Nepal faces a crisis as COVID-19 stems the flow of remittances « Khabarhub
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Nepal faces a crisis as COVID-19 stems the flow of remittances

17 June 2020  

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KATHMANDU: A coronavirus pandemic has pushed the world into recession, their precarious employment conditions have emerged as a major economic issue for the countries in South Asia that most depend on the earnings migrant workers send home as remittances.

The World Bank projects that remittances to Nepal will slide by 14% this year – not the biggest slump in the region, but remittances represent more than a quarter of the country’s economic output.

Data from the Department of Foreign Employment compiled by the International Organization for Migration (IOM) show that the Gulf states of Qatar, United Arab Emirates (UAE), Saudi Arabia and Kuwait are the most popular destinations after India for Nepali migrant workers.

Qatar and the UAE alone accounted for 58% of all the permits issued by the government of Nepal in 2019 allowing migrants to work abroad. These migrant workers pay a high price for the money they earn in the Gulf: in the past five years, there have been 4,143 cases of financial compensation paid by the government of Nepal from the Foreign Employment Welfare Fund to family members after the death of a migrant worker, and 1,348 cases of assistance for injured workers. In 2018/19 alone, the scheme paid out to 755 families after a migrant worker’s death, and assisted with 588 cases of work injury.

The strict lockdown measures – India, Malaysia, Saudi Arabia and the UAE all stopped non-essential services during the pandemic – hit the tourism, hospitality and construction sectors hardest, where many migrant workers were concentrated.

Migrant workers are also especially vulnerable to COVID-19 because of the conditions in the crowded labour camps they are often based in.

Putting a number to the scale of the problem, in mid-May, Foreign Minister Pradeep Kumar Gyawali told a parliamentary committee that a staggering 211,000 Nepalis needed to be rescued and currently it is repatriating Nepalis immediately, and that many thousands more would need to be brought back home to Nepal at the next opportunity.

Before the crisis hit, many Nepali migrant workers sold ancestral land or borrowed money through informal networks to raise the high fees recruitment agencies charge for securing visas and work placements abroad. Suddenly jobless and unable to pay down these loans, they will now likely need to take on further debt to refund the costs of their repatriation.

Nepal Rastra Bank, to help with lower-rate loans for entrepreneurial activities such as commercial farming – agriculture accounts for 27% of Nepal’s GDP, though it remains largely capital-poor.

The flow of remittances from unemployed migrant workers digging into their savings or from those who have managed to hold on to their jobs could be set on fairer terms by providing incentives to banks, mobile network operators, remittance service providers, and payment infrastructure providers to cut transaction fees and make formal remittances more attractive.

Nepal could follow the example of Bangladesh’s central bank, which has raised the ceiling on the 2% “cashbacks” it offers remittance senders. ( World Economic Forum)

Publish Date : 17 June 2020 21:22 PM

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