The new equaliser

There is a lot of moaning and groaning in Nepal about the freezing of USAID programs. While many of the projects are in social services which reach the most marginalised, much of it is also tied aid or money that is ultimately spent in Kathmandu or goes to pay DC-based contracting firms.

Nepal received just about $350 million in foreign aid loans and grants in 2024, but inflows from Nepalis abroad was approximately $11 billion in the same year. And that was just through official channels.

In the first six months of this fiscal year, Nepalis sent home Rs763 billion. This was 4.1% higher than the figure for the same period last year, as the number of Nepalis going abroad to work grew much more.

Remittance made up 26.31% of Nepal’s GDP equivalent, from just 1.5% in 1993. The share of remittances to GDP in Nepal is one of the highest in the world — only behind Tajikistan at 38.42%, according to figures complied by One World In data. Nepal ranks 19th in the list of top remittance-receiving countries.

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One billion people worldwide depend on remittances, and this grew five-fold in the last 20 years regardless of the Covid-19 pandemic, conflicts and other impacts.

According to the International Organisation for Migration (IOM), remittances sent home by migrant workers totalled $831 billion in 2022, nearly four times the amount disbursed as global foreign aid, which was $211 billion. 

In over 30 countries, remittances now account for more than 10% of the value of their entire economy, becoming a much more effective tool in lifting people out of poverty.

Migration is therefore the great new equaliser of the 21st century, a significant redistributor of wealth. Much of the remittance flows to poorer countries from richer nations, but it is also true that Nepal is the seventh largest source of remittances for India. Indians are filling in the semi-skilled jobs left vacant by Nepalis who have left for the Gulf, Malaysia.

While people in destination countries worldwide send only about 15% of their income back home, that money has much higher value in poorer nations like Nepal. 

In Nepal, money sent home by migrants has allowed families in the remotest corners to afford quality healthcare, nutrition and education for their children. Villages now have concrete houses. 

In fact, migration is the single biggest reason for Nepal’s possible graduation to a middle-income country by 2030. It is also perhaps one of the reasons why when asked, more than half the respondents told a public opinion survey recently that they were better off than five years ago — despite being disappointed with the government.

However, money from migration has not translated into investment in productive sectors. Most of it pays for day-to-day living costs of families. The government has failed to engage migrant returnees at home, whose skills and investments are being wasted without meaningful reintegration into society, forcing them no alternative but to migrate again.

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Meanwhile, those leaving on student visas to the US, UK, Australia, Canada and Europe do not send as much money home. They are also much less likely to ever return.

Overseas employment is an outlet for Nepalis frustrated by party politics, corruption, unaccountability and lack of service delivery. It has also allowed the government to get away without having to find an additional 500,000 new jobs every year for the young people entering the job market.

But in the process, Nepal is wasting its demographic dividend, which is the narrow window of opportunity for rapid economic advancement before a country or a society ages. We only have 25 more years or so to correct courses, by investing in people and generating jobs at home to reintegrate returnees, foster innovation and entrepreneurship. So, in general, to clean up our act.

Remittance is highly sensitive to external factors, and is an unsustainable and unhealthy long-term option. More than 2 million Nepali migrants are employed in West Asia, which is prone to conflict. 

For a country that relies so heavily on remittances, it is in Nepal’s national interest to treat its migrant workers well instead of trying to fleece them every step of the way. Instead of a blanket ban on women migrants, the government should ensure their safety. 

Read also: Ban on female migrant workers to be lifted, Ayushman Bhagat and Sunita Mainali

Growing anti-immigrant sentiments around the world, particularly in America and Europe, ignore the fact that their economies are built on the blood, sweat and tears of migrants. It is they who do the dangerous and difficult jobs, at minimal pay. 

The truth is that people will continue to migrate for one reason or another as they have throughout history. For Nepal’s economy it is indispensable. But moving ahead, we must find the right balance between remittances and domestic investment.

Sonia Awale