Remittance growth slows to 7.7 percent in 2015-16

Remittance inflow rose by 7.7 percent year-on-year in 2015-16 to Rs665 billion, according to the Nepal Rastra Bank (NRB). However, last year’s growth rate was much lower than the previous year’s 13.6 percent. The growth rate in the first and second months of the fiscal year stood at 26.3 percent and 27.5 percent, respectively, but it continued to decline in the following months, averaging 7.7 percent for the year, due to a decrease in the number of migrant workers leaving the country. Last fiscal year, the number of Nepalis going for foreign employment declined by 18.4 percent due to Malaysia halting to hire migrant workers since February. The number of Nepalis going to Malaysia slumped to 60,979 last fiscal year from the previous year’s 202,828. However, Malaysia in May lifted the ban in manufacturing, construction, plantation and furniture-making industries amid acute labour shortage. Besides Malaysia, the outflow of Nepalis to the United Arab Emirates, Bahrain, Afghanistan, Israel and Lebanon also decreased. Many Nepali foreign employment firms are not sending workers to foreign countries protesting the government’s “free visa, free ticket” system. “The decreasing growth rate of remittance has increased the risk to the economy because the country is very much dependent on remittance income for the livelihood of many people,” said Nara Bahadur Thapa, chief of NRB’s Research Department. Remittance accounts for 29.6 percent of the country’s Gross Domestic Product (GDP) as of last fiscal year, according to the NRB. Remittance has been considered as one of the key factors for decreasing rural poverty. “If we continue to lose foreign jobs and cannot create employment within the country, it will have a huge impact on poverty reduction,” said Thapa. Oil-dependent Gulf countries facing economic slowdown due to falling crude prices have slowed the hiring of migrant workers. Hundreds of companies in Saudi Arabia have closed down in recent months and those still operating are laying off workers forcing many Nepalis to return. Saudi Arabia is one of the top destinations for Nepalis, with the Gulf nation taking in 138,529 Nepalis—30.8 percent of the total Nepali migrant workers—last year. Government officials, however, Nepali workers are not at risk in Saudi Arabia. “Big companies are retaining workers, while smaller ones are laying off,” said Labour Ministry Secretary Bishnu Lamsal, adding even those facing the axe are finding jobs in other companies. He, however, said the lifting of the ban in Malaysia in a few sectors might help boost the outflow of Nepali migrants and inflow of remittance. In June, the World Bank in its “Nepal Development Update” report stated Nepal could face a slowdown in remittances due to decreasing number of Nepali workers. “A potential slowdown in remittances poses a significant near-term risk to Nepal because of its outsized role in the Nepalese economy.” Remittance inflow, which jumped in the post-earthquake period, slowed down by January 2016. “In three months to April 2016, remittances contracted by 5.3 percent (in dollar terms) compared to the same period of the previous year,” the report pointed out. At a time when Nepal has been facing labour shortages for massive post-earthquake reconstruction works, decrease in the number of Nepalis going abroad could help fulfil the domestic demand for workers. “If the reconstruction works accelerate, there is a chance that many Nepalis will get jobs within the country.” Monthly Remittance Inflow (FY 2015-16) Month    cumulative Amount    Growth Mid-July to Mid-Aug    Rs53.27 billion    26.3% Mid-Aug to Mid-Sep    Rs107.67 billion    27.5% Mid-Sept to Mid-Oct    Rs166.42 billion    24% Mid-Oct to Mid-Nov    Rs215.39 billion    19.4% Mid-Nov to Mid-Dec    Rs271.4 billion    19.4% Mid-Dec to Mid-Jan    Rs323.69 billion    17.3% Mid-Jan to Mid-Feb    Rs375.16 billion    16.9% Mid-Feb to Mid-March    Rs427.37 billion    15.2% Mid-March to Mid-April    Rs481.69 billion    13% Mid-April to Mid-May    Rs538.87 billion    10.2% Mid-May to Mid-June    Rs598.95 billion    8.6% Mid-June to Mid-July    Rs665.06 billion    7.7% Source: Nepal Rastra Bank Source: ekantipur