KATHMANDU - Namrata Pandey leaves in 10
days for a job as a domestic worker in Israel, but
she is eyeing a future move to the United States,
a path she says some friends and family have
trodden. The mother of two left her husband a
couple of years ago and will now quit her job as a
government clerk, which pays about US$70 a month,
for one that will provide at least $650 monthly.
Her contract is for two and a half years and does
not include a visit home.
"Whether I go to
the US or Israel, the bottom line is I need money
to educate my children," she said. In her late
30s, Pandey (who asked that her real name not be
used) says 6-7 Nepalese leave home each day to
work in Israel. It is estimated that 350 citizens
depart here daily (130,000 a year) for various
countries to earn the
living they cannot make in a
nation that was already one of Asia's poorest
before being hit by a Maoist uprising 10 years
ago.
The recent rebel bombing of a textile
factory and the pre-emptive shutdown of another
enterprise following Maoist threats have again
spotlighted Nepal's reliance on its only booming
"industry": the export of labor. But how long can
the economy depend on remittances earned by
workers who toil in other nations?
"At the
local level, remittances help improve living
standards by financing greater consumption in
households, and enabling better health care,
nutrition, housing and education. However, their
longer-term impact on developing countries may be
questionable if few productive assets are
created," says an article on the World Bank's
website promoting a recent book, Remittances:
Development Impact and Future Prospects.
Among South Asian nations, Nepal was most
dependent on money earned abroad in 2003: 14.8% of
the country's gross domestic product (GDP) came
from this source, according to the article. Four
years earlier, the amount was less than 10%. And
the upward trend shows no slowdown - the number of
workers leaving to work abroad jumped 28% from
July 2004 to June 2005, according to the
department of labor and employment promotion.
Reliance on remittances is not a problem,
says one official. The money is "a very good and
stable source of foreign exchange for the country
... we will encourage any model which will further
facilitate remittances," central bank deputy
governor KB Manandhar said. "We are not worried
about the [possible] negative impact of relying on
remittances. We are worried about money coming
through illegal channels" instead of the banking
system, he added, estimating that hidden cash
could total 30-40% of the roughly US$1 billion
Nepal annually earns from remittances.
Earlier this year the government credited
foreign earnings for contributing to an 11% drop
in poverty over the past eight years. "We know
that most people [receiving remittances] initially
spend it on food and lodging," said Manandhar. "As
human beings that is our first priority. Gradually
it will go for land or housing purchases. Thirdly
it will go for investments."
According to
the World Bank, "unlike other capital flows,
remittances are stable and directly benefit the
poor". Ganesh Gurung agrees. A sociologist who has
studied remittances to Nepal for the past six
years, he has found the money "goes directly to
the poor man's household and is used to buy rice
and curry... that's the beauty of these
remittances - there's no 'trickle down' effect''.
He has also concluded that workers who earn abroad
use the money in three ways: to pay off loans they
took to go work abroad or for day-to-day survival;
to upgrade basic needs, such as putting a tin roof
on their house or sending their children to a
private school instead of a government one; and to
buy land or invest in housing or higher education.
Except for higher education, which Gurung
calls a long-term investment, "there are no
productive investments using remittances", he
says. "I have not seen a big industry that has
been established through remittances." Gurung, who
is affiliated to the Nepal Institute for
Development Studies, said the government should be
directing remittances into such investments. "It
is not a good strategy to depend on remittances
[normally] but [only when] it is the only option
you have left; it is a short-term option during
conflict, but we have to maximize the benefits ...
the government must play a positive role."
In other Asian nations that depend on the
export of workers, like the Philippines and Sri
Lanka, governments introduce investment schemes to
workers before they go abroad. In Nepal, "key
policymakers have seen it as a 'dirty game' but
haven't seen that the country's economy is being
supported by remittances", Gurung said.
Nepal's business community has also been
urging authorities to get more involved, in this
case to boost security for industries. Anglo-Dutch
firm Unilever closed its plant south of Kathmandu
recently, putting 2,000 employees out of work. The
consumer goods maker said it could not meet
demands from the Maoists, including a pay hike.
Hours later rebels bombed a spinning mill further
south, on the Indian border, causing losses
estimated at $2.3 million and putting 1,000
employees out of work. Earlier last month, tea
estates in east Nepal reopened after a month-long
shutdown called by unions affiliated with the
Maoists, which had affected 40,000 workers.
Industrialists have lead a peace rally in
southern Birgunj city and demand that businesses
be protected as "zones of peace". "More
industrialists of the country are likely to get
displaced if efforts are not made in time to stop
the continuous attacks of Maoists on the
industrial sector,'' Chamber of Commerce and
Industry president Chandi Raj Dhakal told
journalists.
In February 1996, the Maoists
launched their war against the state, calling for
a republican system of government and fair
treatment for the indigenous people and Dalits
(the so-called "untouchables") who make up more
than half of Nepal's 25 million people. Nearly
12,000 Nepalese have died in the conflict. On
February 1, King Gyanendra Bir Bikram Shah Dev
imposed a state of emergency and fired the
government in part for its inability to defeat the
Maoists. The emergency ended officially in April
but the king continues to rule and shows no sign
of reconciling with the estranged political
parties or of making peace with the rebels.
The government has also been accused of
ignoring civilian victims of the conflict. But it
has started a program of providing loans to Maoist
victims, indigenous people and Dalits so that they
can go work overseas. Asked if she thinks sending
people to work abroad is good for the country,
Pandey says: "The money comes back to Nepal
ultimately."
