CCT: Completely Compromised & Tragic

Questioning the CCT, are you? Well talk to the hand, ’cause Iggy ain’t listenin’.

With a relatively short list of even ambiguous accomplishments to fill an entire hour before Congress and the television audience on Monday, it is a virtual certainty that President BS Aquino will devote a considerable amount of his State of the Nation Address to his cherished Conditional Cash Transfer program. The program he inherited from his predecessor (something he probably won’t mention in his speech) has ballooned from P 21billion in 2011 to P34.9 billion this year, and if he has his way – which of course is the real point of bringing it up to his captive legislative audience – will cost the government P45 billion next year, a little more two-thirds of the entire budget of the Department of Social Welfare and Development.

The basic idea of the Pantawid Pamilyang Pilipino program, or Four P’s according to the tiresome Pinoy penchant for making cute abbreviations out of everything, is that the poorest of the poor receive a modest monthly stipend from the government, on the condition that their children attend school regularly, receive health check-ups, and that the recipients attend monthly seminars given by the DSWD to learn helpful tips on how to be less pathetic. As a hypothetical concept, a CCT program is not without some potential; managed carefully and given to recipients willing to make the most of having the direst edge taken off their impoverished circumstances, it can help improve some people’s lives, and there is evidence from other countries that it does. Whether or not the cultural and administrative climates in those countries are sufficiently similar to the Philippines’, the President is firmly sold on the idea, as he gushed in an interview with ANC on Wednesday:

“I love the program. There are some critics who think it’s just a hand-out but the point is, there is a partnership between the state and the people to give them that helping hand to be able to improve their luck in life,” he said.

Obviously, the massive increase for the third year in a row in the CCT program’s budget must be justified by the program’s success, right? Well, maybe not; in the same interview, N/A admitted that he had yet to receive information concerning the program’s actual results:

“The first batch that started, I think this program started in 2008, the first graduates are being evaluated at this point, I’ve yet to be receive a copy of the study both by the DSWD and by World Bank.”

So despite “yet to be receive” the hard data relevant to a government investment that is the equivalent to a little over half a percent of the country’s annual GDP, the President wants even more money for it. One could chalk that up to the naïve enthusiasm of a hereditary leader who has never had a real need to exercise any sort of business thinking, if not for the scathing report – released at just about the same time as N/A was chattering away on ANC – by the Commission on Audit on “anomalies” in the 2011 CCT budget. Among the more interesting of the COA’s findings were:

• About 6% of the CCT’s beneficiaries were earning income above the level that would qualify them for the program. Assuming the report is statistically valid, that translates to about 206,000 families, or up to P3.7 billion going to ineligible recipients.
• P6.6 billion in unliquidated program funds in accounts at Landbank.
• In a survey among CCT recipients in just one area (Commonwealth in Quezon City), the COA found 46 living in rent-free government housing, 25 engaged in gambling, 4 drug users, 5 with relatives working abroad, and one family who not only owns a six-door apartment building, but whose father earns an additional P 450 a day as a taxi driver; all of these CCT recipients would be disqualified, if the guidelines were being followed correctly.

These findings tend to confirm the warnings issued in a policy brief prepared by the Congressional Policy and Budget Research Department (CPBRD) in July of last year:

CCT programs also exhibit consumption and production characteristics of private goods. Consumption of CCT goods and services is exclusionary yet the program’s cost is not recoverable from the beneficiaries.  There are no competitive pressures for providing social protection and consequently no market signals to provide information about quality of services. This implies that service providers can have a degree of monopoly power and may not provide the services in the way that the program intended.

Related to this, there are information asymmetries in the service delivery with regards to beneficiaries accessing information on the benefit package and its access procedures. For example, providers can offer services of lower quality by reducing the benefit amount—which is easy when goods are in the form of cash—thereby giving way to fraud and corruption. The risk for fraud and corruption is further heightened because the beneficiaries’ group profile renders them less likely to forward complaints. Given the nature of individual consumption, it is relatively costly to check if services/goods have actually reached the intended beneficiaries. At any rate, the CCT programs are prone to risks of error, fraud and corruption in the implementation stage thereby resulting to leakages.

And,

A process risk mapping by the World Bank identified “decision-points” where program implementers both at the national and sub-national level have high-degree of discretion. With wide latitude for discretion, the potential for leakage can be significant. Note that the rapid scale-up of the 4Ps has highlighted these issues that were not readily observed during the pilot years. Clearly, this casts serious doubts on the institutional capacity of DSWD and its partners and the readiness of the systems to implement the 4Ps on such a scale.

The areas/activities where the risks are mostly likely to emerge are: targeting/registration of beneficiaries, payment system and monitoring of the compliance of conditions. Equally important is the institutional design/arrangements, as well as organizational capacity, to service delivery.

The CPBRD report was published a year ago, and it is hard to imagine the COA went public with their findings on the CCT without giving the Office of the President at least a few days’ warning. And if all that wasn’t enough to make a normal person ask a few concerned questions, a full week before the President fielded a few softballs on ANC, a discussion on a regular daily radio program on DWIZ led to this revelation:

…a listener called up from Montalban, Rizal, with the allegation that it has become standard practice among DSWD field personnel to actually give only P500 in cash out of the P1,500 intended for every recipient.

The recipient, the caller said, usually has no choice but sign a receipt for P1,500, which means the DWSD employee routinely pockets the P1,000 for every recipient.

The caller added that what’s also amiss is that not all of the recipients on the list are legitimate residents of Montalban. He said he knew for a fact that as a result, DSWD personnel were fighting one another over the sharing of their loot—suggesting that an organization-wide conspiracy exists.

Right after the caller from Montalban dropped this bombshell on national radio, the DWIZ was swamped with calls and text messages confirming the cash-distribution racket—which showed that the same thing was happening in many other places.

Dinky Soliman, Wealth Despoiler?

Anecdotal though the comments of callers to a talk radio program may be, considering Dinky Soliman’s own sketchy history and the disturbing findings of the COA report, one could easily be drawn to the conclusion that there is something quite a bit different than mere bad management going on with the swelling CCT program, and to wonder whether it’s really the poor President Aquino is trying to help. Once again N/A seems to be in a position where giving him the benefit of the doubt means regarding him as being dumber than a bag of hammers, or at best, the most appallingly uninformed political leader in the history of organized government. It’s happened so often in his first two years in office, it’s not even ironic any more.

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