Where have we heard that one before?

President Bidya Devi Bhandari devoted quite a lot of time in her two-hour-long speech to Parliament on the government’s plans and policies on 15 May laying out a strategy for COVID-19 recovery by helping returning Nepali migrant workers.

She said returnees would be provided funding and employment opportunities. That could have been welcome news, but there was nothing new in that commitment. History shows that similar promises in the past have been limited to rhetoric.

Nepal’s overseas migrants were coming back in the hundreds every day before the COVID-19 lockdown. They came, they struggled, and when things did not work out, most left again. Nepal has a high proportion of repeat migrants who often hop across different countries in the Gulf and Malaysia.

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Sunita Neupane worked in Israel for over a decade as a caregiver, and came back to Nepal with some savings to prepare a proposal for an agriculture project to take advantage of the government’s soft loan scheme for returnee workers.

“The application process took a lot of time and money, but despite following up for months, we did not hear back from the Foreign Employment Board,” Sunita recalls. “I gave up after I saw no hope.”

Like for many other workers, re-emigration seems like a safer bet for Sunita. “All I could get is a job paying Rs15,000 here, compared to over $1,000 in Israel,” she adds, “when things get back to normal after this crisis, I will look at options to go abroad again.”

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Ananda Nepal returned from the UAE and says he was the first among 18,000 applicants for the government’s soft loan program last year. He wanted to start a liquor store, but did not get the loan and has now opened his own shop that did not require much investment.

“The small number of returnees who did benefit from the loans were well-connected and used their network,” Ananda says. “Normal people like me don’t have that kind of access, especially because we live away from Nepal for years and are out of touch. If it was a fair system I should have got the loans since I was the first applicant.”

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The soft loan program for returnee workers was launched in 2018 by the Foreign Employment Board (FEB) and Nepal Rastra Bank (NRB). Workers who returned to Nepal in the previous three years were eligible to borrow Rs 1 million. More than 18,000 workers lined up at the Board for days to apply. Only a little over 100 loans were approved.

“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.

Read also:

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