Overseas Filipinos Remittances for Development Project: Building a future back home
Jojo delos Santos is a 47-year-old father of two from Bohol province, in central Philippines. Each year, Jojo leaves the warmth of his family to spend seven cold months in the Arctic Ocean working as a cargo ship engineer. Jojo is typical of the phenomenon that is the Overseas Filipinos Worker (OFW), now estimated at 10 million and deployed in 197 countries. Most OFWs are motivated by economic reasons to ensure that their families have a better life – food on the table, education for the children and over time a house, a car, other amenities of comfort and leisure, and some investment.
"With the money I've earned after many years of working abroad, I was planning to buy a house and lot so we no longer have to rent a small place. This house will also be big enough for my kids and their own families when they get married," Jojo says. His wife, Alice, is a high-school teacher, and is unemployed. Jojo adds "I also want to start a tutoring school for my wife for students who want to pass college entrance exams. It's a nice idea because my family doesn't have to depend entirely on the money I send, and it can help high-school graduates get into college as well."
It would have been ideal to put earnings from working overseas to savings and investments, but like most OFW families, Jojo's family has been caught in the consumer spending trap. Money he had sent home was spent on needless luxuries. Rather than investing in the future, Jojo's remittances bought an expensive car, mobile phones, and trips out of town. Although his wife managed to set aside a small sum for the tutorial school, she lacked the training and thus, the confidence to run it.
- An average of 3,700 Filipinos leave daily either to work abroad or migrate permanently, making this sector the country's top dollar earner in the last two decades.
- UNDP and Western Union launched the Overseas Filipinos Remittances for Development: Building a Future Back Home (OFs-RED) Project with the Philippine government to tap the potential of overseas remittances for local economic development.
- With pooled overseas remittance going to development, the investments are expected to stimulate a flurry of economic activity, especially among the poor.
An average of 3,700 Filipinos leave daily either to work abroad or migrate permanently, making this sector the country's top dollar earner in the last two decades. Overseas Filipinos often work as doctors, physical therapists, nurses, caregivers; accountants, IT professionals, engineers, architects, technicians, teachers; entertainers; military servicemen; seafarers; and domestic helpers. The Philippines is now the 4th largest recipient of foreign remittances behind India, China, and Mexico. An estimated 20% of all Filipino households receive remittances. In 2010, Overseas Filipinos sent home US$ 18.76B –an enormous amount that remains to be tapped for development.
The consumption spending mind-set needs to change. Overseas remittances offer a huge potential of producing a multiplier effect that might stimulate the economy.
Remittances for Development
On April 5, 2011, UNDP and Western Union, the global leader in money transfer services, launched the Overseas Filipinos Remittances for Development: Building a Future Back Home (OFs-RED) Project with the Philippine government to tap the potential of overseas remittances for local economic development.
The OFs-RED project believes that overseas remittances taken collectively could become a powerful driver of development, with emphasis on investing in economic opportunity. On another hand, the public policy landscape must encourage investment and ownership of income- generating projects must lie with migrant workers and communities. The project will thus support the creation of an enabling environment to encourage OFs to save and invest. In partnership with local governments, two pilot sites will test a model that will channel collective remittances into job-generating ventures rather than the usual donations to charities, waiting sheds, or basketball courts that already abound in the country's rural areas.
OFs-ReD will identify business ventures that OFs could choose to invest in. Ventures will focus on essential social services that support the achievement of the Millennium Development Goals (MDGs).There will also be opportunities for those willing to invest in agricultural businesses, including cottage industries and microfinance organizations.
These ventures will be financed by a collective remittance fund earmarked for the OFs communities. UNDP will also be working to raise the national and local capacities of local governments in managing the project. OFs families will learn financial literacy and the benefits of savings and investments.
Providing Jobs for Family and Community
With pooled overseas remittance going to development, the investments are expected to stimulate a flurry of economic activity, especially among the poor. Many OFs come from this sector and the lower-income classes, and by pooling their remittances, they can be empowered to leverage their interests in the economic arena. In the end, this will be a very meaningful outcome of their hard-earned money – a feeling of reassurance that may well keep Jojo warm during those long, cold months at sea.