By JOSE RAMON G. ALBERT, Ph.D.
Note: This is a guest post. Content may or may not reflect my own opinions.
Two weeks ago, we wrote about crime statistics2 and pointed out that income inequality is far more correlated with crime statistics than income poverty or economic growth.3 This suggests why discussion on the need to address income inequality cannot be overemphasized. Former NEDA Director General Cielito Habito has also pointed out that a big bulk of the growth of the national income is concentrated on the top 40 richest families, which is why the 2011-2016 Philippine Development Plan’s overall thrusts is to achieve inclusive growth, with growth being shared by every Filipino (aside from the complementary goal to reduce poverty). Many poverty analysts would point out the poverty reduction can largely be attributed to either income growths or changes in the distribution of income, particularly the reduction of income inequality. But what exactly does reducing income inequality mean. We thought it would be important for people to understand one of the government’s flagship programs on social protection – the Conditional Cash Transfer (CCT) Program or the Pantawid Pamilyang Pilipino Program (4Ps) – and explain why this program is now considered the fundamental reason why many South American countries have reduced their income inequality and poverty figures from a decade and two decades ago.
Firstly, we answer the question: what is the CCT Program all about? Is it a dole out? Why do several governments across the world conduct this public policy intervention? What do we expect to gain after investing considerably on the CCTs? Are we succeeding?
CCT programs provide cash to beneficiaries (i.e. poor families) but with conditions that they must commit to (e.g., school participation of children, maternal care of mother, health care/visits of mothers/children, etc.). Hence, given that there are conditionalities to the cash transfers, the CCT program is definitely not a dole out. It is a long term strategy to reduce poverty by building human capital with both the government and families committing to each other.4
Several countries around the world have adopted CCT programs. The more popular ones are those conducted by Mexico, Brazil, Chile, and Colombia. For example, Brazil began its Bolsa Familia program in the mid-1990s, piloted in two municipalities. Presently, it now covers 11 million families. Brazil’s strategy slightly differed with Mexico by putting greater emphasis on redistribution than on human capital.4 As a result, a New York Times article written by Pullitzer Prize winner Rosenberg cited that before the CCTs, Brazil was one of the most unequal countries in the world. Rosenberg wrote: “Today, however, Brazil’s level of economic inequality is dropping at a faster rate than that of almost any other country. Between 2003 and 2009, the income of poor Brazilians has grown seven times as much as the income of rich Brazilians. Poverty has fallen during that time from 22 percent of the population to 7 percent.”5
Would any of you be surprised to know that countries adopting the CCT program have been increasing in the past years. (Figure 1). In the Philippines, the main implementing agency of the CCT is the Department of Social Welfare and Development (DSWD). The DSWD’s CCT program, called the 4Ps, started in February 2008 with 6,000 household beneficiaries from four pilot municipalities and two cities; this has significantly expanded to approximately 3 million beneficiaries in May 2012.6 The significant jump between the period 2009 and 2010 is expected as the 1st phase of the implementation was during the period 2008/2009. (Table 1).
In the selection of beneficiaries for the 4Ps, the DSWD firstly used the 2003 city and municipal level poverty estimates generated by the National Statistical Coordination Board (NSCB) as one of the references in the identification of priority areas for the implementation of the National Household Targeting System for Poverty Reduction (NHTSPR).7 The NHTSPR is an information management system that identifies who and where the poor are in the country. It uses a Proxy Means Test (PMT) to predict the income of households (using some non monetary indicators) and then utilizes the predicted incomes and the official poverty lines to determine if households are poor. As a result of the PMT, 5.3 million households were identified as poor out of a total of 10.9 million household enumerated by the DSWD. You may be aware that the 2009 official count of poor families released by the NSCB is 3.9 million families. Hence, there is a seeming inconsistency between the two numbers; but that is to be expected mainly due to the differences in methodology – the official poverty statistics uses direct estimates of income from the Family Income and Expenditure Survey (FIES) while the NHTSPR used an indirect estimate of income using the PMT. Note that even if the DSWD used the FIES questionnaire (a very long one!), they would still have numbers a bit different because of the difference in reference periods. Further, it has also been said that the difference of approximately 1.4 million poor families between the NHTSPR and NSCB accounts for the non-poor who are very close to the poverty line. To empirically check this point, the NSCB made special computations – and found out that by simply increasing the poverty threshold by 10 percent, almost 1.0 million families will fall below the poverty line. Thus, there is reason to believe that families identified in the NHTS are vulnerable, i.e., at high risk of being poor, even if they are not poor! (Table 2)
The DSWD is currently working on efforts to update the NHTSPR by next year, as well as improving the PMT model that can be used to identify the poor beneficiaries for future rounds of the CCT, or other government programs for the poor. This is in line with the effort to better identify the poor, in consultation with concerned agencies and experts in this area, including the NSCB.
A recent World Bank report published in January 2013 and launched through a forum held on 1 March 2013, Philippines Conditional Cash Transfer Program, Impact Evaluation 2012, provided highlights of the assessment of the CCT (a first in the series of evaluations). To quote the Report, “the findings of the impact evaluation support administrative and other assessments that have found that Pantawid Pamilya is reaching most of its key objectives. The impacts found through this study are comparable to the levels of impact found in other CCT programs around the world at this stage of program maturity, particularly in terms of the program’s achievements in improved health service use and school enrollment.”8
More specifically, (Note: the section below is directly lifted from the joint Press Release of the Bank and DSWD.)
- “In Pantawid barangays, 76 percent of preschoolers are enrolled in daycare, compared to 65 percent in non-Pantawid barangays;
- Among school children at age 6-11, 98 percent of children in Pantawid barangays are enrolled in school, as against 93 percent in non-Pantawid barangays; and
- Children in Pantawid barangays from age 6-14 also have higher school attendance (95-96 percent) as compared to children in non-Pantawid barangays (91 percent).
- 64 percent of pregnant mothers in Pantawid barangays had antenatal care as against 54 percent in non-Pantawid barangays;
- 85 percent of children in Pantawid barangays age 6-14 have undergone deworming as against 80 percent in non-Pantawid barangays;
- 81 percent of children in Pantawid barangays at age 0-5 have taken Vitamin A supplements as against 75 percent in non-Pantawid barangays.”9
It is also worth mentioning that prior to the DSWD’s CCT program, the Community-Based Monitoring System (CBMS) has been developed in the early 1990s under the Micro Impacts of Macroeconomic Adjustment Policies (MIMAP) Project -Philippines to provide policymakers and program implementers with an information base for tracking the impacts of macroeconomic reforms and various policy shocks.10 The CBMS is being supported by the Department of Interior and Local Government (DILG), the National Anti-Poverty Commission (NAPC), the National Economic and Development Authority (NEDA), and the CBMS Network as a tool for localizing the Millennium Development Goals (MDGs) in the country, among others.11 As of February 29, 2012, CBMS in the Philippines is being implemented in 20,807 barangays in 782 municipalities and 55 cities in 66 provinces (35 of which are provincewide).7 These initiatives, though laudable, still appears to be a challenge for a number of LGUs to undertake as there still remains a significant number who have yet to implement the CBMS – 55.9 percent and 46.7 percent of the total cities and municipalities, respectively, as of January 2013. And after years since the CBMS was first implemented, while strides have been made in terms of data collection and processing capacities of LGUs, there are concerns on how much capacities have been built on the LGUs to perform data analysis on their own.
Last year the first ever Registry System for Basic Sectors in Agriculture (RSBSA) was implemented by the Department of Budget and Management (DBM), together with the National Statistics Office (NSO), the Department of Agriculture (DA), the Department of Agrarian Reform (DAR), DILG, and NAPC. The RSBSA is a nationwide database of baseline information of farmers, farm laborers and fisher folk from identified provinces, as well as geographical coordinates of agricultural and fishery workers households. During the 1st phase, the DBM covered a total of 2.1 million farmers, farm laborers and fisher folk in identified provinces. The 2nd phase of the will cover 55 more provinces.12
And now, the government will need to put all of these data systems together so that there should be a shared government wide database for targeting. There are current efforts on coming up with a national data unification system. We look forward to the coming years when we will be able to reap the benefits of targeted interventions.
But please… let us not forget that most of the impacts of all these interventions will take a while. Many analysts recognize that the full impact of the CCT program will take a while to be felt – this is a case not unique to the Philippines alone but a general phenomenon across countries undertaking such interventions. Income inequality and poverty reduced in South America, but not immediately. Kaya huwag mainip! There is a time for everything… patience is a virtue, mga cumpañero at cumpañera!
Happy Women’s Month!
Jose Ramon G. Albert. Ph.D. is the Secretary-General of the National Statistical Coordination Board (NSCB).
Follow me on Twitter: @rjamesbarrete