Ways Nepal can rebound from COVID-19
As the global pandemic and shut-downs caused by COVID-19 ripple across the world, they have upset longstanding migration and employment patterns, bringing both challenges and opportunities.
One major impact in Nepal is the sudden return of large numbers of migrant workers who have lost overseas employment due to the shrinkage of the global economy. Even if economies in host countries stabilise in the next couple of years, it could be another five before they invite workers back from Nepal.
The government faces a major challenge as it attempts to steer returnees toward new livelihoods in Nepal. Which is why it is a good time to consider new ways of harnessing this returned labour pool.
The past can inform the present. In 1959, large numbers of Tibetan refugees fleeing the Chinese takeover arrived in Nepal. Timely response to the crisis by development organisations and Nepal government led to the launch of Nepal’s Tibetan carpet industry. At its peak in 1993, the sector employed 1.2 million people and brought in one third of Nepal’s foreign currency earnings.
The Swiss Red Cross and the Swiss Agency for Technical Assistance set up the Jawalakhel Handicraft Center to standardise designs and train weavers to provide jobs for the Tibetan refugees by building on their traditional weaving skills. Carpet centers were also set up in Pokhara, Dhorpatan and Solu Khumbu.
The Swiss helped market the carpets in Switzerland, and demand for hand-knotted Tibetan carpets from Nepal spread to other European countries. In the late 1970s, upheavals in Iran and Afghanistan led European importers to source carpets from Nepal. Tibetan entrepreneurs took the lead in expanding production using refugee weavers, but it was not long before Nepali workers were trained to meet demand and Nepali entrepreneurs began to invest in the sector.
How did the Tibetan refugee crisis become an economic opportunity? Perhaps this 60-year-old disruption and the livelihood opportunities for returnees it provided can be imitated as Nepal attempts to recover from the economic impacts of the pandemic, which includes an estimated 1.5 million migrants returning in the next few years.
One proposed sector is high-value agriculture on under-utilised land in the Tarai and mid-mountain valleys. A high percentage of the returnees come from farming families and are already familiar with the basics. They can acquire the skills required for high-value agriculture once they see the potential returns from growing vegetables and fruits or raising livestock.
There is a large domestic market for agricultural products as well as potential for export to India. The amount of food Nepal imports from India annually provides a ready substitution market and the ecological niches provided by Nepal’s many micro-climates provide the opportunity for producing off-season fruits and vegetables which can be exported to India.
Increased horticulture production provides jobs to vegetable sellers and transporters. On the supply side, high-value agriculture expands the markets for agrovets — small businesses which provide seeds, fertiliser and crop protection to farmers.
Migrants returning from the Middle East and East Asia have greater management and technical skills than the average population, as well as more financial resources. After living overseas for several years most migrants are unlikely to be satisfied with going back to engage in subsistence agriculture in their family fields.
Their limited savings will be insufficient to support their families, who have become accustomed to regular transfers of remittances, but the training they might receive from NGOs would enable them to engage in high-value agriculture.
The experience of comprehensive agricultural value chain projects such as USAID’s Knowledge-based Integrated Sustainable Agriculture and Nutrition (KISAN II) demonstrates that there is plenty of room for growth in high-value agriculture in the country and there is proven capacity in-country to induct hundreds of thousands of new farmers into the sector. Well-designed development projects can leverage substantial resources from the migrants themselves.
Land is currently underutilised in Nepal, with many farmers in the Tarai growing just one crop a year. With irrigation, three crops per year are possible. The government is moving forward with rules to prevent landlords from leaving land fallow and to clarify regulations around leasing of land which returnees can use for growing vegetables and other crops.
In most parts of the Tarai, groundwater is accessible through shallow tube wells. The national grid has reached all municipalities in the Tarai and increasing numbers of farmers are able to use electricity for irrigation pumping. Farmers with small plots of up to one acre of land can purchase relatively low-cost solar pumps suitable for vegetables (typical cost is $600-$800), pay for them in monthly installments, or finance them through a 60% subsidy program of the Alternative Energy Promotion Center (AEPC).
We estimate that a total investment of $170 million by the Government of Nepal and donors would enable 250,000 farmers with an average of a third of an acre to generate over $2 billion in vegetable sales over five years, with $750 million in annual sales going forward.
While the government’s investment of $500 per farmer would be used to reduce the cost of purchasing simple greenhouses and solar pumps, each returnee would spend around $1,540 on seeds, fertiliser, land leases and farm equipment.
We anticipate that donors would need to invest around $180 per farmer for training and linkages with private companies, which can supply inputs as well as sustainably market and process what farmers produce. With such programs in place, returning workers would find it much easier to reintegrate into their communities and, if history is any guide, Nepal could find itself with a profitable new market.
Bikash Pandey is Winrock International’s Director of Clean Energy. Praveen Baidya is Deputy Chief of Party/Finance of Agriculture and Volunteer Programs at Winrock International.