The Philippine gov’t should get cash into the hands of the poor, now

This piece was originally published in Rappler in the Philippines. It has been cross-posted here with their permission.

Instead of halting [cash transfer] programs the government should be distributing these (with no strings attached) to poor and newly-vulnerable populations.

On March 15, the Department of Social Welfare and Development (DSWD) announced that it would suspend a number of its social welfare programs to prevent the spread of COVID-19. This has cut off a critical source of support for the millions of people receiving cash transfers from the DSWD, who are now confined to their homes under the Luzon-wide quarantine.

Instead of halting these programs amid the growing health crisis, DSWD should be expanding its social safety nets by distributing cash transfers (with no strings attached) to poor and newly-vulnerable populations. More than 30 other countries, including Australia, Hong Kong, and Thailand, have rolled out similar cash transfers, also known as basic income programs, to ease the economic impacts of COVID-19. Others like the US and India are considering similar policies. These should be rolled out in the Philippines immediately; proposals are already being discussed in the House of Representatives, and should move forward as quickly as possible.

On March 16, IDinsight, a data analytics, advisory, and research organization shared a list of evidence-based policy recommendations for the Department of Health and other government agencies to consider as part of their response efforts. Drawing on effective response efforts from similar crises around the world, one of our key recommendations was to distribute no-strings-attached payments — otherwise known as “unconditional cash transfers” — to help the poorest people cope and keep money flowing through the economy.

Why give cash?

Cash transfers with no strings attached have been proven to help vulnerable families continue to purchase food and supplies during crises. Already we are seeing people unable to work in the Philippines because of the lockdown. Cash transfers will allow these families, already on the brink of survival, to avoid excruciating choices between food, health care, and shelter. In other crises they have increased the amount of food a family consumes, while also giving them the flexibility to respond to other pressing financial needs.

Cash transfers also make economic sense: they can help support the economy at a valuable time, because they allow recipients to buy groceries and supplies from small businesses in their communities.

Why cash, and not food?

Food distribution was helpful to deal with the immediate shock, but ongoing food and other in-kind donations are not particularly cost-effective. They would require ongoing food preparation and in-person drop-offs, which could create opportunities for COVID-19 transmission. They also lead to lower prices, which hurt small business owners when they need more help than ever. In contrast, cash transfers are cost effective and also have the effect of creating demand that local businesses can respond to (while only minimally increasing prices). That doesn’t mean there isn’t a role for direct food distribution, but cash is a better solution to providing ongoing support to these families.

Some argue against cash, suspecting that people will spend it on alcohol or tobacco or other non-necessities, but numerous studies from around the world have found that is not the case.

To whom and how?

With limited resources and movement restrictions, the government will need to reach households that need the cash now to survive. But how do you identify and find these people? To launch these payments quickly for those in Luzon, DSWD should immediately distribute cash through the 4Ps infrastructure, which has already identified poor families. There is a precedent for this: DSWD did the same to help those affected by Typhoon Haiyan in 2013–2014, with top-ups from UNICEF and the World Food Program. Nearly 90% of these beneficiaries received their payments through cash cards, meaning disbursement will not require human contact or increase risk of coronavirus transmission.

Beyond current 4Ps beneficiaries, DSWD should reach other vulnerable families, using the Listahanan. They can expand the scope to recipients of the Unconditional Cash Transfer (UCT) program. There might be many more affected, such as workers in the informal sector who have lost their source of livelihood. For these, DSWD should look for relatively safe ways to register households. We know this is risky; if they would have to register in person, this puts them at risk of spreading or contracting COVID-19. But if people are starving, COVID-19 is likely not their biggest fear.

As much as possible, these transfers should be done digitally, but there are a few ways that DSWD can mitigate the risk of spreading the virus while still distributing cash. First, they can invite eligible households by phone (rather than in person), and give strict instructions for staggered arrival at DSWD offices to minimize crowding. Second, they can use each household’s visit to disburse a cash payment and to simultaneously enroll the head of household in a digital payment platform whenever possible. This could be a bank account, or e-wallets like GCash and PayMaya. Third, they can enforce strict physical distancing protocols for those visiting offices to register for digital payments. Finally, DSWD staff should be given personal protective equipment and paid sick leave in case they show signs of COVID-19 symptoms.

While the execution will be challenging, the goal is simple and essential: get cash into the hands of those who need it most as quickly as possible. Let’s make sure people most in need can keep themselves and their families alive.