Sun Star (Philippines) ran this editorial the importance of remittances filtering back to original immigrant workers’ homes on Tuesday 05/05/2015.
AS MORE workers elect to find better-paying jobs abroad, the money they send back home has overtaken the total amount of global foreign aid. In 2013, international migrants remitted US$413 billion to their home countries—about three times the amount of all foreign aid worldwide.
The economist Dilip Ratha, who cited that figure, said that remittances now represent “a hidden force in global economics.” Governments and financial institutions have long tracked foreign capital and official development assistance. Ratha’s view is that remittances, all those billions of “dollars wrapped with care,” could become a stronger driver of growth if more attention was paid to making remittances cheaper, safer and more convenient.
That’s sound advice for policy-makers and regulators in the Philippines, where at least one in every 10 households now depends on money sent home by a loved one toiling away overseas.
Last year, overseas Filipino workers (OFWs) sent P38,000 a month, on average, the Philippine Statistics Authority recently reported. In 2013, Ratha said, the global average remittance was US$200 or roughly P8,931 a month. Unlike foreign capital, workers’ remittances do not stop in times of trouble or calamity at home; instead, these tend to increase. The term for that is “diaspora giving.” (For more on this phenomenon, view Ratha’s October 2014 presentation, “The hidden force in global economics,” on Ted Talks.)
Given how much we depend on such remittances, two suggestions by Ratha make sense: first, that the costs of sending money home be brought down further; and second, that all efforts be exerted to stop illegal recruiters, whose fees eat up a large part of remittances long before these reach overseas workers’ families.
The Bangko Sentral ng Pilipinas (BSP) has taken some helpful steps, like allowing non-banks to offer financial services. We see that in the hundreds of pawnshops that now double as remittance agents. A related challenge for the BSP is spreading financial literacy among OFWs and their families, so that their hard-earned funds are put to more productive uses like education and investment, rather than being frittered away on lifestyle goods and the latest gadgets.