Nepal foreign money dependence and remittance | Billions of rupees enter Nepal as remittance. Where does it all go?
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| Nepali men queuing for a foreign job application |
The Nepalese economy is almost totally dependent on foreign labor sending money to their families in Nepal. Everyday there are hundreds of low skilled workers going abroad mostly to the Arab countries and Malaysia but also recently to South Korea.
People also ask
One day, I happened to see a huge long line of people and police gathered. I inquired an officer who told me that they are waiting in line to get application forms for Korean employment. Basically South Korea hires about 5,000 Nepalese every year of which they get about 20,000 to 30,000 Nepalese applicants. The applicants are then tested for Korean language exam and those who pass the exam are eligible for employment opportunities in South Korea.
Nepal is 19th largest receiver of remittances with $8.1 billion
Nepali migrant workers sent home $8.1 billion in 2018, making it the 19th biggest beneficiary of funds sent by migrants around the world, according to a report released by World Bank on Monday.
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By: Sangam Prasain
Nepali migrant workers sent home $8.1 billion in 2018, making it the 19th biggest beneficiary of funds sent by migrants around the world, according to a report released by World Bank on Monday.
The remittances were up 16.39 percent year-on-year despite a drop in the number of departures. As a share of the gross domestic product for 2018, Nepal is among the top five recipient smaller economies, along with Tonga, Kyrgyz Republic, Tajikistan and Haiti.
Five South Asian countries are in the top 20 list of biggest beneficiaries of remittances, with Nepal taking the fourth spot in the region. It is behind India ($78.6 billion), Pakistan ($21 billion) and Bangladesh ($15.5 billion) but ahead of Sri Lanka ($7.5 billion) in terms of remittances, according to the World Bank’s Migration and Development Brief released on Monday.
India is the world’s top recipient of remittances followed by China, Mexico, the Philippines and Egypt. The World Bank said that remittances to South Asia grew 12 percent to $131 billion in 2018, outpacing the 6 percent growth in 2017. The report said that migrant workers and others sent home an estimated $529 billion to low- and middle-income countries last year, up 9.6 percent from the year before, which had also been a record. Such money transfers should hit $550 billion this year, making them the largest source of external finance, according to the bank.
Among the development goals set by the United Nations in 2015 was reducing the cost of remittances to 3 percent. “However, banks on average were charging 11 percent in the first quarter of 2019 while post offices charged 7 percent,” it said.
“Many banks and money transfer operators charged too much, cutting into the gains of migration,” the bank said in a statement. However, the factor making money transfer costs rise are banks’ efforts to avoid money-laundering and terrorism finance, the bank said. “The high costs of money transfers reduce the benefits of migration,” Dilip Ratha, the report’s lead author, said in a statement.
According to Nepal Rastra Bank statistics, Nepali migrant worker departures plunged 39.2 percent in the first seven months of the fiscal year, compared to a 4.9 percent drop during the same period last year. A sharp decline in the number of people leaving for Malaysia, one of the most popular labour destinations for Nepalis, dragged down departure figures.
Nepal has signed a labour agreement with Malaysia, but lack of a mechanism to resume labour migration has stymied departures to this Southeast Asian country.
The World Bank said that migrant workers continue to be afflicted by recruitment malpractices.
A recent report by the Centre for Migrants’ Rights 2018 found that Mexican job seekers applying under the temporary worker programme for work in the US were cheated by recruiters who charged recruitment fees averaging 9,300 pesos (about $470). Excessive charges borne by workers also led the Nepal government to halt worker departures to Malaysia in May 2018, the bank said.
Nepal and Malaysia signed a memorandum of understanding in October 2018 under which Malaysian employers would bear all necessary recruitment costs to hire Nepali workers, including visa and airplane tickets.
In a related development, ministers from 12 Asian labour-sending countries—Afghanistan, Bangladesh, Cambodia, China, India, Indonesia, Nepal, Pakistan, the Philippines, Sri Lanka, Thailand, and Vietnam—met in Kathmandu last November in a high-level meeting of the sixth Ministerial Consultation on Overseas Employment and Contractual Labour for Countries of Origin in Asia (Colombo Process) and made a commitment of ‘zero-cost’ jobs for migrant workers.
Japan identified nine priority countries as foreign labour sources on the heels of a new policy to admit 345,000 foreign workers over a period of five years starting April 11, 2019, the bank said. Except for Nepal, all the countries are in East Asia, namely, Cambodia, China, Indonesia, Mongolia, Myanmar, the Philippines, Thailand and Vietnam.
Workers from these countries will be admitted into 14 sectors facing severe labour shortages. Both Nepal and the Philippines signed a memorandum of cooperation with Japan on March 25, 2019.
Personal remittances, received (% of GDP) - Nepal
World Bank staff estimates based on IMF balance of payments data, and World Bank and OECD GDP estimates.
Nepal (1994)
1.232
Selected Countries and Economies
Country
Most Recent Year
Most Recent Value
Nepal
2018
28.6
All Countries and Economies
Country
Most Recent Year
Most Recent Value
Afghanistan
2018
4.1
Albania
2018
9.7
Algeria
2018
1.0
American Samoa
Andorra
Angola
2018
0.0
Antigua and Barbuda
2018
1.5
Argentina
2018
0.1
Armenia
2018
12.0
Aruba
2017
2.1
Australia
2018
0.1
Austria
2018
0.7
Azerbaijan
2018
2.6
Bahamas, The
Bahrain
Bangladesh
2018
5.7
Barbados
2018
2.1
Belarus
2018
2.3
Belgium
2018
2.3
Belize
2018
4.9
Benin
2018
1.9
Bermuda
2013
22.0
Bhutan
2018
2.4
Bolivia
2018
3.5
Bosnia and Herzegovina
2018
10.5
Botswana
2018
0.2
Brazil
2018
0.2
British Virgin Islands
Brunei Darussalam
Bulgaria
2018
3.7
Burkina Faso
2018
3.2
Burundi
2018
1.6
Cabo Verde
2018
11.8
Cambodia
2018
5.8
Cameroon
2018
0.9
Canada
2018
0.1
Cayman Islands
2017
0.3
Central African Republic
1993
0.0
Chad
1994
0.1
Channel Islands
Chile
2018
0.0
China
2018
0.2
Colombia
2018
1.9
Comoros
2018
13.8
Congo, Dem. Rep.
2018
3.9
Congo, Rep.
2016
0.1
Costa Rica
2018
0.9
Cote d'Ivoire
2018
0.8
Croatia
2018
4.7
Cuba
Curacao
2018
5.0
Cyprus
2018
2.0
Czech Republic
2018
1.6
Denmark
2018
0.4
Djibouti
2018
2.0
Dominica
2018
8.9
Dominican Republic
2018
8.0
Ecuador
2018
2.8
Egypt, Arab Rep.
2018
10.2
El Salvador
2018
20.7
Equatorial Guinea
1996
0.1
Eritrea
2000
0.5
Estonia
2018
1.8
Eswatini
2018
2.7
Ethiopia
2018
0.5
Faroe Islands
2016
5.9
Fiji
2018
5.1
Finland
2018
0.3
France
2018
1.0
French Polynesia
Gabon
2018
0.1
Gambia, The
2018
12.5
Georgia
2018
11.6
Germany
2018
0.5
Ghana
2018
5.4
Gibraltar
Greece
2018
0.2
Greenland
Grenada
2018
4.1
Guam
Guatemala
2018
12.0
Guinea
2018
0.3
Guinea-Bissau
2018
8.8
Guyana
2018
8.6
Haiti
2018
32.5
Honduras
2018
19.9
Hong Kong SAR, China
2018
0.1
Hungary
2018
2.7
Iceland
2018
0.7
India
2018
2.9
Indonesia
2018
1.1
Iran, Islamic Rep.
2017
0.3
Iraq
2018
0.3
Ireland
2018
0.2
Isle of Man
Israel
2018
0.3
Italy
2018
0.5
Jamaica
2018
15.9
Japan
2018
0.1
Jordan
2018
10.6
Kazakhstan
2018
0.3
Kenya
2018
3.1
Kiribati
2018
9.5
Korea, Dem. People’s Rep.
Korea, Rep.
2018
0.4
Kosovo
2018
15.6
Kuwait
2018
0.0
Kyrgyz Republic
2018
33.2
Lao PDR
2018
1.3
Latvia
2018
3.6
Lebanon
2018
12.3
Lesotho
2018
23.0
Liberia
2018
14.1
Libya
2006
0.0
Liechtenstein
Lithuania
2018
2.6
Luxembourg
2018
2.9
Macao SAR, China
2018
0.0
Madagascar
2018
3.1
Malawi
2018
2.6
Malaysia
2018
0.5
Maldives
2018
0.1
Mali
2018
6.0
Malta
2018
1.9
Marshall Islands
2018
14.2
Mauritania
2018
1.2
Mauritius
2018
1.7
Mexico
2018
2.9
Micronesia, Fed. Sts.
2018
5.8
Moldova
2018
16.1
Monaco
Mongolia
2018
3.4
Montenegro
2018
10.7
Morocco
2018
5.9
Mozambique
2018
2.0
Myanmar
2018
4.0
Namibia
2018
0.4
Nauru
2018
5.2
Nepal
2018
28.6
Netherlands
2018
0.3
New Caledonia
New Zealand
2018
0.2
Nicaragua
2018
11.5
Niger
2018
3.2
Nigeria
2018
6.1
North Macedonia
2018
2.7
Northern Mariana Islands
Norway
2018
0.1
Oman
2018
0.0
Pakistan
2018
6.7
Palau
2018
0.8
Panama
2018
0.8
Papua New Guinea
2018
0.0
Paraguay
2018
1.7
Peru
2018
1.5
Philippines
2018
10.2
Poland
2018
1.2
Portugal
2018
0.2
Puerto Rico
Qatar
2018
0.2
Romania
2018
2.9
Russian Federation
2018
0.5
Rwanda
2018
2.7
Samoa
2018
18.0
San Marino
Sao Tome and Principe
2018
4.2
Saudi Arabia
2018
0.0
Senegal
2018
10.1
Serbia
2018
8.5
Seychelles
2018
1.4
Sierra Leone
2018
1.5
Singapore
Sint Maarten (Dutch part)
Slovak Republic
2018
2.0
Slovenia
2018
1.1
Solomon Islands
2018
1.4
Somalia
1983
3.0
South Africa
2018
0.3
South Sudan
2015
9.5
Spain
2018
0.2
Sri Lanka
2018
7.9
St. Kitts and Nevis
2018
2.6
St. Lucia
2018
2.2
St. Martin (French part)
St. Vincent and the Grenadines
2018
5.8
Sudan
2018
1.0
Suriname
2018
0.0
Sweden
2018
0.6
Switzerland
2018
0.4
Syrian Arab Republic
2007
2.6
Tajikistan
2018
29.0
Tanzania
2018
0.7
Thailand
2018
1.5
Timor-Leste
2018
3.7
Togo
2018
9.2
Tonga
2018
40.7
Trinidad and Tobago
2018
0.6
Tunisia
2018
4.8
Turkey
2018
0.1
Turkmenistan
2018
0.0
Turks and Caicos Islands
2018
0.7
Tuvalu
2018
9.5
Uganda
2018
4.5
Ukraine
2018
11.2
United Arab Emirates
United Kingdom
2018
0.2
United States
2018
0.0
Uruguay
2018
0.2
Uzbekistan
2018
15.1
Vanuatu
2018
3.9
Venezuela, RB
2014
0.0
Vietnam
2018
6.5
Virgin Islands (U.S.)
West Bank and Gaza
2018
17.0
Yemen, Rep.
2018
12.4
Zambia
2018
0.4
Zimbabwe
2018
6.0
World
2018
0.8
Arab World
2018
2.5
Caribbean small states
2018
5.6
Central Europe and the Baltics
2018
2.0
East Asia & Pacific
2018
0.5
East Asia & Pacific (excluding high income)
2018
0.6
Euro area
2018
0.6
Europe & Central Asia
2018
0.8
Europe & Central Asia (excluding high income)
2018
1.9
European Union
2018
0.8
Fragile and conflict affected situations
2018
4.3
Heavily indebted poor countries (HIPC)
2018
4.0
Latin America & Caribbean
2018
1.7
Latin America & Caribbean (excluding high income)
2018
1.9
Least developed countries: UN classification
2018
4.7
Middle East & North Africa
2018
2.2
Middle East & North Africa (excluding high income)
2018
5.7
North America
2018
0.0
OECD members
2018
0.3
Other small states
2018
1.2
Pacific island small states
2018
7.3
Small states
2018
1.9
South Asia
2018
3.8
Sub-Saharan Africa
2018
2.8
Sub-Saharan Africa (excluding high income)
2018
2.8
High income
2018
0.3
Low & middle income
2018
1.6
Low income
2018
6.0
Lower middle income
2018
4.4
Middle income
2018
1.5
Upper middle income
2018
0.7
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