Cambodia has exceeded the Millennium Development Goal poverty target. It is also one of the best performers in poverty reduction worldwide in recent years.
Between 2004 and 2011, in only seven years, the share of people who live in absolute poverty, on less than US$1.15 per day, fell by more than half in Cambodia, from 53.0 per cent to 20.5 per cent. That means that only two out of 10 Cambodians are poor, compared with five back in 2004.
There have been many reasons behind the impressive reduction of poverty. The two most important factors have been increased rice prices and increased rice production, which raised farmers’ revenues and farm workers’ wages and together accounted for almost half of the poverty reduction.
Increased rice production was driven in part by a positive external environment, and also by greater road access by farmers to markets, better access to market information through mobile phones, improved irrigation and a liberal undistorted agricultural market.
These factors created an environment conducive for farmers to respond quickly to the increased prices.
With this impressive poverty reduction, where have all the previously poor gone? The answer to this question is: out of poverty, but not very far.
A majority of families remain disturbingly close to the poverty line. The number of those “near-poor” people who live on less than US$2.30 per day per person grew to 8.1 million in 2011 from 4.6 million in 2004.
Being “near-poor”, they are still at high risk of falling back into poverty at the slightest income shock. For example, the impact of losing income of 1,200 riel per day (about US$0.30) would throw an estimated three million Cambodians back into poverty. This would double the poverty rate to 40 per cent.
While they are benefiting from the country’s rapid economic growth, Cambodians say they are hoping for a more prosperous future which isn’t only based on cheap labour.
They are aspiring to attain better jobs and equal opportunities, regardless of status and wealth. Better jobs, in both rural and urban areas, become even more important, as commodity prices may not continue rising as rapidly in the future as in the recent past.
How can Cambodia reduce poverty further, helping the remaining 20 per cent of its people who are poor escape out of poverty, but also prevent the near-poor from slipping back into poverty at the slightest economic shock?
With this double goal in mind, Cambodia’s new development strategy places emphasis on both growth and equity.