Teaching people to fish: Conditional cash transfers in the Philippines

MANILA — Give someone a fish and they’ll eat for a day, but teach him to fish and they’ll eat for a lifetime. This principle is at the core of a new way of doing social assistance in Asia. Conditional cash transfer (CCT) programs provide benefits to families on the condition that they invest in their children’s future.

The Department of Social Welfare and Development’s new Ahon Pamilyang Pilipino program provides cash benefits to families that take their children for regular health checkups and ensure that they go to school. An 85% attendance rate is mandatory. Other conditions include that pregnant women should receive appropriate pre- and post-natal care. Compliance with the conditions is verified. Families receive their full benefit only when all conditions are met — the money is not a “dole-out.”

Smarter, healthier kids

Investing in children’s human capital — ensuring that they grow into educated and healthy adults — is the equivalent of teaching them how to fish. Healthy, educated children ultimately have more choices in life and are able to become productive members of society. CCT programs help to break the vicious cycle poverty. There is a gender empowerment element as well, with cash benefits usually paid to mothers. CCT programs also reduce child labor, since families no longer have to weigh the opportunity costs of sending Juan or Juanita to school when they could be earning money to help put food on the table.

Too good to be true?

Are CCTs too good to be true? One need only to look to Latin America, where there is a wealth of evidence documenting CCT program successes after many years of experience. Perhaps the most famous program, Mexico’s Oportunidades, has been around for more than a decade, with very positive results. The incidence and severity of poverty have fallen, school enrolment and completion rates have improved, health indicators are up, and malnutrition is down. Rigorous monitoring and evaluation, built in from the very beginning, is credited with being able to demonstrate real impacts. Oportunidades now serves more than 25 million Mexicans and is one of the few large-scale poverty reduction programs that have withstood a change in political administration, no small feat in itself.

All of this is not to say that CCT programs are without challenges. Doing it right requires a commitment to support households at least over the medium term (say 5 years) in order to help them break out of the cycle of poverty. Identifying and targeting the poorest is always difficult. Setting appropriate benefit levels is complicated, and a payment system must be devised. CCT programs can be complex to administer. The supply of high-quality services has to be sufficient if demand for those services is increased. There will be growing pains.

In good company

But the growing pains can be eased by paying close attention to the many lessons learned from similar programs operating in about 20 countries, including Brazil, Columbia, Ecuador, Jamaica, Nicaragua, Peru, and Turkey. The Philippines and Indonesia are the CCT pioneers of Southeast Asia. In a particularly interesting development, 2007 saw the launch of a new CCT program in North America. New York City’s Opportunity NYC is a unique attempt to adapt a successful developing country poverty reduction approach to the context of one of the world’s richest countries, one that still grapples with issues of poverty and social exclusion.

The Ahon Pamilyang Pilipino was conceived in 2006 and pilot tested in selected provinces in 2007. The Government has announced ambitious plans to reach 300,000 poor families in 2008. This is a mere drop in the bucket considering the latest official poverty figures, which estimated that there were 27.5 million poor Filipinos in 2006. These estimates used a poverty line that amounted to about $0.80 per person per day at the time. Poverty levels worsened from 2003-2006, and with the current food price crisis the situation does not look likely to improve.

Critics say that the program, much like giving people fish, will make them dependent on handouts. This misses the crucial point that benefits are tied to health and education conditions designed to benefit the next generation. And the maximum benefit level, P1,400 per month for a family with 3 school-aged children, is hardly enough to entice a parent to give up work. The National Statistical Coordination Board set the 2007 poverty line for a family of 5 at P6,195 per month (about $134 at the time). International best practice holds that a poverty-motivated transfer should represent between 20% and 40% of the poverty line in order to be meaningful to the recipients. A P1,400, the maximum monthly benefit is on the lower end, less than 23% of the poverty line.

With these benefit levels, the total annual cost for a program covering 300,000 households in the Philippines would be about 0.05% of its annual Gross Domestic Product.

Meeting human development challenges

The list of human development challenges in the Philippines is long. Primary education indicators are backsliding. Children are dropping out of school where families can’t afford transportation, uniforms, or school supplies, never mind a nutritious snack. Hunger is a problem on everyone’s minds, particularly given skyrocketing food prices. Eight women die every day from pregnancy and childbirth-related complications because they don’t get the necessary basic care. Meeting some of the Millennium Development Goals is going to be impossible if concerted efforts are not made. The APP is a pioneering program that aims to address these challenges head-on, and it holds a great deal of promise.