Microfinance institutions told to tap OFW remittances

CEBU, Philippines - The Microfinance institutions (MFIs) including the rural banks engaged in micro financing are encouraged to tap the remittances of Overseas Filipino Workers (OFWs) and Filipino migrants as source of microfinance funds.

Based on the Central Visayas Regional Development Plan for 2011 to 2016, the availability of microfinance for small businesses is one of the vital drivers to sustain and grow the economy in the region.

However, the lack of access for legal micro-financing still one of the biggest problems faced by the micro players, as they are continually sourcing the capital requirements from the underground lenders of the 5/6 loan sharks.

MFIs can partner with overseas Filipino communities to promote micro-finance as one area for savings and investments of overseas Filipinos, the National Economic and Development Authority (NEDA) led plan suggested.

The time deposits of overseas Filipinos can be a cheaper alternative source for micro finance funds than the funds from MFI wholesalers such as the People’s Credit and Finance Corporation, Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP), and other commercial banks with microfinance programs.

Even local government units can consider the possibility of implementing a micro-finance program using the remittances of OFWs and migrant Filipinos originating from their locality as fund source.

On the other hand, in the next six year the region is committed to strive in increasing credit access and utilization, specifically to farmers, fisherfolks and the SMEs.

According to the NEDA report, part of the region’s initiatives to improve utilization of credit facilities by farmers fisher folks and SMEs shall be the conduct of extensive information campaigns on credit or financing programs being implemented by the government and private financing institutions.

The region shall also work to improve the capability of banks to respond to the special needs of small borrowers so that they will be encouraged to develop credit facilities will less stringent requirements and tailor-fitted to SMEs, farmers, and fisher folks.

Initiatives will also be undertaken to improve the credit-worthiness of SMEs by strengthening their operations. — (FREEMAN)