LAST week the Asian Development Bank hosted a conference on remittances for development. The conference was attended by a number of country representatives and companies offering new and innovative ways to facilitate money transfers from abroad. I was one of the speakers in the conference, where I spoke on a project called the Remittance Investment Climate Analysis for Rural Hometowns (Ricart).
Since 2010 Jeremaiah Opiniano from the University of Santo Tomas and myself have been developing ways of connecting remittances to local economic development. We have observed as early as 2008 that remittances growth in the Philippines has gone down from double-digit levels in the early 2000s to about 9 percent. From 2008 to last year, growth has settled to about 6 percent. In 2011 Ricart won a grant to implement a tool that will help local governments assist overseas Filipino workers (OFW) in finding investments and business opportunities in their localities that expectedly will bring positive externalities in terms of job creation and improved local business climate. We had initially implemented Ricart in Maribojoc, Bohol, and Magarao, Camarines Sur, in 2012; in Pandi, Bulacan, in 2013 and in Guiguinto, Bulacan, in 2014.
What are the key lessons from Ricart, thus far? It is a foregone conclusion that migrant families have more income and savings than their nonmigrant counterparts. The average monthly income of these families is about P15,000, and the average savings is about P5,000 per month. Other interesting findings are Migrant families have more people working locally apart from the remitter; migrant families have higher educational levels than their nonmigrant counterparts; migrant workers have the highest educational attainment, but are working as nonprofessionals abroad. Ricart also asked the families about their need for financial literacy. Only a little over half of the respondent migrant families are able to correctly answer interest rates, inflation and loans questions. Migrant families claimed that they get their own ideas in handling money and that they do not need help in the same. They also rate their skills in handling money as good. As regards owning a business, it was found that about 60 percent of both migrant and nonmigrant families own a sari-sari store or is engaged in farming and livestock as business.
These findings, though, not generalizable for the country, are able to give us a good snapshot of the environment for savings and investing by OFWs. It would seem that local government units (LGUs) need to work beyond the usual to maintain the savings and consumption of these families within its bounds. In particular, the LGUs (as like any other government agency) should be able to provide the nurturing environment for business in their localities. This can come in the form of providing basic information of what are the key competitive advantages of the locality, the business and investment options and facilitating business registration and processes. Many of the migrant families are actually spending their received remittances outside of their LGUs for lack of business activities there. It is recognized that remittances are private flows and, therefore, private decisions are made to where they go. In this regard, the government can only provide guidance through information to where private flows can be utilized to best benefit the whole locality. Another aspect that may be done or encouraged by the LGUs is the conduct of basic financial literacy. It can do so in partnership with schools and civil-society organizations. Participants should include both the migrant worker and his family.
We have been seeing a number of privately organized financial literacy seminars for OFWs and their families. However, they are mostly focused and catering to a higher income level group of migrants. Consider the table below by the author from the 2002 and 2013 Survey on Overseas Filipinos (SOF). This table compares the average monthly remittance of different types of workers by gender in 2002 and 2013. It can be clearly seen that professionals and executives comprise less than 20 percent of total migrant workers, although this has increased over the 10-year period. The average remittances also have relatively stayed the same. The bulk of the OFWs are actually in the lower-income service, unskilled and labor workers. This is significantly dominated by women. Note that the per-capita remittance levels have not increased significantly despite overall remittances breaching $25 billion in 2014. This implies that a large number of the workers who have left are no longer the professional type but the lower-skilled ones.
The Ricart data and the SOF data are pointing to the following: a) There is a need to provide basic financial literacy for OFWs and their families beyond the usual. Thus, private financial literacy seminars must consider income capacities and gender contexts; b) Because OFWs do not receive large amount of remittances but need social protection, the private sector must assist the government in designing and offering savings and investment products for lower-income migrant families; c) LGUs must expand their support for OFWs and their families by providing better information and facilitative services for business and investments.
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Alvin P. Ang is professor of economics and senior fellow of Eagle Watch at the Ateneo de Manila University.