MSME 2/BEE Cambodia
Capital development through Micro, Small, & Medium Enterprises
March 7, 2013
The last thirty years of Cambodia’s bloody history have turned the country into one of the poorest nations in the world. French colonization in the 19th century had set Cambodia on a similar course of development like their neighboring country Thailand. All of that quickly changed with the rise of Pol Pot and the Khmer Rouge. Four years of this brutal dictatorship set Cambodia’s development back decades. The years following have seen a number of efforts from dozens of organizations (both public and private) to rebuild the nation, but even today Cambodia lags in development. 2011 estimates from the UN place Cambodia’s Human Development Index (HDI) at .523, ranking them at 139 out of the 187 reported countries (UN Development Programme, 2011). The World Bank estimates that more than 30% of Cambodia’s population is living below the US$1.25 poverty line (World Bank, 2007). These numbers are growing with each year, due in large part to the assistance provided by NGOs and other international organizations. The 2011HDI estimate shows growth of .005 HDI compared to 2010, one of the highest reported (UN Development Programme, 2011). This growth can be seen in one of Cambodia’s most important economic sectors, the micro, small and medium enterprises (MSME, see table 1). The Cambodian MSME sector accounts for almost 96% of total firms, employing 40-50% of the Cambodian labor force (ABD, 2003). This is likely the reason USAID chose the sector as the focus of the Cambodia Micro, Small and Medium Enterprises II/ Business Enabling Environment Project, a four year project that centered on strengthening a few key value chains in Cambodia’s economy. The project boasts impressive results, but even with these advancements, Cambodia faces critical challenges in its future that will determine the course of development for the country. The issue of corruption in Cambodia is certainly the most significant matter. Research Objective
MSMEs continued growth in Cambodia give proof to the steady development of Cambodia. The MSME project implemented by USAID was an extensive four-year program that applied several of the West’s techniques for reaching maximum capital. Since its conclusion in September 2012, little research has been published on the results of the project, aside from the reports that have been released by USAID itself. The effectiveness of bringing development to Cambodia’s MSME sector will be the focus of this research. Challenges the sector faces in its future will also be examined. Presentation of Findings
USAID & the MSME Project
In September 2005, the United States Agency for International Development (USAID) signed a contract with Development Alternatives Incorporated. The contract implemented a $5 million project to strengthen Micro, Small and Medium Enterprises in Cambodia. The four year project commenced in October 2008, under a management team of 27 Cambodian Value Chain Technical Coordinators. Entitled “Cambodia Micro, Small and Medium Enterprises II/ Business Enabling Environment (MSME 2/BEE),” the project operated in 17 provinces across Cambodia working with micro, small and medium enterprises (MSME) across multiple sectors of the economy. The specific intent of the project was to assist willing Cambodian entrepreneurs and current MSMEs with business management and growth. This would be performed by offering technical training, creating access to business networks, providing aid in the coordination of commercial construction, assisting with the acquisition of new technologies, and forming stronger relations between MSMEs and politicians (USAID, 2012). The project initially focused on three sectors: swine, brick and tile, and aquaculture. During the course of the project, new subcomponents became incorporated. This included work in the honey, resin, and eco-tourism sectors,...
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