CONDITIONAL CASH TRANSFER IN THE PHILIPPINES: AN EFFECTIVE POVERTY INTERVENTION?

I. FACTS AND FIGURES

Introduction

Compared to our neighboring countries, the Philippines is far delayed in its progress toward poverty reduction and faces challenges in achieving the Millennium Development Goal (MDG): eradicate extreme poverty and hunger, achieve universal primary education, reduce child mortality, improve maternal health, and promote gender equality. A slow-moving economic growth over the decades, led mostly by the service sector, did not generate sufficient job opportunities to lift Filipino workers and their families out of poverty. The country thus needs a new development model to benefit the poor. While poverty can be best diminished by economic growth, poverty reduction efforts should be supplemented by an adequate social protection system to relieve the poorest of the poor. The Philippines' social protection system has been fragmented, uncoordinated, and poorly targeted. The conditional cash transfer (CCT) program, which was initiated in 2007 by the Arroyo administration, is currently becoming a centerpiece of the social protection system in the country, under the Aquino administration.

Poverty stands right in front of you

Poor people in Tirana, Albania

The End of Poverty

Although the program is well-prepared having been based on international experiences, it requires an efficient implementation and careful monitoring and evaluation to attain the expected goals. A CCT program with a rigorous impact evaluation offers an excellent opportunity, for both policy makers and development practitioners, to learn what works and what does not work as they seek for effective poverty interventions.

Pantawid Pamilyang Pilipino Program (4Ps or CCT) is a human investment program for children through health and education and a poverty-reduction strategy that provides cash grants to extremely poor households to allow their family members to meet certain human development goals. It provides social assistance through health and education conditional cash grants to poor households with children 0-14 years old and/or pregnant women which are transferred upon the compliance of beneficiaries with the program conditionalities.

Goals and Objectives

1. To promote human capital development among poor families, especially children, to break the intergenerational cycle of poverty

2. To improve the health condition of children age 0-14 years old

3. To improve the maternal health of pregnant and lactating mothers

4. To raise consumption of nutrient dense foods among poor households

5. To increase enrolment/attendance of children in elementary/high school

6. To encourage parent's participation in the growth and development of their children, and their involvement in the community.

Conditions

As the program stipulates, the provision of cash grant to poor households is based on beneficiaries' compliance with the conditions set forth by the program. These conditions include

the following:

1. Pregnant women shall get pre natal care, childbirth shall be attended by skilled/trained health professionals, and mother shall get postnatal care thereafter.

2. Parents/guardians shall attend family planning sessions/mothers classes, Parent Effectiveness Service and other topics that are of their needs and interest.

3. Children 0-5 years old shall get regular preventive health checkups and vaccines.

4. Children in elementary school must at least receive twice a year deworming

5. Children 3-5 years old shall go to day care/pre-school and attend at least 85% of the time.

6. Children 6-14 years of age shall enroll in schools and attend at least 85% of the time.

Program Coverage

Pantawid Pamilyang Pilipino Program geographic and household coverage for the 4th Quarter of 2011:

A. Geographic Coverage

The program is being implemented in 1,046 cities and municipalities in 79 provinces in all 17 Regions (please see Table 1).

Table 1: Geographic Coverage by Level

B. Household Coverage

As of 31 December 2011, there are 2,345,639 households registered in the program or 100.27% of the 2,339,241 target beneficiaries (please see Table 2).

Table 2: Household Coverage

Almost half of the households or 1,134,585 are from Mindanao while 705,692 are from Luzon and 505,362 are from Visayas (please see Figure 1).

Program Budget

As of 31 December 2011, the total cash grants released amounted to P13,093,184,200 of which P6,614,429,500 for Health and P6,478,754,700 for Education covering the period January to October 2011.

In order to deliver the cash grants to the households faster and at lesser cost, the Department thru Land Bank of the Philippines (LBP) has engaged other service providers such as Rural Banks, Cooperatives, money couriers and Government Financial Institutions as partners in distribution. As of 31 December 2011, Globe G-Cash and 23 Rural Banks have been contracted by the LBP. A breakdown of the distribution of Cash Grants per mode is located below.

II. CONDITIONAL CASH TRANSFERS AND POVERTY

The social protection system in the Philippines is characterized by fragmented, uncoordinated, and poorly targeted programs. In 2009, over 60 social protection programs were in place and implemented by as many as 20 agencies, which resulted in poor coordination among the implementing agencies and duplication of program beneficiaries. The poor targeting of program beneficiaries led to high inclusion (unintended individuals or households are included as beneficiaries) and exclusion (intended individuals and households are excluded as beneficiaries) errors, limiting overall impacts of the programs funded by scarce public resources.

Conditional cash transfer (CCT) programs have widely been implemented around the world, particularly in Latin America. A good many programs have made considerable success in improving welfare and social indicators of the poor. In the Philippines, the Department of Social Welfare and Development (DSWD) has initiated the CCT program (Pantawid Pamilyang Pilipino Program or 4Ps) in 2008, following a pilot test in 2007, to establish a better social protection system. From an initial coverage of 6,000 households in the pilot test, the program coverage was expanded to 666,000 households in response to the food and fuel crisis in 2008 and subsequent global economic crisis in 2009. The program was further scaled up in 2010 to cover about 1 million households. The government intends to set the CCT program as the mainstay of the country's social protection system. Major development agencies, including the Asian Development Bank (ADB), provide loans and technical assistance to support this initial expansion and to strengthen related systems and capacities. The government has further targeted the expansion of CCT grants to 2.3 million poor households by the end of 2011.

CCT programs provide poor households with a cash grant based on their fulfillment of predetermined conditionalities. Usually, the grants are conditioned on minimum levels of use of education and health care services. In general, CCT programs, including that of the Philippines, have two objectives: one is to reduce immediate poverty through cash grants for poor households to finance immediate consumption (redistributive goal), and another is to reduce future poverty by encouraging poor households to invest in human capital (investment goal).

The two objectives of CCT sometimes contradict each other. To maximize the impact on human capital investment, one needs to focus on households that cannot send children to school or health centers without a cash grant. However, this tight targeting can impose a trade-off with the redistributive goal, since poor households whose children already go to school or health centers are excluded from the program. (This is not the case for the Philippines' CCT program since eligible poor households can get a cash grant irrespective of their current status of school attendance and health center visits). In designing a CCT program, policy makers need to find a right balance between the two goals depending on policy priorities.

Irrespective of their being conditional or unconditional, direct cash transfers to poor households can face challenges. Even if poverty reduction is the central policy objective, it does not necessarily support direct cash transfers to the poor. Some may argue that, if economic growth is the main engine of poverty elimination, it would be better to spend scarce public resources for other services, such as infrastructure, for higher growth. Others may challenge cash grants because these may give disincentive for people to work and discourage self-reliance among recipients. However, infrastructure and some public services often fail to reach the poor or at least disproportionately benefit nonpoor, and may be inefficient and/or prone to corruption. Further, prevailing market failures in credit and insurance markets effectively prevent the poor from investing in both human and physical capitals to overcome their inherited disadvantages.

Attaching a constraint on cash transfers is not an orthodox idea for economists. Basic economic theory would suggest that unconditional cash transfer (UCT) is more desirable since it can offer a larger choice set for recipient households, allowing them to attain a higher welfare gain based on their preference. UCT allows recipients to tailor their consumption pattern to their specific needs and constraints. However, CCT is more powerful than UCT in inducing behavioral changes in recipient households since they need to increase their service consumption at least to a certain level specified in attached conditions.

Figure 3 illustrates two types of poor households (Type 1 and Type 2). Both types of households maximize their utility at point A given their budget constraint without a cash grant. With a cash grant without any conditions (UCT), both types increase their consumption on education to EB. However, the level of consumption of education attained at point B by Type 1 households is still less than the policy target level (Emin). If we attach a condition that recipients should increase their consumption at least to the target level, Type 1 households maximize their utility at point C, which guarantees households' consumption of education service at the target level. This simple illustration shows that CCT can be a powerful tool in directing recipients' consumption patterns toward the intended direction. Efficiency loss with CCT, which is shown as the difference in utilities (UUCT - UCCT), can be regarded as a cost to encourage their investment in human capital.

Figure 3. Cash Transfers - Unconditional or Conditional?

There are four broad sets of arguments for inducing behavioral changes with CCT. First, poor households do not necessarily have adequate information about the expected returns to investment in human capital (imperfect information by parents). Uneducated parents may not be well informed of the value of education, and the future value of education may be underestimated based on their current assessment of the value of education. Second, a decision by parents can contradict with the interest of a child who has no option but to follow the parents' decision (discrepancy between parent and child optima). Parents may not send their children to school or may require them to work since they put a higher priority on current consumption. Third, even if the level of investment in human capital is optimal at the household level, it cannot be socially optimal because of market failures, particularly spillover effects (market failures due to spillovers). Fourth, there is more political support for cash grants if taxpayers can see some behavioral changes by recipients (political support).

The amount to be transferred has significant implications for CCT's impact on its redistributive and investment goals. An appropriate amount depends on the relative importance of the two goals. If CCT puts a higher priority on behavioral changes for increasing investment in human capital, the grant amount should be more than enough for recipient households to compensate their foregone revenues and additional costs to fulfill conditions. To send children to school, they may need to give up incomes earned by their children. Regular visits to a health center may entail additional costs, such as transport. Recipients may even need to shoulder some costs to get cash from the banks. If the CCT amount is not enough to compensate foregone revenues and costs of conditions, households will neither respond to CCT nor change their behaviors on human capital investment (Figure 4).

Figure 4. Insufficient Cash Transfer

On the contrary, if the cash transfer amount is too large, it is highly possible that recipient

households will reduce their time allocation for work and lose incentives to find jobs. Even worse, they may choose leisure, preferring to survive on cash grants. Internationally, there is little evidence to suggest any appreciable decline in parents' labor participation (though several studies document declines in child labor), in part because benefit levels are chosen very carefully to avoid such adverse incentives. Eligible households in the Philippines' CCT program are expected to receive 23% of their average annual household incomes, which is comparable with those in successful CCT programs in other countries. The cash transfer amount in the Philippines' CCT is set based on the international experience.

CCT is a demand-side intervention since it aims at increasing demands for social services by providing the poor with financial incentives. An analysis of the 2008 Annual Poverty Indicators Survey and other evidence suggest that demand-side factors, namely parents' low value placed on education, as well as the direct and indirect costs of schooling, are likely to be lead factors in dropout issues and lack of school attendance by poor children. Financial burden and other demand-side factors also appear important for access to health services. Nonetheless, a critical assumption embedded in a CCT program is that good services are in place for poor households. If service providers, such as schools and health clinics, are located far away from recipients' residences, they may simply not participate in the program. If services provided there are of poor quality, this may undermine CCTs' impact in improving human capital even if eligible households participate in the program. CCT programs thus need to be complemented by supply-side interventions for better service provisions.

Conditional Cash Transfer has significant positive impacts on countries who have already implemented this program.

1. Increased per capita income or its consumption proxy

By and large, CCTs have been effective in increasing per capita consumption or income. The impact on per capita consumption for the median household ranges from 7 percent in Brazil and Honduras to 29.3 percent in Nicaragua. The impact depends on the size of the cash transfer.

2. Improved consumption?related poverty measures

By and large, CCT programs also show a significant positive effect on such poverty measures as headcount index, poverty gap, and squared poverty gap. Examples:

? Colombia (Familias en Accion) reduced poverty gap by almost 7.0 percentage points

? Nicaragua (RPS) decreased the poverty gap by 9?13 points and poverty headcount index by 5?7 points

The reduction of consumption poverty due to CCT can be particularly large in the case when the transfers are large. In Mexico, for example, Progresa reduced the poverty gap by 19%.

Figure 5. Impact of CCT Programs on Poverty Indices

(Fiszbein and Schady, 2009)

3. Strongly pro?poor distribution of CCT benefits

There is a state?of?the art targeting system with relative less inclusion errors and resistant to selection manipulation.

4. Increased school enrolment

The most cited cases include Brazil's long?standing Bolsa Familia (estimated to have increased enrolments by around 6%), with generally similar results in other Latin American countries. The impact on enrollment rate differs: larger for low socio-economic status.

CCT programs in Asia (largely recently launched) have generally shown double?digit increases: e.g., with enrolments estimated to have risen more than 10% due to programs in Bangladesh and Pakistan, and as high as 31% in Cambodia.

5. Improved health service utilization

As with education, CCTs have generally resulted in substantial increases in the utilization of health services. Moreover, as with enrolments the effects appears to be largest among the most disadvantaged. Despite sizeable variation, CCT programs by and large yielded rises in child immunization/vaccination rates, some on the order of 10%, depending on the initial level of immunization coverage rate.

6. Negligible corruption

There is less opportunities for corruption due to program design (direct transfer of cash to beneficiaries, objective targeting system) and exemplary governance practices: highly transparency, accountability and strong social oversight

7. Less wastage due to pilferage, rotting goods, overpricing and inappropriate assistance (due to use of cash benefits)

PHILIPPINE MACROECONOMIC INDICATORS BEFORE AND AFTER CCT IMPLEMENTATION

Poverty

Following some tepid improvement through mid-2010, poverty and especially hunger have been worsening anew. Self-rated poverty and hunger incidence rose noticeably in March. Self-rated poverty incidence also worsened as 51 percent (10.8 million) of households considered themselves poor against 43 percent in March 2010. Meanwhile, the latest hunger incidence of 20.5 percent (around 3.4 million families) is 2.4 points higher than in the previous quarter and is nearing the record high of 21 percent reached from December 2009 to June 2010. The self-rated poverty threshold6 has also remained flat for several years, indicating that poor families have been lowering their living standards in recent years. Over a longer time horizon, it should be noted that based on the same qualitative surveys used to collect the information on self-reported hunger, self-reported poverty and self-reported food poverty a paradox arises, namely: a declining trend from 1990 to 2011 in both poverty and food-poverty but an increase in hunger (the latter series starts in 1998).

Inflation

Figure 7. Inflation Rate

Headline and core inflation have risen since 2011 but remain contained within the Bangko Sentral ng Pilipinas (BSP) target and below regional peers' inflation Supply pressures, and in particular increasing fuel and food prices and the resulting secondary effects such as increases in transport prices were key drivers of the uptick in inflation, to 4.5 percent, in May (the highest rate since May 2009). Headline inflation has gradually increased since January, with year-to-date inflation at 4.2 percent, but remains within the BSP target range of 3 to 5 percent. Price increases among food items9-though below price pressures seen in neighboring countries-were due to crop/aquaculture damage from adverse weather conditions, as well as elevated prices of imported selected food products. Food inflation contributed 2 percentage points to overall inflation in May. Transport and communication inflation, at 9.7 percent in May against 4.4 percent in January, stemmed from (mostly regulated) transport fare hikes in Q1. Core inflation has been rising moderately since the beginning of the year, reaching 3.7 percent in May. Increases in the minimum wage in five regions have broadly followed pace with inflation. Effective in May, the National Capital Region`s minimum wage was increased by 5.4 percent.

GDP Per Capita

Figure 8. GDP per capita in US $

GDP per capita increased from 3,300 to 3,500 from 2009 to 2010. This can be attributed to the implementation of CCT. Because of the increased money in the market, people use the money to consume more products. This increases the GDP that will then be divided over the total population to come up with the GDP per capita which is the average share per person contributed. This also means that the rate of growth of GDP is greater than the rate of growth of the population of the country which is a great macroeconomic indicator.

GDP Real Growth Rate

Figure 9. Real GDP Growth rate adjusted for inflation (%)

This entry gives GDP growth on an annual basis adjusted for inflation and expressed as a percent. The GDP growth was 3.8% on 2008. Surprisingly, GDP growth stalled and decreased to 1.1% on 2009. On 2010, the country's economy bounced back to post a 7.3%. The CCT was implemented on 2010 and arguably one of the growth machines employed by the current government to increase GDP.

III. PROBLEMS AND ISSUES

The impact of the 4Ps/CCT scheme on genuine poverty eradication is however likely overstated and, indeed, the program even appears to be used for purposes that will actually worsen poverty and undermine the welfare of Filipinos in general. There are four (4) major concerns:

1.) In the specific conditions of the Philippines, the supposed benefits in terms of improved `human capital' are not certain. The country remains saddled with insufficient and poor quality educational and health facilities which may not be able to absorb the additional users.

Further straining limited classrooms and teachers might even drag down the quality of instruction for existing students, and similarly with overburdening health facilities and personnel. The desired health improvements or learning outcomes for beneficiaries may then not materialize for many.

The country is short of some 153,000 classrooms, 13.2 million school desks and 104,000 teachers at elementary and high school levels. There are only 16,200 barangay health stations for the country's 42,000 barangays, while the around 2,300 rural health units are barely changed from 2,200 over a decade ago. The number of government doctors (around 3,050), dentists (1,900), nurses (4,600) and midwives (16,800) has also not kept pace with the growing population and their numbers per 10,000 population has dropped between 10%-20% over the period 1999-2007.

There are also grounds to believe that the billions of pesos committed will not all be going to their intended purposes. There is likely to be insufficient administrative capacity to properly implement the ambitious 4Ps targeting, monitoring and compliance procedures. Entering the 4th quarter of 2010, for instance, the DSWD is apparently still some 212,000 short of a supposed one million target household beneficiaries - yet it seeks to suddenly reach more than double this amount as soon as next year. The entrenched tendency to corruption and abuse for patronage purposes in national and local government, especially of such large lump sum funds as the CCT, is also a formidable problem.

Significant numbers of the country's very poorest are even beyond the reach of the program. This includes those without permanent residence (because lacking stable jobs or livelihoods, or informal settlers in contested communities), homeless families, poor elderly without children, and others. On the other hand, significant numbers of those reached might not even be amongst the most needy or might already be among those who were already complying with the CCT conditions even before the program reached them.

The CCT program may also be overestimating the potential benefits from developing `human capital'. There are some 4.6 million unemployed Filipinos in the country of whom nearly nine out of ten (87%) are reasonably educated - 44% are high school undergraduates or graduates, and 43% are at least college undergraduates or graduates. This underscores how, in overall economic conditions of poor jobs prospects where even having a high school or college degree is no guarantee of getting work, it is unrealistic to assume that having attended school or being healthier as the CCT targets will result in eventually having productive and decent-paying employment.

2.) The 4Ps/CCT program will be a smokescreen to prop up support for the sort of neoliberal `free market' policies of globalization that caused greater poverty and underdevelopment to begin with.

The Aquino government has yet to formally articulate a coherent socioeconomic program but there are already enough clues - from major speeches by the president, choice of a conservative economic team, signals from key Cabinet economic officials, collaboration with major foreign and domestic corporations - to discern that it will continue the `free market' orientation of the Arroyo and previous administrations. It has already pressed for greater privatization as well as new and expansive free trade deals; on the other hand it has remained silent on decisive agrarian reform or a real effort to build national industry.

Successive administrations over the last three decades have already been implementing `free market' policies, both unilaterally and upon pressure from the World Bank (WB), International Monetary Fund (IMF), World Trade Organization (WTO) and governments of the United States (US) and other advanced capitalist powers. But these policies have not delivered broad-based development. Instead they have eroded domestic industry and agriculture, brought the number of unemployed and in poor quality work to record highs, flattened real wages, reduced household incomes, increased poverty, and forced millions of Filipinos abroad to survive.

The retrogressive character of the greatly expanded CCT program is most of all defined by its defense of neoliberal macroeconomic policies. The larger `social protection' budget is going to be used to mitigate the social consequences of these exclusionary policies, rationalize their continued implementation, and to press for even more. The program could also conceivably improve the country's poverty picture in time for the 2015 global deadline to meet the United Nations (UN) anti-poverty Millennium Development Goals (MDGs), when the neoliberal policy trends of the last decades will unavoidably come under greater scrutiny.

Overall, however, the situation will likely be akin to the experience with `safety nets' during the bygone era of structural adjustment and stabilization programs: short-term benefits of CCTs for a few beneficiaries will be more than offset by the long-term costs of `free market' destruction of jobs and livelihood (including for erstwhile CCT recipients).

The affinity of CCTs to neoliberalism is evident. They are justified as `efficient' in focusing on `deserving poor', children are `human capital' to be invested in for their future income-generating capacity, and the role of `individual responsibility' in social poverty is overstressed - while the government is excused for privatizing essential social services because the welfare intervention has shifted to selective cash transfers. Yet it is precisely publicly-provided education and health services that offer the best prospects for genuinely universal access by all Filipinos, especially by the poorest.

Politically, it has also been revealing that among the CCT program's defenders are civil society and party-list groups supposedly critical of neoliberalism and advocating transformative socioeconomic policies. Their support will tend towards increasing, rather than questioning, the legitimacy of neoliberal policies.

3.) The CCTs provide vital short-term income relief but nonetheless remain dole-outs.

The CCT is a dole-out because beneficiaries get money in exchange for something unrelated to their labor as productive individuals. Moreover, it is discretionary in nature and beneficiaries will get money only as long as such a program is in place. The ingrained pattern in the national government budget to sacrifice social services during recurring periods of rising debt payments and fiscal austerity is a particular source of uncertainty and volatility.

The 4Ps/CCTs have been presented as one of "three legs of convergence" of the government for achieving so-called inclusive growth not attained over the last decades of `free market' policies. The second leg is the Kapitbisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services (Kalahi-CIDSS) implementing basic infrastructure and community social service projects since 2003; 1.1 million households have reportedly benefited. The third leg is providing sustainable livelihoods such as through the Self-Employment Assistance-Kaunlaran (SEA-K) program claimed to have benefited 34,502 families nationwide.

However the benefits of 4Ps/CCTs, Kalahi-CIDSS and SEA-K are very localized in terms of scope and are self-limiting - compare their limited reach with the country's some 19 million households in 42,000 barangays, and the need for the economy to create jobs and livelihoods for a continuously expanding population that already stands at some 94 million Filipinos. The intrinsic weaknesses of these programs in terms of scope and long-term sustainability can only be addressed with more far-reaching economy-wide policy reforms that the Aquino administration, like those before it, does not appear to be inclined towards.

The CCTs are also unsettling for its patronizing and paternalistic tendencies at social engineering. The WB has pushed hardest for CCT programs globally over the last decade and is explicit that the conditionality "seeks to foster behavioral changes". This was also expressed by the former social welfare secretary who said: "CCTs are oriented at inducing socially optimum behavior." The essential thrust of the program is to persuade poor families to know what's good for them with cash incentives, big enough to be appealing at their low income levels, rather than through the merits being explained and their forming their own understanding.

4.) The 4Ps/CCT program will likely be implemented in many armed conflict areas as an integral part of the military's counterinsurgency (COIN) program, especially to deflect criticism from the human rights abuses that invariably accompany these.

IV. PROSPECTS AND EXPECTATIONS

Positive

Compared to a similar population not receiving the conditional cash transfer, the following outcomes shall be achieved:

a. Health and Nutrition

? 10 percent increase in the number of pregnant women getting antenatal and post natal care, and whose child birth is attended by a skilled health professional

? 10 percent increase in the number of children 0-5 years old availing of health preventive services and immunization

? 6 percent decrease in stunting among children age 0-5 years old

? 0.5 percent decrease from baseline level in the growth rate of the population

b. Education

? Current attendance of children to increase by 8 percent

? Transition rates from primary to secondary school to increase by 8 percent

? Years of education completed to increase by one year

? Elementary school gross enrollment rate for children 6 to 12 years to increase by 5 percent

? Attendance in a school or day care over 85 percent of school days to increase by 10 percent

? Increased enrollment of children 3-5 years old to day care/pre-school by 5 percent

c. Economic/Poverty

? Share of food expenditures in the household budget to increase by 4 percent

? Expenditure on nutrient dense foods (protein rich foods, fruits and vegetables) to increase by 2 percent.

Negative

The CCT program and its undesirable outcomes will even come at the cost of increased debt for the country. The Philippine government has so far incurred at least US$805 million in debt to finance its CCT program, or some PhP35 billion at current exchange rates. The WB push for CCTs started with technical assistance for a National Sector Support for Social Welfare and Development Project in 2006. In November 2009, the WB approved a US$405 million loan for the Social Welfare and Development Reform Project (SWDRP) which among others covered cash transfers for some 376,000 households. Similarly, The Asian Development Bank (ADB) provided related technical assistance from 2007 to 2009 and, in September 2010, approved a US$400 million loan for a Social Protection Support Project (SPSP) providing financial support for 582,000 households. The WB and ADB have been among the most sustained advocates and sources of pressure for neoliberal globalization policies in the Philippines.

These are loans for uncertain or even doubtful ends. For instance, a UN flagship report on poverty launched in September 2010, referring to "[social protection programs that] target based on income and [that] impose conditionalities," says: "These principles are questionable and do not necessarily produce the expected results, especially when investments in the programmes are minimal and not supported by efforts to tackle the structural causes of economic insecurity." Tempering the pro-CCT hype and notwithstanding support for such initiatives by external donors, the UN report says that "the benefits of narrowly targeting social assistance are questionable" and that "targeting based on income entails high costs, stigma and fails to reach the poor".

The DSWD explains that the CCT or 4Ps program "solves poverty directly in the short-term through the provision of the cash grants to the poorest of the poor in order to lift them out of their vulnerability, while simultaneously reducing long-term poverty through increased investments in human capital." It also asserts: "In the long-run, 4Ps is our only chance to make significant gains [particularly] on eradicating extreme poverty and hunger, achieving universal primary education, reducing child mortality, improving maternal health and promoting gender equality."

Yet, all things considered, the conspicuous expansion in the program has raised justifiable suspicion. For instance, the multi-billion peso expansion does not appear justified by any comprehensive program assessment. The DSWD says that two assessments of the 4Ps were conducted - Pilot Spot Checks and Qualitative Evaluation and a Social Weather Stations (SWS) survey in the first quarter of 2010. If the pilot spot checks refer to the program's pilot implementation in 2007, this experience only covered 6,000 households and an evaluation based on `spot checks' of apparently just some 760 households is far from ample. Moreover, the results of this evaluation were not even of overwhelming success with poor or lackluster results on targets such as de-worming, full immunization, and deliveries being attended by trained health professionals. It is meanwhile still unclear what the methodology and scope of the SWS survey was and, correspondingly, if these were comprehensive enough to justify more than doubling the budget for CCTs.

There is certainly a compelling short-term political motivation for the program - the stumbling Aquino administration is hard-pressed to meet, or at least seem to meet, the high expectations it stoked during the election period and at the start of its term. This coincides with the narrow but chronic interest of politicians for ever-greater resources for patronage and as opportunities for corruption. The 4Ps/CCT program is convenient for these because of its noble stated objectives and the huge amounts involved.

However CCTs will deliver far less poverty alleviation and for a much shorter time than promised. Also particularly alarmingly is how the program is being used for less obvious but more damaging purposes. The CCTs are going to temporarily cover up the severe development failure of `free market' policies to justify even more of these. The marked increase in cash transfer dole-outs is also very much in line with current AFP counterinsurgency strategy and tactics.

The poor and worsening welfare of tens of millions of Filipinos is a serious development challenge. A genuine poverty-reduction effort means fundamental changes in economic policy towards improving the country's domestic productive sectors. The severe income, wealth and asset inequities in the country also mean that radical redistributive reforms in favor of the poor majority are in order. Universal access by all Filipinos to health and education will be more likely achieved through strengthened public health and education systems, not privatized ones and certainly not by selective, targeted and temporary interventions. If these progressive socioeconomic policies were in place then programs such as the 4Ps/CCTs would not be necessary - and without such policies no amount of 4Ps/CCTs will ever be enough.

V. CONCLUSIONS AND RECOMMENDATIONS

Conclusions

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 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. We 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.

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.

Recommendations

Our group has recommendations that may help the government in implementing the CCT and increasing its effectiveness.

1. Conditionality plays an imperative role in CCT programs. Cash transfer, by itself, will not suffice to increase school attendance significantly, which means that conditionality would have to be introduced, and possibly also, the quality of schooling improved when administering any cash transfer programs aimed at a sustained reduction in poverty.

2. It is also imperative to ensure ongoing monitoring of operations and rigorous evaluation of effectiveness of CCT programs.

3. Good governance is an important component of a CCT program. As is the case for all effective social safety nets, a CCT program should be transparent in operation to encourage learning, minimize corruption, and ensure that beneficiaries and the wider population understand how the program functions.

4. Political support at high levels for the program is one of the main issues to be considered in implementing a CCT program. Such political supports are critical as a CCT program requires coordination across different sectors in the government, particularly education, health, and social welfare.

In addition, policymakers face many challenges and tradeoffs in designing effective social programs such as a CCT. On one hand, the emphasis on targeting and conditionality helps maximize the program's impact and effectiveness. However, targeting and monitoring can increase the cost per beneficiary, which reduces the program's efficiency. On the other hand, designing a program with a weak or nonexistent targeting strategy not only reduces the cost per beneficiary but also leads to leakages to the non-poor, driving down its impact and effectiveness.

Finally, to ensure success, complementing CCT programs with other components of social policy may prove meritorious. Complementary programs that can manage the supply side of services and accommodate the heterogeneity of targeted household behavior will enhance the effectiveness of CCT programs.

BIBLIOGRAPHY

Ambat, GHS. Improving inclusiveness of growth through CCTs. Policy Brief. 2011

David, Randy. Poverty and conditional cash transfers. Philippine Daily Inquirer. 2010

Usui, Norio. Searching for Effective Poverty Interventions: Conditional cash transfers in the Philippines. Asian Development Bank. 2011

_________________. 4Ps Concept Paper for MCC. ____________.2009.

_________________.Conditional Cash Transfers and the Persistence of Poverty. www.ibon .org. 2010.

_________________.Pantawid Pamilyang Pilipino Program. Department of Social Welfare and Development. 2011.

_________________. The Economic Rationale for Conditional Cash Transfers.World Bank.nd.

_________________. NSO website: www.census.gov.ph