Beneficiaries of gov’t cash scheme turn to loan sharks | Inquirer News

Beneficiaries of gov’t cash scheme turn to loan sharks

/ 03:22 AM August 01, 2011

Loan sharks are preying on beneficiaries of the government’s P21-billion conditional cash transfer (CCT) program, pocketing 10 percent of the amount that the poorest of the poor get monthly, two lawmakers said on Sunday.

Ako Bicol Rep. Alfredo Garbin said a number of CCT beneficiaries in the Bicol region were willing to get just 90 percent of the cash in advance from the loan sharks so they could buy appliances and engage in gambling, such as “jueteng” and cockfighting.


Garbin and Eastern Samar Rep. Benjamin Evardone said they would block the plan of the Department of Social Welfare and Development (DSWD) to increase the CCT allocation by close to 90 percent to P39.5 billion in the 2012 budget unless Social Welfare Secretary Dinky Soliman could show that the money was not being spent on frivolous expenses.

The proposed fund increase for the CCT, or the “Pantawid Pamilyang Pilipino Program,” would expand coverage by 30 percent, from 2.3 million to 3 million families. In 2010, the CCT program covered only 1 million households on a budget of P10 billion.


The poverty reduction program, a continuation of the scheme started by the Arroyo administration, aims to encourage mothers in poor communities to send their children to school and undergo regular vaccinations, and to have checkups at health centers.

Under the program, each household can get between P800 and P1,400 a month in health and education benefits, depending on the number of children (at most three per family).

ATM cards

The CCT beneficiaries get their cash transfers every two months through automated teller machine (ATM) cards issued by state-run Land Bank of the Philippines and other handpicked banks.

In Bicol, the region receiving the biggest CCT allocation at P2.2 billion this year, a large number of beneficiaries have turned to “rediscounters” and “5-6” operators (who charge a 20-percent interest on loans) to cash in on the poor’s benefits ahead of schedule, Garbin said.

Risk-free lending

The microlenders pay the beneficiaries 90 percent of their monthly allowance and get the remaining 10 percent as profit, a lending scheme which Garbin and Evardone described as “risk-free,” considering that the loan sharks had obtained the borrower’s ATMs to ensure that they get their money back on time.


Garbin said the rediscounters were working in close coordination with DSWD officials who might be more motivated in ensuring that the ATM accounts were replenished every other month than seeing the beneficiaries go for checkups or send their children to school.

TV sets

The beneficiaries use their cash advance to pay for appliances, such as television sets and stereo components or gamble, according to the Ako Bicol lawmaker.

“It is not surprising that appliance stores and cockpits have been enjoying brisk business since the CCT (program) was expanded this year,” Garbin said in an interview.

Evardone also reported a proliferation of loan sharks and illegal gambling operations in Eastern Samar because of the expansion of the CCT program.

Higher sales

While the CCT program has spurred economic activity (higher sales of restaurants, grocery stores and secondhand clothes shops, along with higher attendance in public elementary schools), this has been overshadowed by the rise of “5-6” operators and persistence of the culture of mendicancy, he said.

Evardone said that even before the DSWD demanded a bigger outlay in next year’s budget for the CCT program, Soliman should first provide Congress with a comprehensive report on the distribution of the funds.

Fake names

Soliman should also report how the DSWD addressed complaints about fake names on its master list and the program’s alleged bloated handling costs (P4 billion this year) in the first six months of the year, he said.

While he agreed with the CCT concept of providing direct cash to those who need it, Garbin said its distribution should be based on work output.

“Since the beneficiaries are getting money without doing anything, they tend to spend it on nonessentials. It’s easy come, easy go,” he said.

“What we need to teach the poor is how to earn a living. For starters, we can use part of the CCT funds to hire workers to dig ditches, clean roads and help in disaster relief operations,” Garbin said.

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TAGS: Ako Bicol Rep. Alfredo Garbin, Bicol Region, Conditional cash transfers (CCT) program, Department of Social Welfare and Development (DSWD), Eastern Samar Rep. Benjamin Evardone, loan sharks
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