The DSWD Convergence Framework
PinoyME is assisting the Department of Social Welfare and Development (DSWD) in finding ways to step up the impact of the government’s poverty reduction programs. It is contributing its knowledge and experience in harnessing microfinance and microentrepreneurship and in mobilizing private sector participation to support the DSWD’s convergence strategy.
PinoyME is promoting the Public-Private Partnership (PPP) Pathway out of Poverty or private sector involvement in three key programs of the DSWD—the Pantawid Pamilyang Pilipino Program (4Ps), the Kapit-Bisig Laban sa Kahirapan – Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDSS), and the Self-Employment Assistance – Kaunlaran (SEA-K).
The three-pronged approach responds to the unique challenges in empowering the poor through each stage of development—from (1) providing the chronic poor with basic social services to (2) improving the financial access of the transitional poor through community-driven development to (3) supporting the entrepreneurial poor by providing credit, enhancing socio-economic skills, and developing entrepreneurial values.
Microfinance is one of the fundamental elements of the PPP Pathway out of Poverty.
1st Component: Conditional cash transfers for the chronic poor
The first component of the PPP Pathway out of Poverty is the infusion of microinsurance in the 4Ps or the controversial conditional cash transfer (CCT) program. The 4Ps aims to provide the poorest of the poor with protective social services. The program does not merely directly impart money to the poor, which they can use for food and other household needs, it is also an investment in education and health. Beneficiaries receive conditional cash transfers in exchange for fulfilling behavioral conditions. The beneficiaries receive P300 per child (maximum of 3 children aged 0-14) for 10 months that the children study in school. The child must attend classes for 85% percent of the schooldays.
Health conditions should also be fulfilled by the beneficiaries. Pregnant women should get prenatal care, childbirth should be attended by trained health professionals, and the new mothers should undergo postnatal care. Meanwhile, parents and guardians should attend family planning sessions, and classes on parent effectiveness and other topics that are relevant to their needs. Children 0-5 years old should get regular preventive health checkups and vaccines, while those studying in elementary school should receive at least twice a year deworming.
DSWD has partnered with members of the RIMANSI Organization for Asia and the Pacific, a network of Microinsurance Mutual Benefit Associations (MBAs) offering microinsurance to poor individuals. RIMANSI members will offer this very affordable insurance policy that provides life insurance and savings facility to 4Ps beneficiaries. This will help 4Ps beneficiaries save some of their cash subsidies to enable them to prepare for emergencies and create a cash savings for future investments. The savings account will also enable them to eventually engage in microfinance activities that will help them acquire additional income for their family.
Critical aspects of the 4Ps are that it boosts investment in human capital; promotes responsibility on the part of beneficiaries through capacity building and family sessions. Moreover it promotes growth in the local economy by providing cash to beneficiaries, which thereby increases their purchasing power and their ability to patronize products of the microenterprises in their baranggays.
2nd Component: Community-driven development for the transitional poor
The second component, the KALAHI-CIDSS, is a community-driven development program developed by the World Bank. It treats the poor and marginalized as partners in the search for development solutions instead of mere targets of poverty reduction efforts. While the conditional cash transfer program provides the necessary services to the poor and invests in health and education, the KALAHI-CIDDS supports them by bringing about infrastructure for health, education, and microenterprise. It provides poor communities with technical and financial assistance so that they themselves may make informed decisions and build potable water systems, footpaths, bridges, roads, health facilities, day care centers, and class rooms in their community.
PinoyME will encourage MFIs to enter KALAHI-CIDDS areas and offer microfinance services to community groups that have been organized in those areas. The social capital that has been developed in those communities is potent ingredient that will assist MFIs in providing precious financial services to them. At the same time, access to financial services can spur growth in these areas that have been endowed with much-needed community infrastructure.
Third Component: Enterprise development for the entrepreneurial poor
The third component promotes entrepreneurship in the communities through the Self-Employment Assistance – Kaunlaran (SEA -K) program of DSWD. SEA-K provides technical assistance and loans with no interest and no collateral for the enterprising poor in economically depressed communities.
SEA-K organizes SEA Kaunlaran Associations (SKAs) or community-managed credit facilities to fund microenterprises. Each SKA is composed of about 25 members who receive technical assistance and an average seed capital of P150,000.00 to start the microenterprises of members at P4,000.00 to P5,000.00 each which can lead to a fledgling sari-sari store or carinderia. PinoyME is assisting DSWD in turning over SEA-K successful beneficiaries to MFIs who can provide them with bigger loans, teach them credit and business discipline and offer other capacity building and business development services. It also plans to work with business establishments in creating a market for products and services of SEA-K beneficiaries.
PPP to fight poverty
Through a grant from the Japan International Cooperation Agency (JICA) PinoyME is working with the DSWD to use the PPP Pathway out of Poverty approach in enhancing its convergence strategy. It proposes to apply the public-private partnership model to poverty reduction. Currently the government’s PPP program is focused primarily on large infrastructure. This initiative with DSWD demonstrates how such an approach can also be used to seek ways by which private groups can augment government resources in fighting poverty. By imploring the participation of MFIs, NGOs, business development service providers, academic institutions and private businesses, PinoyME hopes to see microentrepreneurs who generate income and employment in the target areas of DSWD. These micorenterpises can be the driving force for consolidation of small producers and fledgling businesses, and facilitate the link between supply chains and the market.