High-risk remittance

The Nepal government knows how much this country is dependent on remittances from Nepalis working abroad. It pays the salaries of politicians and bureaucrats from the money they send home. 

They should also know how vulnerable the economy is to tensions in the Persian Gulf or Southeast Asia, or global emergencies like this pandemic. The Iraq War, the UAE and Saudi Arabian blockade of Qatar, and tension in the Straits of Hormuz between Iran and the United States highlighted the risk. 

In 2004, twelve Nepali workers employed by contractors at a US military base in Iraq were shot to death on video. Fourteen Nepalis guarding the Canadian Embassy in Kabul were killed in 2016 in an attack by Taliban militants. Hundreds of Nepalis had to be evacuated from Libya when civil war broke out there in 2011. 

And when the massive blast rent downtown Beirut on Tuesday, there were Nepali domestic workers and peacekeepers who were caught up in the horror. Because Nepalis are now scattered all over the globe, any conflict or natural disaster is likely to involve nationals of this country. More Nepalis have died of COVID-19 (190) in 38 countries, than in Nepal itself (60) so far. 

The vulnerability of Nepal’s economy to over-reliance on migrant labour has been driven home by this pandemic. In Asia, Nepal is second only to Kyrgyzstan in terms of reliance on money sent home by its overseas workers – a full 28% equivalent of Nepal’s GDP comes from remittances. 

More than 15% of Nepal’s population is working abroad. Of these 2.5-3 million (no one knows for sure) are in India. Of the other 2 million, 60% work in just four Gulf countries: Saudi Arabia, Qatar, UAE and Kuwait. 

Of these, an estimated 200,000 have returned from India. And of the 210,000 who have registered with Nepal’s missions abroad to come home, only 32,000 have been repatriated since 15 June. 

For the past two years, the number of Nepalis migrating overseas for work had been steadily declining, although remittances held steady. The pandemic now threatens to reduce that income.   

The monthly remittances through official channels in April this year was half the amount for April 2019, although it has picked up since. The World Bank estimates that remittances globally this year will fall 20% below last year’s level, and the Asian Development Bank (ADB) puts the losses at 28% for Nepal as its overseas workers are laid off, or get reduced salaries.

The $7 billion a year that Nepali workers abroad send home helps pay for Nepal’s imports, of which the highest proportion (16%) is petroleum. At the household level, surveys have shown that migrant earnings help pay for food and education of most families back home. 

Nepal’s absolute poverty declined by half to 25% in the past 20 years – most of this is credited to increased household income from workers abroad. A fall in remittances could set Nepal back a decade in terms of gains in maternal and child survival, nutrition and poverty rate.

The hope was that many of the returnees could be re-engaged in agriculture to grow food on land that has been fallow because of out-migration. This has happened to some extent this planting season, but because no government campaign was launched to provide credit and other inputs, it will not be at levels where national food production will go up this year.

There is also the argument that most Nepali workers in India and overseas still have their jobs, and have not returned. Even though there is an economic downturn, host countries still need migrant workers to do the dirty, dangerous and demeaning jobs that their nationals will not do. 

But that is a slim hope. The pandemic shows no sign of abating. And as long as structural distortions in the economy that forced Nepalis to migrate (and be exploited and abused in the process) is not addressed, it is unlikely that those who have returned will stay.

There is no realistic government program on the horizon for mass job creation at home for returnees, the backlog of Nepalis waiting to go abroad, and the 600,000 new entries into the labour market every year.