It has been widely acknowledged that remittance played a key role in reducing poverty in Nepal from 42 percent in 1995-96 to 23.8 percent in 2015. According to the Oxford Poverty and Human Development Initiative of Oxford University, Nepal’s multidimensional poverty plunged 64.7 percent in 2006 to 44.4 percent in 2011. Migration and remittance are universal phenomena. As of July 2015, nearly 4 million Nepali youths had migrated to work destinations abroad. This figure does not include individual applicants and other unrecorded migrants—most of whom have gone to India. These migrant workers send back money which has become an integral component of the national economy and broader society. Today, remittance accounts for 25.5 percent of the national Gross Domestic Product (GDP), up from 10.7 percent in 2001. 

Proper utilisation

Malaysia, Saudi Arabia, Qatar, the UAE and Kuwait are the major destination countries that absorb more than 85 percent of Nepali migrant workers. The choice of destination depends on the origin of migrants and wealth status, according to a report entitled Large-Scale Migration and Remittance in Nepal: Issues, Challenges, and Opportunities issued by the World Bank Group in 2011. It says households with the least wealth tend to send members to India, but India’s attractiveness declines rapidly as wealth increases. The number of labour permits issued to migrant workers from the Mid-Western and Far-Western regions is the lowest among all regions, indicating that the first preference of migrants from these places, which are also known as poverty prone areas, is India.

A study entitled Migration and Entrepreneurship with a Focus on Youths, conducted by the World Bank Group in 2013, revealed that a vast majority of migrant workers, or 85 percent, migrate only once. Among the rest, 13 percent migrate twice and 2 percent migrate thrice, indicating that a large number of migrants remain in the country after returning. Interestingly, only 10 percent of the returnees get jobs. Are the remaining 90 percent prospective entrepreneurs? This is a key question.

Remittances per capita amounted to Rs9,234 per annum in 2011, up from Rs2,100 in 2004, according to the Asian Development Bank (ADB). The most important thing to consider is where and how this massive cash flow is being utilised. According to an ADB report, most of the earnings are spent on family consumption. Likewise, 7.1 percent of the money is used to repay loans, 4.5 percent to purchase household property and 3.5 percent to pay for education. Only 2.4 percent of the remittance is utilised for capital formation, which is a matter of concern for long-term sustainability of rural livelihoods. 

A study on labour migration and remittance conducted in Nepal’s Mid-Western and Far- Western regions by the International Centre for Integrated Mountain Development (ICIMOD) revealed a similar behaviour pattern. The findings show that there is no culture of saving, and most people are eager to spend whatever money they have earned. Safer Migration, a project funded by the Swiss Agency for Development and Cooperation (SDC), has made similar observations. According to its findings, most of the returned migrants hang around doing nothing for six to nine months, and all the while their money keeps dwindling. About a year later, they realise that they don’t have enough to invest in a business. So the only option open to them is to migrate again. 

Common constraints

In order to address this issue, the findings of a study entitled on Migration and Entrepreneurship in Nepal with a focus on Youth: An Initial Analysis published by the World Bank Group, in 2013 is very pertinent. It says that entrepreneurship is more of an economic necessity for returning migrants rather than their desire to find new job opportunities to use the skills and money they have gained overseas.

However, this is not as simple as we think it is. It’s challenging. In the same report, the World Bank found an interesting fact about the choices of returnees. It says that most of the returnees seek paid work rather than doing business. Lack of information and access to technology, lack of finance and other business planning and management skills might also be additional distracting factors. 

Obviously, because of age, limited resource and limited life-work experiences, young migrant returnees face unique constraints in starting new businesses. The irrelevancy of the skills that migrant workers have learnt while working overseas is also equally responsible for discouraging them from going into business for themselves.

Therefore, it is widely recognised that increased technical and business planning and management skills, and access to business information and other support services such as credit, markets and appropriate technologies are some of the key instruments to enhance their entrepreneurial possibilities.

The problems faced by returnee migrants, particularly with respect to starting a business, are nothing new. Others too face the same difficulties. With regard to returnees, what is important is to get them interested in starting their own business, because this is not their first preference. The next step would be to build their confidence that business is a profitable enterprise. The first part is more related to raising awareness, and the latter is about providing support to raise technical and management skills and ensure greater access to business development services that are necessary to start and grow their businesses.

Thing is a graduate from the Asian Institute of Technology (AIT)