Regions and Countries

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p. 7 of 8 BACK | NEXT Executive Summary I. Current Development Trends and Issues II. The Government's Development Strategy III. ADB's Development Experience IV. ADB's Strategy V. ADB's Assistance Program VI. Risks and Performance Monitoring and Evaluation Appendixes

Country Strategy and Program 2005-2009: Cambodia

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VI. Risks and Performance Monitoring and Evaluation

A. Risks

92. The Government’s Rectangular Strategy and CSP face a number of risks. Cambodia is at a critical juncture as it moves away from a postconflict situation towards a more normal development paradigm. The full engagement of Cambodia in regional and world relations has reduced political uncertainty and contributed to improved policy predictability, but is also forcing it to abide by new pressures. The joint strategies of ADB, DFID, and World Bank have been designed to mitigate or manage these risks.

93. Weak capacity in public financial management and inadequate incentives for the civil service breed corruption, constrain delivery of key public services, and retard implementation of key reforms. Inadequate capacity to raise and manage public finances is a key constraint on the Government’s ability to achieve its development objectives. This difficulty is worsened by low public sector salaries, which force public servants to depend on unofficial charges or other income-earning opportunities to secure a living wage. These factors have constrained the delivery of public services, and made corruption a major problem. By working together with its development partners on a comprehensive PFM reform program that incorporates systematic approaches to corruption prevention and action on civil service incentives, ADB, DFID, and the World Bank will aim to mitigate and manage this risk. Support for local governance is designed to strengthen the local voice in government, improve public service delivery, and reduce opportunities for corruption.

94. Cambodia's global competitiveness is fragile. Cambodia's economy is small and vulnerable to shocks. Recent growth has been heavily dependent on a few sectors such as garments and tourism, which are vulnerable to adverse changes in the global market and political conditions. If Cambodia is unable to diversify and broaden its economy, prospects for growth and poverty reduction could be seriously undermined. The joint strategies are designed to mitigate this risk collectively by focusing assistance on the productivity and market orientation of the agriculture sector, infrastructure service provision, financial sector development, and an enabling environment for private sector growth in general, and SMEs in particular.

95. Donor coordination does not improve and transaction costs for the Government increases. Better donor coordination must move beyond discussions to enhanced impact on the ground. There is also a risk that ADB, DFID, and the World Bank may work well together but not with other donors. To mitigate this, the three agencies have committed themselves to an inclusive approach. Recent initiatives to restructure the TWGs and harmonize donor procedures are also meant to minimize these risks and improve the effectiveness of aid delivery.

96. The various governance initiatives fall short of expectations. There is clear recognition among the Government and development partners that improving governance is essential for improved development effectiveness. Most development partners have increased their focus on governance and have launched projects and programs to help build Government capacity, as well as mechanisms to boost public accountability. However, this will be a long and complex process, requiring deep and meaningful reforms in institutions, consensus, strong internal conviction, and ownership. This will not be easy and there may be a temptation to substitute process for genuine reforms, if the commitment to reforms is weak. To minimize this risk, the volume of assistance from the three institutions will be clearly linked to progress on reforms.

97. Increased complexity of projects causes deterioration in quality. The quality of the portfolio of the three development institutions may deteriorate as they become more complex. The joint strategies will help mitigate this risk by continuing to provide adequate TA to support project preparation, and human resource and institutional capacity building. There will also be a greater emphasis on involving concerned stakeholders in the design, implementation, and monitoring of projects.

B. Monitoring Process and Plan

98. The Government recognizes the need to build its institutional capacity in development management, monitoring, and evaluation. Towards this end, the restructured Government–donor TWGs will support implementation of the Rectangular Strategy through action plans and indicators at the sector and thematic levels, which will be jointly monitored.

99. ADB will actively support the TWGs in which it participates. ADB, DFID and the World Bank will jointly monitor and evaluate the sectors in which they are involved in a major and supportive role. Twice a year, ADB, DFID, and the World Bank will meet to discuss progress in implementing their strategies, including progress against outcomes and progress in working with other development partners. Once a year, the three agencies will solicit the views of the Government and other stakeholders on the performance of the three agencies. ADB will also continue to assist the strengthening of policy analysis and development management within Government, building on its ongoing work in reforming PFM. It will help to build capacity in economic policy and strategy analysis at the Supreme National Economic Council. Future support to the National Institute of Statistics of the Ministry of Planning will be reexamined on the basis of need and other donor involvement.

100. ADB is currently piloting results-based CSPs in a small number of its developing member countries. Such CSP’s include a results framework, which is a planning and management tool that defines the links between strategic development goals, outcomes, indicators and interventions. Even though the Cambodia CSP is not among the pilot resultsbased CSPs, it includes a modified version of a results framework to help answer the following questions.

1. What are the MDGs and national goals that ADB assistance will contribute to?
2. What are the key outcomes that are expected to result from ADB’s assistance, combined with the efforts of other development stakeholders?
3. What indicators will be used to assess intermediate progress towards these outcomes?
4. What development interventions will ADB support to contribute to the achievement of targeted results?

101. This results framework has not benefited from the process a fully results-based CSP needs to go through. The main purpose at this stage is to point out the direction of ongoing efforts and present an indicative list of key outcomes and indicators in order to assess and make adjustments to ADB’s ongoing program. As the intention is for these outcomes and indicators to be at the core of a regular reporting of progress of implementation, they need to be refined and specified as the program evolves (see Table A1.12). The annual CSP update exercise will evaluate

1. progress made in the delivery of key results
2. the further refinement of intermediate indicators, based on project and TA performance and revisions to the road maps
3. sector portfolio performance
4. relevance of the lending and non-lending pipeline
5. performance-based allocation of ADF resources

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