OFWs and their families to be taught financial literacy, entrepreneurship

By Ibarra C. Mateo/GMANews.com – A consortium of international organizations, led by the United Nations and the European Union, together with the Philippine government, on Thursday launched the three-year “joint migration and development initiative” focused on teaching financial literacy and entrepreneurship skills among overseas Filipino workers (OFW) and their families.

The Philippines is among the eight countries chosen by the European Union, the Swiss Federal Department of Foreign Affairs, and the Swiss Agency for Development and Cooperation, as part of the global “Joint Migration and Development Initiative Phase II Project” (JMDI 2) worth 430 million pesos. The Philippine JMDI 2 begins in the last quarter of 2013.

The Philippines joins Nepal, Morocco, Tunisia, Senegal, Ecuador, El Salvador, and Costa Rica in the global project to be implemented locally by the United Nations Development Program, International Organization for Migration, International Labor Organization, United Nations High Commissioner for Refugees, United Nations Fund for Population Activities, and the United Nations Entity for Gender Equality and the Empowerment of Women.

In an interview, Secretary Imelda Nicolas of the Commission on Filipinos Overseas (CFO) said the Philippine JMDI 2 seeks to highlight the contribution of migration for development at various local levels, with the Philippine government strengthening “conduits of remittances for development” and “remittances as investments” at the regional, provincial, and local government levels.
CFO is the main coordinator, overseer, and monitor of JMDI 2 in the country. It partners with the regional offices of the National Economic Development Authority (NEDA), the Regional Development Councils, and other local entities such as locally based non-governmental organizations, academic institutions, private sector organizations, the Union of Local Authorities of the Philippines (ULAP), and the Local Government Academy.

Nicolas said the Philippine JMDI 2 is expected to be piloted in Region I (Ilocos Norte, Ilocos Sur, La Union, and Pangasinan), Region IV-A (Cavite, Laguna, Batangas, Rizal, and Quezon), and Region XII (Compostela Valley, Davao del Norte, Davao del Sur, and Davao Oriental).

“These regions are among the top senders of OFWs,” she said.

“The project will use existing regional and local institutions to enhance capacity-building, notably the teaching of financial literacy, entrepreneurial skills, how to channel remittances for development, and how to identify investments opportunities where remittances can be put into,” Nicolas said at the sidelines of the Philippine launch of the JMDI 2.

“Rural banks, micro-financing institutions, local cooperatives, and other existing institutions in particular areas can be used to channel remittances as investments,” she added.

“An OFW can be a lender to rural banks or to micro-finance institutions, where they can get higher interest rates compared to saving in a regular bank. If a micro-finance institution can give an OFW investor six percent in interest rate on his investments, that is good enough,” she further said.
“What we want are viable and sustainable investments for OFWs and their families. We do not want scams such pyramiding in this project.”

Nicolas said most of contractual OFWs return to the country without any substantial savings or retirement funds to live on, forcing them to repeatedly and serially look for jobs abroad.

“Financial education and literacy are very important for the OFWs themselves and to the families they leave behind here. Most of the time, family members here in the Philippines demand excessively and unreasonably from the OFWs,” she said.

“The OFWs themselves and to the families they leave behind here need to know how to budget, how to do financial planning, and how come up with the dream map. A dream map means in five years, they want to achieve this. In 10 years, that. They need to know how much savings or money must be set aside every month to attain this dream map,” Nicolas said.

Nicolas emphasized that OFWs and their families “must learn the first lesson: save first before spending.” Most families of OFWs “spend first and then save what is left after spending, if there is anything left,” she said.

“No. That is not the case for financial literacy and education,” Nicolas said, adding the OFWs and their families must decide how much they must save every month to attain their dream house or save for their retirement fund within a given time frame.

A World Bank study revealed that financial education and literacy become “most effective” when given to OFWs and their families, Nicolas said. “It should be given both ways, to the OFWs themselves and the families they leave behind.”

During the JMDI 2 launch, various UN and EU officials said the estimated $24 billion in OFW remittances in 2012 alone is “a huge potential” to support the Philippine government’s goal to achieve inclusive growth and to decisively reduce poverty.

Toshihiro Tanaka, UNDP country director, said the Philippines remains a major source country of migrants, with OFWs numbering more than 10 million posted in over 200 countries.

The US$24 billion worth of remittances of Filipino migrants in 2012 “has made the Philippines the third largest recipient of foreign remittances behind India and China, and in the same ranking as Mexico,” Tanaka said, adding an estimated 20 percent of Filipino households receive remittances.

Hans Farnhammer, head of operations of the EU Delegation to the Philippines, said, “[T]he EU supports harnessing the potential of migration for poverty alleviation through good use of the remittances and a productive reintegration into the job market after returning from abroad.”

Rebeca Grynspan, UN undersecretary general and also the UNDP associate administrator, who is in the Philippines for the launch, said “the good practices identified by the first phase of JMDI showed the importance of efficiently linking civil society initiatives with local development processes in order to reach sustainability and development impact.”

The JMDI 1, implemented from 2008 to 2011, showed the central role that local authorities play in bringing sustainability and reinforcing the impact of migration and development initiatives.

While the JMDI 2 highlights the strong need to anchor migration and development interventions with local authorities as the main institutional actors, in partnership with civil society organizations.

Ivo Sieber, Swiss ambassador to the Philippines, said the Philippines “is one of the most suitable countries to upscale migration and development initiative given its decentralized local governance, and that Filipino migrants return to their hometowns when they retire from their work overseas.”

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