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The AFD operates in Cambodia since 1993.

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In Cambodia, the main target sectors for AFD intervention are agriculture, infrastructures, the productive sector and vocational training.

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The projects

News

04/07/2013


“Cambodia will only become an emerging country if it implements a policy of widely shared growth”

11/06/2013

Twenty years. For twenty years now, AFD has been helping Cambodia to get out of poverty and face the challenges of dynamic but unequal growth. André Pouillès-Duplaix, Director of AFD’s Phnom Penh agency, tells us about the country’s challenges and opportunities and the role that France and AFD can play in supporting it.

How would you describe the period that Cambodia is experiencing?
Cambodia has been experiencing a succession of critical periods for forty years now: the Lon Nol coup, the horrors perpetrated by the Khmer Rouge, the subsequent Vietnamese occupation, and then the peace agreements (Paris Agreements) and the 1993 elections, which allowed Cambodians to embark on the reconstruction of the country and to restart its economy.
The country has made extraordinary progress since then: today, the administration works, the banking system is structured and a civil society is emerging.
From an economic perspective, there have been ten years of sustained growth, with an average of 5.5% and peaks at 7.5% (apart from 2009, a year of global crisis). However, while there has been an improvement in the standard of living, inequalities have also increased.
Until not long ago, Cambodia was a least developed country (LDC). And today, we are beginning to speak about it as a future emerging country. However, for the development of this country to be sustainable, it is necessary to ensure that it benefits all and reduces social inequalities, which are currently very marked.
At the end of 2015, all the member countries of ASEAN – which it is part of – are going to lift customs barriers on the four types of wealth: persons, capital, goods and services. This means that the country must be all the more prepared and stronger.

Does France play a specific role in the assistance given to Cambodia?
France has certainly been very active in helping the country to overcome the impasse and in supporting its reconstruction: it was in Paris that the peace agreements were signed in 1991. Our first operation in the Southeast Asia region was in Cambodia, with a ten million franc emergency program. For example, it supported the Angkor candidature for the status of UNESCO World Heritage Site.
Cambodia is undoubtedly the most French-oriented of the three countries on the Indochinese Peninsula. It has the closest ties with France, particularly as a result of the special relationship fostered by the late King Sihanouk.
It is also practically the only country where AFD uses all its financing tools to contribute to the country’s development: grants, loans (to the Government and other stakeholders), guarantees, training, studies, trade capacity building program…

In your opinion, what has been AFD’s biggest success in Cambodia?
Microfinance. I could have said “drinking water in Phnom Penh”, but for this project, AFD has simply financed a Cambodian “success story”. The Phnom Penh Authority has been and is exemplary and it is quite easy to support it.
In terms of microfinance, we have done a lot more: we have helped the authorities to create and stabilize this sector, which is vital to the country. We have helped the central bank to legislate and establish the essential legal obligations (statutes, prudential ratios, mandatory audits, accounts, etc.).
At the same time, we have supported the eight microfinance institutions (MFIs) that seemed the most relevant to us. We have helped them to expand and acquire capital so that they can allocate more loans. We have also supported them in terms of methodology and strengthening skills (through training).
When we arrived, there was a whole host of stakeholders working in a completely disorganized way, sometimes even in competition with each other. The sector is now so dynamic that there is a risk of “overbanking”, or even overindebtedness for certain categories of borrower… Hence the reason for a new AFD operation, the Smart Campaign, whereby MFIs are backed by the Central Risk Division, which aims to enforce the seven client protection principles.

The Prey Nup polders to protect paddy fields “against the Pacific”
AFD’s second flagship project in Cambodia is, of course, the Prey Nup polders in the south of the country and farmers’ collective management of the system of locks that protects the paddy fields against the invasion of the rising tide. The responsibility has been shared between user groups and the Government in order to ensure that it is sustainable.
This pilot project has worked so well that it has been held up as a model for national legislation!          I think that our agronomists – who are sometimes anti-authority and rebellious – had in mind the idea that to ensure good governance, it was necessary to promote or establish a countervailing power (via producers’ organizations). And through this type of project, they thought it was possible to gradually instill a democratization process without saying it openly.

Finally, I would mention the health microinsurance project, which finances healthcare provision via the establishment of “social security”. It was created by the French NGO, GRET, when it saw that Cambodians were taking out loans (from microfinance institutions, but not always, sometimes from loan sharks), not to invest, but to get treatment. Health microfinance was therefore an essential tool to ensure that the poorest communities are not driven back into “poverty traps”.
The objective is to transfer know-how to the National Social Security Fund in order to set up a mandatory social security system. However, this objective has not been achieved yet, but we are working on it.

What new directions will AFD’s action be taking in the coming years?
We are going to scale up the focus on sustainable cities in order to build cities that benefit all their residents, where even the poorest can benefit from access to essential services: drinking water, sanitation, social housing, but also employment, public transport, etc.
In terms of employment and the economic integration of youth, we are going to continue to support vocational training initiatives.
Finally, AFD can lend directly to Cambodia thanks to its rating being raised by the International Monetary Fund (IMF). This makes it possible to finance infrastructure that is essential for the country’s development: water, energy, rural roads…
Cambodia has major assets. Admittedly, you can feel the bureaucratic burden, but there is a tremendous dynamism. Buildings are springing up everywhere. Cambodians are very enterprising. Nothing is impossible here.



 
   
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