Poverty Profile

＿＿＿＿＿＿＿＿＿＿＿＿＿＿＿＿＿＿＿

(Executive Summary)

Republic of the Philippines

July 2008

Japan Bank for International Cooperation

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Chapter 1 Poverty in the Philippines

1-1 Philippines at the center of SE Asia

The Republic of the Philippines is an island country in which about 88 million people live in an

area of 299,404 square kilometers. The GNP as of 2007 was about 157 billion US dollars, and

the real GDP growth rate is 7.3%. As compared to other Southeast Asian countries, the

population density and the population growth rate are high, whereas the per capita GNI

(Gross National Income) is relatively low. As for its economy and trading structure, the

Philippines acts as an “assembly factory" which imports parts from foreign country and

exports products such as electronic and electrical equipment.

In terms of health care services, there is not a proper supply of maternal health and mother

and child health services, especially for the poor. This is because the quality of the health

care service depends on the financial ability of the local government unit in charge of

providing services. For education, the proportion of education in public expenditure is high,

and adult literacy rate is high. However, youth literacy is low because of lack of teachers and

classrooms, and effects of growing poverty incidence. As for the government expenditure

by purpose, the Philippines has a debt service rate that is higher than other countries.

1-2 Macro Economic Trends

1-2-1 Economic Growth and Poverty Reduction

For trends in the major economic indicators, the real GDP growth rate has stayed at about

4 % in recent years. The primary industry is the service sector, which center around trade

and private services, and the manufacturing sector follows. Current account had been at

deficit until 2002, but turned to surplus in 2003. In 2006, it was 5,347 million US dollars.

However, although there is increase in exports, the trade balance remains at deficit because

of high demand for import of raw materials, fuels and consumer goods. As the situation of

labor, the unemployment rate in the whole country was 7.4% in January 2008 and the

underemployment rate (ratio of those who work with very low wages) was 18.9%.

1-2-2 Finance Policy and Poverty Reduction

The major characteristic of the government’s public finance policy is its large amount of

foreign debt. The majority is government debt, which had been about 70% of GNI beginning

in 1998. However, it began decreasing after 2004. The government put priority on repayment

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of debt, since it aims to balance the national account. Many international donors try to

support financial reform in the Philippines.

Furthermore, the government is pursuing decentralization. Since enactment of the Local

Government Code in 1991, the local government units (LGUs) have been in charge of

providing basic services including pro-poor programs. Although the Philippines is advanced in

terms of institutional systems than other Southeast Asian countries, there is inadequateness

in terms of operation, as evidenced by the “nepotism” seen in local government units.

1-3 Measurement of Poverty Lines

1-3-1 Basic Methods

In the Philippines, there are three methods of measurement of poverty. The first one is based

on the official criteria by the government, and is computed by income. The second is applied

by the World Bank and based on expenditure. The last one is applied by the NSO (National

Statistics Office) and is based on access to minimum basic infrastructure.

The Government of the Philippines defines major terminology of poverty measurement as

follows:

* “The Poor”: Individuals and families whose income falls below the poverty threshold

as defined by the government and/or those who cannot afford in a sustained manner

to provide their basic needs of food, health, education and housing and the other

amenities of life.

* “Poverty Line”: The minimum income/expenditure required for a family/individual to

meet the basic food and non-food requirements.

* “Poverty Incidence”: The proportion of families/individuals with per capita

income/expenditure less than the per capita poverty threshold to the total number of

families/individuals.

1-3-2 Trends of Poverty Lines

According to the official poverty statistics by the government, the poverty threshold

(minimum income necessary to meet basic food and non-food needs) for an average family

of five members increased from 54,290 (Philippine) pesos in 2000 to 75,285 in 2006.

In the Philippines, the poverty lines are set by region and province by taking consideration of

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the price difference by areas.

1-3-3 Poverty Lines by Methods

There is a food poverty line that focuses only on basic food needs. For the whole country,

the poverty line (for an average family of five members in 2006) is 75,285 pesos and the food

poverty line is 50,125 pesos. 1-4 Trends of Poverty Incidence and Inequality

1-4-1 Trend of Poverty Incidence

According to the official poverty statistics, poverty in the Philippines has worsened. Although

the poverty incidence (the ratio of the poor) decreased from 2000 to 2003, it increased in

2006 to 32.9%, about the same as in 2000. One cause of this increase seems to be the

increase of poor population since price escalation has exceeded the income growth.

1-4-2 Trend of Number of the Poor The poor based on poverty line increased about 2 million from 2000 and reached 27,616,888

in 2006. Similarly, the food poverty line increased by 30,000 in the same period to 12,227,312

in 2006.

1-4-3 Trend of Poverty Inequality To describe the poverty profile in terms of inequality, the Gini coefficient is one measurement.

In 2006, the Gini coefficient for the whole Philippines was 0.4580. By region, there were 6

regions in which the Gini coefficient rose and inequality became serious. In Region Ⅲ

(middle Luzon), it rose rapidly from 0.3515 in 2000 to 0.3994 in 2006. It is highest in Region

IX at 0.5054, and lowest in ARMM at 0.3113.

1-5 Regional Poverty Disparities

1-5-1 Poverty Incidence by Regions and Provinces

To analyze the regional disparities of poverty incidence by region, the incidence was highest

in ARMM (61.8%) and lowest in NCR (10.4%) in 2006. ARMM has the lowest Gini coefficient

but the highest incidence at the same time. It is possible to assume that the region is poor as

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a whole. ARMM is less developed in Mindanao because of strife that has lasted for many

years, and the effect can be seen in its high poverty incidence. 1-5-2 Poverty Incidence by Urban/ Rural Status

NSCB (The National Statistics Coordination Board) conducted a survey on poverty in the

Philippines (“Estimation of Local Poverty in the Philippines 2005”) with the support of the

World Bank. In that survey, poverty is measured by region/province and urban/rural. As a

whole, it was found that the majority of the poor are in rural areas, since the rural poverty

incidence is higher than that of urban areas.

1-5-3 Magnitude of the Poor in the Total Population Another measure of regional disparity is the magnitude of the poor in the total population. By

using this measurement, the highest is RegionⅤwith 9.6% and the lowest is CAR with 1.8%.

1-6 Depth and Severity of Poverty

1-6-1 Gap and Severity of Poverty by Region

In order to review the depth and severity of the poverty, gap and severity are useful indexes.

In the whole country in 2006, the poverty gap was 7.7 and poverty severity was 3.1. For

data by region, ARMM was highest for the gap with 16.2, and Caraga was highest for severity

with 7.0.

1-6-2 Gap and Severity of Poverty by Rural/ Urban Status The survey of NSDB found that not only the poverty gap but also severity is higher in rural

areas than in urban areas. 1-7 Poverty Profiles in Non-economic Dimensions

1-7-1 Educational Status

Regarding the educational background of household heads, most poor household heads have

only an elementary school education. Moreover, the deeper the poverty, the lower the

educational status. Poor households have less access to secondary education, and there is a

gap in opportunity to receive education.

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1-7-2 Land Ownership

Since the majority of the poor live in rural areas, land ownership is worth analyzing for

poverty profile. The government has been working on land reform in order to help poor

farmers, and especially peasants and landless farmers. One of the major land reform projects

is CARP (Comprehensive Agrarian Reform Program), which began in 1988. CARP is designed

to reform 9 million ha of farm land through 1) distribution of land to landless farmer, 2)

support for farming after distribution, 3) support for setting up ARC: Agrarian Reform

Community, and 4) conflict resolution regarding land distribution. Although CARP is a

nationwide project, there are some issues. First of all, the lands to be distributed do not

include fruit gardens and haciendas. Secondly, beneficiaries have difficulties in establishment

of a livelihood, because the support after resettlement (such as access to financial services or

technical assistance) is not enough.

1-7-3 Main Source of Income The main sources of income for the poor are salary and wages (44.4% in the whole country

in 2002). By region, Region IX and CAR have higher ratios for self-employment. ARMM was

very high at 74.4%. On the other hand, other income sources (rental incomes, gifts and

income from other sources that do not include work) composed 43.4% in NCR.

1-7-4 Gender

The Philippines has a high index in terms of gender among Southeast Asian countries. For

example, for GEM (Gender Empowerment Measurement), it is ranked 45 among 177, higher

than for HDI (Human Development Index) for which it ranked 90 among 177. Although it can

be seen that Philippines is a progressive country in terms of gender, the fact is that women

have lower employment rates as compared to men who have the same educational status.

Moreover, by analyzing the conditions of OFWs (Oversea Filipino Workers), the majority of

whom are women, female OFWs suffer from pressure as key breadwinners, human rights

violation, and mental stress caused by being apart from the family.

1-7-5 Household Characteristics

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The average family size is five in the Philippines, and a poor family tends to have more. For

example, in 2000, poverty incidence was 31.1% for a family of five, but 48.7% for that of

seven, 57.3% for that of nine or more. If there are more members in household, they are

likely to contribute for household income, but this is not always true for the poor, who have

difficulties in obtaining job, and tend to receive lower income. According to a research,

income per capita is 15,227 pesos for a family of five, but is reduced to 11,147 for a family of

seven and 8,935 for a family of nine or over. Therefore, it seems that poor families do not

have enough income to meet their members’ basic needs.

1-7-6 Health and Medical Conditions

The poor people in the Philippines are in difficult conditions in the field of health and medical

care. There are not so many people who use medical institutions among the poor. Moreover,

the poor tend to use rural health units or barangay health stations more than hospitals.

1-7-7 Living Conditions

(1) Access to basic infrastructure

By reviewing the access to the basic infrastructure that is considered in Minimum Basic Needs

Indicators, the poor (lowest 30% by income) have big gaps in access to electricity and

housing with strong materials. According to an APIS (Annual Poverty Indicator Survey)

conducted in 2004, among the lowest 30% of income level, 52.8% had access to electricity,

and 43.4%, to housing with strong materials.

(2) Microfinance

As in other developing countries, international donor agencies and NGOs provide

microfinance services. However, the outcome of the project depends on the characteristics of

the operating agency.

1-7-8 Natural Conditions

Natural conditions can have a large impact on living conditions of the poor. Due to its

geographical location, the Philippines often suffers from many typhoons that may cause huge

damage.

The major environmental issues in the Philippines are 1) air pollution, 2) water pollution, and

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3) waste. 1-8 Future Views on Poverty Reduction Although the Philippines is classified as a middle-income country in terms of its economic

development, there is a big gap between the rich and the poor, and 32.9% of the total

population was classified as under the poverty line in 2006. Because of its weak domestic

economy, even after some extent of economic progress, it is sometimes regressed by

external factors. Moreover, in areas where infrastructures are not well introduced, there are

frequent natural disasters which harm peoples’ livelihoods.

From various indicators citied in this chapter, it becomes clear that poverty in the Philippines

has the following characteristics: 1) the majority of the poor live in rural areas, 2) the gap in

educational opportunity is strongly related to poverty, 3) the problems on CARP has become

obvious and is now a new issue for poverty reduction, 4) basic infrastructure and

governmental microfinance services are not properly delivered to the poor, and 5) natural

disasters and environmental issues make poverty severe. The brief summary is as follows:

* The majority of the poor live in rural areas, and has limited access to basic

services such as education and health.

* Despite the efforts of the government for land reform to reduce rural poverty,

there is a lack of support for settlement.

* Since the enforcement of the Local Government Code in 1991, local government

units became responsible for providing basic services, but the gaps in financial

condition and ability between units lead to economic gaps as a whole.

* Mindanao, where Muslims, a religious minority, live, is less developed because of

long-term strife.

* In addition to being an earthquake-prone country, the long-term deforestation

causes erosion, flood and weakened ground.

* The poor are most susceptible to the influence of rapid growth in oil price and

inflation, so it would cause the expansion of income gap.

Needless to say, these factors directly influence the poor who live in rural areas and belong to

agriculture.

The government is struggling to reduce poverty and states its strategy in the Medium-Term

Philippine Development Plan. Also, international donors support the government’s strategy.

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The future outlook for poverty reduction may be outlined as follows

* Poverty reduction is to be at the core of the development plan of the government,

despite changes of presidential administration. The idea of “Pro-Poor” that aims

economic growth with poverty reduction will be carried on.

* By reinforcing the safety net that helps the economic activities of the poor who

would be most influenced by sudden natural disaster or global economic

situations, the poverty reduction program by the government is to obtain more

results.

* The civil society composed by NGOs and POs are to have increasingly important

roles for implementation of poverty reduction, and their commitment would be

strengthened.

* Among international donors, capacity development programs for poverty

reduction are to have much importance.

* Various donors are to cooperate and play their own roles in order to halt the

poverty cycle. In that sense, collaboration among donors is to be increasingly

strengthened.

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Chapter 2 Poverty Reduction Efforts and Performance of the Philippine

Government

2-1 National Development Plan and Poverty Reduction

2-1-1 The Strategy for Poverty Reduction

The "Ten Point Agenda" and present Medium-Term Philippine Development Plan (MTPDP)

(2004-2010) released in October in 2004 are representing the strategy for poverty reduction

as a national policy. The former presents an anti-poverty guideline until 2010 up to Arroyo

Administration would continue, and the latter posts the following numerical targets toward

the biggest goals of poverty reduction and job creation.

1. Reduction in the poor ratio (Poverty Incidence) to 17% from 34% by 2010.

2. The achievement of an annual average economic growth rate at 6-7% to create 10

million new jobs in 6 years.

3. Increase in the investment ratio to GDP to 28% from 19% for 2 years.

4. Export is increased to 50 billion US dollars for 2 years.

2-1-2 Progress of Anti-poverty Efforts

The National Anti-Poverty Commission (NAPC), which is an interagency organization

reporting directly to the President, takes the leading part in anti-poverty projects in the

Philippines. NAPC is composed of representatives from 13 government agencies, 4 city

leagues, and 14 basic sectors, and is conferring on perception about anti-poverty measures.

The role of the said commission consists of the following 3 points.

To adjust and propose ideas for implementing Social Reform Agenda (SRA) effectively

beyond sectoral and areal walls

To institutionalize the basic sectors and the NGOs which manage the cycle of social

reform

To facilitate microfinancing in public and private sectors through the establishment of

People's Development Trust Fund (PDTF), so that the People’s Credit and Finance

Corporation (PCFC), as the preceding engine of microfinance, can lead microfinance

business and expand business opportunities

NAPC offers information on its projects through its website1. Many programs were put into

effect as the dominant outcome during the period of 2001 and 2004, according to the

estimate of the government.

1 http://www.napc.gov.pf/govt_poverty_reduction_programs.htm

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2-1-3 Achievement of Philippine Millennium Development Goals

The Philippines achieves the goals of Millennium Development Goals (MDGs) in many fields.

The reasons are explained as follows: i)MDGs are concentrated in MTPDP 2004-2010 and the

government's action plan was designed to tackle goals for both MTPDP and MDGs, and ii) the

Philippine government continually monitored progress using the MDGs index.

On the other hand, achievement by 2015 is thought to be difficult for “the decline of the

maternal mortality ratio" and "universal primary education” by the related agencies and the

international donor.

2-2 Job creation

MTPDP 2004-2010 promises creation of 10 million jobs over 6 years (entrepreneur support

for 3 million people and development of 2 million hectares of agricultural business site with

superior productivity and market access).

The President, who proclaimed creation of 10 million new jobs at the time of the 10 point

agenda release in 2004, is now attacked by many well informed persons. Creation of 10

million jobs in 6 years amounts to 1,500 new jobs a day and it seems to be impossible

realistically. The statistics which indicate how much new employment was created were not

kept after 2004, and practically, it is thought that the hike of crude oil prices and peso

appreciation starting early in 2007 make this pledge quite difficult to fulfill.

Minimum wages are increasing constantly, but the government faces a trade-off with

declining international competitiveness and maintains the careful stance on steep rises. The

life of the poor has become harder due to sharp sudden inflation over last 1 or 2 years, and

even the dovish labor unions recognize the absolute difficulty in supporting the life of an

ordinary home under the present wage standard.

2-3 Reinforcement of Safety Net

2-3-1 Safety nets by the government

The Department of Social Welfare and Development (DSWD) is handling the projects related

to safety nets. Since its achievements and its contribution to poverty reduction are well

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known, it was chosen as the most active organization over the 79 other Philippine

government agencies in 2007.

The role of DSWD is "to lead individuals, households and communities in poverty and

underprivileged situations to the life with the higher quality through provision of capacity

development." Its mission is "to provide social protection and promote the rights and

welfare of the poor, vulnerable and the disadvantaged individuals, families and communities

that will contribute to poverty alleviation and empowerment through social welfare

development policies, programs, projects and services implemented with or through local

government units (LGUs), non-government organizations (NGOs), people’s organizations

(POs), other government organizations (GOs) and other members of civil society."

2-3-2 The implementation situation of the safety net program

Several international donors cooperate in the social security programs which DSWD is putting

into effect. The target areas are being selected based on the results of FIES implemented by

NSO basically, but in selection of projects, it is necessary to cooperate with LGUs in extraction

of poor households because the FIES only covers the provincial level. Therefore, without

exception, the safety net program of DSWD requires cooperation with LGUs.

The safety net program by DSWD is aimed at timely response to the recent soaring of rice

prices and electric bills due to the high crude oil prices. The program includes (1) supply of

rice and noodles directly to poor families, (2) supply of food directly to the children in

day-care centers, and (3) aid for electric bills of less than 500 pesos for the urban poor.

2-3-3 The effects and issues of the safety net program

Various social protection programs exist in the Philippines, but the coverage of the poor is low

and the contents are also not enough. The government deploys policy to increase the

social-service-related budget. An average of 22% of the national budget was allocated to this

field (education, health, social security and housing) during the years 2001-2005, and this

was increased to 30.1% (368.9 billion pesos) in 2008.

The reasons for low coverage include the limited budget, practical difficulty in selecting poor,

and some overlap of safety net projects done by various agencies due to non-unified project

arrangement. Some other operational problems have also been pointed out.

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2-4 Agriculture and Rural Development

The MTPDP 2004-2010 places importance on alleviation of poverty by improvement of farm

productivity through agricultural modernization. Chapter 12 in particular (entitled

"Responding to Basic Needs of the Poor") places priority on poverty reduction for the

following agricultural development.

Support of rural enterprises and cooperatives

Construction of farm-to-market road

Access to land, finance and technology for the farmers and indigenous peoples

Reduction of interferences by the middleman in the marketing process for farmers and

fishermen

Timely and efficient support in the event of natural disasters and economic crisis, and

provision of a security net in case of emergency

Advancement of the life for rural poor

The Department of Agriculture (DA) and Department of Agrarian Reform (DAR) are the main

agencies which handle the government's agriculture and rural development programs. The

majority of the projects are located in the Visayas region including Mindanao. Of the 4 DA

projects, 2 are in Mindanao, and so are 5 out of 18 DAR projects.

2-5 Infrastructure in Rural and Urban Areas

The current MTPDP 2004-2010 is placing importance on water supply, electric power,

education, and health and nutrition for social services development. The provision of water

and electric power is prioritized in Chapter 12 "Responding to Basic Needs of the Poor".

Both water supply and electric power are showing smooth progress for now.

Water supply is to be extended to the 200 barangays without water facilities in Metro

Manila, and to 200 municipalities lacking it nationwide.

Electric power is to be provided to all barangays in the nation.

2-6 Asset Reform

As for CARP, 6.95 million hectares of distribution (for an achievement rate of 76%) was

achieved as of June 2007 (the target is 9.12 million hectares), while 2.17 hectares remained

unachieved. It will apparently be difficult to achieve the target distribution by 2008 (The

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detailed numerical values have not been published.) The government is considering a

5-year extension of CARP. Requests for CARP extension are being made by various entities

including the Congress and private sector at present.

MTPDP 2004-2010 is proposing the necessity to promote farmland release, return the land

requisitioned in Marcos era to the descendant owners, and secure the catching operation

right up to 15 km offshore for the rural fisherman. For the sake of assuring access to food,

education, and health for the poor, MTPDP 2004-2010 also proposes the necessity to

accelerate farmland release, land improvement in urban areas, finance for social housing,

and reform and development of ancestral land. Action plans are being proposed by

respective benefit clusters.

2-7 Human Resource Development

Job creation for the poor is one of big pillars, and development of human resources is

counted as a part of strategy on providing capable resources to created new employment. In

MTPDP 2004-2010, this human resource development is achieved through i) capability

development of the community through KALAHI-CIDSS, ii) participation in LGU governance,

and iii) participation in poverty alleviation programs implemented by LGUs.

The weight of KALAHI - CIDSS is quite high in terms of human resource development for the

poor. According to the World Bank, which supported this project, there were many volunteers

born in target areas of the program and they became important supporters for the poverty

reduction program after the project.

2-7-1 Education

The Department of Education and Commission on Higher Education (CHED) carry the

obligation in anti-poverty education under MTPDP 2004-2010.

Both agencies are providing various poverty reduction programs, but non-formal education is

not supported sufficiently yet. In particular, the lack of ability in elementary mathematics by

poor people makes it hard for them to find jobs, and is also at the base of social

discrimination and recognition as deprived.

According to the Medium Term Development Plan for Higher Education (MTDPHE) which is

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prepared by CHED and is indicated as the action plan of MTPDP 2004-2010, the following

four strategic targets have been established in order to raise international competitiveness

for the purpose of national development of higher education.

(i) Quality and Excellence

(ii) Relevance and Responsiveness

(iii) Access and Equity

(vi) Efficiency and Effectiveness

2-7-2 Health and Medical Services

Encouraging the cooperation among the central government, LGU, NGO and private sector,

MTPDP 2004-2010 is focusing on various projects relating to quality medical services and the

population issue, which is at the base of poverty in the country. The prioritized guideline on

health sector is as follows.

(1) The price of the medicine offered to the poor is to be halved relative to 2004, with

dissemination throughout the country by using the DOH network.

(2) Distribution of health insurance to the 5 million minority people in the country through

special assistance from the government.

(3) Strengthening of the national health system through the implementation of Health

System Reform Agenda (HSRA).

(4) Improvement of the health nursing management system

(5) Improvement of productivity by research and development (R&D) activity

(6) Establishment of drug rehabilitation centers. Shifting of authority over the rehabilitation

centers established by the COMPREHENSIVE DANGEROUS DRUGS ACT OF 2002 (CDDA)

to DOH. The reason for this is that the harm caused by drug abuse is not counted not

only as a social problem but also as a health problem.

2-8 Micro finance

2-8-1 The Present Situation

Many poor households are still not able to get the opportunity to generate cash income. Out

of 4.2 million of poor household, only 2.5 million have access to microfinance. Also, the

weak organizational structure of microfinance institutions (MFIs) is a problem.

According to information from NSCB, the number of new borrowers of microfinance only

increased at the pace of 200- 400 thousand annually throughout the period of 2004-2006

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and is far below the target of 4.2 million a year. Further, the poverty rate at 32% is far behind

the target at 17%, which is to be achieved through microfinance.

2-8-2 Government Policy and Project

The microfinance sector as the major pillar of KALAHI program is managed on the

responsibility of NAPC, and is strengthened through capacity development of MFIs and the

education of the poor borrowers. NAPC conducts an "awareness-raising campaign for

microfinance" and some remarkable results have been obtained. According to NAPC, out of 8

sectoral targets on microfinance, 6 will be basically achieved.

2-9 Gender and Environment

2-9-1 Gender

The government of the Philippines has established gender development projects earlier than

other Asian countries and aimed to improve the status of women. In response to the Fourth

World Conference on Women in 1995, the government established a 30-years long-term plan

named "Philippine Plan for Gender-responsive Development 1995-2025," which sets forth a

vision of equality and justice from the angles of gender, female empowerment, sustainable

development, realization of potential capability, realization of peace and social justice and

respect of human rights, etc. Since then, the government has ratified various international

frameworks and laws relating to gender issues.

In MTPDP 2004-2010, the government declared its commitment to assisting to "women in

extremely difficult circumstances". It has discussed and implemented measures to cope with

this issue.

2-9-2 Environment

Environmental issues are classified as follows: i) management problems relating to rapid

decrease of natural resources including forestry reserve (including mangrove woods) and

wildlife resources, and ii) problems related to the deterioration of urban environment

including air and water quality contamination. The Filipino poor tend to live in areas with

direct damage brought by environmental degradation.

Exhaustion of forest resources brings about the dysfunctioning of water retention and

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prevention of soil erosion. On this problem, the government has been conducting

Community Based Forestry Management (CBFM), and this effort has been slowing the

decrease in forestry area recently.

As for urban environmental problems such as air pollution, water contamination (river, lake

and sea) solid waste (urban refuse), there is no direct connection with poverty issues. In

MTPDP 2004-2010, it is only stated that the government will monitor the quality of potable

water (TapWatchProgram) which is provided to the poor community under the commitment

of the 10 Point Agenda.

The government projects on natural disaster and environmental contamination being

implemented tend to be delayed by the lack of budget. One of exceptional projects is the

hazard map production carried out by the Philippine Institute of Volcanology & Seismology

(PHIVOLCS), the National Disaster Coordinating Council (NDCC) and the National Mapping

and Resource Information Authority (NAMRIA) etc. The standing budget to achieve the

project is secured.

2-10 Governance

Although the government shows special consideration2 to ARMM in Mindanao, where the

number of the poor outstrips those in other provinces, it is not necessarily true that there is

enough budget prepared for the alleviation of poverty. In fact, the majority of development

budget relies on international donors.

The medium-term development plans for the autonomy called “Regional Development Plan

(2004-2010)" and "Regional Development Investment Plan" existed during the former

regime (Fshin Administration). However, the current government (Ampatuan

Administration) prepared new policy guidelines named "Regional Executive Agenda" and

"Regional Development program (2006-2008)", which indicate the policy and outline of

programs on 5 prioritized agenda ("Peace, Public Order and Security, Development

Administration and Governance, Economic Development, Social Development, Infrastructure

Support Facilities and Logistics") to be tackled in the coming 3 years.

2 Mindanao Economic Development Council (MEDCo) is put in the Office of the President and the Government is taking special attitude toward administrative support to Mindanao.

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2-11 Conclusion

The KALAHI Program was developed by NAPC in 2001 as a national strategy for poverty

reduction that supports the MTPDP 2004-2010. Launched in 2001, it is anchored on the

Millennium Term Development Plan (2001-2004) and uses the convergence of resources,

programs and projects, and stakeholder and sectors as key ingredient for poverty reduction.

There are several issues: 1) political issue, 2) institutional issue, and 3) budgetary issue.

These are being analyzed on the current KALAHI program.

One political issue has to do with the fact that, while the "KALAHI convergence groups" as

the supervisory organization of KALAHI project are set up on central and regional bases, the

function of the regional groups overlaps with that of the Regional Development Committee

(RDC) organized by the Social Development Committee (SDC) under NEDA.

The institutional issue consists in the tangle of organizations which are tackling the same

poverty reduction, such as NAPC, SDC, and President Committee on Urban Poor (PCUP). All

these organizations are agencies for poverty reduction.

As for the budgetary issue, the budget of the KALAHI program is sourced from the President’s

Social Fund and amounts to 200 million pesos. However, the amount is far below the Lingap

at 2.5 billion pesos.

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Chapter 3 Partnerships for Poverty Reduction

3-1 Overview of Development Cooperation to the Philippines

To the Philippines, many agencies such as UNDP, FAO, World Bank, Asian Development Bank

give assistance. Japan is the largest donor in terms of ODA (Official Development Assistance),

and offered 263.63 million US dollars in 2006. The second largest donor is the U.S, and

among international agencies, EC and GFATM are large donors.

The major field of support is “Social Infrastructure & Services,” which includes consolidation

of education, health, and government and civil society. There are both financial assistance

and technical assistance. Japan supports “Economic Infrastructure (transportation and

telecommunication)” and “Production Sectors (Agriculture and mining etc)” with similar

allocation of funds to “Social Infrastructure & Services”. The U.S. put importance on “Social

Infrastructure & Services” (64.8%) especially to the government and civil society and

uniquely, more priority is given to conflict resolution as compared to other donors. Australia

directs the highest share to “Social Infrastructure & Services” at 80.9%, and put 52.0% of

their total funds to government and civil society. Germany has a high distribution to

population programs (40.6%) as compared to other donors (ie. US is 18.6% and Japan is

0.2%). Among agencies, the EC focuses on health sector (68.3%) and UNICEF directs

47.0% to population programs.

3-2 Present Situation of Partnerships

Each donor places importance on partnership with the government, other donor and NGOs,

and states its partnership strategy in its official assistance strategy papers.

3-3 Major Donor Assistance Strategy for Poverty Reduction

1) UNDP

UNDP mentions 6.2 million US dollars as their budget in their Country Programme Action Plan

2005-2009. Moreover, they plan to generate an additional 50 million US dollars in partnership

with other donors and funds. They plan to provide policy support, technical assistance,

capacity development program etc. As for activities to support these core activities, they are

ready to do the following.

1) Specify necessary human resources for project or program, and employ them, or

support the government in employing them

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2) Supply goods and services based on UNDP’s rules

3) Specify and promote training activity

4) Search consultants and agencies through the global information system

managed by UNDP

5) Provide access to services, funds, and programs offered by UN network agencies

2) World Bank (WB)

The World Bank states in its Country Assistance Strategy that, based on the government’s

MTPDP, it aims to assure economic growth and social inclusion by 1) fiscal stability and 2)

improved governance. It considers it necessary to have engagement by three levels of

administrative entities to achieve the goal. The three levels are the national government,

local governments and the private sector. They conceptualize these levels as platforms.

For assistance from 2006 to 2008, they focus on reform of the public sector by responding to

the government’s reform efforts. They estimate 450~900 million US dollars of investment

in these three years. Such investment is to be done through loans, advice, and

knowledge-sharing.

The CAS is designed to complement the government’s effort, because the WB believes that

the effectiveness of the support depends largely on the attitude of the government. 3) Asian Development Bank (ADB)

The Asian Development Bank states in its Country Partnership Strategy that “freedom from

persistent, pervasive and intense poverty is the cornerstone of MTPDP vision and for ADB’s

development partnership with the Philippines”. It views fiscal imbalance as a major

obstacle to progress of poverty reduction, and believes broader and deeper economic

reforms are necessary to allow fiscal space for development spending, and to improve the

investment climate for greater private participation. Thus, these two are the core of its

assistance to the Philippines.

Also, the ADB has a three-year plan called Country Strategy Paper (CSP) to support basic

sector reform. In this CSP, health, water supply, slum mitigation, and growth of SMEs are

stated as focused areas in order to support development for achievement of MDGs and

poverty reduction.

3-4 Development Cooperation for Poverty Reduction by Civil Society

In the Philippines, there are about 0.5 million civil society groups, and 50,000 of them are

registered as NGOs (Non-Governmental Organizations), and 10,000, as POs (People’s

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Organizations3). Generally, NGOs are providers of poverty reduction services, and POs are

their receivers. “Civil Society” is a concept that is mainly composed by the two categories of

NGO and PO4”.

The civil society of the Philippines has the following characteristics: 1) political activity is a

role of NGOs, 2) welfare services provided by NGOs are different from those provided by

religious groups or governments (the former charge fees), and 3) NGOs are protected by the

government including their financial conditions. There are various scales of NGOs, from

those organizing very small-scale projects to those conducting nationwide multi-sector

projects.

NGOs have grown not only in terms of number and scale, but also specialization, some

having an influence on policy-making and implementation of projects. At present, NGOs have

very important roles as a complement to the public in development, and this appears in their

participation in the poverty reduction project of the government and Country Assistance

Strategy (CAS) of World Bank.

3 ADB "Overview of NGOs and Civil Society, Philippines" pp4 (http://www.adb.org/Documents/Reports/Civil-Society-Briefs/PHI/CSB-PHI.pdf) 4 ADB "Overview of NGOs and Civil Society, Philippines" pp3 (http://www.adb.org/Documents/Reports/Civil-Society-Briefs/PHI/CSB-PHI.pdf)