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Anxiety to repay biz loans may weaken DOLE program (Last of two parts)

by Jeremaiah M. Opiniano, OFW Journalism Consortium

NRCO director Vivian Tornea said in a DOLE release that while there’s no collateral, loan applicants must “guarantee the business enterprise… is viable and profitable —or earning, say, like P10,000 a month”.

Actually, Perez and another development finance expert, Hector de Pedro of the nonprofit Mandato Inc., think both LBP and DBP have proven track records in handing out these reintegration loans.

It’s just that the image of these banks as part of the “government” that worries both Perez and de Pedro. Government-run lending programs “fail,” de Pedro thinks, because “the (word) government is literally synonymous to the word dole out —and the approaches of some agencies do not breed entrepreneurs”.

Thus, Perez said the Reintegration Fund’s implementation “must maintain the discipline and conviction that it must be sustainable, thus must support clearly-viable or potentially viable (enterprises) with community impact”.

Not surprisingly, the Reintegration Fund leaves those OFWs planning to launch start-up enterprises by the wayside—similar to how banks offer loans to existing ventures (but not to start-ups).

The upside of this regulation by DBP and LBP is that government invests its loan resources on proven practices, and that means all figures are (easily) given. Still, new business models coming from OFW enterprise start-ups may not be developed “because there is no support,” said de Pedro.

 

Repayment

THE issue of repayment has haunted previous livelihood programs of OWWA, the most recent of which was the loans OWWA and the NRCO issued to OFWs displaced by the global economic crisis in 2009.

Previous OWWA and NRCO programs on reintegration saw OWWA directly providing these services, especially loans (even if OWWA is not a quasi-financial institution). OWWA also has a running Livelihood Development Program for OFWs (LDPO), in coordination with the National Livelihood Development Corporation —though information is not available on the nationally-run loan program’s repayment performance.

During a press conference after the fund’s launch, Labor undersecretary Danilo Cruz told the OFW Journalism Consortium OWWA “will exert extra efforts” to monitor borrowers’ repayment of their loans. Handling loans “is not OWWA’s forte,” Cruz adds, justifying DOLE’s partnership with LandBank and DBP. The partnership sees OWWA’s share to the Reintegration Fund as a guarantee fund in case of non-repayment, Cruz told reporters during a press conference.

LDPO has its own repayment woes. For example, officials of a cooperative in central Philippines that is a conduit of LDPO loans said there is a “high” non-repayment rate among their OFW borrowers. The conduit, the Philippine Cooperative Central Fund Federation, then conducted a financial education and business assessment seminar to some of its borrowers so that the latter are told how to handle the capital they have.

For migrant civil society advocates like Carmelita Nuqui of the Development Action for Women Network (DAWN), the reintegration fund’s regulations are “different from what the government says in public”. Loans for returning migrants, Nuqui says, are available “but why can’t overseas Filipino workers get them right away if these are really for them?”#