Using OFW money to beget more money

(First published in the Philippine Daily Inquirer, Business Monday, August 15, 2011)

by Serenidad F. Lavador

Can the role of our overseas workers in the economy be enhanced to make them true-blue “mga bagong bayani?” Besides spending their hard-earned money on food, appliances, real estate and other nonproductive or dormant assets, can OFWs be enticed to go into business or other productive activities that generate continuing income for them, their families and their communities?

A brief look at the OFW phenomenon may perhaps help in answering these questions.

With an estimated 1,420,000 Filipinos working abroad as migrant workers and 3,900 more leaving each day, their remittances not only continue fueling the economy by generating much-needed dollars for the national treasury, but also assure  the sustained improvement of the living conditions of many of the workers and their families.

Wealth creation

In 2010, the Philippines recorded $18.76 B in OFW remittances.

Money, it is often said, begets money. Apparently, however, OFW money has not resulted in the creation of more wealth.

Paradoxically, even as more and more Filipinos leave the country to work abroad, the poverty incidence in the Philippines has not subsided.  Despite bigger amounts being remitted by our migrant workers, there is little evidence to show that the economic benefits have trickled down to the poor communities where the workers originate.

Moreover, even immediate families of migrant workers are not being guaranteed an improved economic condition over the long haul.

According to the Episcopal Commission for the Pastoral Care of Migrants and Itinerant People of the Catholic Bishops’ Conference of the Philippines, 60 per cent of the families of OFWs remain poor. This is especially true among domestic helpers and other workers in the unskilled-labor category, who mostly return home broke because they have not saved for the future or do not know how to make productive use of the little funds they may have managed to set aside.

Harnessing remittances

Thus the concern among policymakers now is no longer how to increase the amount of OFW remittances but rather how to harness the remittances for wider-scale socio-economic development and longer-term growth that could only come from investments in business and agri-business, self-employment, and other job and income-generating activities.

A study completed this year by the Small Enterprises Research and Development Foundation (SERDEF) and the UP Institute for Small-Scale Industries (UP ISSI) sought to address this concern by analyzing how migrant workers’ remittances can be channeled to productive use.

Commissioned by the International Organization for Migration under the Spanish-funded MDG-F Program on Youth Employment and Migration being implemented by the ILO, IOM, UNFPA and UNICEF, the study identified ways to make use of OFW remittances for the development of the migrant workers and their families and communities.

The study, titled “Channeling Remittances for Development: A study toward Creating Model Mechanisms,” produced  blueprints for appropriate interventions  that can be pilot-tested in four Philippine provinces targeted by the UN Joint Program: Agusan del Sur, Antique, Maguindanao, and Masbate.

From the literature review, focus group discussions and value chain analysis carried out under the study, it was recommended that migrant workers’ remittance flows be channeled to enterprise creation through market-oriented interventions in the target provinces.

Photo: “migrant workers” by Rex Pe, c/o Flickr. Some Rights Reserved

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4 Comments on Using OFW money to beget more money

  1. I work as project development specialist of PADCC, an attached corporation to the Department of Agriculture as its investments arm. We are currently preparing a project concept on establishing an Agri-investments Fund which aims to tap OF’s remittances to fund agri-investment projects. Anent to this, we would like to request for copy of your study on ‘Channeling Remittances for Development: A study toward Creating Model Mechanisms’ which we deem a very helpful material to the completion of the project concept. We hope this request merits your kind consideration. Thank you.


  2. Hi Johnny. We have alerted the approving authorities regarding your request for a copy of the study. We should be able to let you know the response by early next week. Thank you. – admin

  3. Hi again Johnny. We referred your request to Mr. Ricardo Casco of IOM, sponsor of the research study on Rechanneling OFW Remittances. In response, he asks that you write to him directly at this address:

    Mr. Ricardo Casco
    Head, Labour Migration Unit
    International Organization for Migration (IOM), Manila
    25th Floor, Citibank Tower, Paseo de Roxas
    Makati, M.M.

    Mr. Casco, who remembers meeting you in a recent forum or gathering, has also asked for your email address. We gave him the email you registered with when you posted your comment here.

    Thank you for your interest in our study.

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