ADB urges Aspac countries to target social protection for poor, cites PHL case

THE Asian Development Bank (ADB) is urging countries in Asia Pacific to roll out social protection systems to enable the poor to better withstand shocks such as economic crises and natural disasters.

In its evaluation study titled “Asian Development Bank: Social Protection Strategy,” the Manila-based lender said implementing safety nets for the poor need not be expensive as highlighted by the case of the Philippines’s conditional cash-transfer (CCT) Program.

“Governments around the world tend to scramble to adopt social protection programs in times of crisis. But comprehensive systems built in stable years are much more effective in coping with the human impact of future economic or political crises or natural disasters,” said ADB’s Director General of Independent Evaluation Vinod Thomas.

The study noted that widening wealth gaps are drawing attention to the need for greater social protection in Asia, where income disparities over the past two decades have widened in 11 countries that account for more than four-fifths of the region’s population.

Also, it said rapid social and demographic changes are highlighting the need for affordable pensions, health insurance and childcare.

“All countries spend on the poor in some form or another, although there are considerable country variations in the levels and effectiveness of the spending. Concerns over the cost of universal social protection are deterring some countries, but well-targeted safety nets are not prohibitively expensive,” the study read.

ADB cited the case of the Philippines, the government’s CCT program to uproot extreme poverty costs less than 0.5 percent of the country’s gross domestic product yet it reaches 15 million people.

The program makes regular cash payments to mothers conditional on their children attending school and public-health clinics.

“After just three years of implementation, evaluation findings show positive results on elementary education school enrollment and beneficiary households spending more on the health and education of their children,” the study read.

ADB said the CCT was the only national cash-transfer program it supported. The CCT was launched by the Philippine government in 2008 to 6,000 households with technical and financial support from the World Bank and the Australian Agency for International Development.

In response to the food and fuel and global economic and financial crises, the Philippine government expanded the program in 2009. It has since become the country’s main social assistance program, reaching more than 3 million households, and is expected to expand to 4.4 million in 2014.

ADB’s direct support for the program started with a loan of $400-million plus technical assistance in 2010.

The study cited the need for the Manila-based lender to make social protection an integral part of its corporate strategy to “reduce poverty and promote inclusive growth in the region.”

While ADB has what it calls the Social Protection Strategy 2001, the study noted that its implementation plan did not provide guidance for prioritizing development of the social protection portfolio.

Its portfolio of loans for social protection projects and programs totaled $2.2 billion between 2002 and 2011, representing only 2.5 percent of the total value of the ADB portfolio in 2002 to 2011.

The ADB said based on its experience in helping countries build comprehensive social protection systems—which began in response to the Asian financial crisis—governments are generally reluctant to borrow for social protection except in times of crisis. Lending surged during the global economic crisis of 2008-2010, but then sharply declined.

The study pointed out the need for the Manila-based lender to include social protection in country partnership strategies and in policy dialogue as part of macroeconomic and fiscal reforms and the “inclusive growth agenda.” –Jennifer A. Ng / Reporter, BUsinessmirror