Cambodia - Northeast Village Development Project

Report No. PID6945 Project Name Cambodia-Northeast Village (+) Development Borrower Kingdom of Cambodia Project ID KHPA45621 Implementing Agency Ministry of Rural Development Date PID Prepared September 30, 1998 Appraisal Date November 10, 1998 Board Date January 21, 1999 Country Background 1. With an estimated 1997 population of 10.6 million and average GNP of $260, Cambodia is one of the 20 poorest nations in the world. In contrast to some of its neighbors in the region which have already enjoyed rapid growth for some time, Cambodia is a post-conflict country, still recovering from over 25 years of civil war and isolation, during which much of its human, social and economic capital was damaged or destroyed. Following a period of almost exclusive assistance from the former Communist Bloc, the Peace Accords of October 1991 opened the way for assistance by the wider international community. Considerable progress has been made since 1993 in stabilizing and rehabilitating the economy, though the legacy of the past conflict has continued to exert a constraint on the rebuilding of social and economic capital. So far, the main effects of the economy's resurgence have been seen in the capital city of Phnom Penh and a few secondary centers, with limited benefit for most of the rural population. Sector Background 2. Most Cambodian households -- over 80 percent -- live in rural areas and depend primarily on agriculture, including livestock, forestry and fisheries, for their living. There are about 1.3 million smallholder farming households, of which many are headed by widowed or single women, with an average household size of 6 persons, cultivating an average of 2 hectares of land per household. 3. Agriculture constitutes almost half Cambodia's GDP and over 75% of its domestic exports, mainly timber and rubber. The development of agriculture and a more diversified rural economy is crucial in helping Cambodia to meet the numerous challenges that it faces. Amongst these are the need to feed a population that, at its present growth rate of 2.8% p.a., will double in 25 years, and to contain insupportable rates of migration into the towns by creating employment in the rural economy. A critical challenge is to build the Government's capacity to organize agriculture and rural development programs, with full participation of local communities and the private sector in their implementation. Institution building to permit a more decentralized approach to rural development is a key element of the country's rural development strategy. 4. Reflecting the country's continuing challenges of recovery from more than two decades of civil war and social turmoil, two of the main concerns in development of the rural economy are:  (a) poverty reduction - the Government has not yet found the means to achieve a significant and broad based restoration of economic and social well-being for poorest members of the rural population, which suffered great deprivation and social trauma from years of conflict and is now largely impoverished; and (b) natural resource management - the country's natural resource base, on which the prospects for sustained economic development largely depend, is being eroded as a result of financial pressures and the public sector governance issues. Government's Rural Development Strategy 5. The Government's strategy for addressing these two main issues is clearly formulated but suffers from unusually difficult implementation constraints and human resource limitations. Despite recent initiatives, approaches to rural development are still too centralized and "top-down", partly reflecting a persistence of thinking and practice from earlier periods. The Government realizes that top priority must be given to spreading development more widely through the economy, and to do so successfully, planning and implementation of rural development strategies has to be brought much closer to intended beneficiaries in the villages, whose commitment and participation must also be secured if development is to be equitable and sustainable. At the same time, serious efforts are underway (also with Bank support) for strengthening capacities to implement policies for more sustainable management of the country's natural resources, especially forestry. CAS Objectives 6. The Bank's Country Assistance Strategy (CAS) gives high priority to support for accelerating the pace of rural development and reducing poverty, 80t of which is found amongst the rural population. As noted in the CAS, "fostering broad-based economic growth will constitute the primary thrust of IDA's poverty reduction efforts". The project would make a substantial contribution to achieving this objective at area and at national levels. Poverty reduction, and giving greater priority to rural areas in the allocation of public investment funds, are the two overarching objectives of the Government's Social and Economic Development Plan (SEDP) for 1996-2000. Rationale for Bank Involvement 7. Besides its impact on reducing poverty and promoting development of the rural economy, successful implementation will demonstrate the effectiveness of a simple, participatory rural development approach, capable of being replicated in other parts of Cambodia. The Government looks to the Bank for technical support in designing rural development projects appropriate for its unusually difficult situation, and strategic support for planning long-term economic and institutional strategies for rural development. 8. Because of Cambodia's critical institutional weaknesses and human resource constraints, the proposed Northeast Village Development Project, to be financed by IDA as a 'Learning and Innovation Loan' (LIL), will be mainly devoted to knowledge acquisition, piloting of different types of investment subproject, systems development and testing, personnel training and planning for a possible larger rural development program after about three years. Project Objectives 9. The overall goal of the project is to develop a replicable model and necessary implementing capacities for improving rural livelihoods by testing simple, participatory, poverty-oriented approaches to rural development. 10. To achieve this goal, the project aims to substantially improve the rural economy in some of the poorer parts of the northeastern and central regions, - 2 -  in the provinces of Kompong Cham, Kompong Thom, Kratie and Stung Treng. These include some of the poorest areas of Cambodia, mainly because of their inaccessibility and absence of development initiatives. Project Area 11. The project area comprises 12 Districts in four central and northern provinces lying astride the Mekong connected by the Mekong river with the markets of Phnom Penh and lying at the crossroads of trade routes with Vietnam -- Kompong Cham, Kompong Thom, Kratie and Stung Treng. It has an estimated 1996 population of 1.55 million, living in about 220 communes and covering about 20t of Cambodia's total land area. Soils and agricultural potential are good in much of the flatter lands, especially Kompong Cham, while the uplands are largely under forest. Livestock, including bovines and pigs and poultry, are important sources of income but losses from disease are high. Most of the population are Khmer but about 20t belong to ethnic minorities, mostly living in the more remote upland areas. 12. The main development constraints of the area are: a) lack of access to markets, information and public services: the area includes some 3000 km of rural roads and tracks, and over 1000 bridges, most of which are impracticable for motor vehicles having been destroyed in the war or simply unmaintained for 30 years. Partly for this reason, 80t of the population lives close to the Mekong and other rivers, which assure passage for freight transport into and within the region; b) lack of water in the dry season for human and livestock needs, irrigation of vegetable plots and for fishing, and also frequent flooding in the wet season; c) lack of know-how, inputs and credit for increasing agricultural production, including rice and other annual crops, animal production and low-intensity fish rearing; d) lack of know-how, inputs and credit for starting rural enterprises (e.g. building and construction, transport, bicycle and moto repair shops, ox-cart manufacture, fishing gear manufacture/repair, village saw-mill, other services, etc.); e) weakness of institutions at provincial down to village levels to relate rural development initiatives to local needs and opportunities and to secure local participation in the undertaking of community-level investments; and f) lack of basic data for land use planning and natural resource management (e.g. for agricultural settlement schemes, forestry concessions, long-range water resource planning) and on social aspects including the role of women and children in the economy. 13. Such constraints can over time be overcome through poverty-oriented, decentralized and demand-driven rural development programs, in which the necessary knowledge is acquired and local investment priorities determined. Project Description 14. The project's development objective is to develop a replicable model and necessary implementing capacities for improving rural livelihoods by piloting decentralized, participatory and poverty - oriented approaches to rural development in NE Cambodia. 15. In line with the project's rationale, and its learning and innovation objectives, the project has two main components: a) Developing and testing a participatory system for identifying, financing, constructing and maintaining investment subprojects aimed at raising the - 3 -  livelihoods of poor rural households, with the Government role mainly as "strategist", and partner agencies (NGOs, private contractors, local associations) as principal direct service providers; and b) Developing the capacities of local institutions, from VDC in the target villages, to PRDC at the provincial level, up to MRD at national level, to play their parts in supporting participatory rural development programs. Project Implementation 16. Overall project management will be the responsibility of a Project Coordinating Unit (PCU) established under MRD and situated in the project area's main town, Kompong Cham. Provincial Project Management Units (PPMUs) will be established in each project province. The PCU will be responsible for (i) project planning and coordination and the central level and coordination of activities being carried out by participating provinces; (ii) the production and updating of the project operational manual and technical guidelines; (iii) all project-wide aspects of procurement and disbursement, and the implementation of monitoring and evaluation activities; (iv) preparation of implementation reports and annual/semi-annual workplans; and (v) design of training programs for MRD and provincial staff. The PPMUs will be responsible for the day to day implementation and oversight of the establishment of Village Development Committees (VDCs), PRA planning activities, subproject development, and provincial training and monitoring activities. Sub-projects will be implemented by the VDCs with the assistance from provincial government staff and project partners. The role to be played by grassroots village leaders (formal and informal) in implementation will be important, and the support of existing social organizations in the area, such as NGOs and pagoda committees, will be enlisted by the project. Special Operational Emphases 17. The main operational emphasis (POC) of the project would be on poverty, with secondary emphases on decentralization and participation. Project Benefits 18. The selected districts have no large rural development programs in operation, and through the proposed project, sectoral and local initiatives will be integrated in such a way as to address the needs of poor villages, develop provincial institutional capacity and produce results which will have a significant impact on reducing poverty in the medium term. The project will make grant funds available to local communities for developing their social, economic and physical infrastructure. The project will help to acquire knowledge and experience leading to the following benefits: Economic Benefits: - Improved economic conditions for about 20,000 poor rural households as a result of improved market access and upgraded productive infrastructure, such as rehabilitation of village tracks, bridges, water supply and small scale irrigation works. Social Benefits: - By demonstration of participatory and bottom-up planning approaches rural communities will become more directly involved in future development efforts Other Benefits: - Institution building and support for public administration decentralization. The private sector and local NGOs will find opportunities - 4 -  to develop their activities in the area. Target Population: - Local populations in 12 selected districts in the provinces of Kompong Cham, Kompong Thom, Kratie and Stung Treng Project Sustainability 19. The ultimate sustainability of approaches to be tried under the project cannot be assured ex ante, but the LIL format itself encourages sustainability by building in incentives for maximizing local involvement and for learning from the results. Moreover, the prospects for sustainability would be maximized by the proposed approaches of - up-front participation of communities through the PRA process; - required contribution of beneficiaries to sub-projects construction cost; - requirement of agreed plans for sub-project operation and maintenance; and - close monitoring of progress and evaluation of results. Environmental Aspects 20. The proposed project presents no environmental or resettlement issues and is expected to contribute to improved environmental planning at local levels. Through its PRA and community planning approach the project will test mechanisms for including environmental, natural resource and land use planning at the community level. Village investments will involve small scale subprojects aimed at improving the livelihoods of participating resource-poor communities. Participatory village planning will take into account environmental aspects during the formulation of community plans and proposals for subprojects. The subproject menu would deliberately be kept flexible but would include rehabilitation of farm access tracks, small bridges, wells for village water supply, and small scale irrigation and drainage works. Construction of village infrastructure will so far as possible observe practices to minimize construction impacts. This will be reviewed periodically by the proposed subproject monitoring system. 21. Preparation is under way of a proposed biodiversity conservation project which would provide support for the management of critical natural resources in the northeast of Cambodia through strengthened management of selected protected areas adjacent or close to the NVRD area, and through awareness- building and other means to limit impacts of illegal logging and shifting upland cultivation. Contact Point: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone No. (202)458 5454 Fax No. (202) 522 1500 H.E. Ngy Chanphal NVDP Project Coordinator Ministry of Rural Development Phnom Penh, Cambodia Fax: 855 23 366790 Tel: 855 23 366440 - 5 -  Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending October 9, 1998. - 6 -  Annex Because this is a Category B project, it may be required that the borrower prepare a separate EA report. If a separate EA report is required, once it is prepared and submitted to the Bank, in accordance with OP 4.01, Environmental Assessment, it will be filed as an annex to the Public Information Document (PID) . If no separate EA report is required, the PID will not contain an EA annex; the findings and recommendations of the EA will be reflected in the body of the PID. -7-