By Nathan Rupp, MPP, Staff Writer, Brief Policy Perspectives
Recent data show an increasingly regionalized variation in development funding goals. Nations are taking different approaches to how they allocate funds to developing nations. The trends in funding method and sector differences highlight the geographic split in funding by Western and Asian sources. The two geographic areas show preference for funding social services or infrastructure. Cambodia is a country where this bifurcation is evident. The Southeast Asian country’s current government was formed in the early 1990’s after a genocide decimated its population. The new government has been governed as a democracy. Presently, 30-40% of the nation’s budget is funded through foreign assistance. They also have one of the world’s largest non-governmental organizations (NGO) and international non-governmental organizations (INGO) networks.
Until July 2016, Cambodia was classified as a “low income” nation, when it was reclassified as a “middle-low” nation. This status will affect the future of foreign aid the country receives. It will no longer be considered a high priority of the funding lists, however, the county is still heavily dependent of external funds to continue to delivering public services. This raises the question of what the future of aid in Cambodia will look like.
Bilateral aid is assistance given by a government directly to another government or to a local NGO. The Royal Government of Cambodia has been receiving bilateral aid since the 1993 election. The official disbursement of aid in 2015 was USD $817,565,751 and thus far is planned in 2016 to be USD $1,039,480,292. Multilateral aid consists of funds that are directed between more than one party before it reaches the intended recipient. For example, when a donor country allocates aid to an intermediate organization such as the World Bank and the United Nations, these institutions in turn disburse the funds to recipient countries or, as is common with this method, oversee a project using the money to do so (This is often referred to as ‘technical assistance’). Roughly 50% of the international aid coming to Cambodia is multilateral. Multilateral funding can be directed in two ways: directly to the recipient country or to an NGO, which will compete for the funding through a grant process. For example, in 2015 $286,650,639 was given as international development assistance in a multilateral form with $13,664,649.92 given to NGOs working in Cambodia.The final method is directly funding NGOs and INGOs.
When we look at these funding streams we see a few patterns:
First, foreign direct aid comes in a globally bifurcated manner – between the east and west. The largest contributors of bilateral aid to Cambodia in 2016 have been Japan, China, the Republic of Korea, the United States of America, and Australia (in that order). However, upon closer investigation, the data show that each county does not fund various sectors equally. East Asian countries, while a small percentage of the total donors, provide the majority, approximately 90%, of the direct aid. This funding comes with no reform or regulation stipulations attached. These funds are often allocated for physical infrastructure projects, or technical assistance.
Second, Western donors are far more likely to fund social service sector projects pertaining to governance, voting, women’s rights, and other services, while Eastern donors far more likely to forgo these sectors in favor of infrastructure and economic capacity building. One reason for this is the growth of ASEAN. As the region solidifies a united identity, each nation has agreed to support each other. This, coupled with the Royal Government’s “South-South” policy, has created a more cohesive bloc. A clear example beyond simply funding streams is NGO and INGO engagement with different population bases. China, a massive investor (US$4.92 billion from 2011 to 2015) funds zero NGO’s in any sector. In contrast, Switzerland provided little direct foreign aid, but has NGO presence in social sectors. This type of aid goes to organizations with a presence around the country that often do grassroots work, is often doing social reform outside the purview of the host government. In our case of Cambodia, new laws have been set in place to curb such foreign intervention.
Beyond this total amount the network below analyses so the sector differences weighting for amount of projects funded in each sector. When you look at the network of funders you see the aforementioned bifurcation.
For nations like Cambodia, foreign aid is an integral part of its existence. That being said, their relationship with donors has been changing. ASEAN attempts to push a development agenda that primarily focuses on infrastructure only, allowing Cambodia to continue what many have seen as human rights issues. Western donors propagate the idea of a market citizen as a way to better the lives of the Khmer. This distinction forces us to ask the question, ‘why are we funding?’ Is the purpose to impose Euro-American social ethic on a nation? Is it to better the lives of the different peoples of the planet? Is it to provide a nation with the tools to become economically self-sufficient? Or perhaps a mix of all the above? Should more financially sound nations fund nations that are less so even at all? Cambodia has a unique relationship to the world of aid, that being said, many countries face their own issues when it comes to how and from whom they accept money from. It seems from preliminary research, that this bifurcation in funding sources holds true outside of Cambodia as well.