NRB report reveals 68% of foreign employment remittances spent on real estate

KATHMANDU: A study report from Nepal Rastra Bank sheds light on the utilization of remittances sent by Nepalis engaged in foreign employment. The study, titled ‘Impact of foreign employment in economic and social sector in Lumbini Province,’ highlights significant trends and insights.

Key findings from the report indicate that approximately 68.41% of remittances received by workers and their families are dedicated to house construction and real estate purchase.

Furthermore, 66.02% of the remitted funds are channeled into bank savings, while 52.67% is allocated for gold and silver purchases. Business investments account for 12.27%, followed by social work at 12.01%, personal investments at 9.14%, and share purchases at 4.44%.

The report also indicates that 58.78% of remittances are directed towards daily consumption, with 22.48% going to education and health, 10.07% for debt repayment, and 8.67% for entertainment and other expenses.

The study highlights the ongoing challenge of informal remittance channels, such as hundi, as compared to formal banking systems. The report suggests that 97.65% of remittances are funneled through the banking system, with 2.35% using non-banking channels.

However, the accuracy of this data is questioned, as it is unclear whether funds initially entered Nepal through informal means and were later integrated into the banking system.

Regarding financial transactions, 48% of families reported using checks, while 38% use electronic means. Interestingly, 14% of individuals rely on cash for their purchases, even if they have a bank account. This points to a shift toward increased use of banking tools in financial transactions.

The study reveals that a majority of workers and their families (64.49%) engage in home improvements, such as adding floors and maintaining or constructing new houses. The report also notes a notable increase in the use of modern media for communication, with 96% of families adopting such technology after family members engage in foreign employment.

In terms of healthcare access, 77% receive services from government health centers, which indicates growing trust in these facilities. The report further emphasizes the engagement of female family members in organizations that aim to empower and increase self-determination among women.

The study’s demographic insights show that 63.18% of individuals work for more than 5 years in foreign employment, primarily driven by the desire to improve their family’s economic situation (41.80%). Additionally, 60% of those leaving for foreign employment are not involved in any profession within Nepal, while 40% are engaged in local occupations.

The report concludes with the observation that remittances have played a vital role in Nepal’s economy, with a significant increase in remittance amounts entering the country over the years. This growth highlights the importance of understanding the economic and social impacts of remittances from foreign employment, particularly in Lumbini Province.

The study collected data from 383 families from five districts within the province. It found that the vast majority (94%) of those engaged in foreign employment are male, and most (85.90%) are married.