Executive Summary
It is well documented and recognised in key development agendas that financial gaps have been a major hindrance in developing the water, sanitation and hygiene (WASH) sector. However, less analysis and advocacy have been carried out to understand and address countries’ public financial management challenges that affect the WASH sector’s ability to use existing public finance effectively. This includes the impact and extent of fiscal decentralisation, whereby functions and resources are transferred to sub-national administrations (SNAs).
WaterAid’s research aims to generate country-level evidence and identify potential collaborations to improve the effectiveness of fiscal decentralisation for WASH. This study of Cambodia, one of the seven countries included, focuses on water supply, mainly at the district/municipality (DM) level (both rural and urban areas), which according to the government’s decentralisation policy will play an important role in service delivery, including the supply of clean water.
The research finds that the Royal Government of Cambodia has shown commitment to decentralisation by continuously increasing the budget for SNAs – from around US$190m in 2013 to US$821m in 2020. However, the reform progress at the DM level, where service delivery functions have been transferred, has been limited. Fiscal decentralisation in the clean water supply sector has been slow and fragmented. Given the current overall fiscal envelop and budget allocation to the sector, it is unlikely that the state budget, both for the national and sub-national level, will be enough to meet the clean water supply need in years to come. Instead, the more significant and promising financing sources are development partners and the private sector.
As such, when discussing how SNAs, especially at DM level, can contribute to better clean water supply service delivery, both budget and non-budget aspects should be covered. Firstly, DM administrations should improve their work related to planning and targeting of local needs, coordination with the private sector and non-governmental organisations (NGOs), and monitoring and addressing feedback/complaints from local people. Secondly, on budget-related matters, the government should improve DM budget transfer and execution (especially procurement). Thirdly, there should be more alignment between rules and regulations issued by the relevant ministries (the Ministry of Rural Development – MRD – and the Ministry of Industry, Science, Technology and Innovation – MISTI) and the decentralisation reform direction.