Country Focus: the Philippines

Governance challenges and responses from governments, civil society groups and development agencies vary widely across the East Asia and Pacific region. To help improve understanding and disseminate innovations, each edition of this newsletter focuses on a different country and provides a snapshot of its governance challenges, the World Bank’s governance strategy, and successful and promising approaches launched by the Bank, as well as others.

Context

The Philippines has strong potential for economic development in terms of natural and human resources, but outcomes have still fallen short of their promise.  In particular, despite several years of strong economic growth, poverty levels remain high. Most analysts point to lingering governance challenges as a leading cause of weak economic performance.  The Government of the Republic of the Philippines has recognized governance challenges as a major obstacle to sustained economic growth.  In its Medium-Term Philippine Development Plan (2004-2010), the government has pointed to various dimensions of poor governance ranging from corruption to public institutions’ lack of independence, lack of capacity, and certain aspects of their constitutional structure which hamper efficient and coherent decision-making and policy implementation.

The most critical governance challenges include corruption and lack of transparency in public financial management. In recent years, increasing politicization of the bureaucracy has undermined corruption prevention and enforcement efforts. There are prospects for improvement, however, because the Philippines has one of the most dynamic and influential civil societies in Asia, and a highly decentralized system of governance that generates pockets of reform and high performance. Recent examples of progress have often been driven on the demand side by government, with procurement reform among the most prominent of these.    

World Bank Philippines Governance and Anti-Corruption (GAC) Strategy 

Good governance is at the core of the current World Bank Philippines’ Country Assistance Strategy (CAS) 2010-2012, with the goal of achieving inclusive growth.  The World Bank is systematically engaged through analytical activities, policy advice and operational work, in supporting efforts to increase transparency, accountability, and participation at both national and local levels.  The CAS strategy: (i) supports governance and anti-corruption (GAC) in selected national government agencies of strategic importance (including the Departments of Education, Health, and Social Welfare and Development, as well as the Bureau of Internal Revenue and the Department of Public Works and Highways); (ii) deepens existing partnerships with government in procurement and public financial management reforms; and (iii) engages more intensively in improving local governance by supporting effective decentralization. The CAS strategy also calls for enhancing the World Bank’s approach to engaging civil society, especially for initiatives to reduce corruption and promote good governance in Bank-supported activities. 

Examples of Innovation

Mainstreaming in Practice: The Governance Filter

As a pragmatic and concrete means of ‘mainstreaming’ GAC across the portfolio, the World Bank’s team in the Philippines has introduced the ‘Governance Filter’.  This is an analytical process applied at the pre-concept stage to all new projects in the pipeline to systematically assess the level of governance risk in sectors and/or agencies and identify effective mitigating measures.  Drawing on a mixture of: (i) governance indicators from national systems (audit reports, procurement indicators and integrity diagnostics); (ii) prior portfolio performance and; (iii) sectoral assessments, including political economy analyses, the governance filter will help Bank task teams and country management to make more informed decisions on whether or not to proceed with a proposed project and how to mitigate corruption through all stages of the project cycle. 

Governance and Anti-corruption in Conditional Cash Transfers 

A recent example of how GAC has been integrated in World Bank project design and implementation in the Philippines is the Social Welfare and Development Reform Project (SWDRP). This recently approved $405 million World Bank conditional cash transfer (CCT) project will strengthen the capacity of the Department of Social Welfare and Development (DSWD) as a social protection agency.  SWDRP will also finance part of the new CCT program, and establish a national household targeting system to support objective identification of poor households.

Under the SWDRP, the government launched a pilot CCT program in 2008 called the Pantawid Pamilyang Pilipino Program (4Ps). Implemented by DSWD, it commenced with 6,000 household beneficiaries.  In response to the global food crisis of mid 2008, the government rapidly expanded the program to cover one million households by early 2010.  Transfers to some 376,000 households are financed by a World Bank loan, with the remaining households supported by the government’s own resources.  This rapid scale-up in beneficiaries has naturally strained the capacity of DSWD and project systems to maintain program integrity. 

Recognizing these challenges, the Bank is executing a technical assistance program, funded by AusAID, that is assisting DSWD in successfully rolling out the ‘4Ps’, while at the same time reducing the risks of error, fraud, and corruption. This technical assistance is providing advice on targeting, compliance monitoring, spot checking, and ensuring transparency and grievance redress.  It also includes the recently-completed agency-wide Integrity Development Review (IDR), a diagnostic tool that identifies corruption vulnerabilities and appropriate control mechanisms. The IDR has generated an Action Plan that will drive the Bank’s future support for DSWD in achieving GAC goals.  So far, DSWD has demonstrated strong commitment to the GAC agenda and has worked closely with the Bank in integrating risk-reducing mechanisms into the design of the CCT program. 

Transparency in Post-Disaster Reconstruction 

The Government of the Philippines’ commitment to improving governance is also evident in efforts to repair the estimated $4.4 billion in damage and loss caused in September-October 2009 by Tropical Storm Ondoy and Typhoon Pepeng.  Under the coordination of the Special National Public Reconstruction Commission, the government has established the Reconstruction Monitoring and Evaluation System (RMES) to track financial flows and physical progress on projects implemented by the government, private sector, non-governmental organizations and development partners.  The system also features collaboration with civil society groups to monitor progress and receive and resolve complaints from beneficiary communities.  Once fully functional, the RMES will produce quarterly reports to the public on how much and where money has been spent and on results achieved.  This will play an important role in supporting planning and accountability in the reconstruction process.

Civil Society Organization (CSO) Innovations

As mentioned above, the strength and vitality of civil society in the Philippines is justifiably respected across Asia. One recent example of civil society innovation is the work of Vera Files, a local non-profit that engages in investigative reporting.  Vera Files is developing a reputation for exposing the hidden or unexplained wealth of government officials, as well as corruption and abuse of power.  Recently the group uncovered anomalies in the statement of assets, liabilities, and net worth (SALN) of high profile public officials, including members of Congress.  Vera Files has also produced a simple guide for civil society on how to analyze the SALN and use it to expose unexplained wealth. 

Another promising example of civil society efforts to improve GAC is the newly-created CSO, Road Watch. This is a partnership of several CSOs that focuses on improving governance in procurement related to road construction and maintenance. Road Watch was created during preparation of a World Bank loan for the Department of Public Works and Highways (DPWH), but targets procurement beyond roads and beyond the World Bank. In monitoring road quality countrywide, the CSO makes the resulting scorecards available for public review through the Internet. Although only a year old, initial impact has been impressive.  About 100 civil society experts have been trained across the Philippines to assess governance in road work, and already several local officials have been punished for failing to use road improvement funds properly. The scorecards have become a valued resource for top management in DPWH, and officials say they can see benefits from Road Watch’s role, including a decrease in phone calls of complaint from citizens. 

The growing influence of non-profit, non-partisan groups, such as Vera Files and Road Watch, underscores the importance of civil society in addressing corruption and impunity in the Philippines.

Conclusion

By mainstreaming GAC approaches systematically across the World Bank’s portfolio in the Philippines, including strong collaboration with civil society groups, the Bank expects to develop a more ‘governance-sensitive’ portfolio during the CAS term. These changes are expected to lead to better risk management and deeper understanding of the political feasibility of reform objectives, with the goal of achieving more effective governance performance in the Philippines.

For further information about the governance program in the Philippines, please contact Mr. Matthew Stephens, Governance Advisor (mstephens@worldbank.org).