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Poverty Reduction Through Social Entrepreneurship and the PRESENT Bill

MYRNA CLARA B. ASUNCION

Assistant Director, NEDA

Multisectoral Forum Series on Poverty Reduction

Through Social Entrepreneurship

29 June 2012 �Ateneo de Manila University, Loyola Campus, Quezon City

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Anchored on: “Social Contract with the Filipino People”

Overarching theme: “Good governance and Anti-corruption”

Underwent Extensive public consultations

Our Plan

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Upon the assumption of the current administration, the government committed to reverse the long standing problem of “jobless economic growth”. The government outlined its medium-term economic blueprint anchored on President Benigno S. Aquino III’s “Social Contract with the Filipino People.”

The Plan translates the commitments in the Social Contract into effective, efficient and inclusive government interventions that would result in an improved quality of life for all Filipinos. It adopts the overarching theme of Good Governance and Anti-Corruption which defines the strategies to achieve inclusive growth.

The Plan underwent an extensive series of public consultations nationwide. These consultations were held in all the regions of the country, culminating in a national consultation here in Manila.

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Inclusive growth

Growth that reduces poverty, including achievement of Millennium Development Goals

Higher economic growth of 7-8% per year for at least six years

Growth that generates mass employment

Plan Vision:

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The Plan envisions a country that has achieved inclusive growth, which is characterized as high, sustained and broad-based and opposed to the trickle down, jobless growth that we experienced over the recent years. It is fast and sustained economic growth that provide massive employment. It should be rapid enough to matter, given the population of the country, geographical location and social complexity. Growth is considered to be inclusive only when it allows all members of a society to participate in and benefit from the growth process on a generally equal basis regardless of their individual circumstances.

The objectives of inclusive growth are:

<click 1> High economic growth of 7 to 8 percent per year for at least six years.

<click 2> Growth that generates mass employment, drawing the majority of our people into the economic and social mainstream.

<click 3> And three, growth that reduces poverty and achieves the Millennium Development Goals, or MDGs.

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Plan Targets

Halve the proportion of people who suffer from hunger

Achieve universal primary education

Reduce by 2/3 under-5 mortality rate

Reduce by 3 quarters the maternal mortality ratio

Eliminate gender disparity

Halt spread of HIV & AIDS

Halve the proportion of people without sustainable access to safe drinking water & basic sanitation

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To achieve our vision of inclusive growth, the Plan targets for the next six years are the following:

<click 1> A GDP growth rate of 7 to 8 percent a year;

<click 2> Supported by an increase in the investment-to-GDP ratio to 22 percent in 2016 from 18.5 percent in 2010*;

<click 3> Resulting in: employment creation of one million jobs a year; assuming an annual labor force growth of 2.75 percent, unemployment rate will be 6.8 to 7.2 percent; and

<click 4> Along with the social protection and social development strategies, these will reduce poverty incidence from 33.1 percent in 1991 to 16.6 percent in 2015, and

<click 5> will help achieve other MDG Goals such as universal primary education, reduction of under-five mortality rate by two-thirds and other social goals.

*NOTE: The figure cited is still 1985-based since the revised/rebased NIA was only available after the completion of the PDP.

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The Plan focuses on

5 Key Strategies

Boost competitiveness

to generate employment

Improve access

to financing

Invest massively in physical infrastructure

Promote transparent and responsive governance

Develop human resources through improved social services

Stable macroeconomic environment
Ecological integrity
Education, science and technology
Peace process and national security

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To achieve these targets, five key strategies are being pursued.

<click 1> The first policy strategy is to boost competitiveness in the productive sectors to generate more employment.

<click 2> Second is to improve access to financing to address the evolving needs of a diverse public.

<click 3> Third is to invest massively in physical infrastructure.

<click 4> Fourth is to promote transparent and responsive governance.

<click 5> And fifth is to develop human resources through improved social services and social protection.

These strategies shall be complemented by:

One, a macroeconomy with low inflation and sustainable fiscal balances;

Two, ecological integrity that includes mitigation of the potential impacts of environmental factors;

Three, promote education, science and technology to attain higher productivity; and

Lastly, advancement in the peace process and a guarantee of national security.

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Boost competitiveness

to generate employment

Ensure competitive, sustainable and technology-based agriculture and fisheries sectors

Strengthen the competitiveness of the industry and services sectors

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Support MSMEs

Reform transportation and goods production

Streamline business processes

Boost competitiveness

to generate employment

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In line with this strategy, we are already into the following activities:

Enhancing firm-level support to MSMEs to facilitate their entry into larger markets and increase their productivity and efficiency.

We are increasing support to our MSMEs through programs such as the SME caravans brought to 14 provinces, trained and assisted 12,980 participants to help them increase productivity and efficiency, access credits and markets, among others.

We have adopted “pocket open skies policy” by opening the local aviation sector to foreign competition in international airports outside of Metro Manila.

We are pushing for the strengthening of the legal and institutional framework to combat unfair trade practices such as cartels and monopolies through the enactment of the anti-trust or competition law.

With a more favourable air transport policy environment and an aggressive tourism campaign, this has reinvigorated the tourism sector. Which recorded 3.9 million visitors in 2011.

Moreover, we are continuing the streamlining of business processes to facilitate trade competitiveness.

The enhanced Business Name Registration System has reduced the processing time for business name registration nationwide from an average of 4-8 hours to 15 minutes. . A total of 568 LGUs have already completed their streamlining process as of the 1^st Quarter of 2012 under the Business Permit and Licensing System (BPLS) Streamlining Project.

Under the Philippine Business Registry (PBR) facility, sole proprietor businesses are able to register their business in less than 30 minutes.

To improve trade facilitation, the National Single Window (NSW) at the Bureau of Customs (BOC) now facilitates trade transactions and is operational in 30 government agencies that are directly concerned with processing of imports and exports documentations.

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Achieve universal health and education coverage

Converge social protection programs to priority beneficiaries and target areas

Accelerate asset reform in agrarian, ancestral domain and urban sectors

Mainstream gender, climate change adaptation and disaster risk reduction

Strengthen civil society-basic sector participation and the PPP

Encourage volunteerism;

Develop and enhance competence of institutions in social services delivery

Develop human resources

through improved social services

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3 million CCT program beneficiaries in 2012

100% universal coverage in elementary education by 2015

Expanded coverage under the Philhealth’s Insurance Program

Direct housing for 1.47 million households from 2011 to 2016

Develop human resources

through improved social services

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We are already at work on several initiatives:

<click 1> The Conditional Cash Transfer or CCT program shall be expanded. With the 2012 target of 3 million beneficiaries, this was already exceeded with the program covering 3,105,241 beneficiaries as of April 2012.

<click 2> For education, we intend to reach 100 percent universal coverage in elementary education by 2015.

From 2009 to 2011, the net enrolment rate in elementary increased from 88.09% to 90.9%.

<click 3> For health, coverage under the Philhealth’s Insurance Program shall be expanded.

The National Health Insurance Program enrolment rate increased from 74% in 2010 to 82% in 2011.

<click 4> In housing, the target is to provide direct housing for some 1.47 million households from 2011 to 2016.

In 2011, the Housing and Urban Development Coordinating Council (HUDCC) and key shelter agencies have provided decent housing to 109,000 families. More than half of these were designed for socialized housing.

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Chapter 8: Social Development

Social Development has improved the access of Filipinos to quality basic social service delivery in education, training and culture; health and nutrition; population and development; housing; social protection; and asset reform.

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MEETING THE 2015 CHALLENGE:

Philippines Progress Report on the

Millennium Development Goals

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2003

2005

Philippines Progress Reports

2007

2010

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Eradicate extreme poverty and hunger

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It is likely that the target of halving extreme poverty by 2015 will be achieved.

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Let me now share with you the Philippine progress on MDGs, particularly on Goal 1, which is to Eradicate Extreme Poverty (or subsistence and Hunger.

The first goal is to eradicate extreme poverty (or subsistence poverty) and hunger. There is a high probability that we will reduce by half the incidence of extreme poverty by 2015.

Note that the poverty data reflected in this presentation are the results of the re-estimation made by the National Statistical Coordination Board (NSCB) based on the refinements on the official poverty estimation methodology approved by the NSCB Executive Board on 1 February 2011.

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Notes:

Enhancements in the poverty estimation methodology were made to ensure that: (1) province-specific characteristics are captured in the estimation of provincial poverty statistics; (2) the food bundle chosen for the province is “superior” over another bundle based on preferences, that is, the former will provide the least cost but with same level of utility; and (3) the poverty measures are comparable across space and over time.

We are using the subsistence incidence to measure extreme poverty in the country. Subsistence incidence is the proportion of population whose annual per capita income falls below the per annual per capita food/subsistence threshold to the total number of population (NSCB). The subsistence threshold is measured by costing low-cost menus constructed by province, which meet 100% Required Energy and Nutrient Intake (RENI) and 80% adequacy of other nutrients. The menus are costed using the prices obtained from the NSO and Bureau of Agricultural Statistics (BAS) surveys.

Annual Per Capita Food Threshold (2009): Php 11,686

Annual Food Threshold for a Family of Five (2009): Php 58,430

Monthly Per Capita Food Threshold (2009): Php 974

Monthly Food Threshold for a Family of Five (2009): Php 4,869

Subsistence Incidence among population

Baseline Data (1991): 16.5 %

Latest Data (2009): 10.8%

Target (2015): 8.25 %

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Eradicate extreme poverty and hunger

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Proportion of population living below the subsistence threshold

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It is highly probable that we will reduce the percentage of Filipinos whose income cannot provide the basic food requirements, or those below the subsistence threshold.

Results of the 2009 Family Income and Expenditure Survey (FIES) released by the National Statistical Coordination Board (NSCB) on 8 February 2011 show that from 16.5% in 1991, subsistence poverty incidence was reduced to 10.8% in 2009, which is near the 2015 target of 8.25%.

It should be noted, however, that the magnitude of food poverty is still high, with 9.4 million individuals living below the food threshold in 2009.

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Notes:

Magnitude of food poverty in 2006 (population) - 9.9 million.

Annual Per Capita Food Threshold (2009): Php 11,686

Annual Food Threshold for a Family of Five (2009): Php 58,430

Monthly Per Capita Food Threshold (2009): Php 974

Monthly Food Threshold for a Family of Five (2009): Php 4,869

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Eradicate extreme poverty and hunger

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Proportion of population living below the subsistence threshold (%), 2009

Source: NSCB

Region	Subsistence Incidence
Philippines	10.8
NCR	0.6
CAR	10.8
I	7.9
II	5.8
III	5.0
IV-A	3.7
IV-B	14.8
V	17.8

Region	Subsistence Incidence
VI	11.2
VII	17.1
VIII	19.0
IX	23.5
X	20.7
XI	14.8
XII	15.6
CARAGA	25.3
ARMM	11.5

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There is a medium probability that the target of halving the incidence of poverty will be achieved.

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In terms of Filipinos living below the poverty threshold, or those whose income cannot provide the basic food and the following non-food requirements: 1) education; 2) clothing and footwear; 3) medical care; 4) transportation and communication; 5) fuel, light and water; 6) housing; 7) housing maintenance and other minor repairs; 8) non-durable furnishings; 9) household operations; 10) personal care and effects; and 11) rental of occupied dwelling unit, there is medium probability of achieving the target.

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Notes:

Poverty threshold – the minimum income required to satisfy the food requirements and other non-food basic needs. (Non-food basic needs are the following: 1) education; 2) clothing and footwear; 3) medical care; 4) transportation and communication; 5) fuel, light and water; 6) housing; 7) housing maintenance and other minor repairs; 8) non-durable furnishings; 9) household operations; 10) personal care and effects; and 11) rental of occupied dwelling unit)

Poverty incidence refers to the proportion of families/individuals with per capita income/expenditure less than the per capita poverty threshold to the total number of families/individuals.

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Proportion of population living below the poverty threshold

Source: NSCB

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The proportion of Filipinos below the poverty threshold was reduced from 33.1% in 1991 to 26.5% in 2009. However, note that poverty incidence increased through the years from 2003 to 2006 to 2009, despite the fact that subsistence poverty improved from 2006 to 2009 by 0.9% points (from 11.7% to 10.8%).

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Notes:

Poverty threshold – the minimum income required to satisfy the food requirements and other non-food basic needs. (Non-food basic needs are the following: 1) education; 2) clothing and footwear; 3) medical care; 4) transportation and communication; 5) fuel, light and water; 6) housing; 7) housing maintenance and other minor repairs; 8) non-durable furnishings; 9) household operations; 10) personal care and effects; and 11) rental of occupied dwelling unit)

Poverty incidence refers to the proportion of families/individuals with per capita income/expenditure less than the per capita poverty threshold to the total number of families/individuals.

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Proportion of population living below the poverty threshold (%), 2009

Region	Poverty Incidence
Philippines	26.5
NCR	4.0
CAR	22.9
I	23.3
II	18.8
III	15.3
IV-A	13.9
IV-B	35.0
V	45.1

Region	Poverty Incidence
VI	31.2
VII	35.5
VIII	41.4
IX	43.1
X	39.6
XI	31.3
XII	35.7
CARAGA	47.8
ARMM	45.9

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Eradicate extreme poverty and hunger

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Prevalence of underweight children under 5 years of age

Source: NNS, FNRI

27.3

20.6

13.7

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In terms of reducing by half the prevalence of underweight children, our progress has been slow. There is a medium probability that this target will be achieved.

The percentage of underweight children aged five years and below declined from 27.3% in 1990 to 20.6% in 2008. Underweight among children 0-5 years old is caused by hunger, malnutrition and micronutrient deficiency. The underlying causes include poverty, increasing food prices, poor dietary diversity, among others. Despite continuous efforts of the government, improvements are derailed by uncontrollable factors such as frequent occurrence of natural disasters.

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Notes:

1. Definition of underweight:

A condition where the child’s weight is lower than that of a normal person of the same age and is measured using weight-for-age as the index (NSCB definition). Areas where we have the highest underweight - ≈ most likely the areas with high poverty incidence.

For example:

a. A girl 24 months old is considered of normal weight if her weight is between 9 -14 kg.

b. A boy 24 months old is considered of normal weight if his weight is between 9.7 – 15.3 kg.

2. The NNS is being administered every 2 to 3 years, depending on the availability of funds.

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Poverty Reduction Through Social Entrepreneurship (PRESENT) Bill

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Comments on the PRESENT Bill �

The intention of the Bill to reduce poverty through social entrepreneurship is consistent with the PDP’s overarching goal of inclusive growth.

However, there is a need to consider the following:

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Comments on the PRESENT Bill �

A social enterprise is a business with a mission. Its best features are (1) private character, but cross with government as it aims to correct market failures and address equity concerns; (2) efficiency, pragmatism is a principle; and (3) sustainability, this is the distinguishing feature relative to a private enterprise or a non government organization.
Best practices and social enterprise models that could be adapted and applied to ensure success rates and sustainability.

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Comments on the PRESENT Bill �

Coherence with existing policies
The government has been working hard to transform the bureaucracy into an efficient and effective institution.

Rationalization program
Fiscal responsibility
Reducing red tape
Targeting system for beneficiaries

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Comments on the PRESENT Bill �

Consistency with the national development objectives
Significant increase in personal income and creation of massive employment opportunities
Equalizing opportunities for every Filipino
Social protection

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THANK YOU!�

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