IFAD, IOM Laud Impact of Remittances on Nepal's Growth

- The International Fund for Agricultural Development (IFAD) and the International Organization for Migration (IOM), as well as the Resident Coordinator's Office, celebrated the International Day of Family Remittances (IDFR) in Kathmandu yesterday. The event brought attention to the vital contributions of migrants in the form of remittances they send home to support families, rural communities, and the country's overall development. The celebration brought together key stakeholders from government, international organizations, the private sector, diaspora associations and most importantly, returnee migrants.

Remittances are critical in Nepal, estimated at US$11 billion in 2023, accounting for 26.6 per cent of the country's GDP - more than the combined inflow of official development assistance and foreign direct investment to Nepal. Moreover, these flows have proved to be resilient through crises, including the 2015 earthquake and the COVID-19 pandemic.

"Remittance senders or receivers are usually women - this is an opportunity to include them financially by designing specific financial products and trainings that enhances women's financial inclusion and economic empowerment," said Bibiana Vàsquez, Senior Remittances, Diaspora and Inclusive Finance Specialist, IFAD.

The IDFR theme this year emphasizes the importance of digital channels in making remittances faster, cheaper and more accessible. Remittance costs to Nepal have been, and continue to be, low. The cost of sending US$200 as a remittance to Nepal now averages 3.7 per cent, closing in on the Sustainable Development Goal (SDG) for remittance costs to average 3 per cent. Similarly, Nepal has made significant advances in financial inclusion and in offering formal channels for remittance transfers.

"Formal financial inclusion in Nepal has risen significantly, from 61 per cent in 2014 to 90 per cent in 2022, driven by the adoption of digital financial services like digital wallets, now used by almost 19 million people. Yet vulnerable groups such as women, youth, undocumented migrants and rural populations are often left behind. We call on member states and financial institutions to address these barriers and meet our commitments to both the Sustainable Development Goals and the Global Compact for Migration," said Madam Hanaa Singer Hamdy, United Nations Resident Coordinator in Nepal.

The event featured discussions on the impact of remittances on financial inclusion, with a focus on leveraging savings, credit, and investment products to improve the lives of migrant workers and their families. It also showcased preliminary results from IFAD and IOM, highlighting collaborative efforts to digitize remittances, reduce costs, and achieve financial inclusion.

Roshan Cooke, IFAD Country Director for Nepal and Bhutan, noted that "In Nepal it is estimated that remittances make up about 80 per cent of smallholder farm households' income, while only 20 per cent of income is earned from agriculture itself". He announced the ongoing completion of the US$38 million, seven-year Rural Enterprises and Remittances Project (RERP), also known as the SAMRIDDHI project, implemented by the Ministry of Industry, Commerce, and Supplies. The project has benefited rural households, migrants and remittance receivers through financial inclusion and enterprise development.

IOM established the first Migrant Resource Centre to support safe, orderly and regular migration in Nepal. This initiative was later expanded by various development partners to enhance the migrant information management system and assist the government in leading regional consultative processes. In collaboration with government and society, IOM engages the Nepali diaspora and migrants in various migration and development interventions. Additionally, IOM works with academia through migration schools and academic discourses, focusing on migrant worker reintegration and counter-trafficking efforts, aligning with Nepal's championing of the Global Compact for Migration (GCM).

"Nepal is a champion country of the GCM, which promotes faster, safer and cheaper remittance transfers and financial inclusion of migrants," said Helene Fors, IOM Chief of Mission, Nepal. "IOM is committed to supporting the implementation of the GCM, including promoting ethical recruitment, advocating for human rights in business and building the capacities of the private sector."

Panel discussions throughout the event underscored the resilience that remittances help build among rural people. Migrants support their families in achieving the SDGs, and returnees use their accumulated savings and knowledge to invest back home, generating employment and fostering local development. The Central Bank of Nepal discussed the inclusion of remittances sent by international migrants, including Nepali students, in their financial outlook for the country.

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