Cambodia has made greater than expected progress in reducing poverty over the last decade, a new report released said: but new and more complex institutional and policy changes and strengthened partnerships are needed if Cambodia is to achieve its Millennium Development Goal of halving poverty by 2015 and giving millions of Cambodians a better quality of life.

The Cambodia Poverty Assessment 2006 was launched today at a workshop “Cambodia: Halving Poverty by 2015?”, opened by HE Samdech Hun Sen and attended by over 200 members of Government, development partners, civil society, and the media. The Poverty Assessment presents for the first time comparable estimates of household consumption and poverty between different years in Cambodia, and identifies the key successes, lessons, and innovations emerging from Cambodia, as well as the remaining challenges in reducing poverty in the country. The conference was organized by the World Bank, the Asian Development Bank (ADB), the UK Department for International Development (DFID), and the United Nations (UN) in collaboration with the Royal Government of Cambodia.

The Poverty Assessment will be an important input to the March 6-7 international conference Asia 2015: Promoting Growth, Ending Poverty, which will be held in London and sponsored by DFID in collaboration with the World Bank and the ADB.

Prime Minister Hun Sen opened the Launch of the Poverty Assessment by welcoming the new poverty figures and reminding the audience that the robust growth underpinning poverty reduction over the last decade was based primarily on garment exports and tourism, which generated many jobs in urban areas, but had limited impact in rural areas where 91% if the poor live. He said: “Small farms are proven to be more productive and generate more employment than large farms: thus, the Government and development partners should focus on creating policies to help small farmers increase their productivity and market their crops. Social land concessions are also critical to poverty reduction. It is important to identify non-functioning economic concessions and transform non-productive land into productive land through the implementation of the social land concession sub-decree.

The Poverty Assessment has encouraged the effort of the Government and development partners… We are moving in the right direction for development and poverty reduction. However, we can always improve from our past achievements, by striving twice as hard. I believe that the Poverty Assessment provides additional value to our efforts in order to ensure more integrity and equity, and guide policies and strategies to accelerate poverty reduction.”

“The Royal Government of Cambodia has always committed to poverty reduction. Poverty Reduction is the core at every development policies and strategies of the Royal Government. The Rectangular Strategy specifically targets economic growth, full employment for Cambodian people, and equitable distribution of fruits of growth thus ensuring social justice, and strengthened efficiency of the public sector through the implementation of various in-depth and well-coordinated reform programmes,” H.E. Senior Minister Kheat Chhon, Minister of Economy and Finance said.

“This joint conference will further discuss the findings of the report and will try to explore innovative ways forward especially in setting the agenda toward 2015 for the strong partnership in reaching the Cambodia Millennium Development Goals.”

Cambodia’s Progress

The new Poverty Assessment – based on the 2004 National Socio-Economic Survey and a number of specially commissioned studies – finds that in the past decade, Cambodia has made significant progress in reducing poverty. The proportion of the population living below the national poverty line fell from an estimated 47 percent ten years ago to 35 percent today.

Over this decade, Cambodia has consolidated peace and achieved economic growth of over 7 percent a year. Improvements in non-income indicators – including for example ownership of consumer durables, housing quality and school enrolment – corroborates the picture of rising standards of living for most Cambodians.

“Cambodia has made significant progress towards the first of the Cambodian Millennium Development Goals (CMDGs), which commits the Royal Government to halve, between 1993 and 2015, the proportion of people living below the national poverty line. Starting from a base of very low incomes and very high poverty at the start of the 1990s, peace and economic liberalization have made possible a decade of rapid growth and relatively rapid poverty reduction. As Cambodia moves forward, new challenges and expectations will require that reforms deepen and reflect the new challenges and rising expectations of the country”, said Nisha Agrawal, Country Manager for the World Bank in Cambodia.

The Poverty Assessment notes however that while all segments of society benefited over the last decade, the improvement in living standards has been much more pronounced for some groups and areas, and inequalities have risen sharply. Although poverty in rural areas fell by 20 percent over the decade between the surveys, it fell by 60 percent in Phnom Penh (and 44 percent in other urban areas).

In 2004, 91 percent of poor Cambodians lived in rural areas. Poverty rates are highest in remote rural areas with limited access to roads, markets and basic services. Promoting rural development and improving the lives of the rural poor are therefore a top priority – as recognized in the Government’s new five-year National Strategic Development Plan 2006-2010 (NSDP).

The Cambodia Development Resource Institute (CDRI) contributed significantly to the Poverty Assessment with participatory field studies including the Moving -Out of Poverty Study and the Participatory Poverty Assessment. Larry Strange, CDRI Director, stated, “The Poverty Assessment provides a compelling argument for focusing increased attention on developing the agricultural sector as a key engine of growth. The strength of potential linkages between growth in the agricultural sector and poverty reduction will depend on the degree to which the Government, donors, civil society and other key stakeholders can collaborate to better target support for small-hold farmers in terms of secure land tenure and access to natural resources, effective water management, removing barriers to efficient marketing, affordable credit, and extension services for crop diversification and livestock production. To optimize their poverty reduction capacity, such steps must be accompanied by continued improvements in governance as well as the health and education sectors to ensure that both men and women enjoy equal access to the benefits of economic growth and social development.”

At today’s conference, participants discussed Cambodia’s progress in reducing poverty and the future challenges that it faces, covering issues such as peace and stability; growth and macroeconomic stability; regional and global integration; and improved services in education and health. Additional topics of discussion included agriculture and natural resource management; improving Cambodia’s competitiveness; and how to building an effective, responsive and accountable state.

The conference also debated how to strengthen key partnerships for poverty reduction. “Cambodia could perfectly enjoy a higher growth (8-9 percent per annum, with 5-6 percent in agriculture) and reach the MDG goals in term of poverty reduction in the next ten years, if critical reforms (land, civil services and judicial system) for improving competitiveness of the Cambodian economy could be accelerated,” said Sok Hach, Director of Economic Institute of Cambodia.

According to Douglas Gardner, UN Resident Coordinator, the priority in future donor assistance to Cambodia should center on real investments for the benefit of the poor. “While Cambodia still needs technical assistance in specific areas for capacity development, aid cooperation needs to focus on concrete results so that the largely rural poor can benefit from this new phase of Cambodia’s progress”, he said.

Despite Cambodia’s past decade of progress – with poverty rate having fallen by around one percentage point each year for the last decade – the report warns that poverty remains widespread and multidimensional, with a third of the population still living below the poverty line and one in five living below the food poverty line.

The poor face a number of interlocking and mutually reinforcing problems, including lack of secure land tenure, remoteness from markets and services, lack of productive assets, low levels of education, and vulnerability to illnesses which impose high medical costs that can push families below the poverty line.

According to Tim Conway, Poverty Specialist at the World Bank: “As Cambodia enters its second post-conflict decade, we can expect diminishing returns on the ‘peace dividend’ and the initial liberalization reforms which spurred earlier poverty reduction. The challenges Cambodia now faces call for new, more complex and equally fundamental institutional and policy changes, if it is to achieve the goal of halving poverty by 2015.”

These challenges include:

• Maintaining a high rate of economic growth and increasing the share of this growth that goes to poor households by removing the constraints that currently hold back the productivity and profitability of smallholder agriculture, while simultaneously investing in sound economic governance, physical infrastructure and skills in order to sustain and diversify job and opportunity-creating growth in the industrial and service sectors. The report urges that Cambodia, which has very low agricultural productivity compared to other countries in the region, do more to develop a more rural, more pro-poor engine of growth.
  • Expanding investments in health and education, focusing on consolidating the gains made in increasing primary enrolment, while addressing the bottleneck in upper primary schooling and improving the quality of teaching; universal adult literacy programs to improve the skills and productivity of the current economically active generation; improving the quality and reducing the cost of public health services; and developing multi-sectoral programs to tackle persistent public health problems such as severe malnutrition and maternal mortality, as well as acting early to promote behavior change to deal with emerging health problems such as smoking.
  • More effective partnerships for poverty reduction. Improving the effectiveness of aid in reducing poverty requires progress on the three fronts of ownership, alignment, and harmonization The Government-owned NSDP should serve as the framework for donors to align their support towards government priorities; donors should increasingly harmonize their own work practices to reduce the transaction costs faced by Government; and stronger partnerships between Government, donors and civil society should provide the basis for monitoring and evaluating progress in the implementation and outcomes of the NSDP.

  Claire Moran, DFID Cambodia Country Manager saw the conference as an important first step in inclusive policy dialogue. “Today’s Conference was the first time that major policy makers, members of the development community, and civil society were able to come together to discuss, in-depth, the challenges of reducing poverty in Cambodia to the benefit of not only today’s but future generations. Lessons learned from the Cambodian experience will be a critical input into next month’s International Conference on Promoting Growth and Ending Poverty in Asia, which will discuss the changing face of development in Asia over the next decade, and aim to reach agreement on how Asian countries, together with development agencies and the international community, can work together to meet the remaining Millennium Development Goals.”

  (Source: The World Bank Newsletter, Volume 4, Number 3, March 2006)

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