Where have all the poor gone? Cambodia Poverty Assessment 2013

February 20, 2014Phnom Penh, Cambodia

Carlos Sobrado, Senior Poverty Economist

2

1. Progress on poverty reduction

2. Remaining challenges

3. Policy recommendations

What we will talk about…

3

Official poverty estimates in Cambodia

o In 1994, poverty in Cambodia was estimated for the first time

o Several other estimates were developed after 1994, but the results were difficult to compare

o Starting in 2004 the National Institute of Statistics adopted a more standardized field work for the Cambodia Socio-Economic Survey

4

And in 2013, with an updated methodology, poverty was estimated for each year

2004 2005 2006 2007 2008 2009 2010 2011 20120%

10%

20%

30%

40%

50%

53.2%50.1%

38.8%

23.9% 22.1% 20.5%18.6%

Povert

y R

ate

p

5

Reductions reported everywhere; with highest poverty in rural

areas

2004 2007 2008 2009 2010 2011 20120%

10%

20%

30%

40%

50%

60%

70%

15.8%2.7%

4.3% 3.8%

39.7%35.0%

12.7%9.1%

59.0% 57.9%

27.5%

22.2%

Phnom Penh

Other Urban

Rural

p

6

Methodology

o Measures poverty by comparing per capita consumption to a poverty line

o The poverty line is the cost of a food basket with a minimum amount of calories, plus an allowance for non-food consumption

o Estimates based on 2009 data – applied to all years

o Based on a sample (not a census)

7

For those households that escaped poverty

… housing conditions improved

0%

10%

20%

30%

40%

50%

60%

33.9%

3.6%7.1%

52.9%

21.8%28.8%

2004 2011

8

those escaping poverty … also acquired more

assets

Motorcycle Mobile phone Television Suitcases0%

20%

40%

60%

80%

18.9%

2.2%

41.4%

17.1%

54.9%

62.5% 62.7% 63.2%2004 2011

9

In education, net enrollment improved for every schooling year

1 2 3 4 5 6 1 2 3 4 5 6Year in primary Year in secondary

0%

20%

40%

60%

80%Net enrollment rate by year

2004 Net 2011 Net

% s

tud

en

ts a

t a

pp

ro-

pri

ate

gra

de

10

Gender gap in education decreases and disappears over time

19

18

19

22

19

26

19

30

19

34

19

38

19

42

19

46

19

50

19

54

19

58

19

62

19

66

19

70

19

74

19

78

19

82

19

86

19

90

19

94

19

98

-10123456789

FemaleMaleGAP

Birth year

School age

11

Cambodia is on target for the under-five-mortality MDG goal

2000 2005 20100

20

40

60

80

100

120

140

160

Poorest

Wealthiest

Death

s p

er

1,0

00

child

ren

What are the reasons behind this impressive reduction in poverty?

13

In 2004, a large group were just below the poverty line

0%

2%

4%

6%

8%

10% 2004 Poor

2011

Consumption in Per Capita 2009 Phnom Pen Riels/day (000)

Po

pu

lati

on

%

Poverty Line = CR 5,326 in 2009 prices

14

By 2011, they were no longer poor They moved just above the poverty

line

0%

2%

4%

6%

8%

10%2004

2011

Consumption in Per Capita 2009 Phnom Pen Riels/day (000)

Po

pu

lati

on

%

Poverty Line = CR 5,326 in 2009 prices

2011 Poor

15

The most important drivers of poverty reduction were increases in

rice prices and rice production

Increased rice prices & rice production account for 47% of the poverty reduction

Key drivers of poverty reduction 2004-2011

16

Pro-poor growth helped reduce poverty in 2008, 2010, 2011

2004 2007 2008 2009 2010 2011 201205

10152025303540

2119

21 21 22 23 23

3337

32 32 30 28 28

Share prosperity (bottom 40%) GINI * 100

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Other key factors were: … a liberal, undistorted agriculture market

For example, from 2004 to 2009

• International rice prices: ↑134%

• Local rice prices in Cambodia: ↑119%

18

… Government policies on infrastructure

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o 8,000 village roads helped farmers get rice to local markets.

o And the roads were increasingly used by the poorest. Poor households with motorbikes increased four times - from 7% to 29%

…and local infrastructure development funded by communes met local needs

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o Poverty decreased from 53.2% (2004) to 20.5% (2011)

o Reflected in improvements in quality of housing conditions, assets education and health.

o This reduction in poverty came about because:o Many poor moved just above the poverty lineo Rice price and productiono Pro-poor growtho Free rice market price o RGC investments in rural infrastructure.

Progress in reducing poverty - in a few words

Despite the impressive reduction in poverty, challenges remain...

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The poor are less but remain concentrated in rural areas: 9 out

of 10

6.8 million poor in 2004

Other Ur-ban 0.6 mil-lion

Phnom Penh 0.2 million

Rural 6.2 million

Other Urban 0.2 million

Phnom Penh 0.1 million

Rural 2.7 million

3.0 million poor in 2011

23

There are fewer poor, but more vulnerable people

2004 2011

4.6

8.1

Near poor people (million)

Near poor are those living above $1.15 per day , but below $2.30 per day

2004 2011

6.9

3.0

Poor people (million)

Poor are those living below $1.15 per day (poverty line)

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A small shock can double poverty

2011 2011 with shock

20.5%

41.0%Poverty rate

- =

25

Further increases in rice prices are unlikely,

at least at the same pace

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Overage in primary is a major problem

and increases dropout rates

Students entering first grade late, limits the learning potential and increases dropout rates:

o 40% of students are entering first grade at age 8 (two years later than recommended)

o 40% of students are finishing primary at 15 years old (3.1 years later than recommended)

27

Enrollment differences between upper and lower quintiles

1 2 3 4 5 6 7 80%

20%

40%

60%

80%

100%

Lowest quintile Highest quintile

School year completed

% o

f 1

5-2

0 y

ears

old

wit

h

com

ple

ted

sch

ool year

in 2

01

1

28

After some progress child malnutrition rates were relatively

unchanged in 2005-2010

Stunted Underweight0%

10%

20%

30%

40%

50%

2000 20002005

20052010 2010

29

o While HEF is a key instrument to insure access to health services by the poor, some challenges remain:o Increase coverage: 25% poor households do not

have a HEF cardo Increase use: among the poor seeking treatment

in hospitals, 60% do not use the HEF cards

o The poor seek medical advice 55% of the time from informal providers where diagnosis and treatment are unreliable.

Under use of Health Equity Funds (HEF)

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o There are less poor, but more vulnerable households

o Relatively small shocks could double poverty rates

o Another spike in rice price unlikely

o Too many overage students

o Low enrollment rates of poor children

o Malnutrition remains high

o Health Equity Funds are not fully utilized

Remaining challenges… In a few words

Possible implications on policies and programs to

reduce poverty and vulnerability

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o For Example through:

o Improved farmers skills by means of

formal education and better extension

services

o Improved access to improved seeds

o Promote water user associations

Enhance agriculture profitability and diversification

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o Rationalize, connect and maintain roads and other infrastructure

o More funds for commune-driven participatory development to better meet local needs

Continue to improve access to basic rural infrastructure and

services

34

But we also need to look beyond agriculture

Increase jobs in manufacturing by addressing the 3 key bottlenecks:

o Reduce electricity cost and increase reliability by implementing a strategic and competitive roll out plan with Public-Private-Part.

o Enhance business environment through reduced informal payments and burdensome regulations

o Reduce high transport costs and unreliable delivery by implementing a connectivity strategy

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Investing in education

o Expand early childhood education to promote entry to Grade 1 at the right age

o Strengthen the quality of schooling in early grades to reduce repetition in primary

o Provide targeted scholarships and school feeding in primary and secondary schools, especially for poor children, to improve enrollment and reduce drop-out rates.

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o Expand provision of health equity card

o Increase use of health equity card to encourage health services at public hospitals

o Tighter control on informal services to improve medical treatments

Improve access to public health services

37

Integrated programs to tackle child malnutrition

o Food fortification and micronutrients

o Improve feeding practice

o Reduce open defecation

o Promote hygiene practices

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Implement sub-national social accountability policy to improve performance of local service providers

o Establish systematic citizen/user feedback

and monitoring

o Display performance and budget

information for communes, schools and

health centers

Strengthen accountability to improve service delivery

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Implement National Social Protection Strategy

Clarify institutional responsibilities and provide support for agencies implementing the NSPS

Encourage salaried workers to enroll in national security system

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o Agriculture Extension services, seeds and

participation on infrastructure projects

o Manufacturing Lower electric and transport

cost and reduce informal payments and

regulations

o Education Expand early childhood education,

promote enrollment of the poor

RecommendationsIn a few words

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o Health Integrated approach to fight malnutrition,

improved understanding of low HEF utilization, and

strengthen regulation on informal markets

o Social Protection Increased support to

coordinating agency, greater participation of

salaried workers in national security system

o Increase accountability of all service providers

RecommendationsIn a few words

Thank you very much for your attention

Thank you very much for your attention