Through the Looking Glass: The Conditional Cash Transfer Program

Before I became a reporter of INQUIRER.net, I wrote news and features for the Philippine Online Chronicles (an initiative of Vibal Publishing). Here’s one of the longer pieces I wrote in 2010 (a year after I graduated from college):

Through the Looking Glass: The Conditional Cash Transfer Program

By Angeli Sabillo
Philippine Online Chronicles

 

All over the world, different countries, as well as major international financial institutions, are applauding the initial “success” of conditional cash transfer (CCT) programs in developing countries. Around 30 countries have some form of CCT initiatives. Almost half of them are from the Latin America region.

The Economist calls them “the world’s favourite new anti-poverty device.” Most articles about CCTs say they work and improve income distribution, painting pretty pictures of everyday comforts accorded to the poorest of the poor, but they rarely delve deeper into the statistics and the specific problems attached to the programs.

Philippine situation

In the Philippines, the conditional cash transfer program of the government is under scrutiny initially because of former president Gloria Macapagal-Arroyo’s heavy use of advertisements to promote the said project – and her public image – and presently because of President Benigno Aquino III’s decision to retainand expand it.

The initiative hit a larger nerve when the Department of Social Work and Welfare Development was earmarked to receive a P21 billion fund from the General Appropriation Act, more than double of what it received in 2010. This irked several legislators who were either trying to insert more funds for their local districts or social services such as rural electrification, irrigation and improvement of schools and health units.

Year Program Name MOOE CO TOTAL BENEFICIARIES
2011 Implementation of Conditional CashTransfer (CCT) Program (under 4P) 20,976,342,000 217,775,000 21,194,117,000 2.3 million (target)
2010 Pantawid Pamilyang Pilipino Program (P4) 10,000,000,000 10,000,000,000 1 million (target)
2009 Pantawid Pamilyang Pilipino Program (P4) 5,000,000,000 5,000,000,000(* additional funds were given,

not clear how much)

1 million
2008 Ahon Pamilyang Pilipino(Conditional Cash Transfer) 298,550,000 298,550,000

* MOOE – maintenance and other operating expenses
** CO – capital outlay

 

Recently, former president Arroyo roused media attention for criticizing the move to double the CCT budget. According to her, ““I am not against increasing the CCT beneficiaries. I started [the program], but a sudden and massive increase by more than double seems both ambitious and untimely,” Her point was well taken by some fellow legislators. Arroyo even signed a manifesto asking for the realignment of the CCT funds for schools and hospitals. However, it was not pointed out in the media that (1) the proponents of the manifesto were actually protesting the CCT in its entirety. They had in fact pointed out that Arroyo initiated the program and used it for her own political campaign; and (2) Arroyo herself consistently doubled the CCT budget from its inception in 2008 (see chart).

But regardless of political motives, can the CCT program really eradicate poverty?

What is CCT? Is it a dole out?

A Millenium Development Goals Insight briefer described CCTs as social protection programs based on “a multidimensional perspective of poverty reduction.” According to their United Nations analysts, the CCT was devised because “poor and disadvantaged populations have benefited little from economic growth and improving services, undermining countries’ progress on nutrition, education and health-related goals in many countries.”

International definition reiterates the “social protection” component. In response to criticism against CCTs, Aquino clarified that the CCT is not meant to be the solution but a way to ease the suffering of the poor. He even likened it to a lifesaver saying, “There are those who say this program makes beggars out of Filipinos. But I ask them: is it wrong to throw a lifesaver to someone who’s about to drown?”

However, like in other countries (see sidebar), the CCT is continuously being implemented as long term programs aimed to improve poverty statistics, ultimately giving the allusion that it will alleviate poverty. The same observation can be said with the Philippine government’s objective of expanding reach to accommodate and eventually cover all poor families.

As the name implies, a CCT is a program that distributes money to its beneficiaries in exchange of certain commitments.

In the Philippines, beneficiaries receive around P6,000 to P15,000 a year ($140 to $360) depending on the number of children in a household. The conditionalities include availing of health center services (especially for pregnant women), check-up and vaccines for children and attendance of at least 85% for the school-age children.

Government officials backing the program say it is not a dole-out because of the conditionalities attached to it. In general terms, “dole-out” means giving out money or food in small portions, or to dispense as charity. Political context, however, suggests a negative connotation. For emergency situations like natural disasters, giving out money and food is appreciated. However, in dealing with poverty, it is seen as either breeding mendicancy or wasting government funds in unsustainable projects.

Is the CCT a dole-out, regardless of good or bad connotation? Yes. And unless it offers some form of livelihood that will truly alleviate the poor, it will still be considered a dole-out.

Successes or problems?

Kabataan party-list representative Raymond Palatino pointed out during the Congressional discussion of the DSWD budget that if CCTs can really fight poverty, then why are countries still putting it into action after several years of implementation? Supposedly, the problem should have been solved if it is indeed effective in helping the poor. And a longer run probably meant that it is not effective (see sidebar for information on other CCT projects).

An evaluation study commissioned by the World Bank and executed by the Institute of Philippine Culture Ateneo de Manila University showed that while there have been quantitative improvements on school attendance and the use of health facilities, among other things, there are no improvements on the health services and school, as well as the beneficiaries’ sources of income.

In reality, CCT beneficiaries merely receive additional money but the program does not address their lack of employment, job stability or increase in wages. It also does not address the problems in the health and educations sectors. In fact, according to its critics, the fund earmarked for the CCT was increased while the budgets for public hospitals and state colleges and universities were slashed. According to the evaluation done by Ateneo, 18% of the surveyed beneficiaries’ schools had double-shift classes while 20% had multi-grade classes (where students of different grade levels are grouped in one class only). Five percent of these schools experienced lighting problems, 38% and 27% had leaking ceilings and roof, 31% lacked proper ventilation and 41% lacked furniture. There have also been reports on “attempted manipulation by local leaders.”

All of these are consistent with observations noted in other countries with CCT initiatives. A study on Mexico’s Progresa looked into the politics of CCTs and how it is being used by politicians for votes and other political benefits. A World Bank panel convened February 2009 noted that school attendance did not necessarily lead to higher academic performance, while there have been mixed results in the health aspect of the programs. They point out that bringing the kids to school and health centers is only half the solution. There should be a guarantee that these facilities operate well.

This brings us back to the conflicting or changing objective of CCTs. While experts look at its ability to change the poor’s perception or attitude when it comes to availing of public education and health services, it also plays up the supposed improvements in poverty-related statistics.

This raises the question if whether these developing countries should primarily invest in CCT programs when their social services are in the first place lacking. Another problem is the high overhead cost brought about by the screening and administration of the program. As World Bank policy paper raised, “There is a need to assess the effectiveness of CCT programs as both a permanent institution for addressing chronic poverty and a temporary instrument for addressing vulnerability.”

In the first place, the CCT or the Pantawid Pamilyang Pilipino Program was first introduced in 2008 to protect the poor from the global financial crisis.

If it is the attitude of the poor that needs to be changed, have there been studies on why children and mothers are not availing of education and health services? Critics point out that generating more jobs by supporting the creation of basic industries, investing in social services and other public needs will address all of the said problems.

Another SAP?

Structural Adjustment Programs (SAPs) imposed by the International Monetary Fund and the World Bank on developing countries as conditions for new loans have long been criticized for impinging on national sovereignty, compelling the privatization of state assets and the imposition of unfair policies on agriculture, mining, trade and foreign relations.

As analysts point out, the existence of debt gives so much control to the creditor, to the point that it can influence a country’s economy.

The same can be said with regards to conditional cash transfers. Mostly, funding for these programs are taken from the IMF and the World Bank. The World Bank and the Asian Development Bank had recently granted a $405 million and a $400 million loan for the CCT program of the country.

International financial institutions backed by dominant countries such as the United States are able toinfluence the government into prioritizing programs such as the CCT instead of investing in local industries and social services.

In the end, government expenditure for basic social services and infrastructure are slashed in favor of CCTs. It also increases dependence on the mentioned financial institution because of the additional and continued debt.#

CCTs around the world (data from World Bank and various news websites, incomplete list of countries)
LATIN AMERICA
Argentina’s Programa Familias (2002 to present)Target: urban areas, families with at least two children who have not completed secondary school

Because of the relatively higher enrolment rate of children in elementary education, Programa Familias targets secondary schooling as well as health.

Funding: $850 million loan from the Asian Development Bank

The CCT program was introduced during the 2001-2002 economic crisis in the country. Poverty statistics is still being contested in the country, with the government boasting a 15% rate last year and its critics asserting it’s closer to 40%. This is mainly caused by inflation (30% of Argentina’s debt is tied to inflation).

Bolivia’s Juancito Pinto (2006 to present)Target: elementary school students. If the child is able to be present 75% of the school year, his parents receive $25 each year, handed out by th e Army during a special school ceremony.

Funding: $30 million per year

Brazil’s Bolsa Familia (2001 to present)Target: urban areas, poor households, education of children

Funding: $5 billion in 2005

Chile’s Chile Solidario (2002 to present)
Colombia’s Familias en Acción (2001 to present)
Dominican Republic’s Solidaridad (2005 to present)Funding: $57 million in 2006
Ecuador’s Bono de Desarrollo Humano (2003 to present)Funding: $194 million in 2005
El Salvador’s Red Solidaria (2005 to present)Funding: $51.4 million
Mexico’s Oportunidades (1007 to present)Target: poor households

Funding: $3.2 billion in 2006

AFRICA
Burkina Faso’s Orphans and Vulnerable Children(2008 to present)Target : orphans and vulnerable children of HIV/AIDS

Funding : $1.4 million

Kenya’s Orphans and Vulnerable Children (2004 to present)Target : orphans and vulnerable children of HIV/AIDS

Funding : $31.6 million

AMERICA
New York’s Opportunity NYCdiscontinued in 2010 because it did not show substantial results and did not generate enough response from the public.
EURASIA
Bangladesh’s Female Secondary School Assistance Project (1994 to present)Target: secondary school girls

Funding: $40 million in 2004

Cambodia’s Education Sector Support Project(2005 to present)Target: children, gives out scholarships

Funding: $5 million in five years

Philippine’s Pantawid Pamilyang Pilipino Program (2008 to present)Target: poor households

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