Kathmandu: Nearly 19 percent 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.
Senior Economist Keshav Acharya told Xinhua on Saturday that as long as Nepal does not create economic and employment opportunities within the country, Nepal should face this vulnerability.
“The government should take measures to utilize their skills learnt abroad within the country which will help create more opportunities for them,” he said.
Vulnerability 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.
Nepalese heading for foreign employment declined by 18.4 percent to 418,713 in the last fiscal year 2015-16. 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 Nepalese, 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 U.S. dollars a year, an attractive income for general Nepalese.
Nepal received a total of 6.19 billion U.S. dollars in remittance in the last fiscal year 2015-16 that ended in mid-July, accounting for some 30 percent of Nepal’s gross domestic product.
But, when it comes to utilization of the remittance, the migrant workers’ families use 25.3 percent for paying loans, 23.9 percent for consumption of daily essentials and they save 28 percent 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 utilize remittance in productive sector, as only 1.1 percent of remittance is used in production related activities.
Meanwhile, despite penetration of banks and other financial institutions, majority of Nepalese heading for foreign employment receive loans from local merchants at high interest rate, according to the report.
As many as 52 percent of households were found to have taken loans from local merchant while only 6.3 percent 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.