| July 19, 2019

The crisis economy

Remittance plays a significant role in Nepal, in good times and bad. Post-earthquake was perhaps the worst phase for Nepal’s economy, but remittance cushioned the blow at both macro and micro levels.

Because of the surge in remittance inflow immediately after the catastrophic earthquake of April 25, many households affected by the earthquake were able to meet their basic and settlement needs because of remittance, all thanks to destination countries that waived remittance transfer fees after the quake.

According to a recent report released by World Bank, there was a dramatic surge in remittance to Nepal, as it increased by 20.9 percent in the post-quake period, against 3.2 percent in 2014. The report shows that migrant workers sent home money to support their family members, meet their living expenses, and also for rebuilding purposes.

“In the absence of government relief and rehabilitation support, the surge in remittance after the earthquake played an important part in meeting household needs,” economist Chandan Sapkota told Republica, adding, “The delay in initiating rehabilitation and reconstruction has also compelled households to start using their remittance income to rebuild destroyed houses.”


Out of total remittance received from around 35 countries, the highest bilateral remittance inflow was from Qatar (2.02 billion dollars), followed by Saudi Arabia (1.8 billion dollars), India (1 billion dollars), UAE (803 million dollars) and the United States (332 million dollars), according to the World Bank report titled ‘Migration and Remittances Recent Developments and Outlook.’

The same report shows that Nepal was the third largest remittance recipient in 2014 as a share of GDP. Nepal’s remittance was 29.2 percent of the GDP in 2014.

Although remittance has been the mainstay of Nepal’s economy for past few years, this is also the right time for homework on bridging the labor shortage the country is going to face once the reconstruction process kicks off in earnest.

A recent data from the Central Bureau of Statistics (CBS) shows that Nepal is at a historic point in terms of demography. While many developed countries have ageing populations, this Himalayan nation with a population of about 30 million has over 57 percent of its population between 15 and 59.

Unfortunately, the population dividend has yet to pay off as the nation is facing an acute shortage of skilled manpower.


Many economists have termed remittance a ‘trap’. They believe the country can’t rely on it for sustainable development. As remittance is an important component of expenditure of many households, it is unrealistic to hope for sustainable economic growth through its investment.

Senior Program Officer at Safer Migration Project (SaMi), Roni Pradhan, thus speaks of the need to create greater financial literacy.

“In the current circumstances, remittance has been the solution for the majority of the households to make their ends meet, and for their children’s education and health care. Families receiving remittance and returnees should receive guidance on how and where to invest their hard-earned money so that it pays them back for the rest of their lives,” she said.

She even added that the government and private sectors including I/NGOs need to start preparing for employment generation. “Foreign employment should be a choice, not a compulsion,” she said.

The Department of Foreign Employment (DoFE) records show that more than 300,000 people have already taken employment permits for various destination countries after the earthquakes. On average, 1,500 to 17,000 youths leave the country for foreign employment every day.

Sociologists and other migration experts argue that bridging the labor deficit will be difficult unless more job opportunities are created in the country. They say that people are more desperate to go abroad than before so that they can rebuild their houses and regain their lost financial status.

Our education system does not impart meaningful skills. This needs to change. More skilled people are required to contribute to rebuilding and future development projects.

Apart from this, it is important that all stakeholders hold vibrant discussions with youths about the opportunities that are available in the country. People need to understand that foreign employment is not the only way out of this mass frustration.