Nearly 19% of the households in Nepal depend fully on the remittance from their family members for living, becoming vulnerable to any disruption in employment opportunities abroad, a survey of the country’s central bank has revealed.
Given this context, the contraction of employment opportunities in the countries where they are employed will lead to incident of poverty in such families, the Nepal Rastra Bank (NRB) said in its recent report, suggesting the need for addressing this risk through necessary policies in time.
The survey was conducted among 320 households of 16 districts out of 75 focusing particularly on saving and investment tendency of such households, according to NRB.
Economist Keshav Acharya said that as long as Nepal does not create economic and employment opportunities within the country, Nepal should face this vulnerability, Xinhua reports.
“The government should take measures to utilise their skills learnt abroad within the country which will help create more opportunities for them,” he said.
Vulnerability of foreign labour markets has been exposed as remittance inflow decreased as of the first month of current fiscal year 2016-17 that began in mid-July, for the first time in two years. This has been attributed to the decline in number of Nepalese people going for foreign employment, he said.
The number of Nepalis heading for foreign employment declined by 18.4% to 418,713 during 2015-16 fiscal year. It is largely due to Malaysia, traditionally the largest destinations for Nepalese migrant workers, not hiring migrant workers since
February.
“If key destination markets for Nepalese migrant workers continue to take less number of them, it will hurt the Nepalese economy hard because remittance is the key resources for financing of growing imports of Nepal,” said Acharya.
According to the report entitled ‘Saving and Investment Tendency of Households Receiving Remittance,’ a Nepalese migrant worker sends home an average of $4,958 a year, an attractive income for general Nepalis.
Nepal received a total of $6.19bn in remittances in the last fiscal year 2015-16 that ended in mid-July, accounting for some 30% of Nepal’s gross domestic product (GDP).
But, when it comes to utilisation of the remittance, the migrant workers’ families use 25.3% for paying loans, 23.9% for consumption of daily essentials and they save 28% of remittance. They spend the rest for education for children, social works and productive activities.
But for the saving part, most of the households purchased lands and houses, according to the report, pointing out the need of taking measures to utilise remittance in productive sector, as only 1.1% of remittance is used in production related activities.
Meanwhile, despite penetration of banks and other financial institutions, majority of Nepalis heading for foreign employment receive loans from local merchants at high interest rate, according to the report.
As many as 52% of households were found to have taken loans from local merchant while only 6.3% took loans from formal banking channel to cover the cost of going abroad. “This shows the need for favourable policies to expand financial access to the people,” the
report said.
NEPAL
