COVID-hit OFWs need revamped lending programs
Most of the nearly million overseas Filipinos who have gone home after losing their jobs abroad due to COVID-19 are in bad shape financially and need meaningful and sustainable aid from government, not simply dole outs.
What they need most are practical and accessible aid – not simply pies in the sky which look great on paper, but which are hardly accessible.
To the government’s credit, it provides different programs that help displaced OFWs and other needy segments of society. Different agencies, including OWWA and the Department of Trade and Industry (DTI) and its attached units, had been tapped to provide a wide array of technical and financial assistance.
But while the aid programs are a welcome gesture, gaining access to them can be frustrating and even mind boggling. Why set up and offer programs not easily accessible and which don’t take into account the peculiar needs and circumstances of OFWs?
The vast majority of OFWs are now screened out and do not have access to government lending programs, most of which cater mainly to those with existing businesses and those with established profit track records. OFWs with start-up livelihood projects do not qualify to most lending programs.
Sadly, government agencies, like the Land Bank of the Philippines (LBP) and the Small Business Corporation under the Department of Trade and Industry (DTI) often operate like typical private companies, driven mainly by profit, hardly by social amelioration concerns.
Cases in point are the ₱2 billion OFW Reintegration Credit Program which the LBP has been running jointly with OWWA since 2011, as well as DTI’s lending programs that it offers via its attached agency, Small Business Corporation (SBC).
On July 11, Land Bank President and Chief Executive Officer Cecilia Borromeo reported gains that the bank has achieved in the OFW Reintegration lending scheme despite COVID-19 as total approved loans to 176 borrowers increased and reached ₱219 million between March 15, 2020 and May 31, 2021. However, a cursory glance of the figures shows that only 176 OFWs successfully obtained loans during the 14-month period, or just 12 people each month. The puny number of loan recipients certainly pale in comparison with the hundreds of thousands of OFWs who have lost their jobs due to COVID-19 and most of whom must have been keen to set up small businesses only if they have access to government loans. More likely than not, more people would have availed of LBP’s OFW
Reintegration loans if they were offered much easier lending terms than usual.
Remarked a Hong Kong-based Filipino office worker who once attempted but failed to secure from Land Bank an OFW Reintegration loan: “I thought I dealt with a private bank. They [LBP officers] were not interested in funding a start-up project and one of their foremost concerns was what collateral I could put up to secure the loan that I was seeking."
Just like the joint LBP-OWWA OFW Reintegration lending program, access by OFWs to another major government lending program is very tough.
At first glance, loans on offer under DTI’s Bayanihan CARES or COVID-19 Assistance to Restart Enterprises lending program look very attractive. Borrowers need not pay any interest at all, and they also need not put up any collateral or security for loans. There’s a big catch though: Most OFWs are not qualified for Bayanihan CARES loans since the program is only for those with existing businesses that earn profits. First-time entrepreneurs are unwelcome and not qualified.
DTI’s SBC unit offers another fancy-sounding lending scheme, called Helping the Economy Recover thru OFW Enterprise Start-ups or HEROES, but loans are capped at a maximum of ₱100,000. Amid escalating costs, putting up a new business with capital of just ₱100,000 looks dubious, with business permit in Quezon city, for instance, already costing about ₱25,000.
As the unabated COVID-19 crisis throws more and more OFWs out of jobs and force them to return home, it is clear that the government needs to respond to a potential “repatriated jobless OFWs crisis.” One of the best ways to address this is to revamp existing lending programs to accommodate more ex-OFWs, including first-time aspiring entrepreneurs.
The following should be looked into to defuse a potential “repatriated jobless OFWs crisis”:
1] Open a new lending program or window for start-up livelihood projects or raise the loan amount under DTI's HEROES program.
2] Make loans interest and collateral free, just like DTI’s lending schemes.
3] Ensure mentors assist loan recipients for the first 12 months or longer to enhance the success of the latter’s livelihood projects.
4] Make loans payable starting the second or third year of operations of a start-up business to give a start-up business ample time to grow and start earning profits.
5] Ensure loan recipients are closely assisted by DTI and other agencies in their marketing, product design, technology and other technical needs.