City slum Preak Takong along Hun Sen Boulevard is symptomatic of a system that might be ‘challenged’ in its bid to lift people out of poverty

He stands by the side of the road, doing a super hero-like pose while uttering some inaudible lines and gesturing to motorists passing by. Sometimes he just sits by the road, staring blankly, lost in his thoughts.

On some evenings, when the climate is cooler, a scattering of men, women, women with babies, and even young children can be seen along the busy 60 metre-wide road, otherwise known as Hun Sen Boulevard.

The people are residents of Preak Takong, a narrow-lane slum featuring a mishmash of wooden, zinc, stone, and cardboard houses, on the side of towering condominium constructions, outside the bustling metropolis of Phnom Penh.

Surrounding it and beyond is a sprawling site, earmarked for real estate investments and highly touted as the next satellite city in the capital.

Like a mirage, million dollar houses and shopping malls by local and foreign developers, completed or underway, are visible in the distance on the sand-filled Boeung Tumpun lake.

Once water spinach farmers and fishermen on the rapidly shrinking 2,600 hectare-lake, as development closes in, most were forced to give up their livelihood and seek piecemeal jobs to survive daily.

“Over time, many picked up a drug habit to cope. Young men, women, even teenagers have fallen victim to drug addiction,” said a seller of a small snack stall at the entrance of the slum.

Addicts, who can be singled out by their uncanny disposition, have easy access to a concoction of hallucinogenic drugs, thanks to the regular presence of pushers.

The woman, in her 60s, spoke in hushed tones, constantly checking over her shoulder to see if the so-called drug supplier, resting on a motorcycle nearby, was not within earshot.

“It’s so bad for my community and the country,” rued Preak Takong community representative Lay Sreymeth. “The government has announced [the] abolition [of drugs], but it is still in the community.”

Next door, in a shanty zinc and plywood house, 29-year-old Rita (not her real name) is attending to her five children, aged two to 10, and her younger brother, who are eating plain rice porridge.

“I can’t work because I am not well and I have to look after my children,” she said, shifting about on a raised plank flooring, the earth visible underneath.

Rita’s husband is in prison, serving a three-year sentence for being in possession of drugs.

The family of eight, including her mother in her 50s, now depend on her 25-year-old brother who earns $8 a day as a cleaner in a nearby construction site.

However, the household does not receive any financial assistance via the government’s Covid-19 cash transfer programme.

“So far, five households remain to benefit from the cash aid in my community,” said 37-year-old Sreymeth, noting that there are 224 people or 64 families in Preak Takong. “I tried to ask for the whole neighbourhood but the ‘higher authorities’ think that their lives are better.”

The cash transfer programme began in the middle of 2020, as cases began to crop up in Cambodia. Since then, the government has expended half a billion dollars to support 2.7 million people who hold the IDPoor 1 (very poor) or IDPoor 2 (poor) cards.

It also included a one-off allocation to 121,397 eligible non-IDPoor households, as of August 2021, to mitigate the negative impacts of the pandemic, the World Bank mentioned in its latest economic update.

“On average, each poor and vulnerable household received about $45 per month under the programme,” it said.

The rollout of the cash transfer programme depends on the database of the IDPoor programme, a social protection scheme, which itself is at a “very early stage”, despite being introduced in 2006.

It stayed dormant till 2011 when a sub-decree was passed to regulate “the management and implementation of identification of poor households, and the utilisation of poor household data”.

Ten years on, experts continue to ask the government to develop a “good targetting mechanism” to ensure that poor and vulnerable people receive support, either in normal time or crisis time.

‘Higher than reported’

Poverty levels have expanded to about 17.8 per cent, based on a redefined line in the 2019-2020 Socio-Economic Survey, where the benchmark was set at 10,951 riel (around $2.69) per person per day.

Using this new marker, some 4.2 per cent of people in Phnom Penh were identified as being poor – the lowest compared to the rest of the country, the World Bank stated, while the urban poor index stood at 12.6 per cent with the highest being rural areas at 22.8 per cent.

What this figure relays is also the disparity in cash transfers, particularly in relation to the number of those living below the poverty line.

According to Minister of Planning Chayy Thorn in November, the redefined line meant that 2.8 million people in Phnom Penh were categorised as poor, a figure that is larger than the total cash aid recipients nationwide.

To be sure, registration for the IDPoor programme has been ongoing, but the total figure does not commensurate with the supposed activity.

As of January 2021, some 2.8 million poor individuals were on the database, which reflected 92 per cent of the project’s target, ASEAN+3 Macroeconomic Research Office (AMRO) said in its 2021 annual consultation report.

But, the database only represented about “35 per cent of total estimated poor individuals”, as per Organisation for Economic Cooperation and Development (OECD)’s 2017 estimates of poor households in Cambodia.

No doubt, at the time, poverty level had compressed as wages rose and the share of remittances to total household incomes went up to 12 per cent in 2017 (among the poorest households) from three per cent in 2009.

However, the World Bank said, “contribution of transfer to poverty reduction (then) was very small”, which reflected the “weak public social protection programmes”.

Two years on, the pandemic only compounded the situation. Despite the Covid-19 cash aid, its coverage “remains relatively narrow”, the bank stressed.

“The cash transfer programme is very important for IDPoor [cardholders] but [it] has only benefitted [a] small number of poor people, [those] who have connections with [the] ruling party,” said Steve Austin, a programme director with local NGO, Disadvantaged Cambodian Organisation (DCO).

He alleged that many slums were passed over as they did not possess proper documents, such as land titles, or “were not affiliated with the ruling party”.

Dr Jayant Menon, visiting senior fellow with the ISEAS – Yusof Ishak Institute in Singapore, found that the government’s response to the pandemic involving lockdowns and other mobility restrictions have had a “disproportionately large negative impact” on the poor and the vulnerable.

“This is true in all countries, but particularly in developing ones like Cambodia. The various compensation schemes such as the cash transfer programs have been inadequate in terms of the amount of support and in reaching all who need it,” he said.

In fact, the former lead economist for Asian Development Bank (ADB), felt that it is likely that the true impact on poverty is “a lot higher than being reported” and has “probably more than doubled”.

“The liquidation of assets or increases in household indebtedness are not fully captured in income-based estimates of poverty.

“It will take many years to reverse this decline but the current pragmatism being displayed by the Cambodian government in moving quickly to an endemic stage will expedite the adjustment,” Dr Jayant opined.

Reversal of progress

Evidently, the number of poor and vulnerable households has grown, as two major economic sectors – tourism and garment – suffered blows, which caused the unemployment rate to inflate to 2.4 per cent last year from a mere 0.1 per cent in 2019 , AMRO reported.

Added to that, school dropouts are likely to increase as children stay home to help parents, as a result of income shocks, and poor access to food.

According to a survey by the World Bank between August and September, 2020, “40 per cent of households reported having less access to food than before the pandemic”.

“The impact was especially severe for preschool and primary students, those in non-formal education, and those with a valid IDPoor card, with around half of respondents in each category reporting less access to food,” it said.

Unfortunately, the pandemic might be undoing years of work to reduce poverty and unemployment rates, as shown by World Bank poverty simulations based on macroeconomic projections.

Accordingly, poverty could climb by “5.4 to six percentage points”, which is equivalent to “859,000 to 950,000 additional poor” and cause a “reversal of six years of progress against poverty”.

“Households relying on non-agricultural wages, particularly construction workers, have been hit hardest,” the international financial institution remarked.

Now in its tenth round, the government has disbursed monthly grants to the poor and vulnerable under public health and social interventions, representing 1.12 per cent of gross domestic product (GDP) in 2020, with similar estimations this year, and less than one per cent planned in 2022, the World Bank showed.

Last year, the government’s total intervention programme involving social, economic and public health constituted 3.02 per cent of GDP, which is expected to rise to nearly five per cent this year, and possibly moderating to 3.4 per cent in 2022.

Based on a household survey this year, the World Bank said the relief programme has had an impact on the economic well-being of beneficiary households, 42 per cent of whom found that it made a “complete difference” for them.

The survey was done following the cash disbursement to 95 per cent of eligible IDPoor households, who by March this year, had received nine rounds of social assistance with an average of $366.

Seven household groups

On Wednesday, the government announced that the cash transfer programme will be extended till September 2022.

However, it is not certain if the disbursement criteria will be expanded based on calls by experts including those by the UN Development Programme (UNDP) and Ministry of Economy and Finance (MEF) in a study titled ‘Covid-19 Economic & Social Impact Assessment in Cambodia’ last year.

An expanded criteria is seen as crucial as it would help stimulate the economy, unlike the present disbursement model.

The UNDP/MEF study revealed that the government stimulus package “may not improve [an] already deteriorated social and economic conditions since they do not inject additional funds into the economy”. “They [existing stimulus package], in fact, withdraw resources totalling -0.9 per cent of GDP.”

Instead, it recommended a social protection-focussed stimulus package that would see aid distribution for workers in the informal sector, returning migrants, persons with disabilities, persons aged 65 and older, scholarships for primary and secondary students, baby bonus and children aged up to five.

The study, however, contended that the allocation to the seven household groups was actually a “simplified approach without reference to the ability to deliver transfers in this manner and scale” with modifications of the assumption allowed, if necessary.

While the results and key findings were “necessarily provisional”, analysts claimed that they noticed “important differences”.

For instance, analysts saw a small decline in the abatement of GDP losses of around 0.3 per cent of GDP.

“The wider socioeconomic impacts on employment and poverty and the distributional impacts were more positive and, in many cases, significant,” the study showed.

Asked if the government would consider using this model and if it would require a larger fiscal package, MEF secretary of state Phan Phalla did not respond.

To date, the government has been deploying about $30 million a month, using a combination of savings and borrowings, including $250 million from ADB last year, to provide social assistance to affected communities and businesses.

Alissar Chaker, UNDP resident representative, pointed out the IDPoor cash transfer programme has benefitted nearly 670,000 households, including over 60,000 persons with disabilities, 332,000 elderly people and some 2,000 people living with HIV.

Citing results from the UNDP/MEF study, Chaker said the social protection programme had “beneficial effects” in reducing the impact on poverty – 14.1 per cent versus 17.6 per cent with no social protection measures, and economic contraction at -3.1 per cent instead of -4.1 per cent in 2020.

This means that around 570,000 people would have avoided sliding back into poverty.

“An important lesson highlighted by this study is that social protection is not a cost, but an investment in people and a risk reduction measure to lower potential losses in development gains during or after a shock, such as a pandemic or an extreme weather event and to prevent people from falling back into poverty,” she said.

Simple, practical solution

Back at Preak Takong, survival on micro loans taken out with loan sharks or neighbours is a norm, despite hefty interest rates and insecure financing methods.

Sophea (not her real name) borrowed about $200 for health reasons “sometime ago”, and has only managed to settle $25, given the $5 interest rate imposed by an unlicensed loan provider who are “regulars” in the slum, like drug pushers.

“These people are here because they support the bad habit. Many people here are also involved in gambling,” Sreymeth said.

DCO’s Austin said financial literacy is only provided in rural areas, not in city slums.“Only NGOs provide this to poor communities in the slums, although many in there are illiterate.”

His organisation works with marginalised communities in city slums and remote villages where government intervention is limited.

They work on reducing poverty levels, protecting the environment and improving people’s livelihoods via income generation programmes, such as plot rental for landless families and training them how to plant vegetables with higher yield.

“We pay for the first year and the beneficiary takes over the rental fee in the following year. Most of them are farmers, so they were interested in the idea and believed that it could work for them,” Austin said.

However, owing to low education levels, most of the slum dwellers also carry out odd-jobs, like providing motor-taxi service and operating street stalls or find jobs as security guards, construction workers and cleaners.

“Some 40 per cent of the households earn less than $100 dollar a month, with the average household size being five. Such income translates to less than one dollar a day per person.

“It is hardly enough to buy food, let alone other basic necessities,” he said, adding that many forage trash bins at night for items to recycle to supplement their income.

For Austin, the solution to helping the poor should not only be financial, it should also be practical.

“We should be designing sustainable projects [which] help them to help themselves, rather than make them rely on cash transfers.

“[Also] create agricultural alternative income, by providing paddy seeds or other crops, livestock to raise or suitable [skills] training for jobs,” he said.

Sreymeth agreed, but first, she said the government must to go to the crux of the problem, which is to push “lower-level officers” to review the IDPoor applications to ascertain who “exactly is poor”.