Nepal’s remittance economy: Explained in five diagrams



Earlier this week, Nepal’s central bank released a report on a study it conducted on how households use remittances sent by relatives working abroad. The sample study, carried out by the central bank covering 320 households across Nepal, may not be generalised to a large extent, but the findings do indicate towards reality.




Foreign employment, which was limited to a handful of people till the end of the 90s, became popular among the masses with the dawn of the new millennium. Although there were minor aberrations, more and more people are going abroad in search of work than ever before. Between 2013-14, Nepalis went abroad in search of work, breaking the 500,000 mark.




Even with exports dwindling, and imports exploding, Nepal’s Balance of Payment situation has remained in surplus, thanks to the steep rise in the amount Nepalis send home as remittances. Again, with minor aberrations, the story has been about a boom. The amount Nepal receives every year from its workers abroad has now crossed Rs 600 billion.




The sample study shows that ownership of a house remains the Nepali family’s ultimate priority. Having a roof over one’s head, and providing quality education to children seems to be the main motivation for people to go abroad in search of work.



The study also shows that the households surveyed prioritised saving, and then paying off loan. It can be seen that Nepali households want to rid themselves of loan at the earliest. The study also showed that most workers who go abroad for work lend money from informal sources to pay for the cost of finding a job abroad.




The study showed that of the households surveyed, 44.7 per cent of the households that are receiving remittance are involved in agriculture. It can be inferred that people are forced to look for job abroad after agriculture produce becomes insufficient to lead a decent life.

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