The meeting of the Economic Strategy Group recently convened by US Ambassador Scott DeLisi discussed the role of the Nepali diaspora in the country’s economic development through the utilization of their skills, knowledge, experience and savings that can be ploughed back into productive sectors of economy. More than two million young people are now reportedly working as migrant workers outside the country, of which around 87 percent are male. This is 162 percent increment in temporary migration in 2001. The figure is further inflated if unrecorded migration—mostly of women who go through India to fly to Arab countries—is factored in.
Lack of adequate employment opportunities in the country, political instability, poverty, illiteracy and gender discrimination are key factors that have triggered this unprecedented increase in outward migration in recent years. However, migrants are a major source of foreign currency earnings and are crucial for maintaining the balance of payment. The annual remittance flow touched nearly US $4 billion during the last fiscal year, and helped balance the huge trade deficit incurred by the country in goods trade. The export earnings during the fiscal year 2010-11 was a paltry US $ 800 million and covered only one-sixth of the total payment for imports in that year. Thus, remittances received from poor migrant workers are critical components of the Nepal economy.
Most of the Nepali youth who go out as migrant workers are unskilled and hence, their earnings from menial jobs are little and saving is meager. They often fall prey to deception by unscrupulous manpower agencies that lure them with promises of good jobs and attractive salaries but in the end, are forced to work in harsh conditions for low wages. They are unable to take legal recourse because of long and complex procedures and high legal fees. To address this issue, Prime Minister Baburam Bhattarai had announced the setting up of a special task force in November 2011 in order to look into the issue of fraud in foreign employment and come up with recommendations for protecting poor migrants. The task force came up with a 30-point-recommendation for safe migration, which is now in the process of being followed by various ministries.
It goes without saying that safe migration and decent working conditions are pre-requisites for upholding and protecting the rights of migrant workers. This requires dissemination of adequate and correct information, less engagement of middlemen or agents, pre-departure orientation, adequate legal infrastructure to bring the wrong-doers to justice, facilitation of migration and promotion of good governance, among others. Their hard-earned income needs to be remitted safely back home to help alleviate the economic woes of their families. It has been found that most of their savings are spent in procuring land, building houses and purchasing consumer goods like mobile phones and televisions sets.
However, many migrant workers have also invested their savings in productive businesses like poultry farming, vegetable and fruit cultivation, production of high value agricultural products like tea, coffee, honey, etc and small scale industries. There is, however, no reliable data on what proportion of remittances are actually invested in such productive activities.
There is yet another segment of Nepal’s population that lives and works outside—the diaspora that resides in developed countries and is often engaged in big businesses. Their earnings are normally higher and they are in a position to remit a significant chunk of money that can be ploughed back to run large scale industries and hydro-power projects in this country. But the number of such members in the diaspora is much less and visible investment from them is limited to few hydro-power projects, and in the telecom, banking and financial sectors. Their investment in commercial agriculture and manufacturing would certainly help build supply-side capacity in international trade. But this is not happening at the expected pace and these groups are now rooting for dual citizenship, which in itself is a contentious issue.
The key question is how we can bring these two segments of the migrant population together to enhance the economic strength of the country. The large number of migrant workers in Malaysia and Gulf countries needs support from the government with right kind of legal and administrative structure that would ensure safe migration, decent and acceptable working conditions and help turn their savings into productive investment. This can be done in two ways. First, they need necessary training and inducement to take up entrepreneurial activities geared at producing goods and services which could be supplied to domestic markets and also help in gaining export earnings. Second, they should be encouraged to buy bonds and shares in big hydro power projects or manufacturing industries, with adequate security measures put in place. Necessary incentives for counterpart funding could be provided by the government if they wish to establish their own enterprise.
The government should also consider introducing special packages to encourage investments in the country from well-off diaspora settled in US, Canada, Russia, Japan and Australia. Such a package should include financial incentives like rebate in income taxes and customs duties, development of transport infrastructure to make access to industry sites smoother, development of special economic zones, visa facilitation as well as the right to buy fixed property here for people of Nepali origin who have given up their Nepali citizenship.
Low productivity has been a perpetual problem in Nepal. Low investment in agriculture and declining food and industrial production has resulted in poor levels of trade during the last decade. Flight of large number of productive human resources for foreign employment is causing labor shortage in the agriculture and manufacturing sector.
Hence, the government’s prime concern should be retaining its manpower by providing them productive employment opportunities. Meanwhile, tapping the diaspora and the migrant worker community abroad as a whole is also critical to adding more resources to our sluggish economy. Creating a proper investment climate is a sine qua non for utilizing the expertise, skills, knowledge and resources of Nepalis abroad. This should be among the government’s focus areas if we truly wish to build a new Nepal with the help of our own people, both who reside in and outside the country.
The author is secretary, office of the Prime Minister and Council of Ministers. Views are personal