A Poverty Resource Hub of Focus on the Global South Philippines

The Conditional Cash Transfer Debate and the Coalition against the Poor

The Conditional Cash Transfer Debate and the Coalition against the Poor

Jan 14, 2012

The Conditional Cash Transfer Debate and the Coalition against the Poor

By Walden Bello

Conditional Cash Transfers or CCTs have become the subject of controversy recently, with a marathon debate on it breaking out over it during the budget deliberations at the House of Representatives.  The CCT program was introduced in 2008, during the administration of Gloria Macapagal-Arroyo.  During the recent budget hearings, however, Arroyo, now the representative of the Second District of Pampanga, opposed the expansion of the program planned by the new administration.

The idea behind CCT’s is that poor families are given a subsidy if they agree to certain conditions: keep their children in school, receive health care during and after pregnancy, and agree to have children immunized, subjected to periodic checkups, and monitored for growth.  The aim is to “increase the productivity of the poor,” make children more competitive in the job market when they grow up, and thus “break the intergenerational cycle of poverty.”

CCTs in the Philippines
First launched in Mexico, Brazil, and Bangladesh over a decade ago, CCT programs had spread to about 23 developing countries by 2008.  In Latin America alone, some 93 million people are said to be enrolled in CCT programs.
The program in the Philippines was initiated in 2008, during the food price crisis.   A poor family was given a P500 monthly cash grant for health and nutrition needs, with another P300 per child for educational expenses.   Stipends were limited to three children, coming to a maximum subsidy of P1400 for each family per month.

A total of 700,000 families were reached by the program over the last two years.  Now the new administration of President Benigno Aquino III plans to expand the program to cover 1.3 million more families with the help of a recent $400 million loan from the Asian Development Bank, a commitment that comes on top of an earlier $405 million loan by the World Bank in November 2009.  The ADB and the World Bank are among the biggest backers of CCTs, with the Bank claiming that its technocrats played the key role in conceptualizing them.

Do CCTs work?
What is the record of CCTs?  According to a number of studies, they seem to be working in terms of containing poverty.  In Mexico, one exhaustive study of the Progresa-Oportunidades Program claims that it reduced the share of the population living in poverty by 16 per cent.  Over 5.2 million households are enrolled in the program, which has been funded by the government, with support also coming from the World Bank and the Inter-American Development Bank.

In Brazil, the CCT Program, known as Bolsa Familia, is massive, with some 12 million families participating in it.  The flagship program of the Lula government addressing the needs of the poor, it is said to have played a central role in lifting 20 million Brazilians from absolute poverty and pushing 31 million into the middle class.  According to one report in the Guardian, “One of the biggest successes has been the enormous advances made to the school enrollment program.    This is largely thanks to Bolsa Familia (“Family Fund”), which pays poor families if their children attend school.  This fund has pushed children off the street and into the school room, while also providing the poorest with a well-needed form of income support.”

Even the radical MST, the Landless Movement, has supported  Bolsa, though it realizes this might have dampening effects on their members’ willingness to undertake land occupations.  According to one MST leader quoted in the report of a Church-linked research center, “…Given the extreme poverty in Brazil and the large numbers of people going hungry, these clientelist policies are necessary…Necessary but not sufficient.”

Supporters of CCTs emphasize that reduction of gender inequality is one of the principal benefits of CCTs.   According to a World Bank press release, “Women and marginalized groups in particular see benefits from CCTs, often stretching beyond the household. In Mexico, women reported increased self-confidence, awareness and control over family resources. Programs in Chile, Panama and the Dominican Republic have helped indigenous groups and the extreme poor obtain identity documents, which not only make it possible for them to enroll in CCT programs, but also provide access to other social programs, voting rights, and legal protection.”

CCTs: the cons
What is my view of CCTs?
First of all, the ADB and the Bank’s approach to them is that they are the principal tool to reduce poverty.   Now, while they may be a useful complement to structural reform, they are not a substitute for it, and the latter is the agenda of the multilateral agencies, which are loath to address structural issues.

Second, CCTs have a palliative intent, that is, they seek to contain the social damage that is being created by the neoliberal macroeconomic policies pushed by the Bank and the ADB.  In this regard, I would say of CCTs what I wrote regarding microlending a few years ago:  “Structural adjustment programs promoting trade liberalization, deregulation, and privatization have brought greater poverty and inequality to most parts of the developing world…Many of the same institutions that pushed and are continuing to push these failed macro programs, like the World Bank, are often the same institutions pushing microcredit programs.  Viewed broadly, microcredit can be seen as a safety net for millions of people destabilized by the large-scale macro-failures engendered by structural adjustment.”  CCTs have the same thrust as micro-lending: damage control at the microeconomic level.

Let us be clear therefore: CCTs are about poverty containment rather than poverty reduction.

CCTs : the pros
Does this then mean that there is no place for CCTs in the anti-poverty arsenal of a developing country like the Philippines?  Here is where I part ways with some of the more doctrinaire critics of conditional cash transfers.   I would deploy them here for three big reasons.

First, poverty is so pervasive and the combination of runaway corruption and neoliberal policies under the nine-year reign of the previous administration led to so much increase in poverty that any tool to contain its further spread must be utilized.  I agree with the comment of the MST leader on the Bolsa Familia cited earlier:  given the large and increasing numbers of people going hungry, CCTs have a critical role to play, though I would not go as far as saying they are “necessary.”

Second, under the Millennium Development Goals (MDG) covenant, the Philippines agreed to reduce its poverty rate by half, to 15 per cent of the population by 2015.  This covenant may not be legally binding but it has now become morally binding.  Thanks to Arroyo and neoliberal policies, we will probably not reach this target by 2015, but we are expected to at least show significant progress by the international community.  CCTs can be useful in this enterprise.

Third, CCTs buy time for structural reforms to kick in.   The key measures to reduce poverty are reversing trade liberalization, a moratorium on foreign debt payments, and effective agrarian reform.  Progressives need some time to win the battle to win approval for these policies in the administration coalition, and after that, we need more time before the poverty-reduction impacts of these far-reaching reforms kick in.   Thus I would see CCTs as a stopgap measure, to keep millions above the water line until reforms show results.

The Critics’ Arguments
The opponents of CCT in the Philippines have attacked it on a number of grounds: that CCTs are a “dole-out”; that the vast amounts of resources allocated to the program would open it up to corruption; and that the World Bank and ADB would subvert the program along neoliberal lines.

The dole-out argument is based on a deliberate misunderstanding of the way the program works, which is its use of conditionalities, like keeping children in school to provide them with much needed skills, in return for providing cash support for families.

The CCTs as inducement-for-corruption charge has some validity, but it can be addressed, not by throwing out the baby with the bathwater, which is what Arroyo wants, but by the institutionalization of tight controls, which can be done, as proven by the experience of Bolsa in Brazil and Progresa in Mexico.  Under a corrupt regime like the Arroyo presidency, the vast sums of money involved would definitely create corruption.  While the Aquino administration, which ran on an anti-corruption, anti-poverty agenda, cannot promise a 100 per cent elimination of corruption, it will definitely substantially reduce it, and it will certainly make sure corruption does not infect its flagship program.

As for the ADB and the World Bank having their own agenda with CCTs, this is to be expected.  But one does not run away from the devil.  One outsmarts and outmaneuvers it.  And the main way to control and minimize the influence of the Bank and the ADB is by firmly limiting their role to providing monetary assistance and keeping their hands off the design of the program and its implementation.

One of the ways to ensure design and implementation along lines that would reduce the potential for irregularities and foreign interference would be to set up a Special Oversight Committee of the CCT in Congress.  Reps. Bernadette Herrera, Kaka Bag-ao, and I proposed the formation of such a committee during the House budget deliberations.  Over 100 House members signed the resolution, and the House leadership has agreed to set up the proposed committee.

CCTs and the Movement for Social Protection
But even more important, the design and implementation of the program must involve the active participation of civil society and the grassroots urban and rural communities.  CCTs must be democratically implemented, not bureaucratically managed.  This is the challenge that the Department of Social Welfare and Development (DSWD) must take up, and we must hold its feet to the fire to ensure its compliance.

Indeed, as shown in Brazil, CCT’s can be an important weapon in empowering the poor.  The could be, not a barrier, but a step forward in the effort to create a base for a movement for “transformative social protection,” one that sees the right to be free of poverty as a basic social right, the fulfillment of which must be the basic goal of economic and social policy.
Where the Critics are Coming from

But where are the critics of CCTs really coming from?
My sense is that the opponents of CCT may be categorized into the following:
– those who oppose it for partisan political gains, such as Arroyo, who is now critical of a program begun under her administration out of sheer opportunism;
– traditional politicians, who are worried that the CCT program will destroy the ties of patronage politics that serve as their main form of control over the urban and rural poor;
– the extreme left, who are afraid that the reform coalition now in government could use the program to create a mass base that would become relatively impermeable to their ultra-left politics;
-the middle class, who are particularly susceptible to the charge that CCTs are a “dole-out.”

Not being able to come in touch with the poor except at arms’ length, the middle class in most developing countries often fail to appreciate how closed the channels of social mobility are to the vast majority of the population.  The Philippine middle class is no different.  They are unaware of the initial class advantages they possess that have allowed them to “make it” and often cannot see why the poor cannot also make it if they were able to make it.  Only people who really do not understand the lives of the poor would make the criticism that the CCT would allegedly “make men lazy because they know their wives would have a monthly dole from government. “

Countering GMA’s coalition against the poor
The truth is that for poor households, there is never enough, and men and women work at multiple jobs to make ends meet.   Middle class Filipinos ought to keep their subconscious class biases in check and absorb the fact that, to use Ernest Hemingway’s (and F. Scott Fitzgerald’s) oft quoted line about the rich, “the poor are different from you and me.”  What is a wasteful handout for the middle class is a necessity for vast majority of our compatriots living in poverty.

Middle-class Filipinos cannot be complicit in perpetuating them in this awful condition owing to class insensitivity—the kind that is on display when the chattering classes deride CCTs unthinkingly as “dole-outs.”

They must not allow themselves to be unwittingly baited into the anti-poor coalition being constructed and led by Gloria Macapagal-Arroyo.

 (Published in Focus on the Philippines: November-December 2010: http://focusweb.org/oldphilippines/content/view/471/52/)

Leave a Reply

Your email address will not be published. Required fields are marked *