Jagannath Adhikari

What will happen to Nepal’s economy and people’s livelihoods if the prospects for foreign employment decline? This is a serious question with no apparent answer. It demands an urgent response, because the present levels of foreign labour employment for Nepali youths could decline anytime due to a possible recession in global economy and consequent changes in the global political order. Both labour-supplying countries and labour-demanding countries may change their policies.

Therefore, there is an element of uncertainty in foreign labour migration and the remittance economy. For example, Nepal is thinking of banning Nepali workers from going to Malaysia for work. During the economic recession in 2008-09, Malaysia itself returned many of its guest workers due to the closure of companies that employed them.

Risks and gains

Nepal’s growing dependence on remittances is both an opportunity as well as a threat. It is an opportunity if this remittance can be put to better use for local income generation and building livelihood assets. If Nepal can depend on foreign aid, why can it not depend on the money earned by its own people? Thus, there should be no moral dilemma in receiving remittances and using it for development purposes. Even so, the growing contribution of remittances to the income of households and its members also heralds a serious risk. A drastic decline in remittances could give a strong shock to the national economy. Economists have estimated that if remittance is equivalent to more than 20 percent of the GDP, a country could face serious problems if this share declines drastically. Nepal has already crossed this threshold, as remittance is equal to, according to different estimates, 25 to 33 percent of its GDP.

Even though foreign labour migration has its share of problems, such as violations of basic rights of workers in destination countries and cheating of workers by agents and companies in labour-sending nations, remittances have surely contributed to improving social development indicators like education, life expectancy, and reduction in child and maternal mortality.

Still, Nepal’s economic sector is not performing well when compared to its social sector.  So, will the achievements made in social welfare be sustainable in the future, particularly when remittances shrink? It is now clear that remittances have not been used prominently for enterprises that could generate local income and employment opportunities. There are a few examples of using remittances for productive enterprises, but a significant part is used for consumption at the household level. The cumulative impact of this consumption is reflected in a rise in the import of food and other commodities.

Not sowing, not reaping

One major consequence of foreign labour migration can be observed in agricultural production. Despite a few cases of migrant returnees who are using their skills learned overseas to develop agribusiness companies, there is a shortage of labour in farming. This has led to growth in fallow lands, especially in the middle hills. In the Tarai too, which now sends more people to work in foreign countries, people now put in less effort in agriculture. As a result, food production has not been growing, even as its demand is growing due to higher purchasing power—thanks to remittances.

The net result of this has been the growing import of food grains. Last year, for example, Nepal imported Rs 14 billion worth of rice, Rs 5 billion of maize, Rs 4 billion of pulses, Rs 2 billion of meat, and Rs 1 billion of milk. Nepal spent about Rs 26 billion for food imports, which is a huge expense for the country.

This begs a question, why is more food, whose demand has increased in recent times, not produced? Logically, remittance income should have been used for this purpose. But involvement in agriculture is not just an economic issue. It is also a social issue—society has made foreign employment a ‘cultural ambition’ for the young. Accordingly, many youths are exposed to unseen push factors to go for foreign employment. In the villages, there is a craze, or rather a social trend, to go abroad and make more money. Involvement in farming in general is looked down upon by society. These young people certainly see the problems faced by some of their friends and neighbours in foreign employment, but these problems have not yet discouraged them, as there are other many examples of success in foreign employment at an individual level.

Producing food locally

This present economic and social trend does not mean that prospects in agriculture are bleak. Agriculture, combined with nature conservation, nature-based enterprises, and farm/rural tourism, is going to draw a great deal of attention in the near future. As a matter of fact, local food production with an emphasis on meeting local demands should have been the priority in policies with support for farmers engaged in such activities. It is only by boosting local food production that the many evils of corporate food—the deterioration of food quality, greater emission of greenhouse gases, greater need to transport food from one corner of world to another, and heavy use of chemicals and preservatives for long-distance transportation of food—can be reduced. At present, we import much of our food from this corporate food system.

With changes in the global environment and health hazards associated with imported food, it is very likely that people will soon realise the importance of land-based activities for local food production and income generation. These activities are also vital in rebuilding communities. We need to look into proactive ways to encourage young people to engage in such food production activities and in the regeneration of our rural economy.

Published on: 23 April 2015 | The Kathmandu Post