Conditional Cash Transfer, Rural Banks, and Mobile Money Transfer: Observations and Reflections

In a scene being played out in various places in the country, some of them more remote, over 400 households from four barangays in the municipality of Sogod, Cebu received financial support from the government through the Department of Social Welfare and Development’s (DSWD) Pantawid Pamilyang Pilipino Program (4Ps) on May 4, 2011.A 5-year program of the Philippine Government, 4Ps provides conditional cash grants for the poorest families in identified municipalities as financial aid for the family’s health and for children’s education. Aside from disbursements through the Land Bank of the Philippines, conditional cash transfers (CCT) are being disbursed too with the involvement of mobile money remittance channels such as rural banks and their mobile phone banking facility.

On May 4, I witnessed the day-long process of how atotal of PhP562,700 ($13,070) was disbursed to 414 beneficiaries composed mainly of women.It was the second cash grant for this group of beneficiaries. Each disbursement was processed through a system that involved Green Bank’s mobile phone banking facility that makes use of Globe G-XChange Inc.’s (GXI) Gcash platform.

Green Bank is a participant bank of the USAID-supported Rural Bankers Association of the Philippines – Microenterprise Access to Banking Services (RBAP-MABS) program, which has been promoting the use of mobile phone banking in the country since 2004, especially for reaching the unbanked. Green Bank is one of the first few rural banks to adopt the mobile phone banking technology.

Preparations, arrangement and organization

The orderly gathering of a large number of beneficiaries, as well as the smooth flow of the process from the first to the last recipient, was thanks to the impressive cooperation among the public and private organizations involved. Representatives of the Department of Social Welfare and Development (DSWD) (4), the local government (3 local policemen), GXI (3), and Green Bank (4) worked together to ensure the systematic and efficient disbursement of grants from amounts as small as P600 ($13.95) (rare) to P2,800 ($65.12). The average amount for the group was P1,390 ($32.33), with over 85% of the disbursements amounting to P1,000 ($23.26) per beneficiary. The financial assistance consists of P500 ($11.63) per month for health care; and P300 ($6.98)  monthly educational grant for each qualified child. (Each family is allowed up to three educational grant recipients.)

For better crowd management, the recipients wore color-coded T-shirts– yellow, red, white, and black — to indicate the barangay they are from. Residents of the farthest barangay were served first; the nearest barangay, last.

The beneficiaries were at the site at 6 a.m. or 7 a.m. for the preparatory activities: (1) grouping beneficiaries by barangay and lining them up based on the order that their names appeared in the DSWD-provided “payroll”; and (2) orientation by the DSWD on the purposes of the financial grant and the housekeeping rules to keep the cleanliness of the venue.GXI also briefed the participants on the steps to getting their cash payout. The head of the Green Bank team introduced the bank’s savings product, where one can open and maintain an account with only P100 ($2.33).

Disbursement process

Green Bank deployed four people to help process the disbursements. GXI provided the bank staff with a list (“payroll”) containing the beneficiaries’ names, ID numbers, GCash transfer reference numbers, and amount of grant. The staff verified some information with each beneficiary (identity, amount to be received and signature), performed the mobile money transfer using GCASH Remit, and facilitated the payout.

After validating the recipient’s identity, the Green Bank representative sends the beneficiary’s reference number to 2887. In less than a minute, the bank staff receives the confirmation message and corresponding GCASH amount through the bank’s mobile phone wallet. Green Bank’s disbursing staff then gives the payout to the beneficiary after a final signature of approval from the DSWD representative. Green Bank used 3 mobile phone wallets for the 4Ps event in Sogod.

Beneficiaries’ profile

The beneficiaries are predominantly women, whose spouses are engaged in subsistence farming.

We interviewed 20 beneficiaries: 18 women and 2 elderly men. Except for a widower, all were married, and the number of their children ranged from 1 to 9, about 1 to 4 of which are schooling.  All the women said they are fulltime homemakers.  Most of the respondents are spouses of farmers planting corn or root crop in less than a hectare of land under lease or share cropping arrangement. Others’ spouses are engaged in either “tuba” (coconut toddy) gathering, charcoal making, or driving habalhabal, tricycle or multi-cab. Others earn their living as fishermen or workers in construction sites or factories.

Only 2 of the informants have had some banking experience with a rural bank. Some expressed a desire to save with the bank. Only two own a cell phone.

What the recipients intend to do with the money

Bugas (rice) is the priority item to buy for almost all of the recipients. Since the school opening in June was approaching, some said they would purchase school supplies, while a few mentioned uniform and footwear for the school children. It does make sense to start buying the school supplies with the money they got since the next CCT release for the March – April period may come in July or August 2011. Still, a few said they’d use some of the money for medicine or vitamins.

How CCT beneficiaries can use the products and services offered by the rural banks

Involving the rural banks in the disbursement of cash grants offers a great opportunity for the government to bring banking services to the poor families, gear them towards a self-reliant future, and prepare them for a dignified exit from the program at the end of the 5th year. How can this be done?

Let’s start with savings. Helping the poor build up their financial assets little by little but with some regularity is the most important financial service that they can receive from the bank. The 4Ps program and the banks involved can encourage the beneficiaries to set aside an amount as savings every time they get their cash grant. There will always be emergencies to save for, including unanticipated school expenses for the kids. Eventually, savings can also be used to set up a micro business to provide self-employment for the beneficiary at some later date.

Second, banks can consider the future development of the CCT beneficiaries as loan clients. Having a savings track record can also be a basis in the future for getting a loan from the bank for some micro business activities to help earn additional income for the family, or to meet some other financial needs.

Thirdly, banks can also offer microinsurance as a third financial service. As a savings account holder in a rural bank, the beneficiary can now buy– through the bank – a microinsurance product that can provide life/accident and possibly health protection for the CCT beneficiary and his/her dependents. There are already insurance companies that have designed microinsurance products intended for poor families– products that are affordable, easy to access, simple to understand and implement, and quick to settle claims.

During the event, Green Bank presented its savings product that offers ATM-card based access and displayed a tarpaulin showing the savings product’s features. The product requires only P100 to open and maintain, and P500 to earn interest.

Getting the beneficiaries to use the other bank services sooner can produce longer-term benefits for the recipients of the cash transfer, who, eventually and hopefully, would be prouder to be called clients rather than beneficiaries.