Migrant remittances sent by an estimated 150 million migrants worldwide have been on top of policy agenda of the policy makers and became the subject of many studies and debates deliberately dissecting their positive and negative impact. Remittances in 2003 were estimated at US$ 200 billion, up from $155 billion in 2002.
The results of these studies were staggering and the conclusion was remittances are twice more than the official development aid which prompted the World Bank to devote its Global Economic Prospects 2006 report to remittances. According to GEP 2006 report, remittance flows to developing countries in 2006 are estimated at US$207 billion. This was a forecast. The latest report of International Fund for Agricultural Development (IFAD) titled Sending Money Home, valued remittances in 2006 more than US$ 300 billion. Asia received almost US$ 114 billion in remittances annually, the highest regional total in the world. This is just the recorded amount sent through formal channels. There is no data of the value of remittances sent through informal channels such as the hawala or padala but estimates pegged them at 50% of the total amount sent through formal channel.
The amount is now estimated as twice the foreign direct investment and three times the official development aid (which stood at US$104 billion in 2006). Migrant remittances are now considered as a new form of development aid and the lifeline of millions of families and most of them live in the rural areas.
Critics of remittances argued that 80% of the money sent by migrants to their families is spent on consumption such as food, clothing, and housing and therefore, they are not productive. Furthermore, remittances do not contribute to the economy at the macro level. The critic has miserably failed to see beyond the statistics the considerable impact of remittances in improving the quality of life of the poor people.
To illustrate, there are 8 million Filipinos living and working abroad. Last year, overseas Filipinos sent the amount of US$ 12.6 billion. Assuming that the amount is spent on education and at least one migrant supports the education of one child; we can conclude that 8 million children go to school funded by remittances without relying on the government or development aid. This is an optimistic estimate. Even if we cut the figures down into half, at least 4 million children or young people are able to go to school in the Philippines with the help of remittances. If this is the case, is this not enough evidence that diasporas contribute to the development of their countries of origin?
The United Nation’s Millennium Development Goals goal number is to achieve universal primary education. Governments, development agencies, civil society, and the general public are being mobilized to help achieve the target in 2015. However, MDGs did not account the impact of migration and its contribution in achieving the targets. It is in the same light that Poverty Reduction Strategy Plan has not incorporated the impact of migration.
Migrants’ families spend a large chunk of the money they receive for food. MDG no. 2 aims to eradicate hunger and poverty. Millions of families including in the rural areas are no longer suffering from hunger because of remittances.
Despite the huge amount of remittances, critics say that remittances do not contribute at all to sustainable development. Again, this conclusion is based on a myopic analysis. Remittances are small amount of money ranging from US$ 200 to 300 sent by migrants to their families every month. Considering the high costs of commodities and expensive education, surely it is not realistic to expect that families have still money left for investments and productive activities.
However, since the money is spent on food, clothing, shelter and education, they do contribute to local and national economy. Food and garment industries continue to thrive because migrants’ families continue to buy their products. Building houses creates jobs for carpenters and construction companies. Schools continue to operate because children of overseas Filipinos can go to school.
What is a big deal if migrants spend their hard-earned money for consumption? And why as if we blame migrants for only spending 20% for productive activities and therefore, they do not contribute to development? Why can’t policy makers tell business companies which earned millions from migrants’ remittances to invest a portion of their profits for productive activities, one which will create jobs and spur sustainable development?
Migrants do not only assist their immediate families. Hometown associations are formed in almost every country where migrants work and live and engaged in diaspora philanthropy. Some provide start-up capital of social entrepreneurial activities. For example in the Philippines, the Coco Natur OFW and Producers Cooperative was established last March 30, 2007 in San Pablo City, Laguna. Atikha stimulates overseas Filipinos to invest in virgin coconut oil enterprise. To be an investor and to join the Coco Natur OFW and Producers Cooperative, an individual has to buy a share at PHP 100 for a minimum of 5 shares. For OFWs, the minimum share is 50 shares or PHP 5,000. Among the first investors are members of Overseas Filipino Workers – Mutual Benefit Corporation OFW-MBC which is based in San Francisco, California. The money raised by holding a benefit dinner.
The lack of opportunity for poor children to school motivated Bansaleños abroad to band together and start raising funds to support the education of the poor but deserving pupils in their hometown Bansalan through their “Give Back Campaign.” The same motivation that prompted the members of Damayan to raise funds in the Netherlands so they can support children in Paquibato (Davao City), Dugong (North Cotabato), and Lake Sebu (South Cotabato). They also support in building a town market in Misamis Oriental. The members of Damayan are mostly from Mindanao.
The efforts of diasporas in Mindanao are finally given a boost when Misamis Oriental governor Oscar Moreno signed a Memorandum of Agreement dubbed as the "Uno Por Uno Initiative." The MOU was signed by Moreno and representatives of Habagat Foundation, Damayan Association in the Netherlands, BisDak Network Netherlands, and the newly formed Overseas Filipino Caucus for Sustainable Development which match peso-for-peso the investments made in the province by OFW groups. It will be a positive action if this initiative will be replicated all over Mindanao similar to the 3 x 1 programme of the Mexicans where local, provincial and national government matches one dollar each to every dollar Mexican diasporas invest on development projects in their respective hometown.
The central bank, Bangko Sentral ng Pilipinas (BSP), said it had prepared measures to make more transparent the mechanisms for money remittances from overseas Filipino workers (OFWs) and to cushion the adverse impact of a strong peso on households supported by OFW incomes. Among the services which BSP proposes to undertake are: improve OFW families’ access to financial services, rural banks will be allowed to service foreign exchange remittances as well as buy and sell foreign exchange; issuance of acceptable IDs to encourage OFWs and their families to use formal banking channels; and conduct massive financial literacy. These plans if translated into concrete action would surely help in the sustainable use of remittances and will benefit migrants’ families and the country in whole.
However, cutting the cost of transaction is not enough to propel development. The government should look for ways and means how remittances could eventually help create jobs and strengthen the local economy by urging migrants to save and invest. Likewise, the government must be able to stimulate highly skilled overseas Filipinos to share their skills and talents for the country.
A lot of recommendations to harness the potentials of remittances have been put forward at the international levels.
The UNDP Africa Regional Conference on Migration, Remittances and Development was held last August in Accra, Ghana to create an intra-Africa dialogue including the diasporas on strategic options for optimizing the development impact of migration and remittances and provide recommendations for actions (including public-private partnerships) to all relevant stakeholders in the context of the outcome of the High Level Dialogue on International Migration and Development convened by the Secretary-General at the United Nations in New York in 2006.
The International Fund for Agricultural Development (IFAD) and the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB) hosted the 2007 International Forum on Remittances at the IDB Conference Center in Washington DC, on 18-19 October 2007.
The Forum brought key players together to raise awareness of the challenges and opportunities of remittances and to shed light on the rural dimension of these flows, estimated at 40 per cent of total flows. In addition, the Forum explored the links between remittances and banking, technology and microfinance, and discussed ways to integrate development agencies’ agenda on remittances. The two-day event included a series of roundtable discussions and working groups devoted to an in-depth exchange of ideas and business models for urban and rural remittances worldwide. Sessions within the Forum covered such topics as financial inclusion, migrant investments, gender dimension, technology, innovation and development.
Finally, on November 28-30, the German Government hosted the G8 Outreach Meeting on Remittances in Berlin. The high-level meeting has two objectives: First, the aim is to assess the progress of measures to facilitate migrant transfers agreed at the Sea Island Summit in 2004. Second, the conference is intended to initiate a dialogue on new channels for transferring funds, instruments to promote migrant transfers and other potential measures. At the end of the conference, the participants also underscored the importance of engaging diasporas as partners in development.
The non-state actors are also actively involved in finding ways and means on how to harness the potentials of remittances for development. The International Network of Alternative Financial Institutions (INAFI) organized a global conference on Microfinance, Remittances and Development in Cotonou, Benin last November 7-9. During the conference of European Microfinance Platform in Luxembourg last November 27-29, workshops on financial literacy and mobilizing remittances for investments were conducted.
I had the opportunity to attend as a speaker to all the above-mentioned international conferences. I have been asked to share the experiences of Oxfam Novib in engaging diaspora organisations in development. This effort to involve development agency like Oxfam Novib is recognition that policy makers finally realized the need to engage diasporas in development.
What is still glaringly absent in the international discourses and debates on remittances is the rights-based perspective of international migration, particularly the plight of the female migrant workers. The policy debates are also heavily focused on data collection and reducing the cost of remittances. These projects get a lot of financial support from international donors resulting to the proliferation of money transfer operators and an enormous amount of research work on data collection.
Financial literacy for migrants and their families are often cited as an important part in maximizing the benefits of remittances but there are very few actors which are involved in this work at the grassroots level. Most of the activities are done by the civil society and the diasporas organizations themselves but it is extremely difficult for them to secure financial support from the international donors. Is it because the results of the financial literacy (awareness raising) activities and services difficult to measure unlike supporting financial institutions engaged in providing concrete financial products?
Professor Leonor Briones, co-convenor of Social Watch Philippines aptly described the lack of attention given to the overseas Filipinos when she said “remittances by the OFWs serve as social insurance for their families, shielding them from environmental risks but ironically, they do not get their needed social protection while working abroad and when they eventually come back.”
This lack of protection applies to all migrant workers worldwide. Focusing on financial side of remittances but ignoring the plight of migrants is like killing the goose that lays the golden egg.
The next Global Forum on Migration and Development (GFMD) will be held in Manila in October. The Philippine Government will host the event. This is an opportune time for NGOs, migrant organizations and other stakeholders to push forward some policy recommendations in order to maximize the development potentials of Philippine international migration. [Leila (Lalay) Rispens-Noel, a native of Bansalan, Davao del Sur, left for the Netherlands in 1979. She was former staff member of Mindanao-Sulu Secretariat for Social Action (MISSSA). Aside from being a wife a mother of two grown up sons, she works as programme officer in a Dutch development agency. She devotes here free time in supporting small development projects in Mindanao. Her passion is to encourage fellow migrants to harness the development potential of migration and to harness their skills, resources and talents for the development of the local areas. Visit her blog: http://diasporajurney.blogspot.com
You can contact her at [email protected]]