Nepal’s Reliance on Migrant Remittances

|

, ,

If one has visited the departure terminal at Tribhuvan International Airport departure or traveled to or from Nepal, they will come across numerous Nepali migrant workers who are either departing or coming from overseas employment.

Screenshot credit: The Kathmandu Post

One can guess that many of these immigrant workers maybe heading to Malaysia. According a recent Nepali Times report, “There are an estimated 500,000 Nepalis in Malaysia, some of them undocumented workers. Of the 771,000 Nepalis who got labor permits from the Department of Foreign Employment in the last fiscal year, 259,000 went to Malaysia”.

A recent news report underscores the influx of semiskilled Nepalese from rural regions migrating to Kathmandu in search of employment opportunities. Yet, due to the scarcity of local jobs, a considerable number of these semiskilled individuals seek manual labor opportunities overseas as a means of securing their economic livelihood.

The Nepali government relies heavily on money sent by Nepalese working abroad. According to Nepali Times, the amount of money these workers send back to their families in Nepal adds up to about 25% of Nepal’s GDP, which is one of the highest percentages globally.

Latest Nepal Rastra Bank figures show that the country earned $6.35 billion in the last six months of this fiscal year, and foreign exchange reserves hit a record $13.9 billion.

Nepali Times

According to the Nepal Economic Forum, Nepal’s remittances accounted for over one-fifth of national income.

Remittances as a ratio of GDP stood at 22% for Nepal in 2022 making it the world’s tenth largest recipient after Tonga (50%), Lebanon (38%), Somoa (34%), Tajikistan (32%), Kyrgyzstan (31%), Gambia (28%), Honduras (27%), El Salvador (24%), and Haiti (22%) . Such a high remittances-to-GDP ratio not only reflects Nepal’s position among fragile countries but also cautions against heavy reliance on international remittances. Moreover, these reported figures underestimates the actual magnitude as informal channels such as “hundi” and Nepal-India migration corridor remain unaccounted for.

Nepal Economic Forum, 2024

A recent Nepali Times editorial writes “Nepal has to plan for the day when more migrant workers start coming back, so they can contribute to the economy. … The homecoming of semi-skilled Nepalis with overseas exposure can be turned into a national asset. Many returnees have worked in modern agriculture and factories. They have picked up and honed new skills at construction sites, and they have excelled in the service industry.”

A 2016 study from the USAID has conducted a comprehensive study of foreign labor migration remittances and their impact in Nepal.

The finding show that 36% of migrants worked as manual laborers in destination countries because they went abroad without skills-based training for technical jobs. Further, of the total 300 migrants, only 13.3% had invested remittance in productive/business sectors which has not created a favorable environment for them to them to return to or stay in their home communities. Returnee migrants and/or their households have started businesses by investing a very small proportion of remittance in productive sectors, which has not succeeded in creating business opportunities or promoting livelihoods. Therefore, vocational education, and skills training, and entrepreneurship development training is needed for aspiring migrants and their families.

USAID Report, 2016

Ganesh Gurung, a labor migration expert, told Nepali Times “The fact that a major labor destination country like Malaysia is reducing the number of Nepali workers is not good news. It will seriously impact on remittance inflows and the economy. It does not seem like the Nepal government has any concrete plans to deal with this issue.”

“Continuing to depend on other countries to give Nepalis jobs, instead of providing jobs in Nepal for Nepalis, will mean trouble for us down the line.”

Related Resource Links