The Philippine experience of a CCT PROGRAM: A Policy Paper on the 4Ps

Tuesday, 07 December 2010 06:59

I.    INTRODUCTION

The “Pantawid Pamilyang Pilipino Program” or the 4Ps under the administration of Gloria Macapagal-Arroyo was developed as a way to uplift a worsened economic condition and it was supposed to be a stimulus package for the poor. It was a fact that the start of her term (or succession) was a period of political and economic uncertainty in the country. Arroyo, being a practicing economist, and based on official National Economic Development Authority (NEDA) economic growth figures , it was indeed certain that she handled the economic problem very well earning praises from Georgetown classmate, and Former US President Bill Clinton, stating that her tough decisions put the Philippine economy back into shape. However, in the United Nations Human Development Report from 2009-2010 and studies made by local survey research firms show worsening, instead of improving, poverty level. Others mere saying it was a political solution to get the poor sector, especially in the National Capital Region (NCR) to support the Arroyo Administration.

Now with the current presidency, under the leadership of Benigno S. Aquino III, the re-designed 4Ps are aimed to guide the country not only in uplifting the economy and poverty but also in meeting its Millennium Development Goals (MDG)  by the year 2015. The MDG started in 2000 when 189 UN member-countries re-affirmed their commitment to peace and security, good governance, and attention to the most vulnerable with the adoption of the Millennium Declaration. Since the Philippines first resolved to adopt the MDGs, it has made efforts , particularly towards the attainment of targets on reducing extreme poverty, child mortality, the HIV/AIDS incidence and other contagious diseases, gender sensitivity, improving households, adequate dietary intake as well as access to safe drinking water.

With the advent of a recently approved national budget, and considering the ‘tripling’ Php21 Billion  allocation for the said program, the aim of this paper is to analyze the program vis a vis the impacts of other CCT programs. The main problems thereof are: Is the 4Ps just a dole-out program? Will it answer the country’s problem of poverty in the long term or is it just a program established to meet the MDG commitments?

II.    CONDITIONAL CASH TRANSFER PROGRAM

Conditional Cash Transfers (CCT) is a social development program that aims to reduce poverty by making welfare programs conditional upon the recipients’ actions. Normally, the government only transfers the money to persons who meet certain criteria. These criteria may include enrolling children into public schools, getting regular health check-ups, receiving vaccinations, and the like.

According to the World Bank, "conditional cash transfers provide money directly to poor families via a “social contract” with the beneficiaries – for example, sending children to school regularly or bringing them to health centers. For extremely poor families, cash provides emergency assistance, while the conditionalities promote longer-term investments in human capital.

Primarily, the role of the CCT programs in social policy varies from place to place as a consequence of differences in both program design and the context in which they operate. They vary with respect to pertinent measures of size. In terms of absolute coverage, they range from 11 million families (Brazil) to 215,000 households (Chile) to pilot programs with a few thousand families (Kenya, Nicaragua). In terms of relative coverage, they range from approximately 40 percent of the population (Ecuador) to about 20 percent (Brazil, Mexico) to 1 percent (Cambodia). In terms of budget, the costs range from about 0.50 percent of gross domestic product (GDP) in such countries as Brazil, Ecuador, and Mexico to 0.08 percent of GDP (Chile). The generosity of benefits ranges from 20 percent of mean household consumption in Mexico, to 4 percent in Honduras, and to even less for programs in Bangladesh, Cambodia, and Pakistan.

Many of the CCT programs in middle-income countries have pursued different approaches like poverty reduction, balancing goals of social assistance and human capital formation.  For example, the program may cover children from birth (or before) through the mid-teens, with conditions on health care use for children from birth to age 5 or 6 and with conditions on school enrollment thereafter. Programs usually are administered by ministries of social welfare or freestanding agencies under the presidency. Examples of that type of CCT include the programs in Brazil, Colombia, El Salvador, Jamaica, Mexico, Panama, and Turkey.

CCTs have said to reduce inequality, especially in the very unequal countries in Latin America and helping countries meet the Millennium Development Goals (MGD). Nowadays, countries have been adopting or considering adoption of CCT programs at an extraordinary rate. Virtually every country in Latin America has such a program. Elsewhere, there are large-scale programs in Bangladesh, Indonesia, and Turkey, and pilot programs in Cambodia, Malawi, Morocco, Pakistan, and South Africa, among others. Interest in programs that seek to use cash to incentivize household investments in child schooling has spread from developing to developed countries— most recently to programs in New York City and Washington, DC. In some countries, CCTs have become the largest social assistance program, covering millions of households, as in the case of that of Brazil’s Bolsa Familia   (Refer to Annex A)

III.    THE 4P’S: PHILIPPINES’ VERSION OF A CCT PROGRAM

Program Background, Components and Conditionalities
The “Pantawid Pamilyang Pilipino Program” or 4Ps is a social development and poverty reduction strategy of the Philippine national government that provides conditional cash grants to poor and to extremely poor households in order to improve their health, nutrition and education. Conceptualized in 2006, the Department of Social Welfare and Development (DSWD) with technical assistance from the World Bank started implementing the National Sector Support for Social Welfare Development Project (NSS-SWDP) and eventually changing the name to its present title to broaden its scope, components and perspectives.

According to the DSWD, the sole government agency that has oversight on the program, it has dual objectives, which are social assistance and social development. Social assistance would mean providing cash assistance to the poor in order to alleviate their immediate need or in other words, providing a short-term poverty alleviation system, while social development is a process of breaking the intergenerational poverty cycle through investments in human capital .

Also, the program is said to help in fulfilling the country’s commitments in meeting the Millennium Development Goals (MDG). In a study conducted by the United Nations (UN), the overall probability of attaining the targets remain high but dependent largely on the “interaction” of several factors such as leveling-up of current efforts on all target areas, efficient use of allocated and limited resources, additional resources, strong advocacy and the capability to implement the MDGs at the local level. Below are the program’s target MDGs vis a vis the country’s target MDGs:

The program has been implemented since January 2008. It has become nationwide after going through a piloted program mode between June to December 2007. It is estimated that around 300,000 households are currently targeted under the program, which aims to provide money to extreme poor households in order to allow the family members to meet certain human development goals set by the government. In the Philippines, studies have found a strong correlation between low schooling and high malnutrition and poverty. In its conception until the re-running of the program, the main objectives of the 4P’s remains the same, they are to increase enrollment/attendance of children at the elementary level and reducing poverty.

According to the program, the poorest households with children 6–14 years of age would qualify for the education cash grants, provided that the children are enrolled in schools and regularly attend classes. The minimum rate of school attendance is 85% and schools are supposed to report the attendance rate of program beneficiaries to the respective municipal governments (in cooperation with the Department of Education – Division of City Schools) The monthly benefit is 300 pesos per child attending school for 10 months, up to a maximum of three children per household.

Cash transfers are generally entrusted to the most responsible adult person in the household (normally the mothers or parents), and are credited to the cash card facility of the Land Bank of the Philippines. In the experience of the Bolsa Escola (now Bolsa Familia) in Brazil, the presence of banking facilities such as cash cards greatly facilitates the monitoring of the whole program.

Aside from the education component, the program also has a health component. Under the said component, the selected households are given cash grants provided that: 1) pregnant women must get prenatal care starting from the first trimester and get postnatal care thereafter; 2) child birth is attended by a skilled/trained professional (such as midwives); 3) parents/guardians must attend family planning sessions, parent effectiveness service, and other services; and lastly 5) children under 5 years old must get regular preventive health check-ups and vaccination. The health package provides a beneficiary household P6000 per year.

Targeting System

The poorest households in provinces and municipalities are selected through the National Household Targeting System for Poverty Reduction (NHTS-PR) implemented by the DSWD using the Proxy Means Test . This test determines the socio-economic category of the families by considering factors such as ownership of assets, type of housing, education of the household head, livelihood of the family and access to water and sanitation facilities.

The targeting involves three steps (see figure 1). In the first step, the poorest provinces are selected based on official poverty lines. Following this, the poorest municipalities from the selected provinces are further chosen using the small area estimation method. The second step involves the administration of total enumeration of households in identified municipalities. In the last step, the poorest households are finally selected using a proxy means testing that assesses household socioeconomic characteristics.

Residents of the poorest municipalities will be selected based on 2003 Small Area Estimates (SAE) of NSCB including the following: 1) Households whose economic condition is equal to or below the provincial poverty threshold; 2) Households that have children 0-14 years old and/or have a pregnant woman at the time of assessment, and; 3) Households that agree to meet conditions specified in the program.

Pilot Implementation and Current Updates
In its pilot implementation in 2007, a total of 6,000 households were targeted (see table 3), against the 4,589 households that were actually given grants and two of which came from the NCR and the other two are provinces, one coming from the Northern Mindanao region and one from the CARAGA Region.

By the year 2008, already in its full implementation, the DSWD targeted a total of 321,000 households most of which coming from the top 20 poorest provinces (the so-called “Club 20”) and 12 cities nationwide (see table 4). In 2009, according to the data of the DSWD, the program has already given grants to almost 200,000 households nationwide (see table 5)

Currently, the Aquino administration is dramatically expanding the program which now targets to reach 2.3 million households in 2011 (2.6 million by other reports) and up to four million beneficiaries by 2016. To achieve this, the 4Ps budget has been increased from PhP10 billion in 2010 to PhP29.2 billion for 2011, of which PhP21.2 billion is for the implementation of CCTs. The current secretary of the DSWD estimates that related administration costs are around PhP1.9 billion annually, reaching over PhP4 billion if other costs such as trainings to implementers, parent-leaders and communities are also included.

Table4. Year 2008-2009 Target Areas (coming from 26 poor provinces and 12 cities nationwide)

Table5. Summary of Household Beneficiaries by Clusters

IV.    CONCLUSION AND ANALYSIS

As we all know, the world-wide problem of poverty affected a large proportion of our country’s population and eventually the number of poor people has increased over the 2003–2006 period. Unfortunately and sad to say, our anti-poverty reduction strategies and policies and as well as those of other countries are defying conventional wisdom. And it proved over the years and around the globe that single-focus solutions have been ineffective.

Personally, we should support the 4Ps program but not entirely as the main policy program to fight poverty. I do believe that aside from implementing of what seems to be, initially, a dole-out program, there may be other ways to address poverty alleviation issues and some may have just been “lingering” around even before the implementation of the CCT program such as having a broad structure of agrarian reform, foreign debt solution, vigorous job creation and trade liberalization.

One heavy criticism of the CCT program is the perception that it is created for vote buying especially the poor voting population. No doubt, the CCT program will help any incumbent president to secure votes to win if he/she would run for re-election. In the case of Brazil, President Luis Ignacio Lula da Silva, after assuming office in 2003, expanded the country’s CCT program to become a social safety net program. Da Silva was re-elected largely because of the Bolsa Familia Program, apparently his flagship poverty alleviation program. Too bad, GMA could not run for re-election after implementing the 4Ps program because of term limits, otherwise she could have used the 4Ps as a vote-generating arm.

But setting political apprehensions aside, do conditional cash transfer programs really and effectively help the poor break away from the so-called cycle of poverty/ intergenerational poverty?

Yet another recurring criticism of the program is that it discourages the search for employment and eventually would encourage laziness among the poor people. Under this premise, many people would give up trying to find a job, content to live on the program, which, in the experience of the Bolsa Familia, is called the cesta esmola (alms-basket). The National Conference of Bishops of Brazil (NCBB), a powerful arm of the Catholic Church, maintains that “the program is addictive,” and leads its beneficiaries to an “eternal accommodation.”

According to the Katipunan ng Damayang Mahihirap (KADAMAY), an urban poor group, the 4Ps is a “deceitful program” since our government even has to borrow $400 million from the Asian Development Bank (ADB) to fund the program. As the government is already burdened with paying its current debt, acquiring additional debts will more harmful to the country in the long run. Also, besides failing to address the real causes of poverty, the 4Ps as presently construed is sorely insufficient. Compared with CCT experience of Brazil and Mexico which have one-fourth (1/4) and one-fifth (1/5) of their households under their respective CCT programs, the 4Ps covers only a mere one million out of 18 million households. Even if the DSWD achieves its 2.3 million target household by 2011, it still represents about one-eighth (1/8) of total households. Its impact is very minimal and will not make a dent in poverty.

A CCT program like the 4Ps can only be considered a “poverty shield” or “poverty containment” but not as a “panacea” to the poverty problem.  In order for the 4Ps to help families break free from the cycle of poverty, it must seriously address the real roots of mass poverty. And a government dole-out program will not help eradicate poverty. What is needed is a “re-engineering” of the economy that will respond to the needs of the majority of the Filipino people.

References

Annex A

A Summary of Countries with Existing CCT Programs with Target Population and their Components

[1] Based on official NEDA figures, economic growth in terms of gross domestic product has averaged 5.0% during the Arroyo presidency from 2001 up to the first quarter of 2008

[2] The Millennium Development Goals (MDG) are set of eight (8) time-bound, concrete and specific targets aimed at significantly reducing, if not decisively eradicating poverty by the year 2010.

[3] Thru various social development programs spear-headed by the DSWD and as indicated in action plans like the National Plan Action for Children 2005-2010, National Decade Plan for the Filipino Family 2006-2010, Philippine Plan of Action for Senior Citizen 2006-2010 and the KALAHI-CIDSS Program.

[4] During the 2010-2011 congressional budget hearing, former President and 4Ps main proponent, now Rep. Gloria Macapagal-Arroyo interpolated whether the CCT program is the main reason for the budget reduction in farm-to-market roads and state universities and colleges, small allocation for the Visayas and Mindanao, and the budget for the judiciary was decreased.

[5] World Bank Draft Pre-Appraisal Mission Report, December 2008

[6] In the case of the Philippines, the 4P’s operates much similar with other CCTs implemented around the world when it comes to program design, objectives, approaches, conditionalties and rate of cash transfer per household except for Jamaica which includes the elderly (persons who are 60 years old and above), poor adults (18 to 59 years old) and persons with disability (PWD)

[7] The Philippines, having been “graduated” from being a low-income country to a low middle-income country, it has already the capacity to adopt an integrated approach that can address three issues, namely: Poverty, Education and Health issues.

[8] Bolsa Familia translated as "Family Allowance" is a part of the Brazilian governmental welfare program “Fome Zero” (Zero Hunger). Bolsa Família provides financial aid to poor and indigent Brazilian families on condition that their children attend school and are vaccinated. The program attempts to both reduce short-term poverty by direct cash transfers and fight long-term poverty by increasing human capital among the poor through conditional cash transfers. About 12 million Brazilian families receive funds from Bolsa Família, which has been described as "the largest programme of its kind in the world.”

[9] Human Capital can be referred to competencies, attributes, personality or knowledge to perform labor and in the end produce economic value.

[10] The proxy mean test is a simple statistical test to measure the socio-economic condition of the household being undertaken by the National Household Targeting System.

[11] Aside from health and education components, the program also has “Work Rewards” that can improve the family’s quality of life and to be able to sustain its needs by taking training classes and working with the required number of hours for six months while earning money.

[12] The World Bank (WB) signed an agreement with the government of Honduras to loan US$40 million in support of the Family Allowance Program (PRAF)

[13] Formerly known as “Progresa”. In March 2002 it was changed to Oportunidades to broaden its objectives.

[14] In 2007, The Inter-American Development Bank (IDB) approved a $20,170,000 loan for their social protection program (Red de Oportunidades) The loan will help the country  increase the efficiency and efficacy of Red de Oportunidades, which plans to expand its conditioned cash transfers to some 75,000 of the poorest households in the country over the next two years.

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