This Aid Effectiveness Report reflects on achievements recorded and challenges encountered during the implementation of the Royal Government's Harmonisation, Alignment & Results Action Plan 2006-2010. The objectives of the Report are therefore to: (i) review lessons of implementation, principally for 2009-2010; and (ii) to chart the future direction of aid management policy. Evidence used in this Report draws on a range of national and global sources, including from the Cambodia ODA Database, reports provided by the Technical Working Groups and the Evaluation of the Paris Declaration (country case study). 

The Paris Declaration identified eleven 'problems' with current aid arrangements, including the need to strengthen national development strategies and budgets, improve alignment with national priorities and systems, enhance accountability for performance, reform and simplify donor procedures, and to strengthen institutional capacities. Promoting aid effectiveness to achieve development results requires that each of these challenges be addressed. In turn, the link between aid effectiveness and development results is seen to depend on ownership and leadership, provision of an appropriate incentive structure for Government and development partners, a focus on capacity development and service delivery, and the creation of systems that support improved monitoring and accountability. 

The development partnership in 2009/10

Evolution in the implementation of the aid effectiveness agenda has led to a focus on identifying fewer, more relevant actions. A priority has been to engage with leadership to build consensus and integrate aid effectiveness work into sector programmes and reforms. Based on a decision to identify and agree a set of aid effectiveness activities linked to the Joint Monitoring Indicators, TWGs identified actions that can be categorised into three broad areas: (i) strengthening programme-based approaches and sector strategies; (ii) capacity development and use of national systems; and (iii) promoting sound partnership practices. 

Recognising the complexity of multi-stakeholder partnerships, CRDB/CDC established the 'Making Partnerships Effective in Cambodia' initiative to facilitate partnership-building. A Strategic Meeting was held in September 2009, providing participants with a useful opportunity to establish an understanding of how partnerships can manage diversity and create value. The TWG Network has also continued to meet, recognising and promoting the value of peer-to-peer communication that complements formal structures. Activity also took account of the commitments included in the Accra Agenda for Action, focusing in particular on strengthening links with civil society. Additional initiatives include on-going work to promote the use of country systems, and a March 2010 study by the Inter-Parliamentary Union on establishing capacity in the National Assembly to engage in national economic management issues. 

All of these activities informed the Paris Declaration Evaluation country study on Cambodia, which assesses behaviour change and impact on development results. Its preliminary findings indicate that efforts that pre-date the Paris Declaration in Cambodia continue to inform the level of commitment demonstrated by Government, while development partner behaviour is often determined by their own procedures and internal requirements. It confirms the link between capacity and leadership, also observing issues of power that characterise the aid relationship. There have been positive synergies with the core reforms, but more work is required to strengthen national systems, especially in budgeting and M&E, if the link between aid inputs and results is to be made more robust. Aid effectiveness can be seen to have entered the language, if not yet fully the practice, of Government and its development partners. 

Trends in Development Cooperation

Total disbursements in 2009 were USD 989.5 million, an annual increase of 3.5% and equivalent to 9% of GDP. Grant support accounted for approximately two-thirds of total disbursements. Japan remains the largest single source of development assistance, disbursing USD 148.4 million in 2009, an 18% increase from the previous year, while China provided support of USD 114.7 million to the infrastructure sectors, representing 13% of total aid and an annual increase of 20%. Aggregate predictability remains at a commendably high level; 93% of resources indicated as available for 2009 at the December 2008 CDCF meeting were disbursed but there is considerable diversity in individual development partner delivery rates. The Royal Government acknowledges the efforts most development partners have made to provide information and to deliver their programmes in a timely manner. 

Significant funds continue to be allocated to the social sectors, with the combined share of health, HIV/AIDS and education support representing more than 30% of all assistance in 2009. The transportation sector recorded a significant increase, with support rising by 20% in 2009 to become the largest aid-supported sector. The agriculture sector also received an annual increase of nearly 60%, rising to USD 91.2 million. 

The establishment of an on-line NGO Database in 2009 has permitted improved data gathering and validation of NGO activities. Data on NGOs shows that their disbursement of core funds amounted to USD 103 million in 2009, representing 10% of total aid. By far the greater share of NGO support is provided at provincial level, resulting in NGOs accounting for almost 20% of aid disbursements at sub-national level in 2009. Their efforts continue to be focused primarily on the social sectors with health accounting for more than 30% of core support. In their implementing partner role, NGOs managed an additional USD 100 million of development partner funds in 2009, also directed largely to supporting health services but providing the greater share of NGO-delivered funds to governance, trade, agriculture and rural development. 

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