CDC - second Cambodia Development Cooperation Forum

1. Introduction

This Aid Effectiveness Report, which has been prepared for the second meeting of the Cambodia Development Cooperation Forum (CDCF), represents an important contribution to the dialogue on national development. By making close reference to recent national policy developments, including the Rectangular Strategy for Growth, Employment, Equity and Efficiency - Phase II, which was launched by Samdech Akka Moha Sena Padei Techo Hun Sen, Prime Minister of the Kingdom of Cambodia at the First Cabinet Meeting of the Fourth Legislature of the National Assembly on 26 September 2008, and the completion of the National Strategic Development Plan (NSDP) Mid-Term Review, the Report's objective is to consider the role of development assistance and the underlying partnership dynamic in supporting the implementation of the NSDP and the realisation of the Cambodia Millennium Development Goals (CMDGs).

Ownership provides the most direct link to development results

Consistent with the transition from the Consultative Group to the CDCF model, this Report emphasises the importance of national ownership in translating policy commitments into improved capacities, better public service delivery and the realisation of the development priorities articulated in the NSDP. It is therefore instructive to begin the Report by re-asserting the causality between aid effectiveness and development results:

Ownership and Leadership. Emerging national and global evidence confirms that the most direct link between improved aid relations and development results manifests itself through the creation of a partnership dynamic that respects and sustains national ownership.
Capacity development. Where aid effectiveness has been found to support national development it is almost without exception associated with strong evidence of a prominent role for external support in supporting capacity development.
Policy, planning & resource management. Stronger partnerships, shared development agendas and better information management contribute directly to the ability and capacity to link policy, planning and budgeting. Perhaps more important, it also facilitates joint learning and innovation.
Service delivery. Aid continues to directly finance the delivery of important public services. Enhanced aid effectiveness ensures that these services are delivered in a coordinated manner and with a longer-term view to capacity development and sustainability.
Effective monitoring systems. Improved information management, especially related to the delivery of development assistance provides an essential tool to enable mutual review and common learning that helps to establish and consolidate trust between partners.
Accountability. The need to record and make available to the public the level and profile of the external resources that have been allocated, as well as to demonstrate their effective use, is perhaps the most sustainable way in which to ensure the link between inputs and results.

Clarifying the link between aid effectiveness and development results at a national level necessarily implies that a holistic approach must be taken to considering the contribution and impact of aid. By providing a summary overview of resource availability in the period 2003 - 2008, Table One shows the increasing trends in domestic resources and development assistance.

Table One. Total Resource Availability 2003 – 2008 (USD million)

	2003	2004	2005	2006	2007	2008 (est)
Government capital expenditure	---	---	78.8	95.2	110.3	133.3
Development assistance	539.5	555.4	610.0	713.2	790.4	887.9
Total resource availability	---	---	688.8	808.4	900.7	1,021.2
Aid as % of total	---	---	89%	88%	88%	87%

Source: Ministry of Economy and Finance, Department of Budget

Without attempting to articulate the features of a growth model, the role of development assistance as an additional public resource, e.g. in supporting public service delivery, and as a form of crowding-in of private sector investment, e.g. by providing infrastructure and economic services, appears quite evident. Although global empirical models suggest some ambiguity in the relationship between aid and growth, the intuitive relationship in Cambodia looks to be quite strong.

The focus of the 2008 Aid Effectiveness Report

This Report serves an important purpose by consolidating and synthesising a significant number of analytical inputs that have been prepared over the last eighteen months. It reviews this evidence to identify priority actions that are required to ensure effective external support to the implementation of the NSDP. In addition to the routine reporting of TWGs to CRDB/CDC and the improved reporting of development partners on their activities in the Cambodia ODA Database, the period since the first CDCF meeting has been purposefully active and has included: (i) a reflection on the impact and management of technical cooperation; (ii) the Paris Declaration monitoring survey and complementary inputs to the global aid effectiveness work; and (iii) the Evaluation on Aid Effectiveness in Cambodia (taking stock on the implementation of the Cambodia Declaration on Enhanced Aid Effectiveness and the Harmonisation, Alignment and Results (H-A-R) Action Plan at the mid-point in their implementation).

This Report therefore provides an opportunity to consolidate this work and, in the context of the NSDP Mid-Term Review and the Rectangular Strategy (phase II), to highlight their collective policy implications. In particular it provides a summary of key findings derived from the recently-concluded Evaluation in order to propose a number of measures to streamline and accelerate the implementation of the H-A-R Action Plan. It is also important to clarify that the H-A-R Action Plan will not be revised in light of the Evaluation, although some policy actions will be prioritised based on the considered needs of individual Government ministries, development partners and Technical Working Groups (TWGs).

The Report therefore begins by reflecting on partnership initiatives since mid-2007. It suggests that, while there appears to be strong resolve at the level of commitment, this has not yet been fully translated into effective implementation. By considering a number of partnership related activities, including a reflection on technical cooperation and the recent Evaluation, there appears to be a continued need to invest in partnership-based approaches that strengthen trust and, most important, permit clearer communication on a set of pragmatic and realistic activities that will ameliorate the looming onset of 'fatigue'. A quantitative review of aid delivery, complemented by the findings of the Evaluation and the NSDP Mid-Term Review, serves to reinforce these qualitative prescriptions.

The Report then turns its attention to experience in implementing the Joint Monitoring Indicators (JMIs) since mid-2007. The picture from this perspective is broadly encouraging but highlights the divergence between the technical and political nature of aid relations. This combined evidence then provides the basis for identifying a number of policy recommendations, identified in three broad categories: (a) Government; (b) development partner; and (c) joint responsibilities, including those that fall within the framework of the TWGs. A short conclusion then seeks to galvanise both Government and development partners, leveraging global and national sentiment by acknowledging that if Government and development partners cannot take advantage of Cambodia’s favourable climate to implement their respective commitments then the prospects globally – and for the achievement of the MDGs in particular – may appear quite bleak.

Key Messages

In a deteriorating global economic climate the effective use of aid takes on an additional significance given the risk that either external or domestic resources may become more scarce. External assistance may also take on an additional role in supporting the provision of social safety nets that become necessary as a result of the social costs associated with increasing food insecurity and any economic slow-down. With this outlook in mind, and by applying the evidence already gathered, the following points are perhaps the most pertinent:

Evidence of fatigue and a stalling process requires a political intervention.
Focus needs to be placed on simplifying, prioritising and grounding aid effectiveness initiatives.
Efforts to improve implementation will be dependent on more effective partnership dynamics.
Broader engagement is necessary but requires competency and relevant skills to be effective.
The rationale for development cooperation is increasingly premised on capacity development.

This Report is about more than improved aid management approaches to planning and budgeting, implementation and performance, or the need for additional research. It is about accountability to each other and to the wider community for achieving development results.

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