Sunday, February 1, 2015
Flawed narrative on remittance
The following article was published in Republica on February 2, 2015. The direct link to Republica is here.
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.
Labels: inclusive growth, migration, remittance, unemployment
Sunday, September 18, 2011
Poverty Reduction and Inclusive Growth
.
The following opinion piece was published in Republica on September 18, 2011. The direct Republica link is here.
In 2010, a report for UNDP prepared by Oxford University caused a furor in Nepal when it mentioned that 65 percent of us lived under poverty. The report made its calculations by observing factors like nutrition, electricity, food, energy, drinking water and sanitation, maternal mortality, student enrollment, livelihood and availability of property. The study defined an MPI index—Multi-dimensional Poverty Index—as a measurement of poverty.
The MPI had two parts: Incidence of Poverty and Average Intensity of Deprivation. Incidence of poverty recorded the proportion of the Nepali population that was multi-dimensionally poor. The average intensity of deprivation recorded the average proportion of the indicators in which the population was deprived. The study claimed that 64.7 percent of Nepali households were poor, and 54 percent deprived.
Needless to say, the National Planning Commission (NPC) countered the findings of that report, and suggested that the national poverty was only 25.4 percent. The basic difference between the two numbers arises out of the mechanics of measurement. The Oxford measurement was clearly influenced by Prof Amartya Sen’s ideas of measuring poverty levels by observing overall human development and access to facilities. On the other hand, NPC’s measurement is pretty straightforward in specifying a poor person as being somebody who consumes less than 2144 calories per day. The NPC should have bothered to learn this difference before countering the findings.
However, despite the mechanics involved in measuring poverty, it is undeniable that poverty is still a problem, and a constant hindrance to our economic growth. The fact remains that our political, social and economic problems all arise out of, and contribute to, one common factor: Poverty. In addition, what the Oxford study highlighted was a lack of inclusiveness in our economic growth because of which marginalized groups and minorities in Nepal continue to suffer under poverty.
There are certain factors that have significant impact on whether we are poor or vulnerable to becoming poor. Variances in poverty level depend on rural-urban divide, ecological zones, ethnic groups, castes, literacy level, and gender. For example: According to the findings of the Nepal Living Standard Survey (NLSS), a rural household is more likely to be under poverty than an urban household. NLSS 2004 showed that 95 percent of the poor lived in rural areas.
Looking at the raw numbers, it seems that poverty is declining in Nepal. If the past trends hold true, it is safe to say that we are less poor today, and less vulnerable compared to our situation a decade or two ago. For example, in 1996, people in the mountains were more likely to live under poverty than those in the Terai or the hills. In 2004, those in the hills were more likely to be poor than those in the mountains.
However, an improvement in poverty in one scenario does not necessarily indicate improvement in all other fronts. Incidence of poverty reduction in the mountains today could be the result of declining mountain population due to migration downwards to the hills. Many people from the mountains and hills migrated because of Maoist insurgency, lack of economic opportunities, and changing environment and climate. Migration is also the main reason for drastic decline in poverty incidence in the mid-western and far-western regions since 1996.
Among the factors that have been observed to reduce poverty in households, education is the most important. Around 42 percent of illiterate households were poor in 2004. But, if at least one member of the household had more than 11 years of schooling, there was only 1.6 percent chance that the household would still be poor. The good news for us in this regard is that youth literacy rate is increasing today. As our youths become more literate, we can expect that to have an impact in lowering our poverty rates.
However, despite becoming more literate and educated, our youths are struggling to find jobs at home. As a result, they find themselves unemployed and disillusioned. Our inability to create jobs for them has a tendency to undo the progress that we have made by educating them. Our inability to harness the youth education and energy severely hinders our fight against poverty. If Nepal is to follow an inclusive growth approach, inclusion of our youths is vital to that approach.
There is a general consensus among Nepali experts that inclusive growth brings forth sustained and equitable development, social inclusion, empowerment of women, and security in the country. However, this consensus has not been translated into results. Experts have raised their concerns on issues such as integration of trade policy into overall development goals and strategies; export-led growth strategy with a human face; promotion of employment-intensive economic activities; making aid more inclusive and productive; and effective leadership. Until these desired results can be obtained, critics believe that Nepal will not see a proper inclusive growth.
The critics are right to some extent. A 2008 research by Magnus Hatlebakk, prepared for the Norwegian Embassy in Nepal, showed that Tamang and Rai people of eastern hills have high poverty rates. The highest poverty rates are found among the minorities like Magars, Dalits, and Tharus. NLSS I and II show high poverty among the minorities, and low among the upper caste Brahmins and Chhetris. 46 percent of Dalits, 41 percent of Muslims, and 43 percent of Janajatis were poor in 2004. According to a 2005 UNDP report, poverty rates for Dalits were 15 percent higher than the national poverty rate.
Therefore, there clearly exists a strong link between social exclusion—as defined by the caste hierarchy—and economic poverty. In recent years, remittance income has reduced the poverty incidence on female headed households. So, gender dimension in poverty could be reducing. However, despite some improvements in recent years, we have many more miles to go in achieving inclusive growth.
The following opinion piece was published in Republica on September 18, 2011. The direct Republica link is here.
In 2010, a report for UNDP prepared by Oxford University caused a furor in Nepal when it mentioned that 65 percent of us lived under poverty. The report made its calculations by observing factors like nutrition, electricity, food, energy, drinking water and sanitation, maternal mortality, student enrollment, livelihood and availability of property. The study defined an MPI index—Multi-dimensional Poverty Index—as a measurement of poverty.
The MPI had two parts: Incidence of Poverty and Average Intensity of Deprivation. Incidence of poverty recorded the proportion of the Nepali population that was multi-dimensionally poor. The average intensity of deprivation recorded the average proportion of the indicators in which the population was deprived. The study claimed that 64.7 percent of Nepali households were poor, and 54 percent deprived.
Needless to say, the National Planning Commission (NPC) countered the findings of that report, and suggested that the national poverty was only 25.4 percent. The basic difference between the two numbers arises out of the mechanics of measurement. The Oxford measurement was clearly influenced by Prof Amartya Sen’s ideas of measuring poverty levels by observing overall human development and access to facilities. On the other hand, NPC’s measurement is pretty straightforward in specifying a poor person as being somebody who consumes less than 2144 calories per day. The NPC should have bothered to learn this difference before countering the findings.
However, despite the mechanics involved in measuring poverty, it is undeniable that poverty is still a problem, and a constant hindrance to our economic growth. The fact remains that our political, social and economic problems all arise out of, and contribute to, one common factor: Poverty. In addition, what the Oxford study highlighted was a lack of inclusiveness in our economic growth because of which marginalized groups and minorities in Nepal continue to suffer under poverty.
There are certain factors that have significant impact on whether we are poor or vulnerable to becoming poor. Variances in poverty level depend on rural-urban divide, ecological zones, ethnic groups, castes, literacy level, and gender. For example: According to the findings of the Nepal Living Standard Survey (NLSS), a rural household is more likely to be under poverty than an urban household. NLSS 2004 showed that 95 percent of the poor lived in rural areas.
Looking at the raw numbers, it seems that poverty is declining in Nepal. If the past trends hold true, it is safe to say that we are less poor today, and less vulnerable compared to our situation a decade or two ago. For example, in 1996, people in the mountains were more likely to live under poverty than those in the Terai or the hills. In 2004, those in the hills were more likely to be poor than those in the mountains.
However, an improvement in poverty in one scenario does not necessarily indicate improvement in all other fronts. Incidence of poverty reduction in the mountains today could be the result of declining mountain population due to migration downwards to the hills. Many people from the mountains and hills migrated because of Maoist insurgency, lack of economic opportunities, and changing environment and climate. Migration is also the main reason for drastic decline in poverty incidence in the mid-western and far-western regions since 1996.
Among the factors that have been observed to reduce poverty in households, education is the most important. Around 42 percent of illiterate households were poor in 2004. But, if at least one member of the household had more than 11 years of schooling, there was only 1.6 percent chance that the household would still be poor. The good news for us in this regard is that youth literacy rate is increasing today. As our youths become more literate, we can expect that to have an impact in lowering our poverty rates.
However, despite becoming more literate and educated, our youths are struggling to find jobs at home. As a result, they find themselves unemployed and disillusioned. Our inability to create jobs for them has a tendency to undo the progress that we have made by educating them. Our inability to harness the youth education and energy severely hinders our fight against poverty. If Nepal is to follow an inclusive growth approach, inclusion of our youths is vital to that approach.
There is a general consensus among Nepali experts that inclusive growth brings forth sustained and equitable development, social inclusion, empowerment of women, and security in the country. However, this consensus has not been translated into results. Experts have raised their concerns on issues such as integration of trade policy into overall development goals and strategies; export-led growth strategy with a human face; promotion of employment-intensive economic activities; making aid more inclusive and productive; and effective leadership. Until these desired results can be obtained, critics believe that Nepal will not see a proper inclusive growth.
The critics are right to some extent. A 2008 research by Magnus Hatlebakk, prepared for the Norwegian Embassy in Nepal, showed that Tamang and Rai people of eastern hills have high poverty rates. The highest poverty rates are found among the minorities like Magars, Dalits, and Tharus. NLSS I and II show high poverty among the minorities, and low among the upper caste Brahmins and Chhetris. 46 percent of Dalits, 41 percent of Muslims, and 43 percent of Janajatis were poor in 2004. According to a 2005 UNDP report, poverty rates for Dalits were 15 percent higher than the national poverty rate.
Therefore, there clearly exists a strong link between social exclusion—as defined by the caste hierarchy—and economic poverty. In recent years, remittance income has reduced the poverty incidence on female headed households. So, gender dimension in poverty could be reducing. However, despite some improvements in recent years, we have many more miles to go in achieving inclusive growth.
Labels: inclusive growth, poverty
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