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Migrant Workers' Remittances are Crucial for Nepal's Economy

24/06/09June 24, 2009

Money from Nepalese migrant workers is an important source of income for their relatives as well as for the state itself. Most Nepalese emigrants work in the Gulf States and South Asia. Their self-imposed exile is often very long because there is so little work in Nepal. But the global financial crisis is taking its toll on their host countries and uncertainty is rising for Nepalese abroad and their dependents back at home.

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As the construction boom in places like Dubai stalls, Nepalese migrant workers fear for their jobs
As the construction boom in places like Dubai stalls, Nepalese migrant workers fear for their jobsImage: AP

Lele is about a dozen kilometres from Nepal’s capital Kathmandu. There are practically only women and children in the fields. Most of the village men are abroad. Sorasathi’s husband is a waiter in Dubai. Every few months, the 27-year-old explains, her husband transfers 50,000 rupees (about 500 euros) for the family: for her, her son and her parents-in-law.

Remittances account for one sixth of GDP

According to official figures, there are almost 1.3 million Nepalese migrant workers in the Gulf States, South Asia and Southeast Asia. But economics journalist Kiran Nepal thinks there could be up to two million, roughly 20 percent of all Nepalese who are eligible to work. They bring in a great deal of revenues, he says: "We get almost 140 billion rupees in foreign exchange remittances, which is almost 17 percent of the GDP." And that is a safe estimation.

Ras Dev worked in Saudi Arabia as a painter for many years. He earned 40,000 rupees a month there -- a small fortune. He is now waiting for a flight to Qatar, where he hopes to earn just as much. "My family has grown," he says. "My wife and children need to be provided for, and in Nepal there is no work -- so I have to earn money elsewhere." Ras Dev’s brothers and brothers-in-law are already in Qatar so he hopes to find work through them without having to pay a middleman.

Local industry hit by political instability

Nepalis abroad typically do waiting, construction work or odd jobs. It is not uncommon for these men to only go back to Nepal every three years. Many are from the Terai on the border with India, where jobs are scarce and problems are rampant. "In the southern part of Nepal which we call Terai or Madesh, there is a lot industry," says Journalist Kiran Nepal. "But for the last two years there have been huge problems there. Different criminal groups or armed groups fighting for secession are disturbing those areas."

Nepal has not recovered yet from the 10-year-long civil war that ended in 2006. The political situation remains unstable. Officially, the unemployment rate is 7 percent but there is a great degree of underemployment. This is why it is tempting for many to try to make it abroad.

But the international financial crisis is taking its toll abroad -- especially on the building industry in the Gulf States. This in turn will take its toll on Nepal, which is already struggling to overcome political and social problems.

Authors: Sabina Matthay / Anne Thomas
Editor:Thomas Bärthlein