Harnessing OFW remittances

A NEWS report quoting a study conducted by a civic group, Atikha Overseas Workers and Communities, as saying that about 70 percent of overseas Filipino workers (OFWs) are unable to save or invest for themselves due to financial-management illiteracy reflects lost opportunity.

With 10 percent of the 92 million Filipinos, or 9 million, working abroad and sending money back home, there is so much money that could have been invested in productive enterprises.

Last year OFWs sent home $16.4 million. If the projection of the Bangko Sentral ng Pilipinas (BSP) proves right that the OFW remittances will grow 4 percent this year, these remittances will top $17 billion this year. Remittances have been valued at 10 percent of the gross domestic product (GDP) and have been credited with fueling household consumption, which accounts for 70 percent of the country’s economy.

For next year, the BSP predicts that remittances will grow by another 6 percent because of the global economic recovery.

Think how much impact it would have if the country can harness the potentials of this big money coming in from other countries every year, beyond fueling household consumption like the purchase of appliances and home improvements. To think that the exports of Filipino labor have been going on since the Marcos years in the 1970s, which at the time served as a safety valve for disgruntled Filipinos who couldn’t find jobs in the country.

The Filipino diaspora has continued since then. And, yes, OFWs were able to provide for the expenses of their families back home, for the purchase of household appliances and for the education of their children. But not much beyond that. We’re thinking in terms of savings and investments, not expenses for fiestas or other profligate ways that dry up savings. We’re thinking of making OFWs entrepreneurs.

Atikha executive director Mai Añonuevo says the OFWs’ failure to save and invest negates the opportunity to harness their remittances for developing communities, especially the rural areas, through the establishment of social enterprises funded by OFW money. This means creating businesses, owned by the OFWs and which will create jobs.

The biggest hurdle seems to be the lack of financial literacy of the OFWs themselves. We have to realize that most of these OFWs did not have training in business and finance before they left the country to work abroad. Neither did they have the opportunity to get training abroad because they have been busy working and earning.

The European Commission (EC) and the United Nations (UN) have taken the initiative to help by collaborating with local nongovernment organizations. They provided P52.3 million for various projects, including one that seeks to maximize the gains and minimize the social cost of overseas migration through the development of initiatives that will enhance the OFWs’ financial literacy and their families.

Mayan Villaba, who handles the “Enhancing the Capacity of Migrants as Partners of Economic Development” program, also funded by the EC and the UN, explains that remittances have the potential to develop rural communities and provide jobs to townsfolk, if OFW savings are invested in social enterprise.

This is really a matter of proper budgeting and goal-setting, says Añonuevo, and the OFWs will be able to save and invest for their future. We agree and we should work for that, because OFWs, after years of working abroad, will have to think about the time when they come back home for good. They would need something to do with their time and savings. Wouldn’t it be nice if they can contribute something to their communities with their enterprises that create jobs? - Editorial, Business Mirror, Wednesday, 18 November 2009 20:55