CONDITIONAL CASH TRANSFERS

1. CONDITIONAL CASH TRANSFERS The Philippine Experience Paulo Jose M. Mutuc 07222011

2. KEY POINTS Philippines’ conditional cash transfer program (4Ps) is an intriguing large-scale policy experiment Much 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

3. CONTEXT AND RATIONALE • What are conditional cash transfers? • Periodic cash payments to women/household heads of poor families subject to monitored compliance with health and education obligations • Preventive health care and school attendance • Goals: Immediate income support, long-term poverty reduction • Why conditional cash transfers? • Income and incentive effects • More efficient , less costly (direct and objective targeting) • Stimulates supply-side improvements • Favorable, cross-country empirical evidence • Considerable poverty gap reductions (e.g. Brazil) • Double-digit increases in school enrollment and health service use • Improved learning and health outcomes

4. CONTEXT AND RATIONALE • Fragmented approach to social protection in the Philippines • Cost-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 education • Reduce by two-thirds the under-five mortality rate • Reduce by three-quarters the maternal mortality ratio

5. PANTAWID PAMILYANG PILIPINO PROGRAM (4Ps) • 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 Board • At or below the provincial poverty threshold • Have children between 0-14 years old or have a pregnant woman • Agree to meet conditions • Target: 4.6 million beneficiary households by end-2016 • Given Php21 billion (approx. ¥42 billion) in the 2011 budget • Represents 62 percent of DSWD’s Php34 billion 2011 budget • Now being implemented in 98.7% of Philippine provinces • Enabling administrative orders/circulars: DSWD AO 16 (2008), Joint Memo 2 (2011)

6. 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

7. PANTAWID PAMILYANG PILIPINO PROGRAM (4Ps) *Excludes Php0.1B (Php100M) for household targeting system

8. CONDITIONS* 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

9. ORGANIZATION

10. ORGANIZATION

11. ORGANIZATION

12. 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 Program Manager, Project Management Office 17 Regional Directors, Asst. Directors Regional, Provincial, Municipal Advisory Committees Regional Teams *1 Operations Cluster per 20,000 households *1 Municipal link per 1,000 households As per EO 43 (2011), the DSWD Secretary is the chair of the Cabinet Cluster on Human Development and Poverty Reduction.

13. IMPLEMENTATION HISTORY

14. 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.

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

16. PROGRAM CYCLE

17. IMPLEMENTATION • 1. Targeting and enumeration • Development of National Household Targeting System • Poorest 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 data • DSWD deploys enumerators to gather socioeconomic information via house-to-house interviews (questionnaire about household assets) • Households’ incomes estimated using interview response data • Lists of potential eligible households posted in communities for verification* • *On demand applications in communities also accepted • 4.7 million households identified pooras of Jan. 2011

18. IMPLEMENTATION 2. Verification and disbursement Eligible 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 offices Payroll process: NPMO  DSWD Cash Division check  DSWD Project Director and Manager approval  Land Bank 3. Updating (Management Information System) Individual households responsible for updating information Updates flow from community upward to NPMO, for encoding Updates presented at monthly community assemblies, verified by links Third non-compliance offense/change in household eligibility results in termination of payments

19. IMPLEMENTATION Compliance 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 System Grievance application and process via MIS being tested Complaint 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

20. IMPACT Compliance with conditions As of Q1 2011 (April 18, 2011)

21. IMPACT Income effects Potential reduction in beneficiaries’ income gap: 5.3 points Potential reduction in beneficiaries’ poverty severity: 4.3 points Average increase in per capita income among beneficiaries: 12% Fernandez & Olfindo (2011) Simulated health and education outcomes Potential long-run increase in school attendance among poor households: 8 points Potential long-run decrease in poverty incidence: 13 points 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.

22. 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.

23. “Too much, too soon?” 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

24. WEAKNESSES • “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 followed • 4Ps 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 budget • Larger issue of state of local schools and health facilities • Sustainability of 4Ps financing Fernandez, L. & Olfindo, R. (2011)

25. 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