Kathmandu - Remittances from overseas workers are an economic lifeline in Nepal, last year amounting to around USD 4.75 billion, or 25 per cent of the country‟s annual GDP – the highest rate among South Asian countries.
A lack of knowledge about the importance of savings means that much of that money is spent by families on consumer goods, rather than being reinvested into income generating activities. Consequently migrants who have moved abroad at considerable cost end up stuck in a vicious cycle of poverty and re-migration.
IOM, in collaboration with Nepal‟s Ministry of Labour and Employment this week held a six-day training for government officials, NGO trainers, officials of financial cooperatives and a private bank to help them better educate families who are dependent on remittances. Participants will each share their knowledge with up to 200 such households.
The training was based on a „financial literacy‟ manual developed by IOM, the Ministry of Labour and Employment and the Central Bank of Nepal. It covers managing remittances, setting up a small business, savings plans and budgeting. The curriculum also aims to encourage households to receive their remittances through a formal financial institution.
Following the training, a one-day pilot test of the manual was carried out with 30 remittance-receiving households in the village of Chaimale, on the outskirts of the Kathmandu Valley. Suresh Man Shrestha, Secretary of the Ministry of Labour and Employment, said: “While the Government of Nepal acknowledges the enormous contribution of labour migrants to the economy, we are also concerned about the current pattern of remittance use. Migrants and household members should make productive investments, and for this reason financial literacy is important.”
He noted that the Nepali government is discussing creating a migrant-focused „labour bank‟ offering low interest loans and financial schemes for migrants.
IOM Nepal Chief of Mission Maurizio Busatti commented: “IOM Nepal is increasingly promoting participation of the private sector in migration issues and financial literacy is one of the key areas where we are working closely with financial institutions, so that they can extend their services to migrants and their families. This is important for the eventual reintegration of the migrants, who will need to finance sustainable income generation activities.”
The project is being jointly implemented by IOM and the Ministry of Labour and Employment and is supported by the IOM Development Fund.