“The loan program required returnees to apply for loans in businesses directly related to their work experience abroad, which caused complications and has been waived now,” explains Dev Kumar Dakal at the NRB. “The guidelines for the soft loan programs have been made more flexible in late 2019.”
The criteria that migrants need to be recent returnees has also been taken out, and they are also allowed to apply for group loans. The returnee loan program is one of the multiple soft loan schemes that the NRB provides which include commercial agriculture (up to Rs50 million), Dalit Community Business Loan (up to Rs1 million), youth self-employment (up to rupees Rs700,00), women entrepreneurship (up to Rupees1.5 million).
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Bhuvan Dahal heads the Nepal Bankers Association (NBA), and says most banks are reluctant to provide collateral-free loans for proposals that are not bankable. He says most applications at the FEB were not full-blown business plans.
“It is also important to remember that not everyone is an entrepreneur, and the rate of failure of businesses is extremely high,” he says. “There are inherent risks to starting your own venture, and not everyone is built for that.”
He says it is important to be practical and also focus on gainful employment opportunities in sectors like commercial agriculture and infrastructure in close coordination with cooperatives and the private sector.
Gunakar Bhatta at the NRB says loans are just a part of the problem. Returnees interested in starting their own businesses need support in business development, skills training, mentoring, networking and an understanding of the local context.
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“Commercial banks are reluctant to provide collateral free loans to returnees. It may be important to work with select financial institutions like Agriculture Development Banks and provide them with incentives to take ownership of this scheme,” says Bhatta. “Local governments need a coordination mechanism to provide integrated services to potential entrepreneurs to develop viable business plans.”
Nepal’s strategy on out-migration has been changing over time. The 10th periodic plan, for example, set a target to double the volume of overseas workers and help poorer among them meet high recruitment costs. But the latest 15th plan prioritises ‘discouraging foreign labour migration’.
Despite this, the need to channel remittance to productive sectors has been consistently made a priority on paper, and the definition of remittances goes beyond money to also include repatriation of skills, experience, exposure and know-how acquired abroad.
Although promises have been made to returnees in the past, what is different this year is the COVID-19 crisis which has brought reverse migration to the forefront in an unprecedented way. Mere rhetoric about reintegration into Nepal’s economy may ensure that their return is temporary, and they will head back out once the crisis abates to a more challenging working environment.
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