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UNCDF Local Development Fund Project Document - 1996


As the first phase of the CARERE programme is coming to an end in December 1995, UNDP is planning to make the second phase of CARERE (1996-1999) much more development oriented, focusing on intensive capacity building efforts for participatory planning and decentralised management of development. The most recent evidence for this is the vision of the SEILA Administration Structure (which will be referred to in various sections of this report). With the change in emphasis it also expects to change its modus operandi to a more participatory approach. In fact, according to the Work Plan IV, January to December 1995, this has already started; some consultation took place with the provincial authorities and concerned line agencies to prepare the programme and project design and implementation will done with the participation of the concerned DRDCs, CDCs, VDCs and communities.

The strategy document for "CARERE 2" has now been completed and is expected to be approved by the Government of Cambodia, and the United Nations agencies involved (UNDP, UNOPS). The document is programmatically entitled "SEILA", a Cambodian term which may be translated as "Foundation", "Fundamental Principle", or "Framework".

The SEILA document provides the vision for the next four years (1996-1999) and beyond, thus establishing the framework in which the LDF Programme and other externally funded programmes would be implemented in a coordinated and consistent manner.

This LDF project originated with the visit to Cambodia in February-March 1995 by a UNCDF mission which identified a programme for possible financing by the Fund. One of the components of the programme identified is the Local Development Fund (LDF) in the provinces of Banteay Meanchey and Pursat; Battambang was subsequently substituted for Pursat. The LDF project concept as stated in the preamble to the TOR for the mission which prepared this proposal is presented in Annex 1.

The UNCDF planning and project identification mission of February-March 1995 formulated a programme for UNCDF involvement in the development processes in the CARERE provinces with the following five components, that were envisaged as eventually receiving budgets amounting to over 7 million US$:

    1. The Local Development Fund (LDF) - 3 mil
    2. Rural roads rehabilitation - 2.5 mil
    3. Medium-scale irrigation scheme rehabilitation - 1 mil
    4. Pilot district health care - 600,000, and
    5. Credit - rural finance - (no indicative budget given)

The proposed LDF Programme was thus conceptualised as one of a number of programmes with CDF support. However, at the core of the LDF concept and strategy is the idea of strengthening a truly decentralised, participatory planning process.

In this process, the villages and communes (represented by their respective development committees, VDC and CDC), are seen as the "owners" of individual sub-projects of two types, i.e. small scale infrastructure as well as financial assets. The former category refers to five sectors, i.e. irrigation, water supply and sanitation, unclassified access roads, and health education, whereas the latter includes common property such as rice banks, irrigation pumps, or rice mills.

The LDF concept aims at supporting two major development objectives at the same time, i.e. economic development (focus on efficiency), as well as poverty alleviation (focus on equity). The mission took the view that both objectives are to be pursued simultaneously. However, given the extremely difficult conditions in the country, the equity motive, coupled with the beginnings of a wider, distinctly "bottom-up" planning process, has been taken as the primary objective, while also paying secondary attention to the aspects of efficiency-centred economic development. Later on, once the foundation has been laid for a local planning and development process, the time might come for emphasising an economic development programme which would then be more concentrated on fewer high-potential places. In this context, concerns might be raised about the LDF effects on the specific aspects of economic development, such as the availability of local credit for entrepreneurs, and the mobilisation of savings.

2.2 General Information

The two provinces are similar to some extent, as they share the precarious boarder situation, basic topographic features, agricultural development potentials, and demographic characteristics. As far as the recent decentralised administrative development is concerned, the two provinces differ as Table 1 shows. While Battambang has only established relatively few VDCs, and no CDCs, Banteay Meanchey has taken the lead in the establishment of such local development committees (121 VDCs, and 21 CDCs). Both provinces, however, have not formed more than a few District-level committees (DRDCs), as this appears to be the lowest priority in the new decentralisation structure. (In this context, also refer to Section 2.3.2).


Table 1 : Basic Information on Battambang and Banteay Meanchey

Number of
Banteay Meanchey
VDCs formed
CDCs formed
DRDCs formed
PRDC formed


Battambang has highlands in the south and southwest in Mong Russey and Rattanak Mondul districts. The remaining area is predominantly lowland bordering the Tonle Sap. This lake expands in area considerably during the rainy season and inundates a large area in the eastern part of the province; it is probably not possible to utilise these areas in the foreseeable future. The lake extensive fishery resources, which form a source of income and protein for those living near it, are probably not utilised optimally at present due partly to problems of transporting fish to market.

Battambang has large a potential for agricultural development that is underutilised at present due various problems. Rice is the major crop but other crops such as fruits and vegetables, corn, jute, sugar cane, palmyrah palm and coconut are also grown. However, due to the many problems faced by the farmers who make up 95% of the rural population, rural incomes are dismally low. Flooding in the rainy season also causes loss of income in many areas of the province due to crop loss but flood protection would need major investments which are not feasible at present.

At present cultivation is not possible in most areas during the dry season due to the lack of water. The yields are also low as farmers depend on rainfed cultivation. However, there appears to be a potential to develop irrigation. We understand that there are irrigation facilities which have fallen into disrepair; rehabilitating them could contribute significantly to generating income and employment. Where irrigation is available, not only are yields higher, but the land has been cultivated throughout the year.

In Banteay Meanchy, agricultural land is abundant and population density is very low. The principal natural resources in the province are agricultural land, forests, reservoirs, fish and gem stones.

Banteay Meanchey has extensive lowlands suitable for rice cultivation with a few upland areas in the north and east. The upland areas are blessed with abundant natural resources, particularly a large forest cover in Banteay Ampil and Northern Thmar Pourk districts. The forest soils range from poor to very good and are suitable for certain cash crops, vegetables and fruit trees.

The remaining districts are largely in the lowland areas which have great productive potential in agriculture, particularly in Mongkol Borei and Sisophon districts. There are two rivers passing through the middle of the province. The Mongkol Borei river flows from the Thai border of Prachin Buri province and runs through Mongkol Borei and neighbouring districts. The other is the Sisophon river which passes through Sisophon district and forms a natural reservoir. Both rivers do provide water to local irrigation systems for production of rice, kenaf and many secondary cash crops. If improved, the irrigation systems would encourage rapid increase in rice as well as other cash crop production.

Apart from rice which is the major crop of the province, other agricultural activities of high potential for the area include vegetables, fruits, mushroom growing and fish production. Sericulture is widespread and is a valuable source of income for local producers. Production of livestock like chicken, ducks and pigs is common throughout the area. Surplus production can be transported to regional markets in Battambang, Poipet, Siem Reap and other markets near the Thai border.

Numerous problems are encountered in the agricultural sector. The main constraint is the lack of water in the dry season and the flooding in the rainy season, causing considerable crop losses. Soil conditions are poor, and especially low in phosphates. The local seeds have low yields and should be replaced by improved varieties. Irrigation water is in short supply and general agricultural practices need to be improved. Other problems affecting agriculture include the high incidence of land mines, the continuing armed conflict and banditry, shortages of agricultural inputs, and poor infrastructure.


There are several interrelated rationales for the UNCDF Cambodia LDF project in Battambang Province and Bantey Meanchey Province.

i. Infrastructure development is well known to play a critical role in poverty alleviation and economic development.

After years of armed conflict and neglect in the LDF target areas, the level of physical infrastructure, particularly roads, irrigation and water supply is highly inadequate and its quality is extremely poor. This hinders agricultural production is a country which, although once a rice exporter, now imports rice and depends extensively on food aid. The infrastructure for basic social is also highly inadequate, as evidenced by available national statistics:

    • life expectancy is less than 50 years;
    • the infant mortality rate is among the highest in the world;
    • adult literacy is only 59% in rural areas (49% for women); and
    • nearly one-third of people 15 years or older have had little or no formal education.

The types of infrastructure on which the LDF will focus -- rural access roads, irrigation schemes, water supply, village schools, village health centres, etc. -- are basic services that support both greater economic development and an improved quality of life for the residents of rural areas.

ii. During the past few years, the Government of Cambodia has placed an increasing emphasis on furthering rural development.

The promotion of rural development is a cornerstone of the National Development Plan currently being prepared by the Ministry of Planning. This focus is easily justified, as an estimated 85% of the country's population lives in rural areas. The Ministry of Rural Development (MRD) has been created specifically for the purpose of improving and coordinating national and rural development efforts, and PRDCs have been created to help develop and manage rural development initiatives in each province. The PRDCs would be the key LDF counterpart organization at the provincial level, directly supporting the Government's increasing emphasis on rural development initiatives.

iii. The Government has embarked on a major program of decentralization and participation in the development decision-making process.

PRDCs, DRDCs, CDCs and VDCs have been or are in the process of being created at the provincial, district, commune and village levels. The LDF will primarily finance village level projects, as well as provide support to build capacity of these various local level institutions, thus directly supporting the Government's decentralization priorities.

iv. Government resources to implement its intended programs of infrastructure provision, rural development, and decentralized planning and implementation of projects are extremely limited.

There is at present no internally financed capital budget at the central level. The LDF will provide a source of funds to support these initiatives, serving as a base on which the Government can build the country's own fiscal and technical capacity to provide infrastructure projects in the future.

v. The establishment of the LDF is a critical component of UNCDF/UNDP efforts to reorient their broader program of activities in Cambodia.

LDF will serve as a key implementation instrument for CARERE as its central mission turns from emergency relief operations to the support and institutionalization of routine rural development processes and procedures. Moreover, CARERE's present mode of project implementation through provincial level offices of central government technical departments will shift to a process that supports the decentralized planning structure being developed through the VDCs, CDCs, DDRCs and PRDCs. The SEILA document clearly states the vision of a decentralized government structure, as shown in Chart 1.

In summary, the core rationale for the project is to assist the Government of Cambodia as it develops critically needed rural infrastructure to support local economic development through a decentralized, participatory decision-making and implementation process.