Workers in Nepal Are Leaving. Can Government Loans Make Them Stay?

Between 2008 and 2017, more than a tenth of Nepal’s population left the country, looking for jobs that are scarce at home. The government is trying to bring workers back, but their efforts to support entrepreneurs and new businesses aren’t going as well as planned.

Workers in Nepal Are Leaving. Can Government Loans Make Them Stay?

Yam Kumari Kandel, GPJ Nepal

Bishnu Kumar Kathayat learned plumbing skills while working in Saudi Arabia. Now, he hopes to get a government loan in Nepal to boost his business so he can avoid going abroad to work again. Millions of Nepalese workers have sought work in foreign countries since 2008, but the Nepalese government hopes to lure some of them back home.

KATHMANDU, NEPAL — In 2008, Amar Bahadur Khadka left Nepal for Malaysia to make some money.

When he came back home a decade later, he brought with him cash and, more importantly, skills.

In Malaysia, Khadka worked for a company that produces incense. But on his days off, he picked up shifts at a sandal factory. Now, back in Nepal, he makes sandals of his own. Each pair goes for 120 Nepalese rupees (about $1) and he sells as many as 200 a week.

This is the sort of success story that the Nepalese government hopes will attract more people who have gone abroad for work to come home.

About 3.5 million Nepalese went overseas for work between 2008 and 2017 – more than a tenth of Nepal’s total population. That doesn’t include the massive wave of Nepalese who head south into India to find jobs. (There are no visa requirements for a Nepalese person to enter India, so there are no good estimates of how many Nepalese are there for work.)

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Yam Kumari Kandel, GPJ Nepal

Amar Bahadur Khadka and his wife, Hira Khadka, sort sandals they’ve made in their home. Amar Bahadur Khadka learned to make sandals when he worked in Malaysia. Now, he hopes to find success making and selling them in Nepal.

Nepal’s dismal job market is the key driver of labor migration. More than 500,000 people enter Nepal’s labor market every year, according to the International Labour Organization. But the chances that they’ll find work that pays well are slim. Instead, they head abroad, where thousands of them have died working in dangerous conditions. Justice is elusive even in the worst cases of exploitation because Nepalese job agencies, known as manpower agencies, thwart laws regulating how workers are recruited and sent.

Now, the Nepalese government wants people who left the country to return and drive economic growth. To help make that happen, the government issued a directive to banks in September of 2018 to provide loans of 1 million Nepalese rupees ($8,908) to people who’ve returned in the last three years. The loans are meant to be used to build businesses and should be repaid within five years, says Narayan Prasad Paudel, executive director of Nepal Rastra Bank.

To get the loan, applicants must first pass a skills verification test designed by the Council for Technical Education & Vocational Training (CTEVT).

The test isn’t easy, though. In April, 564 people applied to take it. Of those, 168 wrote the exam and 120 people passed, says Din Bandhu Subedi, an information officer at the Foreign Employment Promotion Board.

Khadka, the slipper maker, plans to take the test. He has high hopes that a loan, if he gets one, will help him increase production.

But advocates for returning migrant workers say the program should include training and mentorships so that these new entrepreneurs can learn how to run a business.

Of all the migrant workers who received labor permits from Nepal’s Department of Foreign Employment in the 2013/2014 fiscal year, three-quarters were “unskilled,” according to government data, which references the most recent data available.

In 2016, the International Organization for Migration conducted a survey covering a sample of 1,976 long-term Nepalese migrant workers. The survey found that the majority were employed by the manufacturing, construction or hospitality industries.

Those are the types of skills that are tested by the loan program. A person who hopes to secure a loan needs to pass the test in one of the 20 skill areas, such as plumbing, furniture making, electrical wiring and others, Subedi says.

Plumbing is Bishnu Kumar Kathayat’s area of expertise. He worked in that field in Saudi Arabia for over three years and only returned to Nepal when he found out that he might be eligible for a loan to start his own business.

Kathayat says he took the exam, but didn’t pass. He’d hoped to get a certificate proving that he’s qualified to work as a plumber, in addition to the loan.

Still, he’s working, even without the certificate.

After doing some plumbing work for his brother’s home, he says his brother’s neighbors are asking for his services, too.

“People would call me for my help as soon as I am done with the plumbing work in one house,” Kathayat says. “I earn 25,000 rupees per month from installing pipes.” That’s about $223.

When workers return to Nepal, they no longer send the remittances that make up a huge portion of Nepal’s economy, says Biswo Poudel, an economist.

As of 2017, remittances make up about 28% of Nepal’s gross domestic product, according to the most recent World Bank estimate.

Ultimately, Poudel says, new businesses based in Nepal will eventually contribute to the economy.

But Ganesh Gurung, an expert on Nepal’s labor migration sector, says he doubts whether the loan program will truly promote entrepreneurship.

“The loan facility alone cannot make [migrant] workers entrepreneurs and business-oriented [people],” he says.

Gurung says he knows of some returned workers who took out business loans, but their businesses didn’t succeed because the workers didn’t know how to manage money or get the training they needed.

He adds that some workers abandon their efforts and head overseas again.

Research published by the Nepal-based Centre for the Study of Labour and Mobility echoes Gurung’s concerns, noting that reintegration for returning migrant workers is difficult because there’s little formalized support.

Kathayat, the plumber, says he hasn’t ruled out the possibility of heading back to Saudi Arabia. He plans to take the test again. If he doesn’t pass, he says, he’ll leave Nepal.

Sagar Ghimire, GPJ, translated this article from Nepali.