Dependence on remittance harmful for the economy in the long run

Kathmandu

Qatar is the second major destination, Saudi Arabia being the first, for Nepalis seeking foreign employment with more than four lakhs Nepalis employed in the oil-rich Gulf country currently. For a nation whose national economy depends highly on remittance, the ongoing diplomatic crisis in Qatar requires some in-depth study into the repercussions that this crisis may cause. The current situation in Qatar will not only reflect on the remittance flow into Nepal but will also inadvertently affect the livelihoods of many Nepalis who depend on foreign labour.

Sanjiyu Kumar Mahato, a Nepali citizen, who went to Qatar four years back as an unskilled labour, speaks to THT Perspectives on the phone about his initial struggle on his first venture oversees, “When I first signed up to go to Qatar I was promised a higher salary than what I got paid. As soon as I reached Qatar the agent took my work documents and passport for safekeeping in case I ran away.” Four years later he again finds himself in a dilemma, he says, “After a couple of months I learnt my trade and moved up the ladder as a skilled labour. However, the diplomatic crisis in the Gulf States has me worried again. Since early June this year every consumer product including food has seen a price hike. If the crisis continues, I may have to return home sooner than anticipated, ruining my plans to save a little more money to take back home.” Qatar depends on more than 90 per cent of imported food products for domestic consumption. The diplomatic rift between Qatar and its neighbours is more likely than not to push the country into food shortage or severe hike in price of food products. This potential problem would not only affect Qatari citizens, but also to the huge numbers of Nepali migrant workers living there.

According to Shivaram Pokhrel, Under Secretary, Ministry of Labour and Employment, the Ministry is keeping a close eye on the current situation in Qatar. “The price of food, fruits, vegetables et cetera has gone up but its effects are non-threatening. If the crisis continues and if we find Nepali workers facing problems then we will restrict permits to manpower companies and discontinue Nepali workforce’s migration to Qatar until the situation normalises,” he claims.

Shrinking remittance growth

According to a report ‘Sending Money Home Contributing to SDGs, One Family at a Time’, published by International Fund for Agriculture Development, Nepal topped the list of countries heavily dependent on remittance in 2015. Remittance contributed 32 per cent to the Gross Domestic Product (GDP) of the nation in the same year. Although Nepal has, in the past, seen a healthy inflow of remittance the percentage now indicates a downward incline.

According to the data provided by Nepal Rastra Bank, the remittance inflow in current fiscal saw a growth of 5.2 per cent amounting Rs 566.97 billion in the first 10 months of fiscal year 2016/17. However, in the previous fiscal year (2015/16) the growth rate was 10.3 per cent when Nepal received Rs 538.87 billion in remittance. This stunt in growth of remittance will have an adverse effect on the overall economy of the country in the long run. According to preliminary statistics of Central Bureau of Statistics, remittance contributes to 26.94 per cent to the total GDP of Nepal amounting to over Rs 700 billion in current fiscal year 2016/17. The contribution stood at 29.59 per cent in the previous fiscal year. The Qatar crisis is also likely to push this decline in the flow of remittance into the country’s GDP further.

Decrease in outbound labour

Gulf countries are the major destinations of foreign employment for Nepalis. Mohan Adhikari, Information Officer, Department of Foreign Employment (DoFE), says that this year there has been a decrease in labour permits issued in favour of Gulf countries as compared to previous years. According to DoFE, labour permits have decreased by more than half in ratio after the Qatar crisis. In regard to the current crisis in Qatar and its impact on the flow of workforce to Qatar, he says, “That would depend on the strategy of the host country and the demand they generate for Nepali workforce. As for now, Qatar is still one of the countries generating the highest demand for Nepali workers.”

With World Cup 2022 being hosted by Qatar, the demand for construction-centric labour force had soared in the last few years. Pokharel says, “But as the construction materials are also imported through Saudi Arabia and United Arab Emirates, the construction and preparation for World Cup 2022 is likely to come to a halt for some time.”

Problems in foreign shores

Majority of Nepalis migrating to Qatar and other Gulf countries fall under the unskilled labour category and are vulnerable to exploitations (financial and physical) at the hands of the agents and the employer. Tara Bahadur Kunwar, Information Officer, Foreign Employment Promotion Board, says that people seeking job opportunities overseas must have skills and training as demanded by the host nation in order to avoid being exploited when they reach their destinations. The plight at which Nepali workers find themselves in foreign shores is because of the inefficiency with which the country is run and the sheer lack of action on the government’s part. The government takes little to no interest in the well-being of these migrants, who if given ample opportunity in Nepal itself, would choose not to leave the country. In its lackadaisical approach towards building the national economy and promoting national interests, the government has failed to create job opportunities and business environment in the nation pushing citizens to seek better opportunities outside the country. There is no provision for Technical Vocational Education and Training although stakeholders are lobbying for it with the government. Kunwar says, “The government has not taken any steps to ensure decent living to migrant workers. A migrant worker should be well-equipped to make a decent living before he leaves for foreign employment and this can happen only if the government proactively provides training and skill enhancement workshops.”

Due to weak law enforcement and lack of monitoring, there have been several reported cases of manpower companies cheating Nepali migrant workers in the pretext of giving them better opportunities abroad. “The government’s policy of Free Visa Free Ticket which was enforced in 2015 to six countries — Malaysia, Kuwait, Qatar, Oman, Bahrain and Saudi Arabia, for poor migrant workers has not been effectively implemented. It only remains a formality and hardly any migrant worker has benefitted from this policy,” says Kunwar.

Foreign employment not a sustainable solution

Pokherel asserts that Malaysia used to be the top destination for Nepalis seeking foreign employment but after the completion of major construction works in Malaysia, the demand for workers in this host country dropped. This also stands true to Gulf countries, where the demand for labour for construction is high but will not remain so once the infrastructure and construction overhaul is complete. Pokharel says, “Ideally, a country takes about 20 years to build its infrastructure and once that is completed the demand for foreign migrant workers automatically drop. Therefore, depending on foreign employment as a long-term solution is not practical.” Though remittance plays a significant role in boosting the nation’s GDP, being dependent on this source of income is not advised. Kunwar says, “Foreign employment is not a permanent solution to our nation’s unemployment problem.”

The other worrying aspect of remittance is that a chunk of the money is mostly spent in running households and consumption and a portion of it is spent in unproductive sectors. Kunwar says, “Proper utilisation of remittance money is the need of the hour. The sender and the receiver both must be sensitised on how to judiciously use the money earned. They should be taught the benefits of investing their hard earned money in productive sectors which will ensure good returns.” The government needs to run sensitisation programmes to inculcate the habit of saving among the migrant workers and their families. A business environment with sustainable entrepreneurship schemes must be created to ensure that the money they spend on small solo enterprises is not a one way traffic for investment to flow.