Views of a Nepali Economist

FLAWED NARRATIVE

Economic development in Nepal has never been inclusive. There is still a disparity based on geographical difference, ethnic groups and rural-urban divide. Minorities and marginalized groups continue to suffer under poverty. As a result, social exclusion and economic poverty are still strongly correlated. Seventy percent of the ‘untouchables’ and 60% of the indigenous population are poor. Over 42% of households in the mountains are poor while the figure is only 23.4% in the plains. Only 4% of households in Kathmandu valley are poor. The figure for urban areas outside the valley is 33%.

Poverty and lack of economic opportunities has meant that Nepal is losing its working-age population to overseas work. Around 65% of Nepalis who leave Nepal every day as migrant workers are 29-years old or younger. The other 35% are between 29 and 44 years of age. So, the Nepalis who leave are at the prime of their life. As a result, many Nepali villages in the hills and mountains have virtually lost all their working-age population to the Middle East and other migrant destinations. That demography of 15 to 44-year olds is the target demography of almost all the development programming in Nepal. When that target population is missing from most program locations, it becomes difficult for development organizations to carry out their mandate and programs. The trend for migration does not seem to be slowing down. Therefore, international and national development organizations in Nepal have a real problem in their hands in the coming decade.

This exodus, of mainly working age males, has not been all for the negative. In the absence of males, women in such locations have shouldered more responsibilities. Remittance income has supported them in this role. Their ability to venture into new responsibilities have been made easier because of remittance income which has been increasing each passing year. According to the World Bank, Nepal was the third largest recipient of remittances in 2013 with $5.4 billion. The 2011 Census showed that 25.4% or 1.4 million Nepali households had at least one member of the household living abroad. With the guaranteed financial support from remittance income, those left behind—mainly the women—have become more participatory in community work and decision making. For many, the absence of males has been an opportunity to participate in economic and social work which they would not have had a chance to engage in otherwise.

Nepal’s remittance story is sad. It did not arise because excellent Nepali workers wanted to go global to take advantage of lucrative opportunities overseas. It arose out of inequality and uneven level of development across Nepal. The Maoists exploited this inequality and uneven economic development to launch their revolution. The Maoist conflict has now ended, but the issues still remain. For example: despite having similar geography, demography and climate, the mid- and far-western terai are much less developed than the eastern terai. Jhapa, Morang and Sunsari in eastern terai are among the top five contributors of revenue to the coffers of Nepal government. But, Kanchanpur, Kailali, Banke and all other districts in mid- and far-western terai are decades behind in development.

The eastern districts also rank very high on human development indices. Residents of Jhapa and Sunsari are also disproportionately represented in the Nepali civil service. Similarly, hilly districts in eastern, western and central Nepal are much more developed than those in the mid- and far-west. Among the hilly districts, Palpa and Syangja are disproportionately represented in Nepali civil service. Kaski and Kathmandu are much more developed than similar hilly districts in mid- and far-west. It would not be a stretch to say that there has been a systematic exclusion of mid- and far-west Nepal from the development process. The Maoist conflict successfully exploited that exclusion but did not actually solve it.

There are many in Nepal who believe that the remittance economy has helped to narrow the development gap between the haves and the have-nots. They believe that the poor have been able to go overseas for work, and the remittance income they send home has helped their household enter the coveted middle-class. But, there is a story of exclusion and exploitation within that story. Manpower agencies and brokers charge a much higher rate from workers than advertised. The government has set a maximum fee of Rs 60,000 that agents can charge for sending a migrant worker to Malaysia and Rs 80,000 for Korea. However, agents in Jhapa last year were charging Rs 260,000 as fees for Malaysia and Rs 700,000 for Korea. This practice of extorting higher fees than what is allowed by the government results in exclusion of the poor from an opportunity to go to these lucrative destinations.

As a result, the poor either don’t go to these lucrative destinations or end up taking huge loans to fund their trip. The high rates make the trip affordable to only the middle-class Nepalis who can afford to pay such high fees. This exclusion based on affordability hurts the poor two ways. First, they are unable to go and work in places like Malaysia and Korea that have better working conditions and pay higher wages. Second, the problem of affordability forces the poor to choose locations such as the Middle Eastern countries or India where labor practices are sketchy and wages aren’t great. They are able to sustain a livelihood and be able to make their families slightly better off, but they will always lag behind the middle-class.

Nepal’s remittance story is not inclusive, and does not do much for the poor Nepalis. Nepal’s poor need a different narrative.