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Philippines: CCT Could Raise Beneficiary Incomes By 12.6 Percent, Thus Reducing Poverty In Program Areas—WB-AusAID Report

August 19, 2011

MANILA, 19 AUGUST 2011—The Philippines’ conditional cash transfer (CCT) program could increase annual incomes of beneficiaries by 12.6 percent, resulting in the reduction of poverty incidence among them by 6.2 percentage points, simulations by the World Bank (WB) and the Australian Agency for International Development (AusAID) show.

The results of these simulations were published in the Social Protection Note 3 titled “Welfare and Distributional Impacts of the Pantawid Pamilyang Pilipino Program” released recently by the two development partners.

An in-depth evaluation of the country’s CCT program called Pantawid Pamilyang Pilipino Program (Pantawid Pamilya) is ongoing, but simulations using the rich database of the National Household Targeting System could already be done to show the potential impacts on poverty in program areas, according to the Report.

The Report says that on average, pre-CCT annual per capita incomes of Pantawid Pamilya is equivalent to Php9,205 ($219), way below the national poverty line of Php16,841 ($401) in 2009.

On average, Pantawid Pamilya beneficiary households in program areas receive an annual cash transfer of Php6,200 ($148) from the program. With an average family size of five, this translates to a 12.6 percent increase in their total household income.

“A 12.6 percent increase in the incomes of Pantawid Pamilya beneficiary households can reduce the poverty incidence by 6.2 percentage points among them,” says the Report. “In program areas, the poorest areas of the country where CCT is implemented, Pantawid Pamilya can reduce poverty incidence by 2.6 percentage points and inequality by 6.6 percent.”

Beneficiary households also have large family sizes, ranging from five to seven household members, with those in the poorest income groups having the largest families.

Increasing compliance of existing beneficiaries will enhance the poverty-reducing impacts of Pantawid Pamilya, says the Report.

Encouraging effects of CCTs like the Pantawid Pamilya in reducing poverty incidence at the program level, according to the WB-AuAID report, is consistent with experience in countries in Latin America. In Nicaragua, cash grants reduced poverty incidence in program areas by 5-7 percentage points while Colombia posted a 3-percentage points reduction in poverty incidence.

Pantawid Pamilya aims to reduce poverty and improve children’s health and schooling as well as maternal health in poor households in the poorest provinces and municipalities in the country. It provides cash grants to poor households in poor areas of the country in return for certain conditionalities:

  • Beneficiaries are required to bring their children aged 0-5 to health centers for immunization and weight monitoring while children aged 6-14 are required to take de-worming pills at school;
  • Pregnant women must avail of pre- and post-natal care, and delivery must be assisted by a skilled health personnel;
  • Children aged 3-14 (pre-school, elementary and high school) should stay in school and maintain class attendance of at least 85 percent per month; and
  • Parents are required to take “family development sessions” (topics include how to be better parents, among others).

The monthly cash grants range from Php500 (US$11) to Php1,400 (US$32) per household, depending on the number of eligible children.

The Report says the impact of cash grants among beneficiaries who are in extreme poverty are even more dramatic. About 33.7 percent or one in three households in program areas do not earn enough to even provide for their household’s food requirements. Among the Pantawid Pamilya beneficiaries the figure is are even higher: about two in three or 61.4 percent, suffer from food poverty prior to the program.

“Grants received from the program allow beneficiaries to buy their basic necessities, especially food,” says the Report. “Studies of various CCT programs worldwide have shown how such transfers are indeed directed towards prioritizing food on the table. If this is so, results suggest that the Pantawid Pamilya grant can reduce food poverty among household beneficiaries by 13.3 percentage points. Consequently, it can reduce overall food poverty in program areas by 5.5 percentage points.”

While the vision of the country’s CCT program is to reduce structural poverty by ensuring that the youth nurtured under the program become healthy, educated, and productive members of society, the program clearly has short-run benefits that are particularly important in addressing income volatility of poor beneficiaries, the Report concluded.

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