Philippines - A strategy to fight poverty

A STRATEGY TO FIGHT POVERTY P H I L I P P I N E-S ~~~~~~d7~~~~~~~~7 THE WORLD BANK COUNTRY OPERATIONS DIVISION G COUNTRY DEPARTMENT I EAST ASIA AND PACIFIC REGION NLr. 19i9 b  x ~ : 0: : f:~~~~ V z\ \ o\ <A /1,'_- 0 xtx \>, \ R ,L -'1~~- x 0r--'"--.<--.< :a>"E } ?- c---, i C ,g ,  A STRATEGY TO FIGHT POVERTY P H I L I P P I N E S MARCH 1 9t9 THE WORLD BANK COUNTRY OPERATIONS DIVISION COUNTRY DEPARTMENT I EAST ASIA AND PACIFIC REGION  Cover, center: Young worke- hc vestrg ri--c r Cenhc Lzc-n  A STRATEGY TO FIGHT POVERTY TABLE OF CONTENTS INTRODUCTION I WH-I IS POXERT)i\ SUCH A PEI-IISTENT PROBLEMN IN T'HE P1 HILIPPINES? 1 2 ST1ARING PROGRESS \\ lITH THE RAl. PL()PI I. 1'IA([N ') 3 RAI(SING LIVING STANDARDS OF THE URBAN lP)OR 23 ' INVEST ING IN THIIF NET GUENFR\TON ()N()OF FIII PINO)S ::33 5 A SAFETY NET FOR TIl FP 0 RE,ST 43 6 A STEVIEGC\ FOR PCIVERTh RE(DUCTION (O FRITHE LO()NG( RUN 51 t N ENEXS A HOW SI IOULD) TIl'E POOR BE CO1- NTEL)? 61 B MICROFINANCE IN TH-E PHILIPPINES 63 PHOTO CREDITS 66 ENDN(DOTES 67 BI BLIO(;RAPHY 75 TABLES IN TEX'T' 1.1 Poverty Incidence, Philippines, 1961-1995 3 1.2 Chaniges in Poverty Incidenice for Selected CouLtilrie- 3 1.3 Incidence of Poverty Using Different Measures. Philippines. 1991 6 2.1 Implementation of the Comprelenisive Agrarian Reform Pr-ogramii. Philippines. 1987-1994 13 2.2 Indlicators of Agricultural Lenrding, Philippines, 1983 anid 1993 15 3.1 Costs of Land Conversioni, Perimiit Delay and Land Dex elopiunenit. Various East Asian Cities 28 3.2 Uribani Access to Water, Sarnilar\ Facilities, andl Solid Waste Disposal, Philippines. 1992 29 4.1 Humtiian Developmenit Indicators for Selecte(d Asian Coulitries 34 4.2 Cost Sharinig in Public Education, Philippines, 1986 and( 1994 36 4.3 lotal Health Expenditures and Public Health Expendliture. East Asian Countries 38 4.4 Demographic Indicators for Selected Asiani Coutitries 39 5.1 Government Livelihlod( Programs, Philippines, 1995 47 F F [1 -  A STRATEGY TO FIGHT POVERTY 6.1 Targeting of Provinces: Coverage by Different Poverty MIeasures, Philippines, 1991 57 6.2 Guidelines for National Government Spending on a Poverty Strategy, Philippines 58 I'l (I 1' I I \ I I VI 1.1 Real Income Growth, Philippines, 1961-1994 3 1.2 Trends in Ntumbers of Poor and Poverty Gap, Philippines, 1961-1994 5 I.3 Income Distribution and thie Poverty Line, Plilippinies, 1991 6 2.1 Concentralion of Agriculturlal Land Ownership, Philippilles, 1988 10 4.1 Poverty and Primary Schlool Completion by Province, Philippines, 1991 35 4.2 Allocation of Nationial Budget to Education, Philippines, 1960-1993 36 4.3 Utilization of Health Facilities by Income, Philippines, 1992 38 6.1 Revenue Slharing with Local Governments and( Poverty Incidence. Bv Provinice. Philippines, 1993 55 1.1 Philippine Labor Market Performance: Translating Growth into Jobs 4 1.2 A Portrait of Average Poor Househol(ds in Rural and Urban Areas in the Philippines 7 2.1 Rehabilitation of Coconut Sniallholdings: Higher Yields Improve Farm Incomes and Export Earnings 18 2.2 The Central V isayas Regional Project (CVRP): Community Management for Sustainable Use of Resources 20 3.1 Survival Strategies of the Urban Poor: A Commutnity Study of the Commonwealth Barangay. Manila 25 3.2 The Comirmutnity Mortgage Progranm (CAIP): Pooling Community Resources 27 3.3 The Metropolitan Environmenital lInprovement Program (MEIP): Creating Jobs Out of Urban W'aste 30 4.1 Reducing Household Costs of Edducation in Bangladeshi 37 4.2 LAKASS: A Community Based Nutrition Action Prograrn 40 5.1 Overseas Workers: Employment Abroad Brings Large Benefits Home 45 5.2 Food Coupons for Better Nutrition in Honduras 46 6.1 The Philippine Municipal Development Fund: Financing Decentralization and Making It Work 56 6.2 Indonesia's Use of an ImiprovedI Household Survey for Poverty Targeting 56 6.3 Chili and Coluimbia: Complementing Decentralization with Social Investment Funds 59 The report was prepared by Erika Jorgensen based on inputs by World Bank staff and consultants including Alastair Blunt, Anil Deolalikar, David Greene, and Egbe Osifo. Background work was authored by Arsenio Balisacan, Michael Goldberg, Susan Horton, Joanna Ledgerwood, Caroline Moser, Maniza Naqvi, and Edgard Rodriguez. Charlene Ilsu prepared the maps using the Geographical Information System, Nam Pham provided statistical support, and Hedwig Abbey provided editing and formatting. The report benefitted from comments and suggestions by Pamela Cox. E,mmanuel Jimeenez, Kathie Krummn, William McCleary, and John Shilling. Special thanks go Callisto Madavo for his support of innovative approaches to World Bank work and to the many Filipinos, inside andc outside of govermiienit, who provided insights, commuents, and analysis for this report. P H - J P I J N E S  A STRATEGY TO FIGHT POVERTY CURRENCY EQUIVALENTS Culrrency ULnit-Peso (P) US8 = P 26.2 as of December 1995 ABBREVIATIONS AND ACRONYMS ARMM Autonomous Region of Muslim Mindanzao ASEAN Association of Soutlheast Asian Nations CAR Cordilleras Autonomtiotus Region CARP Comprelhenisive Agrariani Reform Program CM'JP CommunJity Mortgage Program DA Department of AgriultuLre DAR Department of Agrarian Reformil DECS Departmllenit of Education, Culture andl Sports DENR Departmienit of Environmiiieuit andc Natural Resources DILG Departmienit of Interior and Local Govermlent DOH Department of Healtlh DPWH Departmenit of Public Works and Highways DSWD Department of Social 'Welfare andl Development FIES Family Income ani( Expen(liture Survey FFW Food for WTork GATT General Agreemenit on Tradle and Tarif' GBRP Gramneeni Banlk Replicationi Program GDP Gross Domestic Product HUDCC Housing andd Urban Development Coor(liniatinig Council IAD Integrated Area Development LAKASS Lalakas ang katawang sapat sa sustansiya (Bodies wilh adlequate nutrition will grCow strong) LCU Local Governmlilenit Uliit MEIP Metropolitan Environmental Improvement Program MWSS Metropolitan Waterworks and Sewerage System NCR National Capital Region NEDA \National Economic and Development Authority NFA National Food Authority NNC National Nutrition Council NSCB National Statistical Coordinationi Board OECD Organization for Economic Cooperation and Developmiient SRA Social Reforn Agendla UNCHS United Nations Center for Hlunmlani Settletumenit, UNDP Lnitecl Nationls Development Program FH L P ' I  A STRATEGY TO FIGHT POVERTY P c D P P N [ P  A STRATEGY TO FIGHT POVERTY INTRODUCTION T he Philippines is entering a neiw andI promising still have incowile below the poverty line. Slow progress phase in the struggle to lift its people out of primarily reflects inadequate and( unsteady overall e o- poverty. The decade-long effort al macroeco- norai' growth. the inheritance of an historic policy bias nolinic stabilization and strut tural reform is hearinig in favor of capital-intensive, inward-orienite(d levelop- fruit. andI the prospects for the higheri sustainable eco- tenit. continhie(l uneven distribution of income and nomic growth re(luirecl to redluce poverty appear good. assets, insufficient investmenit in humatn capital devel- The Government has taken the boldl stelp of (levolvinig opment, an d limiited success of "safety net" programs. responsibility for kei fulitions to local governments. Although transitional problems are inevitable, thiis step Povetrty is overwleltumingly a rural probleni. Over half holds promise of making government mlore responsive the rural population is poor, accounting for nearly two to the needIs and lesires of the populace. Finally, the thirdls of ilhe COLuIntry's total. Chapter 2 examines the Govoernmenit is launchilig a nevw, better-integrated(l dimeisiotis andl causes of rural poverty and( looks into Social Refortim Agenda wilti the objective of mlobilizinig possible solutions. The basic coniclusion is that rural and coordinating the efforts of the (entral government, poverty cannot be solved in the agricultural sector nongovernmental organizations, private enterprise, and( alone nor in rural areas alo)ne. Progress requires commuliities in the poverty-alleviation effort. greater opportunities provided by highier overall eco- noinii growth, combined with in creased emphasis on This report is an attempt to crystallize key> as yet unire- hutnan capital developmient andI provision of infra- solved, issues in the hope of stimsulatitig an infortned structire in rural areas. increase d researchi and exten- dialogue withiln the Governimienit antd withlinl key groups siOin and( improved access to lan(d an( modlertn inputs. (including NGOs ancl local government officials). The The chapter urges a reexamiiinationi of lanid reform, report is not n]eantL to lhe a final blueprint for governi- wiiclh is entering a inore complex and( expensive ment action. Rather; it is intetinle d to provide sub- phase. Clear choices neecd to be made on the future stance for an ongoing liscussioni and(l debate of the pace of the program andI the trade-offs necessitated hb issues relatedl to poverty alleviatiotn in the Philippines. budlget constraints, while focusing on aciditional imea- The Baank planis to take thiis report to the public and sures to help poor farmers. The report downplays the discuss it wicdely with the Philippine Governiienit, with iniiportanice of expanding rural credlit andc argues local governments, with heneficiaries. xNith NG0s, and( against subsidization of credit but recommends withi the press so thlat a widely unlerstood an d sup- strengtheninia aiid expandfing the role of cooperatives. Ported strategy can be forge(l. The Banii will transnit the outcome of these discussions and tihe various polints Clhapter 3 finds that urian poverty is less extensive of view to all participants antid worLk to idlentify the next and sex ere than rural poverty and that the urban poor phase of our partiiershlil) with the Philippiiies on are iiiore likely to benefit rapidly andl clirectly from poverty alleviationi. accelerated growthi. In addlition, access to healthi and educational services is better in urbani areas. The key Chapter 1 reviews past progress toward poverty allevia- problenis of the urban poor are inadequate hlousiig and tion an( the current extenit an( severity of the problem. transport, unsafe an(d ina(dequate water supply. and It finds that, althouglh the Philippines' social indicators inadle(quate disposal of humiian andl solidl waste. Many are reasonably good, progress towards poverty allevia- of these problenis are linked to failure of the urban tion has been slow, and the country has been losiiig land iiiarket, wlhich results in both poor an(l non-poor ground relative to its East Asiani neighbors andl com- famililies living in unsatisfactory conditions on land to petitors. More thani one third of Philippine households which they lo not have legal tentire. The report urges P H F F [  A STRATEGY TO FIGHT POVERTY exploration of innovative approach-es to "urbani land NGOs. . poveerty alleviation strategy for the refoi'm" and better provision of urban services related Philippines should include the following elements: to environmental health. * Continuing the strong focus on economic growth, Chapter 4 reviews the state of humnani capital of the driven by openness and competitiveness an(i acco- poor and governmenit efforts to improve it. It findls paniedl by macroeconomic stability. that there are severe regionial disparities in health ami( education indicators. The level of overall public * Improving access to the means of production by the expenditure on health and education is not as much of rural poor by focusing rural land reform on the do- an issue as its regional distribution and equity and able, promoting tenancy reforms and market efficiency considerations. Thie major educational assisted land reforn, and ensurinlg the essential problem is the one third of clildren whio do not coiII- investmlients in rural infrastructure and improve- plete the primary cycle. The mnajor health problems mernts of agricultural extension services necessary to are preventable diseases such as malaria and respira- raise productivity anid, thus, incomes. tory and water borne intestitial ailments. Unfortunately, the report finds the trends in expendi- * Addressing the scarcity of affordable urban housing ture favorinig curative medicine and secondary arid and threats to environmllerntal healtlh in urban areas higher education. Instead, the chapter emnphasizes the bv considering a program of urban land reform and need for increased emphasis on improved access to extending water and sanitation services to poor and qualitv of primary' education anid preventive, corn- urban areas, while slashing public spending on mnunity-based primary health care. houisilng (whichl does not reach the trutly poor). Cthapter 5 examiines the "safety net" or the efforts of' * Increasing investmnent in human capital by government to improve the well being of the poor improving the quantity and the quality of primary throtugh food subsidies, employment-creatirc public education across the country, easing access to pri- works programs, and "livelihood creation" (i.e., gov- mary education in rural areas, and strengthening pri- ernment small scale credit) programs. It finds that maiy hiealth services, especially iitonunizationi and mnost of these programs lhave not reaclhed the very poor, prevenition of water-borne and respiratory diseases. have been expensive, and have not produced sustain- able income increases. The report Urges reexamination * Rationalizing and better targeting social safety net of these programs to highlight factors leading to sUC- programs, by transferrinig resources in government cessful outcomes and consolidation of the rapidly livelihood creation programs to capacity building of growing number and variety of programs. Thie report inusLitutions with successful track records in points to the dangers of expanding politically popular; reaching the poor and by ceasing general food price but inefficient and ineffective, efforts at the expense of subsidies iM favor of targeted income subsidies or tried and true approaches such as primary education food stamps and supplementary feeding programs. and health care and rural infrastructure. This report was lbased on a series of technical working Finally. Chapter 6 provides a surnuiary of thle strategy papers. whichl are available upon request. They cover suggested above and outlines the role of' the central the topics of the poverty profile, rural land, urban and local governments in the new era of devolution, in poverty, thie social sectors, the labor market, overseas conjunction with the continued strong presence of workers, anld credit. P - I P F I N E S  A STRATEGY TO FIGHT POVERTY 1 WHY IS POVERTY SUCH A PERSISTENT PROBLEM IN THE PHILIPPINES? .~~V /saN's~~~~~~~~c a5a a a .,,,, .<t ......... ~~~~~~~~~~~~~A nevv hotel st(. ,Js neur squctt~is' ^vF ......... 5~~~~~~~~~~L-,cks n N'jnrila, anal cIfher ch:l- - [:ar a ren Ovca ng r ai gcahblgp dump. "lA ^ Te regard povertv as another tyranny, oppressing half of all VVour population o'f 6b million-a tyranny against which xve must xwagc the moral equivalent of war." lPre.idenl Fidel 1. Rol,os ,Speech to the forld Sinal zit fiir Social nerelopni)eni C(peuihgen. ilairh 12. /QQ3 P overty is still the major devell)1)mellt j)oblenl in sx sere difference.s in po%erty l)etween provinces. Ilie the Philippilies. Between 19(60 and 1985. upper niap shows thie poorest areas; [lie lower iiap accordin'g to official estinialtes, onlv slow points oul the greatesl concentration of the nationi's improvement was registere(d in overall p)ox crtv rates. poor. Improving tlhe welfare of the poor has been haiti- Sinee 1985, a slightly mtore vigolrous redt(lction lhas pered (uLntil tlhe last few years) by over a decade of occurred. partly because of econoimlic growth an(I partlk \x(cak growth associated witli the debt crisis atid its because of a greater governmiient commottitment to social afltermtathl. Now that tlhe economy appears to be l)ack dexelopmnent. Howeveto 11ot olily lias oxe dall progress oni track, the Governmiient is turning its attenitioni to been mmio(lest, nalionial level achiex%ements mask severe poverty allexiation. Its "Social Refortm Agenla" lays geographlical inequity. The two maps illustrate thie out genler'al goals and( possible avenues to reduce Fr H L I P I E  A STRATEGY TO FIGHT POVERTY poverty, and the Ramos Administration has dleclared this its higlhest priority for the coming years. - t Poverty Rate (%) Theie is already widespread understanding that signif- > if l < 10 icant reductio