In the context of global labor market several millions people are now living and working in another countries, far away from their countries of birth. These people regularly remit a substantial portion of their earnings to their home countries. The financial flows generated by these migrants by way of remittances are very substantial. Although accurate figures are extremely hard to get, it was estimated that in 2004, remittances to developing countries from developed countries exceeded US$126 billion, which was up by nearly 48.7 percent as compared to 2001. Actual amounts were probably much larger because flows through informal channels such as hawala were not included in official data collection.
Nepal has become one of the major labors exporting country in recent years. The history of foreign employment in Nepal dates back to the early nineteenth century when Nepalese soldiers began to work for the British army. In the ensuing decades, hundreds of thousands of Nepalese have worked in British and Indian army. Currently, over 60 thousand Nepalese are working in the Indian Army and other government institutions in India. As the border between India and Nepal is open, hundreds of thousands of Nepali goes to India for labor works. The pace of the foreign employment increased dramatically after 1996 and the consequent of shrinking economic opportunities back home compelled Nepalese youths to look for alternatives elsewhere. The massive unemployment inside the country is the main reason behind this upsurge in venturing out to distant lands. As per the government data among the total population of 23.2 million, 47 percent are underemployed. According to one estimate, every year 300,000 to 350,000 new Nepalese enter the labor market. Out of these new entrants, 30 to 40 thousand find jobs within the country; 100,000 to 150,000 go abroad and the rest remain in the country with no job. According to the National Planning Commission (NPC), the number of overseas workers has grown, on average, by 30 percent in the last couple of years. There are now an estimated 1.2 million Nepalese working in 40 countries, excluding India. In the Gulf region alone, about 700,000 Nepalese are working in Bahrain, Kuwait, Saudi Arabia, Qatar and the United Arab Emirates (UAE). The demand was so high that Nepal had to open a consulate in Qatar to supplement the efforts of the embassy in Saudi Arabia, where there are over 200,000 Nepalese. Malaysia first opened its domestic job market to Nepalese in 2001, and it is estimated that about 150,000 workers have legally entered the country since then. Around 70,000 more are estimated to work in Hong Kong. Large numbers are also illegally employed in the rest of Southeast Asia.
There are huge number of Nepalese in UK and USA. They went to those countries as a student but their returning to Nepal is rare. They are remitting their earnings through unofficial channels since the commission charge in official channels is very high.
Today, the process of money transfer to Nepal from abroad through banking channel has become efficient and easy. It is now possible to measure the amount repatriated by the Nepalese migrant from abroad to Nepal every year through formal channel. However, it is estimated that only around 40 percent of Nepalese migrant workers use formal channel to send their earning back home. The rest still rely on the informal channel like hundi that is believed to be fast and economic. Now, there are 26 recognized remittance companies including Western Union, operating to transfers money from all over the world to all the part of Nepal. Since 2001, the flow of remittance to the country has grown at an annual pace of 15-20 percent. It is expected to grow more as number of people going abroad is increasing day by day. Remittance market study shows that around 40 percent of the total inward remittance volume to Nepal is paid within Kathmandu valley.
Migrant workers’ remittance is a strong source of foreign exchange earnings for Nepal. It is estimated that in 2004 money transferred from migrant Nepalese have crossed Rs 100 billion—making it a bigger source of foreign exchange than tourism and all exports combined. Workers remittance is now consider as a backbone of our economy. According to a study by David Seddon for the DFID, the value of foreign remittance from migrant laborers could be equivalent to 25 percent of official gross domestic product (GDP).
Since last few years remittance income is playing a vital role for the foreign currency earnings and favorable impact on balance of payment situation, to reduce the number of people in the country below poverty line and ultimately to the economic growth of the nation.
Mainly the remittance in Nepal from Gulf countries comes through Exchange Houses, Western Union Money Transfer, Money Gram, Himal Remit, and Nabil Speed Remit of which, Western Union Money Transfer and Money Gram are the international brand whereas Himal Remit and Nabil Speed Remit are the local brand. Himalayan Bank Ltd. is the sole agent of Money Gram. Himal Remit was mainly confined to the Gulf countries but now it has extended its service to Europe also. Similarly, Nabil Speed Remit is focusing its business in Doha, Qatar. The remittance from Gulf countries mainly comes through Exchange Houses. For this, Exchange Houses form Gulf countries maintain their accounts in Nepalese banks and issue either drafts or send the payment instructions through telex/e-mail/fax messages to remit the fund to the concerned beneficiary. The exchange houses in the Gulf are depending on these channels since they are not authorized to use SWIFT yet. Recently they have started using web based programme to transfer funds to Nepal, which has became easy and fast.
Major Players in the Market:
Major players of remittance business in Nepalese market are Himalayan Bank, International Money Express, NABIL Bank and Bank of Kathmandu. Himalayan Bank brings almost USD 20 million per month. It has deputed its staff in Gulf countries and in Malaysia and provided excellent delivery system to capture the major share. International Money Express (IME) is in second position in the market and brings almost USD 12 million per month mostly from Malaysia that comes to USD 10 million per month. It transfers money through remittance system and has branches in UK and Malaysia. Similarly, Nabil Bank is also entering the remittance in Nepal through Nabil Speed Remit.
Another company, which is global and major player in the market, is Western Union. Currently Western Union is doing 18,000 remittance transactions per month with the record of 30% increment p.a. and an average amount of USD 700 per transaction. The four existing agents of Western Unions are Annapurna Travel, CG FINCO, SITA Travel & NABIL and they hold 40%, 30%, 20% & 10% business share respectively. Recently Hulas Remittance, a remittance company promoted by Golcha group has received the 5th principal membership of Western Union in Nepal. Hulas Remittance is expecting to capture 15% of the Western Union's remittance volume in the first year of its operation. It is expected that their market share will further increase since they are pioneer in consumer product and have good market reputation.
