Overview As in many countries, the socioeconomic impacts of the coronavirus disease (COVID-19) pandemic in the Philippines were swift and deep, with reports indicating high rates of joblessness, reduction in working hours and earnings, and a rise in risky coping behaviors. This crisis underscores the need to put in place social safety nets and build resilience particularly of poor households to income shocks. From 2018 to 2020, the Asian Development Bank (ADB) pilot tested the graduation approach in the Philippines by building on the government’s conditional cash transfer program with other types of support for poor and vulnerable households. One of the pilot’s objectives was to find cost-effective ways to sustainably reduce poverty and build resilience to socioeconomic shocks. The project ended in September 2020 with positive results despite the pandemic, achieving an average graduation rate of 71%. The graduation approach strengthened household resilience to the COVID-19 shock across a range of dimensions including financial security, food security, and mental health. Beneficiaries of the program fared significantly better than those who received only the government cash transfers. The pilot project also demonstrated that providing individual livelihood assets coupled with group coaching proved to be an impactful and less costly variation of the traditional graduation program design. This case study is adapted from Assessing the Impact of the Graduation Approach in the Philippines, an ADB Brief published in March 2021. Project Information 49242-001 : Unlocking Innovation for Development (Regional) 50364-003 : Deepening Civil Society Engagement for Development Effectiveness (Regional) 52012-001 : Enhancing ADB Support for Social Protection to Achieve the SDGs (Regional) Project Snapshot Dates June 2018 : Start of Pilot September 2020 : End of Pilot Cost $3 million : Institutions / Stakeholders Executing agency : Asian Development Bank (ADB) Financing : Government of the Philippines, ADB Challenges Pioneered in 2002 by the Bangladesh-based international development organization BRAC, the graduation approach deploys a time-bound and well-sequenced set of interventions designed to help people overcome multiple barriers that prevent them from breaking out of extreme poverty. A single intervention, such as education, training, or cash support, cannot tackle poverty in isolation. Yet, there is still limited scaling up of the graduation approach because it is difficult and relatively expensive to implement. It involves close coordination between different government ministries involved in poverty reduction. The cost of distributing both cash and livelihood assets to each household can be significant. The coaching and mentoring of participants, a feature that sets the graduation approach apart, adds another cost element. The traditional graduation program provides individual livelihood assets with individual coaching, which is proven to be effective but more costly. Meaningful interaction calls for well-trained coaches and frequent face-to-face coaching sessions. Context The Philippines launched the Pantawid Pamilyang Pilipino Program (4Ps), a conditional cash transfer for poor families, in 2008, implemented by the Department of Social Welfare and Development, with ADB and World Bank support. In a rapid, nationwide scale-up, the number of 4Ps beneficiaries reached a peak of 4.4 million households (about 20% of the population) by 2014. Participants receive the cash transfers every 2 months based on meeting health and education conditionalities; the grant amount varies, depending on the number of eligible children. The Department of Labor and Employment’s Kabuhayan (livelihood) program provides households with productive assets, training, and business support services. The pilot graduation program built on these two government programs with nationwide reach. Solution Based on preparatory work that began in late 2015, the pilot ran from June 2018 to September 2020. It targeted 1,800 4Ps beneficiaries who were selected into the conditional cash transfer program in the preceding 2 years (not earlier than 2015) based on the national poverty targeting system. The participants were in five municipalities of Negros Occidental province. The Department of Labor and Employment implemented the pilot through the Kabuhayan program. The interventions included a one-time asset transfer for each participant, selected from a list of options identified through a rigorous market and value chain assessment in each area. The livelihood assets were worth an average of $300 and included assets for swine fattening, salted egg production, food carts, chicken raising, massage therapy, and more. The program also gave coaching and life skills training, covering social and health issues; core training in business and financial management; training on specific livelihoods; and general mentorship by the coaches based on but in many cases extending beyond individual household development plans. Each coach supported an average of 110 households. ADB engaged BRAC to provide technical assistance through its Ultra-Poor Graduation Initiative and Innovations for Poverty Action to design and carry out a randomized control trial impact evaluation. For ADB, the pilot was a first attempt to unravel whether group-based coaching and/or group-based asset delivery could bring costs down without reducing the impact. Participants were randomly divided into three groups of 600 households each. The first group received livelihood assets with group coaching. The second group received individual livelihood assets with group coaching. The third group received the traditional graduation approach intervention of individual livelihood assets with individual coaching. A control group of 600 households received only the regular cash transfers from government. Innovations for Poverty Action carried out a detailed baseline survey in June 2018. BRAC used digital technology to frequently monitor and evaluate households’ progress toward the graduation criteria. To complement these data, an end-line survey was originally scheduled for late 2020 but was moved later in 2021 because pandemic lockdowns and quarantine measures made in-person household interviews impossible. Meanwhile, ADB commissioned a rapid mobile phone survey to gather real-time data on the socioeconomic impact of the pandemic on participants. The survey also assessed whether the graduation approach can help build household resilience to a major socioeconomic shock. Results Severe setbacks caused by the COVID-19 pandemic did not stop the majority of participating households from still reaching key benchmarks for graduation and moving closer to their social and economic goals. Project coordinators were able to monitor and help the households through text messages and phone calls during the pandemic, giving them regular health and safety information and continued guidance in their livelihood projects. Coaches conducted remote monitoring and revised their training and coaching format. The monitoring system found that, on average, 71% of households met each of the nine criteria under the four pillars of graduation—social protection, financial inclusion, livelihoods promotion, and social empowerment. Participants improved their life skills and livelihoods and manage their finances better. High rates of knowledge retention from monthly life skills training (a score of at least 80%) resulted in positive behavior change in health, nutrition, and hygiene practices. Majority now include fruits and vegetables in their diet and use safe drinking water only. Everyone has access to a hygienic toilet, compared to only 74% at baseline. Nearly all (99%) retained fully or partially correct health information during the COVID-19 crisis. Participants launched sustainable livelihoods and earned income even during the COVID-19 quarantine period. The program helped them respond better to changing market trends during the pandemic and stay above the monthly food poverty threshold. About 73% of group livelihoods and 60% of individual livelihoods remained fully operational as of September 2020. The rest liquidated their assets and invested in other areas. Just before the pandemic, 62% of households reported being able to save in the last 30 days. However, this fell to 51% by September 2020 as households dipped into their reserves due to the pandemic. The rate of indebtedness increased to 60%, compared to 56% at baseline, but 69% also reported being able to repay all or part of the loan by September. Only 8% of the participants reported having unforeseen expenses, which indicates improved financial management after months of training and mentoring on reducing risk. The mobile phone survey results showed that graduation program participants had higher financial security and food security and better mental health than those receiving only government cash transfers. Results suggest that group interventions, such as group coaching, may have a particularly positive effect on mental health, especially if group members experience a sense of belonging, solidarity, and social support. The experiment showed that, even if the average attendance rate for group coaching was much lower than for individual coaching, the knowledge retention was roughly the same for all. This was likely a result of innovative training and monitoring techniques applied by the coaches. Groups were also intentionally kept small at a maximum of 20 participants. This finding has significant potential cost reduction implications for government training efforts. Group livelihoods, however, faced unique challenges, including inactive group members, high attrition, complex bookkeeping, and managing group dynamics. BRAC provided additional support and coaching to participants to resolve these challenges. Approval of group livelihood proposals also took longer than individual livelihoods although both experienced delays because of the complex government procurement process. Asset distribution began in April 2019 for households in individual livelihoods and was 58% complete by July 2019, but participants in group livelihoods did not receive their productive assets until December 2019. Lessons The pilot has generated several important lessons to inform the design of future government-led graduation programs—both in the Philippines and in Asia and the Pacific more broadly. Three key recommendations derive from these lessons: Explore alternative options for asset transfers Options may include providing “assisted cash” (where participants are accompanied by a coach or other program staff member), or vouchers (that require proof of purchase from preselected vendors), to allow participants to purchase their own assets. This will reduce the burden on government procurement systems. It may also reduce participants’ attrition arising from delays in asset delivery. These options for procuring assets may also prove more efficient when implementing graduation programs on a larger, potentially nationwide scale. The Philippines is exploring assisted cash in the next iteration of the graduation approach, which will be launched in 2021 with 3,000 households in three provinces under the Department of Social Welfare and Development’s Sustainable Livelihoods Program. Consider group-based coaching Individual livelihoods with group coaching proved to be an impactful variation of a traditional graduation program. This approach avoided the challenges of group-based enterprises and leveraged the benefits of individual livelihoods, such as flexibility, autonomy, and control over the livelihood and its operation, combining them with the peer-to-peer learning, sharing, and camaraderie afforded by group coaching. While local culture and context should always be considered, the lessons from the Philippines offer an important case study for governments looking to scale up graduation programs in a cost-effective manner. Invest in coaching and mentoring Whether delivered individually or through groups, coaching was a core factor contributing to household progress in livelihoods and overall welfare. Regular check-ins with participants boosted their confidence. Coaching also ensured that households were earning enough to cover both the costs of running their business and household expenses. Graduation programs require competent and dedicated staff with the right skills and enough time to deliver effective coaching and mentorship support. It is critical to provide tailored training that equips coaches with the skills and knowledge needed to support poor and vulnerable households in challenging situations. The Philippines’ graduation pilot is an important contribution to the growing body of global evidence that highlights the strong potential of graduation programs in building household resilience, even in the face of adverse socioeconomic shocks, and in supporting the poor and vulnerable’s transition toward sustainable livelihoods. Looking ahead, ADB will continue supporting countries in Asia and the Pacific explore opportunities to adapt graduation programs to their unique local contexts. Resources Asian Development Bank (ADB). 2021. Assessing the Impact of the Graduation Approach in the Philippines. ADB Briefs. No. 169. Manila: Asian Development Bank. ADB. 2020. Testing the Graduation Approach in the Philippines. ADB Briefs. No. 132. Manila: Asian Development Bank. Ask the Experts Karin Schelzig Director, Human and Social Development Sector Office, Sectors Group, Asian Development Bank Karin Schelzig is a poverty and social protection specialist with more than 25 years of experience leading human and social development projects, dialogue and research in East and Southeast Asia. Previously based in Beijing, she focused on shock-responsive social protection, social assistance, social welfare services, healthy and age-friendly city development, and inclusive education in Mongolia and the People’s Republic of China. She holds a PhD from the London School of Economics. Follow Karin Schelzig on Amir Jilani Social Sector Economist, Southeast Asia Department, Asian Development Bank Amir joined ADB through the Young Professionals Program in 2018. He has extensive experience in the design, development, and evaluation of social protection, human development, and women’s empowerment projects. He provides analytical, technical, and operational support to ADB-wide social protection initiatives and promotes the use of rigorous evidence to inform country partnership strategies and knowledge and operational lending assignments. He holds undergraduate degrees in Economics and Finance from the Australian National University and a Master of Public Policy from Georgetown University. Asian Development Bank (ADB) The Asian Development Bank is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance. Follow Asian Development Bank (ADB) on Leave your question or comment in the section below: View the discussion thread.