that in the case of externally financed programs and projects funded through loans the development partners have begun to tackle the harmonization issues. The Government and the Asian Development Bank have been collaborating to prepare a Manual on Standard Operating Procedures, and a Financial Management Manual. These manuals will be used to train government staff managing these projects. A joint integrated fiduciary assessment by the ADB, World Bank, IMF, and DFID was completed in 2003. In short, in the case of externally financed programs and projects funded through loans, significant progress has been made over the last two years in moving towards the harmonization of IFIs program/project planning and implementation management practices. 39. More recently, the ADB, World Bank, UN system, and DFID have begun to carryout joint planning to prepare their new country assistance strategies. This joint effort is an important learning experience for the these organizations that will not only reduce transaction costs but will also set an example of better donor-donor coordination. Sector and /or Issues Based Programs 40. Over the last few years, sector wide programs have been developed in the Education Sector (SWAp) and Health Sector (SWiM) by building partnerships to carryout joint planning and programming for these sectors. So far, the joint work in the education sector has progressed more than in the health sector. A significant number of donors are participating as partners in the planning, reviews and financing under the SWAp in the education sector. An Education Strategic Plan (ESP) 2001-2005 and a detailed Education Sector Support Program (ESSP) 2001-2005 were completed in 2001. The first joint review and appraisal of the ESP/ESSP were carried out in June 2001. Since then joint ESSP reviews in collaboration with development partners have been carried out each year. In September 2004, a revised ESP and ESSP for 2004-08 was reviewed and endorsed by development partners. The ESSP 2004-08 outlines how ESP 2004-08 priorities will be managed, monitored and implemented through specific programs. The SWAp in the education sector has made two important contributions. First, it has made available to the Ministry of Education a mechanism for aligning donor assistance with the education sector needs. Second, it has reduced the transaction costs to the MOEYS of coordinating with each donor agency bilaterally. On the financing side, however, donor funding through direct budget support in 2003 accounted for only 18 percent of total donor assistance to the education sector, most of which is comprised of loans from multilateral financial institutions. 41. In the case of the health sector-wide management (SWiM) program the discussions with development partners begun in 1999 and a Joint Health Sector Review was held in December 2000. A Health Sector Strategy (HSP) and a Health Sector Support Program (HSSP) for 2003-2007 were subsequently prepared. The implementation of the 5-year HSSP began only in January 2003. It has served as a way for three major donors, ADB, DFID and the World Bank, to coordinate their financial inputs to the health sector. The majority of donor assistance to the health sector under the SWiM arrangement is being provided in the form of project-type support. As compared to the SWAp in the education sector, the SWiM approach in the case of the health sector has not so far produced a significant reduction in the administrative burden on the Government of coordinating with each donor bilaterally. 42. The Royal Government's SEILA Program was initiated in 1996 to formulate, test and continuously strengthen decentralized and de-concentrated systems for planning, financing and implementation of local development at the provincial and commune levels. Beginning with 5 provinces and a small number of pilot communes in 1996, by the end of 2001 and prior to the commune elections, coverage had expanded to half of the provinces and to more than one-third of the rural communes in the country. In 2003 the SEILA program coverage was extended to cover all provinces and communes. Adopting a partnership approach with the donor community at national level and an integrated, annual programming framework with international agencies and NGOs at the provincial level, a high volume of additional, parallel resources have been mobilized and programmed each year to support development activities at the provincial and commune levels. External evaluations of the SEILA program have reaffirmed the socio-economic benefits that have resulted from civil works projects implemented by the private sector at the commune level as well as the growing capacity of the provinces, districts and communes to manage the decentralized systems. The partnership arrangements now cover all aspects of the programming cycle through joint planning, programming, budgeting/financing, and management of the program implementation. Progress is also being made to extend this partnership arrangement further to include the harmonization of monitoring and reporting procedures. 43. In addition to the sector wide programs and the SEILA program, over the last two years a number of donors have also begun to jointly finance a specific project or program. One recent example is the multi-donor funded Land Management and Administration Project. This project was based on a multi-donor appraisal mission, involving the World Bank, the Governments of Germany and Finland and the ADB. Work is now underway to develop a SWAP for Land Management and Administration. 44. Enhancing public financial management is crucial for strengthening good governance. The Royal Government and the development partners have recently completed the formulation of a SWAp for Public Financial Management (PFM). This Program that is being jointly financed by 10 donors provides a framework for coherent and focused efforts to achieve the goals of the Royal Government’s public finance management reform program. The Royal Government’s PFM reform program is built upon four sequenced and prioritized platforms: (i) a more credible budget; (ii) effective financial accountability; (iii) the RGC policy agenda becomes fully affordable and prioritized; and (iv) RGC managers become fully accountable for program performance. The Royal Government is also working at developing a SWAp for Private Sector Development. |
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