Suits The C-Suite

(First of two parts)
What is the value of P1,500? Of P3,000? For “Raf” of Sta. Cruz, Marinduque, it was the means by which his parents were able to provide him with a pair of slippers, eat breakfast and stay in school. The same sums allowed 10-year old “Jennifer” and her siblings from Guiuan, Eastern Samar to attend school and take notes with pencils and paper. Grade 5 star section pupil “Jeric” of Anini-y, Antique is able to attend his school’s journalism and math workshops as the project fees, as well as food and transportation allowances, are taken care of.
These are but three out of hundreds of stories from thousands of data points that we previously gathered when our teams visited the homes, schools and communities of the Zero Dropout Education Scheme (ZeDrEs or Zero Dropout) program beneficiaries, covering over 30 locations all over the country.
The ZeDrEs program was conceptualized and initiated by the late SGV Founder Washington Z. SyCip and is implemented by the Center for Agriculture and Rural Development — Mutually Reinforcing Institutions (CARD-MRI). The program aims to enable Filipino children, especially the poorest of the poor, to enroll and complete their elementary education by providing micro-loans for school needs. Mr. SyCip believed that proper basic education can help us rise above poverty, achieve development and bring about change in our nation, and this conviction led to an all-out declaration for a zero drop-out goal in at least basic education.
The visits by SGV’s ‘Operation Zero’ teams were part of a three-step process in conducting an impact engagement:

1. Financial audit;

2. Program validation; and,

3. Improvement identification.

Under program validation, our teams visited the homes of the clients (i.e., borrowers and their beneficiaries) to gain a first-hand view of their living conditions and learn how the program has helped them gain access to primary education. The visits included meeting the teachers of the beneficiaries to gain an insight into school enrollment, class performance, and attendance, as well as meetings with municipal and provincial, school heads and local business organizations (e.g., cooperatives) to gather insights on what still needs to be done to improve the local conditions. The engagement yielded insightful information that helped inform discussions with policy makers and stakeholders and lead to practical recommendations — from risk management and control improvements to even the development of a crowdfunding platform.
The locations selected for the visits registered the highest dropout rates and poverty incidence based on data from the Department of Education and the then-National Statistics Coordination Board, which has now been folded into the Philippine Statistics Authority. In addition to the field visits, the process involved analyses and exchange of information, with the objective of putting into proper context the data and definitions being used for policy formulation and investment formation — and how developmental and economic issues can be properly framed using ground information.
The teams faced complex issues and the combination of grounding activities, a thematic approach to reviewing the issues as well as applying a systems thinking approach was vital. While the audit and validation activities were ongoing, the teams also needed to make sense of the macroeconomic data and social indicators that are interdependently used for policy making, investment and spending decisions.
In this article, we look back at some of the unintended socioeconomic dimensions of this impact engagement experience that could be relevant to the government’s push to eradicate poverty and the private sector’s goal of achieving inclusive business, in the hope of attaining shared prosperity for all. The experience included recommendations and insights that not only helped the program itself, but also informed the country’s development agenda and even provided business risk assessments for the financial sector who wanted to increase their exposure allocation for inclusive sectors. For instance, having catalogued areas with high malnutrition cases during their field work, the Operation Zero teams eventually worked with policy makers and stakeholders to help prioritize and redirect agri-development initiatives to address not only malnutrition but support agri-value chain financing and investing initiatives for growth locations and priority commodities.
One issue that needed to be clarified is on the definition of the “Poorest of the Poor,” a key target not only of the ZeDrEs program but also by policy makers to help decide the level of budgetary support. What does “Poorest of the Poor” mean? Quantitative thresholds provide the most common measure and globally these would pertain to those whose income is below the poverty line of $1.25 per day (P62). In the Philippines, cooperative groups generally use $2.50 (P125) as the poverty threshold. Based on the data available and field observations, the Operation Zero teams evaluated and identified the provinces with extreme poverty levels and the related structural issues and correlated factors. There seemed to be a persistent relationship between education drop-out, poverty and the dearth of quality and connected infrastructure, not to mention political governance.
In the second part of this article, we will continue the discussion on the impact of extreme poverty, as well as taking a corridor approach to development.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.
Christian G. Lauron is a Partner of SGV & Co.