IFAD Nepal COSOP 2013-2018

Assessment of issues and options for investing in productive use of migration and remittance in Nepal Background study for IFAD COSOP design January – May 2013

Migration streams in Nepal Six migration streams can be identified, which are associated with economic classes in Nepalese society: Group A: Migrants to United States of America/United Kingdom/Australia Group B: Migrants to Europe/Japan/Korea/Israel Group C: Migrants to Gulf Countries/Malaysia Group D: Migrants to India Group E: Internal migrants Group F: Non-migrants There is a lack of knowledge and policy support for Group D (India) and Group E (Internal).

Contribution of remittance to Nepalese GDP (Billion NPR) Source: Ministry of Finance 2012, p 87; Nepal Rastra Bank 2012, p 94

Distribution of total remittances by district In 2011-2012, the Nepal received remittance worth USD 3.5 billion from countries other than India (Ministry of Finance 2012, p 87). In 2010-2011, 55.8 per cent of households in Nepal received remittance (CBS 2012c, p 80). Source: World Bank 2011b, p42

Contribution of various non-farm economic sectors to GDP Source: Compiled using data from Ministry of Finance 2012, p 87 and Nepal Rastra Bank 2012, p 84

Remittance Transfer Cost as Percentage of Total Cost Country MTO* Bank Credit Card Post Bangladesh 3.30 5.70 - India 6.20 13.20 15.10 12.90 Nepal 4.90 4.80 Pakistan 4.50 9.10 15.90 4.00 Sri Lanka 5.90 Ganesh-ji, kindly, add a diagram or table. *MTO: Money Transfer Operators Source: Manuel Orozco, The Market for Money Transfers in Asia: Scorecard Report, 2013

Present use of Remittance Similar pattern of remittance use had been recorded by other studies: Bhadra (2007), WFP and NDRI (2008), Adhikari and Gurung (2009), NLSS III (2011), and NIDS (2012). Source: NEPAL LIVING STANDARDS SURVEY 2010/11, CBS, Page 48

Contribution of remittances to total household income in 2010 Migrant Internal remittances Foreign remittances Internal and foreign remittances Annual remittance (NPR) % of total annual household income Female 16,919 4.35 128,087 32.94 145,006 37.29 Male 2,054 0.53 109,918 28.27 111,972 28.80 Total 18,973 4.88 238,005 61.21 256,978 66.09 This pattern of remittance use had been recorded by other studies: Source: NIDS 2012, p 36

Social remittance from India “Long time back, I worked as a contract farmer in the Punjab province of India. Now, I do farming in my own village. But vegetable and crop farming in my small piece of land is not adequate. I had learnt many farming techniques while in Punjab. I use this knowledge to grow sunflowers in a land I have got on lease. I make a good profit through mixed farming.” Ram Dev Chaudhary

Social remittance from Gulf countries A RETURNEE FROM GULF

Social remittance from South Korea LARGEST PIGLET FARM IN NEPAL CHHYAM THAPA A RETURNEE FROM KOREA

Recommendations Skills development for rural youth Counseling services for returnees and their families Training for enterprise development Access to land, agricultural value chain development, and support services for returnees Connecting with Nepalese Diaspora Market feasibility for small enterprises Access to credit and formal financial institutions Banking ‘unbanked’ remittance Research to inform policy makers

Project Design New IFAD funded project: “Rural Micro-enterprises and remittances” USD 32 million initial. 4 components : Component 1 - Enterprise promotion and job development Component 2 – Services for Employment Component 3 – Financial Services Component 4 – Support Infrastructure Study June 2013. Design Jan 2014 Community of practice Quantitative approach.

Videos: http://www.youtube.com/watch?v=iHl-O02_O2U More available on IFAD ASIA and IFAD NEPAL TV: Docs:http://asia.ifad.org/web/cosopnepal Videos: http://www.youtube.com/watch?v=iHl-O02_O2U THANK YOU