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146. The purpose of this report was to document the existing capacity building practices of Cambodia's development partners and to outline options and make recommendations to achieve a more harmonised approach for capacity development. To collect the needed information the study team conducted personal interviews with representatives of the donor community and government officials, and through a survey questionnaire collected quantitative information on the activities supported by donor projects. A total of 147 multilateral and bilateral donor supported projects and 77 NGOs provided data. The total expenditure reported on these projects amounted to some 265 million US dollars, representing just over half of the total ODA disbursements in 2002 that have been reported to CDC. A total of some 115 million US dollars or 43 per cent of the expenditure reported in the survey concerned capacity building activities. 147. Five issues were addressed in the survey: training, operational support and equipment, monetary incentives paid to Cambodian government staff, and the employment of national and international personnel to manage projects or fill skills gaps. 5.1 TRAINING 148. Training constituted the second largest component of reported expenditure on capacity building activities, a total of 31.4 million US dollars representing 11.8 per cent of reported expenditure or 27 per cent of the total expenditure on all capacity building activities. If the expenditures on per diems, DSAs and attendance allowances (reported as monetary incentives, see section 4.4.1) are added to the direct training costs, the total expenditure on training would increase further. Total ODA disbursements in 2002 have been estimated to be around US$ 500 million by CDC. If it were assumed that all ODA supported projects spent the same proportion on training, 11.8 percent, then total expenditures on training on all ODA supported projects would be nearly 60 million US dollars. It should be noted that nearly 90 per cent of the projects for which data have been provided indicated supporting some type of training activity. 149. Most of the training, both in-country and abroad, seems to be for short-term courses, seminars and workshops covering a very wide range of subjects. It can be questioned whether such short term training is the best way to upgrade the skills of the personnel concerned and to create a sustainable knowledge base. Based on the information collected through personal interviews with representatives of the development partners it can be argued that some of the training activities reported are more in the nature of providing encouragement and monetary incentives than aimed at a serious upgrading of skills. The training seems to be based more on the short term needs of the respective projects rather than on a broader assessment of the degree and depth of skills that are needed by the public service and the persons concerned. 150. The report was not meant to be an in-depth study of the training activities supported by Cambodia’s development partners. It does, however, provide a snapshot of the magnitude of resources that are being spent on training activities and the broad nature of these training activities. It is well known and acknowledged both within Government and by development partners that the civil service has serious capacity gaps that are at present a major constraint not only to achieve sustained development but also in the implementation of the needed reforms. Taking into account the current significant expenditures on activities that are identified as training and the acknowledged significant capacity gaps in the civil service on which little concrete information is currently available it is recommended that a comprehensive study be carried out that will provide an assessment of the needs and the existing capacity gaps in the civil service, and that based on this assessment a comprehensive training and learning plan be developed to fill the urgent gaps. 151. There is no doubt that the task of filling the existing capacity gaps in the civil service is a massive one that will require a concerted effort over a long period of time. In all likelihood it will involve the adoption of a multi-pronged approach. While some ad hoc training in the context of the implementation of a project can be justified, the need to tackle the training issues in the larger context of filling the capacity gaps within the framework of a comprehensive training plan can not be over-emphasized. One element of such a comprehensive training strategy could be the creation of civil service staff training institutes for three broad categories of civil servants: those at the most senior levels, the middle level, and the entry level. 152. During the personal interviews with representatives of the Government and donors it was pointed out that over the last decade many well trained and experienced Cambodians, who had gone abroad during the prolonged conflict, had returned and formed the backbone of the various governance structures. As this group begins to retire from active service, a process that has already begun, there could be a decline in the quality of leadership that currently exists, because the group following it lacks similar training and experience. To avoid a deterioration in the governance structures over the next decade it is critical that concrete steps be taken on a fast track to develop a cadre of professionals that can fill this potential vacuum, as well as to fill existing gaps. Establishing a Public Service Training Institute for top civil servants is one option. Ideally, such an Institute should be a residential institution in order to create a "esprit de corps" and to form a basis for future networking across the civil service. It should be staffed by competent professionals who are paid market based salaries. These could be Cambodians resident in Cambodia, Cambodians presently residing abroad or foreign experts. Given the extreme constraints on domestic budget resources such an Institute would have to be financed through external sources. There is a need to explore whether some of the reported expenditures on training can be systematically channelled for supporting the proposed Public Service Training Institutes. Consideration should also be given by bilateral donors who have similar public service institutions to offer scholarships to qualified Cambodian candidates. 5.2 OPERATIONAL SUPPORT 153. The provision of operational support, including equipment, constituted a significant component of the reported expenditure for capacity building, close to 22 million US dollars representing 8.2 per cent of reported expenditure or 19 per cent of expenditure on capacity building. In theory, this type of expenditure is aimed at strengthening the institutional capacity of the collaborating institutions and practically all respondents to the survey considered it critical or important for program delivery. It should be noted that sometime such support can constitute an "incentive in kind" by creating a better work environment. 5.3 MONETARY INCENTIVES 154. The expenditure on monetary incentives reported by Cambodia’s external development partners in the implementation of 147 projects and by 77 NGOs is the smallest of the five components of capacity building, totalling only 6.7 million US dollars representing 2.5 per cent of reported expenditure or 5.8 per cent of expenditure on capacity building. It is estimated that, out of the total expenditure of US$ 6.7 million on monetary incentives, around US$ 5.5 million were paid as a “salary supplement”. In terms of overall coverage of the capacity building survey, the programs/projects for which the external partners (multilateral and bilateral donors and NGOs) have provided information represent, in terms of total reported expenditures in 2002, around half of the total disbursements of all external partners in 2002. A simple extrapolation of the survey data based on the response rate of each donor category produces an estimate of total expenditure on all type of monetary incentives of around US$ 13.5 million on all ODA supported programs and projects in 2002. It should be noted, however, that this estimate is likely to be lower since the programs and projects for which data have not been reported by donors include large infrastructure projects and other ODA supported activities that may have a lower incidence of paying monetary incentives. 155. Monetary incentives cover a variety of measures: salary supplements, payments for special tasks, DSAs and per diems, attendance allowances and other unspecified forms of incentives. Altogether some 20,000 persons, over 12,000 by NGOs, were paid some form of monetary incentives in 2002, the overwhelming majority at local or district level. However, of the 20,000 only 4,760 persons have been reported to have been paid a "salary supplement". In most cases the salary supplements reported were less than 80 US dollars per month but in some cases exceeded 500 dollars per month. 156. The current average monthly salary level of 28 US dollars per month that is projected to be increased to 51.5 US dollars by 2006 is well below what is considered to be a “living wage”. Based on the available information on the projected key macroeconomic indicators to the year 2008, it is unlikely that a significant increase in salaries from the projected levels can be implemented through domestic budget resources. Therefore, it would appear that for donors to get the commitment of counterpart personnel in collaborating institutions in the implementation of their programs some form of monetary incentive will need to be paid. The issue is whether it is done openly in a transparent and accountable manner or through spurious accounting practices. 157. In personal interviews most donor representatives stressed the need for transparency and harmonisation of practices on the payment of monetary incentives. All considered the present situation as unsatisfactory. However, it is also clear from the interviews and to some extent from the responses to the survey that transparency is not likely to be easily achieved. For instance, when straight salary supplements are banned by a donor agency, they are often replaced by what is euphemistically called "payments for special tasks". Also the payments of DSAs and of attendance allowances at workshops and seminars are used to replace or add to these payments. During the personal interviews, many donor representatives have pointed to the high incidence of "cheating" and "spurious accounting" that is going on. 158. The options to move forward based on the realities on the ground are rather limited. These realities include as a non-starter the Government increasing civil service salaries to an acceptable “living wage” level in the short to medium term, and donor practices that lack transparency. Nevertheless, to achieve sustained economic growth and to implement its reforms agenda the Government needs to consider all options and the donors need to become more transparent and accountable in their practices. It is recommended that the:
- limiting the payment of DSAs/per diems to only cover actual expenditure, which could be dispensed at standardised rates. The payment of "fictitious" DSAs/per diems and of attendance allowances at seminars, workshops and training sessions should be discontinued. Such a procedure would also ensure that participants in such activities were genuinely interested in participating and did not do so only to obtain the monetary incentive. - developing a standardized scale for the payment of salary supplements and/or a monetary incentive under another nomenclature. - requiring donors to provide the names of the recipients of salary supplements and/or monetary incentives under another nomenclature to a central register which would be accessible to both Government and donors. This would ensure the necessary transparency and make it possible to verify that no recipient received more than one supplement. Such a register could be managed by the appropriate Cambodian authority.
159. Experience from other developing countries shows that reforms in the area of salary incentives and other monetary incentives are not easy to carry through. Donors have their own particular interests which can conflict with the professed desire for transparency and harmonisation. Beneficiaries of monetary incentives often have no real desire for transparency of the system. The government, for its part, has budgetary and some political constraints. Even if agreement is reached on a new system there are no real enforcement mechanisms to use against the trespassers. A reform in this area will therefore depend on a real and sustained political will by all donors and by the government alike to change the existing system. 5.4 EMPLOYMENT OF NATIONAL PERSONNEL 160. The expenditure on the employment of national personnel amounted to some 21.5 million US dollars representing 8.1 per cent of total reported expenditure or 18.6 per cent of expenditure on capacity building measures. A total of 6,400 national personnel were employed on projects for which data was provided. Around 60 per cent of them were employed by NGOs and another 30 per cent by the UN agencies. The rest were employed by other multilateral and the bilateral programs. 161. Practically all national personnel had long-term employment. About 70 per cent of those serving in UN agency programs were employed as field staff while more than half of those serving in bilateral and other multilateral programs were characterised as support staff. The bilateral and IFIs, ADB and EC supported programs employed a higher proportion of national personnel as Project Directors/Managers, 6.5 and 7.1 percent respectively, than UN agencies (2.0 percent) or NGOs (3.1 percent). 162. In terms of salaries, most were paid in the range of 150 to 2,000 US dollars per month. There are, however, cases where salaries are reported to be as low as 30 dollars and as high as close to 3 000 dollars. Anecdotal evidence indicates that salaries at the upper range and even above the reported range are not uncommon for national experts/consultants. Over 80 percent of the national personnel employed by UN system agencies were paid between 100-300 US dollars. The bulk of these were involved in de-mining operations. On bilateral donors supported programs around half were paid between 500-1,000 US dollars. In the case of NGOs, the majority of the national personnel employed were paid in the range of 100-500 US dollars. 163. When donor funded projects pay significantly better salaries than the public administration, even when account is taken of various allowances and donor funded incentives, it is obvious that these projects attract the most competent people, particularly if they can get leave of absence from a civil service position and maintain their security of employment. There are also indications that these salaries are quite competitive in relation to the private market. 164. In order to create a more level playing field, consideration should be given to require public servants who take employment in a donor funded program or project to resign from their civil service position (just as it can be assumed they would if they went to a private employer). They would then have to make a choice between (relative) security of employment and a better salary. At the end of their program/project employment they would, of course, be able to reapply to another civil service position, go to a private employer or go to another program/project. It is recommended that such a practice be introduced. 5.5 EMPLOYMENT OF INTERNATIONAL PERSONNEL 165. Expenditure for international personnel constituted the largest component of the recorded expenditure for capacity building, amounting to some 34 million US dollars in 2002 representing 12.7 per cent of total reported expenditure or some 30 per cent of expenditure on capacity building. Altogether some 740 international staff were reported to have been employed. Of these about 40 per cent were employed by the multilateral programs and about 30 per cent each by bilateral programs and NGOs. 166. About half the experts serving in multilateral and bilateral programs had a long-term employment while practically all those serving in NGO projects had long-term assignments. Of the experts employed by multilateral and bilateral agencies some 8 per cent served as project managers or equivalent, some 50 per cent served as technical advisors and experts and about 25 per cent served as short term consultants. 167. The role of the international experts is to fill existing capacity gaps in the Cambodian public service system but also to transfer their expertise to their Cambodian counterparts. Over time this should allow the counterparts to take over the functions now filled by international experts. Given the severe capacity gaps that exist in the civil service this can be expected to take a considerable time. Moreover, during the interview process questions were raised whether the international experts devoted sufficient efforts to make themselves redundant by transferring their expertise to their counterparts. If this were true, it would lengthen the transition process. 168. Given the lack of data, it was not possible to ascertain whether the sectoral orientation of the international experts (and the projects with which they were associated) corresponded to the priority needs of Cambodia as defined by the Government or whether they corresponded more to the interests of the respective donors. 169. The estimates of the Ministry of Economy and Finance show that the total expenditure on wages and salaries in 2002 for all personnel in the civil administration was less than 78 million US dollars. The civil administration includes in addition to the civil service, the National Assembly and various Councils. It is interesting to note that a crude extrapolation of the survey data indicates that the total costs of international personnel involved in the implementation of the ODA supported projects may be as high as 50-70 million US dollars. The high costs for international experts in relation to the total wage bill for the civil service underscores the importance of embarking on a major effort to upgrade the skills and expertise of civil servants, as proposed in the section on training. |
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