CONDITIONAL CASH TRANSFERSThe Philippine Experience

Paulo Jose M. Mutuc 07222011

KEY POINTSPhilippines’ conditional cash transfer program (4Ps) is an intriguing large-scale policy experimentMuch bigger set of resources and responsibilities for a relatively small, lesser known executive government office

Very technical, yet very political as well Consistently mentioned and highlighted by the President in reference to the anti-poverty and anti-corruption platform of governance he campaigned on during the previous election (May 2010)

Involves challenging policy implementation issues at the grassroots level

CONTEXT AND RATIONALEWhat are conditional cash transfers?Periodic cash payments to women/household heads of poor families subject to monitored compliance with health and education obligationsPreventive health care and school attendance

Goals: Immediate income support, long-term poverty reduction

Why conditional cash transfers?Income and incentive effectsMore efficient , less costly (direct and objective targeting)Stimulates supply-side improvementsFavorable, cross-country empirical evidence Considerable poverty gap reductions (e.g. Brazil)Double-digit increases in school enrollment and health service useImproved learning and health outcomes

CONTEXT AND RATIONALEFragmented approach to social protection in the PhilippinesCost-effectiveness of existing programs questionable due to arbitrary, varying modes of targeting

Share of poor in total Food for School transfers only 39.5% Low, very variable amount of resources devoted to social assistance

Real social assistance/poor person (1999-2006): Php81.75 (¥163.50)

Bala, A. R. (2010). The Philippine experience in social assistance., in S.W. Handayani & C. Burkley (Eds.)., Social Assistance and Conditional Cash Transfers. Mandaluyong: ADB.

Achieving Philippine Millennium Development Goal targets by 2015: Halve the proportion of Filipinos living below the national poverty and food subsistence thresholds Achieve universal, gender-equal primary educationReduce by two-thirds the under-five mortality rateReduce by three-quarters the maternal mortality ratio

A national poverty reduction program administered by the Department of Social Welfare and Development (DSWD) providing conditional cash grants to households that:Live in the poorest municipalities as identified by the National Statistical Coordination BoardAt or below the provincial poverty thresholdHave children between 0-14 years old or have a pregnant womanAgree to meet conditions

Target: 4.6 million beneficiary households by end-2016Given Php21 billion (approx. ¥42 billion) in the 2011 budgetRepresents 62 percent of DSWD’s Php34 billion 2011 budgetNow being implemented in 98.7% of Philippine provincesEnabling administrative orders/circulars: DSWD AO 16 (2008), Joint Memo 2 (2011)

PANTAWID PAMILYANG PILIPINO PROGRAM (4Ps)

Total maximum monthly grant: Php1,400 (approx. ¥2,800)

Total maximum yearly grant: Php15,000 (approx. ¥30,000)*

Grants are given up to a maximum of five years, through cash cards from government bank

branches*On average, about 20% of beneficiary-households’ annual income

Monthly Amount

Purpose

Php500 Health and Nutrition

Php300/child Education

Purpose Budgeted

amounts

Share in total

Actual cash grants

Php17.1B 81%

Training Php1.6B 8%

Salaries Php0.7B 3%

Administrative expenses

Php0.6B 3%

Advocacy materials &

manuals

Php0.6B 3%

Capital outlay Php0.2B 1%

Bank fees Php0.1B 1%

PANTAWID PAMILYANG PILIPINO PROGRAM (4Ps)

*Excludes Php0.1B (Php100M) for household targeting system

Availing of pre- and post-natal care for pregnant women, with childbirth overseen by trained health

professional

Attendance in monthly family development sessions

Regular health check-ups and vaccines for children (0-5 yrs.)

School attendance requirements*:Daycare or preschool for children aged 3-5

Elementary or high school for children aged 6-14*Attendance in 85% of classes per month

Twice a year deworming for school age children*Additional conditions exist for some communities

CONDITIONS*

ORGANIZATIONLead Agency DSWD

Supporting Offices Departments of Health, Education, Interior and Local

Government, and Land Bank

National Implementing Arm

DSWD-National Project Management Office

Regional Implementing Arm

Regional Project Management Offices

City/Municipality Implementing Arm

City/Municipal Links for every 1,000 households

Local health and education service providers (under

DOH, DepEd)

Funding and Technical Support

World Bank, AusAID, ADB, UNICEF, UNFPA

ORGANIZATIONDSWD (Central) Oversight, supply

assessment, target area identification, technical

assistance, data repository, grievance system

implementation, fund and resource management

Regional DSWD offices Specific operational guidelines, availability of

health and education supplies at municipalities, resolution of all regional concerns, preparation of

accomplishment reports and monthly meetings

Department of Health Ensure health supplies, assist in logistics,

permanent support staff for 4Ps at all levels, monitoring

ORGANIZATIONDepartment of Education Ensure education supplies,

assist in logistics, permanent support staff for 4Ps at all levels, monitoring

Department of Interior and Local Government

Incorporation of pro-poor programs and capacity

building for local governments, impact

evaluation in communities

National Anti-Poverty Commission

Coordination and advisory functions, provision of national poverty data,

regional oversight assistance

Local Governments Availability of health and education supplies in target areas, implementation and coordination of municipal

activities, reports to regional gov’t, monthly

meetings

ORGANIZATION*DSWD Secretary Nat’l. Advisory

Committee (DSWD, DepEd,

DOH, DILG, NAPC, NAPC, Budget,

Nutrition Council, NEDA)

Undersecretary/Project Director

Asst. Sec./Deputy Project Director

Regional Teams

Program Manager, Project Management

Office17 Regional Directors, Asst.

Directors

Regional, Provincial, Municipal Advisory

Committees

As per EO 43 (2011), the DSWD Secretary is the chair of the Cabinet Cluster on Human Development and Poverty

Reduction.

*1 Operations Cluster per 20,000 households*1 Municipal link per 1,000 households

IMPLEMENTATION HISTORYNovember 2006 DSWD and World Bank

begin work on 4Ps

March 2007 Pilot implementation– 4,459 households in

three regions

February 2008 320,000 households in 27 provinces, 160 cities

December 2009 665,542 households in 63 provinces, 446 cities

December 2010 1 million households in 79 provinces, 729 cities

June 2011 2 million households reached

December 2011 2.3 million households

Fernandez, L. & Olfindo, R. (2011). Overview of the Philippines’ conditional cash transfer program: the Pantawid Pamilyang Pilipino Program (Pantawid Pamilya). Philippine Social Protection Note No. 2. World Bank and Australian Government Aid Program.

Fernandez, L. & Olfindo, R. (2011)

PROGRAM CYCLE

IMPLEMENTATION

1. Targeting and enumerationDevelopment of National Household Targeting SystemPoorest provinces identified (Family Income and Expenditure survey)Poorest cities and municipalities identified within poorest provinces

Outside poorest cities, poor communities identified via data from Presidential Commission on Urban Poor and local social indicators

In poorest cities, communities are selected based on local gov’t dataDSWD deploys enumerators to gather socioeconomic information via house-to-house interviews (questionnaire about household assets)Households’ incomes estimated using interview response dataLists of potential eligible households posted in communities for verification**On demand applications in communities also accepted

4.7 million households identified poor as of Jan. 2011

IMPLEMENTATION2. Verification and disbursementEligible households sign agreement and are organized into community assemblies (with elected leaders) for monitoring Actual cash disbursements made every two months, to coincide with compliance checks by DSWD program management officesPayroll process: NPMO DSWD Cash Division check DSWD Project Director and Manager approval Land Bank

3. Updating (Management Information System)Individual households responsible for updating informationUpdates flow from community upward to NPMO, for encodingUpdates presented at monthly community assemblies, verified by linksThird non-compliance offense/change in household eligibility results in termination of payments

IMPLEMENTATIONCompliance Verification System

NPMO (compliance forms) RPMO (compliance forms) City schools & health centers RPMO (via municipal links) NPMO updates MIS and issues compliance forms for next

period

Grievance Redress SystemGrievance application and process via MIS being testedComplaint reporting mechanisms (text hotline, e-mail, social networking)

4. Program monitoring Aside from internal monitoring by DSWD and World Bank, biannual spot checks done by a third party (Social Weather Stations in 2010)President has mandated Senate and House Oversight Committees on Public Expenditures to monitor 4Ps implementation

IMPACTCompliance with conditions

As of Q1 2011 (April 18, 2011)

Condition Compliance

Day care attendance 95.71%

Primary and secondary school attendance

97.50%

Check-ups for children and pregnant women

96.99%

Deworming for school-age children

97.29%

Family development sessions

97.30%

IMPACTIncome effects

Fernandez & Olfindo (2011)

Potential reduction in beneficiaries’ income gap: 5.3 points Potential reduction in beneficiaries’ poverty severity: 4.3 pointsAverage increase in per capita income among beneficiaries: 12%Potential long-run increase in school attendance among poor households: 8 points Potential long-run decrease in poverty incidence: 13 points

Simulated health and education outcomes

Son, H.H. (2008). Simulation of impact of conditional cash transfers on school attendance and poverty: the case of the Philippines. Presentation made at the 46th annual meeting of the Philippine Economic Society.

Results of Northern Samar field spot check in 2010*:

“In general, the CCT in Northern Samar is successful.”

“The CCT’s mechanisms for monitoring are in place in Northern Samar, though it’s unpaid extra

work for the teachers and health workers who must record the compliance of the grantees with

the conditionalities.”

Mangahas, M. (2010, November 26). A conditional cash transfer spot check.

Philippine Daily Inquirer(Mangahas is president of Social Weather Stations, a leading

Philippine public opinion and social research institute.)*Northern Samar was identified in a 2008 national development mapping survey as one of the country’s three poorest provinces.

Inadequate support infrastructure “The decision to expand and accelerate the program was…made without adequate due

diligence in assessing supply-side, implementation, and program delivery

requirements.”“Of the 409 CCT towns and cities audited, an

overwhelming majority are not meeting seven of the nine quantity benchmarks for education, and all three benchmarks for health personnel ratios

to population.”

Philippine Center for Investigative Journalism

“Too much, too soon?”

“As of October 2010, only around 59 percent of Set 1 and 71 percent of Set 2 active beneficiary

households receive payments through LBP cash cards. Even for municipalities with LBP branches,

issuance and distribution of cash cards to beneficiary households have been particularly

challenging”

Proposed project cycle not exactly followed4Ps scaled up even as assessment of health and education in communities remain unfinished Concerns about gov’t. capability and accountability Doubling of DSWD staff and budgetLarger issue of state of local schools and health facilitiesSustainability of 4Ps financing

WEAKNESSES

Fernandez, L. & Olfindo, R. (2011)

INSIGHTS

Promising initial results, but too early to tell whether 4Ps truly make a difference

Administrative challenges and financing issues need to be discussed more openly and tackled

more directly

There may be a need to distinguish or prioritize between social protection and social development

aims

Policy ownership may be an issue given considerable input by foreign aid organizations