Remittance growth rate falls for 5 mths straightThe growth rate of remittance flowing into Nepal has been dropping for five months straight even though the total amount of funds received has been swelling, Nepal Rastra Bank (NRB) said in its latest macroeconomic report published on Tuesday.
The growth rate of remittance flowing into Nepal has been dropping for five months straight even though the total amount of funds received has been swelling, Nepal Rastra Bank (NRB) said in its latest macroeconomic report published on Tuesday.
Nepali migrant workers scattered across the globe sent home Rs481 billion in the first nine months of the fiscal year.
The pace of growth started slowing in mid-December 2015, recording a continuous decline from 26 percent to 19.26 percent in mid-January, 15.90 percent in mid-February, 13.91 percent in mid-March and 12.71 percent in mid-April.
Remittance companies said the fall was not completely unexpected as labour departures to the major work destinations of the Middle East and Malaysia had been dropping since the start of this fiscal year.
“We’ve been seeing a gradual decline in the departure of migrant workers, especially to Malaysia, while the number of returnees from work destinations abroad is on the rise,” said Suman Pokharel, CEO of International Money Express (IME), one of the country’s leading remittance companies. According to the Department of Foreign Employment (DoFE), 311,850 workers left for overseas jobs in the first nine months of this fiscal, down 39.20 percent year-on-year. Some 512,887 Nepalis had gone abroad to work in the first nine months of the last fiscal year.
At the same time, there was a three-fold jump in hiring demand for Nepali workers which shows that the drop in departures was not for lack of job opportunities.
Experts said that fewer workers went abroad due to swelling employment opportunities for unskilled workers at home. Meanwhile, a dispute over the free visa, free ticket scheme also hit departures to Malaysia.
While it is too early to correlate the slowed growth in remittance with declining departures, money transfer companies said that remittance inflows would be affected if the trend persisted.
“If this mismatch between departures from Nepal and arrivals from abroad continues, it will automatically lead to a slowdown in remittance inflows,” Pokharel added.
The money sent home by the 4 million Nepalis toiling in faraway lands has been the most reliable source of income for a country that has been suffering from a protracted political crisis and depressing economic growth.
Bhesh Bahadur Karki, one of the directors of the DoFE, said that a number of factors including last year’s earthquake had contributed to the decreasing growth rate of remittance.
Stakeholders said that a jump in demand for manpower at home for post-quake reconstruction may have discouraged migrants from going for overseas jobs. “Many new workers gave up plans to go abroad after the earthquake,” said Karki.
“After the government unilaterally imposed the ‘free visa, free ticket’ scheme, hiring demand plunged 90 percent,” said Kumud Khanal, proprietor of Fusion International, a manpower agency that sends workers to Malaysia.
“My agency has sent only 100 workers to Malaysia since the plan was launched. If the government wants this scheme to be successful, it must sign bilateral agreements with destination countries where the provision of ‘free visa, free ticket’ is mentioned.”
Manpower agencies became reluctant to send workers abroad after the government said that they could not charge for the visas and air tickets of the prospective migrant workers, which played a crucial role in decreasing departures.
Last July, these agencies even went on strike to protest against the government’s decision. “The strike by recruiting agencies also contributed to bringing down the departure rate of migrant workers to some extent,” said Karki.
According to Pokharel, if the government doesn’t sort out the issue, not only the remittance growth rate but the amount of funds transferred could shrink too.