Despite doomsayers' repeatedly pointing out that the Nepali economy was about to collapse at any time in the last four years, why was it that such a collapse did not happen?
True, annual economic growth rates fell far short of potential during the four-year period. Aid budgets had to be slashed as the royal regime reshuffled development priorities, thereby alienating international friends. Revenue collections were dismal. Imports remained greater than exports. And the worsening security situation slowed down the completion rate of public development works. Yet amidst all these growing hardships, life in Nepal somehow limped on.
Armchair psychologists have seized the result to chatter in the press about Nepalis' innate resilience and optimism. But looking back, it is reasonable to assume that a steadily increasing flow of remittance, ie foreign-earned private money, from Nepal's million-strong global migrant labourers did much to cushion many against the shocks wrought by the ailing economy.
Indeed, one estimate puts the value of remittances sent to Nepal in 2004 alone to be more than US $ 1 billion. That's an amount greater than what Nepal earns every year from tourism and agriculture combined. What that further means is that Nepal's most valuable assets are no longer "Mt Everest and more" or agricultural fields. They are primarily our people: lakhs of young men and women who leave this country as poorly-educated and ill-skilled migrants to work in more than 40 countries as janitors, assembly-line machinists, maids, waiters and the like.
By regularly sending a portion of their incomes to their families in Nepal to spend on food, housing, healthcare, education and starting small businesses, they have quietly risen to the forefront of Nepal's biggest poverty reduction program.
But displaying its usual penchant for making grandly sweeping economic pronouncements, the state continues to fail to acknowledge the contributions of our global migrant labourers. Wednesday's budget speech, for instance, even with all the talks about "developing economic infrastructure" made no mention of any contribution made by migrant Nepali labourers, let alone talk about how to lower the social, political and economic costs of receiving remittances across Nepal. The closest the speech came to the issue was in a paragraph about "making foreign employment business prestigious, organised and transparent," as though the state's role were to confer prestige (read: political patronage) to this already politicised 21-year-old lucrative industry.
But the most effective role the government can carve out in this industry is the same one it should carve out in any industry: that of a regulatory 'infomediary'-enforcing rules and providing information. To that end, its focus on foreign employment processes should be on helping potential migrant labourers gather information about work abroad, making it easier for them to be credibly linked to appropriate financial institutions for loans to pay for passage abroad, putting in place tax breaks on remittances and implementing policies that make it cheaper for labourers to make use of formal financial channels to wire money home.
The goal, after all, is not to follow the Maoists in taking a bite out of other people's incomes, and justify such a cut in the name of some vague social justice. It is to find ways to enable hardworking overseas Nepalis to be more able to entrust their private earnings to the network of Nepal's formal financial systems so that the effects of their deposited money run deep for possible lending and investment opportunities.
Remittances appear to have saved us once from collapsing altogether. Let us now consciously look ahead to add them as a strong third pillar, alongside foreign aid and foreign direct investment, as a source of finance for development.
