Remittance Economy. Where are we heading?

The contribution of remittance in the GDP of Nepal has been increasing over the years. However, we lack a proper assessment of the impact of remittance in the households.

Source: World Bank

I had been to Jhapa, my birthplace, to celebrate my annual festive-vacation for a month. Jhapa, it’s always awesome, lovely and growing. I just love to be there. My home at Jhapa is close to the border with India. The transit point is Kakarvitta, which is one of the largest port of Nepal.

One fine morning I got chance to go to the entry point, where I saw many Indians coming by bicycle to Nepal. I asked one of the locals, "who are they? where are they going?" He said,

“All of our brother – sisters, sons – daughters, dad – mom, uncles – aunts are abroad. We need someone to work in fields and factories in our country, right? They are labors. They help to run our economy”.

I was shocked.

There were almost a hundred people. They come to Nepal everyday for employment. They reside in India, consume in India and come to Nepal for work. And these many people were coming only through one entry point. As per Reuters "Indians account for the largest segment of foreigners in Nepal, amounting to about 600,000 in a country of 28 million, according to some estimates. Officials, though, say the open 1,750 km (1,100 mile) border and a lack of visa requirements means it is impossible to pinpoint the number of Indians living or visiting there at any one time." This is of-course not to say that citizens of Nepal don't go to India for employment. They do, and they too consume from India.

I was already concerned about the impact of Nepalese going for foreign employment when I heard a program featuring the families of foreign employed in Nepal in BBC. Most of the families that were featured were devastated due to absence of family head. Children were following wrong path and most of the income was spent in luxury items. They didn’t aid to economic development - rather increased BOP deficit because all of those items are imported. Now, this situation of Jhapa forced me to analyzing the impact of foreign employment in my locality, which would in term reflect the status of the country as a whole.

While I was shopping for goods, there was a product whose marked price was INR 10 i.e. NPR 16 but the shopkeeper had priced it NPR 20. NPR 4 more than its maximum retail price - I was bargaining.

While I was demanding for fair price a lady came to the shop and purchased same product at NPR 20 without a word. The shopkeeper laughed at me and said,

“If I mark it NPR 22, I will be able to sell it faster……… Her husband is abroad to earn as well………… So people like her receive money without any labor. Money is free for them………. People of Nepal don’t know the value of money. They want to show off their friends that they can make larger expenses then those around them.”

And he is true. Almost every product's price is inflated far too above the marked price. He further adds,

"People are paying for it because those residing in Nepal are receiving money without much labor. They don’t respect money, they have no idea how difficult it is to earn a penny,  and they also don’t know how to use it (money)."

(The current inflation rate of Nepal stands at 9.3%, 2016). As for me, I never receive money for free so I couldn’t purchase the product.

Next day I went to India, got same product at INR 9 (whose marked price was INR 10). I got INR 1 discount at retail purchase.

Not only me, its a trend in border areas of Nepal to purchase goods from India. However, it’s not because people bother about the price of the product or quality.

Source: World Bank

They perceive that goods purchased in India is better in terms of price and quality. They are right to some extent, only to some extent. Moreover, to purchase goods from India is a culture now. The money that comes to Nepal through remittance is not spent in home country or any home product. In fact we don't have much as home product.

The adjoining chart only shows the formal formal import and export of Nepal. If all the import-export are recorded, the condition will be worse.

Concretization is another issue that has come along with the remittance flow. Concretization: converting cultivatable land to plots for residential housing. 

On top of that, because there are no youth in the villages, most of the land that were cultivated in the past are barren.

Source: World Bank

We are driving ourselves to food crisis. We are also creating a generation that know how to purchase but not how to produce. This is one of the reason for extreme poverty in Africa. Through our activities we are driving ourselves towards No. 1 rank in terms of poverty.

The government has brought a policy which says barren land holders will be punished. The government has also brought foreign employment policy which will ease the process of going abroad for employment. One thing that the ruling government couldn't understand here is, one of the reason for barren land in Nepal is lack of labor force. Sending more people outside the country will not help in increasing the arable land of Nepal. The new policies do not support each other.

Another problem that has emerged with remittance economy is number of schooling children. Most of the under aged don’t go to school. Its because studying is a tough task and there are abundance of job for illiterate in gulf countries.

I asked a kid in my neighbor, why aren't you going to school. His answer was shocking,

“Why should I study. It’s useless.”

I then asked, “Who said? What will you do for living? How will you have a better life?”

“After 18 I will go to Quarter for earning.” was his simple and sincere answer. "My father and my elder brother are abroad and they earn lot of money", he added.

On my quest as to how the money was utilized, he said that they made a better house, they purchased a TV, DVD player, a laptop (which is used to play games in our villages) and a motorcycle.

There are almost 15 FM stations that operate in Jhapa. The content they play as advertisements are not helping as well. The media and communication sector claim themselves to be the fourth pillar for the development of our nation but instead they are driving the nation into dark. The advertisements are all about work in gulf countries, EDV and individual focused real state (for housing). The advertisements are so convincing that it would lure anyone to follow what they say.

I couldn't see any positive and sustainable impact of those advertisements in the development of our country. Especially when we are facing the crisis of human resource and the money sent from abroad is used for meeting useless expenditure rather then investing. This trend will further create a poorer, dependent and backward Nepal.

To summarize, the problems we are facing due to miss management of remittace earnings are

1. Children are not going to school
2. The cultivable fields are barren
3. Imports of edibles are increasing at rapid rate
4. We are heading towards extreme food crisis
5. There are no labors for our factories and industries
6. People love to shop abroad
7. There are no youths in villages – they are empty – and
8. No one is interested to address the problem.
9. Media and communication sector who claim to be the agent for positive social change are bringing about negative trend.

Most amazingly, in the duration of a month of my stay in Jhapa, none of the FM stations ever played any news about IPO of any company, no news about any development works, there were no interviews of any entrepreneurs or businessperson or teachers, there were no adds that would request people to send their children to school, no advertisements about job vacancies in home country.......... nothing at all that would reflect that our society is prospering or that would give a hint that our society would prosper in coming future.

Is remittance really good for Nepal?

Remittance are always good, there's no doubt about it. They are earnings of our citizen. Its a source by which our country is running.

What are we doing with the remittance?

is the question that all of us must be asking. Until we make any effort to learn a habit of investment in productive sector and saving, and until the responsible people and sources of our society act responsibly and if this trend of using remittance to purchase luxury items, concretization or purchase from abroad continues - the impact of remittance will not be good in our country.

No matter how much money we earn, we will still be poor, our country will still be undeveloped and remittance cannot be a boon.