The Introduction chapter to this report notes that aid effectiveness 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. With this in mind, the 2008 Aid Effectiveness Report brings together evidence from a broad range of national sources to review progress in implementing the commitments to improved partnership arrangements. These commitments, which have been institutionalised in the 2006 Cambodia Declaration on Aid Effectiveness, have been formally articulated as a set of priority activities in the Harmonisation, Alignment and Results (H-A-R) Action Plan.
The 2008 Aid Effectiveness Report also draws on global analysis that informed the recent mid-point reflection on the Paris Declaration on Aid Effectiveness that took place at the High-Level Forum in Accra in September 2008 and makes particular reference to the Accra Agenda for Action. The evidence, of both a qualitative and quantitative nature, is then used to support a number of policy recommendations for discussion at the Second Cambodia Development Cooperation Forum (CDCF) that will take place in December 2008. These recommendations are based on five main messages that derive from the analysis contained in this Report:
These messages result in a number of recommendations for Government and development partners, both individually and jointly. They relate chiefly to the need to identify a narrower and more realisable set of priorities from within the existing H-A-R Action Plan framework, to more effectively integrate and link our aid effectiveness efforts with central and sector reform processes, and to develop our competencies to engage in a partnership-based approach to development cooperation. The Report's final recommendation is that Government and development partners initiate a process of reflection and review so that priority actions, grounded in the reality of each sector, Ministry and partner, can be identified, implemented and jointly monitored through the establishment of a Joint Monitoring Indicator:
Taking note of: a) the Rectangular Strategy (Phase II); b) the NSDP MTR; c) the H-A-R Action Plan and the Cambodia Declaration on Enhanced Aid Effectiveness; d) the Evaluation of Aid Effectiveness (self-assessments and Independent Review); e) the recommendations made in the 2008 Aid Effectiveness Report; f) the dialogue at CDCF; and g) the Accra Agenda for Action, the Royal Government and its development partners agree to:
CRDB/CDC, as the national aid coordination focal point, will facilitate this process in collaboration with the Partnership and Harmonisation TWG. The agreed actions will be presented at a meeting of the GDCC and shall then be incorporated retrospectively into the 2009-2010 JMI matrix as a mutual commitment to the implementation of the H-A-R Action Plan and commitments made in the Cambodia Declaration on Enhanced Aid Effectiveness.
A number of activities that are central to the effort to promote and accelerate aid effectiveness objectives were implemented in the period since the first CDCF meeting in June 2007. Chief amongst them was the second round survey of Paris Declaration monitoring. The survey process demonstrated significantly enhanced Government and development partner capacity to collate and analyse information on aid delivery, primarily through the Cambodia ODA Database. The results suggested that significant progress had been made in making aid delivery more predictable and in recording support in national systems to support the planning and budgeting process. More limited progress was recorded in using a wider range of national systems, in moving towards programme-based support, and establishing plan-budget linkages with results-based monitoring systems. The survey emphasised the need for increased effort and accelerated progress.
Additional analytical work included a reflection on the use of technical cooperation, a sub-regional perspective on mutual accountability and an Evaluation of Aid Effectiveness. All of these studies emphasised the need to establish partnerships that are based on mutual understanding and a common agenda for action if the impact of development cooperation is to be maximised. Associated training initiatives, including in aid effectiveness techniques for Government and in national institutional arrangements for development partners, attempted to contribute to the development of capacity, stronger ownership and more effective partnership dynamics.
Overall aid delivery continued to increase with disbursements of USD 790 million reported in the Cambodia ODA Database by development partners and NGOs in 2007. This represented an 11% increase on the USD 713 million recorded in 2006, and a further increase in 2008 appears likely (a projected figure of USD 888 million has been provided by development partners), although the depreciation of the US Dollar against most other currencies in 2007 and 2008 accounts for part of this increase. As support from a broader range of development partners becomes available, e.g. from Kuwait, Qatar, China and from the rising number of global funds and vertical financing instruments, there will be an opportunity to bolster financing of priority objectives but these will also bring associated challenges as the imperative for enhanced coordination grows.
Source: Cambodia ODA Database, October 2008
An assessment of aid alignment shows that external support was equivalent to 95% of revised NSDP financing requirements in 2007. The sectors receiving most support were Health and HIV/AIDS (a combined amount in excess of USD 150 million), education (USD 88 million), and rural development and agriculture (a total of USD 114 million to these two sectors in total). Combined governance support was USD 110 million, almost half of which was for decentralisation and deconcentration reform. Overall the analysis indicates that most external support is relatively well aligned with the NSDP at an aggregate level, although continued reallocation towards agriculture and rural development, which the 2008 estimated figures indicate is already happening, will ensure that priorities in the Rectangular Strategy Phase II can be adequately supported. As sector strategies are developed and increasingly linked to budgets and operational plans, enhanced mechanisms for ensuring alignment within broad sector categories will be developed.
While aggregate aid delivery is in line with national development priorities the modalities by which external support is provided remains more challenging. Increased loan financing, a reversal in recent trends, will require that debt sustainability be monitored while the number of small projects continues to impose a large transaction cost on Government. Technical cooperation comprised just over 30% of total support and associated analytical work resulted in the drafting of a Guideline that, when linked to the national capacity development policy, will ensure effective use of these resources. 2007 also witnessed the beginning of budget support, disbursing USD 35 million, which represents promising progress in strengthening the development partnership.
Investment project assistance comprised the largest share of development assistance in 2007, approximately 45% of the total, but the large number of active projects (759 in total) disbursing relatively small sums (622 disbursed less than USD 1 million each) suggests that the management burden on national counterparts is significant (the increase in project management units recorded during the Paris Declaration survey may be linked to this observation). The Report therefore examines progress in establishing delegated cooperation arrangements; there were 41 reported instances of partners delegating funds to others in 2007. Acknowledging the need for increased efficiency, more use of programme-based approach practices are also endorsed and a criteria for a 'division of labour' is identified. Notwithstanding the sensitivities involved in these complementarity initiatives, Government indicates its readiness to facilitate this process should development partners communicate their willingness to engage in such an exercise.
There was also progress in advancing mutual accountability arrangements during 2007 and 2008. Efforts to bolster Technical Working Groups and to improve the dialogue at the Government Development Partner Coordination Committee were implemented and are expected to make a positive contribution to improved development partnerships in the relatively short-term. The Joint Monitoring Indicators showed that progress had been made on all fronts but, although most targets were met, there are still a number of JMIs that require further attention. The Evaluation of Aid Effectiveness, which included an independent assessment of progress, also represented an important step in establishing improved mutual accountability arrangements and its findings are reflected strongly in the analysis presented in the Report.
A reflection on overall H-A-R Action Plan implementation reveals significant progress in establishing the institutional framework for effective aid management. The challenge ahead concerns the need to link these processes – chiefly the NSDP, the Public Investment Programme, the budget/MTEF, aid management and related sector processes – and then establish a robust national system for monitoring the developmental impact of all resource use.
The Report's conclusion notes that the challenge in linking aid effectiveness to development results concerns the need to build and sustain a consensus on the nature of this link. This is then made operationally useful by identifying policy-relevant actions that can deliver results. Much of the analysis in Cambodia suggests that the environment is well suited to a more comprehensive and accelerated implementation of improved aid management practices. While recognising limitations of the local context, "we need to go faster" adequately summarises the policy recommendations made in this Report.