The power of public programs: cash transfers are helping reduce poverty in the Philippines

Photo Credit: Benson Kua/Flickr

The Philippines’ conditional cash transfer program is a boon for poor families, but it isn’t perfect.

By Zachary Frye

In 2008, the Philippines initiated a government-run cash transfer scheme knows as the Pantawid Pamilyang Pilipino Program (4Ps). The program gives money to poor families, but only if they meet certain conditions. As of March 31, 2019, it had served over four million poor households nationwide.

In order to benefit, children need to be enrolled in school, achieve an 85% monthly attendance rate, stay up to date on vaccinations and take deworming pills twice a year. Parents need to attend family development sessions and pregnant women must complete pre and post-natal care with a certified physician.

Setting conditions on aid packages is one of the most valuable ways to incentivise social progress. If properly implemented, these programs can lead families into better, healthier lives – and put much-needed money in their pockets.  

In the Philippines, one of the most beneficial aspects of 4Ps is its school enrollment provision. More students are now finishing secondary school, increasing social mobility and providing young Filipinos with an opportunity to break the cycle of poverty.   

One of the main drawbacks of the program, however, is its relatively short window to receive benefits. Currently, families can only take advantage of the program’s stipend for a period of seven years. This should be expanded to reduce the incidence of intergenerational poverty.

Higher graduation rates have the potential to improve lives

4Ps is contributing to poverty reductions in the Philippines. The World Bank estimates that the country’s poverty rate is set to dip below 20% in 2020. This would represent a 6% reduction from 2016. According to the Bank’s report, 4P’s was responsible for a 1.2-1.5% nationwide poverty reduction from 2012-2015.

There is also evidence that the program’s emphasis on education is having a positive impact on students. From a baseline of 60.8%, 4Ps beneficiary households with students in the 16-17-year demographic range saw a 10% increase in school enrollment. For 12-17-year olds, 4Ps beneficiaries increased enrollment by 4.9%.

Since better high school graduation rates are correlated with better living outcomes, including improved health and higher income, this is a promising trend.

The program should be expanded

It’s important to note that 4Ps isn’t a comprehensive anti-poverty program. It uses targeted screening to reach the most deserving families, but implementation gaps are hindering full enrollment.   

In a newly released assessment on the program’s effectiveness, the World Bank took a note of the 4ps’ challenges.

“The recent halt in program expansion and use of outdated targeting system have resulted in lower coverage levels and incidence rates among the poor. Also, the inability to adjust benefit levels with inflation has resulted in lower generosity of benefits,” it said.

Starting in 2015, program onboarding plateaued. In 2018, a modest reduction in beneficiaries was recorded. For the first time since 2013, the program’s base dipped below four million. To improve coverage, the report recommends reducing the time between database updates, and integrating its targeting mechanisms with the new national I.D. system.

There is also a concern that certain program specifications are too restrictive. As it stands, families can only receive benefits for a period of seven years. The program is geared for generational changes, but the cap weakens its effectiveness. With most families supporting their children’s education for 12 years, this is problematic.

Without proper education, young people’s choices, mobility and abilities are severely diminished.
Photo: John Christian Fjellestad

Education will be paramount in eliminating poverty

Government-funded safety nets are crucial because they help expand opportunity. For families without many resources, they can be the difference between condemning another generation to a life of poverty and economic progress.

Without proper education, young people’s choices, mobility and abilities are severely diminished. 4P’s gives the next generation an avenue out of poverty.

The program should also be applauded for its emphasis on family development. Poverty is a multidimensional problem and personal choices matter, especially for parents. 4P’s emphasis on a positive and healthy home life is a smart way to promote parent’s education, which in turn helps cultivate good habits to their children.

At mandated family development sessions, parents learn about children’s rights, family planning, healthy diets, basic finance, disaster preparedness and ways to resolve domestic conflict. Coupled with increased school attendance, the transformational power of education has the potential to drastically improve the lives the poorest Filipinos over the coming years.

But 4P’s most effective implementation will require strengthened targeting systems and eligibility windows. The program will continue to be a cornerstone of the country’s poverty reduction efforts moving forward, but adjustments need to be made in order to reach its full potential.