Philippines Overseas Foreign Workers (OFWs) remit more than 20 Billion US dollars every year to their country. At our own home, Remedios has been taking care of our household for past five years and sending her monthly salary to support  her three school going children, ailing seventy-five year old mother, and an unemployed brother who hasn’t got a job in last two years although he has earned a Diploma in computer maintenance. Remy has eventually learnt to save for herself by remitting a part of her money to her own home-country savings account and the remaining balance to her mother.

In general, OFWs find it difficult to overcome their past financial difficulties, as they keep remitting money to their family members or next-of-kin and finally not saving enough money for themselves. They are a bunch of extremely kind and humble people and would not refuse anyone when asked for help or a money loan. As a result, they continue to stay as poor and return home with little savings and hope for the future. This situation can only change when their employer coaches them to remit money to their own savings account that could probably help them one day to start a small business of their own, as and when they eventually decide to return home. Last year from Accenture, my team and I went on a study mission in the Philippines and we discovered few startling facts that I would like to share here.

About 70% of the total remittance (US$ 20 Billion) happens through banks in overseas and 22% of the remittance happens through other channels. About 57% of the OFWs don’t have savings from the Cash remittance sent. Less than 25% of the total amount remitted is being saved by majority of the population.

There is near-absence of any major and mature downstream ecosystem for cash flow (digital financial service) after a Cash-out is made by the beneficiary from local remittance agent. Existing remittance systems, benefits the remittance beneficiaries and not the senders, the OFWs in this case. I would share in one my next posts, amazing works of Dr. Jaime Aristotle B. Alip, MD of CARD MRI. I had met him last year, when card MRI already had more than 2.5 million poor families with a total outstanding loan of more than Peso 9 Billion. Total asset of CARD MRI is more than Peso 17 Billion, and they have more than 7000 dedicated staff workers, while under CARD micro-insurance they have included and insured more than 9.7 Million citizens.

The Philippines is ranked as the third biggest recipient of remittances, and yet more than half of the families are dependent on remittances as source of their daily sustenance and they do not apportion any significant amount towards their personal or family savings. Poor personal financial management has been a key problem of Filipino OFWs and their families at home, well over decades now, and the interventions introduced by the government have still been less than adequate, despite many programs that are currently running. In fact, four of five Filipinos still do not have a savings account. Mobile Money ecosystem is available only for those who have SMART or GLOBE mobile number. Mobile wallet access is not available for OFWs who have an International MSISDN. OFW can remit money to the families through GCash and SMART Money. Unfortunately, in most of the cases. the OFW doesn’t have any control over the money once sent to the Philippines.

Financial Literacy Programs, Raising Self Awareness. Period!

Check your device loudspeaker, and watch this Video..

Notable mention and admiration is due to USAID’s Scaling Innovation through Mobile Money (SIMM) Project that is aligned with the Philippine Government’s thrust of promoting financial inclusion by expanding citizen’s access to formal banking and financial services and improving accountability and security in government transactions through digitisation of payment and collection systems. http://www.usaid.gov/philippines/press-releases/us-government-and-quezon-city-launch-mobile-money-system