Growth, at a costMore remittance isn’t something to celebrate if we can’t pump it into building national capital.
Nepal has seen a 25-percent year-on-year rise in remittance inflow in the first half of the current fiscal year. With a whopping Rs733.22 billion coming in, the country’s foreign exchange reserves have swelled by 18 percent, to a record Rs1.81 trillion in mid-January 2024. In an ideal scenario, the news of a substantial rise in remittance and reserves should be good news. In the short run, it is decent news, indeed, as it ensures better living standards for the Nepalis and a deeper pocket for the government. But in the long run, this is, at best, a bittersweet development: The money is coming in only because the youth of the country are flowing out, and we stare at a bleak future.
A cursory cost-benefit analysis of the remittance inflow over the years tells us that we are investing far too much of our youth energy compared to what we are getting in return. In the first half of the current fiscal year, 343,405 individuals were issued foreign work permits, of whom 207,970 were first-timers. There is another section of the population that goes abroad to study and settles there. There are concerns that with a significant segment of youths exiting the country to toil in foreign labour markets, our window for reaping the demographic dividend is going to be pretty small.
These concerns are not unfounded. The 2021 National Population and Housing Census shows Nepal’s annual population growing at 0.92 percent, down from 1.35 percent a decade ago. There are now fewer children and more elderly, meaning that we are on the way to becoming a country of the elderly. The youth bulge we are experiencing today would have come as good news if their collective power could be harnessed to build a stronger economy. But they are leaving the country in droves. In essence, we are becoming a nation that produces a cheap labour force for the well-off countries of the West and the Persian Gulf.
After over 30 years of consistently increasing outflow of Nepali migrant workers and inflow of remittance, we have seen some changes in the individual lives and society at large: Declining mortality, rising life expectancy, higher school enrollment, well-equipped hospitals, more vehicles on the road, and better-stocked kitchens, among others. These certainly are significant achievements. But in all these decades, Nepal has failed to come up with a consistent policy to retain the returnees and reinvest the remittance earned in order to build national capital. Since the remittance is hardly invested in manufacturing, we have essentially become a consumer society, with little headway in strengthening our economic foundations.
Although we are going to remain a relatively young country for the next few decades, there is a lot to do to catch the bus to development and prosperity. Only when Nepal makes a concerted effort to invest in human capital can we hope to take advantage of our precious youth power. Again, the rise in remittance is not something we can celebrate if we cannot think of a robust plan to pump it into building the national capital. Or Nepal risks becoming an old nation before it becomes a developed one.