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Progress in Poverty Reduction and NSDP Challenges 1. Cambodia’s pervasive poverty, in the context of more than two decades of war and civil strife, is one of the key challenges facing the RGC. The SEDP I, 1996-2000, started with the premise that “eradicating poverty is the single most important long-term objective of the Royal Government, and reducing it is the central thrust of the Plan for 1996-2000”. Since then, this message has been repeated in other policy documents that followed, such as SEDP II, 2001-2005 and NPRS, 2003-2005. 2. Poverty estimates in Cambodia are based on Cambodia Socio-Economic Surveys (CSES).[1] The latest survey was conducted in 2003/04 which collected consumption data using both recall and diary methods. Table 1 compares the poverty levels in Cambodia derived from the first Socio-Economic Survey of Cambodia (SESC) in 1993/94, which could cover only 59 % of the country’s total area and 68 % of the households due to security problems at the time, and the CSES 2004 which covered the entire country. Table 1: Poverty Head-Count Ratios in Cambodia (in percent)
Note: "..." means data not available; Poverty line is based on food poverty line (providing 2,100 calories per capita per day) and a minimal non-food allowance. 3. The results show that the poverty incidence for the whole of Cambodia is 34.7% in 2004. There is no comparable estimate for 1993/94 because the geographical coverage of 1993/94 survey was less. The 2004 estimates from samples covering the same geographical areas included in 1993/94 SESC nevertheless indicate a strong decline in Cambodia’s poverty rate: from 39% in 1993/94 to 28% in 2004. This represents a decline of about 11 percentage points over the period, that is, an average of 1 percentage point decline per year. 4. Similarly, population living below the food poverty line for the entire country was 19.7% in 2004, whereas for the geographically comparable samples, the food poverty index fell from 20% to 14.2% over the same period, 1993/94 to 2004. Poverty, measured in terms of both the indexes, declined in all three regions of the country for geographically comparable samples although the rural areas still experience significantly higher rates of poverty. 5. Over the same period, changes in related poverty measures, such as the poverty gap index (P1) and the squared poverty gap index (P2) broadly mirror the observed changes in the head-count ratios, as mentioned above. These indexes declined consistently in all three regions for comparable samples suggesting that, even among the poor, a greater share of the people is now closer to the poverty lines than they were in 1993/94. 6. In 2004, the higher poverty rate for Cambodia as a whole compared to that for the areas included in 1993/94 SESC indicates that the areas not covered in the 1993/94 survey (44% of the total area of the country) have significantly higher incidence of poverty. A simple calculation shows that the head-count ratio in these excluded areas is 45.6% in 2004 (compared to 28% in included areas) while the food poverty index is 28.7% (compared to 14.2% in included areas). 7. Of the total number of the poor, more than 90% live in the rural areas indicating that Cambodia’s poverty is rooted in its large agricultural sector which has low productivity and low growth, but provides livelihood to the vast majority of the country’s population. Along with sharp differences in the rates of poverty, rural-urban differences in the share of the poor also widened during the period as reflected in the increasing rural share in total poor population in the country (from 87% in 1993/94 to 91% in 2004) and declining shares in Phnom Penh (from 3% to 1%) and other urban areas (from 10% to 8%). 8. The profile of Cambodia’s poor is not very different from that of the poor in other low income countries. Poverty, as well as food poverty, is much higher in rural areas than in Phnom Penh and other urban areas. Besides living in the rural areas, the poor tend to have low levels of education, limited access to land and other productive assets, and are highly concentrated in low-paying, physically demanding and socially unattractive occupations. In both urban and rural areas, the poor have less access to modern amenities and services. They reside in houses of inferior quality with no or limited access to basic services like safe water and improved sanitation. The poor are more likely to reside in households with large membership sizes, have more children, and have a household head who is less educated. They also have much less access to public services. 9. The reality in Cambodia is that rural poverty has declined at a much slower rate than poverty in Phnom Penh or other urban areas. The significant fall in poverty in these areas (and generally in areas included in the 1993/94 survey) has largely been due to strong urban bias in growth and concentration of public investments in these areas. This also reflects "peace dividends" that Cambodia was able to derive through coming out of more than two decades of conflict and isolation resulting in fairly rapid initial rise in investment and growth, and consequently reduction in poverty. Nevertheless, growth has generally been unbalanced, centred in Phnom Penh and other urban areas, and is also narrowly based, driven by such activities as garments manufacturing, construction and tourism. 10. In contrast, growth of rural activities, based primarily on agriculture, shows considerable variability and significantly lags behind the rest of the economy. Moreover, agricultural growth of the period was largely confined to rural areas with more favourable locations. The large differences in poverty levels between the included and the excluded areas in 1993/94 SESC are the result of these factors. 11. If growth continues to remain urban-focused, rural poverty will remain high especially since the depth of poverty is greater in rural areas. In such a situation, poverty reduction gains of the NSDP will be much less. This will significantly undermine achieving the 2010 NSDP targets and thereby the CMDGs in 2015. A major challenge of NSDP is, therefore, to adopt deliberate, focused and targeted strategies and actions to accelerate poverty reduction in the rural areas, especially in those high poverty-stricken areas that were excluded from the 1993/94 SESC. In addition, the NSDP challenge will be to further consolidate the poverty reduction achievements resulting from the progress in two important elements of the Rectangular Strategy (peace and security; and regional and international integration) and initiate equally rapid progress in other pillars of the Rectangular Strategy including accelerated economic growth and social and human development. 12. The number of excluded villages in the 1993/94 SESC by provinces is shown in Table 2. In total, 5,093 rural and 90 urban villages were excluded from the survey due to difficult terrain and security reasons. The survey fully excluded six provinces--Koh Kong, Kratie, Mondul Kiri, Preah Vihear, Ratanak Kiri and Stung Treng. 13. The table shows that the left-out villages in the 1993/94 SESC were located mostly in the rural areas which have high incidence of poverty in 2004. In the coming years, it is more likely that the relatively better-off urban and rural areas (which were included in 1993/94 survey) will continue to grow and poverty levels in these areas will decline with Cambodia’s general economic growth which averaged around 6% during the last decade. On the other hand, the excluded areas from the 1993/94 survey, in addition to growth-promoting measures, will require special attention and targeted inputs and investments to bring down poverty from their existing high levels. This is also true for communes and villages in other areas which are remote and have high concentration of the poor. In addition, the NSDP strategies should recognize the specific needs of minority and indigenous people covering complex interlinkages of economic, social, cultural, legal, political and other issues. Table 2: Number of Excluded Villages in 1993/94 SESC
Note: Provinces marked with asterisk (*) were totally excluded from the survey. In the 1993/94 SESC sample frame, the province of Krong Kep was included in Kampot, Otdar Mean Chey in Siem Reap, and Krong Pailin in Battambang. 14. These special actions should include, depending on existing situations and specific local needs, more and better health care, expanded educational facilities, development of agriculture and rural non-farm activities, improved infrastructure, generation of sustainable livelihoods, and similar other activities. It will also be necessary to devolve more funds to these areas during the NSDP period through the Commune/Sangkhat Development Fund. 15. Another major issue for NSDP in regard to poverty reduction is the rising trends in inequality, since the impact of economic growth on poverty also depends on what happens to inequality. Increasing inequality in Cambodia, particularly in rural areas, suggests that the past pattern of Cambodia's rural growth has a strong underlying tendency towards generating higher inequality. To counteract such tendencies, along with promoting higher productivity and returns, growth strategies and policies of NSDP must address the sources of rising inequality, such as uneven spread of economic and social opportunities, skewed distribution of financial and human capital, and growing disparities in other spheres of life. The fuel for rural economic growth has to come both from farm and non-farm activities, a mix that would be necessary to sustain poverty reduction during the NSDP period and beyond. 16. During the NSDP period, efforts to raising agricultural incomes need to cover several key areas, such as increasing crop (especially rice) productivity through greater use of improved seed varieties and other inputs, appropriate soil and pest management, and better water control especially through small-scale irrigation facilities. Increasing livestock and fisheries production is also important, and this will require improved technical services for animal health and fisheries research, conservation and management. Support for expanding access to formal rural financial institutions will be important for farmers and rural entrepreneurs to enable them expand their scale of operation and diversify towards more profitable and sustainable activities. Similarly, easing the land constraint will require speeding up the land-titling efforts as part of creating a transparent and secure land market. 17. In Cambodia, the rural non-farm economy--composed of trade, transport, processing, small-scale manufacturing, retail sales and services, and the like--holds significant potential for strong growth and rapid poverty reduction. The NSDP will have to capitalize on these potentials. Policies aimed at increasing physical assets of the poor, such as land, credit and rural infrastructure will be an integral part of promoting rapid growth of the rural sector and the economy as a whole. 18. For ensuring synergy and bringing quick and efficient results, specific actions under the NSDP will have to be build on what has been achieved so far; and through changes in emphasis, in practices, and in policies, these will bring healthy growth benefiting the rural poor. This will also ensure a more rapid and sustained movement towards greater equality and justice. 19. For NSDP, the critical element will be to ensure that, along with higher level of economic performance; growth reaches the poor and expands their opportunities. In turn, the policies will have to ensure that the poor have the assets--education, good health, access to inputs and markets, voices and power, and participation in decision making--to capitalize on the expanding opportunities of growth. Thus, translating the NSDP strategy into concrete and effective actions for poverty reduction will require determination and imagination, not only from the RGC and other domestic stakeholders, but also from external development partners. |
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