OFW Journalism Consortium
DAVAO CITY-A GOVERNMENT executive here warns of an increasing number of
overseas Filipino workers defaulting on their loans from an economic crisis
Zenobia Caro, officer-in-charge of the Overseas Workers Welfare
Administration (OWWA) Region XI, said she is worried about the low repayment
rate among overseas Filipino workers who borrowed from a two-year credit
The loans, tapped from the Filipino Expatriate Livelihood Support Fund
(FELSF), would mature by year's end.
Caro told the OFW Journalism Consortium that even though the FELSF just
reached a year old in implementation, she claims the running repayment rate
in her region is low.
Davao region's repayment rate for the FELSF loans is 49 percent, Caro
revealed on the sidelines of a policy forum on remittances held at a hotel
Started last year, the FELSF is one of the Philippine government's stimulus
packages supposedly for OFWs affected by the global economic crisis. It
carries an annual interest rate of five percent for loans of up to P50,000.
The loan is payable in two years, but displaced OFWs are given a grace
period of 90 days upon the loan's maturity to fully repay the loan.
A report from the OWWA central office furnished to the OFW Journalism
Consortium showed that some 4,464 OFWs displaced by the crisis secured total
loans worth P204.589 million.
Davao region had 152 displaced OFWs who availed of loans amounting to P7.6
As of December 31 (see Table 1), total payments from 1,577 borrowers to the
OWWA hit only P6.8 million.
However, past due loans has hit P36.2 million.
Culling from experience, Caro pins the low repayment rate to the OFW
borrower's attitude towards OWWA and its credit window.
THERE are OFWs "who have no intention of paying back" the loan, Caro claims.
"They think that since (the loan) comes from OWWA, and they paid a
US$25-membership fee, they say 'it is our money.'"
OWWA, in 2008, is said to have 1.2 million sea- and land-based OFWs who paid
the fees prior to their departure overseas.
The Commission on Audit's report for 2008 bared that OWWA got P1.377 billion
in membership dues from OFWs.
Caro said other borrowers are more "enterprising," citing a case of a
displaced OFW in Davao City who used the debt to start a small eatery.
Based on field reports, the borrower was said to have migrated to another
province and left the business to her mother-in-law.
Caro said the only thing they can do in that case is write the displaced OFW
asking her to pay the loan to the OWWA office in that province.
These were just some of the dozens of cases encountered by OWWA employees
who scoured four provinces in the region where these borrowers lived.
She said these are Davao City, Davao del Norte, Davao del Sur, and the
Caro said some of the borrowers have left the running of their businesses to
family members and sought again jobs overseas.
Overall for the Davao region, Caro says displaced OFWs who secured loans
"are repaying slowly" and their start-up enterprises are running "smoothly,"
based on her office's site-monitoring reports.
Still, she believes providing livelihood loans to OFWs should be left to
government-run financial institutions, not the OWWA.
OWWA, she thinks, may be better off providing enterprise training assistance
Caro noted that OWWA was effective in the first phase of the two-phase
FELSF, which focused on training displaced OFWs on running a business and
developing business plans.
OWWA, Caro says, has been into providing livelihood assistance since 1997.
But at the end of 2009, her regional office has uncollected loans from OFW
borrowers worth P2.9 million.
While her regional office has yet to witness a delinquent borrower jailed,
Caro said there were OFWs who have been sued for non-payment of loans.
LENDING'S not alien to OWWA, having two notable livelihood assistance
programs in the past: the OFW Groceria and Botika (grocery and pharmacy
These facilities targeted OFW family circles or local associations of former
overseas workers and OFW families.
From 2004 to 2007, according to a value-for-money audit by the Commission on
Audit (COA) on the OFW Groceria and Botika project, a total of P42.95
million were handed out to the regional offices of OWWA.
Davao region lent out a total P1.5 million during the four-year period.
A total of 848 OFW family circle organizations nationwide availed of these
groceria and botika loans, COA observes.
However, only 62 OFW Family Circles have fully paid, including ten family
circles whose loans were fully repaid prior to their maturity.
Thus, of an outstanding balance worth P28.5 million, about P15.7 million or
55.03 percent was already past due.
The collection efficiency rate of the OFW Groceria and Botika project is
46.83 percent, the COA report said.
OFW Groceria is a P50,000 loan, in the form of grocery items and medicines,
with zero-interest rates that must be repaid by the OFW family circle for a
maximum of two years.
OWWA also runs a loan program called the Livelihood Development Program for
OFWs (LDPO), but the money is handled by the Landbank-owned National
Livelihood Development Corp. as wholesaler.
NLDC then partnered with some rural banks and cooperatives to act as
retailers of the LDPO, which offers loans of up to P150,000 to returning
OFWs wishing to set up a business.
No value-for-money audit report is available on the LDPO, though the 2008
COA audit report shows that OWWA has P109.911 million in receivables from
The COA's 2008 audit report of OWWA also showed that there are P201.02
million in "non-current receivables" from OFW loan borrowers, and the amount
"represents the balance of livelihood and groceria loans".
The OWWA, which public auditors categorize as a government-owned and
controlled corporation (GOCC), has a total asset of P11.989 billion.
OFW Journalism Consortium