Overseas remittances from migrants and migrant workers are a vital means of building household finances in their home countries. In developing Nepal, household income from overseas remittances has a major impact on domestic economic growth, underpins the development of the country, and household stability contributes to higher living standards for Nepali families.

Number of Nepali Overseas Migrant Workers and Remittance Amounts

Currently, the number of workers from Nepal overseas is said to be 5.81 million.

By country: 1st Malaysia 1.67 million / 2nd Qatar 1.58 million / 3rd Saudi Arabia 1.16 million / … 9th Japan 210,000 … /

The Middle East is the main destination for overseas migrant work. The number of overseas migrant workers from Nepal peaked at 527,814 in 2014 and has tended to decline since, but the accompanying remittance amount from overseas has been roughly flat since 2018 at 875 billion Nepalese rupees, equivalent to 23.2% of GDP.

(Source: Data from the Embassy of Japan in Nepal

https://www.np.emb-japan.go.jp/files/100138070.pdf)

Overseas Remittances and Escaping Poverty

Overseas remittances to Nepal are said to account for one-fourth of household income. Remittances increase household spending on education, household investment, medical care, and more, and play an important role in raising living standards and helping families escape poverty.

Low educational attainment, a factor in Nepal's poverty problem, is being improved through overseas remittances, which is also reflected in better learning environments and academic performance for children in low-income households.

The boost to household finances from remittances can also be seen in Nepal's construction boom over the past several years. Many new builds and expansions are visible in the Kathmandu Valley, and even during the COVID-19 pandemic the construction industry has tended to remain more active than other sectors.

Overseas remittances to Nepal have in the past lifted millions of people out of poverty, played a major role in women's social advancement, and had a significant impact on economic trends.

However, there is concern that the COVID-19 pandemic may again create impoverished households in Nepali society, and families unable to receive remittances are being forced into situations where they must cut spending related to education and health.

The reality that livelihoods cannot be sustained without overseas remittances is one reason Nepal continues to send labor abroad, and most of those who hope to work in Japan under the Specified Skilled Worker program or as technical intern trainees come from this kind of background.

Impact of Declining Overseas Remittances During the COVID-19 Pandemic

During the COVID-19 pandemic, conditions for overseas migrant workers have been severe, with cases of reduced income due to layoffs and remittances being cut off.

Due to the impact of COVID-19, figures showed a 12% decline in overseas remittances to Nepal in 2021, and the World Bank has projected that Nepal's economic growth is tending to change dramatically.

In Nepal, the second wave of COVID-19 infections has left the domestic situation quite unstable, and with tighter restrictions such as stay-at-home orders and suspension of international flights, the country is struggling to balance infection control with economic growth.

The decline in overseas remittances has dealt a major blow that is shaking the economies of developing countries, including Nepal. COVID-19, which has raged worldwide, has starkly highlighted the widening gap between developing and developed countries, and the vulnerabilities of developing countries that cannot prevent infection on their own stand out clearly in national responses to vaccination, income, education, and healthcare.

With no end to COVID-19 yet in sight, the decline in overseas remittances and falling living standards mean that prolonged economic lockdowns for infection control are not feasible in Nepal over the long term.

The role of overseas migrant workers is to build continuously stable household finances through the economic activity of remittances. For Nepali overseas migrant workers currently abroad and for young people in Nepal who aim to work overseas in the future, this is a period of dramatic change.

There is an enormous amount to think through between overseas and home—from shifting mindsets anew to reexamining economic activity that depends on overseas remittances.

* Holders of status of residence in Japan → Foreign nationals: 2,885,904 / Nepali nationals: 95,367

(Source: Ministry of Justice data on the number of foreign residents)