Making safety nets work for all in an age of uncertainty

Making safety nets available across the developing world is one of the World Bank’s key themes and was discussed at the 2012 Spring Meetings held in April in Washington D.C. Among many country examples, the Philippines has embraced a unique approach with promising results, and Secretary of Social Welfare and Development “Dinky” Soliman was in town to share the Philippine experience.

In 2008, the food, fuel and global financial crises prompted the Philippine government to expand a conditional cash transfer program, Pantawid Pamilya, with the support of the World Bank and other partners. The program targets chronically poor households with children ages 0-14 living in poor areas. Households that qualify receive cash in return for sending children to school, regularly visiting health centers and for undertaking preventive check-ups for pregnant women.

I was pleased to hear Secretary Soliman report that in little over three years, 3 million of the 5.2 million families identified as poor are benefitting from the program, with 6.5 million children across the archipelago receiving help. In areas where the program has been implemented, school dropouts have decreased; health visits for immunization have increased; and food consumption has improved. A simulation by the Bank and AusAID forecasts that poverty incidence among beneficiaries will be reduced by 6.2 percent under the program.

Conditional cash transfer programs such as this are an effective form of social assistance that was spearheaded by countries in Latin America including Brazil and Mexico. In my former role as the Bank’s Vice President for Latin America and Caribbean, I saw for myself how a well-targeted cash transfer program can make all the difference in helping people cope with economic shocks or other crises, costing as little as half a percent of GDP in Brazil and Mexico. These programs have now spread to over 40 countries, tailored to meet local circumstances with ongoing efforts to improve design for greater effectiveness and efficiency.

Expanding safety nets in developing countries has gained renewed urgency with the recent round of crises, to enable countries to respond to crises as well as address persistent poverty. Even temporarily high food prices can affect the long-term development of children in poor households. The vicious cycle of malnutrition, poor health, and impaired cognitive development can be irreversible. As Secretary Soliman said, in the medium- to long-term, cost effective safety nets including cash transfers are an investment in the future of the country, to break inter-generational poverty by keeping children healthy and giving them the chance to finish elementary school.

East Asia has first-hand experience dealing with volatility and uncertainty. Not only did it weather a financial crisis of its own a decade ago, it is extremely vulnerable to natural disasters and the effects of climate change, as the Philippines witnessed most recently when tropical storm Washi caused such devastation in Mindanao.

These experiences underscore the importance of being prepared, and continuing efforts to build resilience to crises of all kinds. The Bank is working with the Philippines to find innovative solutions drawing from the knowledge and experience of other countries.

For example, after tropical storm Washi, the Bank provided immediate financial assistance to help the Philippines’ recovery and reconstruction efforts. The funds came from the Disaster Risk Management Development Policy Loan with Catastrophe Deferred Drawdown Option (Cat-DDO), a new line of credit available to governments to enhance their capacity to manage the impacts of natural disasters. The $500 million liquidity facility for the Philippines was the first of its kind in the East Asia and Pacific region, after the Bank pioneered this form of assistance in Latin America.

I had the opportunity to live in the Philippines 30 years ago, when the country was in a different stage of economic development. I look forward to visiting again in a few days, for the first time as the Bank’s Vice President for the East Asia and Pacific region. I hope to learn more about the country’s progress and to discuss with the government and other stakeholders how we can work together to further reduce poverty and provide opportunities for all in a volatile and uncertain global environment. We need to be ahead of the game. If a crisis happens, the poor and vulnerable get hit the hardest. Well targeted and effective safety nets to protect the poor will help mitigate their suffering.