UN Economist: Cambodia Needs More Aid

Jeffrey Sachs, celebrity economist, special adviser to UN Secre­tary-General Kofi Annan, and head of the UN Millennium Project, said Monday that Cambodia is badly off track to meet its Millennium De­vel­­opment Goals and estimated that in­ternational aid to the country needs to be doubled to about $1 bil­lion a year.

The special adviser also stated that he will personally review Cam­bodia’s estimated $2 billion in international debts to see to what extent Cambodia’s obligations need to be canceled, and that he hopes to start Millennium Village projects, where the goals are all met on a microcosmic level.

Sachs sat down with Prime Min­i­ster Hun Sen, senior government officials and donors over the past several days to discuss the millennium goals, which include halving poverty, reducing child mortality by two-thirds and reversing the spread of AIDS and malaria—all by 2015.

On Monday morning he ad­dressed students at the Royal Uni­versity of Phnom Penh, calling on them in inspiring tones to be the generation that ends extreme poverty in Cambodia.

“Cambodia should be getting help, even more help, from the in­ter­national community to achieve these goals,” he said. “I believe that ex­treme poverty can be ended en­tirely on the planet by the year 2025…. Unfortunately the older generations didn’t do enough… you are going to be the ones to end ex­treme poverty in the coming years.”

In his speech, Sachs described the severity of life in a drought­strick­en Battambang village he had visited on Sunday; the utter lack of transport, clean water, clinics and irrigation.

Nonetheless he said that, compared to other countries he has visited, Cambodia has greater potential for escaping the poverty trap.

“There are big advantages in Cambodia compared to other poor counties,” he said. “You are a coastal economy, you have a deep water port…you have nice wonderful plains to grow a lot of food in this country and to have good transport…. I was in a lot of countries that are mountainous and that have very difficult conditions for growing food.”

Sachs also said that proximity to the powerful South and East Asian economies also offers Cambodia significant advantages.

“They provide markets for you, investment, technology, and some good lessons for development as well,” he said, noting that China and India should be developed as markets for Cambodian food produce.

The development plan for Cam­bodia needs to be both rural and urban in its scope, he said. Rural areas need massive investment in agricultural productivity. In the cities, industries other than the garment industry need to be fostered.

Sachs cited information out-sourcing and food processing as potential sectors. And, the two-fold development needs more aid from abroad, he said.

“We want to see a scaling up, an acceleration of the investments,” he said, explaining that in countries like Cambodia, his studies have shown that halving poverty requires investment of $70 to $100 per person, or a total of about $1 billion for Cambodia’s population.

Over the last decade, Cambodia has received between $500 million and $600 million in official aid each year.

“Cambodia is a very poor country. The help that it gets should come in the form of grants rather that loans,” he said.

“Recently the creditor nations pledged 100-percent cancellation of debt to 18 countries,” he said. “I will look vis-a-vis Cambodia about whether Cambodia should be a case like that.”

In response to questions from the audience about past aid that has disappeared due to corruption or overpaid consultants, Sachs said that new aid needs to go to direct physical infrastructure and that projects need to be carefully audited.

In an interview after his presentation, Sachs was asked if big increases in aid are likely. He said that a real needs assessment, in coordination with the government, must to be done first, but more aid is likely needed.

But donors are cautious, he said.

“The donors are saying we give a lot of aid but the results are mixed and I believe that when you hear those points of view you have to figure out what is going on… More aid could be more effectively utilized for example,” he said.

Cambodia’s big five development priorities, he said, are in­creasing rural productivity, in­creasing access to clinics, building schools, fostering new exports and improving transportation for those exports.

Asked if in Cambodia, where by some estimates 25 percent of aid is siphoned off, it makes sense to tackle corruption before increasing aid, Sachs said aid increase must not wait.

“In my view it makes sense to address implementation issues in the context of actual aid projects. Having workshops against corruption for three years before you start a health scale-up wouldn’t make sense,” he said. “I think the idea of the effective use of aid is to say that donors give incremental X million dollars and that is to purchase incremental results.”

Asked if donors should reduce aid money when corruption is found, as the World Bank did this year, Sachs said corruption is best combated by designing programs correctly and by specifying concrete results.

“I often find that the aid projects are very poorly structured,” he said.

He ended the interview by calling on rich nations to fulfill their commitments to pledge 0.7 percent of their wealth to the millennium goals.

“With regard to hunger, with regard to child mortality, with regard to maternal mortality, with regard to environmental sustainability, my impression both from what I saw first hand in the country and what I can read from the data is that they’re not on track right now,” he said.

“I believe this is because neither side of the bargain has done their part…the results are plain to see: Lots of suffering, the deaths of children and their mothers and so on.”



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