The Conditional Cash Transfer Program in

the Philippines: Emerging Issues and

Challenges

Ace Lennon N. Babasa

Yuchengco Center Policy Paper Series

The Conditional Cash Transfer Program in the Philippines: Emerging Issues

and Challenges

Ace Lennon N. Babasa

Introduction

Poverty and inequality in the Philippines remain a challenge. While economic growth
has gone through boom and bust cycles, recent episodes of moderate economic
expansion have had limited impact on the poor. Large inequality across income levels,
regions and sectors are key factors constraining poverty reduction initiatives. The
members of Filipinos below the poverty level rose in the past years and various
solutions have been sought to no avail.

Given that 20 percent of households live in chronic poverty, the economic growth
potential of the country in the next decade or is jeopardized by a lower number of fully
skilled and productive workers. Human development investments can therefore break
or continue the cycle of poverty (ADB, 2009).

The progress that the Philippines achieved in reducing poverty over the last two decades
has been modest, compared to other ASEAN countries. Poverty incidence among
Filipinos in the early trimester of 2014 was estimated at 25.8 percent. In 2013, it was
24.6 percent. Filipinos whose incomes fall below the food threshold, was estimated at
10.5 percent in the first semester of 2014. This is at the same level of subsistence
incidence among Filipinos (10.5 percent) in the first half of 2013. Poverty threshold is a
similar concept, expanded to include basic non-food needs such as clothing, housing,
and transportation, health, and education expenses. In the first months of 2014, a
family of five needed at least Php 6,125 every month to meet the family’s basic food
needs and at least PhP 8,778 every month to meet both basic food and non-food needs.
These amounts represent the monthly food threshold and poverty threshold,
respectively. They indicate increases of about 9.5 percent in food threshold and 9.4
percent in poverty threshold from the first semester of 2013 to of 2014 (Recide, 2015).

The government’s anti-poverty and social programs for the poor are inadequate if not
totally absent. Weak institutional capacities for programming and implementation as
well as budget misallocation pose challenges to this poverty reduction commitment.
Corruption channels resources for development into personal resources. Inequality,
underinvestment in agriculture, unemployment, and corruption characterize the cycle of
poverty. The low income of poor people is allocated mainly to food and basic needs.
Education and health, the precursors of human development, are not their priorities.
The poor do not invest on health and education because they are financially incapable
of sending their children to school and attending to their health needs. These are
aggravated by the geographical location problems in access to education and health
facilities.

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 The Conditional Cash Transfer Program in the Philippines: Emerging Issues and Challenges

Income, affecting education and health, is a major determinant of human development.

If the parents invest inadequately or are not investing on these factors, this will result in
lower education, poor health and high mortality in children. About 67 percent of the
heads of poor households were grade school graduates (ADB, loc. cit). This trend is
passed to their children creating a series of uneducated generations. The poor also suffer
from hunger and malnutrition. They become less productive. Those in the workforce;
those who could not find work; or work for low wages have problems in providing food
for their families (Dasgupta, 1997). Not only are the services insufficient but their
situation - poor health and low education limits their capacity to find earning work.
Parents opt to have their children work for additional family income. Healthcare may
also entail costs that parents are not in a position to bear. Thus, people are often in poor
health which decreases their productivity and learning capacity. These issues combined,
along with inadequate education systems, poor school attendance and limited healthcare
all retard human capital accumulation.

The Conditional Cash Transfer (CCT) program was initiated by the World Bank in
Latin America, Africa, and Asia as an effective anti-poverty strategy that imposes
conditionality through cash transfer under certain conditionalities. The imposition of
certain conditions linked to school attendance, utilization of health services (maternal,
pre-natal and post-natal care) would eventually lead to improvement in living standards.

Areas needing attention in the implementation of cash transfer programs include:

targeting ‘deserving’ beneficiaries; efficient administrative procedures; realistic
assessment of institutional capacities of implementors; preparedness in the
operationalization of the program (e.g., strong monitoring, evaluation and
accountability); and concerns of long-term fiscal sustainability. Conditional Cash
Transfer (CCT) initiatives have been quite popular in most Latin American countries
and Africa in Asian countries such as Bangladesh, India, Pakistan, Indonesia and the
Philippines. These programs consist of transfers in cash to poor families with children
on conditions that they send their children to school and regularly visit health centers.
The implementations of these programs in Asia raise concerns in several sectors of
society.

These programs have a two-fold objective of short-term poverty alleviation and

breaking intergenerational poverty in the long run. The short-term effects are relatively
easy to assess if information is readily available but difficult to determine in the long
run.

To address the issue of chronic poverty and its deleterious effects, the government
launched a conditional cash transfer (CCT) program called the Pantawid Pamilyang
Pilipino Program (or Pantawid Pamilya). This is termed as the keystone of the
government’s social protection efforts. The program provides cash transfers with
conditionalities related to education and health. It was launched in February 2008 with
6,000 household beneficiaries in four pilot municipalities and two cities. Since then, it
has scaled up rapidly, covering approximately 3 million households by May 2012. In
2011, Pantawid Pamilya accounted for half of the Government’s expenditures on
national social protection programs, equivalent to 1.64 percent of total government
spending net of debt financing (Chaudhury, Friedman and Onishi, 2013).

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Yuchengco Center Policy Paper Series

The redesigned Pantawid Pamilyang Pilipino Programs aimed to uplift the economy and
reduce poverty eventually meeting its Millennium Development Goals (MDG).

The government exerted efforts to combat poverty through the continuing expansion of
the Pantawid Pamilyang Pilipino Progam (4Ps), the Philippines’ version of the
conditional cash transfer (CCT) program patterned from Latin American countries. The
4Ps by far is the most comprehensive but, controversial poverty reduction program of
the Philippine government due to the huge amount of money the government is
spending for this. It represents an investment in human capital to address five of the
Millennium Development Goals (MDGs): eradicate extreme poverty and hunger,
achieve universal primary education, promote gender equality and empower women,
reduce child mortality, and improve maternal health. The expansion of the program
since 2008 led the government incurring loans from the World Bank and the Asian
Development Bank amounting to a total of $805 million to finance it. To date, there are
already 2.3 million households in 80 provinces enrolled in the program. The country,
while experiencing success in some aspects of the program, continues to struggle with
4Ps in terms of its implementation and in achieving the desired impact. This paper
examines the Pantawid Pamilyang Pilipino Program with particular focus on the key
issues in the implementation and the challenges in its continuation.

Overview of Poverty in the Philippines

Poverty is a major challenge in the Philippines. Despite economic advancements, there

are segments of the population that cannot partake the benefits of economic
development - the poor. Of the 92.3 million Filipinos (NSO, 2010), there was an
estimated 29.8 million poor individuals comprising almost one third of the population.
The National Anti-Poverty Commission reported that the number of individuals below
the poverty line increased from 19.8 million (3.2 million families) in 2003 to 23.1 million
(3.9 million families) in 2009. This occurred despite the modest economic growth from
2000-2010 which averaged 4.7 percent annually versus 2.9 percent two decades before
(Velarde and Fernandez, 2011).

The Asian Development Bank (2009) in comparing the Philippines with other Asian
countries indicated that the main reason why poverty reduction in the country is slow is
the failure of the economy to generate employment in sectors with large numbers of the
poor. Majority of the poor live in the countryside with agriculture as their source of
major livelihood. Three fourths of the poor reside in rural areas (World Bank, 2014).

Modality to Break Poverty: Conditional Cash Transfer

The conditional cash transfer program was viewed as an effective way to link safety nets
– or more generally social assistance policies – with investments in human development
benefitting the poor (Son, 2008). The cash transfer is intended for the poor to invest in
education and health to break the intergenerational cycle of poverty.

Conditionality is a prerequisite to achieve the economic and social goals of providing

the means for achieving equality of opportunity.

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 The Conditional Cash Transfer Program in the Philippines: Emerging Issues and Challenges

Human capital serves as a tool for poverty reduction. It emphasizes the role of health,
nutrition and education. Boissierre et al. (1985), Glewwe (1996) and Becker (1993)
attested that the educational attainment of an individual determines his level of income.
This is directly related to their health and nutrition status (Behrman, 1993; Alderman et
al., 2000; Jamison, 1986, and Glewwe et al., 1999). A healthier person improves working
capacity with potential for increased income (Strauss and Thomas, 1998 & Behrman and
Deolalikar, 1989). Other studies showed a positive impact of human capital on poverty.
Household sizwe, which is inversely related with income decreases with higher levels of
education (Lam and Duryea, 1998).

The conditional cash transfers’ are directed to investments in educations and health,
which are believed to provide assistance to the poor to meet their immediate needs
(short term) and break the intergenerational cycle of poverty through investment in
human capital i.e., education, health and nutrition (long term).

Social Policy and the Context of Conditional Cash Transfers

Conditional cash transfer programs provide cash to poor households in exchange for
the recipients’ commitment to take actions such as enrolling their children in school or
taking them regularly to health clinics. After early successes in South Asia and Latin
America, CCT programs are found in every continent. The biggest programs are in
Brazil and Mexico. Its popularity is spreading to Southeast Asia, with Indonesia
implementing it in 2007 followed by the Philippines. The idea of implementing CCT in
Indonesia came up in 2005, as an alternative poverty reduction strategy. Since the
institutional support did not yet exist and it would take a couple of years to set it up, the
government decided to implement the unconditional cash transfer program in 2005. It
only shifted to conditional cash transfer in 2007.

It operates in developing countries and was introduced as part of larger efforts to make
safety nets more effective. Colombia’s Familias program gained positive evaluation
results and has received sustained support from the World Bank. CCTs have grown
phenomenally around the globe. In Mexico, the program called Progresa began in 1997
with 300,000 households; its successor Oportunidades reached 5 million households.
Positive evaluations by researchers encouraged this scaling up in Mexico. In Brazil, the
Bolsa Familia program began in the mid-1990s as an experiment in two municipalities.
This program covered 11 million families. The expansion of such programs in other
countries has been less dramatic but still notable. In Colombia, the program’s initial goal
was 400,000 families, but had expanded to cover 1.5 million households in 2007.

Variations in Size and Scope

CCT programs are tailored to suit different needs in different countries around the
world. Some programs are nationwide, others are niche programs that serve a regional
or narrow target population, and others are small-scale pilot projects. Some insist only
on schooling conditions; others require both schooling and health commitments. In
terms of absolute coverage, the size of a CCT program range from 11 million families in
Brazil to 215,000 households in Chile to pilot programs with a few thousand families in
Kenya and Nicaragua. Budgets range from 0.50 percent of GDP in countries such as
Brazil, Mexico, and Ecuador to 0.08 percent of GDP in Chile. The actual benefits
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Yuchengco Center Policy Paper Series

extended range 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 CCT programs in middle-income countries have used an integrated
approach to poverty reduction, balancing goals of social assistance with human capital
formation. Examples include Brazil, Colombia, El Salvador, Jamaica, Mexico, Panama,
and Turkey. What makes Mexico’s program ironic are the successive waves of old data
collected to evaluate its impact, the public availability of this data, and the resulting
research and analysis generated by the publication of such information. Brazil’s use of
CCT is also exemplary; the program is similar to Mexico’s in coverage and importance
but differs in its slightly greater emphasis on redistribution than on human capital
formation.

CCT in The Philippines: The Tide-over Innovation

Conditional Cash Transfer is classified within the family of social assistance programs
that constitute a country’s formal, publicly provided safety net system. These have
focused on short-term poverty reduction especially during periods of crisis, with little
attention on long-term, structural poverty. These are viewed as trade-off between short-
term equity objectives of efficient economic growth.

Pantawid Pamilyang Pilipino Program (4Ps) is dubbed as the flagship poverty alleviation
program of the Philippine government by the Department of Social Welfare and
Development (DSWD). It started in 2007 patterned after the CCT in Latin America and
African countries.

Features and Components

Conditional Cash Transfers are geared toward poor households on the condition that
they comply with prescribed conditions. Health and nutrition conditions require
periodic checkups, growth monitoring, and vaccinations for children (Fiesbien and
Schady, 2009). Conceptualized in 2006, the Department of Social Welfare and
Development with technical assistance from the World Bank started implementing the
National Sector Support for Social Welfare Development project (NSS-SWDP).

In 2007, DSWD pre-pilot tested the program in municipalities of Sibagat and Esperanza
in Agusan del Sur; the municipalities of Lopez Jaena and Bonifacio in Misamis
Occidental, the Caraga region; and the cities of Pasay and Caloocan with a 50 million
pesos budget. It was renamed Pantawid Pamilyang Pilipino Program (4Ps) on July 16,
2008 by administrative order number 16, series of 2009 and set implementing
guidelines. It is implemented in partnership with the Department of Education
(DepEd), Department of Health (DOH) and the Department of Interior and Local
Government (DILG) and in coordination with the local government units (LGUs). It is
an investment in human capital that ensures that children belonging to poor households
particularly those aged 0-18, grow up healthy and stay in school. It utilizes the
conditional cash transfer scheme wherein beneficiaries receive cash grants based on
their compliance to the provisions (DSWD, 2015).

Selection of Beneficiaries

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 The Conditional Cash Transfer Program in the Philippines: Emerging Issues and Challenges

A core element of the program implementation is the standardized household targeting

system to select beneficiary households. The proxy means test (PMT) is used to select
the poor households within a municipality. It is the statistical tool that determines a
household’s economic condition based on information such as household composition,
socio-economic characteristics, assets, housing conditions and tenure status, education,
access to basic services, and regional variables. In January 2011, about 10 million
households were surveyed, of which 4.9 million households were identified as poor
(Fernandez and Olfindo, 2011).

One process adopted by DSWD from the National Household Targeting System for
Poverty Reduction (NHTS-PR). This is a database of DSWD in identifying who are the
poor families. Areas with poverty incidence of 50 percent and above are identified a
survey is then conducted, estimating the household income based on the variables in the
survey form. Identified households undergo a validation process. Eligible households
for the cash transfer should meet the following criteria:

1. Located in the municipalities and barangay selected (with poverty incidence

higher than 50%);
2. Economic conditions are equal to or below the provincial poverty threshold;
3. Have children aged 0-14 years old or have pregnant woman in the household
during the registration; and
4. Willing and able to commit in complying with the conditions specified for the
program.

Violation or missing out on any of the conditions will mean deduction or termination of
the cash transfer. For every household beneficiary, every child beneficiary receives a
cash of Php 500 and an education cash of Php 300 if enrolled in elementary and high
school. A maximum of three children per household is covered. Children are no longer
qualified to receive cash transfers once they reach the age of 15. The DSWD proposed
an age extenson to 18 years old. On the other hand, mothers of beneficiary household
receive Php 500 every month.

Among the poor households in program areas, eligible households – those with a
pregnant mother at the time of the Household Assessment by the NHTS-PR and/or
children between 0-14 years of age – are invited to enrol in the program by attending
the community assembly (Chaudhury, Friedman and Onishi, loc. cit).

DSWD asserts that CCT is not a dole out program because of the several conditions to
be fulfilled by beneficiaries to be able to receive the cash. These three main conditions
are on Health and Nutrition, Education, and Family Development Sessions. Non-
compliance of the conditions in health and education means the household beneficiary
will not receive the cash for the specific month. The second offense means temporary
suspension from the cash grant; they will be reprimanded to report to the Social Welfare
and Development officer for. The cash grant will resume if they have willfully complied
with the conditions. The third offense means temporary suspension and another offense
will lead to their termination from the CCT. Household beneficiaries receive the cash
every two months after they have complied with all the conditions. The transfer of cash
to beneficiaries is coursed through an Automated Teller Machine (ATM) of Land Bank
of the Philippines (LBP).
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Program Grants and Conditionalities

Health Grant
Children 0-5 years old get regular preventive health check-ups, growth monitoring and
vaccines. Pregnant women get pre-natal care and must be attended by skilled/
professional health worker during child birth. Mothers who have given birth shall get
post-natal care in accordance with the standard DOH protocol. Children 6-14 years old
receive de-worming pills twice a year (DSWD, loc. cit). The health grant is aimed at
promoting healthy practices, improving the nutritional status of young children, and
increasing the use of health services. Poor households with children 0-14 years old
and/or pregnant women receive a lump sum amount of PhP 500 (about US$ 11) per
household per month. Households must fulfill the following conditions:

1. All children under the age of five follow the Department of Health (DOH)
protocol by visiting the health center or rural health unit regularly;
2. Pregnant women attend the health center or rural health unit according to
DOH protocol;
3. All school-aged children (6-14 years old) comply with the de-worming
protocol at schools; and
4. For households with children 0-14 years old, the household grantee (mother)
and/or spouse shall attend Family Development Sessions at least once a month
(Chaudhury, Friedman and Onishi, loc. cit).

Education Grants
Children 6-18 years old shall enroll in primary/secondary schools (or equivalent
Alternative Learning System / Alternative Delivery Method) and have at least 85%
school attendance. Children 3-5 years old shall attend daycare/preschool program with
at least 85% school attendance (DSWD, ibid). The education grant is aimed at
improving school attendance of children 6-14 years old living in poor households in
selected areas. The education transfer is PhP 300 (about US$ 6.50) per child per month
(for a period of 10 months/year), for up to a maximum of three children. Beneficiary
households receive the education transfer for each child as long as they are enrolled in
primary or secondary school and attend 85 percent of the school days every month
(Chaudhury, Friedman and Onishi, loc. cit).

Once compliance with program conditionalities is verified, cash grants are distributed
on a bimonthly basis through different modes of payment. The disbursement of the
cash subsidy depends on compliance with program conditions as verified through the
Compliance Verification System (CVS). On a bimonthly basis, CVS forms are
distributed to schools and health facilities where beneficiary children and mothers are
enrolled and registered with the program. Schoolteachers and health facilities identify
beneficiary mothers and children who have not complied with the conditionalities for
the reporting period. These forms are collected, then data is entered at the regional level
and submitted to the national office where it is linked with the payment system. As of
July 2011, in areas covered by the impact evaluation study, 43 percent of beneficiaries
received their cash grants through ATM cash cards; 30 percent through Globe G-Remit
merchants; 18 percent through Rural Bank; and 9 percent through over-the-counter

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 The Conditional Cash Transfer Program in the Philippines: Emerging Issues and Challenges

payments at Land Bank branches (Chaudhury, Friedman and Onishi, ibid).

Design Features of the Program

Targeting System
The Pantawid Pamilya targets poor households located in the poorest areas of the
Philippines. To be eligible for the cash grants, households must meet multiple criteria at
the time of registration which are:

1. They must reside in poor areas selected by the program.

2. They must be classified as poor.
3. A household must have a pregnant woman or at least one child aged 0-14
years.
4. The households must be willing to commit to meeting program
conditionalities (Fernandez and Olfindo, loc. cit).

The targeting system follows a multi-step process. The poorest provinces are first
selected based on official poverty incidence according to the latest Family Income and
Expenditure Survey (FIES) by the National Statistics Office (NSO). Within the selected
provinces, the poorest municipalities are selected based on the poverty incidence of
Small Area Estimates (SAE) by the National Statistical Coordination Board (NSCB),
while the poorest cities are selected based on a standard set of indicators such as data on
pockets of poverty. A household targeting system is then used to identify poor
households within the selected barangays. Finally, potential beneficiary households are
selected among the poor households in the barangays based on the eligibility criteria.11
List of potential beneficiary households is published at the barangay hall for community
validation, before beneficiaries are enrolled in the program. (Fernandez and Olfindo,
ibid).

Program Coverage
The 4Ps was piloted in 2007 and was launched on a wider scale starting 2008. There are
already 2.3 million households in 80 provinces who are enrolled in the program,
covering 734 municipalities out of a total of 1, 495 municipalities, and 62 key cities out
of 138 cities. It targets 3 million household beneficiaries by end of 2012. The expansion
of the program since 2008 necessitated the government to secure loans from the World
Bank and the Asian Development Bank amounting to a total of $805 million or 34.6
billion pesos to finance the program (Reyes and Tabuga, 2012).

Current Program Profile

As of 26 March 2015, the Pantawid Pamilya is being implemented in 144 cities and
1,483 municipalities in 80 provinces, with a total of 4,425,845 active beneficiary
households. Of the total number of households, 4,207,468 are covered by the regular
Pantawid Pamilya program while 218,377 households are covered by the Modified
Conditional Cash Transfer (MCCT). The MCCT covers beneficiaries who are not
covered by the regular CCT such as homeless street families and IP households in
geographically isolated and disadvantaged areas (GIDA). Of the total number of
enrolled households, 1,807,651(40.84%) are from Luzon, 1,713,472 (38.72%) from
Mindanao, and 904,722 (20.44%) from Visayas.

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The total cash grant paid to eligible and compliant Pantawid Pamilya household
beneficiaries for periods one (P1), covering January to February 2015 is PhP
9,206,923,000.00. Of this amount, PhP 5,257,902,500.00 is for education grants and
PhP 3,949,020,500.00 is for health grants.

Pantawid Pamilya operates three major systems: Beneficiary Update System (BUS),
Compliance Verification System (CVS), and Grievance Redress System (GRS). From
January to March 2015, a total of 1,416,677 updates under BUS were approved by the
Regional Director, 920,509 or 64.90% of which are changes/new enrolment in school.
Updating the beneficiaries’ health and education status is a continuous process to ensure
beneficiaries are availing the maximum health and education grants.

Compliance Verification System reported high compliance rates on health (97.44%),

education (96.44%), and attendance to Family Development Sessions (FDS) (95.30%)
during the monitoring period for the months of January to February 2015. This shows
that poor households are maintaining their co-responsibilities as beneficiaries: children
are in school and availing health services, while grantees are attending the FDS and
increasing their knowledge and skills on parenting.

There were 16,896 complaints encoded and recorded in the GRS in 1st Quarter of 2015,
10,997 (65.09%) of which have been resolved. A total of 53,456 households have
already been delisted from the program since the GRS started in 2009. Likewise,
272,741 households have been deactivated or are pending for validation from the
program. This is to continuously address complaints on inclusion errors and maintain a
clean database of beneficiaries.

Major System Operations

Beneficiary Updates System (BUS)
The BUS records changes on the status or condition of households. It captures recent
information about household members to serve as basis in monitoring compliance of
beneficiaries. Updating is a continuous process to ensure that the beneficiaries are
availing the maximum health and education grants.

Compliance Verification System (CVS)

The CVS links compliance with conditionalities to the payments of grants. It serves as a
monitoring system for verifying beneficiary household compliance with conditionalities,
controlling payments, and generating managerial reports and progress indicators. The
CVS involves the following steps:

1) NPMO generates the Compliance Verification (CV) Forms;

2) RPMO downloads and prints the CV Forms and disseminates them to cities
and municipalities;
3) City/Municipal Links distribute the CV Forms to schools and health centers
(including day care and preschools);
4) Schools and health centers record non-compliance with conditionalities
during the reported period;
5) City/Municipal Links collect the non-compliance data from schools and
health centers, encode the data into the CVS program, and forward electronic

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 The Conditional Cash Transfer Program in the Philippines: Emerging Issues and Challenges

and hard copies to RPMO;

6) RPMO reviews the non-compliance data and submits them to NPMO to
serve as the basis for payment during that period; and
7) NPMO updates the database prior to the generation of CV Forms for the
next reporting period. (Fernandez and Olfindo, loc. cit).

Findings of CCT: Impacts and Initial Review

The 4Ps is said to bring about desired impacts on income poverty and vulnerability in
the short run. The ADB4 cited an analysis of 4Ps education grants and it noted that if
accurately targeted to children in all poor households nationwide, the education
component alone could lift 31.1% of poor households out of poverty and decrease the
national poverty gap measure by 52.5%. The document further claims that since the 4Ps
has targeted the poor areas, the impact would be much larger. The estimated increase in
the total incomes of the poor and eligible households in the targeted areas per World
Bank is 23 percent, where the poverty rate is expected to fall by 6.1 percentage points.
In the long-run, the 4Ps’ goal is to achieve improvements in human capital. The 4Ps is
seen to have great potential in increasing educational attainment and improving
nutrition and health outcomes based on the experience of other countries who have
implemented the CCT. One of the problems in the educational system that the 4Ps is
expected to impact is increasing dropout rates. (Reyes and Tabuga, loc. cit).

The Social Weather Stations (SWS) conducted a World Bank‐commissioned pilot spot
check on 760 household beneficiaries in Northern Samar from February to March 2010.
The findings include:

1. Compliance rates for health are low. One of the most pressing problems of
the country is the very high maternal mortality rate (MMR) and looking at
the compliance rates of pregnant women surveyed, it seems that the
4Ps‐CCT is ineffective or inadequate in addressing the maternal deaths
among the poor. Given that deworming and immunization are free, the low
compliance rate is puzzling.

2. The low awareness of beneficiaries is a major factor for low compliance

rates. The same spot check also indicates that only 5 percent of grantees
knew all the conditions for pregnant mothers and 19 percent knew all the
conditions for 6‐14 year olds.

3. It would have been better to see the program’s actual outcome on health
and education had World Bank or other donors included an impact
assessment in the pilot areas of 4Ps‐CCT—i.e., rate of
stunting/malnutrition/undernutrition, infant mortality rate, MMR, and
completion rate, among others; and not merely provide compliance rates
(Senate Economic Planning Office Policy Brief, 2011).

While the spot check revealed that attendance has improved, there are concerns that the
poor conditions of school facilities will negatively impact the learning outcomes and
likely, the retention rates of students.

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From 2004 to 2009, 75,584 new classrooms had been constructed and 52,536 new
teacher items were created in response to the growing demand in public school.
However, primarily due to poor targeting, shortages in classrooms and teachers still
persist in many areas as evidenced by high pupil‐classroom and pupil‐teacher ratios,
respectively. While the education budget increased significantly in 2011, the DepEd
pointed out that the said increase is not enough for the sector to be able to catch up
with the accumulated shortages in previous years. This implies that the education
system, given its current resources, might still not be ready to welcome and maintain
more students. For health, while deworming pills and immunization are available in
almost all barangay health centers nationwide, the shortage of facility for Basic
Emergency Obstetrics Care in 1,863 local government unit (LGU) hospitals/ barangay
health stations/RHUs will continue to hinder the goal of reducing MMR. With the
expansion of 4Ps‐CCT, addressing the challenges from the supply side should
simultaneously be fast‐tracked. The shortage in facilities and service providers should
not be downplayed since it poses a major hurdle for beneficiaries who commit to satisfy
the conditions (Senate Economic Planning Office Policy Brief, ibid).

Design and Implementation Constraints

Since its inception, the 4Ps has been the subject of many praises and criticisms. It has
been hailed as a program to help fulfill the country’s commitment to meet five of the
eight Millennium Development Goals. On the other hand, some have questioned
whether this is the most effective and sustainable way of reducing poverty. 4Ps
addresses poverty in the cash it provides; vulnerability by filling in some financial gaps;
physical weakness by requiring maternal and child health care; and, isolation by the
compulsory school participation of children. These are four of the five interlocking
cluster of disadvantages. Using this theoretical lens, one immediately views the
inadequacies of 4Ps. The cash it grants only attends to income poverty. It does not
guarantee freedom from hunger for example in the face of inflation. The health care
requirement is only limited to mother and children and excludes the chronically sick for
example of pulmonary tuberculosis (PTB).

Challenges in Program Structure

The National Anti-Poverty Commission is the coordinating and advisory body and
helps monitor 4Ps operations. It is composed of the heads of 13 government bodies,
presidents of the Leagues of Local Government Units from the provinces down to the
barangays (villages), and representatives from each of the basic sectors like the farmers
and landless workers, artisanal fisherfolk, urban poor, indigenous peoples, and 10
others. The Department of Social Welfare and Development (DSWD), the lead
implementing agency of 4Ps, is a member of NAPC, and is headed by a cabinet
secretary. At the level of implementation, NAPC is part of the program’s advisory body
at different levels.

The partner agencies are the Department of Health (DOH), the Department of
Education (DepEd), the Land Bank of the Philippines, the Department of Interior and
Local Government (DILG), and their local offices i.e., the Provincial Social Welfare
Development Office, Municipal Social Welfare Development Office and the Municipal
Health Office and the local government units (LGUs).

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 The Conditional Cash Transfer Program in the Philippines: Emerging Issues and Challenges

The 4Ps is linked especially with two other poverty alleviation programs: the Kapit-Bisig
Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services
(KALAHI-CIDSS), and the Self-Employment Assistance-Kaunlaran (SEA-K)
programs. KALAHI-CIDSS works mainly for infrastructure projects like farm-to-
market roads, day care centers, and water system. SEA-K concentrates on micro-
entrepreneurial endeavors.

As the lead agency, the task of DSWD includes, among others, the following: oversee
the implementation, monitoring and evaluation of 4Ps, conduct assessment of supplies
for health and education in partnership with concerned agencies, identify target areas,
forge agreements with LGUs to ensure the availability of the supply side, provide
technical assistance at the local level on the over-all operations of the program, and
manage and account program funds and resources.

The regional offices of DSWD translate national policies to region specific operational
guidelines, and coordinate the implementation of sectoral activities and functions at the
regional, provincial and municipal levels. The DOH is mandated to ensure that supply
of health and nutrition services are available and to augment LGU logistics on the
supply side of 4Ps. DepEd is tasked to provide the supply of schools, teachers and
education materials and assist in the monitoring of program operations. The DILG is
assigned to encourage LGUs to incorporate pro-poor programs especially on health and
nutrition in their budget plans. The LGUs are entrusted with the task of providing for
the supply side of health and education, and coordinate with various agencies of
government at the local level, sectoral representatives and non-government
organizations (NGOs).

The poorest households are the intended recipients of 4Ps. These households are
identified through the geographic targeting system and the Proxy Means Test, a method
of identifying poor households in villages where income data are dubious. The qualified
households are those that are located in the poorest municipalities of the poorest
provinces in the country.

The program beneficiaries get cash grants on a bimonthly basis provided that certain
conditionalities, specifically, school-age children attends school and children and the
pregnant/lactating member of the household regularly visit health centers for
immunization, preventive health check-ups and maternal care services, are met.

The beneficiary household gets a total of PhP 6,000 per year or P500 per month for
food, medicine, and vitamins. For education, it receives a total of PhP 3,000 per year or
P300 per month per child for 10 months a year, for a maximum of 3 children per
household. For school months therefore a household with three eligible children gets
PhP 1,400 per month, or PhP 15,000 (US$ 358 at PhP 41.9 to the dollar) per year
including the two non-school months.

The goal of 4Ps which is to “break the intergenerational cycle of poverty by fostering
change in behavior among parents to invest in their children’s future and its specific
targets are very clear: eradicate extreme poverty and hunger, achieve universal primary
education, promote gender equality and empower women, reduce child mortality, and
improve maternal health. As mentioned earlier, the program therefore effectively
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Yuchengco Center Policy Paper Series

excludes the other sectors of poor people like the chronically ill, the elderly, the persons
with disabilities and the out-of-school youth. These sectors however share household
resources. Hence, it is not surprising to find households that re-channel resources away
from what they were intended for by the program; hence, the decreasing income
poverty level brought about by the program may not be enough to reduce hunger and
undernutrition among many in the population as a whole.

As 4Ps is the flagship program, other poverty alleviation efforts were given lower
priority. So again, the programs for the vulnerabilities of the Indigenous Peoples (IPs),
the unemployed, and other poor sectors of society are placed in the back burner.

People’s organizations from various disadvantaged sectors and civil society

organizations are involved in the program, but mainly as council members. As such
their roles are limited more on to the level of policy, and less on actual program
implementation and monitoring. Many of the “municipal links”, persons in charge of
bridging the beneficiaries with the LGU and therefore with the program, have been
accused of exploiting the beneficiaries.

Challenges on Process
Program implementation began with the selection of eligible provinces, municipalities,
cities and barangays based on the classification developed by the National Statistical
Coordination Board (NSCB) using the 2006 Family Income and Expenditure Survey.
The selection of municipalities and cities was made using the procedure called the Small
Area Poverty Estimates. In urban areas, barangays were selected; in rural areas entire
municipalities were included.

At the municipal level, after the LGU was oriented on the nature of 4Ps, the supply side
assessment tool on health and education was applied to determine the readiness of the
LGU to deliver priority health and education services. Then the poorest of the poor
households in selected barangays were identified through the Proxy Means Test. Then
the barangay community assembly initiated by the DSWD regional office, in close
coordination with the local government units, was called to validate the beneficiaries
earlier identified

The beneficiaries were given an orientation on the conditionality of the program, such
as:
1. Pregnant women must get pre natal care starting from the 1st trimester, child
birth is attended by skilled/trained professional, get post natal care thereafter;
2. Parents / guardians must attend family planning sessions/mother's class,
Parent Effectiveness Service and others;
3. Children 0-5 years of age get regular preventive health checkups and
vaccines;
4. Children 3-5 years old must attend day care program/preschool; and,
5. Children 6-14 years of age are enrolled in schools and attend at least 85% of
the time.
6. The beneficiaries were then registered, provided with identification cards and
given schedules of the first release of cash grants through the Land Bank of the
Philippines. Subsequent releases of cash grants were based on the results of the

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 The Conditional Cash Transfer Program in the Philippines: Emerging Issues and Challenges

monitoring made by the DSWD and partners.

The question of process is mainly on ‘what is happening’. The eligibility issues in

program implementation reflect defect in process. One may look at the nature of
politics in Philippine democracy. LGU officials, given enough leeway to identify the
beneficiaries will certainly name their supporters, the National Household Targeting
System for Poverty Reduction (NHTS-PR) using the Proxy Means Test,
notwithstanding. And there were the gaps in the supply side of the program. For
example, FGDs in Davao City revealed the following: lack of medicines in health clinics,
limited number of doctors as budgeted positions for health service providers were yet to
be filled up, lack of classrooms and daycare centers, small number of classroom teachers
vis-à-vis the number of learners, and lack of books and school supplies. These mire the
procedures used in examining the readiness aspect of the LGU for 4Ps. These also
reflect the generally low public investment in education and health.

Challenges on Targeting
One of the main issues being raised concerns targeting, or selection of beneficiaries.
Various reports on the status of the 4Ps focus on its poor targeting as the DSWD delists
many of its target beneficiaries. In November 2011, there were already 171,947
households (or 7.5% of total 2.3 million household beneficiaries the program has served
so far) who were delisted from the program. The delisted households included those
who were found to be nonpoor or those with stable income sources and those who did
not comply with the program’s conditions.

The National Household Targeting System for Poverty Reduction (NHTSPR), from
which the 4Ps draws its list of poor households, showed that there were 5.2 million
poor families in 2009. This has not successfully reflected the official poverty estimate in
2009 of 4.9 million poor families, based on the old methodology of poverty estimation,
nor the 3.9 million poor families based on the refined methodology. The proxy means
test model of NHTS-PR) is overestimating the number of poor families. Already we can
see the leakages as shown by the number of families delisted. A study done by
Fernandez and Olfindo (2011) using the 2009 FIES reveals that 72 percent of the
beneficiaries in 2009 below to the bottom 20 percent of the families. Official estimate of
poverty incidence for the same year is 20.9 percent. Thus, about 73 percent of the
beneficiaries can be classified as poor. For every 100 beneficiaries, 73 are poor and 27
are non-poor. This suggests the need to fine-tune the program’s targeting scheme prior
to further expansion.

The 4Ps failed to account as well that the poor is not a homogeneous group nor has
targeted the extremely poor which is by official definition may refer to the food poor
(those living below subsistence level). In 2009, there are about 2 million families
considered to be subsistence poor or those who are extremely poor they could not even
afford to meet their basic food needs. This amounts to roughly only more than a third
of the current total number of poor households, at 5.2 million, being used by the 4Ps as
its universe of poor households. Citing from other country’s experience like the Bolsa
Familia of Brazil, the difference in the conditions of the poor has been taken into
account when they differentiated the amount of transfer given to the extremely poor
and the moderately poor. (Reyes and Tabuga, loc. cit).

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Yuchengco Center Policy Paper Series

Moreover, the poor consists of the chronically or persistently poor and the transient
poor or those who become poor because of certain shocks. In fact, more than half
(52.6%) of Filipino families who are classified as poor in 2009 were transient poor.
These are households who are moving in and out of poverty. Only 47.4 percent of poor
households in 2009 were consistently poor since 2003 (Reyes, et al., 2011). These two
groups have varying characteristics. The chronic poor face constraints that are caused by
their lack of capacity; they are mostly uneducated and are more likely to perpetuate
poverty (i.e. intergenerational poverty) because they could not send their children to
school. Poverty reduction intervention for this group takes sustained efforts. The
transient poor meanwhile are those who become poor during certain periods due to
economic shocks or natural calamities but may be able to recover when given crop
insurance, access to credit or emergency employment programs. They have better
capacity than the chronic poor and their needs may be intermittent. The CCT program,
as we knew it, normally caters to the chronic poor or the extremely poor. In the
targeting scheme of the 4Ps, such heterogeneity of the poor was not taken into account.

Implementation Challenges
Issues are raised not to linger on the deficits and drawbacks of 4Ps, but to find some
blockages that planners, policy makers, and implementers can work on.

The national governance structure of 4Ps is mainly a super advisory body, and the
frontline activities are down at the regional and barangay levels. Social welfare is among
the functions of the national government that were devolved to the LGU by Republic
Act 7160 (Local Government Code of 1992). Since regions are administrative and not
political subdivisions of the country, the 4Ps Regional Team of DSWD headed by the
Project Director as the local counterpart of the national management office, had to
work through the LGUs and the local chief executive (LCE) in implementing the
program. But the role of the LGUs in the structure is mainly advisory to the Regional
Team. The institutional capacity building experience of 4Ps therefore centers more on
the regional line agency of a national structure and less on the LGUs which are the front
liners by virtue of the devolved function. It is recommended therefore that technical
capacities for program implementation and monitoring be developed at the level of the
LGU as an institution.

The program is besieged by so many challenges and issues, in spite of which the
program is able to reach its target. The goal of human capital formation should be
people empowerment. It is recommended therefore that the beneficiaries themselves,
together with civil society organizations, the LGU, and the program implementers do
participatory monitoring and evaluation. In this way, there will be more transparency in
program implementation, performance evaluation, and social accounting in addition to
people empowerment.

Many of the issues on 4Ps relate to the ubiquitous shortage of funds in realizing social
services. Civil society organizations, non-government organizations, and people’s
organizations can help in one way or another. For example, Gawad Kalinga (literally
care giving) helps in the matter of housing and livelihood. In areas where it had merged
with Couples for Christ, a lay religious organization, there is social capital formation and

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 The Conditional Cash Transfer Program in the Philippines: Emerging Issues and Challenges

enhancement. The efforts of 4Ps do not cover all the aspects of poverty and its
manifestations. But the aspects not covered are closely intertwined with those that are
covered. For example, a beneficiary household may have to re-channel grant money
intended for children education if the house is badly in need of repair. In the spirit of
convergence, it would be good to tap the services of volunteer organizations.

Inherent in CCT programs are the implementation challenges associated with the
administratively complex nature of the program. The rapid expansion of the Pantawid
Pamilya in a short period of time exacerbated the implementation challenges. For
example, DSWD needed to survey at least double the targeted number of beneficiary
households, as it was estimated that almost half of the surveyed households would be
identified as poor and would be eligible for the program. Because of this, DSWD faced
several challenges mostly related to the limited resources available for the program, such
as the number of personnel, physical equipment (computers and IT systems), and
financial resources necessary for program operation. Moreover, the Pantawid Pamilya
was scaled up when the systems were still under development.

The rigid institutional structure and weak procurement system have constrained the
expansion of human and capital support for the Pantawid Pamilya. Despite the urgency
to expand the Pantawid Pamilya, DSWD’s institutional structure has not allowed for an
increase in staff to work on the Pantawid Pamilya. Although it created the NPMO, the
unit made use of existing personnel. By the end of 2010, staffing at the NPMO was 69
percent of what it should have been based on the number of approved positions.28 Of
the 109 approved positions, only 75 positions were filled. Likewise, the level of staffing
at RPMO was 74 percent of the approved positions. Limited manpower in the field was
also evident as one Municipal Link, which was supposed to handle 1,000 beneficiary
households, actually handled as many as 3,000 beneficiary households. Moreover, the
weak procurement system in DSWD caused delays in some key implementation
processes. The Pantawid Pamilya requires IT systems that can handle the massive data
collection and management, but IT constraints at the regional level pose a major
bottleneck, delaying the processing of payments.

Rapid expansion has also posed challenges to supply-side readiness in areas where
Pantawid Pamilya is implemented. A supply-side assessment is conducted for the areas
selected by geographic targeting, which involves meeting with the local government unit
and conduct of surveys to assess the availability of health and education services in the
area. In the municipalities or barangays where the supply-side facilities have been
assessed as adequate, DSWD’s regional offices facilitate activities leading up to
implementation of the Pantawid Pamilya. However, given the pressure to expand the
program—particularly to areas with a high concentration of poor—some municipalities
with inadequate education and health facilities have also been included in the program.
The lack of health facilities and schools in these areas has major implication for
beneficiary compliance with conditionalities, thus potentially limiting program impact.
Both the AusAID CCT Quick Supply Side Assessment and World Bank pilot spot
check surveys, for example, found a poor state of day care centers, school infrastructure
and an inadequate number of teachers in schools attended by children of beneficiary
households.

Challenges from the Side of Beneficiaries

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Yuchengco Center Policy Paper Series

Anecdotal evidences from communities give us a picture that is different from how
government describes the positive impact of its anti-poverty program. The Department
of Social Welfare and Development (DSWD) is seeking a Php 645-billion budget in
2013 to support more beneficiaries of the conditional cash transfer (CCT) program. The
CCTs, which take up the largest part of government’s Pantawid Pamilyang Pilipino
program (4Ps), will peak in 2013 and is reportedly accommodating 700,000 more
households to its current 3 million household beneficiaries.

International agencies World Bank and Asian Development bank (ADB) lauded the
government’s conditional cash transfer (CCT) program, saying that the multibillion-
dollar program has provided “social protection” amid the slow “trickling down” of
growth. The World Bank has even cited the Philippines as a model in providing so-
called safety net against today’s global economic problems.

Both the World Bank and ADB provided huge loans for the CCT program, which the
Philippines will repay at an estimated US$1.007 billion including projected interest
payments.

Aside from resulting in a heavier debt burden for Filipinos, the CCT program is
criticized as an essentially dole-out program that brings insignificant impact on real
poverty alleviation in the country. The Aquino government has also vastly expanded the
program without the benefit of comprehensive studies on its effectiveness.

In Barangay Tambis, Barobo in Surigao del Sur, children ages 5 and up know all about
gold-panning and earn a living from it. Among them is 13-year-old, who is one of three
beneficiaries of the CCT program in the family. Even if he qualified as a CCT recipient,
he decided to stop going to school last year to mine gold full-time and help augment
their family's income.

He explained that the educational cash grant does little to help augment the family's
expenses. “CCT beneficiaries like me are expected to make contributions to the school,”
he says. “This includes paying a monthly contribution for the salary of their teacher.”
He adds that most of the children in Tambis prefer to pan gold rather than go to school
to help their families get by.

Barangay Tambis is also home to a mother who died while waiting outside a Land Bank
of the Philippines outlet to avail her cash grant. She suffered a heart attack due to the
heat.

Stories provided a picture that is different from how government describes the positive
impact of the CCT program on beneficiaries.

Viability and Relevance in Question

After several years of CCT implementation under the Aquino administration, the
capacity of the DSWD to monitor its implementation and troubleshoot corruption
tendencies remain in question. The Commission on Audit (CoA) reported double
entries in hundreds of payrolls and the accumulation of idle funds in the Land Bank of
the Philippines amounting to Php19.5 million for over-the-counter payments and Php

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 The Conditional Cash Transfer Program in the Philippines: Emerging Issues and Challenges

516,300 for cash card payments. Cash grants totaling Php367.7 million were released to
60,433 sampled beneficiaries even if they did not comply with the program’s conditions.
Initial field reports by IBON also noted incidents wherein program implementers
threatened some beneficiaries of being delisted especially if they put forward grievances.
Some DSWD personnel reportedly advised these beneficiaries to stop availing their cash
transfers if they are not satisfied with the implementation.

In CARAGA, some beneficiaries of Mamanwa tribe said that they were forced to dance
before receiving their cash grants. Meanwhile, some beneficiaries spend between Php10
up to Php 1,900 to comply with the requirements ranging from documents to T-shirts
and IDs; food during meetings with the DSWD; transportation and updating records.

A tribe leader noticed that beneficiaries who were not in their homes during DSWD
visits were automatically delisted. Despite their compliance with the CCT conditions,
these beneficiaries reported that they are still made to clean up barangay halls, schools,
and dikes, among others. Others reported that they either do not get the correct amount
of cash grants or they receive these irregularly. Implementers are also quick to cut the
amount if the beneficiaries miss even one activity.

Several accounts illustrate and validate the inefficiency and weakness of the CCT
program. Field reports showed a trend that aside from being prone to corruption and
questionable transfers, the CCT is not being implemented well because of the basic lack
of health and education facilities. The CCT is also burdensome to beneficiaries as they
will have to shell out considerable amount to comply with the requirements. Moreover,
it has reinforced the patronage and dole-out mentality and is demeaning to recipients
who have to line up for long hours just to get temporary cash relief.

CCT remains an unsustainable and artificial trickle-down mechanism that brings

insignificant impact on real poverty eradication in the country, especially since the
program is being implemented without complementary economic policies to create jobs
and genuinely address poverty, such as land distribution, support for agriculture and
building domestic industry.

Unresolved Poverty
Despite a modicum of economic growth (average 4 percent) over the past decade, the
Philippines has not seen a reduction in the poverty rate. In this regard, the Philippines is
an outlier in the region, which has experienced a rapid decline in poverty. According to
the latest available poverty data from the 2009 poverty estimates from the Family
Income and Expenditure Survey (FIES), the Philippines is home to around 23.1 million
poor people. This figure is equivalent to over a quarter of the country’s total population.
The Philippines also lags in progress toward key Millennium Development Goal (MDG)
targets, primarily due to large inequalities in health and education outcomes between
income groups and across regions. Although the Philippines is currently on target to
achieve the child mortality MDG, the poverty, universal primary education, and
maternal and reproductive health goals are not likely to be achieved by 2015. In
education, almost one-fifth of school-aged children in the lowest income quintile are
not in school, compared to only 2 percent for the highest income quintile. Evidence
also indicates that the geographic inequity observed in the 1990s has persisted into the
2000s and possibly worsened (World Bank; AusAID, 2012 in Chaudhury, Friedman and
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Yuchengco Center Policy Paper Series

Onishi, loc. cit). Similarly, large income-related disparities can be seen in health. The
skilled birth attendance rate among the highest income quintile is 94 percent, with 84
percent occurring in a health facility, compared to only 25 percent and 13 percent,
respectively, among the lowest income quintile. Coverage of childhood immunization is
only 70 percent among the lowest quintile, compared to 84 percent for the highest
quintile.

The government allotted billions of pesos for this dole out program, while health and
education fund gets the least amount from every General Appropriation Acts (GAA). It
was clear then that this CCT program is a band-aid solution. In the DSWD report in
2013, the measurement for their accomplishment is counting how many millions of
individuals have benefited from the program, how dropout rates decreased, and how
many mothers have benefited from their training activities. This way of measurement
will surely result in a positive remark to the country’s achievement for the five MDGs.

The question is on the quality of life of the beneficiaries after the lapse of their
contracts. The government is sending signals that it will continue the program even
without the conduct of a comprehensive assessment, whether it worked or not at all in
terms of eradicating poverty and in fulfilling other objectives of the Millennium
Development Goals from the perspective of beneficiaries and of long term sustainable
self-reliance. Government uses language of the liberal framework which projects that
poverty is being addressed, when in fact globalization at present is the cause of poverty
and underdevelopment. An impact of the CCT should be a qualitative and sustainable
improvement in the lives of poor beneficiaries.

While there are conditions in implementation to make it less of a dole out, it essentially
is still a dole out that even breaks down strong village culture of volunteerism and self-
reliance. Drawing from the experience of both the “children of government” and the
“neglected by government” in poor communities, CCT has only reinforced the mindset
that women are helpless; it breaks up self-reliance and local resiliency; and promotes a
mindset to be beholden and myopic. This leads to another state of disempowerment
among indigenous women who, throughout their lives, learned to be resilient, to depend
on their cooperative and collective strength, and be self-reliant. Misuse of the cash
grants is a high risk in a state of poverty, where the essential goods of food is a daily
struggle. The temptation, or even the necessity to use the cash grant to purchase food, is
inevitably high. On another side, corruption of values happens when the “children of
government” use the amount to purchase non-essential goods including liquor.

What the government failed to inculcate is that the amount given is a loan to be paid by
all Filipinos. The cash grant is not a “pension” or grant. The purpose of increasing
children’s attendance in school and of regular check-ups for pregnant and nursing
mothers is better done without money reward but through sustained information
campaigns; and if basic livelihood needs are met so that children would be free to be in
school and mothers also free to attend to their maternal health needs. Compliance with
requirements will always be a conflict and are bound to fail when the more essential
issues of food and livelihood, practicality and access, are not sufficiently addressed. The
created mindset of being beholden on small gifts from government is a way to obliterate
the essential role of government as the duty bearer.

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 The Conditional Cash Transfer Program in the Philippines: Emerging Issues and Challenges

The government is expected to deliver more comprehensive, appropriate and

sustainable poverty solutions. The government as the duty bearer should not only be
delivering band-aid solutions or dole outs like CCT. The tandem of the Philippine
government with notorious banks, such as the World Bank and the Asian Development
Bank, is another controversial area of concern, noting that these international financial
institutions are responsible in deepening poverty worldwide. In this regard, it is
important to heed the calls of the indigenous communities, as well as other indigenous
and poor women for the government to: assess the CCT and other poverty alleviation
programs and address the questionable process of selection and issues on the
implementation, such as on the grievance mechanism; heed the call for a comprehensive
poverty solution, where land and resources are within the control and access of
indigenous communities along with viable knowledge and practices to sustain these
resources; provide necessary support in enhancing the sustainable and safe agricultural
production of indigenous women and their households; and be transparent on the
source of funds as loan, explain the loan conditions and provide qualitative indicators
on what the CCT achieved with the active voice of beneficiaries.

On CCT as well as other issues, facilitation of continued discussion and collective

analysis will be pursued to amplify the voices, experiences and actions of poor and
marginalized population and indigenous peoples, and the women. These are
opportunities and tools for education and for mobilization. Ultimately, the voices and
actions for socio-economic development be theirs when their involvement is an
empowering journey.

Synthesis
Experts point out that a country that has grown at a respectable rate over a decade but
has not seen substantial reduction in poverty rates like the Philippines may need to
improve the inclusiveness of its growth strategy. The country’s adoption of the CCT
program is a welcome intervention as it shifts the poverty reduction strategy from
waiting for the benefits of growth to trickle down to directly redistributing income to
targeted poor population. However, given the ineffective and wasteful subsidy programs
in the past, many remain doubtful of the government’s preparedness to implement a
program like CCT, which requires large budgets and exceptional administrative capacity.
The Aquino administration requested Congress and the public to grant 4Ps‐ CCT a
chance, given the program’s potential. With its campaign promise of transparent and
prudent spending of the taxpayers’ money, the government assures that the amount
allocated for CCT will not go to waste. It must be remembered though that at the
minimum, CCT program’s potential can only be realized with a system that is able to:

1. capture targeted population with very minimal leakage rate.

2. address the shortages in the supply side.
3. instill behavioral change in households when it comes to investing in human
capital.
4. monitor and evaluate compliance and progress of beneficiaries regularly.

Monitoring the implementation and evaluating the results of the program is particularly
important given that plans are now being drawn to further increase the CCT budget for
next year. Lastly, CCT programs are just one option within the arsenal of social
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Yuchengco Center Policy Paper Series

protection programs that can be used to redistribute income to poor households. They
cannot be the right instrument for all poor households. For example, they cannot serve
the elderly poor, childless households, or households whose children are outside the age
range covered by the CCT. Redistribution to those groups is better handled through
other means. (Senate Economic Planning Office Policy Brief, loc. cit).

Despite the challenges and issues, the government successfully rolled out the Pantawid
Pamilya to reach the poorest households in the Philippines. To date, the Pantawid
Pamilya is the largest social protection program in the Philippines and has been able to
achieve the widest coverage of the poor. The concerted efforts and commitment of
DSWD and its partner institutions in implementing the pilot program and establishing
the household targeting system were critical to program expansion. The pilot program
imparted several lessons that were essential in improving the core design of the
Pantawid Pamilya and in preparing the systems for rapid scaleup. Although the
expansion brought several challenges for DSWD, the agency managed to get the
program running and has continually improved the systems necessary for program
operation.

The PMT-based targeting system combined with geographic targeting has helped
minimize the inclusion and exclusion errors, thereby enhancing program impact. The
combined approach of a standardized targeting mechanism to select potential
beneficiaries for the program and a registration process to validate the information
gathered have been key to the credibility and acceptance of the program. This process
was complemented by the GRS, which allows people to present complaints about
inclusion errors, exclusion errors, and program operations and which has clear
guidelines for complaint resolution.

The targeting system based on PMT has produced good targeting outcomes. About 90
percent of Pantawid Pamilya beneficiaries belong to the bottom 40 percent of the
population. This outcome has been achieved by combining geographic targeting based
on poverty maps with a rigorous and standardized household assessment, including
validation of poor households with local communities.

The Pantawid Pamilya has already shown positive impacts on beneficiary households.
The cash grants increase the household incomes of the poor, while the conditionalities
have helped improve the education and health of their children. Anecdotal evidence
shows that net education enrollment rates of children in beneficiary households have
risen, and the number of children who undertake de-worming at schools and avail of
vaccines from health centers has also increased. In addition, field reports indicate that
beneficiary households benefit from the seminars and development sessions in their
communities.

Other social protection programs in the Philippines can learn from the best practice
methods developed in the Pantawid Pamilya. A considerable amount of resources has
been invested in setting up the Pantawid Pamilya, in terms of financial resources as well
as efforts to build technical and program implementation capacity within DSWD and its
regional and local counterparts. Thanks to these efforts, the government has a pioneer
social protection program that takes into account international best practice and

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 The Conditional Cash Transfer Program in the Philippines: Emerging Issues and Challenges

methods. The Pantawid Pamilya is the only social protection program in the Philippines
in which control and accountability mechanisms are embedded in the core program
design. Other government agencies implementing social protection programs can take
advantage of the investments made by DSWD in creating the Pantawid Pamilya and in
improving the targeting and delivery systems of the program.

Recommendations
Before further scaling up, it is vital to assess the implementation of the Pantawid
Pamilya Pilipino Program (4Ps) and address the concerns about the program to ensure
that the extremely poor experience the maximum benefits from the program. Llanto
(2008) noted that it is important to establish empirical evidence that the 4Ps program
impacts human capital outcomes before contemplating any rapid expansion. The 4Ps
being implemented on a phased model allows for this generation of empirical evidence
to test crucial program components such as targeting and monitoring system. More
importantly, it should reconsider how it identifies the extremely poor. Targeting the
chronic poor would provide better focus to the program. Moreover, to properly identify
the extremely poor, one needs to utilize more than one reference period to account for
the movements in and out of poverty. Data show that majority of the poor in 2009 are
transient poor, only 47 percent are considered chronic poor (Reyes, [Link]. loc. cit).

This important information was extracted using longitudinal data obtained from
tracking the same households for several years. The finding evidently shows that
targeting the poor based on a single reference period and treating them as if they are all
the same would be too narrow a strategy that will not tackle poverty successfully.
Programs have to be designed to comprehensively take into account the differences
among the needs of different segments of the poor. Moreover, it might be good to
review the strategy of covering selected barangays in some of the municipalities.
Limiting coverage to “pockets of poverty” in areas where poverty incidence is high
based on 2003 small area estimates may lead to significant exclusion. Only 25 percent,
or 404 municipalities and cities, have poverty incidence greater than or equal to 50
percent. The rest, representing 3 out of every 4 municipality and city, have poverty
incidence less than 50 percent. Limiting survey area to “poorest municipalities” to
reduce data collection costs may not be the most appropriate way since this will lead to
exclusion of some of the extremely poor. Other options such as using CBMS data
already collected by the local government units or partnering with local government
units in implementing CBMS may be a more practical solution. This would not only
avoid duplication of efforts and wastage of resources, but it would also encourage
greater buy-in by the local governments in national programs. It is imperative to assess
the impacts of the program by examining the situation of this group of families and
whether 4Ps has indeed improved the health, education, nutrition and poverty outcomes
of these families.

Moreover, it would be good to see whether the exit policy of the program (beneficiaries
can only participate in the program by at most 5 years) is feasible, It would also be
helpful if the NHTS updates its proxy means test model for its targeting system by using
the most recent Family Income and Expenditure Survey data and adopting the revised
estimates of poverty thresholds. This would likely address the seemingly too large
number of eligible beneficiaries being identified by the current system. It is also
important to evaluate how effective the program is in terms of the amount of the grant.
23
Yuchengco Center Policy Paper Series

Is the size enough to encourage the children to remain in school? Do we see evidence
of reduced participation in the labor force because of the transfer?

It is critical that an impact monitoring and evaluation be done to improve the

mechanisms of identifying the beneficiaries to minimize leakages and exclusion, address
loopholes in the system to avoid wastage of scarce resources, and address the supply-
side deficiencies. The 4Ps is such an important and expensive program and going on
hastily with further expansion with all these concerns is the last thing a poverty-stricken,
budget-constrained, and highly indebted country like the Philippines should be doing.

Program Appraisal
Cost of participation must be adequately covered by cash transfers to attract participants
and increase compliance rates. Direct costs such as transportation to and from
government offices/public clinics/schools certainly influence participation and
compliance rates. Furthermore, if the cash transfers are not enough to reimburse
households for these additional costs, then a number of recipient families may decide
not to participate in the program. The same is true for the indirect costs of participation,
which is incurred when children are sent to school instead of earning a living.

Target pre-primary school age children to maximize their capacity (children before 7
years old) to absorb information at a rapid rate. Target secondary school-age children by
gradually increasing transfers as they are promoted from one high school level to the
next. Progressive transfers can raise the likelihood of CCT success. Address the
observed increase in school failure rates by rewarding households with children who
earn good grades.

Support workshops and seminars that not only facilitate the achievement of the
behavioral changes CCT seeks to develop in its beneficiaries but also empower them.
Presently, the conduct of CCT development workshops is hindered by lack of
resources. DSWD is addressing the problem by recruiting NGOs and civil society
organizations to help manage the workshops;

Empower local government units to develop CCT complementary programs (i.e.,

participation of female CCT beneficiaries in livelihood programs, program that will
educate women on how to efficiently allocate cash transfers, etc.);

Study the effects of CCTs on the political economy. CCTs may have an effect on how
governments are perceived by the beneficiaries and non-beneficiaries of the programs.
Data and studies on the “intended and unintended consequences of the CCT program
on local politics” are recommended for careful examination. Interest was also expressed
pertaining to the “consequence of the national elections in areas where CCT is
implemented”.

Ensure rigorous monitoring of the program implementation—from identifying the

qualified households, compliance to CCT conditions, to the impact of the program.
Moreover, sharing the data, not just the findings, of all the studies pertaining to CCTs is
critical for the continuous improvement and success of the scheme.

24
 The Conditional Cash Transfer Program in the Philippines: Emerging Issues and Challenges

Poverty alleviation measures must identify the link between human capital investment
and labor market absorption capacity. Whereas raising the health, nutrition and
education status of marginalized families is necessary for improving the lot of the poor,
a minimum standard of living can only be achieved if the economy can create jobs that
pay decent wages.

Although CCT may not be a “cornerstone for poverty alleviation”, it could be a

“complementary or supplementary program to other government initiatives.” The long-
run CCT impact in the Philippines may be more significant than its short-run outcome.
Thus, the need for continuous monitoring is strongly recommended.

The decision to adopt, continue, and consequently expand CCTs has been triggered by
the urgent need to address poverty that has plagued millions of Filipinos, as well as the
devoted desire to meet the MDG targets, especially as regards reduction of poverty and
hunger, and improvement in education and health indicators. But digging deeper, this
decision only reflects the country‘s unchanged social policy trajectory epitomized by the
bias for targeted, palliative, and purportedly apolitical social provision measures, not to
mention externally-influenced, drawing ―encouragement‖ and financial support from
multilateral institutions, all at the expense of structural reform and redistribution. This
flight is, in turn, shaped by the historical and institutional contexts, of which the elites
and the multilateral institutions have been a constant feature. Dominating the economic
and political arenas, the privileged have not only helped mold and remold policies, but
have also proven to be a strong block, upsetting reform efforts that threaten their
position and hold of power. On one hand, maximizing the country‘s seemingly
insatiable need for financial assistance, multilateral institutions, notably the World Bank
and the ADB, have been able to push a number of policies and programs including, of
course, the conditional cash transfers whose very nature is unwilling to confront
structural issues. Given this, it is neither to be expected that Pantawid Pamilya would
provide a long-term solution to the Philippines‘ poverty and inequality problems, nor
catalyze the necessary shift towards a more redistributive or universal social provision.

The untidy process of social policymaking must also be emphasized. As illustrated by

the CCT in the country, policy elites or policymakers are never really autonomous in
their policy and program choices. Apart from their own interests, proclivities, and
values, they also have to deal with and ―listen‖ to the pressures coming from the
different forces in society which, in this case, include, among others, the clamor and
need of the poor to survive, contending views of progressives vis-à-vis CCTs, as well as
the advice and preferences of multilateral institutions. Likewise, progressives, especially
those who are now in government, have to make a difficult decision that involves, on
the one hand, making a compromise of their ideologies to address an urgent need (i.e.,
poverty and hunger), and in view of the institutional limitations that do not allow for
dramatic reforms instantaneously; and on the other, going for structural reform and
redistribution without delay or distraction. The decisions made and positions taken by
the different progressive groups must be understood in the light of the political alliances
they have forged with. Scattered with such ideas as disciplining the poor, investing in
children‘s well-being, saving on government‘s tight budget, and less susceptibility to
politicking, it has elicited a strong appeal to many, thus creating a broad agreement of
outright support among different sections in the Philippine society. It must be brought
out that in the midst of the aforementioned argument, one voice remains a whisper, that
25
Yuchengco Center Policy Paper Series

of the poor whom CCTs are supposed to be helping.

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