Helping Cambodia Move Up

Khmer Times
Tin Sokhavuth

One of the improved irrigation canals that was financed by France’s development aid agency. Supplied

PHNOM PENH – The Agence Française de Développement (AFD) opened its office in the capital in September 1993. Today, the AFD provides direct funding in the field of agriculture and agro-industry, infrastructure development, manufacturing sector and vocational training. Since 1993, the AFD has given grants of more than €360 million ($400.5 million) to projects in Cambodia including a deposit guarantee scheme for commercial banks, support to NGOs and regional projects.

According to AFD, at present the most important economic pillars in Cambodia are agriculture, the garment industry, construction, and tourism. Despite remarkable economic development based on these three pillars, most Cambodian people still do not gain much benefit from this progress. One can still see the economic disparity between Phnom Penh and the countryside, just by travelling outside the capital.

As late as last year, the United Nations still considered Cambodia as a “least developed country” (LDC) with its gross national income (GNI) per capita close to $1,200. To graduate from the LDC list, a country’s threshold GNI per capita needs to be above $1,242.

In 2012, the total amount of money provided by the AFD to Cambodia reached €70 million ($77.9 million). This amount made the AFD one of the top donors in terms of bilateral aid to the Kingdom.

Around 80 percent of the Cambodian population live in rural areas. For this reason, agricultural development is one of the most relevant factors to raise the standard of living of the poor as well as the economic growth of the country. AFD considers agriculture as one of its top priorities for development aid to the Kingdom.

Philippe Steinmetz, Country Director for Cambodia and Laos of AFD, told Khmer Times via email that: “A historical area of investment of AFD’s projects in Cambodia is still in rural development with support given to the rehabilitation of irrigation schemes, water projects for farmers, support for commercial rice production, value chain development for rubber growers, support for the rehabilitation of rural roads and help with facilitating the Geographical Indication (GI) registration for Cambodian products like Kampot pepper and Kampong Speu palm sugar in the EU.”

By registering their products as GI products in the EU, Cambodian producers of Kampot pepper and Kampong Speu palm sugar will be able to combat counterfeits of their products.

Since the end of the 1990s, the AFD has supported the Kingdom in its efforts to rehabilitate and modernize its irrigation system destroyed by years of civil war and the B-52 US bombings of Cambodia during the 1970s Vietnam War.

From 1997 to 2008, it granted a total of €10.75 million ($11.9 million) for the rehabilitation of more than 10,000 hectares of flooded rice-growing areas in Sihanoukville’s Prey Nup district.

The AFD has also co-financed with the Asian Development Bank to increase irrigation schemes and support the improvement of law and regulations concerning the public management of water resources.

Between 2013 and 2017, the AFD loaned €20 million ($22.2 million) and gave out grants totaling €4 million ($4.4 million) in parallel with the ADB’s financing to different clients in the irrigation sector and to improve 11 canals and more than thirty creeks.

Furthermore, by providing another grant, the AFD is supporting Cambodia to realize its ambition to be one of the biggest rice exporters in the world by reaching its goal of one million tons of exported rice.

In the garment industry, the French development aid agency’s strong support stems from the fact that it is one of the most important sectors in the country’s economy. The garment industry generates more than 70 percent of export products and represents about 18 percent of the Cambodian GDP.

The AFD has been financing a pilot project called the Health Insurance Project (HIP) to create a system of voluntary health insurance for employees in the garment industry sector. According to the aid agency, around 6,500 workers benefit from this kind of health insurance. The HIP complements the government’s National Social Security Fund, for garment workers, which covers injuries by accidents in the workplace.

The AFD has been also helping employers in garment industry sector by providing grants to the Garment Manufacturers Association in Cambodia (GMAC) to create a vocational training center to train new workers, with the hope that these workers will later become trainers themselves for the center.

This training center could help Cambodian workers assume supervisory and management positions and obviate the need for foreign skilled staff, due the current lack of a qualified workforce.